It's a modified auction method. You buys bids for $1. Each time you bid, it costs you a dollar and the bidding time on the product is extended X minutes/seconds. So... if no one else is bidding, you can spend your $1 to bid and get something cheap. Theoretically.
How I figure they make all their money is people buying into the idea and buying $20 worth of bids. Then they bid on items and either fight against other actual bidders or a computer program until their 20 bids are gone and they've wasted 20 bucks without winning anything. But the company made $20 off your time plus whatever from the advertising they pushed to you.