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Comment by vetclmark | Hacker News Reader

From https://www.ycombinator.com/companies/yotta

> SAVE MONEY AND WIN PRIZES UP TO $10M THROUGH WEEKLY NUMBER DRAWS.

> Users save money, get over 2x the national average in interest and weekly chances to win additional prizes up to $10 million through weekly random number drawings.

These are the kinds of companies YC invests in. Then the moderators here at HN go around telling users that they should apply to YC. As if an investment from YC is something to be proud of.

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dont forget https://www.ycombinator.com/companies/coinbase

even worse

Why is this a bad thing? The psychological draw of gambling is very strong. Independent of execution, it seems like this product harnesses that aspect of human psychology to get people interested in saving money. Governments have utilized this same model effectively to entice citizens to save and invest: https://en.m.wikipedia.org/wiki/Premium_Bond

Who is paying for the prizes? I would wager a wild guess that it’s the bank, and they’re probably doing it instead of offering a decent interest rate.

Also, trying to teach people to save money by teaching them to gamble is… not a good idea. Any number of reputable banks would love to teach someone to save money, it’s just not nearly as fun as gambling.

YC investors, like all other investors, are only interested in making money. You don't make money by paying people twice as much interest as everyone else. Something is fishy.

For what it's worth the claim is "2x the national average in interest", the national average in interest is incredibly low as many people have their money in checking/savings accounts at large banks with near 0% interest rates. It's very possible to give people twice the national average and still make money on the spread between that and the ~5.5% short term treasury yield.

Marcus by Goldman Sachs claims their rate is "8x the national average" at 4.40% and I'm sure they're making money just fine too.

> You don't make money by paying people twice as much interest as everyone else.

The national average is only 0.46%, according to https://www.marketwatch.com/guides/savings/average-savings-a...

I checked many other sources, all reporting in the 0.45-0.6% range.

Meanwhile, there are plenty of banks that offer 5% or more. So merely being twice the average is actually still pretty low.

Not all investors are only interested in making money. That's why so many investment vehicles take into account ESG scores. Or why people refuse to invest in cigarette companies.

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