Paper Checks in the Digital Century

Paper Checks in the Digital Century

A Brief History:

Checks are believed to be one of the oldest forms of non-currency payment in human history. Ancient Romans used checks in the first century B.C, and there is evidence of usage in the Persian empire of financial instruments referred to as a ‘Chak’. In the US, checks reached their peak usage in the 1970’s, when an estimated 85% of all non-cash retail payments where completed using checks1. While decreasing in popularity with the expansion of plastic cards and ACH’s, checks still remain a commonplace item in the modern financial world.

A Move Towards Digitalization

The ability to deposit a check via a phone, dubbed ‘Remote Deposit’ or ‘Mobile Deposit’, was created as a part of the “Check-21” regulation in 2004 that allowed for banks to send electronic versions of a check. While the regulation was aimed at allowing banks to more cheaply process checks, this regulation also allowed customers to send the same ‘digital’ images of checks to banks (2004). Combined with improvements in mobile phone technology, the first such application was launched by USAA in 2009.

The Competitive Dynamics

Remote deposits emerged as a way for smaller banks or banks without national branch networks to compete. Banks such as USAA, Ally, and then ING-Direct (now Capital One 360) needed a way to better engage with customers. Before this, customers had to either send a check in the mail, or send an ACH through their main bank to get their money to the online bank. Since those two methods are time-consuming, remote deposits offered a more convenient option for customers that also cut out their reliance on major banks.

It also became a new way for the major banks to have more digital servicing for their customers and lower their costs associated with their national banking networks. Banks can reduce the need for staff to process low value check deposits, and can focus their time on performing more value-add services. Average teller transactions dropped from 25% from 2008 to 2013 – and are expected to decline even further in the near future.

Results: As of 2014, 11% of checks were deposited using Remote Deposit2

Should you add this feature to your banking habits?

Upsides: The whole operation takes around a minute to do. The user must take a picture of both sides of the check and type in the dollar amount.

  • Can save a trip to the bank or ATM
  • It’s free. Only 1 bank in the Pew report charged a fee 3,4


 Banks have longer hold times on the money due to increased fraud risk

  • Most banks have a maximum value of check you can deposit via this method ($5K – $10K)
  • There are monthly limits on total checks deposited through Remote Deposit.
  • Doesn’t scale with multiple checks. If you have 10 checks, you have to take 20 pictures.

 So if you are customer who receives a couple of small checks every once-in-a-while (holiday, birthday), this is a great way to avoid the hassle of visiting a bank.

If you are customer with a large stream of checks, this service currently won’t help you much, unless you are nowhere near your current bank and don’t mind scanning check after check into your phone. Also, the slower funds availability time might not appeal to customers that need the money right away. As of now, you may need to continue to use your local bank or ATM to deposit checks.

What does the future likely hold?

What seems like a fantastic innovation a few years ago is now table steaks. Over 75% of financial institutions now offer this feature, and the point of differentiation has been erased. As banks become more comfortable with the fraud risk, we may see some incremental changes like removal of the current limits or a quicker experience taking photos. But don’t expect this feature to ever gain a dominant market position. This feature currently does not support small business users or customers with frequent check usage well – who will continue to use other means to deposit large quantities of checks. Maybe these customers will opt to use another system, say cash, ACH, or other electronic currency instead. In the meantime, using Remote Deposit for your one-off checks is a great time saver. Just remember one thing; after you’ve made the deposit, destroy the check.











By: John Watts

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Customer reviews are one of the most valuable inputs for companies to shape their future. Why is it then that consumers give away such an important tool to companies but yet don’t get rewarded for it? Birchbox, is one of the first companies to revolutionize what valuing the customer really means.

They created a business model where everybody wins: cosmetic producers, customers, and of course, Birchbox. They built a subscription model where for $10 a month, customers get five personalized beauty samples. They give customers the option of reviewing those items, and if they do, they get 50% off their monthly subscription. Cosmetic producers win, as they are able to reach a homogenous population across the US, and get instant feedback on their first release of their beauty samples. Their best sellers get as much as 60,000 customer reviews for each product! Customers win, as they not only get a great service, but also get truly rewarded for their important feedback.

