Los Angeles startup
TreatFeed
just launched a new spin on the crossover between social networking and
e-commerce — it wants to reward users for their social recommendations
with prizes and cash.
Scott Roback, the company’s senior vice president of strategy and
business development, said that where companies like Facebook are trying
to build a social graph,
TreatFeed is trying to create “the commerce graph, or the monetization layer of the social graph.”
Here’s how it works:
TreatFeed
aggregates deals from across the Web. Users come to the site for the
deals, then ask their friends and family to join too. When users find
deals they like, they can recommend them to their connections on the
site. And if someone actually acts on a deal, then TreatFeed gets an
affiliate commission, which it then splits with users. The user who
signed up for the deal gets a percentage, and the user who brought them
into
TreatFeed gets a smaller percentage, and so on, up through four “generations”.
Technically, the commission for shoppers takes the form of points, but
those points can be redeemed for prizes or cash. Roback estimated that
half of the money TreatFeed receives for each deal will eventually go to
users.
This system takes advantage of the fact that shoppers are already
recommending products and deals to each other, Roback said. And the fact
that
TreatFeed
is rewarding people for bringing in more users, rather than for
recommending specific deals, seems smart, because it will help the site
build out its user base quickly. It might also avoid criticisms that
this system (like other “multilevel marketing” programs) starts to look
like a pyramid scheme.
Even though
TreatFeed is
building a social graph (er, “commerce graph”) of its own, it also
integrates with Facebook, allowing users to find friends from Facebook
and post deal recommendations on the social network. And it will work on
affiliate programs with publishers, allowing publishers to make money
not just on the shoppers who sign up directly from their site, but on
the larger SocialTree that builds as those shoppers continue using
TreatFeed and bringing in their friends.
TreatFeed
was incubated by Lagovent, the firm created by Konstantin Glasmacher
and Brett Markinson. Markinson is the new startup’s chief executive. The
pair has already successfully launched one e-commerce company,
HauteLook, which was acquired by Nordstrom. TreatFeed raised $5.4
million in a round led by Norwest Venture Partners.