GiftRocket (YC W11) Lets You Send Gifts That Can Be Redeemed At Any Location

So... a few questions:

1. What happens if I forget about my GiftRocket? Yes, you could say the same about gift cards, but those are physical items I can keep in my wallet and discover months later. If I forget about a GiftRocket, what happens...? Do I get a notification that it's gone unused after a set period?

2. Will you notify me upon entering a restaurant that I have a GiftRocket, or must I remember that I have one?

3. Are you linking paypal transfers based on location? So I have to be at said restaurant for me to get my money that my friend gave me? I get it's not that much different from a gift card, but the actual card itself carries an inherent value. I will always have it, and it will always be worth a certain amount given the expiry date has not passed. It seems like my gift is locked somewhere in your cloud until I have proven to you that I am at a given location.

4. Do many people even use paypal to buy food when they're out?

5. If yes to 4, are the paypal transfers instant? It would seem kind of bizarre to eat at Bill's Burritos using my credit card, and then redeem my GiftRocket thinking to myself "It's ok, the cost of this meal will be compensated to me in a few days' time pending my GiftRocket transfer."

I'm sorry, I just don't see it. I feel like there's a lot being hidden from the user here. A gift card is something delivered to me by the the gifter -- there's no middle man putting a restriction on when you actually receive your gift card. And when I lose a gift card, it's money I've lost somewhere in my nightstand, not money I've left in my gift card broker's pocket.

Maybe I am wrong.

So I pay a company 5% for the privilege of sending my friend blocks away so I can put money in his paypal account?

Everyone's ripping into this, and I'll be honest: I just wrote a long rant about what a terrible idea it is, but I thought about it some more and deleted it. And as a gift card, I still think I'm correct, this is not a great value proposition, primarily because you can't actually use the money (which comes in via PayPal) to buy stuff wherever you are. As someone that still remembers all too well being in college with $3 in my pocket and an overdrawn bank account, the greatest thing about gift cards was that they let you actually buy stuff immediately even if you have no money. The Paypal involvement bollockses that up, and that's not good; it also makes the fact that you're sent to a physical business kind of annoying, since you can really only use the money for online stuff unless you transfer it out of Paypal first.

But...

I had similar "who would ever use that?" thoughts about Foursquare when it launched, and had to revisit my feelings after seeing its success. It turns out that even if there's little value in the actual services provided, people really like the types of game mechanics that location-based apps make possible. This, IMO, is where GiftRocket should be focusing: they really should be pitching a game experience instead of a mere gift card.

I can easily imagine people setting up scavenger hunts, races, treasure maps, etc., if the site was set up to make that sort of thing easy and fun. You could even set up entire Amazing Race-style multi-leg races if it was done right. There are a lot of possibilities, and I could see the same sorts of people that get really into Foursquare getting really into this.

Don't get me wrong: I think this is a pivot that may need to be made, it's not where they are right now. As-is I don't see much emphasis of any game-mechanic in the marketing (and for that matter, the most likely fun applications, races and multi-leg treasure hunts, don't seem to be possible to construct), and the exclusive focus on sending people to businesses may not turn out to be the best approach unless they can start to sign on businesses to sweeten the deal (I'm sure they can line up things like 10% off if you redeem a gift card there or something like that). But even that's a bit of a shift, and it puts them more in the discount-seeking business than the gift card one.

Or I could just be wrong. This is a YC company, so they're sure as hell going to get enough eyeballs to battle-test the idea, and maybe the sheer novelty of it all will lure enough users to make this work even if they just stick with the current model.

Interesting concept. I tend to give a lot of gifts in the form of gift certificates to friends and loved ones, and they tend to be a little bit different from your run of the mill Old Navy card. I go for "experiential" gifts, like short plane tickets if I can afford it, speaker series tickets, theater tickets, etc.

From a gift giver perspective, I always screen my gift ideas for things I can physically deliver in person. I want to be able to wrap it up and see the surprise on their face when they open it. "You got me a Southwest Airlines gift card?? I can go anywhere??" If the process is completely electronic, it turns me off.

How do you plan to handle this? What are the specific use cases?

This is literally one of two ideas we have been flipping between.

What we found was that all the current mobile gifting services lacked local businesses, were mostly SMS based and, the surprising problem, were partnering with the merchant. This means they are not "everywhere" nor are they granular - Not personal enough ($25 at Target). We tested a few last year and found that when we went to redeem the gift, either the merchants had no idea what we were talking about, even with phone and print out in hand, or the redemption process was a pain in the ass.

We also found something that surprised us. We assumed people would think it was rather impersonal. However, finding new ways to say "thanks for helping me move", etc., people found to be much more fun and personal - We also implied a level of custom-ability in gifting and had no interest in partnerships, big box or otherwise.

It is fantastic to see someone else taking this on as I personally think there is something huge here. There are so many nuisances to this and it is very interesting to see how each company is tackling them.

I admit it's an interesting idea at first thought. However, usually gift cards are perceived as lame gifts by me and my friends/family. The train of thought usually goes something like "I couldn't think of anything to get you because I don't really care enough about you to pay attention to the things you might actually want or need but I'm obligated to get you something soooo here you go." And in that case I think you're better off just giving an AmEx or Visa Gift/Check card. Among my circle this is usually acceptable for occurrences where you're just lost, like giving a gift card at a baby shower since I know nothing about babies, etc. But, my group could totally be outliers here. I think the tech is cool and could be interesting for pub crawls or the like where on each stop you get a discount. Any unclaimed discounts could be pocketed by the company or the group that setup the crawl. That's very niche but maybe that can scale to something else.

The concept has merit IMO, but I'm not sure about the current implementation. I assume (perhaps wrongly) that they are going to establish relationships with merchants ... or maybe they're building something that FB or Groupon can plugin to their network of merchants.

When I need to send a list-minute gift or a gift to someone out of town, I almost always email an Amazon gift card. And I can't see (yet) why I'd use this instead.

"Of course, the recipient can always opt not to actually use the gifted money..." That's some A+ writing there, Lou.

How many billions do people spend on gift cards each year? Must be a multi-billion market...and that's constrained by the fact that with normal gift cards merchants must actually opt-in to start offering gift cards. With this it seems like they're able to expand the market by offering "gift cards" to places that haven't opted in or signed up. That's brilliant.

Oh wow! I've thought of something like this too, and really wanted it for myself. Very cool, good luck to you! (:

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It's actually quite interesting. I didn't know about these guys, but was thinking through this idea a few weeks ago. My version was called "Money Drop". I concluded that technology was cool,but I couldn't think of a compelling reason to use this application, except for 2 cases. 1) Drug dealers and 2) Kidnappers.

Say I just kidnapped your dog and I'm holding it ransom. I email you and tell you to MoneyDrop $100 at the local mall. Once I see the money has been "dropped" I go there and collect it with my smart phone app. Why would this be useful? It's harder to figure out who picked it up since you are in a public space and are just clicking a "pickup" button. Win-win!