The kind of entrepreneur I like

Last week we were in Boston and met up with Mukesh Chatter, CEO of MoneyAisle. People ask me the kind of conversation I like having. This is it. A new business that I hadn’t heard of that is adding real value. A smart executive who can explain how it works clearly, cleanly (it lets you buy investment instruments like certificates of deposit through a reverse auction with 80 banks. The price you get is a lot better this way and it also is aimed at taking Google out of the advertising picture). Good story for the turbulent economic times we’re heading into.

I’m off to fly to New York tonight to meet the world’s top designers. More on the other side. Any other entrepreneurs like this? Drop me a line. scobleizer@gmail.com

Comments

  1. Robert, I tried MoneyAisle, it gives less rate than Bankrate.com.

    One plausible explanation is the following (which may or may not be correct). The banks are not going to manually bid on every transaction. Most likely they have a proxy bid somewhere. So you see a certain process of ascending auction, as an UI. But in essense it is running a proxy bidding which stops at the second highest bid. Whereas on Bankrate.com you could get the rate equivalent to the highest bid of a bank. So in essense the loss of this rate from the highest to the second highest pays for the cost running this auction.

  2. Robert, I tried MoneyAisle, it gives less rate than Bankrate.com.

    One plausible explanation is the following (which may or may not be correct). The banks are not going to manually bid on every transaction. Most likely they have a proxy bid somewhere. So you see a certain process of ascending auction, as an UI. But in essense it is running a proxy bidding which stops at the second highest bid. Whereas on Bankrate.com you could get the rate equivalent to the highest bid of a bank. So in essense the loss of this rate from the highest to the second highest pays for the cost running this auction.

  3. Robert, I also saw the whole video. This is quite untimely. First, a website like bankrate.com effectively runs a reverse auction, low tech but high quality. Just sort the offers by APY. This reverse auction is more transparent and pretty much has all the goods of fancy looking but opaque moneyaisle technology. As Mukesh said, it is a commodity. There are not many auction mechanisms to buy/sell commodities. The other benefits like, banks can change the interest rate according to their goals, they could already do so on bankrate.com website.

    This is untimely (for your readers) because of so much fear. Fear makes people vulnerable to fraud. I am sure Mukesh is making sure that every institution who says it is a bank, is actually a bank. But still, I would recommend the users to run a verification themselves. Because FDIC etc kicks in after you have successfully open an account with a bank. So here is what I would suggest, to resist fraud while opening a bank account in a timely manner through a middle agent.

    1. Find the highest paying bank and reputed website at a transparent comparison banking engine such as bankrate.com (it shows the star ratings too). You could use Moneyaisle.com too, but do not give your information before getting the names of those banks. This favors banks not the user.

    2. Take the name of the bank. If it is a local bank, visit the branch. If it is a remote bank, then visit FDIC.com.

    3. Enter the name of the bank as FDIC.com. Find the website link and the official address at FDIC. Go to the bank’s website from FDIC website. That way you know that you are visiting a authentic website of a FDIC member bank. Not some fraud website.

    4. Mail your check to the address you found at FDIC website. Or verify that the address on the bank’s website is the same as the address shown at FDIC website. If not then call the bank and make sure about the things. That way you are not sending your check to a fraudulent person who just coined a bank name to receive your check.

    5. If possible write the check in your own name and make it redeemable to a bank account only. A bank could cash the check written in your name to open a bank account in your name.

    None of it could be foolproof, but doing the verification yourself is still more reliable than Mukesh does it for you. There are other bunch of precautions you could find at FDIC.com.

    Needless to say, I do not have any connection with moneyaisle or bankrate or fdic. I am just putting it here for the benefit of your users. I found moneyaisle to be pro-bank and not pro-users. If it is pro-users then it should give the complete information of bid, bank name, etc to the users before asking them to register to see a fancy UI (for a table look up? That’s what a commodity trading is, a table look up).

  4. Robert, I also saw the whole video. This is quite untimely. First, a website like bankrate.com effectively runs a reverse auction, low tech but high quality. Just sort the offers by APY. This reverse auction is more transparent and pretty much has all the goods of fancy looking but opaque moneyaisle technology. As Mukesh said, it is a commodity. There are not many auction mechanisms to buy/sell commodities. The other benefits like, banks can change the interest rate according to their goals, they could already do so on bankrate.com website.

    This is untimely (for your readers) because of so much fear. Fear makes people vulnerable to fraud. I am sure Mukesh is making sure that every institution who says it is a bank, is actually a bank. But still, I would recommend the users to run a verification themselves. Because FDIC etc kicks in after you have successfully open an account with a bank. So here is what I would suggest, to resist fraud while opening a bank account in a timely manner through a middle agent.

    1. Find the highest paying bank and reputed website at a transparent comparison banking engine such as bankrate.com (it shows the star ratings too). You could use Moneyaisle.com too, but do not give your information before getting the names of those banks. This favors banks not the user.

    2. Take the name of the bank. If it is a local bank, visit the branch. If it is a remote bank, then visit FDIC.com.

    3. Enter the name of the bank as FDIC.com. Find the website link and the official address at FDIC. Go to the bank’s website from FDIC website. That way you know that you are visiting a authentic website of a FDIC member bank. Not some fraud website.

    4. Mail your check to the address you found at FDIC website. Or verify that the address on the bank’s website is the same as the address shown at FDIC website. If not then call the bank and make sure about the things. That way you are not sending your check to a fraudulent person who just coined a bank name to receive your check.

    5. If possible write the check in your own name and make it redeemable to a bank account only. A bank could cash the check written in your name to open a bank account in your name.

    None of it could be foolproof, but doing the verification yourself is still more reliable than Mukesh does it for you. There are other bunch of precautions you could find at FDIC.com.

    Needless to say, I do not have any connection with moneyaisle or bankrate or fdic. I am just putting it here for the benefit of your users. I found moneyaisle to be pro-bank and not pro-users. If it is pro-users then it should give the complete information of bid, bank name, etc to the users before asking them to register to see a fancy UI (for a table look up? That’s what a commodity trading is, a table look up).

  5. “Good story for the turbulent economic times we’re heading into.”

    How do you know that there are turbulent economic times that we are heading into?