Why is it that customers should be #1 on every company, but yet, very few use this type of business models to connect to customers? Will this be the new revolution for online customer interaction?

There is an “untapped” opportunity in the online-retailers today, where companies could leverage this business model to get feedback on their prototypes or products.  In the startup world, one of the biggest challenges we have is finding a large network of customers that are willing to review your prototypes or early stage products.

Companies like Birchbox, give access to a large amount of customers that are willing to help companies test and tailor their products on their early releases. Birchbox started with cosmetics, but imagine if we had these networks for other consumer products. Large-scale food producers could find this model extremely useful. They would be able to reach a large population across the US, and even globally, and have consumers taste and review their products before they mass-produce them.

There are endless possibilities to apply this business model into different industries, de-risking market adoption significantly. The constant interaction of customers and companies throughout the lifetime of the product or service is key to the success of any company. Customer reviews should be an integral part of companies’ day-to-day interaction with customers, and Birchbox has found a “sweet spot” to make this possible.

By: Maria Elena (Malena) Gonzalez Dabdoub

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Uber for X is all the rage. But can (and should) we try to apply Uber’s model to one of the world’s most stagnant institutions?


10 seconds. Maybe a little longer if you mistype your password.

That’s how long it takes to call an Uber. Through the app, you can see your driver’s name and rating; you can see the make and model of the car and track its approach; and you can even call if one of you gets lost. After the ride, payment is handled automatically and you can leave a review that helps decide whether the driver gets to continue working with Uber. All this at a fraction of the cost of taking a taxi.

If you’re reading this blog, you’ve probably already used Uber. Since 2009, Uber has grown into a $50B behemoth that offers its services in 300 cities in 57 countries.

Given its tremendous valuation, it’s no surprise that entrepreneurs and investors alike have rushed to support Uber-like models in other industries. Need an on-demand dog walker? Meet Wag. How about a mover? Try Lugg. Left your plane at home? There’s even an Uber for private jets.


For now, many of the above services are only relevant for narrow segments of the population. Sorry, Glamsquad, but the average American doesn’t need on-demand hair styling. But could an “Uber for X” startup work in a different type of business, perhaps one that could affect nearly every individual in the world?

As an education entrepreneur, I’m excited about the potential impact that Uber-like services (often labeled “on-demand mobile services” or ODMS) can have on the way we learn, from early childhood education to professional development.


How education has already changed

First, some context.


Don’t listen to the naysayers – education certainly has changed over the last century. In the 1950s, US classrooms focused almost exclusively on rote memorization. By the 1970s, they had begun flirting with the Open Classroom model. By the 2000s, schools were beginning to emphasize softer skills like the 4C’s: communication, collaboration, critical thinking, and creativity. Policies like No Child Left Behind have encouraged more standardized testing, and things like cursive, arts, and recess are mostly absent in today’s schools. Charter schools have transformed the public school landscape by allowing administrators to adapt organization, culture, and curricula to community needs. From a technology standpoint, educators are increasingly using online video libraries like Khan Academy to “flip the classroom” and software like Google Classroom to promote collaboration. Interactive whiteboards have replaced chalkboards in over 2.8 million K-12 classrooms globally. From a pedagogy perspective, 46 states have adopted national Common Core standards which emphasize a quicker path to literacy and deeper mathematical understanding.

Despite progress, in other ways education has been slower to adopt changes seen in other industries. Students don’t have individual learner profiles which follow them around from school to school and capture their strengths, weaknesses, and learning preferences (like electronic medical records in healthcare). We don’t really have a great sense of how to collect, analyze, and interpret student data (like we do for consumer data in e-commerce). Most learning management systems don’t have robust predictive algorithms to truly personalize learning (like the ones powering Netflix or Amazon’s recommendation engine).

