Comments: 1158 • Responses: 82  • Date: 

pm_me_actsofkindness664 karma

A lot of people here seem suspicious of your business model. It feels generally too good to be true.

My question is if this model works for you, why isn’t everyone doing it?

bdonvr666 karma

It's just a gamified version of interest. Though admittedly pretty good interest compared to some banks.

yottasavings432 karma

Yes this is right.

yottasavings327 karma

Our business model is very similar to that of consumer banks. There are many consumer banking products. We just offer this product with a unique spin.

MeowWow_75 karma

Yeah I tried starting this business in college and was pretty much told by banks, angels, even the college that this was unprofitable and has some legal issues with users. This was three years ago

yottasavings98 karma

What were the reasons given? Doesn't make sense to me.

Grodd-12 karma

They are stealing from people with susceptiblity to a gambling addiction.

yottasavings6 karma

Not true at all.

tizz66319 karma

I signed up for Yotta after your last IAMA because it sounded interesting, but honestly after a couple of weeks of interest it was terribly underwhelming. I won a total of $1.90 over the ~5 months I had my money ($2000) in my account.

Obviously I didn't expect to win tons of money, but getting an email each week saying I'd won 15¢ was just a bit lame. It sounds backwards but I think not winning anything would have been less frustrating! I know you don't have the scale of the big lotteries, but I think winning $10 occasionally as a bonus would be more satisfying than 15¢ a week.

Do you hear the same sort of feedback from other users (maybe I'm an outlier), and do you have any plans/ideas on improving the overall experience?

yottasavings203 karma

Yeah we hear this. We've thought about skewing the prize distributions less, but unfortunately with a product like ours, there will be periods where people are unlucky (like your experience). Any feedback on your end or suggestions for how we might be able to improve this?

hellafarious200 karma

Maybe change the drawings to weekly. I stopped looking at the daily notifications.

yottasavings138 karma

Got it - thanks for the feedback.

bareneth285 karma

So how does Yotta make money as a company?

yottasavings401 karma

We earn yield on our deposits and also make money on interchange from debit and credit cards. Very similar to how banks generally make money.

JCDU230 karma

the average household spends over $640 every year on the lottery.


I'd love to see some sauce on that figure, that's insane if true.

yottasavings209 karma

It's actually more now and was $640 a few years ago!

Total lottery spend in 2021 was $105.26B (https://www.statista.com/statistics/215265/sales-of-us-state-and-provincial-lotteries/) and total number of households is 130M (https://www.statista.com/statistics/183635/number-of-households-in-the-us/)

That comes out to $800 per household! Lottery spend has gone way up in the last couple of years.

itsthebrod107 karma

That's average, which means some families are spending shit-tons to drive up the average for all the families that don't play at all.

yottasavings92 karma

Yeah on average. Not a median.

alice_op68 karma

It's $12 a week per household, anecdotally it certainly fits my parents habit of £10 on the lottery each week.

yottasavings36 karma

Yeah that's exactly right.

PsychVol42 karma

Keep in mind that this is an average, not a median or mode. A few outliers could really inflate that average.

yottasavings15 karma

Yes very true.

wunderbraten2 karma

That's slightly above $50 per month

yottasavings2 karma

Yes that is right.

lady_fapping_85 karma

Hi! I've never played the lottery myself, but I did receive a small scholarship to university that was funded out of the South Carolina state lottery. If we eradicate the lottery, is the expectation that states will meet the shortfall out of general taxation or just no longer fund these small scholarships?

yottasavings169 karma

If the lottery was abolished, that would be $50B+ US consumers would have in their pockets (lottery spend net of lottery winnings). The state lotteries are an inefficient taxation scheme. There's a lot of overhead for that $100B before it actually goes to state programs.

I feel better about putting that $100B right back in people's pockets rather than the government generating tax revenue on it.

sweetbldnjesus89 karma

It’s been said that lotteries are a tax on people who don’t understand statistics

yottasavings100 karma

And people who do as well. Gambling is sadly so deep rooted in our psychology. Hard to overcome even if you know you're likely to lose.

orthotraumamama26 karma

Mississippi just got their state lotto approved a few years ago. They codified it into the rules that the initial profits go to infrastructure immediately. We met that goal within like two weeks of the lotto opened. They fixed almost all the roads in my town with that money. I like the idea of your program and will look into it. Just wanted to say lotto could be good if it's properly executed.

yottasavings28 karma

Lotteries can be fine if people don't spend more than they can afford to lose on them. I worry about the families that got good roads, but lost a ton of money by buying lottery tickets.