    Daniel Kemp

  6. “Good story for the turbulent economic times we’re heading into.”

    How do you know that there are turbulent economic times that we are heading into?

    Daniel Kemp

  7. After reading your blog, thought you would be interested in this…

    CNBC will be airing “The Entrepreneurs” on Wednesday October 1st at 10p ET featuring the founders of Feed Granola Jason Osborn and Jason Wright. They will be discussing the methods which led to their estimated three million dollar a year business. Additional web extras can be found at http://theentrepreneurs.cnbc.com

    Please let me know if you would like any additional information.

    Thanks,
    Kevin
    201 735 4730

  8. After reading your blog, thought you would be interested in this…

    CNBC will be airing “The Entrepreneurs” on Wednesday October 1st at 10p ET featuring the founders of Feed Granola Jason Osborn and Jason Wright. They will be discussing the methods which led to their estimated three million dollar a year business. Additional web extras can be found at http://theentrepreneurs.cnbc.com

    Please let me know if you would like any additional information.

    Thanks,
    Kevin
    201 735 4730

  9. Wow, his description of the cost of clicks is fascinating and important. Here is a rough quote from the video at 14:40:

    “Just in last three years alone, the prices for some of the bids have gone up 200% to 300% As an example from google, to be one of the top three advertisers for “high yield savings,” you have to pay $13.20 for a click. With a 1% conversion, it costs you $1,300 to acquire a customer”

    Lead generation companies should continue to do well. Here’s a list of 11 lead generation companies that raised money over the last couple of years:

    http://vcastocks.com/index.php/category/internet-related/digital-advertising/lead-generation/

  10. Wow, his description of the cost of clicks is fascinating and important. Here is a rough quote from the video at 14:40:

    “Just in last three years alone, the prices for some of the bids have gone up 200% to 300% As an example from google, to be one of the top three advertisers for “high yield savings,” you have to pay $13.20 for a click. With a 1% conversion, it costs you $1,300 to acquire a customer”

    Lead generation companies should continue to do well. Here’s a list of 11 lead generation companies that raised money over the last couple of years:

    http://vcastocks.com/index.php/category/internet-related/digital-advertising/lead-generation/

  11. Kamal,
    I read your post. I have used the Moneyaisle to find a great rate for my CD. Let me tell you that my experience was good. They actually did measure up to all your suggestions of safely.

    1. At the end of the auction, I was presented with the Bank’s FDIC number, bank facts and a link to the FDIC, if I wanted to verify the information – which I did. All the bank information is linked to FDIC.

    2. They did not ask for any of my information, until I was ready to provide it. I was pleasantly surprised that they didn’t ask for any sensitive and private information like social security number. I provided all that information directly to the bank.

    3. The money was sent directly to the bank, Moneyaisle did not have anything to do with my funds.

    I will put faith in the credibility of NY Times.

  12. Kamal,
    I read your post. I have used the Moneyaisle to find a great rate for my CD. Let me tell you that my experience was good. They actually did measure up to all your suggestions of safely.

    1. At the end of the auction, I was presented with the Bank’s FDIC number, bank facts and a link to the FDIC, if I wanted to verify the information – which I did. All the bank information is linked to FDIC.

    2. They did not ask for any of my information, until I was ready to provide it. I was pleasantly surprised that they didn’t ask for any sensitive and private information like social security number. I provided all that information directly to the bank.

    3. The money was sent directly to the bank, Moneyaisle did not have anything to do with my funds.

    I will put faith in the credibility of NY Times.

  13. I’ve been visiting Bankrate for a while now. Must point out that Indymac was rated three stars before it went under, raises serious doubts on the validity of the Bankrate ratings process.

  14. I’ve been visiting Bankrate for a while now. Must point out that Indymac was rated three stars before it went under, raises serious doubts on the validity of the Bankrate ratings process.

  15. Emily, my experience has been slightly different. I visited Moneyaisle for a CD product. They showed me a fancy UI, which is less information than Bankrate.com. They came up with a lower APY and did not tell me the name of the banks until I register with them. What if the bank they have is I-do-not-like and I end up giving my email address to them for no benefit to me? It is the fanciest method of a table look up. Or say, table look up is far superior “reverse auction technology” then what they are claiming.

    The site is designed for banks in mind and not users in mind. The information which is openly available, they try to hide it. The enable the bank to offer the second highest yield and not the highest yield, and potentially pocket the difference. I would understand the registration requirement, if the deal is binding on me (in such a case bank would offer me a far superior rate than available openly). Clearly, since the deal is not binding on me, the bank has no reason to offer superior rate and therefore they have no reason to collect my personal information, as far as user side transaction is concerned.

    Regarding Indymac, 3* is a moderate rating and one error is not everything. And you do not have to trust it, since you could choose to ignore it and run independent checks to confirm it elsewhere. Moneyaisle does not even show this information. How’s about if I do not like the top bank, and I want to bank with 6th highest bank which gives 0.01 less APY but I consider it superior. They have like 100 banks, which is not a big number to list on a website. Just list the bids of all the banks and not the top bank then they are at par with Bankrate (not better for customers yet). For now they are far behind.

  16. Emily, my experience has been slightly different. I visited Moneyaisle for a CD product. They showed me a fancy UI, which is less information than Bankrate.com. They came up with a lower APY and did not tell me the name of the banks until I register with them. What if the bank they have is I-do-not-like and I end up giving my email address to them for no benefit to me? It is the fanciest method of a table look up. Or say, table look up is far superior “reverse auction technology” then what they are claiming.

    The site is designed for banks in mind and not users in mind. The information which is openly available, they try to hide it. The enable the bank to offer the second highest yield and not the highest yield, and potentially pocket the difference. I would understand the registration requirement, if the deal is binding on me (in such a case bank would offer me a far superior rate than available openly). Clearly, since the deal is not binding on me, the bank has no reason to offer superior rate and therefore they have no reason to collect my personal information, as far as user side transaction is concerned.

