One of the features of working in an ambitious start-up company are the exhilarating highs and lows one goes through—sometimes on a daily basis. If you happen to work at a big company as I did in an earlier life, you certainly know what I’m talking about. It is the same there too, perhaps a bit less intense.
Recently I experienced an extra valued high when reading a popular newspaper.
For a little context, it is important to know that during my previous life, I spent years trying to convince a lot of people that mobile payments were about to take off. I tried to convince retailers and banks that this was the case, and that it would be meaningful for them. I tried to appeal to their sense of logic that new competitors who are already rich on information and rich on customer loyalty, will be trying to become rich on additional transaction fees. I tried to explain that my target partners had a big market presence, wonderful customer access, and nice margins. I tried to explain that all the big internet giants are after this domain and they had better deal with such a competitor early on. Despite the overwhelming evidence, and our agreement on these facts, my target partners barely moved an inch.
It felt a little like maybe another ten years earlier. At that time, Amazon was young, but not so young for an interesting bookstore could still ignore it. I was in my local bookstore, trying to get an English book for about half an hour, only to learn that it was not in stock, but we could send a letter somewhere and hope for the best. An hour before that, I had seen the book at Amazon. I tried to explain to them that if I could get it from Amazon, there should be a way they could get it too. They didn’t. Judging by my success with the bookstore employee, as well as the major banks I mentioned earlier, I must be really bad at explaining.
Feeling like a failure for such a long time, it was refreshing to read that Margit Wennmachers, a German-born partner at Andreessen Horowitz, thinks it is natural to overestimate what will happen in five years’ time, but underestimate the changes in 20 years time. I think she even gives a reason why this may be the case by defining the existence of “product genius” as one of the key ingredients for success. Well, if you are a genius, most people will need time to comprehend what you do, and if it is a commercial product, it certainly takes even longer for you to market it and for the market to accept it broadly.
The same newspaper reported on PayPal going offline, replacing cash in a pilot setting in Berlin. Not a big deal yet, and far behind what I had honestly expected two years ago, but hey, this is eBay, and more is on the way. Google is still toying with mobile payments, as is Starbucks, and Amazon as well. For certain, there will be tough times ahead for banks in retail payments.
One of the reasons why new B2C-based payment models are having such a difficult start is they are lacking a real, perceived need from the customer side. Just think of the last time when you really worried about the method of payment for just about anything – most likely never. One could argue that it is similar in B2B payments and along the B2B financial supply chain. It is a hurdle to switch or complement existing banking relationships and existing tools. Many CFOs, as well as their sales departments, will say that everything works just fine as it is, so there is no need for change. This is not a surprise really. There never was any reason to change. This is the challenge that Mrs. Wennmachers talks about in that first five years.
Think about it. Our ancestors killed those mammoths with stones just fine. Horse riding was helpful and also a pleasure. No cars were ever needed, there were no roads available anyhow. And the three TV channels on our black and white set delivered everything I ever wanted from TV back in the 70’s. And yet, some crazy people were persuaded by those product geniuses and adopted those unnecessary new things, and found new ways of using them, and built new roads, new dreams, and their lives and the world were transformed forever. And things that were once the product of geniuses became the new “normal”. Today, very few people switch back from their flat-screen-TV-two-cars-you-name-it-lofts into a cave, and with the exception of TV content, it is because better is the enemy of the good. Looking at all the things that are technologically possible today—and the speed and scale of adoption of new innovation in the past decade—it is encouraging and gives hope and promise to those of us creating and inventing the future.
There are so many arcane elements and complexities related to B2B transactions and commerce; so many strange pricings in cross-border payments, exception handling, information retrieval on payments, so many gaps to what modern data processing does anywhere – except in the arteries of our economies that make capital get stuck, dribble out, or turn bad… It may last another five years for everybody to get it, but we are excited to be working with companies and partners who get it already, and are setting themselves up to become winners in this new economy.
In short, I salute you, Mrs. Wennmachers! This was an insightful interview, and I’m looking forward to the day, twenty years from now, when we look at today’s business much as we look at Tom Selleck and “Dallas.”