How does Honey make money, aside from the obvious data collection?
I know a few people who use it, and I've cautioned them in the past that I can't think of any savory business model that would make this profitable.
Is there one? Is it just tracking purchases for advertisers, or is there some other monetization strategy I'm missing? Their main site says they make commissions, but I don't know how to square that with the way consumers use it -- which is to find coupons from other sites.
Honey isn't like a credit card, is it? If I'm a retailer, I don't know why I'd pay a company money for them to scrape coupons from other sites -- and it's not like Honey is going to stop scraping coupons for my products if I don't pay them money, right?
jartelt 1610 days ago [-]
I've read that part of what they do is effectively steal affiliate referrals from other websites. Say you click on an affiliate referral link from a blog that takes you to retailers website. Normally that blog would get a cut of whatever you buy at that retailer. However, if you then use your Honey extension, their affiliate link takes over and gets credit for the sale. Honey can then give you a small discount that is a portion of their affiliate commission.
In some sense Honey can steal the affiliate commissions from blogs and other websites since you use Honey right before the sale.
gamblor956 1610 days ago [-]
They don't steal affiliate commissions.
They capture the most valuable sales--i.e., those made with the immediate intent to purchase--and direct those purchasers to the cheapest site in exchange for a commission.
It comes down to a question of what is more valuable to the seller. The blogger may have created the intent to purchase the product but Honey created the intent to purchase from the specific seller. And to the seller, that is far more valuable, especially as a lot of Honey-generated sales may have been sales that would have otherwise gone to competitors.
patd 1609 days ago [-]
AFAIK, Honey doesn’t make you got to a specific seller.
They insert themselves on the cart page which is the final step of the purchase funnel when the product, the seller and the purchase has already been decided.
Paraesthetic 1609 days ago [-]
It seems like they use some cashback system, similar to shopback or cashrewards, and so take a cut of the sale when it is processed.
mikeryan 1610 days ago [-]
If Honey is inserting themselves between the blogger and the seller and then pocketing the commission, how is this not “stealing/hijacking” the commission?
sparky_z 1610 days ago [-]
I have no special knowledge about Honey, but I think the distinction being made is that Honey redirects them to a _new_ seller that offers a cheaper price, essentially poaching the customer. The blog's affiliate never makes a sale in the first place so of course it never pays out.
For the blog, the outcome is the same as if you took the time to price shop manually and ended up picking a different retailer. Honey's just automating that process.
viraptor 1609 days ago [-]
No, that's not correct. You can get rewards from the page you're already on, whether it's the cheapest or not. You're not redirected and you're not incentivised to switch the retailer.
I'm getting their points from doing online grocery order directly from the supermarket site for example.
sparky_z 1609 days ago [-]
But is that superceding another site's affiliate link, or did you just go straight to the website yourself?
viraptor 1609 days ago [-]
I'm going directly to the website.
dillonmckay 1609 days ago [-]
How do they (Honey) know, though?
IanCal 1609 days ago [-]
It's a browser extension.
joking 1608 days ago [-]
Ok, I get how they do technically, but how the shops let honey insert they affiliate id and take a cut when the user has come directly from a newsletter?
lamps12 1609 days ago [-]
> the distinction being made is that Honey redirects them to a _new_ seller that offers a cheaper price, essentially poaching the customer. The blog's affiliate never makes a sale in the first place so of course it never pays out.
Based on what you surmised, Honey essentially acts as a middle man between two businesses. Did I get that right or am I missing something here?
gamblor956 1609 days ago [-]
Honey isn't inserting themselves between the blogger and the seller automatically. The user is doing that when they use the Honey add-on after visiting the blogger's website.
This is no different then a user visiting a different website about the same product and clicking through the affiliate link on that new blogger's page before making the purchase.
gnicholas 1609 days ago [-]
What percent of the time does “using the honey add on” result in selecting a different vendor? That is, if you read a blog post and get linked to an Amazon page, does honey not try to capture a commission there? What if you open the add on to compare prices but still end up purchasing from Amazon?
Sorry if this is a dumb question, but I don’t use honey so don’t know the mechanics of how it works.
geitir 1609 days ago [-]
Do you work for them? It sounds like you work for them. Based on your description, the crux of it is they exactly do insert themselves between a blog / affiliate link and their incentivization towards a specific seller exactly does replace whatever commission the blog would have seen
gamblor956 1609 days ago [-]
I don't work for them, nor do I know any of their employees.
However, I have used their add-on and it does not work the way you described.
deelowe 1609 days ago [-]
Agreed. The parent is coming across as obtuse to the point where I wonder if it's intentional.
gamblor956 1609 days ago [-]
It sounds a lot like the two of you work for one of Honey's competitors. You both are coming across as obtuse to the point where I wonder if it's intentional.
Oh wait, you say you're just a guy on the internet and you don't work for anyone in the industry? Yeah, pal, same here. The difference is that I base my comments on having used Honey as a customer, not on some random comment based on a random comment by someone who hasn't actually used the product we're all talking about it.
It's fine if you guys want talk out of your rears but at least be honest about what you're doing.
Reason077 1609 days ago [-]
> ”and direct those purchasers to the cheapest site in exchange for a commission.”
This is incorrect. Honey does not redirect you to different/cheaper retailers.
Honey is a browser plugin which applies coupon codes (scraped from the web) to reduce the cost of the purchase from the retailer at the checkout phase.
BLanen 1609 days ago [-]
Thanks, Honey PR.
birdyrooster 1609 days ago [-]
Be warned your comment is likely in violation of the the Guidelines:
Please don't post insinuations about astroturfing, shilling, brigading, foreign agents and the like. It degrades discussion and is usually mistaken. If you're worried about abuse, email us and we'll look at the data.
How are online retailers ok with this? Surely this violates referral kickback ToS or something? Doesn't seem fair to not pay the _real_ referrer that leads to a purchase.
sturgill 1610 days ago [-]
Rewards and coupon websites are notorious for leaching off the affiliate process without driving much incremental revenue. In the heyday of ABestWeb.com they coined the phrase ParasiteWare for places that stuff cookies like this.
