“When you’re selling dollar bills for 85 cents, people tend to like you,” says 27-year-old CEO George Bousis.
That’s the idea behind Raise, the online marketplace he created to enable people to buy and sell prepaid gift cards at a discount. Since his February 2013 launch, Bousis has grown the company from 15 employees working from his Chicago apartment to 121 in a 50,000 square foot office. He says Raise crossed the $100 million revenue run rate mark at just 15 months old. And since raising $56 million in a series B financing last week, Raise is now backed by $81 million in venture capital.
What makes discount gift cards such a hot commodity? According to the National Retail Federation, gift cards were the most requested present for the eighth year in a row this past holiday season. Their sales amounted to $124 billion in 2014, up from $118 billion in 2013 and $80 billion in 2007, according to CEB TowerGroup. But CEB also estimates that $750 million worth of cards will go unredeemed this year. Recipients never get around to using them, or the consumers who return those ugly sweaters without receipts wind up with unwanted cards instead of cash.
Four years ago, Bousis was attending college at night while working for his family’s Chicago area grocery chain. A child computer whiz who claims he earned “a few hundred thousand dollars” by age 16 as the world’s top-ranked competitive online video game player, Bousis built a loyalty and rewards platform for his family’s business. The data it collected about customer behaviors helped eliminate food waste and overstock to the point that the chain’s revenues tripled, he says.
When The Credit Card Accountability Responsibility and Disclosure Act of 2009 banished gift card expiration dates, he conceived the idea for Raise and invested his own savings to build a platform for consumers to turn in their unwanted cards for cash and acquire cards they want at a discount.
Bousis says some 900 brands are represented on Raise at any given moment—3,000 overall—and a new card is either sold or listed every 5 seconds, at an average 16 percent markdown. Those most in-demand cards—Amazon and Walmart—might be discounted only 1 or 2 percent, but sell in under an hour. A new Raise mobile app even lets shoppers buy cards while waiting in a checkout line to get instant savings by scanning their phone. Sellers are charged 15 percent of transactions in commission. And Raise runs security checks and requires each seller’s credit card information to prevent fraud (try using a gift card that you’ve already sold on Raise, and they’ll ding your credit card).
Cards offered on the site range in value from just a few dollars to thousands. Bousis says the highest value transaction took place recently: The recipient of a pair of unwanted diamond earrings got a $15,000 gift card when she returned them to Tiffany’s. When she offered the card for sale at a 7 percent discount, Raise verified its value with the jeweler and it sold quickly. The seller walked away with close to $12,000 cash, Raise earned a $2,000 commission, and the buyer got a deep discount at Tiffany’s.
While writing this article, a sold-out dress I’d been coveting for an upcoming wedding became available in my size online. I decided to try out Raise for a discount. I purchased a $353.71 Anthropologie card for $309.99 and got an email receipt promising delivery of my voucher “within one hour.” When no voucher had yet materialized two hours later, I feared that, instead of saving myself $43.72, I’d be stuck with a pricey gift card when another shopper snatched up the dress first. I called Raise customer service on Sunday morning and a friendly agent named Clark sorted things out for me right away. Turns out Anthropologie was slow to verify the card value before the transaction could be processed. Clark made it happen instantly, and I got the dress at more than 10 percent off the sale price. Success.
To be sure, several consumer complaints about Raise appear on the Better Business Bureau website. Raise appears to have resolved all of them satisfactorily. “Any time you’re selling the volume of cards that we’re moving now, by the second, you’re going to have at times things that will slip thorough the cracks,” Bousis says. “That turns out to be a poor experience on the buy side, but we’ve always stood behind our money-back guarantee.”
Bousis points out that Raise sold over 1 million cards in 2014 alone. “Every one of those validates why people love us and it’s another vote of confidence in our business,” he says.