Raffle.it: a new take on online trading
Written on May 1, 2008 – 1:54 pm
Ernst-Jan Pfauth, editor in chief
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Every week we publish an interview with a start-up. We ask five questions, hoping the answers will give you inspiration and new views.
This time I’m interviewing Pascal Wheeler, founder of British start-up Raffle.it. This is a peer to peer marketplace based on the raffle as the trading mechanism. Although Wheeler and his team are still “stuck on the fund raising roller-coaster”, they’ve soft-launched the service. For now, selling is limited to invite only users as Wheeler wants to avoid unnecessary disappointment. Yet in the near future, Raffle.it could be an interesting new player in the field of online trading. In this edition of Five Questions for Start-ups, Wheeler explains why.
How did you come up with the idea of Raffle.it?
“Raffle.it came from a gut feeling that there was a better way to buy and sell. No science, little research (at that time) and not a great deal of brain time, just one of those ‘there’s a better way’ feelings. Raffles are such a powerful mechanism for channeling common interest but are so often overlooked and underestimated - raffles are for school and village fetes, and for charities to raise a little extra cash. Not so! People that enter a raffle do so because of their interest in the prize or their interest in the beneficiary. With a couple of tweaks Raffle.it was borne to be used by anyone - for good cause, personal gain, or commercial awareness.”
What was your biggest challenge during the development process?
“I think I’m not alone when I say marrying ambitions and desires with budgets is far harder than you can ever imagine at the outset. Shortly after finding our first investors a friend said to me, “Spend every £10,000 like it was your absolute last”. I thought I was but looking back over the last year I know we could have saved several £10,000’s by truly heeding his advise.”
Can you describe the British start-up culture compared to Silicon Valley?
“II’ve been totally naive to the start-up culture of England. I’d always followed other start-ups’ developments but never felt that Raffle.it qualified. I think there’s a good base of support in England with a wide range of early stage investors and venture capitalists. My experience with raising money here is that it really does take 2-3 times longer than you have 100% convinced yourself it would. We all think we’re different, our idea is so magical, so obvious that any angel or investment house will jump at the chance. But so many different ideas actually make us all the same. The web scene over here is thriving with many great ideas and people shinning through its a great place to begin your journey, and I’m beginning to realise now that Raffle.it is a part of it.”
What will be the influence of your start-up on the next web?
“We might be revolutionising the humble raffle, but Raffle.it itself isn’t revolutionary. I’d love to say we’re going to change the web landscape but if we are I can’t see it right now. What we will do is take some of the great apps being developed by all the cool people out there and channel the relevant ones to our community of users. If, by channelling common interest, we can make lots of small differences to individuals both online and off, I’ll be a happy man. And if we complete this raffle this year I’ll be ecstatic!
You can make up this question yourself!
“I’d like to fire this one back at you Ernst, you fellow writers and of course everyone that has made it this far. Currently raffles are being created on an invite only basis while we gain momentum, very soon though it will be a free for all, so the question we love to ask everyone is …
What would you raffle?
We have an email address for these - raffleit@raffle.it, with the subject ‘I would raffle …’ - the ones that make us go ooh or ahh get free cash on their Raffle.it accounts.”
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18 Responses to “Raffle.it: a new take on online trading”
By mike jones on May 1, 2008 | Reply
wow Pascal this looks like a great idea - i like the look of the site http://www.raffle.it although it seems just companies are having raffles just now - I guess that is what you mean about soft launch. I haven’t heard about it anywhere else though - i think you need to get the name out for it to work.
Good luck though.
By Ernst-Jan Pfauth on May 1, 2008 | Reply
@mike jones, I’ve noticed the same thing. We’re the first tech blog that has covered it. This will be a good start though ;-)
By CasaMan on May 1, 2008 | Reply
Seriously, is anybody going to invest in one of the fake “lowest bid” lotteries? Maybe the business model is solid but you’ll have to throw away your moral values if you want to invest in this (or you don’t get what they are doing exactly).
It may make some money but tricking people in giving you money isn’t a good base for building a well known web property.. Maybe this is why you won’t hear other tech blogs about this or any of the other “lowest bid” sites..
By Ernst-Jan Pfauth on May 1, 2008 | Reply
@CasaMan, please elaborate a bit on that.