The overall affiliate channel has become increasingly challenging to manage profitably from a merchant perspective. But it’s very easy for a “manager” to see all of the sales affiliates “drive” and assume that it’s making them money.
If you let affiliate sell for you, you had better invest in a professional affiliate manager that you can trust. If you source it to an intern you’ll lose a ton of money to leeches and fraud.
mmanfrin 1610 days ago [-]
> that stuff cookies like this.
It should be noted that cookie stuffing is a term for a specific process where a site will inject cookies for thousands of sites with their own referral code on pageload of a landing site they control. It is highly illegal and people have served jail time for it, as it is considered fraud.
What coupon sites do is they tend to hide codes behind a button that onclick will load the retailer's site with their affiliate code, then show the code.
55555 1609 days ago [-]
Sure, you can note that, and that's helpful, but other than in the strict legal sense, many coupon code sites do engage in other forms of coupon stuffing. For example, many display fake coupons which don't exist or which they know are expired, and which you must click to reveal. Upon clicking, the target site opens in a new window, and a cookie is dropped. The user was already buying the product anyway, and perhaps another affiliate was set to get the referral commission, but now this accidental popup has stolen it for the coupon site, and there's no coupon to be found. No value delivered for merchant or customer, but the coupon site makes money.
There's a lot of forms of cookie stuffing that are legal, or at least grey, and still seem to me like cookie stuffing, even though they aren't standard, clear-cut, illegal cookie stuffing fraud.
mmanfrin 1609 days ago [-]
That's not cookie stuffing, that's just being deceptive. Cookie stuffing doesnt just mean sending a user to an affiliate link, it means specifically loading unrelated sites, usually in the background (or used with js/flash). I'm noting it because you're using the wrong term.
I disagree that there is a monopoly on the term. But even if we accept that, my example meets the requirements of the page you linked. Read it more carefully.
Flenser 1610 days ago [-]
What about services like revlifter[1] where you put their script on your basket page and they give customers offers based on their basket contents?
I don’t know anything about revlifter. But I’ve been in this space long enough that I’m skeptical of most claims.
I usually try to build flows now that don’t ask for coupon codes at checkout (because that leads to deal searching right at the last moment). I prefer dedicated URLs with embedded offers as much as possible.
If you need to go the coupon code route, I recommend how Namecheap does it: they registered a unique domain (namecheapcoupons.com) that publicly list all coupon codes. They rank #1 in organic search results.
But, as a general rule, I encourage you to avoid working with deal sites and coupon affiliates. This is a general rule, but they tend to drive very little incremental revenue. You should also disallow any PPC campaigns using your branded terms.
treebornfrog 1610 days ago [-]
This seems very similar to yieldify.com
jartelt 1610 days ago [-]
I imagine the retailer just cares about getting the sale and doesn't really care who they pay the 2% (or whatever) commission fee to? Shouldn't make too much of a difference whether they pay the commission to Honey or to some random blog.
It certainly sucks for the blogs and websites trying to fund their content with affiliate links though. Someone like Wirecutter can spend time and money on reviewing items and then can lose out on the referral commission in the end.
zten 1610 days ago [-]
They do care. Some affiliate rates are far higher than that.
Affiliate comes out of retailer marketing budgets. They set the rates thinking they're paying for certain types of customers from certain participants. Honey is getting paid what the retailers think it's worth - they're skeptical, but it seems to be driving incremental conversion for especially price-sensitive shoppers.
patd 1609 days ago [-]
Coupons affiliates typically get a lower rev share than others. It may be cheaper for retailers to have them if they don’t care about pissing off their others affiliates (most are too small to get their voice heard)
zten 1609 days ago [-]
I think we're in agreement. The numbers through Honey probably look good, and the other affiliates probably don't have a good handle on how frequently they're getting scooped by other affiliates.
wongarsu 1609 days ago [-]
But if the other affiliates are more valuable then merchants do care if they piss them off. After all they want those high value affiliates to continue doing what they are doing
patd 1609 days ago [-]
90% of affiliates are very small players that don't have any bargaining power. In most modern platforms, all the referrers are tracked.
I'm pretty sure that big players do complain and they'll get a "first cookie" or at least partial attribution for the sales they make.
wongarsu 1609 days ago [-]
They have no individual bargaining power, but that doesn't mean they can be ignored. The more you ignore them the more go to greener pastures, the more you do for them the more resources they focus on your business.
patd 1609 days ago [-]
In theory, yes. But that's not my personal experience (I'm mostly active in Europe).
shamblesRed 1610 days ago [-]
This is simply not true. I don't think anyone would pay $4 billion for a referral stealing chrome extension anyway
CydeWeys 1610 days ago [-]
They're paying for the large existing userbase, regardless of how that large userbase was acquired.
shamblesRed 1609 days ago [-]
Sure! But just 17 million user by itself isn't worth $4 billion. It's the value brought in per user. There's no figuring out what you want and what are your interests like with social media platforms, it's straight forward giving away info about what you want to buy, what will make you buy it etc.
Just look at Honey Droplist https://www.joinhoney.com/features/droplist. Let's say that I wanted to buy a product but I think I'd rather buy it at 5% off. Or let's say that I just put it on droplist for no reason and am not that interested to buy it. Honey could literally provide this information to retailers and suggest price drops and email honey users to create demand. Now, when you see a 10% price drop notifications, you being prone to scarcity are so much more likely to buy. And that's why this data is so valuable.
Now on top of this, you got rewards programs, payment splitting programs (https://www.joinhoney.com/honeypay/overview) (which provide yet another advantage, you got a discount but still can't afford to pay, how about you only have to a quarter of the price right now?), a mobile app with 100+ stores integrated in a single app, it adds up!
bonestamp2 1609 days ago [-]
Those are all good points. I believe paypal wants Honey for one thing, to insert themselves in the middle of the checkout process and offer incentives to complete checkout using their payment service.
