Sam Altman will clean your house for $5 | Hacker News Reader

Sam Altman will clean your house for $5

blog.agrawals.org

215 pointsdavidhperry69 comments

Besides the fact that the idea makes no sense, I find it downright wrong that Loopt is enriching itself at the expense of local businesses. Establishments work damn hard to establish a brand, and here is Loopt going around shitting all over them, without consent.

This is where I'd hope trademark law kicks in. Here's hoping Loopt gets what's rightfully coming to them.

I find it downright wrong that Loopt is enriching itself at the expense of local businesses

It would be impossible for Loopt to enrich itself at the expense of the local businesses. A local business wouldn't take the deal unless they felt it was to their advantage-- unless it was a "win-win" scenario.

Let the businesses decide what's at their expense.

Merely publishing these deals enriches Loopt at the expense of the business -- even if none of them take it.

Loopt is building a mailing list of people using the business's brand name and causing customer service issues for them.

I've forward to this to some friends in the payments space. This might be considered credit card fraud because they are also taking people's credit card numbers in conjunction with a service they can't commit to delivering.

Merely publishing these deals enriches Loopt at the expense of the business -- even if none of them take it.

That's not true. Unless this is genuinely valuable to enough businesses, it won't be sustainable. If too few businesses accept the offers made to them by buyers, the buyers will find the service useless and won't recommend it to their friends, and traffic will dry up.

> "That's not true. Unless this is genuinely valuable to enough businesses, it won't be sustainable."

I agree it's unsustainable, but this seems to miss the point: while the business model of the idea in question does not revolve around win-lose deals and trademark infringement, something ethically questionable has happened here.

This is reminiscent of the AirBNB brouhaha - while the service itself may be valuable, the means by which the company chose to market and launch itself was sketchy to the extreme. If AirBnb's core offering was not compelling, spamming people on Craigslist would've been unsustainable, as it would be here - but the fact that the product doesn't suck is not justification for questionable behavior such as this.

Some material harm (thankfully it would seem, not much) has come to at least one business involved, and had it continued in that format (i.e., vague text that doesn't seek to distance Loopt from these unaffiliated merchants) it would certainly have caused more damage.

Publishing results in: - Loopt getting subscribers to its list. That seems like a benefit to me. - Merchant getting perceived as a discount brand. For many merchants, that's a negative. - Merchant having to deal with customer inquiries about a deal they know nothing about. That's a negative.

It should also be noted that Loopt picked really high profile businesses like Bi-Rite and Ritual Coffee. These places usually have lines and don't have much need to run large discounts.

If Loopt had picked obscure businesses, it would make it easier to claim they weren't trying to benefit from the business's good name.

Loopt getting subscribers to its list. That seems like a benefit to me.

But not a net benefit. Unless this is sustainable, it will have been a very expensive way to collect email addresses.

This whole model is going to collapse for a lot of reasons. I wrote about that here:

http://redesignmobile.com/2011/06/22/loopts-u-deals-offer-an...

Merely publishing these deals enriches Loopt at the expense of the business -- even if none of them take it.

How on earth is that? This is not an AdWords/web traffic model - Loopt does not make any money unless they can close a deal with a business. If Loopt really is what you say it is then it will go under as soon as they run out of cash, and you don't really need to worry about it so much, as it's just like any other bad startup idea.

If we have a lot of users sign up for deals that don't go through, that hurts us a lot. That's the reason we pre-set the discounts at levels that make sense for each category of business, and why we're reaching out to businesses early in the process.

We're taking credit card numbers in the same way Priceline does for name-your-own price deals and Groupon used to when deals might not tip. Please let me know what your friends say, though.

I'm well aware of the Priceline model. I've booked hundreds of room nights using Priceline -- in fact, I'm staying at a hotel I Pricelined right now.

The difference between Priceline and what you're doing is that Priceline has already established relationships with hotels. They have the ability to fill demand that meets certain criteria.

You don't have the ability to fill demand for the product you're advertising. Now, if Loopt were willing to pay the difference out of its own pockets (as some daily deal vendors do), that's another story.

Even then, you've got a trademark infringement issue.

From a payments expert: "I have never seen anything get so close to full on fraud in the open."

