Tag: Startup Reviews

Square Could be The Next Paypal

Category : Entrepreneurship
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Square has the potential to be a game changer.  It allows anyone with an iPhone to accept credit cards.  The founders, who previously founded Twitter, realized that while just about everyone has credit cards, only 2% of credit card holders had the ability to accept them.  From their site:

Square changes all that.  All you have to do is download their app, give them your social security number and a bank account number and you can process credit cards.  If you want to get a lower fee, you can request that they send you a free credit card reader, which you plug into your headphone jack.  From their site:

In February 2009, Jim McKelvey wasn’t able to sell a piece of his glass art because he couldn’t accept a credit card as payment. Even though a majority of payments has moved to plastic cards, accepting payments from cards is still difficult, requiring long applications, expensive hardware, and an overly complex experience. Square was born a few days later right next to the old San Francisco US Mint.

I’ve downloaded the app and played around with it and it’s about as easy to use as it could possibly be.  Just like paypal, you always know what you have to do to accept payments.  Imagine being able to settle debts and split bills at restaurants right on your phone.  Or maybe accept a utility bill from your roommate who never has cash and doesn’t like to write checks.  Or imagine a street vendor selling food or tshirts.  Square opens up completely new markets and lowers the friction between buyers and sellers.

There are drawbacks.  First, many people do not trust vendors who use their personal mobile phones to accept credit cards.  People are worried about being scammed.  I wouldn’t be too worried about being scammed, since if you challenge credit card purchases, your credit card company refunds you and goes after the seller.  From my understanding you won’t have any liability, but that does not stop the trust factor from being an issue.

The second problem are the credit card fees.  Square charges 2.5% when you use the card reader (card present transactions) and 3.5% when you just type in the credit card number.  These fees seem really high.  I use traditional credit card processors and their fees have been 1.5%-2%.  I know that when I sell big ticket items, I shy away from PayPal because the fees eat up any money I make.  Square needs to figure out a way to lower it’s fees and get buyers to be more trusting, or find a place where people are willing to pay those fees out of convenience like PayPal did with eBay.

For now, I probably won’t use Square very often, but I can see times I would use it.  I’m really interested to see how the general population reacts to Square as it becomes more mainstream.  I think it’ll be a tough road, but ultimately, accepting credit cards on a mobile device will be the way of the future, unless we just eliminate the credit card completely and just use our phones to make purchases like they do in Japan.

What do you think?  Will Square take off?  Will you use it?  Are the fees too high?

Paul Graham’s Newest Essay is a Must Read

Category : Entrepreneurship
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I’ve never written a post solely telling readers to read someone else’s work, but Paul Graham‘s newest essay called “What Startups are Really Like” is so good I’ll break my rule.  Graham is the founder of Y Combinator, a company that funds startups and gives them guidance, money and a community for to help them start their startup.  Graham emailed all of the founders of the companies Y Combinator has funded asking them what was the most surprising thing about their experience:

I’m in the unusual position of being able to test the essays I write about startups. I hope the ones on other topics are right, but I have no way to test them. The ones on startups get tested by about 70 people every 6 months.

So I sent all the founders an email asking what surprised them about starting a startup. This amounts to asking what I got wrong, because if I’d explained things well enough, nothing should have surprised them.

He took the most interesting responses and wrote an essay reacting to it.  If you run a startup, are interesting in starting one or are just interested in what entrepreneurs go through to start a company, this article is a must read.  Pretty much everything he says rings true to my experiences and would be advice I would give, so I will just let it stand on its own.

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How To “Stickk” to Your Goals

Category : Personal Thoughts
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Have you ever set a goal that you wanted to accomplish, only to give up after a few days or weeks?  How about a New Years resolution?  If you are like me, your probably set a bunch of different goals each year, but are only successful on attaining a small percentage.

Most of my goals are not huge.  For example, this year, I wanted to make sure that I traveled more frequently, played more soccer, read more books and learned how to cook at least one new dish per month, to name a few.  I have done some of them, but all of them and wanted to try to find ways to give myself incentives to actually complete them.  I was reading the Freakonomics blog the other day and remembered an old post about a new website designed to help you follow through.