CydeWeys 1608 days ago [-]
Are you sure it's not worth that much? That's only $235 per user. Given how affiliate revenue can easily approach 10%, and their average user probably spends thousands of dollars online per year, it seems easily within the bounds of reason to me.
t0ughcritic 1610 days ago [-]
Agreed. Most people just don’t understand how it could be so simple or how honey makes so much.
jartelt 1609 days ago [-]
"...PART of what they do..."
Paraesthetic 1609 days ago [-]
They are probably looking to direct people to use paypal, or find out what sites aren't using paypal that are driven with high traffic
pjc50 1609 days ago [-]
It's interesting to compare this discussion with how adblockers are treated. Either we're in favour of the user having control of the operation of their browser, including delegating that to extensions, or we're not.
1610 days ago [-]
kevindong 1610 days ago [-]
Major retailers typically have affiliate programs in which if an affiliate (say Honey) refers a customer to the retailer and the customer then makes a purchase, then the retailer will pay out a commission to the affiliate.
This model is substantially similar to RetailMeNot, except Honey will automatically try every coupon they know of for you automatically.
danShumway 1610 days ago [-]
But when does Honey ever refer a customer to a product? My impression is that you only ever use Honey when you're already about to make a sale -- you go to the product page, and Honey finds a discount for you.
I'm not super familiar, does Honey run any advertisements or recommendations for products? It makes sense why I might pay a blogger affiliate revenue for referring a reader to my product, but I'm not going to pay someone an affiliate link to someone who claims they influenced a purchase decision where the customer is already sitting on the checkout page. If I go to an Amazon product page, will Honey give me a recommendation for a different product that's lower priced?
kornish 1610 days ago [-]
If you were going to buy something from Amazon and Honey tells you it's cheaper at Walmart, Walmart would reasonably want to pay Honey for driving business to them.
etxm 1610 days ago [-]
Most affiliate networks are pretty shit about tracking. Last click attribution is how it generally works. Some have started keeping track of when you landed vs when you got the affiliate link, but it’s a grey area as far as user intent.
Let’s say I got to checkout and after tax and shipping the product was too expensive. I use Honey or search for a coupon and the price goes down and I complete a sale.
Did the deal site offer value? Arguable.
dwoozle 1610 days ago [-]
That happened to me literally an hour ago. I checked out and when the shipping was added the price felt high. I left the cart open and started browsing Reddit. I was waffling on the purchase. Then I remembered to Google for coupon codes and I found one and put it in and at the new price I checked out.
sjg007 1610 days ago [-]
This is probably why honey is legit
1610 days ago [-]
bonestamp2 1609 days ago [-]
> does Honey run any advertisements or recommendations for products?
They can drive a sale by tracking prices and notify you of a drop in price. That might be one case where they help make a sale that wasn't otherwise going to happen.
pbreit 1610 days ago [-]
I don’t like to hate on acquisitions especially by smart companies like PayPal but I don’t understand this one at that price. I’ve tried Honey several times and it’s mostly annoying. I suppose one could save a buck or 2 here and there but that’s about it. And you’ll end up at a retailer with lousier total offering.
viraptor 1609 days ago [-]
Not a huge fan of honey, but I'm happy to extract back any stupid money that went into marketing rather than the product. I saved ~$200 directly over a few months and got $100 voucher waiting. It's not a huge amount, but it's also more than pocket change. That's without actually switching retailers, just using it where I'd buy things anyway.
gnicholas 1609 days ago [-]
What are the privacy implications? Do they have access to your full browsing history? Or can you limit them to just amazon.com and a few other domains?
viraptor 1609 days ago [-]
They do have access. Whether they use it or not... not sure. It would be interesting to check. I assume everything in the same browser profile is compromised either on purpose or by accident.
bonestamp2 1609 days ago [-]
I agree with you on the value of honey as a consumer, although I'm guessing we're not the main targets for this kind of plugin. But, I think you have to look at it from the perspective of PayPal's core business: payment services. My guess is that paypal wants honey because honey lives in the checkout of every website when the plugin is installed.
PayPal can increase their own revenue by offering incentives for people to checkout with PayPal (instead of another payment service). Maybe someday they could even offer payment services on sites that don't even accept paypal, at least more easily integrate with those sites for Honey users.
They could also sell extended warranties, or resell 3rd party ones as many retailers now do.
harikb 1610 days ago [-]
No, Honey knows about "intent to purchase" - which is very valuable. And same intent will be sold to a million merchants even though the person will only buy from one.
There is money to be made, it is theirs to lose. However, considering it is PayPal.... who knows.
delusional 1610 days ago [-]
Supposedly they make money from referrals, so if you buy something from Amazon, they load in their referral link.
From what I've heard they don't actually sell purchase data. I don't know for sure though.
I don't understand how referrals are worth 4b though.
bradlys 1610 days ago [-]
I don't think Amazon works with them anymore for referrals? Other websites might though.
Rakuten/ebates works the same way. You go to a website, turn on the referral program, and then the plugin will send you a physical check in the mail once you hit a minimum amount (and it will be at most quarterly).
If you have customers spend $1B+ quarterly using these plugins and you get maybe 1% cut then you're getting $10m cash/yr plus all kinds of browsing data to sell analytics on.
tzs 1610 days ago [-]
What they claim on their "About" page [1] is:
> Our Business Model
> We earn a commission from stores when you find savings. What we don't do is sell or share your data (you can read our Privacy Policy here)
> We're building a better way to shop, one that saves you time and money, even if there's less in it for us. If this sounds like a new way of doing things, you're right.
They're very specific about the actual meaning of "your data". By any basic understanding of "selling your data", Honey does exactly that.
> We may also share information in the following cases
> with your express consent
> in an aggregate or anonymized format that does not identify any specific person;
These cases are ORs, not ANDs. Whenever any company sells your personal info, it's always anonymized and aggregated. I can't just buy Facebook or Google data of a specific person, and I think almost anyone would agree those companies do "sell your data."