Some people will benefit, and some won't. If you don't play the lottery at all, you get all the benefits of the infra spend without any cost.

zakpakt10 karma

I can see your point. My area is rife with gambling addiction. Anything that would put more money into the school system is a good idea. I'm sure there is a lot of overhead involved with the state lottery funding education.

yottasavings15 karma

Agreed, but would rather the families not lose the money in the first place. You lose 50%-60% on average on lottery tickets.

LordOfCastamerde7 karma

Yeah, our lottery funds our educational system here.

yottasavings25 karma

The issue is it funds it by many people losing money on lottery tickets who need the money. Very circular.

smkorpi58 karma

Some of my friends fall in the category of low earners but tend to spend more on the lottery than many others.

What approach do you guys take to overcome the psychology behind an addiction to lottery gambling?

yottasavings127 karma

We give people the chance to win big, without any risk of loss. You can dream of winning the jackpot, have the excitement of numbers being drawn, and even if you don't win, you don't lose. That is the key part. It scratches the same itch in a safe way.

Satisfies the craving.

smkorpi22 karma

Thank you!

Do you know of any resources on behavioral economics related to gambling that you recommend?

I’d like to read more about it when possible.

yottasavings32 karma

Gambling specifically not really. Behavioral economics books: Influence, Thinking Fast and Slow, Nudge are some of the best.

Thinkofyouincolors57 karma

If no one has won the $10m prize yet, what’s the biggest prize someone has won?

yottasavings85 karma

No $10m winner yet, though on expectation it should happen and isn't that unlikely over the next couple of years. We have had many winners of $40k.

Posaunne48 karma

"Many" is pretty vague, can you give an actual number? Or at the very least an estimate?

1FrostySlime68 karma

5, they show a list of the top 5 winners every week and 5 people have won the 40k

yottasavings41 karma

Yeah we try to be transparent here.

MomentComfortable52848 karma

What is your opinion of Arcade claw machines and do you believe that it has a impact on kids gambling later in life when they play them early on?

yottasavings49 karma

I don't think they're a problem. Paying for entertainment is fine. I don't think these machines are precursors to a gambling addiction. If they are, then that's a problem.

Mooseherder40 karma

If someone wins a prize, are they then ineligible to win again for a short amount of time? Does your algorithm prevent someone from winning multiple times in a row? Or could someone, if they were reeeeaaally lucky, win back to back?

yottasavings47 karma

No it's totally independent. Winning once does not impact your ability to win again.

Naskin38 karma

Any plans for helping educate any winners of large jackpots ($100k-10M+)? Most people lack proper financial education to handle large windfalls of money.

yottasavings37 karma

We are working on improving our blog to help educate lottery players on these types of things. It's true that many big lottery winners end up going broke.

squidhunter36 karma

Will the prize pool payouts be updated with the increase in interest rates?

yottasavings27 karma

We are looking into this now.

Roadsoda35027 karma

I've been using yotta for quite a while now and have referred over 10 people to use it. On average yotta has given me a better interest rate than any other HYSA. This coupled with the possibility of winning big prizes makes it a no brainer for me.

u/yottasavings I do wish you would increase the point at which you start getting less tickets per dollar. It becomes a much lower ROI to put anything greater than $10000 in my account at the moment. Are there any plans to increase this value to incentivize users to put more than the current limit(before diminishing returns) in their accounts?

yottasavings22 karma

Yes we are evaluating this right now. I can't make any guarantees here on what the outcome will be, but it's something we are actively looking at, so stay tuned.

MicheleWeinberger23 karma

Can parents open accounts for kids?

yottasavings17 karma

Yes they can

sonsonmcnugget3 karma

Wait I didn't know this! Will referrals count for setting one up for both of my kids? I need 2 referrals to go up a tier!

yottasavings3 karma

Yes - anyone who signs up using your invite code and makes a deposit will qualify as a referral!

InSixFour21 karma

Is this just a savings account? What about checking? How long does it take to transfer money in/out of the account?

yottasavings16 karma

We have both savings and checking. Transfer times can be 1-4 business days to deposit into the account, depending on the user. Withdrawing out is typically 1 business day, but we have instant withdrawal options as well.

