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NEWS19 February 2008

You pay ‘peanuts', you get a $3.2m investment

Peanut Labs wins VC backing for business model that rewards survey participants with virtual currency

US— Peanut Labs, a firm that recruits survey-takers aged 13-25 through social networking sites, has secured $3.2m in venture capital backing.

The company, which launched in early 2007, plans to use the funds for continued development of its sampling technology, Sample3.0.

Sample3.0 has been integrated into more than 70 online social networks – including Facebook, MySpace and Google OpenSocial.

Users of these sites are encouraged to take part in surveys, but before they can they must complete a profile questionnaire. Peanut Labs uses this information to match surveys to potential respondents, who then receive invitations through their social network.

The company was set up by three former college friends, Murtaza Hussain, Ali Moiz and Prosper Nwankpa, who had previously launched networking site XuQa.com.

It was while working on XuQa that Hussain, Moiz and Nwankpa came up with the idea for Peanut Labs.

Speaking to Research in December, Hussain said: “We had two million users on XuQa and we thought, ‘How do we monetise this?’ And we stumbled on a model that gave people ‘peanuts’ in exchange for taking part in surveys.”

These ‘peanuts’ are a virtual currency, and cannot be traded for cash or anything that has a cash value. But they can be used within social networks – to ‘purchase’ applications or to access special features, for example.

Hussain said that the virtual currency proved very popular in testing, with 80% of survey-takers choosing 1,000 ‘peanuts’ over a $5 incentive.

And he is adamant that the company’s “no cash” rule is to its advantage, helping it avoid the attention of professional respondents who see survey completion as an easy way to make money.

“In the online survey space, companies that give out cash rewards have significantly lower quality as a result,” said Hussain.

Peanut Labs does not disclose its sales and profitability figures, but said revenue for 2007 ran to seven digits. It claims to have more than 30 of the Honomichl Top 50 on its client list and is targeting eight-figure revenue for 2008.

Author: Brian Tarran

@RESEARCH LIVE

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