Also the 5th item in that list says they may sell your data if:
> with a buyer or successor if Honey is involved in a merger, acquisition, or similar corporate transaction. If that happens, you will be notified via email and/or a prominent notice on the Website of any change in ownership, as well as any choices you will have as a result.
sieabahlpark 1609 days ago [-]
You can just not use the service or delete your data. It's a CA company that by law must abide by CCPA so you know your data is deleted except for regulatory purposes
squeaky-clean 1607 days ago [-]
I don't use the service, and for the reasons I mentioned in my comment. But saying they do not sell your data because some non legally binding webpage says so is not true and that is the point of my comment.
dawnerd 1610 days ago [-]
In a way they did just sell all your data...
anthony_doan 1610 days ago [-]
Referrals.
They work with other companies, and these companies give them a unique code to apply for discount. When users use these code they get a commission. It's like CJ (commission junctions www.cj.com) that many other websites such as slickdeals uses. I used to work for one of these start up that does slickdeals like websites.
They're exactly like Rakuten.
You use their browser extension and they'll apply the code for you automatically. I believe all of these codes are via cookies.
Reason077 1609 days ago [-]
> ”How does Honey make money, aside from the obvious data collection?”
Online retailers typically pay a “referral fee” to websites that direct traffic to their store using affiliate links.
There has long been a whole genre of “cashback” websites which take advantage of this by paying the referral credit (or some of it) back to the end user. This UK link lists some and explains how they work:
Honey is a bit different, because they pocket the referral fee for themselves, but attempt to save the user money by automatically checking/applying coupon codes that they scrape from the web.
Honey claims they do not make any money from selling data to third parties.
Honey also does not, in my experience, attempt to redirect you to other retailers as some other comments have suggested.
etxm 1610 days ago [-]
Last click attribution, baby. Get those affiliate fees for 30 days after click on some sites.
I worked on a competing product some years back there is much money to be had in the deal/affiliate/coupon space.
Our biggest mistake was going hard on SEO. We got the google rug pulled out from under us and quickly burned all of our capital trying to do click arbitrage.
Going after browser installs is a pretty ~sneaky~ savvy way to keep a user base.
willart4food 1610 days ago [-]
> How does Honey make money, aside from the obvious data collection?
Affiliate commission from the online vendors.
gadders 1609 days ago [-]
I don't know, but recently they saved me £20 on a £60 purchase, so I'm a fan :-)
undefined3840 1610 days ago [-]
Generally these coupon sites all make money the exact same way - through affiliate programs that pay them some % of the purchase price for referring a customer to their site.
Honey shares the savings with the customer.
1610 days ago [-]
kart23 1610 days ago [-]
I think honey by itself probably doesn't make much if anything. Integrated with PayPal however has the potential to become a big earner in terms of fees and new customers.
1610 days ago [-]
wp381640 1610 days ago [-]
I pulled the Honey extension a while ago to poke through it in order to better understand it and the first interesting thing I found is that despite the Google order that they'll no longer allow obfuscated Chrome extensions[0] the Honey extension is still - a year later - a large 2MB+ Javascript blob (webpack compiled and minified) [1]
I've been meaning to go back into it to figure out what exactly they're doing but never found the time
$4B cash on an extension that is at the mercy of Google and it's ever-changing rules and sporadic enforcement seems a risk
AFAICT, Google allows minified extensions, just not obfuscated ones. A quick browse through the Honey source code suggests to me that they are appropriately minifying and not obfuscating, because many of their variable names are comprehensible.
seanwilson 1610 days ago [-]
> appropriately minifying and not obfuscating, because many of their variable names are comprehensible
Wouldn't most scripts run through a minifier have incomprehensible names?
grenoire 1609 days ago [-]
There are also JS maps which allow you to download the obfuscated blob but still view more or less what is the original code; used for debugging React/JSX code, for example.
np_tedious 1609 days ago [-]
Outside of OSS, these are not frequently shared with the public. Is Honey's?
meowface 1610 days ago [-]
Yes, if set to maximum minimization. They might retain the original names to help with debugging, possibly.
seanwilson 1609 days ago [-]
Chrome extensions allow minimisation, including destroying the original names. I'm curious how they review the extensions to be honest as they don't ask you to provide the source code or the source map.
kevindong 1610 days ago [-]
$4 billion acquisition price / 17 million monthly active users [0] = $235.29 per active monthly user
Given the timing, network effects, potential, address book data and $0 CAC, they were stealings and I can’t believe Honey sold for $4B. Sounds off by x5+
josephjrobison 1610 days ago [-]
You’re saying Honey is worth $20B?
namibj 1610 days ago [-]
Pretty sure parent means the other direction.
jacurtis 1609 days ago [-]
He is saying it is 5x too high. So the valuation should be 1/5th (20%).
So he is suggesting a valuation of $800,000,000 ($800M). Which in my opionion is about right.
That puts the value per user right at $47 per user. Again, which given PayPal's previous acquisitions, looks accurate.
rasz 1609 days ago [-]
Skype : $240/user
Broadcast.com: $10,000/user
mrfusion 1610 days ago [-]
Couldn’t you basically start any website and pay users $200 and get as many users as you want?
thesausageking 1610 days ago [-]
That's literally what PayPal did. They gave users $20 if you created an account. Over time, they lowered it to $10 and then $5. The program cost them ~$70m, but let them grow at 7-10% / day. They went from 800k accounts in March of 2000 to 4m in September, and then 11m in September of 2001.
beaverden 1609 days ago [-]
Reminds me of the Monese rush my colleagues have. I heard they're giving referral money to both the inviting and the invited.
So far, I've seen only the person who actively invites people to actually use it, because no one else actually needs it in the heavy presence of Revolut in our market.
Basically, if you give away money, make sure people are actually using the product
jaredsohn 1610 days ago [-]
>but let them grow at 7-10% / day.
not seeing that math
gonesilent 1610 days ago [-]
Also jet.com subsidizing sales.
pg_is_a_butt 1610 days ago [-]
I paid for a semester of college at least thanks to that paypal program... I think it started out at $75 referral... then $50 to you and $50 to them, then 50/25, 25/25, 10/25, etc.
