Author: Rakesh Agrawal

Rakesh Agrawal is a 0-1 product leader. Ex-Amazon, Ex-Microsoft, as well as a number of startups. He tweets at @rakeshsfnyc

Improving Amazon’s GC

Rakesh Agrawal

Supposedly the Amazon app can scan real world objects. But Amazon requires you to manually enter the claim code. You should be able to scan a bar code or QR code to automatically apply the code to your account after logging in. OCR technology is also good enough that you should be able to scan the text as printed.

Amazon has a wide range of gift card products. Some of the responses focused on emailing gift cards and doing things electronically. Amazon already does that.

But Amazon also offers gift cards at retail and through incentive programs. This particular gift card was received through a credit card rewards program. I’m not exactly sure what the magnetic stripe is for, because I can’t swipe it on my computer. My best guess is that it’s for activation.

This particular card doesn’t have the scratch off; cards sold at retail do. (There used to be gift card fraud where crooks would copy down activation codes and wait for them to be activated.)

  • Print the card on card stock so it can be recycled or biodegrade. Whole Foods does this with their gift cards. I’ve seen other gift cards made of a plasticky corn based product.
  • Use all alphabetic characters. The intermingling of numbers and letters makes entering the code on mobile devices especially hard because you have to toggle between keyboards.
  • Make the print of the redemption code larger so that older folks or folks with vision issues can more easily read it.

iTunes already does this, making it easy to redeem Starbucks app and song of the week codes.

The most fundamental flaw in FICO credit scoring

Rakesh Agrawal

Imagine two borrowers.

Borrower 1

  • Has a $20,000 credit limit on 1 card.
  • Is using $5,000 of that credit limit.
  • Makes $25,000 a year.
  • Has no assets to speak of; essentially a net worth of $0.
  • Has a mortgage and a car loan.

Borrower 2

  • Has a $7,500 credit limit on 1 card.
  • Is using $5,000 of that credit limit.
  • Makes $250,000 a year.
  • Has $300,000 in liquid assets.
  • Paid cash for car; mortgage is paid off.

Who is the better credit risk? Most humans would say borrower 2.

But the FICO scoring model would say borrower 1.

The fundamental flaw in FICO is that it doesn’t take into account the income or assets of the borrower. It focuses on things like credit utilization, recent inquiries, etc. Someone who makes $500,000 looking for a $25,000 line of credit is more likely to be able to repay that loan than someone who makes $30,000.

The FICO model has many, many flaws. Another significant one is that it often creates scenarios where doing the economically optimal thing reduces your FICO score. We’ll cover that in a later quiz.

A small change lets PenFed make a lot more money on credit cards

Rakesh Agrawal

photo (5)

PenFed sent me a new Visa without asking. Why?

In one case, it is “Platinum”. In another it’s “Signature.”

The interchange rates for Signature cards are substantially higher than for Platinum cards. The issuing bank can make a lot more on transactions simply by “upgrading” the customer to Signature. This is virtually no cost, aside from re-issuing the cards. There are a bunch of services that come with Signature status (like concierge), but these are low-use services of marginal value.

redesignQuiz: What’s the easiest, most productive way to improve this @uber screen?

Rakesh Agrawal2 Comments

Difficulty: Moderate. Sam got it in about 15 seconds, but she is brilliant.

One small change to this screen would greatly enhance this Uber experience. What is it?

Uber screen

redesignAnswer: What the paper clip is for

Rakesh Agrawal

I use the paper clip primarily for ejecting SIMs. I also some times use it to reset routers and other similar devices.

Other people responded: to clean keyboards (I use business cards for that) and hanging things. Most paper clips probably won’t bear much load, but you could hang light things.

Apparently there a couple of other things people discovered in that photo.