    Regarding Indymac, 3* is a moderate rating and one error is not everything. And you do not have to trust it, since you could choose to ignore it and run independent checks to confirm it elsewhere. Moneyaisle does not even show this information. How’s about if I do not like the top bank, and I want to bank with 6th highest bank which gives 0.01 less APY but I consider it superior. They have like 100 banks, which is not a big number to list on a website. Just list the bids of all the banks and not the top bank then they are at par with Bankrate (not better for customers yet). For now they are far behind.

  17. Kamal Jain brings up some points which I feel need to be addressed.

    First, Bankrate does not run a reverse auction, Bankrate is a rate board which provides information that is periodically updated. A reverse auction, by definition, occurs when sellers iteratively bid for the buyers (reversing the eBay model where buyers bid against each other for the sellers.) As the auction process on MoneyAisle is fully automated, the engine can change the interest rate per the market conditions, within constraints laid out by the bank. By contrast, a listing service such as Bankrate generally receives updates once every few days.

    To further set the record straight, each and every bank in our network has to be an FDIC member. It is stated very clearly on our home page and at many other locations on our site. At the end of a MoneyAisle auction, users are provided with links to both the FDIC Website and to the winning bank’s site – it is easy from there to look up the winning bank via the FDIC so they can see for themselves that their deposits are FDIC-insured. This is again in sharp contrast to a listing service such as Bankrate, where that is not necessarily the case, as the banks listed or advertised are not necessarily FDIC members.
    Furthermore, MoneyAisle provides additional pre-screening of the banks by using an independent rating agency – Veribanc – and any bank which is rated ‘Red with no stars’ is not accepted into our network. This provides consumers with an additional level of safety. For example, neither IndyMac nor WAMU were part of our network, whereas listing services such as Bankrate had them on the top of their APY list without ever mentioning that these banks could be in trouble. These same listing services are happy to collect their advertisement fees even if the consumer winds up having to spend hours in line outside a failed branch. At MoneyAisle, consumer commitment is one of our passions – which is why we pre-screen our member banks, even at the cost of losing revenue.

    (continued)

  18. Kamal Jain brings up some points which I feel need to be addressed.

    First, Bankrate does not run a reverse auction, Bankrate is a rate board which provides information that is periodically updated. A reverse auction, by definition, occurs when sellers iteratively bid for the buyers (reversing the eBay model where buyers bid against each other for the sellers.) As the auction process on MoneyAisle is fully automated, the engine can change the interest rate per the market conditions, within constraints laid out by the bank. By contrast, a listing service such as Bankrate generally receives updates once every few days.

    To further set the record straight, each and every bank in our network has to be an FDIC member. It is stated very clearly on our home page and at many other locations on our site. At the end of a MoneyAisle auction, users are provided with links to both the FDIC Website and to the winning bank’s site – it is easy from there to look up the winning bank via the FDIC so they can see for themselves that their deposits are FDIC-insured. This is again in sharp contrast to a listing service such as Bankrate, where that is not necessarily the case, as the banks listed or advertised are not necessarily FDIC members.
    Furthermore, MoneyAisle provides additional pre-screening of the banks by using an independent rating agency – Veribanc – and any bank which is rated ‘Red with no stars’ is not accepted into our network. This provides consumers with an additional level of safety. For example, neither IndyMac nor WAMU were part of our network, whereas listing services such as Bankrate had them on the top of their APY list without ever mentioning that these banks could be in trouble. These same listing services are happy to collect their advertisement fees even if the consumer winds up having to spend hours in line outside a failed branch. At MoneyAisle, consumer commitment is one of our passions – which is why we pre-screen our member banks, even at the cost of losing revenue.

    (continued)

  19. Consumers should indeed pay attention to bank ratings, but they should also make sure to investigate the conflict of interests at the rating services. Any listing service which rates banks while simultaneously collecting advertisement fees is seriously conflicted. This is precisely what got us into such an economic mess to begin with – when rating agencies such as Moody and others were doing advisory services with the same companies they were rating. I am glad the government cracked down on this serious conflict of interest. Unfortunately, it has not happened yet with bank ratings, exposing the consumer to a potentially questionable quality of information. Compare that to an independent rating agency such as ‘Veribanc’, which does not collect any advertisements and maintains their full independence. In keeping with our consumer commitment, we have forgone potential advertisement revenue to eliminate any possibility of influence from advertisers. I think it is high time that these Wall Street practices are banned to protect the unassuming consumer. Ratings should only be provided by those who are absolutely free of any conflict.

    MoneyAisle is strictly an auctioneer – we facilitate the reverse auction and stay out of any and all money transactions. The transaction is strictly between the consumer and the FDIC-insured bank – we are out of the process at that point.

    MoneyAisle is proud of our consumer commitment and our technology, which our amazing team has developed with Professors Rob Freund and Rob Rines at MIT. Providing an environment free of advertisement fees and conflict of interest to consumers is fundamental to our existence. If it bothers the existing establishment, so be it.

    I am happy to answer any and all questions about our system, either here or in the comments section of the MoneyAIsle blog at http://blog.moneyaisle.com.

    Kevin Cafferty
    Senior Web Producer
    http://www.MoneyAisle.com

  20. Consumers should indeed pay attention to bank ratings, but they should also make sure to investigate the conflict of interests at the rating services. Any listing service which rates banks while simultaneously collecting advertisement fees is seriously conflicted. This is precisely what got us into such an economic mess to begin with – when rating agencies such as Moody and others were doing advisory services with the same companies they were rating. I am glad the government cracked down on this serious conflict of interest. Unfortunately, it has not happened yet with bank ratings, exposing the consumer to a potentially questionable quality of information. Compare that to an independent rating agency such as ‘Veribanc’, which does not collect any advertisements and maintains their full independence. In keeping with our consumer commitment, we have forgone potential advertisement revenue to eliminate any possibility of influence from advertisers. I think it is high time that these Wall Street practices are banned to protect the unassuming consumer. Ratings should only be provided by those who are absolutely free of any conflict.

    MoneyAisle is strictly an auctioneer – we facilitate the reverse auction and stay out of any and all money transactions. The transaction is strictly between the consumer and the FDIC-insured bank – we are out of the process at that point.

    MoneyAisle is proud of our consumer commitment and our technology, which our amazing team has developed with Professors Rob Freund and Rob Rines at MIT. Providing an environment free of advertisement fees and conflict of interest to consumers is fundamental to our existence. If it bothers the existing establishment, so be it.

