Launchpad IGNITION: Giftmeo

There's no question that Facebook is the biggest thing to hit the Internet in the last five years. With that type of hyper-adoption, it was only natural for folks to try to tag along and turn a buck. Unfortunately this usually translated into nuisance social gaming apps from companies like Zynga, who is already planning a secondary offering in order to keep insiders from jumping ship after having gone public a mere three months ago.

So you can imagine my relief when I found a company in New Orleans that leverages the power of Facebook and other social media to a useful and practical end. The company is called Giftmeo and it is launching into the "crowd-gifting" space.

You know how, when you log into Facebook, it shows you which of your friends has a birthday today? It's usually one of the first things you notice. Suppose you felt like giving that person a gift but didn't want to spend more than a couple bucks just to remember them on their birthday? Well, if you and 40 or 50 of his other friends kicked in two buck apiece, that would add up to a pretty nice birthday gift. And that's what Giftmeo is all about.

The concept behind Giftmeo is dead simple, and that's what I love about it. You give your buddy two bucks and so do 49 of his other friends, and now he's got $100 at Giftmeo to redeem for the gift card of his choice. That could mean $100 to spend on Amazon, a couple dinners at Chili's, that new band saw he's had his eye on at Home Depot, whatever.

The API is seamless and once you've signed up it's integrated with your Facebook account (and your Twitter account if you choose). It's free to use, and they plan to launch in the next 30 days.

It's not only applicable to gift giving, however. Giftmeo is also a powerful tool for fundraising. People can use it to raise money for everything from charities to the Friday office party.

So how does Giftmeo make any money? Because they're a bulk buyer of the gift cards, they receive a discount from the vendors. So that $100 Amazon gift card might only cost Giftmeo $90. The gift cards are all transmitted electronically, so there's no shipping costs and no physical inventory.

The company has successfully completed a round of angel funding, so I asked founders Michael Angle and Martin Roth what the plan was going forward.


Gift cards, group gifting and this entire space is very exciting and is just now starting to see changes and companies entering the space.There will be, in our opinion over the next 6+ months, a large influx of companies all taking a swing at their market share with a unique strategy. The company that gets the user experiance correct will emerge from the noise.

Also, we are currently seeking a round of funding to ensure we have the right team in place, a solid marketing budget, and the flexibility to adapt features as we see our user base interact with Giftmeo.

When I asked them how large the potential market was they laughed and said, "How many people have birthdays?"

It's a compelling idea, especially in this era of what I call "peripheral friends". You know, the kind of people that you sort of know and sort of like, but wouldn't go all out and buy a present for? I can also see it being a great way to raise money for office events like happy hours or office birthday parties.

Michael Angle has agreed to answer any questions you guys have in the comments, so fire away.

 
Edmundo Braverman:
There's no question that Facebook is the biggest thing to hit the Internet in the last five years. With that type of hyper-adoption, it was only natural for folks to try to tag along and turn a buck. Unfortunately this usually translated into nuisance social gaming apps from companies like Zynga, who is already planning a secondary offering in order to keep insiders from jumping ship after having gone public a mere three months ago.

So you can imagine my relief when I found a company in New Orleans that leverages the power of Facebook and other social media to a useful and practical end. The company is called Giftmeo

sound like some one trying to sell something :/

 

Pretty sure blastoise is the only one that could publically get away with throwing ms at Eddie, haha.

Anyway Eddie, what sort of equity cut are they giving you for evangelizing this? You heard about the mural painter at Facebook, right? Hope you got something good.

“Millionaires don't use astrology, billionaires do”
 

Quick note:

A two-paragraph stub of this post went up for a few minutes yesterday by mistake. It was, however, enough time for blastoise to hit me with monkey shit (thanks bro), and for Nouveau Richie to make his comment - in case you were wondering why their comments are dated yesterday.

@Nouveau Richie - I didn't work these guys for any equity. I'm just writing this series to highlight some of the exciting start-ups that are happening in New Orleans. If I have any ulterior motive at all, it's to attract even more top flight entrepreneurial talent to the Big Easy.

@blastoise - Die in a fire, lol.

 
Edmundo Braverman:
Quick note:

A two-paragraph stub of this post went up for a few minutes yesterday by mistake. It was, however, enough time for blastoise to hit me with monkey shit (thanks bro), and for Nouveau Richie to make his comment - in case you were wondering why their comments are dated yesterday.

@Nouveau Richie - I didn't work these guys for any equity. I'm just writing this series to highlight some of the exciting start-ups that are happening in New Orleans. If I have any ulterior motive at all, it's to attract even more top flight entrepreneurial talent to the Big Easy.

@blastoise - Die in a fire, lol.

LOL my bad m8 my comment was before you added more to it :D

 

Sounds really interesting. Kind of in the vein of the "game-ification" that social media has brought to our modern hyperconnected world.

