Peer to Peer payments

Europeans coming to visit or study in United States are usually surprised by dozens of differences between both places; the type of food, the transportation system, etc. However, nowadays Europeans need to add another difference to their list, peer to peer mobile payments which are only available in US.

Peer to peer mobile payments allow users to send and receive money with their friends by simply using their smartphones and without knowing other’s people account. Currently there are several applications available such as Venmo, Square Cash, Google Wallet, PayPal, Dwolla or Clinkle. All of these applications solve the same “job to be done” which is to transfer money in a convenient and easy way. However, each one of them has several features that make them different from the rest.

Analysis of differences between applications

Venmo brings together mobile payment and social network. It allows transferring money between Facebook friends registered on the platform. Moreover, Venmo also allows users to comment on the payments done by their friends, which helps to make the payment process fun and engaging. For those users that don’t want to share their payments it is possible to change the privacy setting to avoid sharing payments details with their contacts.


Square cash is the easiest application from the user perspective since it does not require that the person receiving the money is registered on the platform. The recipient receives an email where he needs to introduce his debit card to finalize the transaction. Contrary to other applications, Square Cash is only available for debit cards; it does not accept either credit cards or bank accounts.


Google Wallet apart from allowing users to transfer money between accounts, Google Wallet let users to attach coupons, gift cards and loyalty cards to their accounts. Moreover, users can also make payments on stores by either tapping their android phones or swiping a Google card.


PayPal is the most established player and a lot of people have already an account. It allows transferring money among national and international PayPal users. Another differentiation factor (except for Google Wallet) is that allows larger amounts of monthly transactions than its competitors (up to 10,000$/transaction, whereas other apps allows only ~3000$/transaction or per week).


Dwolla differs from the other application in that is the only application that verifies the user ID and makes him comply with customers regulations before he can start using the platform. Even though this additional security could be considered as a positive feature; the users perceive it on the opposite way because it requires completing an exhaustive registration and waiting several days for the verification process to be completed.


Clinkle has recently launched it service (September ’14) and it is based on “treats”. The idea behind the platform is that after seven different transactions users will receive a “free treat” (e.g. coffee) that they will be able to share with their friends. It does not have any other main difference in comparison with the other applications.


Market Design – Safety and privacy

Now that we understand the main differences among platforms, the first concern for users in order not use this application is the potential lack of security and privacy on these applications. Fortunately, there is nothing to be worried about, because all the companies have created agreements with the main credit card companies (MasterCard, Visa and American Express) to ensure protection for all the digital transactions, and also to support users with teams against fraud and risks.


The other main concern that could avoid users from adopting this peer to peer technology is the cost of using the service. Different companies have monetized their services on different ways, either by charging a flat fee per transaction, or by charging variable fees when using credit or debit cards. Additionally, another method used by these companies to monetize their services is to invest the money transferred from the bank account to the peer to peer account as any typical bank would do.

The only platform that is currently not monetizing its users is Square Cash that is not charging any fee. All the transaction costs for users for the different platforms are summarized in the following table:


Peer to peer payments are here to stay and is very unlikely that they will disappear any time soon. “Venmo, alone handled $314 million in mobile payments in the first quarter of this year” according to Bloomberg. Moreover, the total global market according to BI Intelligence could “worth well over $1 trillion” by 2018.


Network Effect and Winner take all

By this time I am quite positive that most of the readers are already convinced of the attractiveness of peer to peer payments. However, they might be wondering which application to download from all the existing.

Taking into consideration that there are not big differences between platforms, what really makes the difference is the number of users on each of them (network effect). The platform that will manage to grow faster will take control over the market, because the more users available in the platform the more powerful it will become (winner-take-all). Currently Venmo is winning this race and is fairly common to hear among Millennial users to use Venmo as a verb and ask their friends to “Venmo me”, which reminds to what happened in the past with Facebook or Google (“Facebook me” or “Google it”). However, it is important to keep an eye on the rest of applications, especially on Square Cash that is currently trying to increase its Network effect by not charging its users and by giving 1$ away for new users to start using its services.