So while education has changed somewhat, the pace of this change is remarkably slow compared to other sectors. Can we change education as swiftly and extensively as Uber is changing the taxi industry?

To figure this out, let’s:

  1. Break down Uber into its component parts
  2. Imagine what these components would look like when applied to education
  3. Identify education-specific challenges and way to overcome them


Component 1 – Two-sided platform which matches latent supply with unmet demand


A two-sided platform in education would connect educators who have excess capacity, with students who have unmet demand. Here, educators aren’t teachers in the traditional sense. Uber educators are anyone with the ability to help others learn a specific skillset. They may themselves be experts in the particular area they are teaching, or they may simply know how to help others become expertsin that area.

This looser definition of a teacher is relevant because the US is facing a nationwide teacher shortage, so latent supply for an educational Uber would need to come from other professions (e.g., engineers, writers, musicians). For starters, we could focus on the areas of education with the greatest supply/demand mismatch. Given the increased emphasis on STEM in schools and the increasing number of workers moving to the tech industry, matching experienced  tech professionals with students interested in technology could be one option.


Non-traditional teachers may not know how to teach – You could be the world’s foremost biologist, but that doesn’t necessarily make you more qualified to teach middle school biology. Teaching requires more than just subject knowledge – it requires an ability to connect with students, an understanding of pedagogy, and unbelievable patience, among other skills. Any two-sided platform in education needs to either properly train the supply side in effective teaching methods, or pair non-teachers with teachers to give students a solution that combines content expertise with teaching expertise.

Unions would fight back – Teacher unions are notoriously resistant to outside influences in the education system, which they fear could erode their power. And given teachers’ immense political clout, an Uber-like business in education would be prudent to figure out how to deal with unions before they are overburdened with regulations that stymie its growth. It could potentially position itself as a supplement, not competitor, to teachers, or perhaps employ the Uber approach of lobbying for regulations that fight against incumbents.


Component 2 – On-demand, mobile service

This actually has a few sub-components, so let’s examine each individually.


  1. Exactly what you need – Just like Uber gets you from point A to point B and does little else, an Uber for education should deliver exactly the educational content you need in bite-sized chunks. The best way to do this is to tie content to action-oriented outcomes. In other words, you want to learn how to do X? Let’s match you with someone who can teach you how to X. No more, no less.
  2. When you need it – In order for Uber to match every rider with a driver within minutes of opening the app, and to keep drivers close to full utilization, it needs to carefully connect supply to demand and ensure neither side outgrows the other. Students find that instruction is most effective when it is delivered when they need it most. Perhaps you can expand the capacity of individual educators by making it easier for them to serve multiple students at the same time, without sacrificing quality. And if we assume the teacher-student interactions can take place online, a supply of teachers located across multiple time zones can support 24/7 coverage.
  3. Where and how you need it – True on-demand learning means that students are taught wherever they are most comfortable, whether that’s at the library, in the classroom, or from home. They also need to be able to choose from multiple teaching styles (e.g., video lectures, problem sets, group projects) in order to learn in a way that best suits them. A service could either match specific teaching styles (e.g., expert video lectures) with specific learning preferences (e.g., student wants watch videos on the subway), or make it easy for an educator to convert a lesson into multiple formats.


Students may not be able to outline specific learning needs – What if a student is falling behind in algebra and wants general math help, instead of help with a specific algebra problem? Well just like you wouldn’t order an Uber without having a single, imminent destination in mind, Uber for education may not be right for students who can’t modularize their needs. Any viable service would most likely need to focus on specific, manageable chunks of education, either in the form of specific homework questions, learning objectives, or even tasks at hand (i.e., professional development). If students can’t break their needs up into chunks themselves, the service should be able to help.


Component 3 – High-quality, community-rated suppliers

Just like with Uber drivers, any teacher on the platform should be continuously rated and dismissed if their rating falls below a predetermined threshold.