Within a month everyone on campus had an account.
baddox 1610 days ago [-]
In order to do that and get PayPal to acquire you for at least that much money, you'd have to convince PayPal that your users also spend money that makes it back to you. Honey's pitch probably wasn't just "we have x daily active users," but rather something like "we have x daily active users who are big e-commerce spenders, and we can make money by connecting our users with retailers."
smt88 1610 days ago [-]
Yes, but when potential investors or acquirers were doing their diligence, they'd find out that your cost of user acquisition was extremely high.
It's likely Honey did have a high cost of acquisition, but nowhere in the ballpark of $200/user.
swampthinker 1610 days ago [-]
Except you also need to get money from those users on a recurring basis.
objektif 1610 days ago [-]
Yeah but they would not be active.
gravypod 1610 days ago [-]
That's something PayPal did initially.
etxm 1610 days ago [-]
Yeah that was the first thing I calculated when I read that. That’s pretty nuts. Having an installed use base helps. They’ll continue to make cash off a large portion of checkouts.
hnburnsy 1610 days ago [-]
If you use Edge on Android, Honey is a built in extension, but not enabled. Go to settings then coupons to see it lurking there. Thought it was weird that Microsoft would partner with such a weird company. Having a deal with Microsoft may have given them Street cred.
gonesilent 1610 days ago [-]
Looks like pay to play worked for them.
shamblesRed 1610 days ago [-]
Feel like a lot of people don't understand what business Honey is in. And a lot of the times they're not even familiar with the whole lineup of Honey products. Knowing someone's intent to purchase is very powerful. You're literally giving information about what you want to buy, what price you might buy at etc. Plus deals, coupons, price drops etc make manipulation really easy. $4B might be a bit too much but still, this adds a lot of value to Venmo. I'd say it was a good buy! But yeah people calling it a scam etc. are unaware of the company. Maybe because they weren't as publicized as Bay Area companies or didn't raise too much money
_1qd4 1609 days ago [-]
You don't understand how fickle technology is and how fickle users are. It's a browser plugin, it takes 2 seconds to uninstall. This entire company could disappear in a flash if something about the plugin ecosystem changes, or if e-commerce habits change to be more mobile oriented. They have absolutely 0 stickiness. Most of their users probably installed the plugin during their initial marketing push and have forgotten to turn it off.
1609 days ago [-]
undefined3840 1610 days ago [-]
That might be one of the best exits you could hope for as a founder or startup employee. Very little money raised to get to that valuation.
devicetray0 1610 days ago [-]
Pertinent data points from the article:
> $4 billion, mostly cash
> 17 million monthly active users
> 350 employees
> profitable on a net income basis, 2018
> raised $49 million from investors
yellow_lead 1610 days ago [-]
I know it's apples and oranges, but when I compare this to the Instagram acquisition (1B) in my head, I'm truly stunned.
tr33house 1607 days ago [-]
A lot of people agree that Instagram was sorely underpriced and was a steal for fb
maerF0x0 1610 days ago [-]
CamelCamelCamel had no idea what it was worth, Retailmenot missed the boat, wikibuy can now market itself for 4B to Square or something.
“ According to RetailMeNot’s suit, Honey infringes on U.S. Patents 9,626,688; 9,639,853; 9,953,335; and 9,965,769, which detail technologies related to things like facilitating access to promotional offers, merchant offers and coupon codes.”
Gross!
durbin 1610 days ago [-]
Wikibuy was already acquired by Capital One.
Hydraulix989 1609 days ago [-]
What about Wikibuy is a wiki?
joncrane 1609 days ago [-]
Wiki means fast in Hawaiian.
It came to be synonymous with online community editable websites for information.
But it's original meaning is from the Hawaiian phrase "wiki wiki" which means quickly.
So it makes sense. Quickbuy.
appleflaxen 1607 days ago [-]
that's the origin, but not exactly what the contemporary computer meaning is (which is more like "crowd-sourced")
liveoneggs 1609 days ago [-]
wikipedia has tons of goodwill so calling yourself "wiki"-something is excellent free marketing
You might find this useful: if you are worried about what's happening with your data with an alternative like Honey, or you actually want to compare prices while shopping on Amazon (which clamps down on anyone trying to offer price comparison or price history graphs)
Please note that this is quite rough, and can do with a number of feature improvements (we haven't had the time to get back to it)
nerdkid93 1609 days ago [-]
you can get price history graphs from CamelCamelCamel for Amazon products
> data collection companies that have tried to buy user data
> We turned them all down.
Guess that didn't last long.
celim307 1609 days ago [-]
I mean, whenever a company says they dont sell user data, they just mean they haven't found a price they like yet
darianlamberto 1609 days ago [-]
it wasn't an employee, it was a founder doing a calculated marketing campaign that they bragged about in a seed funding deck
which i wish i had bought into at the time..
eaenki 1610 days ago [-]
Even if the data is highly valuable and it’s not losing money, I don’t see how it’s worth $4B with 17M users. Sounds off by like x5
graphememes 1610 days ago [-]
I thought honey was a pure scam, it's not?
strbean 1610 days ago [-]
They are EBates, without the cash back. They just auto-plug coupons into coupon code forms and take the referral money.
viraptor 1609 days ago [-]
Technically without the cashback. In practice you still connect honey gold which converts into vouchers, so it's really like 1-2% cashback.
strbean 1608 days ago [-]
Interesting, didn't know about that aspect of Honey!
tbh, my experience with EBates (and promo codes in general) is that retailers hardly run promo codes anymore. It seems most codes now are individualized, probably as a reaction to the adoption of tools like these.
1610 days ago [-]
crankylinuxuser 1610 days ago [-]
I was in the same boat. The few ads that got past my adblocker indicated the site was borderline porn-scammy. I stayed as far as I could away.
They feel similar as "Wish". Just as terrible. Don't trust them.
WrtCdEvrydy 1610 days ago [-]
They take referral links when you go to Amazon and in exchange they just try multiple coupon codes.
hello_1234 1610 days ago [-]
Honey sponsors a lot of youtube personalities. I remember Mr Beast talking about them. Seems like it paid off.
bballer 1609 days ago [-]
Yeah they sponsored a ton of Yes Theory videos as well. It always felt a tad off, but you're right, it worked.
