There has been a lot of activity in the market for peer-to-peer (P2P) payments lately. While the concept of P2P payments is not new (one could argue it started once upon a time with the barter system), multiple products are trying to capture a share of this market today in the world of mobile. PayPal’s latest quarterly earnings report notes that $2.1 billion of payments were processed through Venmo in Q3–2015, growing at the rate of 200% a year! Venmo is just one of the products, although arguably the most popular, and competes with many other products such as Square Cash, Google Wallet, Facebook Messenger and PayPal itself. Apple is also planning to launch a P2P payment service, according to the New York Times.

The objective of this post is to analyze

  1. Whether P2P payments is a winner-takes-all market and
  2. Brief strategies that both larger incumbents and newer entrants can pursue to succeed in this market.

This post does not cover the market size, different features and nuances of the various products (unless they’re relevant to the above objectives), various stakeholders involved in building such products and their incentives (e.g. banks, credit card network operators etc.) and other considerations such as security and privacy.

Is P2P payments a winner-takes-all market? ?

To evaluate the extent to which this is a winner-takes-all market, we can evaluate the following:

  1. Strength of network effects

    In a P2P payment transaction, by definition, there is a ‘payer’ and a ‘receiver’. The products above clearly exhibit network effects in these terms because more payers in a network attract more receivers and vice versa. A user can play the role of both ‘payer’ and ‘receiver’ across different transactions and, hence, each additional user increases the value of the network to the other users too.

    But how strong are these network effects? In P2P payments, a user could potentially want to use this service with multiple other people (including friends, family, colleagues at work, an acquitance at a party etc.). It is also not easy to predict in advance when or with whom a user will transact. However, there is not much value in the ability to transact with a ‘random’ person (unlike the ability to check the profile of or connect with a ‘random’ new person on Facebook). Hence, on a scale from 0 (none) to 5 (high), I would rate the strength of network effects in this market as 4.

  2. Multi-homing costs

    Multi-homing means the ability to check multiple products offering the same functionality in parallel (which product the user ultimately decides to use depends on various other factors such as cost, user experience and so on). The process of homing has 1 to 2 steps in this case: installing the product and signing up for it (if not already done) and making a transaction.

    How high are the multi-homing costs? I would argue that the first step of installing a product and signing up is costly. While some products allow signing up through a debit or credit card, they may charge fees in making P2P payments (especially when using a credit card). The one mode of payment that is mostly free across several products is transacting through a bank account. However, signing up through a bank account takes time: the user needs to recall the bank account number, routing number and wait for a day or two to verify the account (usually done through a debit and credit of random amounts less than $1).

    However, once a user has signed up for another product, multi-homing is not as costly. It depends primarily on the user experience (e.g. details the user would need to enter to make a transaction and the ease of use).

    Overall, on a scale of 0 (none) to 5 (high), I would rate multi-homing costs in this market as 3.5.

  3. Demand for differentiated products

    While the core functionality may not be different across products, users would appreciate differentiation of the products in terms of the user experience (e.g. ability to start a transaction even without signing up, a feature of Square Cash and Google Wallet), platforms it is available on (e.g. mobile-only or both mobile and desktop) and other related features such as tracking, security and so on.

Overall, while there are strong network effects and strong (although less so) multi-homing costs, there is also a demand for differentiated products. Hence, the P2P payments market is not likely to be winner-takes-all and will likely have multiple products competing in the long-term. At the same time, due to the network effects and multi-homing costs, I would not expect more than 3–4 players competing in the long run.

Strategies to succeed

Given the above drivers of the extent to which this market is winner-takes-all, both large incumbents and new entrants can follow different strategies to succeed. A few of the strategies (certainly not exhaustive) are very briefly discussed below:

  1. Reduce ‘friction’ in signing up and using the functionality for the first time

    This is especially important for new entrants so that they reduce multi-homing costs, but this is not easy. Companies like Apple may have an advantage on this front: If P2P payment is added to Apple Pay, existing Apple Pay users are signed up by default. Companies like Facebook and Google are also making it relatively simpler by adding ‘$’ buttons to Facebook Messenger and Gmail respectively which already have large user bases.

  2. Provide a superior user experience when making transactions

    This is one of the definite ways to differentiate the product. For example, Apple Pay can have a mechanism where the user double-taps the home button, scans the fingerprint and pays/requests another iPhone nearby, all this without even unlocking the phone! Of course, not all better user experiences are necessarily appreciated by the users. Careful attention should be paid to user experiences that actually solve a pain point. For example, is the ability to pay/request a nearby iPhone without unlocking the phone actually valuable to users?

