HasOffers: Twin brothers bring a new face to affiliate marketing

Twins share many common attributes. But — Winklevoss twins aside — do they actually make good co-founders of startups? The twin partnership is working for HasOffers, a 23-person Seattle affiliate marketing company founded by Lucas and Lee Brown.

The 26-year-old co-founders are now tracking more than $300 million affiliate payouts per year on behalf of 7,900 clients. We chatted with Lucas Brown, one half of the dynamic duo, to find out more about how they built the company so fast and what advice they have for other entrepreneurs.

Explain what you do so our moms can understand it: “Like a refer-a-friend program on steroids, HasOffers helps online businesses keep track of who sends you new customers.  Like Amazon, Netflix, Groupon and other online giants, you can pay partners to send new sales, leads, subscribers, etc. to rapidly grow your business.”

Inspiration for the idea hit us when: “My brother and I spent years in online advertising trying to find the most effective and efficient way to track performance of our advertising campaigns.  Our first software license cost us $10,000 to get set up and thousands per month to operate, which was a lot of money to us back then, but that still didn’t cut it. After testing and using every platform available we still couldn’t find anything that was accurate and cost effective, so we spent three years developing our own tracking technology to support our business model. In the Fall of 2008, we realized that we were not the only ones running into this problem…. Thousands of companies are paying more than $8 billion a year for referrals, affiliate sales, in the United States alone, and they are running on old technology that is slow and unreliable.  So that spring we released HasOffers as a SaaS product, and it caught on like wild fire.”

VC, Angel or Bootstrap: “Bootstrap. Using our own money to build HasOffers forced (us) to concentrate on sustainability.  We invested $2 million, became cash flow positive in a little over a year, and we are now at a point in development where investment will substantially increase revenue.”

Lucas Brown

Our ‘secret sauce’ is: “Passion. After participating in every part of online advertising, we realized that we should concentrate on the part that we really love, and believe it or not, that’s performance tracking technology.”

The smartest move we’ve made so far: “Offering our software for free. Two years ago we released our tracking software as a completely free service which brought fast adoption and really incredible feedback immediately.  Our decision to start with a freemium model was definitely influenced by the story of SalesForce vs Siebel –  a classic David versus Goliath example.  We believe there’s a fundamental shift going on in software.  Enterprise solutions are a thing of the past, and nimble, customer-centric companies are taking over.  Though we have since shifted to a subscription model, we attribute much of our early development and adoption to those first excited customers.”

The biggest mistake we’ve made so far: “Not building an effective on-boarding process. While we have a really smooth sign-up process and an awesome support team, we didn’t realize there was a middle ground. On-boarding is the process of taking a new client and helping them actually get setup to use your product or service. Since we provide SAAS, we assumed we just needed to get people signed up and they’ll do the rest on their own. This was a big misconception. ”

Would you rather have Gates, Jobs, Zuckerberg or Bezos in your corner: “Zuckerberg. Though we realize it was a Hollywood version of reality, we were pretty inspired by The Social Network, perhaps seeing too many similarities to some of our own life experiences.  Aside from that, I don’t know of any other movie that shows a passionate technologist plugging in to work for 24 hours plus and audiences still loving it.  Though my twin brother Lee is the stronger programmer, you will find us both “plugged in” for obscene amounts of time…. While many company founders take a ten thousand foot view, Lee and I believe in working closely with our teams to be closer to our product and our customers.  Lee works with the code along side our programming team, giving him unique insight into our larger technology landscape, and I interact directly with our other departments on every level.  I suppose that’s why the story of Zuck resonates with us the most.”

Our world domination strategy starts when: “The tracking software we built is awesome, but it is really just the foundation…. We’re constantly innovating to develop more efficient models.  We’re working hard to tackle the difficult questions of engagement, attribution, tracking accuracy, and more. I guess I’d say we’re already on our path to world domination. We just have to finish dominating performance advertising first. :)”

Rivals should fear us because: “Our pricing model completely disrupted the status quo.  Because of our modern approach to tracking technology, we were able to provide our service at a fraction of the cost of competitors.  As a result they’ve been slashing their prices and bleeding revenue… Moving forward, our rivals should fear us because we have no other agenda than to develop absolutely ground-breaking technology.”

We are unique because: “We spend far more time and resources on our actual product than our sales and marketing efforts.”

The biggest hurdle we’ve overcome is: “Breaking-even.  While the freemium model enabled us to rapidly gain market share, it is obviously not a sustainable model. We debated for a long time about how changing our business model would effect our company’s perception and new customer acquisition, and we eventually decided to make the shift to a subscription model with a free one month trial.  This kept the barrier to entry low while providing pricing models for businesses of any size and quickly brought us to positive cash flow.”

What’s the one piece of advice you’d give to other entrepreneurs: “Focus on developing prototypes…. It’s one thing to have an idea. (My brother and I have lots of other business ideas ourselves). However, it comes down to the entrepreneur’s ability to execute upon their vision. So the best thing an entrepreneur can do is figure out how to build a prototype to prove their idea.”

John Cook is co-founder of GeekWire. Follow on Twitter: @geekwirenews and Facebook.

  • Jonathan

    Awesome interview! The twins seem awesome.

  • http://www.123Homepage.com Rafael Zelik

    Great interview!!! Great Company!!!

    Any news about when HasOffers will go public?
    I’m thinking about buying a share.
    It’s a fast growing industry and HasOffers did a major jump in no time…

    Thanks!
    Rafael Zelik

  • http://twitter.com/dougan dougan

    Great article. Nice work by the Brown Brothers and Team.

  • http://www.puzzazz.com Roy Leban

    As a twin myself, I’ll certainly pull for Lucas and Lee to succeed. But … investing $2M of your own money is not bootstrapping. It’s being your own angel investor.

  • http://www.facebook.com/leamariecharlton Lea Charlton

    Awesome article. Their “On-boarding” issue is common; it can make or break a service that is trying to mainstream … either way, I can’t wait to check HasOffers out.

  • http://www.affiliatepaying.com AffiliatePaying

    Awesome interview with the HasOffers brothers.

  • http://twitter.com/RedRussak Joshua ‘Red’ Russak

    Great interview! [/nothing else to add]

  • Guest

    Where did a couple of guys in their early 20s get $2m from? That is what I’d like to know. Rich uncle? Delivering pizzas in college? Their parents? If you have $2m to drop on starting a business then it is hard to call that bootstrapping.