I'm more interested to see how it stacks up in the charitable giving arena ... maybe against existing ventures like Crowdrise/etc.

I am permanently behind on PMs, it's not personal.
 

could work....but who is their competition? how do they gain traction?

I like the simplicity, but if I am not willing to spend $20 on someone, why would I even spend $2? Also, do they hide the amount you donate / give?

Wouldnt that be a bit embarrassing if some pseudo friend saw that you "valued" their friendship at a whopping $2? Kind of funny, because we are definitely in the age of the "peripheral friend"...just not sure anyone would spend 1 penny or $1 dollar on one of these friends instead of just sending them a nice note.

Now as a platform for fundraising, I could definitely see some potential there. But who knows, I've been dead wrong before - maybe giving a $1 to a peripheral friend will make sense to the new generation? Or you make it "gamey" enough so that it's fun to chip in?

Good luck Giftmeo!

 

I find it hilarious that blastoise has turned into a little brother type figure for all of WSO.

Another reason not having a facebook is awesome, I don't have to give 3 bucks to some slag from high school that have me a cleveland steamer behind the gym after wrestling practice. Pretty sure she gets more than 3 bucks from the taxes I pay as it is anyway.

If I had asked people what they wanted, they would have said faster horses - Henry Ford
 
Unforseen:
It also opens the door to Money Laundering. How's Giftmeo going to tackle this issue Eddie?

I'll let one of the founders give an official answer, because I'm sure it's something they've thought of, but I don't think the business model is particularly vulnerable to money laundering (unless I'm missing something).

You have to use an account with a paper trail (checking account, credit/debit card) to fund the gift. If you could use cash, then absolutely money laundering would be a concern. But by using a credit card or Paypal or whatever, you've pretty much eliminated any ability to launder money.

That said, since you set my mind on a nefarious train of thought, I have conceived a way that Giftmeo could enable tax evasion. Probably best if I don't go into the details here, though.

 
swagon:
This is the remix to Ignition, hot and fresh out the kitchen. Mama rollin that body, got every man in here wishin.

I swear to god, you really are just the real life Jean-Ralphio, aren't you? (You should have thrown in an extra syllable at the end to screw it up like he does though.)

“Millionaires don't use astrology, billionaires do”
 

Maybe I'm missing something, but how are they monetizing donations?

I get the they'll take a cut of gift cards, but I'd assume that doesn't apply to donations. If I use Giftmeo to donate $50 to a good cause, I'd assume that $50 cash goes to that cause. If $45 goes to charity and $5 to Giftmeo, I definitely wouldn't be using Giftmeo.

It also seems like this would have to be a huge hit for these guys to be very successful on the Bday present idea. I'd have to assume that their pretax operating margin is ~7% or so on the Bday donations. If that's true they'd need ~75 million $2 donations to net $10M (pretax).

I think it's a cool idea, just not sure I see the $.

twitter: @CorpFin_Guy
 
accountingbyday:
I get the they'll take a cut of gift cards, but I'd assume that doesn't apply to donations. If I use Giftmeo to donate $50 to a good cause, I'd assume that $50 cash goes to that cause. If $45 goes to charity and $5 to Giftmeo, I definitely wouldn't be using Giftmeo.

No no. They don't actually take a cut of the card. The card vendor sells the card to them at a discount. In other words, when you donate $100 the charity gets $100 gift card. It's just that the card only costs Giftmeo $90 to provide (for example, I don't know the actual discount/margin and it varies from vendor to vendor).

 
Edmundo Braverman:
accountingbyday:
I get the they'll take a cut of gift cards, but I'd assume that doesn't apply to donations. If I use Giftmeo to donate $50 to a good cause, I'd assume that $50 cash goes to that cause. If $45 goes to charity and $5 to Giftmeo, I definitely wouldn't be using Giftmeo.

No no. They don't actually take a cut of the card. The card vendor sells the card to them at a discount. In other words, when you donate $100 the charity gets $100 gift card. It's just that the card only costs Giftmeo $90 to provide (for example, I don't know the actual discount/margin and it varies from vendor to vendor).

Yeah, I worded that very poorly. I understand that they're just getting a discount on the card and selling it at the stated price.

It's the donations, where I assume it's cash and not gift cards, that doesn't make sense to me.

twitter: @CorpFin_Guy
 

If you receive money from a lot of people, more than anticipated, now you will feel obligated to gift them all back. If you have a lot friends, you're going to have a birthday once a week. Instead of having cash, you're stuck with a gift card and paying out of your account. I'm not too sure about using it for fundraising... I believe there's already a couple websites that provide that service.

 

The charity thing probably works through gift cards as well ie you send Backpacks for Gibraltor a 50 dollar walmart gift card to buy backpacks for little babies in Gibraltor, giftmeo bought said card for 45 dollars but gives the charity the card valued at 50.