It’s difficult for a student to gauge a teacher’s quality –It is arguably easier to assess the quality of an Uber experience than an educational experience, partly because preferred learning styles and speeds vary vastly among individuals. Instead of giving a rating on a single dimension, an educational Uber could ask for teacher ratings on multiple dimensions like content knowledge, patience, enthusiasm, etc., like AirBnB does by asking guests to rate accuracy, cleanliness, location, etc. The service could also periodically match teachers with “master teachers” and have them be rated more formally, much like they would be rated by an observer in a school.

Digital lessons aren’t as effective as in-person sessions– As anyone who has taken an online course can confirm, learning over your computer or phone isn’t always as engaging, and thus less effective, than learning in an actual classroom. An Uber-like service can mitigate this decrease in quality by focusing on subjects which can be augmented with technology, not ones where technology is just a medium for the interaction. For example, a physics teacher can easily send over simulations to students to help them understand tough concepts, or a programming teacher can do a quick code review with any number of digital tools – activities which wouldn’t be as seamless in-person.


Component 4 – Low cost

Uber keeps its prices to consumers low by paying drivers as contractors, not employees, circumventing a taxi monopoly which requires taxicabs to own highly-priced medallions, and using scalable technology in place of overhead like a central dispatcher.

An Uber in education may to keep costs low by having younger, more inexperienced employees (e.g., college students) work as teachers, or by hiring lower-cost teachers from overseas like some online tutoring services do.


Maybe we can Uber-ize education, but should we?


In summary, there is definitely opportunity in creating low-cost, on-demand learning experiences, especially in disciplines where there is a growing demand for teachers and flexible supply (e.g., technology professionals can  supplement the  learn-to-code movement).

However, it is important to consider the effect such a disruption would have on the broader education system. Many students would not benefit from an educational Uber, from reasons ranging from being unable to pay for a premium educational service, to not being engaged by a digital teacher (and perhaps no in-person teachers are nearby).  As a result, the service may miss the students who need it the most, entrenching inequity issues we have been fighting for decades. And just like the success of Uber may leave the lowest-quality drivers left in the traditional taxi industry, we should worry if on-demand education gives wealthier students a monopoly on the best teachers.

Furthermore, the analysis above assumes that the goal of education is to learn a specific, well-defined skill. That premise is itself controversial. When Governor Scott Walker of Wisconsin tried replacing the words “search for truth” with “meet the state’s workforce needs” in the state code for universities, it was met with backlash from academics and educators alike. They argue that an education should provide a sense of social responsibility, encourage discovery, and instill wonderment about the world. Any service that claims to educate should serve this dual purpose of preparing students for work and life.


What next?

Several well-positioned players are already moving into on-demand education. Online course provider Udacity has recently pivoted from offering full-scale university courses to bite-sized “nanodegrees” which are proctored by their global network of 300 code reviewers. They claim their best code reviewer can earn more than 8x the monthly salary of a part-time teacher in the US. Startups like MathCrunch provide Uber-like math tutoring services at a fraction of the cost of incumbent Maybe even Uber, who partnered with Levo League in early 2015 to offer brief “mentoring rides” with influential businesswomen, can themselves make a play in the market.

As for myself, I’m excited about exploring whether an “Uber for Education” has any merit given the immense social value it could create. If you have thoughts on the topic, please share them below!



Image sources:

By: Vibin Kundukulam

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Can innovation truly be democratized and how?

Quirky was launched in 2009 by Ben Kaufman to democratize innovation – anybody with a good idea could bring a product to market with Quirky’s support. Quirky was backed by VC powerhouses  such as Andreessen Horowitz and Kleiner Perkins Caufield & Byers as well as GE, and raised over $185 million. However, on September 22, 2015, the company filed for Chapter 11 bankruptcy as it ran out money. I’d like to take a look at what caused the demise of such a promising and innovative startup and offer suggestions for version 2.0.

How did Quirky work?