SublimeBear19 karma

How much Profit did you make compared to what you 'gave away'?

yottasavings46 karma

We are giving all that we earn back to users, so we are not making any profit. So $0 profit vs. $8.5m given away.

ColonelBelmont30 karma

This may be a silly question, but if that's the case then why does your company exist? Is it a non-profit org? Pure altruism? Or do you all still earn a hefty salary but it's the "company" that keeps no profit?

yottasavings51 karma

We are focused on delivering a great product experience and growth right now. Like many startups, that can result in no profits earlier in the company lifecycle. Not unusual at all.

SensorialSpore516 karma

$0 profit. So are you a non-profit or simply a company currently growing and reinvesting anything that would be profit?

yottasavings7 karma

We earn revenue on other products; for example, interchange on debit and credit card spend. However, we are highly focused on delivering a great product experience and growth right now, which is very typical for a startup at our stage.

Infinite_Series377415 karma

  1. Do you find that people are more willing to go for a credit card with a 1:50 chance of any given purchase being paid for over a 2% cash back card? Do you feel that people do not realize that they should "expect" about 2% cash back equivalent from those odds?
  2. Have you had situations where someone winning the $2500 prize (split among all winners) is paid out more than someone winning the $3000 prize? (this happened in simulation a few times for me)
  3. Is it possible to find out how many tickets are in play for any given week?

yottasavings20 karma

1) Yes there's a big chunk of people out there that prefer 1 in 50 vs 2% guaranteed. I think they prefer it even when they know on average it's the same value. It just adds some fun to life.

2) I am not sure off-hand to be honest. It certainly is possible. We are going to re-evaluate some of these bigger prize levels soon.

3) We don't disclose this - sorry.

Twerkatronic15 karma

I meannn where are you getting the 4% interest money from?

yottasavings19 karma

That is the maximum that can be made on average, through our non-FDIC insured product offering by holding USDC. Our core product is the FDIC insured account.

oscargamble12 karma

So the base APY is 0.20% and you can never make less than that, but you can make up to 4%? Am I interpreting that correctly?

I'd be curious to know what the actual average APY is across all users, not just the maximum.

yottasavings18 karma

Average APY on USD is ~1.5%

drfoxxx3 karma

So you take user funds, buy crypto (USDC), stake it and then pay the yield returns forward?

yottasavings6 karma

We have lending partners that lend to institutions to earn yield. Different than staking.

Khtie13 karma

I was interested but then I looked at your reviews and a ton of people love the idea but say ur app is super clunky? And customer service was an issue?

yottasavings32 karma

We doubled our customer support capacity in June. It's a huge focus for us right now.

I think our app can be confusing, and we need to work on simplifying it. But for the most part we find people leave us great reviews. There's certainly a lot of room for improvement to reduce app confusion and clunkiness on the margins. But we are improving every day.

Grepus13 karma

A someone who knows a bit about online gambling and lotteries, as there's a draw, with a fixed odds outcome, are you also insuring the jackpot? You've mentioned earning off deposits and interchange, etc, but I have also worked with companies who will literally insure the product, so if the 10m is won, you would just pay the insurance excess and the insurance company picks up the rest.

yottasavings19 karma

Yeah we are insuring the jackpot, so if someone wins the 10m prize, an insurance company pays it out.

RenderMaster12 karma

Is it possible to opt out of all the crypto, credit and debit card promos in the app? I’ve got my emergency fund parked in a saving account and I’m not interested in the other products.

yottasavings9 karma

I see. This is helpful feedback. No way to opt out of seeing the promos, but we can add this to our backlog to add in.

RenderMaster5 karma

Thanks, even I could just dismiss these two boxes. I’d like to be able to just see my savings account and weekly picks.

yottasavings5 karma

Makes sense for sure

sentientmantra12 karma

What is the median spend on lottery tickets?

yottasavings12 karma

I'm actually not sure. I haven't come across a public statistic on that. It's likely much much less than the mean.

Ricemilk64912 karma

I signed up for a Yotta account and was told I'm not eligible. I was told this after I entered in my personal and financial information.

Support said they are unable to disclose why some people are ineligible.

To be honest, it felt pretty dirty to give you personal information and then be denied with no explanation.

I also asked that my account and information be deleted, but received no response.

I have now gone out of my way to tell people to avoid this nonsense. I wonder how many people gave you their info and were told "Sorry no account for you"?

yottasavings4 karma

Can you please DM me with the email on the account?