    I am happy to answer any and all questions about our system, either here or in the comments section of the MoneyAIsle blog at http://blog.moneyaisle.com.

    Kevin Cafferty
    Senior Web Producer
    http://www.MoneyAisle.com

  21. I ran some auctions. I’ve seen MoneyAisle beat BankRate more than once.

    This is impressive to me since BankRate has been around much longer than MoneyAisle has. What will it be like when MoneyAisle has been around for a couple of years and has the same name recognition?

    I read KAMAL’s and TED’s comments. I think the savings that the banks are supposed to have with MoneyAisle (cf Ted $1,300 per customer) will eventually (cf Kamal) lead to higher rates than you’d get at BankRate. I think the banks just need some time to get used to a new business model.

    I mean, are banks FastCompanies? I don’t think so.

  22. I ran some auctions. I’ve seen MoneyAisle beat BankRate more than once.

    This is impressive to me since BankRate has been around much longer than MoneyAisle has. What will it be like when MoneyAisle has been around for a couple of years and has the same name recognition?

    I read KAMAL’s and TED’s comments. I think the savings that the banks are supposed to have with MoneyAisle (cf Ted $1,300 per customer) will eventually (cf Kamal) lead to higher rates than you’d get at BankRate. I think the banks just need some time to get used to a new business model.

    I mean, are banks FastCompanies? I don’t think so.

  23. I ran some auctions. I’ve seen MoneyAisle beat BankRate more than once.

    This is impressive to me since BankRate has been around much longer than MoneyAisle has. What will it be like when MoneyAisle has been around for a couple of years and has the same name recognition?

    I read KAMAL’s and TED’s comments. I think the savings that the banks are supposed to have with MoneyAisle (cf Ted $1,300 per customer) will eventually (cf Kamal) lead to higher rates than you’d get at BankRate. I think the banks just need some time to get used to a new business model.

    I mean, are banks FastCompanies? I don’t think so. (resubmitting since I’m not sure if my NoScript add-on killed my original post)

  24. I ran some auctions. I’ve seen MoneyAisle beat BankRate more than once.

    This is impressive to me since BankRate has been around much longer than MoneyAisle has. What will it be like when MoneyAisle has been around for a couple of years and has the same name recognition?

    I read KAMAL’s and TED’s comments. I think the savings that the banks are supposed to have with MoneyAisle (cf Ted $1,300 per customer) will eventually (cf Kamal) lead to higher rates than you’d get at BankRate. I think the banks just need some time to get used to a new business model.

    I mean, are banks FastCompanies? I don’t think so. (resubmitting since I’m not sure if my NoScript add-on killed my original post)

  25. Kamal

    The Bankrate rating issue is more serious that a simple error. Either I trust Bankrate or I don’t. Had I been the one who relied on these ratings to put my money in IndyMac my retirement savings would have been in jeopardy, as FDIC only covers a limited amount. You are clearly saying that I should not trust Bankrate’s rating system. Are there others that I can trust and count on their due diligence?

  26. Kamal

    The Bankrate rating issue is more serious that a simple error. Either I trust Bankrate or I don’t. Had I been the one who relied on these ratings to put my money in IndyMac my retirement savings would have been in jeopardy, as FDIC only covers a limited amount. You are clearly saying that I should not trust Bankrate’s rating system. Are there others that I can trust and count on their due diligence?

  27. Kamal,

    You are saying that a look-up table is superior to an auction system. I don’t get that – -
    Then explain to me why do millions of transactions happen successfully on eBay?

    I also don’t get your objection to giving an email address to register. I had to give my email to post here. I don’t view giving an email address has the same level of sensitivity as providing a home address or social security number.

    I do agree with you that one must check the bank out independently no matter which site you go to.

  28. Kamal,

    You are saying that a look-up table is superior to an auction system. I don’t get that – -
    Then explain to me why do millions of transactions happen successfully on eBay?

    I also don’t get your objection to giving an email address to register. I had to give my email to post here. I don’t view giving an email address has the same level of sensitivity as providing a home address or social security number.

    I do agree with you that one must check the bank out independently no matter which site you go to.

  29. Emily, when you press Bid History on ebay, what you see is a table of bids. Ebay has to run an auction because there are millions of different types of products for which nobody has created a table of how much each is willing to pay.

    That’s not true in the case of Bank bidding for a CD. Banks precisely know how much they are willing to pay for a CD of certain amount of certain duration at a given point of time. This data exist.

    The auction already exist. Different banks send their bids to Bankrate. And a user could order the bids in the descending auction and choose the winner. That’s an open cry auction. It favors the end users, i.e., you and me.

    Moneyaisle auction is closed bid. It favors the bankers. It is solving banker’s problem not an end user’s problem. It does not give any thing back to the users. In fact it takes something back. On bankrate you get the highest rate and on Moneyaisle you get the second highest rate. The difference either is kept by the bank or go to moneyaisle. This difference could have come to our pockets.

    It is a fine business to pitch to the banks. But do not tell to the users that it is solving their problem.

    Regarding the email address, I do not mind giving my email address. But I do mind verifying it. This blog does not verify the email addresses. A verified email address is lot more valuable. So I want to give this value to them, only when I am sure to get the value from them. So a consistent protocol is to show the name of the winning bank. If I want to lock the deal for 7 days, then sure please take my email address. (BTW, most banks anyway provide 7 days locking period to arrange the transfer of funds).

  30. Emily, when you press Bid History on ebay, what you see is a table of bids. Ebay has to run an auction because there are millions of different types of products for which nobody has created a table of how much each is willing to pay.

    That’s not true in the case of Bank bidding for a CD. Banks precisely know how much they are willing to pay for a CD of certain amount of certain duration at a given point of time. This data exist.

    The auction already exist. Different banks send their bids to Bankrate. And a user could order the bids in the descending auction and choose the winner. That’s an open cry auction. It favors the end users, i.e., you and me.

    Moneyaisle auction is closed bid. It favors the bankers. It is solving banker’s problem not an end user’s problem. It does not give any thing back to the users. In fact it takes something back. On bankrate you get the highest rate and on Moneyaisle you get the second highest rate. The difference either is kept by the bank or go to moneyaisle. This difference could have come to our pockets.

