It’s quite fitting – and extraordinary – that El Segundo-based Prodege raised $60 million in funding already this year, the same amount its loyalty and rewards site Swagbucks has awarded its more than 10 million users in gift cards. That amount is also quite close to what the up-until-now bootstrapped company earned in revenue for fiscal 2013, at $53 million.
Although the company says its been quietly growing by word of mouth and social media – with more than 10,000 interaction every day – the May investment is a loud testament to the industry’s staying power. Even more evidence is recent activity among competitor sites: RetailMeNot went public in 2013, Coupons.com went public in March and eBates is reportedly planning an IPO this year.
Former executive chairman Chuck Davis, who was appointed CEO in May, attributes Swagbucks’ and its competitors’ success to their shared goal of giving back to the consumer. “When a company keeps its head down to focus on the consumer, everything works out,” he says. “The compatriots in this category are all looking out for the consumer value proposition.”
Despite the shared goal, Davis points to Swagbooks’ breadth as a key differentiator. “While other successful companies are good at a particular vertical, our [approach] exposes different consumers to many different engagement opportunities,” he explains. This model allows users to earn “swagbucks” by engaging in an array of online activities, from shopping to simply discovering offers to watching videos and playing games to reading articles and answering surveys.
Davis joined as executive chairman in January 2013 to help scale the expanding company. The May move to CEO that coincided with the $60 million investment from Technology Crossover Ventures was part of a strategic expansion in C-level executives. Former Shopzilla and BizRate CFO Brad Kates was appointed CFO and former Fandango and Synapse Group CTO Shane O’Neill was appointed CTO. Prior to Prodege, Davis was CEO at Fandango and Shopzilla, seeing both companies through significant exits.
“We have found remarkable talent to expand our executive leadership,” says Prodege and Swagbooks founder Josef Gorowitz. “Utilizing the collective expertise and insight of these industry veterans, we foresee tremendous market opportunity for growth in 2014 and beyond.”
Plans and forecasts for Swagbooks aside, Davis sees the strategy as something any startup can benefit from. “A startup can do really well when it mixes the entrepreneurial, early stage leaders with some later-stage leaders,” he says. “Each has a different strength that makes the whole company stronger, and each learns from and builds on each other.”
As part of the plan to scale, Swagbucks will focus the new funds and talent on mobile capabilities, product development and expanding internationally. The team plans to focus on ramping up partnerships and broadening the company’s reach to “anywhere it makes sense to do so.”
This anticipated “ramp up” is quite different than the more metered growth of Swagbucks’ past. As mentioned, the $60 million investment is the startup’s first round; until then it had been entirely bootstrapped. What’s more, it became profitable after only two years, making it one of Los Angeles’ most successful bootstrapped companies. “Only one in 50 million companies get to profitability without outside money,” says Davis, who sees Los Angeles-area startups as more fiscally responsible than their Bay Area counterparts. “[Founder] Josef was evolutionary. He was investing as he made money and working with what means he had to become profitable.”