How Badgeville Is Gamifying the Internet A look at the growth spurt of this tech startup, plus the founders' advice on how you can stay ahead of the curve, too.

By Erica Swallow

Opinions expressed by Entrepreneur contributors are their own.

Two years ago, serial entrepreneur Kris Duggan was itching to start another company, following his success in founding Medsphere, a government open-source medical platform, and OzNetwork, an Internet media company.

Inspired by the popularity of social games like FarmVille and the Internet gamification trend, he left his position as vice president of sales for Socialtext, a developer of collaboration software for businesses, and began searching for a partner with web development skills. He soon met Wedge Martin, and less than two years later, they have a hit technology startup on their hands: Badgeville, which helps companies boost user engagement by gamifying their websites.

Menlo Park, Calif.-based Badgeville applies various elements of social games, such as challenges, points, badges and levels, to non-game business websites. Given the success of FarmVille and other social games, it's no wonder that companies want to make their brands' websites and mobile apps more engaging. Because the user's experience becomes fun and sometimes even addictive, companies often see an increase in Facebook "likes," customer product reviews and, most important of all, purchases.

Growth Spurt: Started in September 2010, Badgeville was initially funded with $300,000 from the founders' families. While testing the concept, Duggan and Martin got a lucky break. They were invited to participate in the startup launch competition TechCrunch Disrupt Startup Battlefield. Badgeville made it to the final round and won the Audience Choice Award.

The Badgeville website was launched during Disrupt, and in the first 30 days after the event, it attracted 20,000 visitors, overwhelming Duggan and Martin with hundreds of qualified business leads--more than they could handle. Martin was still working at IBM, but left the day of Badgeville's successful launch, realizing that he and Duggan really were on to something.

The company now has 50 employees and boasts more than 100 customers. It says revenue last year totaled between $5 million and $10 million and that it has raised $15 million in venture capital. Duggan declines to be more specific about revenue but notes that it grew 400 percent. "With our fast growth and customer traction, we are now on a clear path to profitability," he says.

Working with customers like Dell, Samsung and eBay, Badgeville says that on average, it helped increase social sharing by 200 percent, user-generated content by 50 percent, and conversion of users from nonpaid to paid status by 10 percent in 2011.

Samsung, for example, came to Badgeville hoping to increase the number of product reviews users post on its website. The companies combined forces to launch Samsung Nation, a social loyalty program that lets users earn badges for such activities as writing reviews and watching videos and compete for rewards. By using Badgeville's platform along with its own technologies, Samsung saw a 500% increase in customers' product reviews.

Why It's Worth Watching: Badgeville's platform sets it apart from other companies because it can be embedded into any company's website or app. That means Badgeville can typically promise lower costs because customers don't have to pay developers to create a customized solution.

While gamification is a hot trend, Badgeville doesn't face a lot of competition in the category--at least not yet. Copycats could start popping up, as more companies try to jump on the gamification bandwagon.

Why It Matters: As Badgeville grows, Duggan doesn't intend to stray from its strong customer focus. "We've been very focused on customer acquisition and delivering a product that customers want to buy," he says.

The company has based its decisions on market research. "We did it the old-fashioned way," Duggan says. "We picked up the phone, and we called [potential customers]. We asked them, 'If you had this product, would you buy it?'" The research helped Badgeville identify exactly what potential customers wanted and how much they were willing to pay.

Looking Ahead: Badgeville is investing in its customer support and marketing teams, as it continues to add clients. Duggan expects revenue to more than double this year and his staff to grow to 100 people in 2012, with most of the expansion in New York and Europe.

From a product standpoint, Badgeville's platform "is about 10% done," Duggan says. "If you think about all of the different levers you can pull to influence user behavior, we feel like we've started off with some really strong ones, but there are so many more... That's probably going to keep us busy for the next several years."

Tip to Stay Ahead of the Curve: Duggan recommends that business owners "consider how they can leverage gamification inside their businesses and how they can make their experiences with their audiences more social." That doesn't just mean using Facebook, he says. Companies "should think about how they can create communities, experiences and engagement that are going to drive results." He also encourages businesses to thoroughly understand gamification before trying it. "Gamification is not about adding games to your website," he says. "It's about identifying ways to drive behavior using techniques from games."

Wavy Line

Erica Swallow is a New York City-based tech and lifestyle writer and owner of Southern Swallow Productions. Erica’s work has been published by Mashable, CNN, Forbes and USA Today.

Editor's Pick

'Catastrophic': Here's What You Should Know About the Debt Ceiling Crisis — And How a Default Could Impact Your Business
I Helped Grow 4 Unicorns Over 10 Years That Generated $18 Billion in Online Revenues. Here's What I've Learned.
Want to Break Bad Habits and Supercharge Your Business? Use This Technique.
Don't Have Any Clients But Need Customer Testimonials? Follow These 3 Tricks To Boost Your Rep.
Why Are Some Wines More Expensive Than Others? A Top Winemaker Gives a Full-Bodied Explanation.

Related Topics

Business News

'All Hell Is Going to Break Loose': Barbara Corcoran Issues Warning About Real Estate Market, Interest Rates

The "Shark Tank" star appeared on FOX Business' "The Clayman Countdown" this week.

Growing a Business

The Best Way to Run a Business Meeting

All too often, meetings run longer than they should and fail to keep attendees engaged. Here's how to run a meeting the right way.


Working Remote? These Are the Biggest Dos and Don'ts of Video Conferencing

As more and more businesses go remote, these are ways to be more effective and efficient on conference calls.

Science & Technology

How to Make a QR Code in 5 Simple Steps

Need to know how to make a QR code for your business but not sure where to start? Check out this step-by-step breakdown for more info.

Money & Finance

3 Ways to Create Multiple (Big) Streams of Income

Here are three ways to create multiple streams of income. These strategies require effort and resources but offer significant financial potential.

Starting a Business

What Is an LLC? Here's How It Works.

Deciding whether or not your business should be an LLC is a big decision. Continue reading to learn the pros and cons of starting your own LLC.