It was simple:

1.       You submit a hardware idea; it could be developed independently, or jointly with Quirky community members with various expertise who would later share in the product revenue

2.       Community members and Quirky employees would then discuss and vote weekly at a live product evaluation session called Eval

3.       Quirky would then pitch winning products to their brand partners like GE,  Mattel, Harman, Poppy or manufacture the products themselves

4.       Quirky then sold the products to big box retailers and online

5.       The innovator earned commission on each item sold

At the time of the bankruptcy, Quirky had over 1 million community members, was receiving 4,000 ideas a week, had developed more than 400 products and was in 50,000 retail stores.

So what went wrong?

A pseudo multi-sided platform that was overly concentrated on one stakeholder: Quirky’s platform comprised of 3 main groups – community members, brand partners and big box retailers. Quirky did a great job creating a large community of innovators and innovation influencers – 1 .15 million strong! However, it failed on the brand partner and retail side. Quirky had only a handful of large brand partners who picked some (likely a minority!) of innovations to manufacture. Quirky therefore had to bear the high cost of manufacturing and distributing several products with its own capital. It also failed in its selection of retail partners. It targeted only big box chain retailers who had strong buying power/leverage and so offered very low margins (retailers wanted 60-70% margin) and required large volumes to stock all their brick and mortar stores. Therefore, Quirky was unable to test concepts in stores in small volumes. It is also worth noting that some large retailers, like Walmart, are able to return unsold inventory to manufacturers, which could prove costly for failed Quirky products.

No strategic focus/market segmentation: Quirky manufactured everything – from a smart air conditioner selling for $350 to a $3.00 citrus spritzer.  It was focused on bringing any and all good ideas to market at light speed. As a result, there was no strong brand identity. This negatively impacted high value items as customers were not willing to pay the price for an unknown brand. Quirky attempted to create several sub-brands, but failed in getting buy in from consumers.  Furthermore, Quirky was so focused on volume that it did not spend time iterating and improving on products once launched.

Improvements for version 2.0

Earlier this year, Quirky tried to pivot by a) focusing more on internet connected devices for the home, anchored to its Wink app; and b) positioning itself as a supplier of ideas to large companies like GE and Harman, who will do the manufacturing and distribution. The products will carry the big company brands and the tag line ‘Powered by Quirky’.

However, investors had lost faith in the company and were unwilling to pour in more cash. Wink is now up for sale, with Flextronics as the leading potential buyer. The Quirky brand and community is being sold separately.

I would like to offer the following considerations to anyone who decides to pick up from where Quirky left off.

·       Redefine mission and become an asset lite company: Quirky should serve only as the Uber for ideas; its purpose should be to continue to filter ideas through Eval and then connect stakeholders in the value chain to figure out manufacturing and distribution. In order to ensure quality, manufacturers and retailers should also be rated by users on the platform to facilitate the selection process by innovators.

·       Refine selection of stakeholders and create a true marketplace: Quirky should look to sign up all sizes (small, medium, large) of OEMs/contract manufactures to bid for innovations it promotes. These manufacturers will have the option to purchase the IP outright and/or offer royalty to the innovator while bearing the full cost of manufacturing. However, if an innovator can bear the cost of manufacturing, he can still source a manufacturer on the platform.  On the distribution front, small, medium and big box retailers can then purchase from manufacturers or innovators on the platform. Big box retailers can have the option to bid to manufacture the products themselves or with a manufacturer on the platform as private label at their own cost.

·       Focus on simple, functional, low value items: High value items require significant investment in product development, manufacturing and marketing. It’s best left to companies like Bolt ( who can be more hands on, iterate and achieve better product market fit and provide financing. Being just a supplier of ideas to large companies is also a weak position to be in. GE, Harman could easily create their own platforms to source ideas for high value items. The next iteration should rather focus on low value items like the Quirky flexible power strip ( Very little branding/marketing is required for such products and they could easily be sold online only to reduce distribution cost.


By: Alice Agyiri

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Will There Be More Than One Winner in the Local Services Market?