Update: I’ve sent Pascal Wheeler a line to reply on your comment
By Simon percival on May 1, 2008 | Reply
i am a friend of a friend of the guys that run this site and was involved in the testing at the beta launch- As far as I’m aware there is no con and i think the big plan is for charity fundrasing and school benefit not the con you are suggesting. when I was testing the site you can see the winners, how they won, there is an exact number of tickets and everyone that plays gets a discount voucher.
i would suggest the previous comment is completely unfounded and unfair. where is the tricking - I wonder if this guy thought he was going to win and didn’t perhaps a bad loser?
By CasaMan on May 1, 2008 | Reply
@Ernst-Jan Pfauth
I’ll be glad to elaborate on that.. These sites do their very best to make it look like a “lottery” but actually it has nothing to do with a lottery..
In a lottery you buy a ticket with a UNiQUE ticket number.. The lottery will pick a number out the pool of sold ticket numbers. And on lucky dude can collect the prize..
On these sites YOU pick the ticket number but it HAS to be UNIQUE (on most sites by picking a “lowest unique bid” by sms). If you choose a ticket number that is NOT unique it will render your ticket worthless immediately.. In order to win you have to choose the LOWEST unique ticket number so you’ll start low and buy tickets until you find a unique ticket number (without any guarantee it is the lowest.. Unless you started at 1 and moved up until you found a unique ticket number). At this point your ticket might resemble a real lottery ticket but it isn’t.
As soon as somebody else picks the same ticket number as you it will render both of your tickets worthless. At this point (if you’re still interested in the “prize”) you’ll have to start over again without a single clue of what the lowest unique ticket might be so you’ll start low again. A pound a pop.. But hey, at least you’ll get a 20% discount coupon!
I don’t see any similarities with a real lottery and i personally believe this as a scam. This raffle.it has packaged this scheme very well, they don’t even give away their own prizes.. Smart..
By Simon percival on May 1, 2008 | Reply
the minute the first prize ticket is drawn in a normal raffle and you don’t win your ticket is worthless - the minute the first ball out in the national lottery is not yours you can’t win the jackpot - what a daft premise to challenge it on.
Does this person think everyone should win the main prize for their £1 - my goodness!!
By CasaMan on May 1, 2008 | Reply
@Simon percival
You are right..The limited amount of tickets is a very very big plus compared to all the other sites.. I wonder how long it will take till they crank up that amount to an unfair amount (they have to earn some $$ at some point)
I have never gambled on one of these sites.. I never will but If i was forced to do so, i might consider raffle.it because the limited tickets. If i see a product i like, I’ll buy it.. In a store.. With almost 100% chance of getting the product..
Secondly if I do something for a good cause i do it because i chose to.. Raffle.it is pretending to do something for a good cause. It’s all PR.. It doesn’t cost them a dime. All the money comes from the players it even generates interest.. They benefit without giving away.. And that is pretty lame if i may say..
A real charity 2.0 tip for the next webbers: http://www.1procentclub.nl/
Launched just 2 weeks ago but in dutch..
By CasaMan on May 1, 2008 | Reply
Does this person think everyone should win the main prize for their £1
No, but i like my tickets to have the same amount of chance like every one elses before the draw.. In the raffle.it case there isn’t even a draw.. So stop comparing it to a lottery!
By CasaMan on May 1, 2008 | Reply
I’m sorry to be so vocal about this but as a skeptic i like to point out the flaws..
It’s funny how they bend their real business values to sound very positive for participants on this page..
http://raffle.it/manifesto
Their real business values would probably sound a bit like this..
1) Sell products above retail price
Nintendo Wii (retail price £179.99) sold on raffle.it for £250
2) Ensure advertisers (ie: “the marketplace”) will get their leads
Advertisers will pay X to advertise or donate a product to raffle in exchange for leads and marketing data.
3) Speed up the “raffle” process (by scheme above)
Selling raffle tickets is actually quite hard.. Ask the schools, village fetes, and charities whom try really really hard to raise a little extra cash. It takes effort and time.. Let’s speed up the process by letting people buy ticket after ticket..
4) Provide little to none transparency about the dynamics of the gambling game, disguise it as a lottery.