Dange54310 karma

So you are earning yield on USDC, where are you staking or earning that? As you know its crypto winter and companies are shutting down left and right. Are the users deposits in FDIC insured banks or are they converted to crypto?

Are you FCF positive? How does your business operate if you are not making any profit?

yottasavings17 karma

We are not FCF positive. We've raised almost $30M in venture capital and try to operate close to breakeven.

We choose our yield partners for the USDC product very carefully. With the crypto product, we chose lower yielding options for USDC than what you saw in the market with a lot of the companies that got into trouble. We felt the other companies were doing things with poor risk management practices.

This product is not FDIC insured, so people should only use it if they are comfortable with the risk. The FDIC insured offering is our core product.

Dange54310 karma

How does this work in a case of bankruptcy? See Voyager for example, they used a FDIC bank as well yet user assets were all still frozen and now are at risk. The TOS covers the banks failure, not Voyagers. How is your TOS set up?

"Metropolitan Commercial Bank issued a statement recently informing Voyager customers that FDIC insurance coverage would only be offered if the bank itself failed and not in event of Voyager’s failure"

yottasavings13 karma

Our USD FDIC insured accounts are separate from any USDC wallets. If there was an issue with the USDC offering, this would not impact the USD accounts at all.

thansal7 karma

Can you link some stuff on this? I've never heard of Voyager before and it sounds interesting.

yotta's involvement in crypto is what turned me off of them from the last AMA they did, I just can't approve of anything involving it (on a gambling front, on an environmental front, and just disliking the people who back it).

edit: I will say that yotta seems pretty good about being open about what they are doing, so that is a plus in their column.

yottasavings7 karma

We try to be as transparent as we can be.

rovert68 karma

I made an account some time ago, maybe 4 months ago? And I had already earned $56 with my $8k deposit that I moved from my banks savings to Yotta. Was always excited to see what I had won, and how much my savings was growing!

I have tried to deposit money again, and it won’t let me. Says that I can only do increments, but no matter the amount, it won’t let me deposit. But I was able to deposit $8k before with no issue. I did withdrawal the money to buy a home but can’t reinvest. How do I fix this?

Thank you, and keep up the great work!

yottasavings7 karma

Sorry to hear about this. Could you DM me so we can look into this?

JparkerMarketer7 karma

Have you at anytime used "...Yotta, Yotta, Yotta" in your advertising?

yottasavings7 karma

Not really actually! Maybe we should.

handlesscombo6 karma

What's the average amount most users have in their account? What the average amount most users win? Is there a cap? Can I essentially move my entire savings account?

yottasavings4 karma

The account is FDIC insured up to $250k. The average amount is in the single digit thousands. But we have people as low as $25 and as high as the FDIC limit.

TurtleBilliam6 karma

Is it ever coming to the uk?

yottasavings3 karma

Likely eventually, but nothing imminent.

alice_op5 karma

For anyone that's interested in seeing lottery odds as a simulator gif: https://www.reddit.com/r/CasualUK/comments/t74tg6/uk_lottery_simulator_playing_the_lottery_1000/?sort=confidence

Very cool, I watched all 10 mins of it. But indeed someone won the £195 million jackpot in the UK yesterday.

yottasavings6 karma

Thanks for sharing this! Notice how the more you play, the more your balance depletes...

patsfan543214 karma

A lot of friends are skeptical because u don’t publicly post the number drawn each night. They think that people get different numbers (basically calling it rigged) how do u randomize the numbers drawn?

yottasavings4 karma

You can compare your apps with your friends. It would be the same number. We work with an insurance company that picks the numbers.

patsfan543214 karma

Appreciate the response. I do see it as a good suggestion though and would probably attract more users who are skeptical. Even if it was just a story post every night of the number drawn I feel like it would bring in more users.

yottasavings3 karma

Got it - thanks this is helpful

gusguida4 karma

You mentioned you’re shooting for breakeven. What’s your long term plan? Are you planning to launch other financial products and using the lottery product as way to have a low customer acquisition cost?

Great idea BTW!

yottasavings5 karma

Yeah we have a lot more products planned. Our end goal is to build a product so good and differentiated, we have strong word of mouth. Most other banking products rely on expensive paid marketing. We have an acquisition advantage through word of mouth by being different and exciting.

sandee_eggo3 karma

Can you help us understand why the impulse to gamble (take big risks to possibly win big money) is so powerful, yet losses are felt about 3 times as intensely as gains? We seem both risk-averse and risk-attracted.

yottasavings4 karma

We are risk-seeking with small dollars. The dream to win big is worth that "$2" ticket. But that $2 ticket all of sudden turns into a habit and before you know it it's $100s per year.