  3. Develop a differentiated and valuable offering, perhaps for a specific niche in the market

    One of the differentiating factors of these products is cost. For example, some of the big incumbents may not necessarily aim to make money through this ‘feature’ and hence have a lower charge. Their aim may be to increase usage and engagement of their products and monetize through exisiting or other means. New entrants may also start by serving specific niches and developing a differentiated offering for them. For example, one specific niche could be an offering optimized for payments and settlement between users in a large group.

Finding good strategies and executing them is easier said than done, but it would be fun to see how this market plays out.

What do you think?

By: Shankar Vellal

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Twitter has acquired dozens of companies since its inception and contrary to popular belief, these are not exclusively talent deals. The acquisitions of Crashlytics (Jan 2013), an app crash testing tool, MoPub (Sep 2013), a mobile ad exchange, and TapCommerce, (Jun 2014), a mobile app retargeting tool, have reportedly each cost the company over $100M and have added core mobile products that it is leveraging today.

So what’s the purpose behind all of these acquisitions and how are they linked? Twitter answered that question on October 22 at its Flight Conference when it announced Fabric, a modular mobile software developer kit (SDK), which leverages parts of each of these acquisitions, as well as capabilities it built in-house.

What is an SDK? It’s a set of software development tools that allow third party developers to build applications for a particular company or software package. Its primary purpose is to simplify otherwise time-consuming development tasks for developers and hopefully provide value to the company offering the SDK (in this case Twitter).

Fabric SDK has three modules, described briefly below.

Twitter Kit

Twitter Kit has three main features. “Sign-in with Twitter” simplifies the authentication process for new users. “Native tweet embed” makes it easy for developers to integrate tweets into their apps. “Digits” allows new users to sign up for apps with just a phone number.

Crashlytics Kit

Crashlytics Kit also has three main features: Crashlytics, Answers, and Beta. Crashlytics allows app developers to see what part of the code caused a crash and which users were affected, in order to quickly stabilize the app. Answers provides analytics on app usage. Beta allows developers to do beta testing and get user feedback.

MoPub Kit

MoPub Kit integrates with MoPub, a mobile ad exchange, to place ads into 3rd party apps so developers can monetize their traffic.

For a more information on Fabric, check out Twitter’s press release.

So why has Twitter invested hundreds of millions of dollars to launch an SDK – especially when two of the three modules don’t seem to relate to the core product (tweets)? Fabric allows Twitter to deepen its relationships with app developers, which can help create additional network effects and attract new users to its core product.

Being a platform business is the Holy Grail for technology companies. If executed well, you can create network effects, barriers to entry, and significant scale leading to enormous returns. Just look at Apple and Google – their aggregate market cap exceeds $1 trillion! This is in large part because of the iOS and Android platforms that allow them to profit from the explosion of mobile devices and the related ecosystem.

Companies like Twitter and Facebook don’t have the ability to develop a mobile OS, which is pretty clearly a two-horse race now. So how do they avoid being relegated to just another app sitting on your home screen, or worse yet tucked away in some folder?

They need to leverage their assets – the real-time communications layer and the social layer, respectively – to build or expand platforms they do have. Facebook has done this through acquisitions such as Parse, a mobile back-end-as-a-service provider of development tools, which is the basis for some of its SDK offerings. Twitter is hoping that Fabric will allow it to become an indispensible resource to developers as well.

How can Fabric create network effects for Twitter? Below are two examples:

  1. Offering developers an easy sign-in process (Sign-in with Twitter or Digits), which will drive higher app usage (by removing sign-up friction), which will drive more developers to use the SDK. Part of the Twitter Kit is tweet embed, so the hope is that developers will also integrate this feature into their apps thereby expanding Twitter’s distribution and hopefully accelerating new Twitter user sign-ups.
  2. Offering developers a tool to monetize their app traffic (MoPub). As more developers use the MoPub Kit, more advertisers will want to buy ad inventory, which will drive more developers to use MoPub. Twitter clearly benefits from this, as it will earn a share of the advertising revenue.

Ultimately developer relationships come down to proving your value. Can your SDK help developers grow and monetize their user base? If Twitter can do that, developers will happily use Fabric SDK and Twitter will benefit from the additional distribution and monetization.