    It is a fine business to pitch to the banks. But do not tell to the users that it is solving their problem.

    Regarding the email address, I do not mind giving my email address. But I do mind verifying it. This blog does not verify the email addresses. A verified email address is lot more valuable. So I want to give this value to them, only when I am sure to get the value from them. So a consistent protocol is to show the name of the winning bank. If I want to lock the deal for 7 days, then sure please take my email address. (BTW, most banks anyway provide 7 days locking period to arrange the transfer of funds).

  31. Andy, I agree with you. I have trouble giving any credibility to the Bankrate rating system. Don’t they rate the same banks they accept advertising from? How is that any different from stock analysts accepting investment banking fees? (Or was that too many financial crises ago?)

  32. Andy, I agree with you. I have trouble giving any credibility to the Bankrate rating system. Don’t they rate the same banks they accept advertising from? How is that any different from stock analysts accepting investment banking fees? (Or was that too many financial crises ago?)

  33. Bankrate is not an auction system. They don’t get bids from banks. Bankrate has is a rate aggregation table with the rates advertised on a periodic basis (weekly, monthly) and each time the user clicks on a bank name, $$’s add to the revenues. Which part is the auction, the click cost for banks gets bidded up, is that new. Wow! didn’t know that, will have an intern investigate this.

    What you say about second highest rate is not true because I did get a higher rate from Moneyaisle than the advertised rate on bankrate site and yes I had the option of walking away completely at any point after having connected with the bank. I did not see the process any different than if I clicked a bank name at Bankrate and dealt with the bank. No difference there.

    Based on the NY Times article and the MIT professors authenticating the auction technology, I will definitely take their word. Also, from what I experienced the auction process was not a closed bid one. The whole bidding process happened on the screen. I saw the rounds and the rates go up, except they were not presented in a table. See the bidding process capture in the NT Times article.

    Have a good day.

  34. Bankrate is not an auction system. They don’t get bids from banks. Bankrate has is a rate aggregation table with the rates advertised on a periodic basis (weekly, monthly) and each time the user clicks on a bank name, $$’s add to the revenues. Which part is the auction, the click cost for banks gets bidded up, is that new. Wow! didn’t know that, will have an intern investigate this.

    What you say about second highest rate is not true because I did get a higher rate from Moneyaisle than the advertised rate on bankrate site and yes I had the option of walking away completely at any point after having connected with the bank. I did not see the process any different than if I clicked a bank name at Bankrate and dealt with the bank. No difference there.

    Based on the NY Times article and the MIT professors authenticating the auction technology, I will definitely take their word. Also, from what I experienced the auction process was not a closed bid one. The whole bidding process happened on the screen. I saw the rounds and the rates go up, except they were not presented in a table. See the bidding process capture in the NT Times article.

    Have a good day.

  35. Hey Rob,

    I’d love to hear about you breakig away from the day job scene “working for the man” and telling everyone in due time how affiliate marketing and running your own venture online has significantly benefitted you. I think you have way too much knowledge to still be working for someone else…:-)

    Shawn :-P

  36. Hey Rob,

    I’d love to hear about you breakig away from the day job scene “working for the man” and telling everyone in due time how affiliate marketing and running your own venture online has significantly benefitted you. I think you have way too much knowledge to still be working for someone else…:-)

    Shawn :-P

  37. First, we need to agree on the facts. Moneyaisle does not give higher rates. Example: which anybody could verify. 1 year CD is quite common. BankRate shows me 5% APY, whereas Moneyaisle shows me 4.4% APY (at 11:27 AM PST, Friday Oct 3, 2008).

    If moneyaisle beats this 5% APY (say today), then I will take that offer and pay you half the difference to whatever benefits it accrues to me.

    Second, I always sign my full name on any discussion and you could easily find information about me on the web, and confirm that I have nothing to do with Bankrate. But I can’t say the same about you, whether you are related to Moneyaisle or not.

    I will write the rest later, because on technical ground this is spreading so much mis-information in order to fool ordinary citizens. A part of such behavior is partly responsible for the financial mess we are in. Their system provides higher value to bank. They say it to get endorsements from banks. It is a perfectly valid business.

    But at the moment, it does not provide added value to the end users. It may change because moneyaisle folks are working hard, but until then they should not claim this. Especially in the economic situations we are in.

  38. First, we need to agree on the facts. Moneyaisle does not give higher rates. Example: which anybody could verify. 1 year CD is quite common. BankRate shows me 5% APY, whereas Moneyaisle shows me 4.4% APY (at 11:27 AM PST, Friday Oct 3, 2008).

    If moneyaisle beats this 5% APY (say today), then I will take that offer and pay you half the difference to whatever benefits it accrues to me.

    Second, I always sign my full name on any discussion and you could easily find information about me on the web, and confirm that I have nothing to do with Bankrate. But I can’t say the same about you, whether you are related to Moneyaisle or not.

    I will write the rest later, because on technical ground this is spreading so much mis-information in order to fool ordinary citizens. A part of such behavior is partly responsible for the financial mess we are in. Their system provides higher value to bank. They say it to get endorsements from banks. It is a perfectly valid business.

    But at the moment, it does not provide added value to the end users. It may change because moneyaisle folks are working hard, but until then they should not claim this. Especially in the economic situations we are in.

  39. 5% seems to be gone from bankrate. As of now both services are returning the same exact rate on 1 year CDs(from the same people). Which certainly isnt that exciting, but it could be the result any number of factors. Perhaps they dont really add a lot(or any) of value over their competitors yet. Which is very different then adding no value. Both services are much better than the way most people are currently purchasing CDs, which is what they were comparing it to. I’d check both before purchasing anything.

  40. 5% seems to be gone from bankrate. As of now both services are returning the same exact rate on 1 year CDs(from the same people). Which certainly isnt that exciting, but it could be the result any number of factors. Perhaps they dont really add a lot(or any) of value over their competitors yet. Which is very different then adding no value. Both services are much better than the way most people are currently purchasing CDs, which is what they were comparing it to. I’d check both before purchasing anything.