I, for one, laud PayPal's bold move to acquire such a large future tax write-off.
dyeje 1610 days ago [-]
How is Honey worth even remotely close to 4B. It is a coupon aggregator in a browser extension?
netsharc 1610 days ago [-]
For one thing, userbase (see other replies), for another, there's too much cash floating around looking for good ROI, thanks to governmental policies.
chanchar 1610 days ago [-]
Can someone with a better understanding of Honey's business explain why it's worth $4B?
pcurve 1610 days ago [-]
$100mil+ in revenue. 60-70% probably goes to 300 people payroll. I guess projected numbers are amazing.
1609 days ago [-]
gonesilent 1609 days ago [-]
And the rest +vc money on ad's and paid installs. What the heck did PayPal buy?
twostorytower 1610 days ago [-]
Over 300 employees AND profitable. How many other startups have achieved that?
Bootwizard 1610 days ago [-]
Sure but HOW does it make money?
twostorytower 1610 days ago [-]
I believe they’re an affiliate of many of the popular shopping sites. So they get a cut of any sales they help drive.
gonesilent 1610 days ago [-]
Nope, it got kicked out of most of them. It makes money by retailers paying them to push deals.
willart4food 1610 days ago [-]
$235 per active user, and a mostly cash deal.
That sounds like one of those dot-com's deals.
myskier 1610 days ago [-]
Honey permissions in Safari Browser:
1. Can see all webpages in browsing history
2. Can read sensitive information from webpages, including passwords, phone numbers, and credit cards on all webpages
saagarjha 1610 days ago [-]
That’s the standard warning for extensions that inject their scripts on every page.
asar 1609 days ago [-]
As others have mentioned, at first sight, this seems like a crazy valuation at $235.29 per monthly active user. But customer acquisition costs for financial products can be a lot higher than that. Honey is close to the payment process, this must be very valuable to PayPal, maybe because it gives them a clear advantage over other PSPs or because they can offer merchants another way to increase revenues and customer satisfaction. The tech might also provide an easier way to enter new markets since it would distinguish PayPal from other payment providers, i.e., entering a new market as the payment provider that's secure and lets you save money.
foobaw 1610 days ago [-]
How rich will this make Honey employees? Especially the early ones?
twostorytower 1610 days ago [-]
The co-founders will be billionaires. Early employees will be millionaires. The earliest probably high 8 figures.
1609 days ago [-]
whalesalad 1610 days ago [-]
A tenth of one percent of that acqusition amount is ~4 million.
airstrike 1610 days ago [-]
Very rich
darianlamberto 1609 days ago [-]
rich enough not to use coupons anymore
yalogin 1609 days ago [-]
Honey is very similar to the ad programs we had during the early 2000s. People used to get paid for clicking on ads. Now the same idea is repackaged and used to gather browsing data and it’s worth 4billion? Why don’t companies look at the downside before buying these? One single privacy issue will kill the whole product. This is like buying a new car, PayPal already has Lot less than 4billion in its hands.
giarc 1609 days ago [-]
When I was a young teenager, I remember using one called AllAdvantage (IIRC). I believe you earned money by simply having the extension open while you browsed. Cash out minimum was supposed to be $20, but once I hit that mark, the minimum all of sudden changed. I never got my money.
rgbimbochamp 1610 days ago [-]
Isn't this just a chrome extension that shows up in ads everywhere?
nellyb84 1606 days ago [-]
there's an amazon app extension that does something super similar to this. "Amazon Assistant" - https://www.amazon.com/gp/BIT
syshum 1609 days ago [-]
So will they now ban people from using Coupon's based on their political beliefs too?
chirau 1610 days ago [-]
In what world is Honey worth 4b?
yjhoney 1610 days ago [-]
Winnie the Pooh
dboreham 1610 days ago [-]
A new high water mark in "they paid $x for a company I never heard of?!?"
1610 days ago [-]
xfitm3 1610 days ago [-]
One scummy company acquiring another.
1605 days ago [-]
datavirtue 1610 days ago [-]
The rampant consolidation continues....
sarcasmatwork 1610 days ago [-]
I'm more amazed people still use Paypal in today's society.
hello_1234 1610 days ago [-]
Venmo, owned by paypal, is very popular in the US. People use to split expenses among friends.
rconti 1610 days ago [-]
It's so odd, because Venmo is both newer than PayPal, yet limited in the same stupid ways PayPal is (multi-stage xfers), which Square Cash avoids entirely.
It's perplexing to me that Venmo ever caught on.
airstrike 1610 days ago [-]
Network effects. Square Cash is vastly superior but Venmo is the incumbent so it's hard to tell your friends "no, I have this other cash app you should install instead"
It transfers to your Venmo balance and not directly to your bank account.
Infinitesimus 1610 days ago [-]
Venmo caught on likely because of Facebook integration
birdyrooster 1610 days ago [-]
Also the whole publishing all of your transactions on the public internet by default was a really good feature.
kevindong 1610 days ago [-]
Importantly however, Venmo doesn't make money on peer to peer transactions that use bank accounts, which I'd imagine is what most people do as that's free.
Venmo transactions' data and the social network inferences you can make from them are probably pretty valuable on their own.
idunno246 1610 days ago [-]
I don’t see how that data is all that valuable. There’s the inherent network effect of needing to install it to send/receive money from a friend who did.
But a surprising number of people will pay for instant transfer(almost all of that 300m probably comes from this), and the debit cards they get to take in a portion of the merchant transaction fees. They’ll probably be profitable off that, with p2p as a loss leader to drive installs
kevindong 1610 days ago [-]
But Venmo/PayPal don't have any ads?
Furthermore, just because you can link people together, it doesn't mean that knowledge is actually valuable. The only social network you can link to Venmo currently is Facebook. The only other way to "discover" contacts/friends is by uploading your contact book to Venmo's servers.
texasbigdata 1610 days ago [-]
Its marginally better for online shopping than Visa and Mastercard. No address and zipcode and depending on authentication settings significantly less friction to purchase. Its surprising PayPal isn't everywhere.
Small data point but personally maybe 5 or 6 of last 20 online purchases have been PayPal.