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Over the past semester we have identified successful mobilization for new lines of business in tech incorporate backwards compatibility, complements that may be generated by third party developers or by the core business itself, and solutions to customer pain points with significant barriers to entry.  At the same time, core product offerings can provide stand-alone value to customers through simply streamlining the interface between software users and the data they use. While many large companies have adopted software to improve productivity of individual enterprise activities, it is the recent push towards integrating business technologies onto one platform in enterprise marketing software suites (EMSS) that unlocks the opportunities inherent in holistic marketing solutions. [1]

The beginning of the twenty-first century witnessed a revolutionary incorporation of the internet with everyday communications and transactions.  This in turn generated an unprecedented volume of information, or “big data”, encompassing how consumers make decisions and how businesses operate more efficiently.   Big data analytics now facilitate myriad entrepreneurial ventures that leverage niche markets and long-tail consumer demand into viable business models.  Consequently, traditional companies in established markets have had to redesign and streamline how they serve their customers to match changes in consumer demand and increased global competition.  Enterprise software has emerged as an answer for these established companies to utilize big data analytics to guide their business strategies.  EMSS  aim to integrate a diverse range of activities including management of ad campaigns, digital assets, web content, marketing and lead resources, as well as predictive modeling. [2]  

The complexity associated with integrating diverse marketing software solutions has left EMSS development to big software players such as and Adobe. In fact, the magnitude of the opportunity to create value in this space is demonstrated by the “…$3.5 billion shopping bill as it positions Salesforce as a one-stop-shop for all its customers from the sales department to, now even more importantly, the CMO’s office.”[3]   Expected benefits from EMSS consolidation of current disparate marketing and tracking software are improved visibility and collaboration between all marketing channels resulting in clear resource efficiencies and reduced total costs of strategy implementation.  Additionally, strategy development should be of higher quality and larger impact due to improved ability to create holistic solutions aligning company offerings with customer expectations. As of yet, it seems that no one EMSS incorporates both best-in-class software and seamless integration [4].  It will be interesting  to watch how the current digital marketing integration leaders discussed above shape the convergence of real-time data analytics and holistic marketing strategies to transform online and mobile commerce as they further penetrate our global economy.

1. Teradata (October 30, 2014)

2.  Teradata (October 30, 2014)

3. Salagar, Serge, “Salesforce’s Reinvention as a Marketing Behemoth”,  (October 29, 2014)

4. Munbach and Warner,  “Forrester Wave: Enterprise Marketing Software Suites, Q4 2014”   (October 21, 2014)

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In 2011, Steve Jobs famously declared that he was “going to destroy Android because it’s a stolen product. [He was] willing to go thermonuclear war on this” and that he “will spend every penny of Apple’s $40 billion in the bank to right this wrong. [1]” Three years later, Android has arguably beaten iOS for smartphone market share, controlling 62% of the market compared to iOS’s 33%. Despite this seemingly resounding victory for Google, the war between Apple and Google is far from over; in fact, it has only begun as Apple takes the war to where it really hurts for Google—its core search and advertising business.

Google revolves around its lucrative advertising business. Significantly more profitable than any other line of business that Google operates in, advertising composes 96% of the company’s revenue [2]. Google’s advertising business is so important to them that every strategic decision they make can be traced back to helping their advertising business in three ways. Namely, every one of Google’s decisions does one or more of the following:

1.     Increases the number of times users see ads served by Google. For example, Google released Chrome and Android for free with Google Search as the default search engine to direct more users to Google Search, and thus, AdWords.

2.     Increases the effectiveness of ads served by Google. Google does this primarily by collecting more information about users, resulting in better targeting for their ads. Products like Gmail, Chrome, Maps, Google+, and a whole host of others help Google collect more information about users (and as a bonus provide other web properties where they can show display and text advertisements.)

3.     Increases the time users spend online. The logic here is simple: the more time a user spends online, the more they use Google, effectively helping point 1 and point 2 above. This is the rationale for projects like Driverless Cars and Project Loon, which appear completely tangential to Google’s core strengths until viewed from this lens.

These three priorities encompass the core of Google’s business, and Apple has begun to relentlessly attack each one.