StickK.com, a website founded by Freakonomics contributor by Ian Ayres and two of his Yale collegues, allows you to set a goal, a completion date and puts some teeth behind failing to complete your goal.  They came up with a “commitment contract” to help make sure that you follow through on your goal.  From their site:

Entirely unique to each person, a Commitment Contract obliges you to achieve your goal within a particular time-frame. Not only are you challenging yourself by saying “Hey, I can do this,” you’re also putting your reputation at stake. If you are unsuccessful, we’ll let your friends know about it.

Oh but wait, there’s more…

Sometimes losing face with your friends might not be enough to keep you on track. So, what is the one thing no one can stand to part with? You guessed it! Cold hard cash.

As a true test of your commitment, stickK will let you put your money on the line for any Commitment Contract. Achieve your goal and you don´t pay a thing (and you´re much happier than before, aren´t you?).

But if you aren’t successful, you forfeit your money to a charity, an anti-charity or even that neighbor who keeps stealing your newspaper.

Adding money into the situation is a really interesting idea, but the idea of an “anti-charity” is what makes this website unique and innovative.  For example, if you are a hardcore Republican and you want to lose 15 pounds, you can make your contract say that you will donate $100 to a gun control advocacy if you do not achieve your goal.  The anti-charity adds so much added motivation for you to complete your goal.  If you fail, you are not only letting yourself down and spending money, but you are helping a cause that you do not like.

I decided to try it out today to see if it works and set up an account.  They only have a few anti-charities, so I used the “friend or foe” option.  Since I am a proud UW grad and a huge Badger sports fan, if I do not achieve my goal, I will donate $200 to the University of Michigan Athletic Department.  I will keep you updated if I accomplish my goal or if the University of Michigan Athletic Department will get $200 of my hard earned money.

Do you think StickK is a good idea?  What anti-charity would you donate to?

Startup Review: City Dictionary

Category : Entrepreneurship
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City Dictionary is a Madison-based startup that organizes user generated definitions for local slang and locations.  Co-founded by brothers and Wisconsin grads Thomas and John Carmona, City Dictionary is similar to urban dictionary, but location based and and city specific.  Thomas Carmona told me their “goal is to capture the subtleties of American cities that existing references leave out.”   From their website:

Have you ever gone to a new city and been confused by the way the locals speak? Whether it’s an idiomatic expression, a nickname for a local street, or the name of a local food, cities can have confusing language. For example, should you be offended if someone in Pittsburgh calls you “nebby?” In Philadelphia, will you know what to say if someone offers you a “whiz wit?” Will you be alarmed in Madison when someone says they drank a “boot” last night?  If you understand all three of these references, then you’re in the minority. For the rest of us, there’s City Dictionary.

They launched the site back in May 2008 as a Madison website, trying to “capture the eccentricities of Madison language and culture” but have since expanded nationwide.   They have made some great progress lately, including winning the Burrill Business Plan Competition and a cool $10,000 first prize, signing a deal to put dictionaries on over 60 local TV news websites and adding lots of new definitions.  

The site is interesting because it fills in the gaps that other sources like traditional encyclopedias, Wikipedia and others leave out.  Thomas Carmona told me that “eventually, we would like City Dictionary to be a valuable reference for all cities and towns–large or small–in the US, similar to the way Wikipedia is a powerful reference for, well, everything. Whereas Wikipedia and other existing city references give the “official” account of a city, City Dictionary will fill in the gaps with the subtleties that only real locals can offer.”  

City Dictionary’s market is a niche that had been previously underserved and  I really like their strategy of partnering with local TV stations to get more users and content.  If they are able to get enough partners, they will build a wall around their industry, making it hard for competition to break into the market.  The syndication deals are a promising sign because others companies realize the value that City Dictionary brings to the table and provides City Dictionary with a much larger presence across the web.

Currently, City Dictionary is ad supported and it will be interesting to see if they can find a way to squeeze revenue out of the page views that they generate or have to find another revenue stream as they move forward.  I’m excited to see how they continue to grow.  Check out City Dictionary and let me know what you think.