

SwipeGood (YC W11) Gives Its Start Fund Cash To Charity - tbgvi
http://techcrunch.com/2011/02/27/swipegood-gives-its-start-fund-cash-to-charity/

======
kalvin
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.

------
reynolds
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.

~~~
SteliE
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

~~~
reynolds
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 :)

~~~
spencerfry
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?

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

~~~
russell_h
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.

------
ulugbek
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.

------
icode
"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.

~~~
SteliE
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 :)

~~~
icode
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?

~~~
SteliE
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.

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

------
pclark
is there a version of SwipeGood that rounds transactions up _and puts that
amount in a savings account_? I'd love that.

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

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

~~~
rudiger
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.

------
exit
how does swipegood generate returns for investors?

~~~
SteliE
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 :)

~~~
alphamerik
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 :)

------
edw519
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.

