5 ms·

What does YC think of companies that make affiliate revenue? Is it a positive or a negative in the VC world?

by dzink 9y ago

ntzm 9y ago
I think it's a perfectly legitimate way of making money, so long as users aren't deliberately deceived into getting a worse deal to get a better deal for the company
hkmurakami 9y ago
Has Pinterest moved off of affiliate revenue making?
michaelbrooks 9y ago
Personally, I think it's not a terrible way in making some sort of revenue. As long as it's honest and doesn't try to manipulate their potential customers. I'm trying to make some revenue from Udemy affiliation using my Twitter account as it relates to my profile and I don't see why others shouldn't be doing it as well.
liaukovv 9y ago
I don't think it's possible to implement an affiliate program in a completely ethical way. Even if you try to make your reviews fair and honest you will still have a subconscious bias to give every product as high score as possible, because high scores generate affiliate purchases.
- tomp 9y ago
  This guy looks honest. He was even featured on Indie Hackers I think. https://www.sitebuilderreport.com/ https://www.sitebuilderreport.com/
  - maaark 9y ago
    And how do we know he's not paying you to say that?! /s
  - jasongill 9y ago
    I can tell you from experience that web hosting affiliates like this are absolutely the most "faked" of any industry out there. Affiliate payments from webhosts can equal 100x what a referral pays monthly, and the payouts are an ever increasing "race to the top" as hosts attempt to pump their customer numbers up
b3lvedere 9y ago
Isn't affiliation a sort of a pyramid scheme? Oh sorry .. multi level marketing .. ?
- patrickk 9y ago
  It's more like a salesman making a commission for recommending or selling someone else's product.
  - othersideofcoin 9y ago
    Specifically, if sales = Sales Dev Rep + Closer, then affiliate sites (leadgen) is like outsourcing the SDR and them getting a commission or referral fee.
- zbentley 9y ago
  No. Affiliate sales is just a basic "every sale you send my way, you make some money" arrangement, different only from traditional commissioned sales in that the affiliates usually don't work "directly" for the company selling the product. Multi level marketing (MLM) schemes are situations in which people make money, or are promised money, based on their ability to recruit additional affiliate salespeople. The typical MLM pitch is "if you sell product X, we'll give you a (typically huge) sum of money, and also if you convince someone else to enter into this same agreement, we'll give you a different (usually smaller) sum of money, and what's more you'll get money for every sale that recruit makes, any people they recruit, and any sales they make, recursively on down the tree." The con is usually in the fact that product X is difficult née impossible to sell, and that entering into such an agreement in the first place requires payment into the scheme. Those factors result in the people towards the "root" of the tree making tons of money simply from the fact that more people are getting recruited and paying in at lower levels. They make money from the tree growing, even though the leaves are not making sales. This is widely considered unethical (and illegal, in some cases) since its primary profit engine is recruitment under usually-false pretenses. MLM can be practiced ethically between a given two parties, but usually only makes money due to subsequent unethical practices (e.g. one seasoned affiliate marketeer agrees to be a recruit of another such seasoned salesperson in a multilevel scheme, knowing full well the behavior of the scheme; they then both go on to enrich themselves and each other by shilling unsuspecting rubes with the typical "you can work your own hours, get tons of money, and, if you grow your network big enough, rake in the cash while your recruits do all the hard work!" sell concealing the "...for a nominal [signup|monthly|etc] fee" hook). Edit: removed accidentally repeated repeated words.
Distant_horizon 9y ago
Bulletin (YC W17) started as an online magazine with affiliate revenue. https://www.forbes.com/sites/forbestreptalks/2017/07/17/a-y-combinator-backed-startup-bulletin-wants-to-be-the-wework-of-retail/#62d23bdf7041 https://www.forbes.com/sites/forbestreptalks/2017/07/17/a-y-... Edited typo.
rwmj 9y ago
Not VC-funded, but MoneySavingExpert which is a fairly well regarded and large UK site for people interested in financial products, FI, etc was sold by its owner in 2012 for £87M. It makes most or all of its money from affiliate links, although it has a transparency policy where links that make money for the site have an asterisk next to them, and they also include (but not as prominently) non-affiliate links. There are some revenue numbers in the Wikipedia page: https://en.wikipedia.org/wiki/MoneySavingExpert.com https://en.wikipedia.org/wiki/MoneySavingExpert.com

