Alums create gift-giving business
By Alison Polton Simon, The Dartmouth Staff
Published on Thursday, March 31, 2011
When Nicolas Baum ’07 and Kapil Kale ’07 decided to quit their jobs last August to create an independent startup company, neither had determined a concrete business plan. Following a three-month development process facilitated by Y Combinator, a startup incubator firm, the two Dartmouth alumni — along with Baum’s childhood friend Jonathan Pines — launched a “third party, independent gift card” company called GiftRocket on March 21, Kale said in an interview with The Dartmouth.
Using the GiftRocket website, individuals can purchase a gift for a friend or family member who resides anywhere in the United States, according to Kale. The individual then receives an email notification directing him or her to travel to a predetermined location. The only prerequisite is that the location be listed on Yelp, a website that provides user reviews of various businesses, Kale said.
Once the recipient arrives at the indicated location and pays normally for his purchase, he clicks “redeem” on his smartphone, and the device’s GPS confirms his location. The value selected by the gift buyer is then added to the recipient’s PayPal account, according to GiftRocket’s website. If the user does not have a PayPal account, PayPal will automatically create one.
The team charges buyers a fee of $1 and an additional 5 percent of the purchase, which mostly goes toward covering credit card processing costs, Kale said.
In order to promote GiftRocket in the Dartmouth community, users with a Dartmouth-related email address or anyone who uses the site to purchase a gift card for any business in New Hampshire or Vermont will not pay the service charge, according to Kale.
Baum said there are likely other ways to make money through the venture if he and his partners decide to expand the business, but declined to reveal specifics due to ongoing discussions with several investors.
Baum and Kale initially applied to Y Combinator with the concept for a restaurant referral program, Baum said. Just a week before their interview, they completely changed concepts and decided to instead pitch an idea that would not be tied to any particular merchant.
As students at the College, Kale studied economics, while Baum majored in math and computer science.
Kale said that although his economics training at the College has sometimes proven useful, it has often been less applicable in managing his business than he had hoped.
“If I could go back and redo it, I would have studied more computer science or engineering or more of the difficult stuff, which I think would be handy now,” Kale said.
Kale said his parents — both engineers — discouraged him from pursuing technology-related fields. He followed their advice, but said he now regrets his choice.
Pines, who completed his masters degree at Harvard University and considered pursuing a doctorate in computer science before joining the GiftRocket team, also emphasized the disconnect between his academic studies and his professional work.
“Nothing in my academic experience has any relation to the kind of work I’m doing,” he said.
Although Pines said he gained a general background in programming from his coursework, he said has taught himself much of what he knows about building a company from reading books independently of schoolwork.
The past experience that most prepared Pines to work on the technical aspects of GiftRocket was his job at Facebook. While employed by Facebook, Pines helped develop the “like” button that users can click to express approval for friends’ photographs, comments or links to other media. After settling on the gift-certificate concept, the group of entrepreneurs had initially planned to create an iPhone application. Under their initial proposal, both parties needed to possess an iPhone, download an application from the iTunes store and create a GiftRocket account. After suggestions from Y Combinator advisors and personal acquaintances that they should streamline the process, the group decided to create a web-based program instead, according to Baum.
“It’s greatly simplified and focused a lot more on the average user,” he said.
Response to the product thus far has been positive, Baum said. The GiftRocket website has received tens of thousands of page views and several thousands of dollars of purchases have been made using the service, according to Baum.