First, Apple threatens to disintermediate Google’s search business. One way they do this is through Safari, the default web browser in all Macs and iOS devices. Safari attacks Google’s business in several ways. First, as of version 8, Safari suggests a top hit for users’ searches even if they have never gone to that page before. If a user enters a search term to Safari’s address bar, they go to a search result directly from the location bar, bypassing Google search completely. (See picture.) This is a huge threat for Google: if users get search results without going to Google’s search landing page, Google will not be able to show search advertisements. Incidentally, Safari search results are provided by a combination of Bing, Wikipedia, Apple Maps, Yelp, and iTunes, which gain the added benefit of user data from the queries.

Safari Search

Apple is also using Siri, iOS’s voice assistant, to attack Google on this front. When it launched in October 2011 as part of iOS 5, Siri was nothing more than a toy—novel enough to show friends and family, but not great enough to actually matter in the day to day lives of iPhone users. Since then, Apple has invested great resources into improving Siri, getting it to the point where most basic smartphone functions and many search inquiries (sports scores, weather, stock prices, restaurants, etc.) can be done through Siri. Guess which search engine Siri uses. Hint: it’s not Google. Every search that someone makes through Siri is a search that they are not making through Google, a particularly disturbing development for Google given that traditional desktop searches have remained flat while the majority of growth comes from mobile devices. As Siri continues to improve, it is only a matter of time before Apple brings Siri to the desktop, threatening Google’s desktop search business.

Recently, Google’s greatest defense has been its Chrome browser. By investing heavily in creating a technically superior browser to any on the market for much of its lifecycle, Google uses Chrome to keep its search engine as the default for users. Apple has neutered Chrome on iOS by severely hamstringing it. First, there is no way to change the default web browser on iOS from Safari to Chrome. This alone will stop many users from reaching for Chrome on their phones. The default search engine for Safari? Bing. But the big weapon Apple brings against Chrome on iOS is the control that it exerts over apps in the iOS App Store. Apple’s developer agreement bans developers from creating programs that interpret code, preventing Google from implementing its own Javascript engine for Chrome. Instead, Google must use the default Javascript engine for iOS apps, which is significantly worse in performance than Safari’s Javascript engine. As a result, Chrome’s share of the iOS browser market is insignificant. [3]

Apple also presents a huge threat to Google’s ability to capture information about users. The rise of the iPhone and iPad has resulted in an app based ecosystem on mobile rather than a web based one. Unlike on desktop computers, users spend a significant amount of time on individual apps rather than in a web browser on individual sites. Within apps, there are no cookies so an important spigot of user information for Google has been shut off. As users spend more time on mobile and time on desktops remains stagnant, if Google misses on this mobile data, it will find it much more difficult to accurately target advertisements and to reach these mobile users, as Apple’s iAd network dominates on in app devices. As Google spends lavishly on projects like Loon and Driverless Cars to increase the amount of time that users spend online, Apple attempts to capitalize by bringing these users spend their newly freed internet time into its app ecosystem through products like CarPlay and the Apple Watch, thus co-opting Google’s web capabilities.

Fortunately for Google, despite Apple’s considerable resources, Google has several options to counter Apple’s moves. Most importantly, the historical trends of the technology industry favor Google’s web-centric approach over Apple’s app-centric ecosystem. As hardware becomes more powerful and mobile browsers become comparable in performance to their desktop counterparts, webapps will become preferred over native apps, as users prefer easier web access and developers crave the cost savings of developing for the web instead of each smartphone platform. This same trend of decentralization has played out over and over again in the history of the tech industry, from the client-server architecture of the 1980s to the domination of the web browser in the 1990s to the rise of the cloud today. This scenario is Apple’s worst nightmare as it commoditizes its mobile operating system and plays directly to Android’s strengths. Unfortunately for Google, mobile web browser performance today is not yet good enough for this transition to occur. Google must accelerate this improvement as soon as possible. First, they must support a high performance open standard for the web in HTML5 to stimulate companies and developers to create bigger and better products for the web. Then, it must make high performance web browser technologies as widespread as possible, which Google does through the open source Chromium project. Next, Google must increase the performance of the underlying pipes, which they have done by introducing Google Fiber, a loss-leading project that has improved internet speeds at incumbent ISPs just through the threat of entry into a market. Finally, Google must partner with semiconductor manufacturers to produce microprocessors that will power faster and better web browsers. To this end, Google has entered into a partnership with Intel to create more powerful x86 mobile chips. By combining this with their relentless pursuit of the domination of Android, Google may head off Apple’s attacks in the long run.