Who will be the winner of this race? Would it be Venmo, Square Cash or any of their competitors? The only thing that I can say is that I hope that these companies expand their services quickly to Europe because if there is one thing that I will miss from United States when I will be go back home, it will be peer to peer payments.



read more

I would like to introduce the idea of a new car sharing service, which will allow the customers to share their ride with strangers by using existing transportation services, such as Uber, Lyft, and “regular” taxis.

 In my vision, the new car-pooling service will reduce the price for each passenger, allowing cheap public transportation for all. The new service will offer the customers the shortest available option to reach their destination (by finding the closest driver and the best shared route), together with the freedom to choose the ride service provider by the price, driver rank, partners for the ride, type of car, etc.

The use cases for such a service are endless: driving from an airport to a nearby city or town (or vise versa), going out to (or from) the popular places in the city downtown, and driving to a show or a sport event. Of course, in addition to the abovementioned examples, where one of the destinations is a public place with many potential passengers, the service can be relevant for any other ride, but will require many more users to match with one another.

The envisioned system will match between riders and drivers according to their location and destination, and will take into account the riders potential routes, optimizing on shortest time to destination or on the price (according to the rider preference). A key advantage over similar services such as Lyft Line[1] and UberPool[2], will be the option to choose between different services, including option to share a taxi ride. This will encourage all the existing players to raise their service standards, and lower the prices.

For a new player, offering this ride-pooling service could be a promising entry strategy to the ride-sharing market, which, as noted by my classmate Abhishek Sharma on his post from Nov 3, 2014[3], is currently dominated by two giants. The new player should avoid direct competition with the current players, and focus on offering low prices and expanding the market to new riders whose willingness to pay is lower. When a price of a bus or train ride will be almost the same as to price of the suggested new service, these knew potential customers will be more inclined to use a ride-pooling service.

In order to launch a successful service, several main conditions must be met:

Large user network

The service has a strong network effect: more users lead to more potential riders to share a ride with, which in turn attracts even more riders to join the service. The strength of the new service is that it is not a “two sided network,” as the service does not require the cooperation of the drivers or the service providers (Uber/Lyt/Taxis) and can be offered independently. To attract new users to the service, it should be heavily subsidized by the new player, at for the first few months.

Ability to decline partners for the ride

One of the key challenges of the offered service is the hesitation of potential riders to share a car with a stranger. Indeed, the driver himself/herself is a stranger, but some background checks are being made to ensure the riders safety. To deal with this issue, a rating system for passengers will be put in place. To protect the riders from revenge by a violent rider who get a low rate, one will not be able to see his reviews. Riders will have the option to decline other drives from joining, but in this case the price would be the full price for a single rider. In addition, an emergency button will be added to the new app (similarly to what SaferTaxi, a ride-sharing company in Latin America, offers to it drivers).

Prevent avoiding the additional payment for the service by “bypassing” the system

There is a potential risk that riders who have been connected by the service will try to avoid payment and take a taxi/Uber/Lyft not through the system. Therefore, the system should collect the payment prior to the ride, upon a successful match.

Strong legal standpoint to prevent blocking by current players

According to my preliminary research, the existing players APIs and user agreements don’t prohibit the suggested service from operating. However, these players may try to change them and/or technically block the new service from using their systems. The new player should make sure it can protect itself from law suits, and use the other player public available data in a legal manner. In should also be mention that if more riders will use the current players services thanks to the suggested solution, it will reduce the risk that current players will take actions again the new player.

 As described above, there are many challenges in the establishment of a new ride-pooling services, but I believe that with the right entry and pricing strategies there is a huge potential for a new player in the ride-sharing market. I hope and believe this vision will soon become a reality, and look forward to use such a service in the near future.




read more

Conventional wisdom among many startup founders and investors suggests that to build significant scale as an Internet company, you must be able to demonstrate strong repeat usage, engagement, and virality.  If your users aren’t coming back to your website frequently and/or sharing with their friends, how will you generate sustainable growth? While these metrics may be critical for some startups, there is one major exception to this rule – that is, sites that are fortunate enough to have figured out how to attract millions of free monthly visits from Google and other search engines.