Thank you, Paul. I'm having a hard time reconciling the Loopt-haters with mere common sense. We have to remember this is the business world where (barring twisted government intervention) there is no profit without value created. Sam said it as well:

Obviously, it doesn't work for us unless it works for both of those groups [consumers and businesses]

Since this is exploiting someone's brand to boost your own brand, I sure hope that the courts eventually rule it as trademark infringement.

Having said that, some businesses will likely go for this, and the legal penalties will probably be lower than your profits, so kudos!

You do not find that the unauthorized use of trademarks to lend credibility to an (unproven) business to be unjustly enriching? Or, as another poster pointed out, using the credibility of this trademark to gather subscribers for its own product?

I want to attribute this whole thing to Hanlon's Razor, but it's hard to believe that a bunch of professionals are so brazenly callous about the use of others' trademarks.

Do you feel it's evil for a company giving away, say, a car as a prize to disclose the brand of the car?

Maybe I misunderstood the article - I thought that Loopt was saying, "Get $15 worth of stuff for $10 at BusinessCo!" without actually getting BusinessCo to agree to this - in which case the analogy would be like offering to give away a brand new Nissan without actually having a Nissan, or even a car.

These aren't the same thing. When "Bob's Plumbing and Heat" run a promotion and say "Win a Toyota Camry!", no reasonable person would presume that Toyota endorses or is otherwise affiliated with Bob.

Now let's look at what the Loopt UI looked like:

1 - It's presented in a way that's extremely similar to what all of the other group-buying websites look like. Which is to say, a reasonable person can easily confuse this for a deal from an affiliate (Groupon-style)

2 - The bullet points do not do anything to dissuade this. In fact, nowhere on Mr. Agrawal's screenshot does the website mention that the merchant must approve the deal.

3 - In fact, there is nothing on the page that would indicate to a user that this isn't the standard group-buying affiliate-deal we're all used to seeing. There's not even messaging in the vein of "Tell Bi-Rite you want to see this deal!" that might defuse confusion.

So it really comes down to reasonable interpretations. When a reasonable internet user, who has heard of Groupon, LivingSocial, et al, sees this Loopt UI - would it be reasonable for him/her to perceive a affiliation or endorsement for Loopt from the merchant?

Personally, I'm leaning towards "probably". Had the user base of HN not been tipped to the business model prior to seeing the feature, I would expect much confusion even from our seasoned web-guru user base.

3 was a major bug. We've pulled down all deals until we fix that--it should say "pending merchant approval", with an explanation, not a tip counter.

It would be if the company didn't actually own the car, but instead "gave away" a car from a local auto dealer without their consent.

If this is actually the Loopt business model, to offer deals that the businesses have not agreed to, you should fully expect to be sued in court for trademark infringement very soon. How could you be so short-sighted? You are driving traffic based on the brand name of another reputable company, who has not agreed to or even been asked if you could use their name.

How about this analogy (tongue in cheek):

* Sunday Super-Deal: $50000 YCombinator Seed Funding! *

Value: $50000, Discount: 5%, You save: 5% off the share that YC would normally take

Purchased: 17 of 100

Time Remaining: 2d 21h 43m 13s

[Big Green Button ->]

If the the post is accurate, it definitely hurts the business.

Suppose Loopt posts some deal, like this one with the bi-rite creamery, and then bi-rite is like "heck no!" What will the user think? They will think "bi-rite sucks, what the heck, those jerks aren't honoring their commitment. Dicks."

It is waaaay too much to expect users to have a thorough understanding of what's happening here.

Put another way: For myself, I like to underpromise and over deliver. Loopt here is making the promise, and then saying "Hey, so your users now have this expectation. It's your choice whether you meet it, which may not financially tenable, or fail to meet their expectations, damaging your brand."

I'm envisioning small businesses group buying legal services to sue for trademark infringement.

This is slightly reminiscent of Get Satisfaction's model of creating support forums for companies unless they opt out.

And sometimes those companies take offense: http://37signals.com/svn/posts/1650-get-satisfaction-or-else

Can companies really opt out of Get Satisfaction, or will they always be presented with the "Company X has not yet committed to open conversations about its products or services."

If Loopt explicitly allows companies to opt out (and prevent the creation of deals for that company) then perhaps the service might be beneficial (companies that opt in to stay may get valuable feedback of what the consumer wants/would be willing pay for).