But give some information after a successful sale to give the participants the sense of transparency and it actually being a “lottery”
5) Ensure advertisers will get valuable marketing data
By accepting the vouchers the participants give away their personal data, advertisers happy!
I would love to see a reply from Raffle.it but i also like to see a comment from you Ernst-Jan Pfauth if I changed your opinion.
By CasaMan on May 2, 2008 | Reply
P.s.
As described on linkedin..
“A phenomenal start up business offering consumer brands and retailers opportunity to entice new users and motivate their existing customers. Raffle.it runs competitions where everyone wins every time! Everyone that takes part gets a voucher from the brand partner - thus a great incentive to enter and a great incentive delivered to potential new clients for the brands using Raffle.it. “
By Pascal on May 2, 2008 | Reply
@ CasaMan
Wow, I have to say this is the first time I’ve ever received an attack on Raffle.it - and such a strong one!
First off we’re not trying to scam anyone, we tried to create a legal, raffle inspired game that anyone could play. I do take onboard your general comments about some reverse auction style sites but that’s why we have a fixed number of tickets, display exactly how many other people are playing and try to relevantly reward everyone that plays.
In any competition there can only be one winner and this idea of marring the common interest people have in a particular prize and discount vouchers from those companies selling them made perfect sense. We take 30% of the ticket cost to host raffles, so if you play in a raffle with £1 tickets, 70p of that will go to whomever is running that raffle. This is obviously heavily reduced for individuals and charities, with our current £1 Million to the charity of your choice being 1 million tickets at £1 each - we’ll loose money but as you quite rightly said the exposure is important - we want to display to charities especially just how powerful this new style of raffle can be.
We’re building a platform for individuals, charities and companies, enabling them all to create raffles for their own specific needs and ensuring that we build a robust business model - ie we have to make money in order to continue to grow.
We’re using a model that seems to work fine - early feedback from people playing suggests they enjoy the unique/not unique - especially that it ensures complete transparency when selecting a winner.
I’d be happy to talk to you more to discuss our model and ethics anytime you want - just contact me @ raffle.it
By CasaMan on May 2, 2008 | Reply
Hi Pascal..
I’m sorry to pick on you guys.. You probably aren’t the best example to bitch about..
It is true that setting a limited amount of available tickets is a big improvement compared to the other reversed action sites.. And the 30% commission sounds like a reasonable amount for advertisers..
But that doesn’t take away the fact that
- You are eager to hide the fact your “raffle inspired” game really isn’t a raffle.
- The dynamics of the “lowest unique bid” game is exactly fair, why not stick to real raffle’s and give everybody the same amount of chance?
- At this point the site only contains commercial “raffle’s”. There are none community based raffle’s.. We have to take your word on that. Why not start with community based raffles and at that point mix in the commercial “raffle’s”?
I see you use the we are building this for a “good cause” argument a lot
- So by not taking 30% commission you are losing money? That sounds like a rather weak argument for pretending to do something for a good cause.. Why not take 1% of your total earned commissions and add it to the 1milion prize money? You would give something away to charity for real and it makes you feel warm and fuzzy inside.
- “Winning” a voucher isn’t exactly winning.. It is trading your personal data for a discount. And it’s not all bad.. But maybe be a little bit more clear to participant that these are advertisers they give their data to.
If you’d change these points I would advocate this site but at this point I personally wouldn’t touch it. I hope that Schools village fetes and charities stick to real raffle’s to raise a little extra cash. What is more fun then a fair with some nice real raffle’s? It also helps connect to your local community and maybe attract some new members/volunteers for your cause!
“early feedback from people playing” shows you played very well to the ignorance of these players. It doesn’t mean you are doing the right thing (ethically).
And finally i would like to point to some flawed logic on your manifesto..
“Entering competitions is great, they’re free of course and you never know, you might win. In reality though they are not so free, you’ll be passing your personal information over to the competition operator who will either use that information in house, or trade it.”
And
“you control what happens to your personal information”
But wait a minute!
From the user agreement:
“We may hold and use the information you provide for future marketing purposes and notification of promotional offers.”
From the privacy policy:
“We regard our database of customer information (which may include your Personal Information) as a business asset. Should we sell or transfer our business or any of our business assets this may include the sale or transfer of such databases of information to third parties. In using the Site, you consent to such use of your Personal Information.”
