As a follow-up to its company pitch (Friendgiftr-March 18, 2010), StartUp Beat conducted a Q&A with Friendgiftr CEO Rob Carpenter. The Hollywood, Calif.-based company sells gift cards for major retailers through social media and mobile channels. The company was founded in 2008 and now counts 22 employees.
SUB: Can you explain some more how Friendgiftr allows people to take advantage of social networking platforms like Facebook? Maybe a better way to ask the question is: how does your typical user purchase gift cards through your service…is it as a gift for another Facebook member, for example, or is it something that brands are using to directly monetize platforms like Facebook?
Carpenter: This is a great question, thanks for asking. In terms of how a Facebook user makes a purchase from us, for example, all they have to do is add our app by going to the application directory or by simply searching for “Friendgiftr” in the search box—installation then takes a couple of seconds. Once this is done, a user has a quick, three step process of selecting which gift card they want to send, entering the recipient’s email address, and filling out their credit card information. This process usually takes about 60-to-90 seconds. And that’s it. It’s extremely quick and convenient.
In terms of the monetization of platforms like Facebook, Friendgiftr has been the first company to originate the concept of commercializing multiple social networking sites. In other words, once we built our technology and business model, we approached the more than 145 big brands we have to join our service so that we could monetize social media together in a very innovative and groundbreaking way.
SUB: Do users create an account with Friendgiftr before making purchases? Do you keep an ongoing relationship with individual users?
Carpenter: The great thing is we don’t require users to create an account prior to making a purchase on any of the platforms we operate on. Instead, we ask for their email address in the purchase process to make collecting that rich information much more seamless for them and for us. This allows us to maintain an ongoing relationship with them after they make a purchase, though we don’t and would never spam them.
SUB: In terms of payment, have you developed a proprietary platform or have your partnered with a third party provider?
Carpenter: We have a third party provider, CyberSource, who handles our payment processing. They’re extremely good at what they do so that we can focus on what we need to do, namely expanding our service.
SUB: How are you marketing the service?
Carpenter: We’re using a number of traditional advertising approaches as well as a few new twists. Unfortunately I can’t talk too much about this, as this is where some of the secret sauce is.
SUB: I know you said many of your upcoming product/service offerings are secret, but can you provide some hints as to what directions you’re going to go in the near future?
Carpenter: My lips are closed. What I can say, though, is that we’re moving into some very new territory that people will be able to see in time. Commercializing social media and mobile phones is really only the tip of the iceberg for us.
SUB: Who do you consider your competition?
Carpenter: The unusual thing about the gift card industry is that there are really only a handful of companies that operate in the primary markets, and they mostly do that in the physical retail space. By that I mean, while gift cards are ubiquitous and seemingly a commodity, it’s really not that simple to convince major world class brands to work with you (otherwise you would see a lot more companies trying to do what we’re doing). There’s currently nobody doing anything like what we’re attempting. There are, however, some traditional web 1.0 gift card legacy companies selling on their websites or startups doing auction models with a single website.
SUB: Do you plan to seek more investors/funding in the short term?
Carpenter: Some additional early stage venture capital and private equity firms have approached us for follow-on financing, so we’ve kept a very open mind about it. But the great thing about our company is that from day one we have been a revenue business, so we’re not dependent on huge gobs of money just to break even—we’re already making money. I will say this, however: if you look at companies like Zynga or Facebook, for example, they have waited to take on additional equity investments after they’ve scaled so that they could dictate the terms of the investment (Facebook received a $200 million infusion of funds and only gave up one percent of their company). That’s really the time to accept more funding.
SUB: Finally, what advice do you have for entrepreneurs just starting out, especially in this challenging economic environment?
Carpenter: Entrepreneurs always have to believe—they have to believe in themselves, believe in their company, and believe in the notion that they have the ability to create a better future. As simple as it sounds, this belief is enough to break barriers, move mountains, and redefine reality.
Friendgiftr – www.friendgiftr.com