Student Entrepreneur to $10M Revenue Run Rate: Extrabux CEO Jeff Nobbs (Part 2)

Sramana: Why would stores offer cash back to customers?

Jeff Nobbs: We think of it as a win, win, win. For stores, we are an outsourced marketing arm. We not only drive new customers, but we also make their existing customers more loyal by offering cash back on every purchase. If you are an Extrabux.com member, which is free, and you shop at JC Penney, Home Depot, Victoria’s Secret or any of our other 3,000 stores, and you make a purchase, then we get a commission. Let’s say you spent $100 and we earned a 10% sales commission. We will pass the majority, more than 80%, of that commission to you as cash back to your Extrabucks account.

Sramana: I see. So you pass on your affiliate fees back to your customers. Do you keep about 20%?

Jeff Nobbs: We keep roughly that amount. Each store is a little bit different.

Sramana: Your business model is really about 2% affiliate commission on transactions. Is that it?

Jeff Nobbs: Yes, we take a small cut of the affiliate commission on every transaction.

Sramana: That is the concept on which you won the business plan competition?

Jeff Nobbs: Yes. We also integrated a comparison shopping engine into that model so that you could go to Extrabux and search for a product. You can see a product comparison with an extra column for how much cash back you would receive.

Sramana: Who was on the team during the business competition?

Jeff Nobbs: Just the two of us co-founders. Me and Noah.

Sramana: What are your backgrounds?

Jeff Nobbs: Our only real background is Extrabux. We started this our freshman years in college. We started it seven years ago and students, and we are still doing this today.

Sramana: These are the kinds of stories we love to do. How long did it take you to launch this project after you won the $25,000?

Jeff Nobbs: We came up with the idea for Extrabux in January of 2006. We launched the initial site in June of 2006. We entered the business plan competition in early 2008, and we won in May of 2008. We started hiring a team that summer and got our first office in early 2009.

Sramana: Did you have any revenues when you won the business plan competition?

Jeff Nobbs: Yes, but looking back on them now they don’t even show up on our revenue chart. They were really small. We had some customers, and we were making a little bit of money.

This segment is part 2 in the series : Student Entrepreneur to $10M Revenue Run Rate: Extrabux CEO Jeff Nobbs
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