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Comment by anson | Hacker News Reader

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.

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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?

I assume the "up to" applies to both the selling and buying. Not all cards will fetch 90% of the face value. Simple arbitrage.

Ah, yes, the web site makes that more clear.

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.

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