In other words the participants already gave their personal data to YOU the “competition operator” to use the information “in house, or trade it.”.. It wasn’t even free! The participants only controls his personal data in regards to trading it for vouchers from third party advertisers (and you are still a little bit vague about that)..
Where’s the difference between you and the free “competition operators”?
By CasaMan on May 2, 2008 | Reply
I meant to say:
The dynamics of the “lowest unique bid” game ISN’T exactly fair
and
I see you use the we are building this for a “good cause” argument a lot but it doesn’t show of (yet).. If you use it that much maybe you should start doing it first!
By Gareth on May 2, 2008 | Reply
CasaMan: A lot of interesting points, but I’m confused as to why you think the game is unfair.
First, let’s look at a traditional raffle (for my example there is only one prize in this raffle). With 100 tickets sold, there will eventually be 1 winning ticket and 99 losing tickets. That means the chance of any one ticket winning is 1%. Losers find out their ticket is a losing ticket when the draw is made.
Raffle.it and other lowest-unique-bid competitions work similarly. In a 100 ticket raffle, there will eventually be 1 winning ticket and 99 losing tickets. That means the chance of any one ticket winning is 1%. Those maths are the same as the traditional raffle - the chance of a ticket being the winning one is only linked to the total number of tickets sold. However, the only difference is that with Raffle.it losers find out their ticket is a losing ticket as soon as it can’t be a winning ticket any more.
*Your* chance of winning is therefore directly linked to the number of tickets you buy, the same as any traditional raffle. The raffle.it results are as transparent as they can possibly be - you can see for yourself on a completed raffle page how the tickets were distributed… whereas in a traditional raffle you have no guarantee that your ticket is even in the hat to have a chance of being drawn.
As I say, there are some interesting points raised, but I don’t think the maths behind the operation can really be questioned. I’d like to know what you think though.
By CasaMan on May 2, 2008 | Reply
@gareth..
Again i have to say the limited tickets is great it creates a limit on what people are spending on buying the product collectively..
My point is this game is not a raffle or lottery. There is no draw at all..
This is a tactic game of finding the lowest unique number which is crafted in such a way there is a huge incentive to buy more and more tickets first to find a unique ticket and the if you lose the unique ticket find a new unique ticket again without any clue what the odds are on that particular moment (what are the odds of you picking a unique ticket, what are the odds of it being the lowest unique ticket, what are the odds of it staying the lowest unique ticket). It speeds up the process of people buying tickets (spending money) compared to selling real raffle’s tickets where chance is evenly distributed among all sold tickets from buying till the draw . And that is what i think is unfair..
I see there might be a problem in the transparency in drawing a ticket the old fashion way but the chosen solution is designed this way to drive people to buying more tickets. They give “transparency” after a game but provide none transparency before/during a game unlike in a real raffle.
By Paul on May 3, 2008 | Reply
Casaman wrote “crafted in such a way there is a huge incentive to buy more and more tickets”.
I think you got the nail on the head there CasaMan.
Businesses are run to make money. Raffle.it wont exist unless people buy tickets.
Does it really surprise you that they are going to encourage people to buy tickets?
I think it’s also interesting to note that if big brands like Nokia are prepared to give their phones away for free (http://raffle.it/raffle/10073/closed) then Raffle.it must be doing something right… and it’s definitely not by scamming people.
By CasaMan on May 4, 2008 | Reply
@Paul
It’s true businesses are run to make money. But does it justify al means to achieve that goal?
I’ve not seen any compelling argument why they won’t stick to a real raffle (their name is raffle.it for god sake)
Instead they chose a tactic used by the most shady businesses on the Internet and in telecom (they know it) and opened it up a but by limiting the amount of rounds played and give “transparency” afterwards. (like that is gonna help you during a game)
This blog is about “interesting products, start-ups and existing companies that are building The Next Web, or the future of the Internet as we know it” The tactic used is certainly one we can not use for the future of the Internet.
Raffle.it uses this tactic in a (almost) “friendly” manner but it is proven others will not and that is a bad bad thing for the Internet. (oh, I take back the scam comment)
I’m confident that they CAN rafflutionize the “industry” if they’d just stick to real raffle’s.
Viva la rafflution!