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Why can a scam company raise $40 Million Series C + $76 Million Series B?

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Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#51
post #3

Most of you are too young to remember, "Buy now and we'll send you CD's each month for just $9.95 per month, keep only the ones you want, cancel anytime" This is the same thing. It may feel scuzzy, but they do tell you this up front, and while they hope you forget, it isn't a scam, it is just preying on the uninformed.

I actually clearly remember that - and at least they did send me something every month - reminding that my card is getting charged. And yes, it still felt scammy and I was glad to unsubscribe as soon as possible. Here - this is definitely anti-pattern designed to hide the fact that you are not really buying an item, but instead subscribing to something that will charge you monthly with nothing in return...

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#52
post #31
post #23

I'm the Series A investor in this company. We in fact have done plenty of due diligence, and you will be pleased to know it is not a scam company. In fact, the company has very high customer satisfaction ratings, including an NPS that is in the ballpark of Amazon, and a very high customer retention rate. More than half of the people who subscribe to the service are still subscribers after two years, which is unusuall…

This is their previous checkout page: https://news.ycombinator.com/item?id=4592827

Thank you for this.

I was going to say OP's (your) girlfriend went through this 8 months ago, which probably meant a completely different looking checkout page. We all know startups are constantly trying different things in their UI to increase conversion.

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#53
post #31
post #23

I'm the Series A investor in this company. We in fact have done plenty of due diligence, and you will be pleased to know it is not a scam company. In fact, the company has very high customer satisfaction ratings, including an NPS that is in the ballpark of Amazon, and a very high customer retention rate. More than half of the people who subscribe to the service are still subscribers after two years, which is unusuall…

This is their previous checkout page: https://news.ycombinator.com/item?id=4592827

Thanks. For me - they are and were good enough. In particular you can get your shoes for past credits. This is far from scam.

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#55
post #3

Most of you are too young to remember, "Buy now and we'll send you CD's each month for just $9.95 per month, keep only the ones you want, cancel anytime" This is the same thing. It may feel scuzzy, but they do tell you this up front, and while they hope you forget, it isn't a scam, it is just preying on the uninformed.

Well, kinda but not quite.

There's no indication that they'll automatically send you the month's featured item or even email you about what it is and that you're about to pay for it.

Rather, they're silently selling you "Credits" expecting you to forget all about it until you happen to study your credit card report some month in the future.

Maybe not illegal, but definitely shady.

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#56
post #23

I'm the Series A investor in this company. We in fact have done plenty of due diligence, and you will be pleased to know it is not a scam company. In fact, the company has very high customer satisfaction ratings, including an NPS that is in the ballpark of Amazon, and a very high customer retention rate. More than half of the people who subscribe to the service are still subscribers after two years, which is unusuall…

A prime example of a scam, that you can get away with in court because just like fine print in contracts, it was actually stated.

See, there is the action (the orange checkout button) on the left box. Right below it are the shipping options. And then there's the VIP sidebar. It's "action" isn't in any discernable way a "button", it's a small red link. It's designed to be non recognizable as an "action" that is an alternative to the big orange action, and unless you actually read the sidebar, you won't know that the sidebar is also a checkout option display. Sidebars, for the most part, are not known to consumers to contain relevant information, because everybody stuffs sidebars with advertising.

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#58
post #23

I'm the Series A investor in this company. We in fact have done plenty of due diligence, and you will be pleased to know it is not a scam company. In fact, the company has very high customer satisfaction ratings, including an NPS that is in the ballpark of Amazon, and a very high customer retention rate. More than half of the people who subscribe to the service are still subscribers after two years, which is unusuall…

You want to know how to make it crystal-clear what the buyer is opting-into? Add the VIP membership as a line-item in their cart with an explanation of what it is underneath that item.

I bet they'll never ever do that.

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#59
post #42
post #29

Earlier quoted context omitted.

Not the OP - but I did take a look at that page, and I do find it misleading. The "checkout as a regular member" is in a small font on the sidebar, while the main CTA is big, bold and defaults to the VIP program. The part where you're told about the monthly fee is in the last sentence of the sidebar. I had to practically hunt it to find it - for most people shopping online this will be oblivious. By giving the screen…

I don't accept the word "misleading" -- I do not believe the page in any way misleads. It does not try to position it as anything other than a subscription, and the language is plain english. Could they put the subscription details in bold? Could they use a larger font than all the other text? Sure. It's a tradeoff, for sure, and every retailer has to optimize their site to perform. Could they pop up three boxes afte…

It does not try to position it as anything other than a subscription, and the language is plain english.

Yup, plain english which is pretty loaded in the favor of subscription. Point me to one heading which says "VIP subscription costs only 39 USD per month".

every retailer has to optimize their site to perform

This is not the same thing. The typical shopping site constitutes of 1 time purchases. When I google for a product and end up on your site and try to purchase something, I am not going to think it's a crazy thing like monthly subscription whether I buy something or not. Given this scenario, choosing a default like that is not simply optimizing.

We can argue over the fine details, but you can't convince me that this is not shady.

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#60
post #23

I'm the Series A investor in this company. We in fact have done plenty of due diligence, and you will be pleased to know it is not a scam company. In fact, the company has very high customer satisfaction ratings, including an NPS that is in the ballpark of Amazon, and a very high customer retention rate. More than half of the people who subscribe to the service are still subscribers after two years, which is unusuall…

This is an old business practice that I remember from when I was a kid. There were a lot of second-rate publishers (books, in this case, but it worked for pretty much anything) which basically worked on a "buy a book now, and we'll send you a new one each month for ". But you had to specifically opt out of this, which was done by ticking a very small box in the corner, in which case the prices for a single order would quadruple or something. Needless to say, refunds were out of the question.

I casually discarded those, blaming it on the new-found business astuteness of the society I lived in, but it seems this kind of scam is still around.

I'm calling it scam because, where I live, this type of business was actually considered a scam, and I think this went to the extent that they passed legislation to ensure their activity is regulated. They were required to clearly state the subscription model, in a separate box, delimited with clear colors and a bright background. Needless to say, they died out in less than a year.

The website obviously works, and is profitable, because it deliberately misinforms customers, and I think investing in this kind of business is very short-sighted. Not for you directly, since I presume it will bring you enough profit, but for the economy at large: this kind of activity adds no value whatsoever to anything, no one's life is substantially and essentially improved, all that happens is that some money change hands without producing any meaningful result. It's an economic plague.

I'm not casting judgement on yourself for investing in this business, particularly since I'm not willing to start a debate (on the Internet, of all things) about the "but everyone does it" argument. But defending this kind of shady practice is pretty low.

(Edited the rather rude words that were initially there instead of "pretty low")

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