Gift Cards Profit Issuers, Google Pressures Zillow, Tech Corps Modernizes Government - Episode Hero Image

Gift Cards Profit Issuers, Google Pressures Zillow, Tech Corps Modernizes Government

The Best One Yet · · Listen to Original Episode →
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TL;DR

  • Gift cards represent a "triple profit puppy" for issuers, securing upfront cash, generating profit from unused balances, and incentivizing consumers to overspend by 30-40% on average to redeem full value.
  • The emergence of Google as a potential competitor in real estate listings creates urgency for Zillow, pressuring it to innovate and improve its offerings, as competition historically drives product enhancement.
  • The US Tech Corps offers a unique two-year service opportunity for tech professionals to earn $150-200K annually fixing government systems, positioning service as a resume-building "flex" comparable to military or Peace Corps duty.
  • Gift cards, comprising 1.6% of the US GDP, are a socially acceptable yet financially inefficient gift, with 10-20% of cards going unredeemed, representing lost value for consumers and booked profit for issuers.
  • Zillow's dominant market share has historically allowed it to dictate fees to agents, but Google's entry into real estate listings, even as a test, threatens this position and could force Zillow to adapt.
  • The US Tech Corps aims to address the systemic inefficiency of government digital infrastructure, moving it from "dial-up to the AI era" by leveraging private sector tech talent.

Deep Dive

Gift cards represent a significant and often overlooked financial engine for corporations, functioning as a "triple profit puppy" that benefits issuers upfront, through unredeemed balances, and via consumer overspending. This pervasive model, while lucrative for companies, highlights a consumer disadvantage where cash remains the superior gifting option due to its inherent flexibility and lack of hidden costs.

The competitive landscape for Zillow is shifting dramatically as Google enters the real estate listing market. This new pressure, however, presents an opportunity for Zillow to innovate and improve its offerings, potentially by adopting a "name your price" model. This would allow homeowners to signal their willingness to sell at a specific price, even if not actively listing, thereby increasing market transparency and transaction potential beyond currently listed properties. Such a move addresses the inherent friction in traditional real estate transactions and could foster a more dynamic market.

The U.S. Tech Corps initiative aims to address the systemic inefficiencies in government digital infrastructure by recruiting 1,000 tech professionals. These individuals will receive substantial compensation, up to $200,000 annually, to modernize federal systems. Positioned as a service akin to military or Peace Corps duty, this program seeks to improve the effectiveness of government operations, moving them from outdated to modern capabilities, and is expected to enhance the resumes of participants, signaling a commitment to public service.

The core takeaway is that while gift cards offer companies a unique profit model, they represent a less optimal financial choice for consumers compared to cash. Furthermore, increased competition, as seen with Google's entry into real estate, can spur innovation in established companies like Zillow, while government initiatives like the Tech Corps offer a structured approach to improving public sector technology.

Action Items

  • Audit gift card practices: Analyze redemption rates and identify opportunities to reduce unused balances for 3-5 product lines.
  • Design "Name Your Price" feature: Develop a prototype for Zillow to allow homeowners to indicate their willingness to sell at a specific price point.
  • Evaluate US Tech Corps impact: Track the effectiveness of 1,000 techies in improving government systems over two years, focusing on measurable outcomes.
  • Measure gift card overspending: Quantify the average consumer overspend (30-40%) when using gift cards across 5-10 brands.

Related Episodes

Key Quotes

"1.6% of the US economy is Gift Cards... And 1 outta 7 of you will get a Starbucks one."

The hosts highlight the significant economic impact of gift cards, noting that they represent a substantial portion of the U.S. economy. They specifically point out Starbucks as a major beneficiary, indicating that a considerable percentage of consumers receive their gift cards.

"The White House launched Tech Force... $200K/yr sabbatical to make the DMV run like Airbnb."

This quote introduces the U.S. Tech Force initiative, which aims to improve government digital services. The hosts emphasize the attractive compensation and the ambitious goal of modernizing inefficient government operations, likening the desired outcome to the user-friendly experience of platforms like Airbnb.

"Zillow’s getting zucked by Google, so we have an idea to save Zillow... Name Your Price."