If I had asked people what they wanted, they would have said faster horses - Henry Ford
 

Sounds like a charity rather than a bday present where everyone is chipping in. Like Patrcik mentioned above, it takes the personal touch out of the whole bday experience. But you never know how this will pan out. I hope they did some market research and tested out this in the real world like Tim Ferris tests out his ideas. Hahha wish I had some monkey shit to throw :P

 

Wow, very excited to see such interest in Giftmeo. It's a busy day here in Nola for New Orleans Entrepreneur week but i'll try and answers all the questions I can, and break them down into topics.

The biggest thing to note is we are looking forward to our launch to get our product in the hands of users and see how they use it. We all have specif cases where Giftmeo could fill a need and we plan on listening to our users and building features that accommodate those needs that make sense for the companies growth.

CHARITY:

In the charitable arena we hope that large and small organizations will be able to use this to reach their goals whatever they may be. If we lower the threshold for donating (ex:$100 down to $1) we open up the pool of potential contributors, without cannibalizing on the existing market.

For example an inner city after school program has a 2000 user following on Facebook. Lets say they usually email their members about donating $100 to their program and of that network some are able to do so but majority are not. Now with giftmeo the vast majority can give $1 or more while the same group of users can still give $100. The biggest thing to note here is also when you give you can share that with your FB network. So I might be 1 of the 2000 fan base but if I share it with my personal network of 1100 I have spread the message to a larger pool. Hopefully those will gladly join the group in gifting the organization as little as a $1 since the barrier to participate is so low.

The organization can check out gift cards to several retail locations to buy sports equipment, food, supplies, etc. If they put a $100 on ABC Sports Store gift card they have a $100 to spend. Our revenue is predetermined with ABC Sports Store in advance and we send them their portion of the collected amount.

For larger organizations using Giftmeo for donations our revenue is made up through a transaction fee charged the giver like a typical processing fee. Our hope here is since they are a large organization the number base will help make it up but also gain awareness about Giftmeo.

Also because we focus on "micro-transactions" we have a special low processing fee in place from our payment processor. This obviously is crucial and helps the margins on such low items of $1

Michael Angle Co-founder

 

MONEY LAUNDERING / FRAUD

This was a topic brought up early in the idea phase. We actually worked with a Money Laundering consultant who is a Miami, FL Officer having spent years (1988-present) starting as a detective and moving up in experience and qualifications. Currently still an officer but doing consulting for organizations large and small. We received a lot of excellent guidance on what to look for, how to protect the company, and what to realistically expect.

The good thing here is there are safe guards set in place by not only us but also the merchants. A few examples I can list are limits on the value you can add to a card ranging from $500 to $2000. This does deter someone from trying to move large sums of money because hiding $1million dollars $2000 at a time is not efficient. There is also a personal limit of what a user can give a day. If someone tries to repeatedly exceed this it will raise a red flag in the system. Also, stores do not allow for cash back on a gift cards. So the person putting $2000 on a card is stuck spending it at that store or trading it.

Last, as a positive we want to reward our active users for giving. So if we see that John Doe has been earning points, badges etc, by giving his friends gifts this month, sharing Giftmeo activity, "liking" friends campaigns etc then great; we want to reward him and keep him active. If we see that John Doe has been hitting the upper limits of what a user can give and raising a red flag, then we have something to take note of.

 
mangle:
MONEY LAUNDERING / FRAUD

This was a topic brought up early in the idea phase. We actually worked with a Money Laundering consultant who is a Miami, FL Officer having spent years (1988-present) starting as a detective and moving up in experience and qualifications. Currently still an officer but doing consulting for organizations large and small. We received a lot of excellent guidance on what to look for, how to protect the company, and what to realistically expect.

The good thing here is there are safe guards set in place by not only us but also the merchants. A few examples I can list are limits on the value you can add to a card ranging from $500 to $2000. This does deter someone from trying to move large sums of money because hiding $1million dollars $2000 at a time is not efficient. There is also a personal limit of what a user can give a day. If someone tries to repeatedly exceed this it will raise a red flag in the system. Also, stores do not allow for cash back on a gift cards. So the person putting $2000 on a card is stuck spending it at that store or trading it.

Last, as a positive we want to reward our active users for giving. So if we see that John Doe has been earning points, badges etc, by giving his friends gifts this month, sharing Giftmeo activity, "liking" friends campaigns etc then great; we want to reward him and keep him active. If we see that John Doe has been hitting the upper limits of what a user can give and raising a red flag, then we have something to take note of.

What happens when someones steals someone else's credit card and buys multiple $2000 gift cards?

 
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If I had asked people what they wanted, they would have said faster horses - Henry Ford
 

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