A couple of weeks ago I wrote a somewhat negative post about an unlaunched startup in Boston called Swaptree. Ouriel wrote a follow up post comparing Swaptree (unfavorably) to a French service called SplitGames.
Since that time I’ve had a chance to talk at length with Swaptree founder and CEO Greg Boesel about some of the perceived shortcomings of the service that I pointed out. That conversation, and an eye-popping demo he walked me through, made it clear that I had made some incorrect assumptions about the service.
Swaptree will allow users to swap media items (books, CDs, DVDs and video games) with other users without the use of cash. Swaptree will not charge a transaction fee, relying instead on contextual advertising revenue that will be placed on the site. For a new user, the idea is that you type in a few items that you own and are willing to trade (using the UPC or ISBN code) and you’ll see thousands or tens of thousands of items that people are willing to trade for your stuff.
My assumption was that Swaptree was going to have a difficult time creating a demand curve. Getting a new user to type in a couple of things they are willing to trade is easy. Getting them to type in things that they want and associate them with things that they already have to trade would be much more difficult. At the end of the post, I suggested that actual money served as a very nice stored value currency, and that’s why eBay has been so successful.
It turns out that Swaptree actually has a fairly interesting and much simpler way to build the demand curve of items. In addition to maintaining a list of items that a user wants to trade, they simply build a long list of items they want to own as well. This list can be created by clicking on items on the Swaptree site, or even easier ways like importing your Amazon wish list or using a plugin to click on items on Amazon directly and have them included on your Swaptree “wish list”. When I saw the demo, I was convinced that large numbers of users could be enticed to do this. If there is a match, any match at all between an item that you have and an item that you want, Swaptree suggests that a trade occur to both parties. If both accept, the trade is confirmed.
There are a number of really nice touches as well. Swaptree will analyze have and want lists and try to organize trades among as many as four users, so the possible number of trades increases exponentially. They also allow you to print out an address form and postage directly from your printer. They actually lose money on postage sales after credit card charges, but they felt is was important service to offer. They also have envelopes available and will send you new ones automatically as you use up the old ones. The list continues – basically Swaptree has done a very good job of thinking through the details and making swaps occur as easily as possible (Frankly I wish eBay offered these kinds of services as well).
Sometimes, I love being wrong.
The service is still some time away from launching a private beta, which I will eagerly participate in. Sign up on the Swaptree home page.