YRMV
ceejayoz 1610 days ago [-]
I'd much rather use PayPal for a smaller retailer than give them my credit card number directly. If they get compromised, it's a lot less grief for me.
imtringued 1610 days ago [-]
Paypal effectively has a monopoly.
windsurfer 1610 days ago [-]
It's often the only choice.
durbin 1610 days ago [-]
Reading these comments has actually made everyone in the room less intelligent.
durbin 1607 days ago [-]
You may downvote me all you wish, I stick by my comment. haha. These are really bad takes.
Rendered at 17:58:08 GMT+0000 (Coordinated Universal Time) with Vercel.
I know a few people who use it, and I've cautioned them in the past that I can't think of any savory business model that would make this profitable.
Is there one? Is it just tracking purchases for advertisers, or is there some other monetization strategy I'm missing? Their main site says they make commissions, but I don't know how to square that with the way consumers use it -- which is to find coupons from other sites.
Honey isn't like a credit card, is it? If I'm a retailer, I don't know why I'd pay a company money for them to scrape coupons from other sites -- and it's not like Honey is going to stop scraping coupons for my products if I don't pay them money, right?
In some sense Honey can steal the affiliate commissions from blogs and other websites since you use Honey right before the sale.
They capture the most valuable sales--i.e., those made with the immediate intent to purchase--and direct those purchasers to the cheapest site in exchange for a commission.
It comes down to a question of what is more valuable to the seller. The blogger may have created the intent to purchase the product but Honey created the intent to purchase from the specific seller. And to the seller, that is far more valuable, especially as a lot of Honey-generated sales may have been sales that would have otherwise gone to competitors.
They insert themselves on the cart page which is the final step of the purchase funnel when the product, the seller and the purchase has already been decided.
For the blog, the outcome is the same as if you took the time to price shop manually and ended up picking a different retailer. Honey's just automating that process.
I'm getting their points from doing online grocery order directly from the supermarket site for example.
Based on what you surmised, Honey essentially acts as a middle man between two businesses. Did I get that right or am I missing something here?
This is no different then a user visiting a different website about the same product and clicking through the affiliate link on that new blogger's page before making the purchase.
Sorry if this is a dumb question, but I don’t use honey so don’t know the mechanics of how it works.
However, I have used their add-on and it does not work the way you described.
Oh wait, you say you're just a guy on the internet and you don't work for anyone in the industry? Yeah, pal, same here. The difference is that I base my comments on having used Honey as a customer, not on some random comment based on a random comment by someone who hasn't actually used the product we're all talking about it.
It's fine if you guys want talk out of your rears but at least be honest about what you're doing.
This is incorrect. Honey does not redirect you to different/cheaper retailers.
Honey is a browser plugin which applies coupon codes (scraped from the web) to reduce the cost of the purchase from the retailer at the checkout phase.
Please don't post insinuations about astroturfing, shilling, brigading, foreign agents and the like. It degrades discussion and is usually mistaken. If you're worried about abuse, email us and we'll look at the data.
https://news.ycombinator.com/newsguidelines.html
The overall affiliate channel has become increasingly challenging to manage profitably from a merchant perspective. But it’s very easy for a “manager” to see all of the sales affiliates “drive” and assume that it’s making them money.
If you let affiliate sell for you, you had better invest in a professional affiliate manager that you can trust. If you source it to an intern you’ll lose a ton of money to leeches and fraud.
It should be noted that cookie stuffing is a term for a specific process where a site will inject cookies for thousands of sites with their own referral code on pageload of a landing site they control. It is highly illegal and people have served jail time for it, as it is considered fraud.
What coupon sites do is they tend to hide codes behind a button that onclick will load the retailer's site with their affiliate code, then show the code.
There's a lot of forms of cookie stuffing that are legal, or at least grey, and still seem to me like cookie stuffing, even though they aren't standard, clear-cut, illegal cookie stuffing fraud.
https://en.wikipedia.org/wiki/Cookie_stuffing
[1] https://revlifter.com
I usually try to build flows now that don’t ask for coupon codes at checkout (because that leads to deal searching right at the last moment). I prefer dedicated URLs with embedded offers as much as possible.
If you need to go the coupon code route, I recommend how Namecheap does it: they registered a unique domain (namecheapcoupons.com) that publicly list all coupon codes. They rank #1 in organic search results.
But, as a general rule, I encourage you to avoid working with deal sites and coupon affiliates. This is a general rule, but they tend to drive very little incremental revenue. You should also disallow any PPC campaigns using your branded terms.
It certainly sucks for the blogs and websites trying to fund their content with affiliate links though. Someone like Wirecutter can spend time and money on reviewing items and then can lose out on the referral commission in the end.
Affiliate comes out of retailer marketing budgets. They set the rates thinking they're paying for certain types of customers from certain participants. Honey is getting paid what the retailers think it's worth - they're skeptical, but it seems to be driving incremental conversion for especially price-sensitive shoppers.
I'm pretty sure that big players do complain and they'll get a "first cookie" or at least partial attribution for the sales they make.
Just look at Honey Droplist https://www.joinhoney.com/features/droplist. Let's say that I wanted to buy a product but I think I'd rather buy it at 5% off. Or let's say that I just put it on droplist for no reason and am not that interested to buy it. Honey could literally provide this information to retailers and suggest price drops and email honey users to create demand. Now, when you see a 10% price drop notifications, you being prone to scarcity are so much more likely to buy. And that's why this data is so valuable.
Now on top of this, you got rewards programs, payment splitting programs (https://www.joinhoney.com/honeypay/overview) (which provide yet another advantage, you got a discount but still can't afford to pay, how about you only have to a quarter of the price right now?), a mobile app with 100+ stores integrated in a single app, it adds up!
This model is substantially similar to RetailMeNot, except Honey will automatically try every coupon they know of for you automatically.
I'm not super familiar, does Honey run any advertisements or recommendations for products? It makes sense why I might pay a blogger affiliate revenue for referring a reader to my product, but I'm not going to pay someone an affiliate link to someone who claims they influenced a purchase decision where the customer is already sitting on the checkout page. If I go to an Amazon product page, will Honey give me a recommendation for a different product that's lower priced?