The hosts describe a competitive threat to Zillow from Google's entry into the real estate market. They propose a strategic solution for Zillow, termed "Name Your Price," suggesting a new feature that could help the company maintain its market position.

"Plus, SNL did a skit about a fake Uber Eats Wrapped... but then it really happened."

This quote points out the surprising convergence of comedy and reality in the business world. The hosts note that a satirical sketch on Saturday Night Live about a personalized Uber Eats year-in-review feature was quickly followed by Uber Eats actually launching such a product.

"The gift card is the rare triple profit puppy for the company that issued it and here's why yetis first the company gets cash upfront and second the unused balance becomes pure profit but the wildest profit source for gift cards is the third because when you do spend a gift card as a consumer you tend to overspend on that gift card by a lot actually."

The hosts explain the financial advantages gift cards offer to issuing companies, detailing three distinct profit streams. They highlight that companies receive immediate cash, benefit from unredeemed balances as profit, and further profit when consumers overspend to utilize the full gift card value.

"The secret ingredient to getting better is a competitor yet zillow's ceo felt something this week he hasn't felt in 11 years what he felt was urgency zillow probably declared code red all hands on deck google is attacking us we got to get better."

The hosts argue that competition is a crucial catalyst for business improvement, using Zillow's reaction to Google's market entry as an example. They suggest that the CEO's newfound sense of urgency, after a long period without significant competitive pressure, indicates a necessary "code red" situation for the company to innovate.

Resources

External Resources

Books

  • "Gods of New York" - Mentioned as an audiobook listened to on a flight, detailing the men who ruled New York City in a specific year.

Articles & Papers

  • Capital One research - Referenced for data indicating that Americans buy $500 billion of gift cards annually.

People

  • Oscar Wilde - Quoted regarding life imitating art.
  • Ted DiBiase (The Million Dollar Man) - Quoted as saying "everyone has a price."
  • Rory Sutherland - Mentioned as a marketing guru whose ideas inspired the "Name Your Price" concept for Zillow.
  • Brent Hendrix - Credited with sending in a fact about Mariah Carey's songwriting.
  • Fernando - A "Yeti" on Spotify who attended the Chicago show and bought tickets for the Washington D.C. live show.
  • AJ Hero - A listener in Hong Kong.
  • Carrie - A new "Yeti bestie" who joined the podcast.
  • Ryan - Sent in a story about Flock, the license plate scanner company.
  • Emily Joy Ashmead - Ran the Phoenix marathon and created a "TBOY" sign.
  • Christian Gonzalez - Ran the Dallas half marathon.
  • Shara Gutta - Launched a fitness app called "Fitness Raft."
  • Prasanti - Celebrated her 33rd birthday in Frisco, Texas.
  • Sofia Aguirre - Celebrated her 45th birthday in Atlanta, Georgia.
  • Maddie Sussman - Celebrated her 18th birthday in Woodbridge, Connecticut, and got into Tulane.
  • Joaquin Venezuela - Celebrated his 14th birthday in Des Moines, Iowa.
  • Evan Thomas - Celebrated a birthday in Austin, Texas, and will attend the live show.
  • Maureen Sanchez - Celebrated a birthday in New York City and calls the show "The Teddy."

Organizations & Institutions

  • Starbucks - Mentioned as the potential most popular gift card in America, with significant gift card revenue and profit from unused cards.
  • Visa - Mentioned as the top gift card in the country.
  • Instacart - Mentioned for comparison of annual revenues.
  • Sofi - Mentioned for comparison of annual revenues.
  • Burberry - Mentioned for comparison of annual revenues.
  • TSA Pre-Check - Mentioned as a brand that sells gift cards.
  • Waymo - Mentioned as offering a robotaxi gift card.
  • Gucci - Mentioned as selling gift cards up to 50,000 euros.
  • Forever 21 - Mentioned in relation to unused gift cards and expiration.
  • Zillow - Discussed as facing new competition from Google and the idea of implementing a "Name Your Price" feature.
  • StreetEasy - Acquired by Zillow in 2013.
  • Trulia - Acquired by Zillow in 2014.
  • Redfin - Mentioned as a distant second in the real estate listing industry market share.
  • Google - Mentioned as dipping its toes into the real estate listing market, posing competition for Zillow.
  • OpenAI - Mentioned as a competitor to Google, prompting Google to add new features.
  • Meta - Mentioned for comparison of job compensation to the US Tech Corps.
  • Zoom - Mentioned as a company that supports employees taking a sabbatical to join the US Tech Corps.
  • Healthcare.gov - Used as a case study for a government initiative launch that was doomed by good intentions and a lack of phased rollout.
  • US Army - Mentioned in relation to Uncle Sam's recruitment.
  • Peace Corps - Mentioned as a service comparable to the US Tech Corps.
  • Teach for America - Mentioned as a service comparable to the US Tech Corps.
  • Hooters - Mentioned in relation to its bankruptcy and four shut-down locations being taken over by Duolingo.
  • Duolingo - Mentioned as taking over four shut-down Hooters locations and using its owl mascot.
  • Kirkland - Mentioned in relation to Kirkland toilet paper raft.
  • Costco - Mentioned as a company fans might want a "raft" for.
  • Tulane - Mentioned as the dream school Maddie Sussman got into.

