SwipeGood (YC W11) Gives Its Start Fund Cash To Charity | Hacker News Reader

SwipeGood (YC W11) Gives Its Start Fund Cash To Charity

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94 pointstbgvi34 comments

The "gives start fund cash to charity" title is just great marketing (like the campaign itself.)

- Corporations get tax deductions for donations to nonprofits too, so this won't cost the full 150k. And this will get far more than 15k signups, since people will keep signing up because of this splash long after the 150k is gone. So really, profit = (@$20/month "revenue", 5% on top of credit card fees) $1/customer/month. Real cost/user will likely be less than $5, so if LTV/user is $5 or more, this is worth it on the $$ alone.

- Donorschoose.org, one of the web-savviest nonprofits around, gives out gigantic quantities of $25/$50/$100/etc "gift cards" to basically anyone who asks for them who'll bring them good PR. (They also get large retail chains to give them out as prizes.) These cards are funded by outside donors, and they collectively bring in huge amounts of buzz and new donors (who end up donating more than the base amount on the card.) This is the for-profit twist on that... SwipeGood could likely get anyone who supports them (e.g., their investors) to put up money that [the investors] "would have given to charity anyway" for future stunts like this.

Great idea.

This seems like a slap in the face of the investors. Giving a chunk of your startup capital to a charity is basically throwing it away. Good for the charity but this startup seems too early stage to be giving that kind of cash away. I hope it pays off for them.

Steli here from SwipeGood! On average our users donate over $20 per month to charity and stay enrolled for a very long time...so this move is a win/win/win. It's great for our users to be able to instantly give away money for charity ; great for our partner charities who receive the donations and good for SwipeGood since it makes economic sense for us :)

Cheers, Steli

That doesn't really answer reynolds' question at all.

How is this better than spending $150k on hiring, for example, 2 engineers for a year? Or 1 engineer and 1 designer? Or 1 customer service person, 1 community manager, and 1 developer? Etc.

It is better if NGOs are promoting the service to their existing and potential donors. It is possible that revenue from giving away $150,000 with a buzz brings in more users than 2 engineers can.

Our investors are really happy with us... we are in fact hiring engineers & designers right now as we speak. And this money is accelerating our growth today. Believe me when I tell you that if you can acquire new users for less money than they generate you revenue your investors will be happy to see you invest money this way! Let me know if this answers the question :) Thx, Steli

That makes sense. At least you guys are using it to get user referrals rather than throwing it in a wheel barrow and burning it :)

Even PayPal with millions in funding only gave away $5/referral. $150,000 there brings you 30,000 users, but "SwipeGood is giving every user who enrolls on the service $1000 that they can give away to charity." That's 150 users or am I missing something?

It looks like $10/referral up to 100 referrals. If they make $20/user/mo this is a no brainer.

I think they only get 5% of that $20/user/month. That being said, here are two options for how to use $150,000:

1. Hire an engineer for a year

2. Sign up 15,000 users and generate $15,000/month in revenue. Hire an engineer permanently and net an extra $30,000/year in profit.

I know which I'd choose.

Every user can invite up to 100 people who each get $10 if they sign up (thats a max of $1000 for 100 users). Hope that clarifies it a bit :)

I disagree. The article gives the distinct impression that this is a marketing strategy - a very noble one, but I don't see how you could equate this to "throwing it away", as a moment's calculation will tell you it will bring in ~15000 new users.

You're right. After jumping the gun I realized they're not "giving it to charity", but rather using it to acquire users.

SwipeGood is hoping that many people will make the same mistake you made. It is a savvy business move that lines up very well with their business model of supporting charities.

I feel inclined to disagree with you again... nothing personal, but I think I should point out that they are "giving it to charity", and using it to acquire users...

It was just bad wording on my part. What I tried to say was that there's a difference between giving $150k to a charity outright and donating money on behalf of the users who refer more users.

I have explored this kind of marketing before. This creates a buzz among the non-profit organizations and non-profits will be doing the marketing for you if they consistently receive funds through SwipeGood. Instead of asking for $10 one time donation, they can say "Hey, enroll in this program and indicate us as a recipient." This strategy is utility maximizing, bc small amount of funds given away over some period of time is less painful than parting with $10, especially the effort of donating is attached to other types of activities we already are used to, like purchasing stuff.

"SwipeGood rounds up all of your credit card purchases to the nearest dollar and allows you to donate the difference to the charity of your choice. It's the easiest way to give to charity!"

I guess that nobody ever invented a stranger and more complicated way of transfering money. Calling it "the easiest way" is really... well.. interesting.

The reason it's easy is because you set it up and then you can just forget about it, and then you're doing good things for charity.

Whats the advantage over typing a money transfer order in the online interface of your bank?

Most people behave differently in "near-mode" and "far-mode".

I'm more willing to commit to donate $20 to charity 6 months from now, than I am to cough up a $20 this instant.

SwipeGood (and BoA's keep the change program) try to short-circuit this cognitive bias by getting you to commit now, but pay incrementally.

Giving away your "loose change" for charity is an idea that has been around for a very long time and resonates very well with people. SwipeGood just makes this model scale with all your purchases since you sign up with your card. It's easy because people don't have to think about "how much" & "when" to give which means we take away friction from the process of giving. Our users as well as our charity partners LOVE it :)

Sure, the users like it.. otherwise they would not have become your users. And sure your charity partners like it. Who wouldnt like to get money?

But "easy"... typing a money transfer order in the online interface of my bank is easy. Giving away ~50cent everytime I use my credit card is a much more complex thing.

How much do you keep from that money? Is there something about your business model anywhere?

It's easier because you don't have to make a decision what the right amount is and you can give proportionally to your spending! Reg our bm: SwipeGood uses 5% of each monthly donation to cover operational costs and 2.5% to cover the cost of third-party fees such as credit card processing.

I don't get the criticism. Actually seems like one of the most interesting YC startups yet, IMHO. A simple proposition for the user and the charity, and a simple revenue model built in.

This looks like a great idea to promote their product virally. It has an automatic incentive for people to invite friends and get conversions.

is there a version of SwipeGood that rounds transactions up and puts that amount in a savings account? I'd love that.

Bank of America already does this for their debit cards through their Keep the Change program.

http://www.bankofamerica.com/promos/jump/ktc_coinjar/

Bank of America matches 100% of your Keep the Change savings for the first 3 months. After that, they match 5% a year. The maximum total match is $250 per year. Sign up for SwipeGood through a Keep the Change card and donate to charity for free!

or nearly free.

Bank of America does this with their Keep The Change program.

how does swipegood generate returns for investors?

Every user on SwipeGood is generating $20/mth/user in donation revenue for the charities. Users stay enrolled with SwipeGood for a very long time and we take a 5% cut out of every transaction that is happening on our system! You see, it's a very simple business model :)

So at an average of $1 per user/month, and a charity giveaway designed to generate at least 15,000 users, the $150k should be recovered in less than year. Good stuff :)

The single biggest problem for any new business is almost always getting noticed. This sounds like "getting noticed to the third power":

- great name

- y-combinator

- windfall to charity

Sounds a little gimmickly, but so what? Finding a way to be noticed enough to get traction is mandatory. Good job.

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