AlertPay Targets Affiliate Marketers and Grows Business Where PayPal Doesn’t Go

Ferhan Patel and his brother Firoz started AlertPay in 2004. The brothers found a niche and pain point with affiliate marketers and MLM businesses, many of which ran the risk of having their accounts frozen by PayPal for being in violation of PayPal’s user agreement. Whether those businesses were in violation or not, AlertPay became a friendlier, more easily accessible option. The company is now adding 5,000 new members daily and scaling aggressively. It’s been 6 years of toiling away, growing their business and meeting specific market demands.

The company is nowhere near the size of PayPal, nor is it clear whether or not they’ve got that level of scale in their sights, but it’s an impressive feat all the same to go into a space as complicated and challenging as online payments. They’re now working on adding developer tools to make AlertPay more attractive for e-commerce stores to include as a payment option. The goal overall is to expand the brand and make sure more and more people know that AlertPay is a legitimate payment processor.

NextMontreal: When and why did you start AlertPay?

Ferhan: The idea of AlertPay started in 2004, and we officially launched and went live in June 2005. Before 2004, we were in the business of developing
affiliate tracking software (referral tracking software) for 2 years and during this time, many of our clients kept running into problems with PayPal shutting down or freezing their accounts due to their business involving affiliates. It wasn’t until our own company’s PayPal account was frozen that we felt the pain of our own clients. We realized a serious need in the market for another payment platform, and AlertPay was founded.

NextMontreal: Why was PayPal shutting down so many accounts, including your own?

Ferhan: It had to do with their interpretation of Multi-Level Marketing in their user agreement. Any business that was structured in an affiliate model, or similar model, ran the risk of being in violation. When your account gets frozen and all your funds held for 6 months, it can destroy your business as it did for many of our customers. This was a consistent complaint against PayPal from numerous merchants.

NextMontreal: What’s your background, and the background of your co-founder?

Ferhan: Business has been in our blood since we were young. My family operated a grocery store when we were growing up and, at the same time, a home-based
needle trade business. My parents always ran their own business and worked countless hours to provide for us and give us a better future.

I studied Commerce at Champlain College, and went on to receive a Bachelor of Computer Science from Concordia University. I also have a certificate in Project Management from McGill University.

Firoz, (CEO) inherited his entrepreneurial spirit from our family roots and has been doing business since high school, starting off by selling comic books. From there he went on to complete a degree in Business Administration from Champlain College. His experience includes working as a technology officer for a business expense tracking software company, to sales processing.

After graduating from university, I joined Firoz in his processing business to develop our own affiliate software solution that would help e-commerce merchants track referrals and affiliate commissions.

NextMontreal: How was AlertPay originally financed? Have you ever raised external financing?

Ferhan: Believe it or not, during the R&D phase of developing the application for between 2004 and 2005, we (founders) actually had to fire
ourselves to maintain enough funds to pay for our developers. During this time, to make ends meat, I took on another job at an IT consulting company working there during the days, and putting in my nights and weekends to work on AlertPay. We’ve always been self-financed and put everything we had to get it off the ground.

NextMontreal: How is it different from PayPal? Seems like a big gamble to go after a giant like that.

Ferhan: We’re different from PayPal in quite a few ways and we’re also quite similar. We’re different in terms of our business model, the types of
businesses we support, more funding options, more withdrawal options, more currencies, and we support more countries than PayPal to receive payments.

When we first started AlertPay, we never planned to compete against PayPal. We planned to just service a market need that PayPal was neglecting or
servicing poorly.

NextMontreal: Why did PayPal ignore the affiliate market, which is where you seem to have found a niche? And are they still ignoring that market?

Ferhan: I don’t think they ignored the affiliate market, but they took a very strict approach with it due to the bad seeds in the industry. A lot of people still distrust PayPal with their funds if their business has an affiliate program or follows a MLM structure. We were fortunate enough to get involved at the time we did and fill that need, and continue to fill that need today. I doubt it hurts their bottom line in any way, and we’re happy to take on this business.

For more information about AlertPay. Click here.

Ashkan Karbasfrooshan – Building a Video Content Business in a World of Tech

Watchmojo is one of the top producers of original video content online. In February, 2011 they announced that they had surpassed 200,000,000 cumulative views and reached profitably with 75% growth in revenue. The company was started in 2006 by Ashkan Karbasfrooshan and now has 13 full-time staff. Ash has remained resilient and aggressive with Watchmojo and it would seem the company is definitely hitting its stride.

Ash is one of the most open and honest people I’ve ever spoken to for NextMontreal. He doesn’t pull many punches in this interview talking about his strategy behind Watchmojo, why he’s been successful, the failure of VCs in the video space and much more. He has an interesting take on co-founders and even the moniker, “Founder” and how it impacts other employees. This is by far one of my favourite interviews because of how much detail Ash provides, and the fact that he’s unafraid to share his opinion.