Let’s say I got to checkout and after tax and shipping the product was too expensive. I use Honey or search for a coupon and the price goes down and I complete a sale.
Did the deal site offer value? Arguable.
They can drive a sale by tracking prices and notify you of a drop in price. That might be one case where they help make a sale that wasn't otherwise going to happen.
PayPal can increase their own revenue by offering incentives for people to checkout with PayPal (instead of another payment service). Maybe someday they could even offer payment services on sites that don't even accept paypal, at least more easily integrate with those sites for Honey users.
They could also sell extended warranties, or resell 3rd party ones as many retailers now do.
There is money to be made, it is theirs to lose. However, considering it is PayPal.... who knows.
From what I've heard they don't actually sell purchase data. I don't know for sure though.
I don't understand how referrals are worth 4b though.
Rakuten/ebates works the same way. You go to a website, turn on the referral program, and then the plugin will send you a physical check in the mail once you hit a minimum amount (and it will be at most quarterly).
If you have customers spend $1B+ quarterly using these plugins and you get maybe 1% cut then you're getting $10m cash/yr plus all kinds of browsing data to sell analytics on.
> Our Business Model
> We earn a commission from stores when you find savings. What we don't do is sell or share your data (you can read our Privacy Policy here)
> We're building a better way to shop, one that saves you time and money, even if there's less in it for us. If this sounds like a new way of doing things, you're right.
[1] https://www.joinhoney.com/about
> We may also share information in the following cases
> with your express consent
> in an aggregate or anonymized format that does not identify any specific person;
These cases are ORs, not ANDs. Whenever any company sells your personal info, it's always anonymized and aggregated. I can't just buy Facebook or Google data of a specific person, and I think almost anyone would agree those companies do "sell your data."
Also the 5th item in that list says they may sell your data if:
> with a buyer or successor if Honey is involved in a merger, acquisition, or similar corporate transaction. If that happens, you will be notified via email and/or a prominent notice on the Website of any change in ownership, as well as any choices you will have as a result.
They work with other companies, and these companies give them a unique code to apply for discount. When users use these code they get a commission. It's like CJ (commission junctions www.cj.com) that many other websites such as slickdeals uses. I used to work for one of these start up that does slickdeals like websites.
They're exactly like Rakuten.
You use their browser extension and they'll apply the code for you automatically. I believe all of these codes are via cookies.
Online retailers typically pay a “referral fee” to websites that direct traffic to their store using affiliate links.
There has long been a whole genre of “cashback” websites which take advantage of this by paying the referral credit (or some of it) back to the end user. This UK link lists some and explains how they work:
https://www.moneysavingexpert.com/shopping/cashback-websites...
Honey is a bit different, because they pocket the referral fee for themselves, but attempt to save the user money by automatically checking/applying coupon codes that they scrape from the web.
Honey claims they do not make any money from selling data to third parties.
Honey also does not, in my experience, attempt to redirect you to other retailers as some other comments have suggested.
I worked on a competing product some years back there is much money to be had in the deal/affiliate/coupon space.
Our biggest mistake was going hard on SEO. We got the google rug pulled out from under us and quickly burned all of our capital trying to do click arbitrage.
Going after browser installs is a pretty ~sneaky~ savvy way to keep a user base.
Affiliate commission from the online vendors.
Honey shares the savings with the customer.
I've been meaning to go back into it to figure out what exactly they're doing but never found the time
$4B cash on an extension that is at the mercy of Google and it's ever-changing rules and sporadic enforcement seems a risk
[0] https://blog.chromium.org/2018/10/trustworthy-chrome-extensi...
[1] https://robwu.nl/crxviewer/?crx=https%3A%2F%2Fchrome.google....
Wouldn't most scripts run through a minifier have incomprehensible names?
[0]: https://investor.paypal-corp.com/node/10556/pdf
WhatsApp: $55/user
Instagram: $20/user
So he is suggesting a valuation of $800,000,000 ($800M). Which in my opionion is about right.
That puts the value per user right at $47 per user. Again, which given PayPal's previous acquisitions, looks accurate.
Broadcast.com: $10,000/user
not seeing that math
Within a month everyone on campus had an account.
It's likely Honey did have a high cost of acquisition, but nowhere in the ballpark of $200/user.
> $4 billion, mostly cash
> 17 million monthly active users
> 350 employees
> profitable on a net income basis, 2018
> raised $49 million from investors
Gross!
It came to be synonymous with online community editable websites for information.
But it's original meaning is from the Hawaiian phrase "wiki wiki" which means quickly.
So it makes sense. Quickbuy.
https://www.capitalone.com/tech/software-engineering/saving-...
You might find this useful: if you are worried about what's happening with your data with an alternative like Honey, or you actually want to compare prices while shopping on Amazon (which clamps down on anyone trying to offer price comparison or price history graphs)
Please note that this is quite rough, and can do with a number of feature improvements (we haven't had the time to get back to it)
> We turned them all down.
Guess that didn't last long.
which i wish i had bought into at the time..
tbh, my experience with EBates (and promo codes in general) is that retailers hardly run promo codes anymore. It seems most codes now are individualized, probably as a reaction to the adoption of tools like these.
They feel similar as "Wish". Just as terrible. Don't trust them.
I, for one, laud PayPal's bold move to acquire such a large future tax write-off.
That sounds like one of those dot-com's deals.
It's perplexing to me that Venmo ever caught on.
Consequently, Venmo is not profitable.
https://www.cnbc.com/2019/04/24/venmo-has-40-million-users-p....
But a surprising number of people will pay for instant transfer(almost all of that 300m probably comes from this), and the debit cards they get to take in a portion of the merchant transaction fees. They’ll probably be profitable off that, with p2p as a loss leader to drive installs
Furthermore, just because you can link people together, it doesn't mean that knowledge is actually valuable. The only social network you can link to Venmo currently is Facebook. The only other way to "discover" contacts/friends is by uploading your contact book to Venmo's servers.
Small data point but personally maybe 5 or 6 of last 20 online purchases have been PayPal.
YRMV