Finance Friday Feature: How Companies Like Lolli Make Bitcoin Accessible
Rewards Programs & The Gateway to Investing
Happy Finance Friday!
Since the past two Fridays have been focused on aviation, I wanted to branch out a bit and talk about a company (or more generally a category of companies) that I think are revolutionizing the finance space.
I took to the internet to poll for just what type of company I should feature, and the responses were overwhelmingly related to companies that reward users for shopping and spending in the form of bitcoin or cryptocurrencies in general.
My mind immediately jumped to Lolli.com, and I reached out to their CEO and Co-Founder (and one of my favorite Twitter pals) Alex Adelman to learn more about how Lolli can help just about anyone get started with Bitcoin.
Without trying to sound like an ad (because it’s not) let’s get into what Lolli.com has to offer.
What’s the deal with Lolli?
Free cash-back is great, who doesn’t love free money (or sats)?
But there’s more to the story than that.
Aside from sharing the oh-so prestigious title of my Twitter mutual, Alex Adelman is the CEO and Co-Founder of Lolli. Previously, Alex was the CEO and Co-Founder of Cosmic, described as a 'universal shopping cart' allowing retailers to sell across devices -- and shoppers to buy from multiple online stores in one virtual trip, that was first acquired by PopSugar and then later by Ebates (now formally known as Rakuten).
Born in Charlotte, North Carolina, Alex had a passion for discovering the ins and outs of markets, increasing efficiency, and facilitating cash flows from a young age, eventually graduating from UNC-Chapel Hill with a degree in Economics. Alex and I share a similar accidental-introduction to undergrad economics; both of us initially thought we were destined for business school, but soon learned that we were fated for a love for all that field of economics has to offer.
As a teenager, Alex worked on freelance projects and told me that he was often frustrated with the complexities of sending money payments for labor abroad, dealing with fees and barriers frequently, and even the occasional suspended bank account. From his frustration, Alex developed a yearning to fix the issues posed by centralized currencies and tricky exchange.
The excitement that Alex had when sharing his own story, and the story of how Lolli came to be, reminded me of my own passions for bettering the lives of others through efficiency and knowledge, and I couldn’t help but feel connected to the same wonder that the world of economics brings to so many. I chose Lolli as this week’s feature for that reason — it is a company truly backed by the promise to bring ease and efficiency to the lives of (potentially) billions.
What is Lolli?
Lolli is a free browser extension that offers you bitcoin or cash back on purchases you make every day, and is currently home to hundreds of thousands of users who have access to over a thousand websites, from eBay to Sephora to Sam’s Club. In a lot of ways, Lolli operates similarly to Rakuten; both offer users seamless cash back on purchases made via an app or through a browser extension.
Lolli, however, gives users the option to earn fractals of Bitcoin, in the form of Satoshis, or sats (equal to one hundred millionth of a single bitcoin), back on purchases instead of cash. Users receive a unique SatsTag, and sats are stored in a Lolli digital wallet until users decide to transfer them to other digital wallets or exchange them for cash.
Alex’s simple dream is to bring Bitcoin to billions of users across the globe, in an easy, risk-free way, as we delve deeper into the inevitable age of technology. As if it couldn’t get more wholesome than that, after I talked to Alex I did some digging, and I found the origins of Lolli’s name in a December 2020 interview with Junction:
“When I was young, my dad would take my sister and me to the bank. I never liked going to the bank, but always looked forward to the lollipop at the end. I believe bitcoin is the bank of the future and all that's missing is Lolli.”
Alex Adelman, CEO and Co-Founder of Lolli
Personally, I like Lolli because I earn sats back on stores I frequent far too often — like Chewy.com (for my dog’s overpriced prescription medicine) and Bloomingdales, for all of life’s needs (or so I tell myself).
A Brief Tangent on the Economics of Loyalty and Rewards Programs
From airlines to department stores, rewards programs are a consumer favorite — who doesn’t love getting free cash back or redeemable points on purchases from companies they know and love?
The great thing about general rewards programs is that users are less constrained in terms of lock-ins. Most leisure and hospitality programs, such as those for United and Hilton, have lock-in effects, as points accrue on a use-it-or-lose-it basis and are only redeemable at those specific locations. This is because in most instances, rewards are tied to loyalty programs, where companies must find the equilibrium between profit maximization and generating a stream of repeating customers.
Leveraging the margin through loyalty programs only tied to one specific company may generate rewards, but much of recent economic discourse has focused on whether or not these rewards actually come at a great benefit to consumers, or if consumers would be better off without them. The amalgamation of purchases when consumers are part of loyalty programs is lessened, as consumers have a hard time valuing loyalty-specific rewards and may not venture to competitors, thus paying an above market price for goods and services offered by one company to which they are “loyal.”
Of course, one could argue that consumers already have these external costs priced in, and we must be at an equilibrium, or else they wouldn’t behave in such a manner. But that’s a story for a different day.
Places like Lolli and Rakuten offer users more variation in where they can shop, as they break the strict tie between loyalty to one company and company specific rewards and lessen the costs of lock-in and use-it-or-lose-it by offering cash back at thousands of different companies that their users likely already frequent. Such rewards programs are focused on the cash-back aspects and incentives associated with connecting repeated customers to an array of companies to which they are loyal, instead of just one.
But again, the difference is that with companies like Lolli, the incentives run much deeper.
Thinking Rationally
Like all rewards and cash back programs, the simple goal of Lolli is to reward users with sats back on their purchases, and help consumers earn while they spend. Where this deviates from the norm is that your rewards are now returned to you in the form of investments. In some instances, users have leveraged their rewards by tenfold, as Bitcoin reaches all time highs.
And yes, that means that fluctuations might also come with dips at times, like any good investment. Lolli clearly specifies that the “BTC value of your reward for purchases is locked-in and the USD value will then fluctuate to reflect market value.” So, if you put fears of volatility aside, ride the dips and HODL, your returns for purchases have the chance of of reaching all time highs as well.
For people who want a risk-free gateway into the world of bitcoin and cryptocurrency investing, Lolli.com is the perfect place to start.
And as for me, my dog won’t pay his food bills, but our rewards from Lolli might buy us one bag of over-priced doggy kibble (eventually).