I'm not quite so confident about this idea. To me, all you will get are people voting for discounts at places they already frequent. This is not a good measure of what customers want, nor the prices they're willing to bear for these goods and services.

I may be willing to pay $3 for a latte from my favourite coffee shop... but you're damn right I'm going to vote yes on $1 coffee. Why wouldn't I? This is going to result in a lot of businesses needlessly offering discounts to existing customers for little discernible benefit. On top of this, it sheds no light on the effectiveness of pricing structures, since there's nothing in the system that encourages the discovery of pricing equilibrium.

I've spoken to a couple of business owners who have done Groupons - they see it as a marketing expense that seems to have greater returns than many traditional methods (coupons books, junk mail, etc). But Groupon works in a way that this idea does not: it gets new customers (whether or not they're good new customers is besides the point).

So true. Thank you whomever you are. Tell Rockya this.

Back to loopt suggested deals. We have thought of this but how does this possibly work? When the only people that are going to really work hard for discounts they already want are full price paying advocates already. I can't see any benefit to this type of promotion at all. Absolute cannibalization of their current full-price paying customers. It's not sustainable and much worse than daily-deals.

New customers that never return.

We're trying something new and innovative, and of course we'll have to iterate on it. We're moving as quickly as we can to fix this and make it work for consumers and businesses--obviously, it doesn't work for us unless it works for both of those groups. We have a chance to really improve local commerce, and I hope we do.

As soon as a business wants to opt out, we block them permanently in the system and remove any pending deals. We're changing the product right now to make the language more clear, and we're not going to use any trademarked images until the business approves the deal. We're going to make it really clear that a business hasn't approved a deal until they do.

We've certainly gotten negative feedback from a few businesses, but in general people seem excited about this--word of mouth is a great referral, and businesses understand that. The promise of u-Deals, if it works, is that your best customers become your big advocates.

Should we have gotten this right from the beginning? Yes, and I'm sorry we didn't. We've gotten things wrong in the past, and we're going to get things wrong again. As always, we'll try not to get the big things wrong, we'll do everything we can to make it up to our users, and we'll get it fixed as fast as possible. That's the nature of trying new things, and it's how the world gets better.

I think there is something one or two steps away from what you're doing now which will be a success. Especially if you can figure out a way to lower marginal costs to deliver a service through this kind of shared pre-buy (for instance, it's only worthwhile for a business to open late at night if customer demand exists; this way customers could prepay for midnight meals at a place which normally closes at 9pm on weeknights).

Or really any service where a business might be capital constrained and where economies of scale exist.

We're certainly trying to figure out how to make this work the best for businesses. Certainly helping better utilize resources is part of it, and so is driving repeat visits.

If you should learn anything from reading tech sites it's this: Opt-in.

Always, always, ALWAYS Opt-in.

Using the names of others to promote yourself until they tell you to stop is unethical and possibly illegal.

This is a stain you can never cleanse from your business. Everyone will always say 'Loopt? Wasn't that the company that used other companies without the approval?' And that's if you're lucky.

Because it if goes any further and a company gets a bad name from this, it'll be 'Loopt? Wasn't that the company that destroyed the reputation of Company X?'

Saying you were 'trying to iterate on it' is not enough. Saying you're trying to fix it is not enough. You need to outright admit how wrong it was and publicly apologize to every company you did this to.

I've sent apologies to the companies that were at all upset, and I apologize again here (and we're working to get the companies that are excited about this up and running as soon as possible). They've been understanding.

I think if we use the name of a business in a "Loopt users want a deal at Place X. If enough users express interest, Loopt will talk to the business owners to try to make it happen" that's ok. But we definitely shouldn't imply that a business has given any sort of consent before they have, and we shouldn't use their logo or images.

When in doubt, use common sense.

Sam-

There's no way this should be an opt out. Loopt is trading on the business's good name and offering a "deal" that doesn't exist.

It's inconveniencing the business and potentially damaging their relationships with customers to the benefit of Loopt.

It's just plain wrong and indefensible.

(Author of the original post.)

Do you think clearer messaging would fix this? Seems to me like a problem only if it seems to people that this business is offering the deal. If its clear that isn't the case, would you still have issues with this?

Associating discounts with businesses who haven't agreed to them is problematic for me.

Many manufacturers have MAP guidelines so that they don't get to be perceived as bargain basement providers. Some (e.g. Bose) also require that their products be excluded from all storewide discounts.