But with high dollar amounts we are risk averse. People wouldn't take the gamble if it was $640 upfront for example. But the small dollars each time you gamble on the lottery brings out the risk-seeking part of us in a powerful way.

youngonelooking3 karma

Hey I really like you guys but can you do something about customer service? If I have a banking emergency I have to wait 24+ hours for someone to contact me back

yottasavings3 karma

We doubled the capacity in June and are continuing to invest heavily here. We are on it! You should see improvement already. And we will continue to improve.

elojodeltigre2 karma

The issue with almost any supportive project is overhead. What is required to avoid this becoming a thing and what is necessary to root it out?

yottasavings1 karma

In this case, I don't think it's solvable for the lottery specifically. They need to advertise, they need to pay vendors that sell tickets, they need to pay staff, etc.

I think the issue with the lottery is much deeper than the overhead though. The take rates are crazy high.

zackdaniels932 karma

Is the age old theory of "if you know someone who's won big, you're likely never going to win big" actually true? Probabilities would indicate it makes the win more unlikely, but so many people disagree.

yottasavings15 karma

No that isn't true. It's an independent game. Other people winning does not impact your chances of winning.

Sewidd2 karma

Behavioral economics… I’m very interested in why I have to keep saying to my friends (I’m in the financial industry so they ask me), “wanna find the root of any problem today, follow the money.”

Do you think I’ll be able to say this less before I die? Have 30 something years on the planet so far.

yottasavings3 karma

Unfortunately, no I don't think you will be able to say this less. Human nature has many flaws.

sea-fi-lo-fi2 karma

With inflation going crazy, does the odds of your lottery change? Secondly do you need to change the marketing to convince people to save?

yottasavings8 karma

The odds for our sweepstakes have not changed. We are playing around with different ways to incentivize savings to make it more fun and that may come with different odds in the future for sure. But it will always be expected value positive.

With the stock market performing poorly and interest rates rising in the economy, people do seem more inclined to save. Whereas previously a lot of people were placing bets in crypto and the stock market during the bull market.

laky_19982 karma

The prize money that we win gets paid by an insurance company right? So the prizes arent paid using the yield Yotta makes on our deposits?

yottasavings5 karma

Only the jackpot is paid for by the insurance company.

tvibam2 karma

With the Federal reserve increasing interest rates are there any plans to increase yottas interest rate(0.2%) in the near future?

yottasavings6 karma

More likely to tweak prizes than the base rate itself, effectively increasing rate.

DancinWithWolves2 karma

Any chance of launching in Australia? Can Australians use it?

yottasavings2 karma

You should be able to sign up in Australia, which will put you on the waitlist to be notified whenever we launch there! No plans to any time soon, but eventually.

remaking_the_noob2 karma

Do you prefer smooth or crunch peanut butter?

yottasavings1 karma

Crunchy - for sure. What about you? Smooth is too boring.

lastweekwastuff1 karma

I see lots and lots of billboards for powerball in my hometown outside Atlanta. Any idea on what the marketing budgets are for the lottery?

squirtleturtle10 karma

4% interest on USDC? Where is the USDC deployed to, to be making this kind of return. We've seen numerous crypto lenders go under recently offering 5-10% and it seems like that's all you're doing as well. Lending out user deposits. Likely you'll go under if you fuck up once. Where is this being lent?

yottasavings1 karma

We choose our yield partners for the USDC product very carefully. With the crypto product, we chose lower yielding options for USDC than what you saw in the market with a lot of the companies that got into trouble. We felt the other companies were doing things with poor risk management practices.
This product is not FDIC insured, so people should only use it if they are comfortable with the risk. The FDIC insured offering is our core product.

isquinn0 karma

What about the money that the lottery uses to help fund educations?

yottasavings2 karma

If the lottery didn't exist, that would be $50B+ US consumers would have in their pockets (lottery spend net of lottery winnings). The state lotteries are an inefficient taxation scheme. There's a lot of overhead for that $100B before it actually goes to state programs.

I feel better about putting that $100B right back in people's pockets rather than the government generating tax revenue on it. It's effectively taking money from people who most need the money (largely a regressive tax) and then giving it back to them inefficiently.