Organic Search Market Overview

According to SimilarWeb, a platform for measuring consumer behavior online through its worldwide panel of tens of millions of users, in October 2014, an estimated 28% of all desktop traffic across the millions of websites in its database came from organic search (as opposed to direct traffic, referrals, or social media.) Within organic search, 89% of this traffic came from Google. In select categories though, the majority of traffic to all websites in that category is actually driven by users searching for something specific online. A few notable examples are Health (63% from search engines), Reference (62%), Food and Drink (57%), Home and Garden (56%), and Recreation & Hobbies (55%). Any company entering one of these markets would be making a huge mistake by not evaluating the potential strength of Search Engine Optimization (SEO) as a critical customer acquisition tactic.

Even some of the largest sites on the Internet are almost entirely dependent on organic search as opposed to direct visits or referrals from other sites. For example, in SimilarWeb’s Top 200 US websites, you’ll find popular sites like WebMD (87% from search engines), (87%), Wikipedia (83%), TripAdvisor (70%), and Yelp (67%) that all generate over 2/3 of their traffic from users who first go to Google or Bing to type in a query. Without SEO, these sites would have a fraction of the traffic and revenue they have today.

Upward Mobility in SEO: A Boon for Startups

There is no doubt that organic search can be an extremely powerful customer acquisition channel, but how easy is it for a newer company to master the ins and outs of SEO and build meaningful levels of traffic in a reasonable period of time? To answer this question, I analyzed historical ranking data from SEMRush, a company that tracks keyword rankings and competition for over 100 million keywords on the web. In looking at the top 30,000 search-driven sites in the United States this month on SEMRush, I uncovered some interesting trends. When comparing this to a similar list from May 2012, the oldest data set I was able to access, I found that 42% of the top 30,000 sites today (as ranked by estimated search traffic) were not in the list of top 30,000 sites 2.5 years ago. This suggests a reasonable degree of fluctuation in search rankings that presents an opportunity for SEO-savvy startups to gain share against incumbents. In looking at an even more recent list (from August 2013), that number was still surprisingly high, with 29% of today’s top 30,000 sites not appearing on the same list 15 months ago. When analyzing the ups and downs of the rankings of individual sites more deeply, I found that a lot of the fluctuations seemed to be due to Google’s increasing emphasis on promoting high-quality content. Google’s major algorithm changes in the past couple of years have generally benefited agile, user-driven companies with a unique content strategy that sets them apart from competitors.

Some notable examples of sites that have benefited from a focus on SEO best practices include (now ranked #181 on SEMRush), (ranked #284) and (ranked #990) who all grew from nonexistent or relatively small levels of traffic to millions of monthly visits from SEO in less than 2 years. Although generating growth at this frenetic pace is not a trivial task, there were many other examples of new companies that entered the upper echelon of SEO-driven sites in just a few years.

How Startups Can Evaluate the Importance of Organic Search

Mastering SEO is certainly not critical for all startups, and its relevance varies significantly by industry. However, for any company that offers content of any kind that is likely to meet the needs of a meaningful population of online searchers, it is one that should not be ignored. Two fantastic research tools that should be explored have already been mentioned: SimilarWeb and SEMRush. With SimilarWeb, you can check to see what percentage of traffic is being driven by SEO for any competitors and other adjacent sites, and determine if it is moving the needle for them. With SEMRush, you can generate lists of hundreds of relevant sites that overlap with your top competitors in Google’s search results, and dig in deep to lists of thousands of keywords that may be relevant for your own site. By looking at patterns across groups of keywords and top competitors, you can start to piece together a preliminary view on which SEO strategies are most effective in your market and where there is room for improvement. Once you do this, you still have your work cut out for you, but popular resources like Moz’s Beginners Guide to SEO,  QuickSprout’s Advanced Guide to SEO, and even Google’s own Webmaster Academy and Guidelines can help get you up the learning curve fast enough to make strong progress on your way to generating strong levels of traffic from SEO.

read more

As my co-founder and I are working in our startup idea, we are overwhelmed by the features, which would be good to provide to consumers and desperately trying to find ways to attract consumers onto our platform. As a startup, we are facing a few major decision of trying to “do it alone” or utilize the existing APIs of major players. Going with latter option seems attractive for many reasons.