What does YC think of companies that make affiliate revenue? Is it a positive or a negative in the VC world?

by dzink 9y ago

What does YC think of companies that make affiliate revenue? Is it a positive or a negative in the VC world?

ntzm 9y ago

I think it's a perfectly legitimate way of making money, so long as users aren't deliberately deceived into getting a worse deal to get a better deal for the company

hkmurakami 9y ago

Has Pinterest moved off of affiliate revenue making?

michaelbrooks 9y ago

Personally, I think it's not a terrible way in making some sort of revenue. As long as it's honest and doesn't try to manipulate their potential customers. I'm trying to make some revenue from Udemy affiliation using my Twitter account as it relates to my profile and I don't see why others shouldn't be doing it as well.

liaukovv 9y ago

I don't think it's possible to implement an affiliate program in a completely ethical way. Even if you try to make your reviews fair and honest you will still have a subconscious bias to give every product as high score as possible, because high scores generate affiliate purchases.

tomp 9y ago
This guy looks honest. He was even featured on Indie Hackers I think. https://www.sitebuilderreport.com/ https://www.sitebuilderreport.com/
- maaark 9y ago
  And how do we know he's not paying you to say that?! /s
- jasongill 9y ago
  I can tell you from experience that web hosting affiliates like this are absolutely the most "faked" of any industry out there. Affiliate payments from webhosts can equal 100x what a referral pays monthly, and the payouts are an ever increasing "race to the top" as hosts attempt to pump their customer numbers up

b3lvedere 9y ago

Isn't affiliation a sort of a pyramid scheme? Oh sorry .. multi level marketing .. ?

patrickk 9y ago
It's more like a salesman making a commission for recommending or selling someone else's product.
- othersideofcoin 9y ago
  Specifically, if sales = Sales Dev Rep + Closer, then affiliate sites (leadgen) is like outsourcing the SDR and them getting a commission or referral fee.
zbentley 9y ago
No. Affiliate sales is just a basic "every sale you send my way, you make some money" arrangement, different only from traditional commissioned sales in that the affiliates usually don't work "directly" for the company selling the product. Multi level marketing (MLM) schemes are situations in which people make money, or are promised money, based on their ability to recruit additional affiliate salespeople. The typical MLM pitch is "if you sell product X, we'll give you a (typically huge) sum of money, and also if you convince someone else to enter into this same agreement, we'll give you a different (usually smaller) sum of money, and what's more you'll get money for every sale that recruit makes, any people they recruit, and any sales they make, recursively on down the tree." The con is usually in the fact that product X is difficult née impossible to sell, and that entering into such an agreement in the first place requires payment into the scheme. Those factors result in the people towards the "root" of the tree making tons of money simply from the fact that more people are getting recruited and paying in at lower levels. They make money from the tree growing, even though the leaves are not making sales. This is widely considered unethical (and illegal, in some cases) since its primary profit engine is recruitment under usually-false pretenses. MLM can be practiced ethically between a given two parties, but usually only makes money due to subsequent unethical practices (e.g. one seasoned affiliate marketeer agrees to be a recruit of another such seasoned salesperson in a multilevel scheme, knowing full well the behavior of the scheme; they then both go on to enrich themselves and each other by shilling unsuspecting rubes with the typical "you can work your own hours, get tons of money, and, if you grow your network big enough, rake in the cash while your recruits do all the hard work!" sell concealing the "...for a nominal [signup|monthly|etc] fee" hook). Edit: removed accidentally repeated repeated words.

Distant_horizon 9y ago

Bulletin (YC W17) started as an online magazine with affiliate revenue. https://www.forbes.com/sites/forbestreptalks/2017/07/17/a-y-combinator-backed-startup-bulletin-wants-to-be-the-wework-of-retail/#62d23bdf7041 https://www.forbes.com/sites/forbestreptalks/2017/07/17/a-y-... Edited typo.

rwmj 9y ago

Not VC-funded, but MoneySavingExpert which is a fairly well regarded and large UK site for people interested in financial products, FI, etc was sold by its owner in 2012 for £87M. It makes most or all of its money from affiliate links, although it has a transparency policy where links that make money for the site have an asterisk next to them, and they also include (but not as prominently) non-affiliate links. There are some revenue numbers in the Wikipedia page: https://en.wikipedia.org/wiki/MoneySavingExpert.com https://en.wikipedia.org/wiki/MoneySavingExpert.com