  41. William, did you sort Bankrate table by APY? It still shows 5% APY.

    http://tinyurl.com/8j8kv or
    http://www.bankrate.com/brm/rate/high_ratehome.asp?web=brm&prodtype=invest&product=15&sort=2

    It does not add value for the users and sometimes it can subtract value. For an example, even though you checked both service, you may have subscribed to 4.40% APY at Moneyaisle.

    BTW, everytime you run their auction, Moneyaisle shows 4.4%. You know why? Because effectively they are reading a table. Their process is opaque and that’s where they subtract the value. They do not highlight the value they provide, e.g., show a comparison to existing service such as bankrate.com.

    They instead work like a magician, whose job is to fool you (magic!) by waving an ordinary rod as a magic wand.

    They are doing the same, by showing an increasing counter, which has no meaning except the last value. Why are not they simply showing me, “here is your 4.4% APY”. It is like holywood movie, when they have to show an spacecraft from aliens, they put flicking lights here and there. That’s holywood job. A business which adds value underline the added value. I am sure that’s what they must have done when they sign up a deal with bankers, because they add real value to bankers by letting them acquire customers at low APY’s the available at other competing services.

  42. William, did you sort Bankrate table by APY? It still shows 5% APY.

    http://tinyurl.com/8j8kv or
    http://www.bankrate.com/brm/rate/high_ratehome.asp?web=brm&prodtype=invest&product=15&sort=2

    It does not add value for the users and sometimes it can subtract value. For an example, even though you checked both service, you may have subscribed to 4.40% APY at Moneyaisle.

    BTW, everytime you run their auction, Moneyaisle shows 4.4%. You know why? Because effectively they are reading a table. Their process is opaque and that’s where they subtract the value. They do not highlight the value they provide, e.g., show a comparison to existing service such as bankrate.com.

    They instead work like a magician, whose job is to fool you (magic!) by waving an ordinary rod as a magic wand.

    They are doing the same, by showing an increasing counter, which has no meaning except the last value. Why are not they simply showing me, “here is your 4.4% APY”. It is like holywood movie, when they have to show an spacecraft from aliens, they put flicking lights here and there. That’s holywood job. A business which adds value underline the added value. I am sure that’s what they must have done when they sign up a deal with bankers, because they add real value to bankers by letting them acquire customers at low APY’s the available at other competing services.

  43. Ah, didnt realize it wasnt sorting it automatically. Not suprising WaMu isn’t bidding on MoneyAisle, I wonder what happens if you try and apply? Chase’s rates are bad.

    Certainly good to be skeptical, and the graphics certainly dont have to mean anything. But I think its a bit soon to assume they are worthless or worse, actively scamming people. 1 day of testing might not be fair especially given the market conditions. Or maybe it still needs work. It’d be nice if they had a list of participating banks somewhere tho.

  44. Ah, didnt realize it wasnt sorting it automatically. Not suprising WaMu isn’t bidding on MoneyAisle, I wonder what happens if you try and apply? Chase’s rates are bad.

    Certainly good to be skeptical, and the graphics certainly dont have to mean anything. But I think its a bit soon to assume they are worthless or worse, actively scamming people. 1 day of testing might not be fair especially given the market conditions. Or maybe it still needs work. It’d be nice if they had a list of participating banks somewhere tho.

  45. Some points brought up by Kamal Jain need to be addressed.

    First, Bankrate does not run a reverse auction, Bankrate is a rate board which provides information that is periodically updated. A reverse auction, by definition, occurs when sellers iteratively bid for the buyers (reversing the eBay model where buyers bid against each other for the sellers.) As the auction process on MoneyAisle is fully automated, the engine can change the interest rate per the market conditions, within constraints laid out by the bank. By contrast, a listing service such as Bankrate generally receives updates once every few days.

    To further set the record straight, each and every bank in our network has to be an FDIC member. It is stated very clearly on our home page and at many other locations on our site. At the end of a MoneyAisle auction, users are provided with links to both the FDIC Website and to the winning bank’s site – it is easy from there to look up the winning bank via the FDIC so they can see for themselves that their deposits are FDIC-insured. This is again in sharp contrast to a listing service such as Bankrate, where that is not necessarily the case, as the banks listed or advertised are not necessarily FDIC members.
    Furthermore, MoneyAisle provides additional pre-screening of the banks by using an independent rating agency – Veribanc – and any bank which is rated ‘Red with no stars’ is not accepted into our network. This provides consumers with an additional level of safety. For example, neither IndyMac nor WAMU were part of our network, whereas listing services such as Bankrate had them on the top of their APY list without ever mentioning that these banks could be in trouble. These same listing services are happy to collect their advertisement fees even if the consumer winds up having to spend hours in line outside a failed branch. At MoneyAisle, consumer commitment is one of our passions – which is why we pre-screen our member banks, even at the cost of losing revenue.

    (continued)

  46. Some points brought up by Kamal Jain need to be addressed.

    First, Bankrate does not run a reverse auction, Bankrate is a rate board which provides information that is periodically updated. A reverse auction, by definition, occurs when sellers iteratively bid for the buyers (reversing the eBay model where buyers bid against each other for the sellers.) As the auction process on MoneyAisle is fully automated, the engine can change the interest rate per the market conditions, within constraints laid out by the bank. By contrast, a listing service such as Bankrate generally receives updates once every few days.

    To further set the record straight, each and every bank in our network has to be an FDIC member. It is stated very clearly on our home page and at many other locations on our site. At the end of a MoneyAisle auction, users are provided with links to both the FDIC Website and to the winning bank’s site – it is easy from there to look up the winning bank via the FDIC so they can see for themselves that their deposits are FDIC-insured. This is again in sharp contrast to a listing service such as Bankrate, where that is not necessarily the case, as the banks listed or advertised are not necessarily FDIC members.
    Furthermore, MoneyAisle provides additional pre-screening of the banks by using an independent rating agency – Veribanc – and any bank which is rated ‘Red with no stars’ is not accepted into our network. This provides consumers with an additional level of safety. For example, neither IndyMac nor WAMU were part of our network, whereas listing services such as Bankrate had them on the top of their APY list without ever mentioning that these banks could be in trouble. These same listing services are happy to collect their advertisement fees even if the consumer winds up having to spend hours in line outside a failed branch. At MoneyAisle, consumer commitment is one of our passions – which is why we pre-screen our member banks, even at the cost of losing revenue.