 Using MindBody API to get access to salon’s direct schedule and free slot inventory would make our lives tremendously easier. We will have access to a good portion of salons without needing to spend time and money recruiting salons and then convincing them to adopt a separate inventory management tool. We would also get accurate data on inventory and not need to worry about double bookings and delays in confirming appointments with the consumer. Accurate data and speediness of matching and booking, as we learned from extensive consumer research, are key for our success and central to our customer value proposition.

 Furthermore, as we have seen throughout the semester and especially in class on Reviews and Reputation, ratings and reviews are important drivers of customer acquisition and sales. It seems that we are blessed to already have a very developed ratings ecosystem with Yelp providing a substantial number of ratings on almost all existing beauty salons and even individual technicians. What makes this even better is that they are willing to share their API and allow you to use and display their information on your web/mobile app.

 It seems like a no brainer to pay a fixed fee or negotiate a revenue sharing agreement in exchange for accurate and abundant information, which small startup like us, with a non-existent sales team and very limited funding, would never be able to get. However, we must consider the flipside – becoming dependent and building our entire business in direct dependence (in case of MindBody API) and an important part of our value proposition (in case of Yelp API) puts our startup at huge risk of getting our oxygen cut off at any point. As a potential competitor, we are very likely to experience resistance from these giants down the line.

 The decision we are facing is the tradeoff of short-term vs. long-term success and opportunities. While we will struggle to bring salons on board and get real-time accurate inventory from them and provide ratings and reviews of salons, an important value proposition to our consumers, we will have the chance to build a self-sustainable business.

read more

Human Rights Considerations in Online Networked Businesses

The risks associated with ignoring human rights principles transnational companies face have been apparent ever since the 1980’s: the Union Carbide disaster in Bhopal, India, and the “Nike sweatshops” highlight the strength of public perception and consumer power that, coupled with growing technological advancement, resulted in one of the drivers of the business and human rights movement. I think the online businesses today, especially those are dependent on network effects or monetizing user data, face similar risks in not considering the potential human rights implications of their operations and use of their products. Whether it’s Firechat’s “mesh networking” tool or Twitter, online businesses, even those initially targeted towards the U.S. audience, should consider the implications of the rights to privacy and freedom of expression and anticipate the potential effect on these rights use of their products may have abroad. These considerations are particularly salient when an online company is making strategic decisions about mobilizing a business, or entering/existing a particular geographic market.

For example, companies that decide to expand abroad might face scenarios where local law conflicts with international norms, and where host governments require companies to act in ways that interfere with consumers’ rights to free expression and privacy. Though numerous instances can be mentioned, two specific examples come to mind. One case in point is Yahoo!, an industry pioneer of expanding operations in international markets, that faced significant problems when it complied with a request by Chinese officials to turn over information about Shi Tao, a journalist engaged in pro-democracy efforts, who was subsequently discovered and sentenced to 10 years in jail. Another example is LinkedIn, which faced criticism of being paternalistic when it decided to block censored content not just in China but on all its servers worldwide to protect the identities of the activists.

Though we discussed some problems the legal environment might pose to strategies of online businesses (Ex: Airbnb), we have not focused on the topic extensively. In addition to public relations and customer perceptions problems, as Yongju Shin’s blog post on this course website demonstrates, online networked businesses can face significant abandonment risks because of the interference of the host government.

If you are in the business of using user data, you need to engage in a more thoughtful analysis and anticipate potential human rights issues, however small your company or user base is initially. Some strategies to protect companies’ brand name, customer base, and success of operations abroad would be to instill an internal process of human rights impact assessments, become part of the voluntary initiatives, like the Global Network Initiative, through which companies can find a working relationship with local governments, or change their products (e.g. through encryption) to make them more secure.

read more