Courses & Educational Resources

  • The IPO Tour - Mentioned with links for tickets in Austin, Arlington, New York, and Los Angeles.

Websites & Online Resources

  • tboypod.com/shop/product/economic-support-yeti-doll - URL for purchasing a TBOY Yeti Doll gift.
  • tboypod.com/newsletter - URL for the newsletter.
  • wondery.com/links/the-best-idea-yet/ - URL to listen to "The Best Idea Yet" podcast.
  • qualtricsxm88y5r986q.qualtrics.com/jfe/form/SV_dp1FDYiJgt6lHy6 - URL for a 2-minute survey for new listeners.
  • tboypod.com/shoutouts - URL for submitting shoutouts or facts.
  • www.instagram.com/tboypod - Instagram URL.
  • www.tiktok.com/@tboypod - TikTok URL.
  • www.youtube.com/@tboypod - YouTube URL.
  • www.linkedin.com/in/nicolas-martell/ - LinkedIn URL for Nick Martell.
  • www.linkedin.com/in/jack-crivici-kramer/ - LinkedIn URL for Jack Crivici-Kramer.
  • tboypod.com/ - General website URL.
  • art19.com/privacy - URL for Privacy Policy.
  • art19.com/privacy#do-not-sell-my-info - URL for California Privacy Notice.
  • vitalproteins.com - URL to learn more about and purchase Vital Proteins.
  • audible.com/tboy - URL for a free 30-day Audible trial and first free audiobook.
  • airbnb.com/host - URL to find out how much a home might be worth on Airbnb.
  • betterhelp.com/tboy - URL for BetterHelp, offering 10% off.
  • wonderry.com/survey - URL to fill out a survey about listeners.

Podcasts & Audio

  • The Best One Yet - The podcast being transcribed.
  • Robinhood Snacks - The former name of "The Best One Yet" podcast.
  • The Best Idea Yet - A weekly deepdive show mentioned.

Other Resources

  • Gift Cards - Discussed as the most popular gift, a "triple profit puppy" for companies, and a significant portion of the nation's GDP.
  • Uber Eats Wrapped - A concept that originated from an SNL skit and was subsequently launched by Uber.
  • Gmail Wrapped - Suggested as a potential year-in-review feature.
  • Tinder Wrapped - Suggested as a potential year-in-review feature.
  • Therapy Wrapped - Suggested as a potential year-in-review feature.
  • Microsoft Teams Wrapped - Suggested as a potential year-in-review feature.
  • Name Your Price - A concept inspired by Ted DiBiase and Rory Sutherland, proposed for Zillow to implement.
  • US Tech Corps - A White House initiative to recruit tech workers for government service.
  • Jobs Report - Mentioned in relation to the unemployment rate and job losses.
  • Humanoid Robots - Mentioned as a focus for Tesla's future.
  • Robotaxis - Mentioned as a focus for Tesla's future.
  • "All I Want for Christmas Is You" by Mariah Carey - Mentioned for setting a record for the longest streak at number one.
  • "Where Are You Christmas" by Faith Hill - Mentioned as being written by Mariah Carey.
  • Flock - A license plate scanner company mentioned.
  • Fitness Raft - A fitness app launched by Shara Gutta.

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