    (continued)

  47. Consumers should indeed pay attention to bank ratings, but they should also make sure to investigate the conflict of interests at the rating services. Any listing service which rates banks while simultaneously collecting advertisement fees is seriously conflicted. This is precisely what got us into such an economic mess to begin with – when rating agencies such as Moody and others were doing advisory services with the same companies they were rating. I am glad the government cracked down on this serious conflict of interest. Unfortunately, it has not happened yet with bank ratings, exposing the consumer to a potentially questionable quality of information. Compare that to an independent rating agency such as ‘Veribanc’, which does not collect any advertisements and maintains their full independence. In keeping with our consumer commitment, we have forgone potential advertisement revenue to eliminate any possibility of influence from advertisers. I think it is high time that these Wall Street practices are banned to protect the unassuming consumer. Ratings should only be provided by those who are absolutely free of any conflict.

    MoneyAisle is strictly an auctioneer – we facilitate the reverse auction and stay out of any and all money transactions. The transaction is strictly between the consumer and the FDIC-insured bank – we are out of the process at that point.

    MoneyAisle is proud of our consumer commitment and our technology, which our amazing team has developed with Professors Rob Freund and Rob Rines at MIT. Providing an environment free of advertisement fees and conflict of interest to consumers is fundamental to our existence. If it bothers the existing establishment, so be it.

    Kevin Cafferty
    Senior Web Producer, MoneyAisle

  48. Consumers should indeed pay attention to bank ratings, but they should also make sure to investigate the conflict of interests at the rating services. Any listing service which rates banks while simultaneously collecting advertisement fees is seriously conflicted. This is precisely what got us into such an economic mess to begin with – when rating agencies such as Moody and others were doing advisory services with the same companies they were rating. I am glad the government cracked down on this serious conflict of interest. Unfortunately, it has not happened yet with bank ratings, exposing the consumer to a potentially questionable quality of information. Compare that to an independent rating agency such as ‘Veribanc’, which does not collect any advertisements and maintains their full independence. In keeping with our consumer commitment, we have forgone potential advertisement revenue to eliminate any possibility of influence from advertisers. I think it is high time that these Wall Street practices are banned to protect the unassuming consumer. Ratings should only be provided by those who are absolutely free of any conflict.

    MoneyAisle is strictly an auctioneer – we facilitate the reverse auction and stay out of any and all money transactions. The transaction is strictly between the consumer and the FDIC-insured bank – we are out of the process at that point.

    MoneyAisle is proud of our consumer commitment and our technology, which our amazing team has developed with Professors Rob Freund and Rob Rines at MIT. Providing an environment free of advertisement fees and conflict of interest to consumers is fundamental to our existence. If it bothers the existing establishment, so be it.

    Kevin Cafferty
    Senior Web Producer, MoneyAisle

  49. William, Bankrate.com order the listings but not according to your benefit but according to its own benefit. Any business would do that. Search engines order the ads according to their own benefit. Same as Moneyaisle.com. A business could only portray that it lists the deals according to consumers benefit, but it always lists the deals according to its benefit. Here is a theoretical proof: your bank has the best interest rate but gives no or overall much smaller commission to bankrate or moneyaisle, in that case they would not perpetually surface your bank’s listing, at least not at the top. The good thing is that you could see lower listings on bankrate.com and moneyaisle would not show you lower listings.

  50. William, Bankrate.com order the listings but not according to your benefit but according to its own benefit. Any business would do that. Search engines order the ads according to their own benefit. Same as Moneyaisle.com. A business could only portray that it lists the deals according to consumers benefit, but it always lists the deals according to its benefit. Here is a theoretical proof: your bank has the best interest rate but gives no or overall much smaller commission to bankrate or moneyaisle, in that case they would not perpetually surface your bank’s listing, at least not at the top. The good thing is that you could see lower listings on bankrate.com and moneyaisle would not show you lower listings.

  51. Kevin and Emily:

    Bankrate.com runs reverse auction once you order their listings by APY. Moneyaisle also runs an auction. The question you could ask is whose auction is more efficient and better for consumers. Bankrate.com auctions favors consumers, and Moneyaisle.com auction favors bankers. Both businesses take their fee from banks. The main difference is that Bankrate.com is more transparent and Moneyaisle is opaque. Bankrate.com is more efficient so it could pass the savings in terms of higher interest rate to consumers, where moneyaisle can’t.

    An auction is a price setting mechanism, where either one or both sides picks up the best deal. In case the underline auction is a commodity, e.g., a stock on wallstreet, you do not typically run a separate auction for each buyer or seller. You run a common auction, to match the best offers from both sides.

    Money is a commodity. A bank would as happily take my $ as yours. So the bank has no reason to offer you a different APY than me. Therefore it is inefficient to portray it that way. A more efficient way is to run a single auction, and put all the bids on a board. That auction is called posted prices. That’s what you see on bankrate.com. That’s what actually happens on moneyaisle too but in a rather expensive and opaque way. It shows the same highest APY if I run the auction twice consecutively. And thanks God for that, because if not then I would have to run the auction 100′s of times, causing more inefficiency.

    If you compare moneyaisle with Ebay, then you need to study auction 101. Ebay has millions of different types of goods. So posted prices do not makes sense. So one needs to run the expensive procedure of determining the prices, called auction. Where somebody sells multiple items of the same kind, many actually choose the posted price method on Ebay.

    There is another difference on Ebay or say priceline.com. They requires commitment from both the sides. Typically you can squeeze water from stone. Price setting is a zero sum game, in fact negative since one has to spend time and money to come with an agreeable price. So you need to increase the underline value to create benefits on both the side.

    If moneyaisle makes my locking of interest rate a commitment on both sides, then I could have agreed that Moneyaisle could enable additional interest rate for me, in exchange of my commitment. But Moneyaisle does not require any commitment, so there is no reason for any bank to offer any extra interest rate than they post at bankrate.com. Therefore, if you know proxy bidding, what ever they post on bankrate is their proxy bid on Moneyaisle.

