They Got $30 Million for WHAT?

by Tim Sloane 0

This fun article by Josh Constine in Techcrunch discussesthe new wrinkle in Clinkle: the Treats Debit Card that gamifies a prepaid cardwith a lottery concept:

“Notsince Color has a startup been as widely laughed at as the troubled Stanfordpayments startup Clinkle. So it’s little surprise that the company has changedthe name of its app to “Treats”, as well as its direction. After seeing thecompany’s site had rebranded, I spoke with 23-year old CEO Lucas Duplan to findout how Treats will work.

Theprivate beta product now centers on you paying for things with a Treats debitcard to earn “Treats” — essentially lottery tickets you send to friends thatpay for the entirety of their next purchase if they “win”.

If you thought a lottery would be simple, you simply don’tknow Clinkle:

“Back in September, the stealthystartup accidentally launched by putting up its website complete with detailson how Clinkle worked. After 17 months of getting chided for raising $30million only to be called vaporware and see its execs jump ship, at least weknew Clinkle existed, even if many thought it was a dumb idea.

The company’s own director ofdesign Rob Ryan admitted on Product Hunt that “Sure, it’s Venmo”, but with theability to earn and send Treats. Copying a five-year old “pay back yourfriends” startup with traction and the backing of PayPal probably wasn’t goingto work. So now Clinkle is doubling down on the more quirky functionality thatwas popular in its beta.

How Treats Works

Vague descriptions of Clinkle haveproliferated, but Duplan gave me the specifics on how his new app Treats willactually function:

1. Yousign up for Treats, order its debit card, and add money to it.

2. Youswipe your Treats card to make purchases like normal, with no extra fee, thoughthere are charges for ATM use, etc.

3. Afterevery seventh purchase you earn a Treat.

4. Youtake a photo to create a virtual gift card, and send the Treat to a friend. Youcan’t redeem it yourself.

5. Yourfriend is notified they have a Treat waiting to be unlocked.

6. Otherfriends can see the locked Treat and its photo, and can “Boost” aka Like theTreat to increase the chance it will be a winner.

7. Thefriend who received the Treat swipes their Treats card to make a purchase,unlocking the Treat.

8. Ifthe Treat is a winner, they immediately get refunded the entire price of thepurchase they just made.

9. Whetheror not they win, they then see the photo gift card you sent them.”

The article also highlights the optimistic nature of theClinkle CEO:

“Yes,that’s a pretty complicated sequence with plenty of points of failure. Beforeyou get any real value out of Treats, a friend has to make seven purchases,choose you to get the Treat, you have to buy something with Treats, and youhave to get lucky and win.

Buthey, at least it’s not just a Venmo clone. Treats will work with Apple Pay andother mobile payment systems, rather than against them. Eventually, Treats hopesmobile wallets will go mainstream and it can start simply issuing debit cardsdigitally. It’s starting with a physical card the way Netflix started with DVDs— because they’re more widely usable for the time being”

I don’t think I can improve on the conclusion Josh wrote,although I might suggest that even Josh is an optimist:

“Treats’only shot at traction will be its wiley gambling aspect. Variable rewards areknown to stimulate addiction, and the app is bonafide social slot machine.Treats will have to rely on the lure of hitting the jackpot to keep peopleswiping. But maybe, just maybe, if the stories of big winners turn viral,Treats can clear Clinkle’s name.”

Overview by Tim Sloane, VP, Payments Innovation for Mercator Advisory Group

Read full story at Tech Crunch