For years, investors and technologists have been pointing to the trend of “verticalization”, or the need for a new marketplace start-up to be vertically focused on an industry or function in order to succeed.  As Chris Dixon, a partner at Andreessen Horowitz, pointed out, with the dominance of Craigslist’s marketplace across almost any category you can imagine, this focus increases a start-up’s chance of success by allowing for a better user experience and quicker minimum viable liquidity on both sides of the platform.

As Uber, Airbnb, Lending Club, and others have shown, because many of the categories on Craigslist are addressing multi-billion dollar markets, there is enough demand to create a billion dollar business by just focusing on one sub-category listed on Craigslist. As David Haber illustrates in a blog post (pictured below), dozens of large, successful, businesses have been built doing just that.

haber market map

This trend towards vertical specialization has persisted in business models today. In just the local services category on Craigslist, companies are focusing on specific sub categories like dog walking (Trottr), cleaning (Handy), and home improvement (Porch), among others. However, Thumbtack, one of the latest tech unicorns, has bucked conventional belief and focused on a more horizontal approach. Despite skeptics view that this approach is doomed to fail because of Thumbtack’s lack of specialization relative to its more vertically focused competitors, Thumbtack has seen impressive growth, fielding thousands of requests for providers a day.

However, several questions still remain. Who will eventually win in the local services space? Is it a winner-take-all market or can there be more than one player in these verticals?

For the following reasons, I personally believe there can be multiple winners due to diverse consumer preferences and markets that are large enough to support more than one player, and that Thumbtack’s horizontal approach and business model will allow it to succeed.

 First, let’s start with Thumbtack’s business model. Thumbtack is a horizontal marketplace for local services, meaning that consumers can find specialists to perform almost any task for them in their local area. Consumers fill out a form describing what they need and Thumbtack provides them with up to 5 bids from local providers. In order to be able to bid on consumers’ requests, providers need to buy points, essentially paying to bid on specific customer requests.

1) Why There Will be Multiple “Winners” in Local Services

  • Consumer preferences for local service providers are diverse and thus there is strong demand for differentiated products. Some consumers want the “quickest solution” while others want “lowest cost” and others want “high quality”. Different platforms that cater to these different market segments can co-exist.
  • In fact, multi-homing costs not that high, meaning that it is relatively easy to compare prices and providers across multiple platforms. For example, consumers will often check Amazon, Thumbtack, and Taskrabbit before selecting a provider to install their new television.
  • Local services market is large. Forbes estimates it to be between $400-800 billion. Within the overall category, many verticals, like catering and home repair, are multi-billion dollar markets.  Therefore there is enough value to be captured for more than one player to build a multi-million dollar business in terms of revenue and profits.

2) Why Thumbtack Will be a “Winner”

  • Often, consumers’ preferences for a specific provider are based on who they believe provides the greatest “value”. However, consumers’ view of value (e.g. lowest cost, quickest service, etc.) differs not only across consumers, but also specific tasks (e.g. moving vs. catering). Thumbtack allows consumers to compare providers and decide which one provides the optimal value for them by job they need completed.
  • Thumbtack’s pay-per-lead system is distinct from other competitors in that it forces service providers to pay upfront to bid on a job. If the market is working correctly, this competitive bidding model should only attract proposals from service providers who are qualified for the job and who offer competitive rates, otherwise consumers will not select them from their service provider options.
  • Lastly, because all service providers pay the same amount to bid on a particular job, Thumbtack is indifferent as to which provider the consumer picks from a revenue perspective, aligning the service providers’ incentives with Thumbtack’s. In comparison, on other platforms service providers pay a hefty percentage of the total transaction value, incentivizing providers to charge a higher rate. 

For the reasons above, I believe that Thumbtack will be one, but not the only, “winner” in the local services market. Thumbtack’s business model, though contrary to current wisdom about vertical specialization, creates a marketplace that provides great value to both the providers and consumers on its platform, while also being able to extract value through its bidding system.

However, Thumbtack and its competitors are still working hard to build their businesses and experts still differ on the questions of who will succeed and why. It will definitely be interesting to see how competition plays out in this space and to see how many “winners” do emerge, and which companies they will be.

By: Medha Agarwal

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