This is by far one of the best YC ideas I've heard in a long time!
If you succeed, you're going to destroy balance sheets, move markets, and hopefully reform the gift card scam forever. But, you probably already know all this.
It's certainly a good idea, but they're not the first to come up with it. Plasticjungle.com seems to have been around since 2006 and looks very similar. A quick Google search for "sell gift cards" reveals several other similar sites as well.
YC has always had a penchant for poppy, Hanson-esque startups, but this one is flat-out embarrassing. They turned down CouchDB but picked up a gift card exchange? When did Dr. Paul Graham, author of On Lisp, turn into pg?
First, for this gift card thing, where is distribution and SOM? Those are cornerstones and as my Mama always said, "Bridges without cornerstones are fally." I'm not saying the guys behind it have done something wrong. Their mandate is "pay the bills and buy a lottery ticket at the same time." I hope it works out for them.
But you didn't ask about that. You asked, "What makes CouchDB a better investment?" Well, it's technology. And even if it doesn't get the business case, it can lend a role in someone else's business case. You've advanced the world a little bit. You've fought the good fight.
I mentioned Hanson. What if a record company, founded by good musicians, had Hanson and Glenn Gould sitting on their couch and said, "Sure Gould is amazing, but will teenagers buy it? Let's fund those Hanson boys." You would question their intentions and if they really ever understood music. You would be embarrassed for them. You can't always fund the Goulds of the world, but there's a level of superficiality that you can always rise above.
What stops a scammer from writing down the relevant card numbers, selling the card to CardPool (or any competitor), and then still using the card after receiving payment?
First and foremost, our customers are always protected by this since we take on 100% of the risk associated with any transaction and we guarantee its full value.
Second, to protect ourselves, we've developed several methods of detecting high-risk transactions and ways to mitigate them (such as working with merchants to reissue new gift cards). I'd go into more detail, but we don't want the wrong people to get ahold of this information ;).
In the end though, we'll be fine. The fact that we mail the check to a physical address, make out the check to the seller's name, and the seller has to cash the check at a real bank, is already a big deterrent to bad behavior. These bad people will have an easier time trading their fake gift cards to people on sites like craigslist.
"There have been a number of auction-like marketplaces, such as Plastic Jungle and Rackup, that have popped up to allow users can buy and sell their gift cards to each other..."
"...CardPool is entering the space but with a slightly different twist to its model. Card Pool allows users to both buy and sell gift cards."
great question, the techcrunch article needs to be updated. but basically, we strive to have the simplest, most hassle-free solution, at the best prices.
all our gift cards have no fees and never expire and we offer a 100-day return policy, something no one else can claim. and since we are a small and lean startup, we can afford to focus purely on the consumer while offering the best prices. all of these features are unique to our startup and are the result of listening to what they want.
I think you will be genuinely surprised how little customers care about price relative to other things, even in a market where one suspects that price would be the only differentiator. (I mean, come on, if you're shopping around for an N% discount at Best Buy "clearly" you want the best N, right? Three years ago I thought that teachers were "clearly" universally as stingy as their reputation suggested.)
Trying to differentiate yourself primarily on price will give you ulcers because you'll always be one basis point away from losing to the next guy with more stupid money to burn (e.g. a funded competitor who can afford to have their spread go negative to gain market share, because their objective isn't to run profitably but rather to goose metrics then flip), and you'll attract disproportionately pathological customers who will be loyal to you only as long as no one else offers a better deal. Pathological customers will find every possible way to botch the transaction and blame you for it. (I tried using your Apple B's card to buy an iPod and it didn't work!! YOU THIEF!!!)
Article: "CardPool makes money off the spread between buying and selling cards."
Forgive me for my ignorance, but how does end up making you money? The way I see it, you can't sell more cards than you buy, and if you pay more to get the cards (90%) than you sell them for (70%) then aren't you facing a net loss overall?
Not sure where you're getting those numbers from. The article talks about paying 90% for a Best Buy card and selling it for 95%, while 1800 Flowers sell for about 70% (no CardPool purchase noted).
Ah, I guess I skimmed over the middle of the paragraph, and just saw the 1-800 Flowers at 30% off. So, I guess they're hoping to sell a whole lot more cards at 1-9% off than 10-30% off. I knew I was missing something obvious.
was one of the sharktank companies, meaning they got national tv promotion as well.