They have high affinity and a premium value and want to protect that.

Sam claimed that they posted what they think is a reasonable discount. That's not for him to decide. If I'm as popular as Bi-Rite, I don't consider 33% a reasonable discount for my product.

Again, I think it may be about messaging. The problem comes from the association with daily deal sites. If you think about it (and communicate it clearly) as an offer/demand/bargaining attempt and less like an existing discount/offer, which it is not, I'm not sure there would be a problem.

Imagine the business had started this way: You have lots of friends who like to do the kind of stuff they're promoting. You have some guy in the group who is willing to call around and bargain. We'll fill 10 tables @ 4pm tomorrow if you give us the free appetizers & desert. Then he decides to create a scalable process for this kind of bargaining to happen. That might look similar to the business they're building here.

That negotiation happens in private and some businesses might be willing to entertain that.

The fact that this happens in the open has significant potential to devalue the brand.

Under very specific conditions, I will do free or discounted consulting. But I don't want "free" or $25/hour associated with my brand when someone does a Google search.

Associating discounts with businesses who haven't agreed to them is problematic for me.

That's a much broader net than this specific issue.

Run of the mill coupon websites have been associating businesses with coupon/discount verbiage for a long time, some even profitably.

To be clear, where do you stand on verbiage such as "If x people vote to request a 50% off coupon at Premium Brand, we will talk to Premium Brand."

Personally I have no problem with this - it may screw up the premium brand when it comes to SEO but that is Team Google's problem to improve search quality.

a) Coupon/discount verbiage is typically done with the consent of the business.

b) Please try doing this with Bose and Apple. Let me know how it works out.

http://www.retailmenot.com/view/apple.com

http://www.retailmenot.com/view/bose.com

http://www.bargainist.com/deals/stores/amazon/#b

http://dealspl.us/zappos-coupons

Those are compilations of actual deals offered by the merchant, not stuff that was made up by others deciding what sort of discount a merchant might offer.

Loopt is going to settle this matter tomorrow by putting up an offer for 50% off the iPad 2 redeemable at your local Apple store.

Wait, they aren't going to do that? Well, they really should... don't you all agree with me, guys?

Snarkiness aside, this illustrates why I don't like the Loopt model. Even if you ignore the trademark use issues, the whole system sets up a situation in which an outside party is allowed to set another business up as the bad guy for not honoring arbitrary deals they may never had any intention of offering.

IMO this is way worse than Groupon because at least with Groupon you sign up to be screwed.

I think it's a great idea.

The only problem here is the deceptive presentation. If the site was crystal clear about how it works then you wouldn't have to apologize to anybody. There's nothing wrong with a bunch of people getting together to ask for group discounts.

Just be upfront about the scheme. I think people will go for it.

Loopt is causing conflict with a business's potential customers simply by making such "deals" public when they don't actually exist and are meant solely to show businesses that customers want discounts. Off course people want discounts, but that doesn't mean the business is willing to give said discount.

When I first read about this - it seemed like a new Groupon angle that might have some legs.

Seeing it in the flesh - it feels wrong. It's passing-off.

http://en.wikipedia.org/wiki/Passing_off

There are a few things that seam clearly, though not necessarily badly, wrong here. For, example: They use a a Groupon like appearance as many deal-a-day sites use. This sends a strong-ish message that something Groupon-like is going on. A lot of people will have bought these coupons recently and will make quick assumptions. This is the kind of things brands do, usually, to send a message to the buyer/user. It's like when generic coffee comes in a nescafe-like jar. There's also potential for non-savy small businesses owners to feel coerced. I'm not sure trademark is the issue though, at least not a terrible one.

Anyway, I think judgement should maybe be postponed. This could easily be an awkward mistake. The overall intent doesn't seem nasty. The execution, particularly clear messaging, has just (perhaps) been done absentmindedly. It shouldn't be too late to clean this up. Let's see if they do.

Group buying is actually a variant on an older practice called Tuangou (http://en.wikipedia.org/wiki/Tuangou), which Loopt is recreating here.

This reverse deal idea didn't make any sense when I heard about. But I have been surprised before, so would interesting to hear counterpoints.