    Therefore if WaMu puts 5% APY on bankrate.com. WaMu will put 5% proxy bid at Moneyaisle. So if the second highest on Moneyaisle is at 4.39% APY, WaMu’s proxy bid will end at 4.40% APY at Moneyaisle. So the consumer lost 0.6% APY on Moneyaisle and WaMu got it.

    Now, if you bring ratings, I do not trust anybody’s ratings. Bankrate.com gives me this right so that I could choose the bank I trust even if it offer a little less APY. But why should a consumer trust Moneyaisle ratings. Show the consumers all the bids, so that the consumer could sometimes choose another bank with a little less APY.

    Last, Kevin, since you work for Moneyaisle. Please take a single stand. Your founder says FDIC insurance make deposits a commodity, so there is no reason for the user to choose any lower rate. You say that the ratings are important. Well if it is not important then you may not be showing me the best offer according to my own perceived value of banks. You are forcing me to trust your own rating system. May be I may want to go with a well known bank even if it gives me 2% less APY. A transparent system offers me this choice, an opaque and expensive auction system like Moneyaisle.com does not give me this choice.

    Emily, regarding trusting MIT professor, well it is like trusting a model on her choice of shampoo. It is fine as long as you know that model is not paid, because after all the model perhaps paid more attention to her shampoo choice than us. Moneyaisle could be a fine profitable business because it provides better value to banks, but it may not be the best choice for consumers. Or one day, Moneyaisle may provide better value to consumers too, but that day is not today.

    The current financial situation could be made better by bringing more transparency and not more opaqueness.

  52. Kevin and Emily:

    Bankrate.com runs reverse auction once you order their listings by APY. Moneyaisle also runs an auction. The question you could ask is whose auction is more efficient and better for consumers. Bankrate.com auctions favors consumers, and Moneyaisle.com auction favors bankers. Both businesses take their fee from banks. The main difference is that Bankrate.com is more transparent and Moneyaisle is opaque. Bankrate.com is more efficient so it could pass the savings in terms of higher interest rate to consumers, where moneyaisle can’t.

    An auction is a price setting mechanism, where either one or both sides picks up the best deal. In case the underline auction is a commodity, e.g., a stock on wallstreet, you do not typically run a separate auction for each buyer or seller. You run a common auction, to match the best offers from both sides.

    Money is a commodity. A bank would as happily take my $ as yours. So the bank has no reason to offer you a different APY than me. Therefore it is inefficient to portray it that way. A more efficient way is to run a single auction, and put all the bids on a board. That auction is called posted prices. That’s what you see on bankrate.com. That’s what actually happens on moneyaisle too but in a rather expensive and opaque way. It shows the same highest APY if I run the auction twice consecutively. And thanks God for that, because if not then I would have to run the auction 100′s of times, causing more inefficiency.

    If you compare moneyaisle with Ebay, then you need to study auction 101. Ebay has millions of different types of goods. So posted prices do not makes sense. So one needs to run the expensive procedure of determining the prices, called auction. Where somebody sells multiple items of the same kind, many actually choose the posted price method on Ebay.

    There is another difference on Ebay or say priceline.com. They requires commitment from both the sides. Typically you can squeeze water from stone. Price setting is a zero sum game, in fact negative since one has to spend time and money to come with an agreeable price. So you need to increase the underline value to create benefits on both the side.

    If moneyaisle makes my locking of interest rate a commitment on both sides, then I could have agreed that Moneyaisle could enable additional interest rate for me, in exchange of my commitment. But Moneyaisle does not require any commitment, so there is no reason for any bank to offer any extra interest rate than they post at bankrate.com. Therefore, if you know proxy bidding, what ever they post on bankrate is their proxy bid on Moneyaisle.

    Therefore if WaMu puts 5% APY on bankrate.com. WaMu will put 5% proxy bid at Moneyaisle. So if the second highest on Moneyaisle is at 4.39% APY, WaMu’s proxy bid will end at 4.40% APY at Moneyaisle. So the consumer lost 0.6% APY on Moneyaisle and WaMu got it.

    Now, if you bring ratings, I do not trust anybody’s ratings. Bankrate.com gives me this right so that I could choose the bank I trust even if it offer a little less APY. But why should a consumer trust Moneyaisle ratings. Show the consumers all the bids, so that the consumer could sometimes choose another bank with a little less APY.

    Last, Kevin, since you work for Moneyaisle. Please take a single stand. Your founder says FDIC insurance make deposits a commodity, so there is no reason for the user to choose any lower rate. You say that the ratings are important. Well if it is not important then you may not be showing me the best offer according to my own perceived value of banks. You are forcing me to trust your own rating system. May be I may want to go with a well known bank even if it gives me 2% less APY. A transparent system offers me this choice, an opaque and expensive auction system like Moneyaisle.com does not give me this choice.

    Emily, regarding trusting MIT professor, well it is like trusting a model on her choice of shampoo. It is fine as long as you know that model is not paid, because after all the model perhaps paid more attention to her shampoo choice than us. Moneyaisle could be a fine profitable business because it provides better value to banks, but it may not be the best choice for consumers. Or one day, Moneyaisle may provide better value to consumers too, but that day is not today.

    The current financial situation could be made better by bringing more transparency and not more opaqueness.

  53. Ben, it would be more useful if you name the bank and the rate it offered you.

    In my second last paragraph of the previous comment, what I meant, which is clear but still for clarification, is that technically, if MIT professors are benefitting from Moneyaisle, then it is the same conflict as Kevin mentioned in his defence of Moneyaisle. Kevin can’t choose which conflicts we should ignore and which we not. So could Kevin certify that professors of MIT have nothing to gain if Moneyaisle succeeds.

  54. Ben, it would be more useful if you name the bank and the rate it offered you.

    In my second last paragraph of the previous comment, what I meant, which is clear but still for clarification, is that technically, if MIT professors are benefitting from Moneyaisle, then it is the same conflict as Kevin mentioned in his defence of Moneyaisle. Kevin can’t choose which conflicts we should ignore and which we not. So could Kevin certify that professors of MIT have nothing to gain if Moneyaisle succeeds.