NextMontreal: What is Watchmojo, when did you start and how has it evolved since the beginning?

Ash: WatchMojo is a producer of premium videos. After my last company AskMen was acquired and integrated into News Corp./FOX/IGN, I had to start from scratch and due to a non-competition agreement, I could not start or join a men’s online magazine, so I thought of creating a catalog of evergreen, ad-friendly videos on a wide array of categories.

At the time in 2006, there was a lot of euphoria around social media and user-generated content (UGC). I felt that social media and UGC would be very disruptive in news and publishing but when it came to any ad-supported editorial media, marketers would seek professional content. People thought I was nuts in financing original video content creation, but now that content is growing in value and acquisitions are being announced every week (AOL acquiring 5min, Techcrunch and Huffington Post, Yahoo acquires Associated Content) the idea behind WatchMojo isn’t that crazy anymore.

It’s basically a cross between and with the editorial tone of a consumer magazine, but all in video and all professionally-produced by an amazing team of producers, researchers, writers, videographers, hosts, editors in Montreal. We have a lean but productive team, pumping out 100 videos per month and nearly 7,000 all-time.

The main evolution came early on when we moved from a destination approach to a distribution one, when we realized that search engines did a poor job of indexing videos and consumers were developing the habit of watching videos on sites like YouTube.

Otherwise, we’ve actually stayed true to our core vision that content is king, but without distribution it’s akin to a tree that falls in the forest.

For more information about video stream online. Click here.

Can Montreal Become an Open Source Startup Hub?

“First prize is a Cadillac El Dorado. Second prize is a set of steak knives. Third prize is you’re fired.” –Blake, Glengarry Glen Ross

Seth Godin, in his great book The Dip, points out that the only place that’s worth being, in business, is first place. When power laws and network effects are involved, the first place in line is the only place to be. You need to be “best in the world” at something, or you need to quit and start doing something else.

Technology ecosystems – most business markets, actually — have network effects. And that means that the only rank to have, as an ecosystem, is first place. Best in the world.

Who’s best in the world in Web startups? The San Francisco Bay Area. Who’s second? Probably New York City. Who’s third? Who cares? Third prize is you’re fired.

If we care about growing our local ecosystem, maybe we need to collectively quit our race for 14th or 29th place in the Web startup world and think about building something else. Something that we’re good at, and that nobody else is really working on. Something we can be best in the world at – not 14th in the world, and dropping.

Montreal has the opportunity to be the best ecosystem in the world for Open Source software startups. We’ve got a good cadre of entrepreneurs here who’ve had experience with building Open Source companies. We have investors who’ve been through the process of investing in and nurturing Open Source companies. And we have the all-important talent pool of people who’ve been part of the process.

More importantly, there’s not another leading Open Source city on the globe. San Francisco and Boston have a few companies, but they’re definitely not hubs. The commercial Open Source landscape is spread much further across the globe – from London to Utah to Germany to Austin.

Most of all, Open Source commercialization is hard. Ask anyone involved in an Open Source company. It’s difficult to make the model work. There aren’t easy answers. Startup techniques for other kinds of businesses — investment and release strategies — don’t seem to apply as well. That means there’s a barrier to entry for other ecosystems – one we can exploit.

Right now, I know of at least five Open Source startups in the city.

  • StatusNet – I started this company here in 2008. We’ve raised $2.3M in Montreal and New York. We do about 5000 downloads per month, and we have 45,000 sites running on our SaaS service. We have a staff of 9 in Montreal and San Francisco.
  • Vanilla Forums – World’s best forum software. It powers hundreds of thousands of sites worldwide, including a high-performance SaaS service.
  • Bookoven – This social publishing platform has pivoted to an Open Source software model. Led by Hugh McGuire, creator of Librivox, the immensely popular Open Content audio book project.
  • Stella – This great performance metrics company makes their software available as Open Source.
  • Subgraph – Startup security company whose vulnerability assessment software, Vega, is Open Source.

On the investor front, two of the leading funds in the city (iNovia Capital and Real Ventures) have experience with Open Source startups. Real Ventures (or rather, its predecessor fund, MSU) is an investor in three local Open Source companies.

As for talented potential employees… that’s tougher. There are a lot of talented technical people in the city, and out-of-town Open Source companies like Canonical have local tech teams that can feed into the startup talent pool. But talented business staff with Open Source experience? They’re thin on the ground everywhere. Fortunately, the people who’ve been working in the above companies are a good core for that pool, too.

I believe the conditions are ripe for Montreal to take its place in the technology world as the Open Source startup hub. Next week, I’ll give what I think is a potential plan for Montreal to take the lead in Open Source commercialization.

For more information about Montreal Business Opportunity. Click here.