The fundamental problems as I see it just starting with user persective: 1) I put in effort as a user to create a deal - with the high chance of no payoff - why would I ever do this the first time, let alone the second time 2) I have to wait for other people to join - so gratification is at best delayed 3) Very likely the deal will not be accepted by the merchant.

The ideal model for coupons would be take out the high cost of sales in this business. And getting businesses to go to a website and submit their deals by themselves. Of course SMB are notoriously slow to adopt new technology (many still advertise in YP). But over time, they will get there as well and the winner will be whoever is there when SMB begin making the move.

I would have been willing to pay $50 dollars... anyone willing to reopen the deal? :-)

Loopt seems like a democratized version of group purchase organizations (GPOs), which have been around forever and are used, for example, by groups of hospitals banding together to get bulk discounts on the things they regularly buy.

If you got ten of your friends together and put in bids on Loopt for a few different pizza places, it's not too different from the GPO process. You are basically saying, "I am willing to buy 10 pieces from you at this discounted rate." It makes me wonder if most of this talk about brand erosion etc is mostly alarmism.

nope, mtkd nailed it when he cited the "passing off" laws. they're not just banding people together to get bulk discounts, they're implying that the businesses in question already support their model, and are using those businesses' brand recognition to add legitimacy to loopt.

It's more than banding together to get bulk discounts. Loopt is facilitating group buying - that's the "democratized" part of it.

yes, but they're going about it dishonestly.

When I heard about this the first time, one of the "benefits" of this approach is they only sell deals to companies that actually have demand. And I never understood that. One of the reasons Groupon is so reviled is because the demand for these ridiculous deals causes great problems for the business in question. If the deal didn't have any demand, then there wouldn't be any problem whatsoever and people wouldn't be hating Groupon. If anything, the way Loopt is doing this is far worse than Groupon, as the article demonstrates.

You guys really need to think about the chance that it actually works. Loopt isn't some shady company trying to steal people's credit card information for something malicious. Their goal, in the end, is something benevolent for all parties.

If they fail (which is likely for any startup) then it's because the idea wasn't a good. It stands to reason that they can make this clear to both parties: consumers and businesses. If they didn't at this point then I am sure they'll fix it because ultimately everyone actually will be angry. The market will answer so you need not worry. I am sure Loopt has done a sufficient amount of customer development before exhausting all their engineering bandwidth, marketing resources, and product focus--meaning you should consider giving them the benefit of the doubt.

Let businesses decide. It's not something you're capable of proving. Loopt likely is gaining more feedback about it then you realize.

First airbnb, now loopt. Something evil has infiltrated the house of ycombinator.

What "evil" has AirBnB done? Yes, they're disruptive to the hotel industry, and you might claim that hotel taxes are a major and legitimate source of cost-recovery (although I'd be perfectly happy if AirBnB negotiated to collect occupancy tax and then pass it on to the city). That's approximately as evil as Amazon or any other online merchant, though.

http://news.ycombinator.com/item?id=2603844

People need to chill and not downvote just because they disagree. Seriously, what is wrong with the parent's comment?

I had a very visceral reaction to reading that YC had dirty money from spammers, but to be fair there's a much longer list of startups they've funded who are not airbnb-type scum (at least that we know of).

At least according to them, AirBNB didn't do this directly--it was done by a firm they hired to get leads, and that they didn't continue working with.

As the sysadmins say, Rule #1: spammers lie. If their "policy to forbid such actions" even existed it was a completely unenforced fig leaf of deniability, because that is in fact how their "person-to-person sales" contractors were allowed to spend their time until a third party did a little diligence and caught them at it, and unsurprisingly they're going to get away with it—there's been no mention of a lawsuit or anything to claw back what they got paid for poisoning the well.

I don't understand why Paul thinks so highly of Sam Altman, supposedly a guy with a 40 year old soul [1], that he even made him partner at yc.

I saw plenty of writhing away from the blame (It's a bug!), instead of admitting his mistake and apologizing publicly.

I saw a lame joke written by Sam in this thread (shortly pulled after by the author) that was something to the effects of "I wouldn't help clean his house, he clearly doesn't like me".

If I saw all this and I was on the board, I would've already called a quick board meeting to replace the current CEO.

[1] http://www.paulgraham.com/notnot.html

I noticed that too. That comment was pulled right as I (author of original post) entered the thread.

I repeat... I have nothing personal against Sam. Never met the guy.

Reply on news.ycombinator.com