The thing I can see cardpool executing on better is user-experience, but is that enough?
This reminds me of companies like ebay, godaddy, and cashforgold. It's ridiculous to see how spammy and ui-horrific these sites/models are... but they are huge companies nonetheless.
Having a disinterested party set the prices seems unlikely to work (sustainably/scale-ably). A bid/ask system (like the stock market) seems like a decent model, although it might be difficult to present in a way that is easy for most users to understand.
Just like in the real markets there would room for a market-maker to make money on the bid-ask spread, while providing liquidity... if the service had an API, this could be a third party, although the more obvious scenario is that CardPool itself would be the market maker.
If I purchase £50 GBP giftcard, then my friend wants to swap that in for 80% of the value, they get £40 to spend elsewhere. Now if CardPool sell the card back to the company for £45 they're both splitting the remaining £10. CardPool don't need the customer buyers in order to buy cards. They could presumably also deal with the companies to buy cards direct at a discount (as if they were an affiliate).
CardPool then have a few options. If they lower the swap value of company A then I'm more likely to use my money there. This can actually be bad for company A as whilst they can negotiate a potentially larger amount of the difference of a buy-back they also risk the customer keeping the card and actually using it. Which is a transactional loss for them but a potential win if they can gain repeat custom.
It's really quite interesting to consider the back room deals that might go on over this.
Plastic Jungle seem to sell them at fixed prices too, although the price is set by the seller. Why is having a third party, CardPool, set the price an advantage? Surely they are going to have to price them at the market value anyway?
Are there any companies/non-profits/charities that would allow me to donate my gift cards that have a small balance on them but not enough to buy a product? Ideally I'd like to give this money to charity instead of throwing them away.
If you can create arbitrage situations for customers you can generate a decent amount of buzz in certain circles. Off the top of my head one way to do it is to offer to buy gift cards for more than 95% of their value. Some people have credit cards that give them back 5% on grocery store purchases and many grocery stores sell gift cards. If the folks on FatWallet Finance (http://www.fatwallet.com/forums/finance) get wind of it (heck, post it yourself) they'll jump all over it and you've got immediate exposure to hundreds of people. I would set limits though and do it only sporadically lest you end up w/ a huge surplus of gift cards that may take you a while to sell.
To get a sense for the kind of exposure you can get here's a thread from another arbitrage situation (buy dollar coins from the US government at face value, collect credit card rewards/cash back, deposit coins into bank account). These guys went nuts and the US Mint policies were actually changed to combat it. There's an article somewhere from a press conference where the US Mint publicly addressed it but I'm too lazy to dig it up right now.
http://www.fatwallet.com/forums/finance/837472
Also, on occasion people post in the forums questions like "How can I turn $X credit limit into cash." Set up relevant topic alerts (http://www.fatwallet.com/forums/alerts.php) and respond by letting them know they can buy gift cards and then convert them into cash on your site.
I'm a regular in that forum so let me know (contact info in profile) if you want any guidance in posting to FatWallet Finance.
I've often wondered if stores could make money selling discounted gift certificates with a time delay. It's 5% off, but not useable until 2 months after purchase. It'd probably be a hassle to handle, but I'd actually consider using gift certificates if they had something like that.
Very interesting, if you are familiar with the "Gold Pass" vs "Silver Pass" movie gift cards, there is a tiny subset of your idea built in there. The idea is Silver passes are cheaper than Gold passes, but you can only watch movies that are a bit dated, I think at least 10 days from release date.
Is there a way to view all the merchants you accept and what you percent you pay for them? I'm guessing the value depends on not just the merchant but also the value of the card and the expiration date so it may not be possible to just have a simple list view.
I ask because I'd like to refer you to a friend who has a boatload of credit card rewards points she needs to use and can get gift cards for the rewards points. If she could immediately see which merchant cards will give her the highest return it'd be a lot easier than tediously selecting each merchant and clicking "get offer."
absolutely. we verify every gift card when we buy it and when we sell it, and will refund your purchase for any reason, even if its because the retailer goes bankrupt, leaves town, or you simply change your mind. we are creating this service to solve the problems with gift cards and the last thing we would want to do it contribute to it :).
Most .com's are US based, and a lot of them don't deliver outside the US. While I agree that's not ideal, it's hardly a surprise. I do agree more services should work international: There's a lot more foreigners than people in the US :).