Finally, there is an interesting opportunity for Google to disrupt Apple’s OS ecosystem from the low end. Today, Macs are more than powerful enough for the work that the majority of their users do: surfing the web, writing emails, etc. Google can develop a cheaper operating system with lower hardware requirements that can perform these jobs as easily. Thus, they can prevent the disintermediation of their business in the desktop by Apple products like Siri and also hurt Apple’s market share on the desktop. Google has begun to do this in their Chrome OS products, although they have yet to fully invest in this business. It will be interesting to observe the evolution of ChromeOS in the next few years and see if it can truly become a substitute for Mac OS X and Windows as the internet performance continues to rise.

Google faces attacks on many fronts from Apple as Tim Cook aims to complete the blood fued that Steve Jobs started. Though only time will tell which of these giants will win the thermonuclear war, it has been fascinating to watch these battles being fought in the last few years.

[1] Steve Jobs, Walter Isaacson, 2011




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Last year I decided to found my own tech start-up.  MBA alumns with whom I connected advised me to recruit a technical cofounder early on in the process. At that time, I had some general knowledge about coding and software development. I had completed some basic assignments in C++ and Java.  “Hello World” was the most advanced coding exercise I had undertaken. Clearly, I was not an expert. Since my business was the usual technical start-up that required the creation of a phone application, I had two choices: develop the app myself or look for a technical cofounder. Like most non-technical cofounders, I opted for the latter. This is where my story begins, just two months into my MBA career.

The idea I was looking to develop was one I had envisioned long before starting school.  I had discussed the idea with a number of experienced entrepreneurs and friends. The overwhelming response was very encouraging and I was determined to spend as much time as I could to develop this idea. In fact, I was almost convinced that my business will be so successful that I would drop out of school

So how did I look for a technical cofounder? What strategies did I adopt? What are the key lessons I learned from my experience?

I wasn’t interested in outsourcing my work as my idea was tech heavy and required ongoing technical work. I also wanted a flexible option and a technical person with whom I could partner to meet advisors and potential investors.

First, I posted on a number of online websites that specialized in connecting cofounders. Browsing through these websites, I discovered that the majority of the people who posted were also looking for technical cofounders. Not surprisingly, I haven’t received a single response from anyone after almost a year.

Second, I proactively searched on linked in for potential technical cofounders. I was more successful as I was able to talk to two people who had prior coding experience. One of them was really interested in the idea and we eventually met in person.  We worked on the idea for almost a month and then he suddenly disappeared. The last message I received from him was about an emergency situation and I never heard from him again.

After that experience, I decided to visit the “headquarters” of technical cofounders: computer Science departments at local colleges!  I created fliers to post, and visited 4 major schools in Boston. On one of my visits, I met a faculty member who was not at all impressed with my pitch or my fliers. He told me that he sees 5-6 people like me every week looking to hire technical cofounders. It’s been a year now and no one really called.

This experience has taught me a number of lessons:

Lesson Number 1 – Be Humble

You may have heard this phrase many times but it’s not as easy in practice as it sounds. Sure you have an MBA degree from a prestigious school backed up by 4-5 years of experience. You may have negotiated the most complicated business deals, developed the most interesting sales pitches or created the most sophisticated financial models, but none of these qualifications help create a web application. During my quest to find a technical cofounder, I was genuinely humbled by watching 19 years old Computer Science students compiling open source data and creating some state of the art technologies in less than 24 hours at “Hackathons”.

Lesson Number 2 – Meet everyone in person

It’s nearly impossible to find technical cofounders online. You may find random people who have some technical experience but you won’t find the right people who are passionate about programming. You certainly won’t find the real passionate coders looking for a job on a random “find technical cofounders” website. I believe the best places to meet avid programmers are hackathons, CS classes and local coding events.

Lesson Number 3 – Build relationships

Finding and selecting a technical cofounder is not something that happens overnight, it’s a lengthy process. Even if you are eager to recruit someone, patience is paramount. I believe that it is critical to build a relationship with the person. Learn more about his or her experience, past accomplishments and current interests.  Try not to  mention your business idea on your first session and avoid sounding too eager to hire a cofounder.  Also, don’t overemphasize your MBA degree. It probably won’t make a difference to a young programmer.

Lesson Number 4 – Build a prototype

Create the design of your app/website/software.  You can create a static website using many tools available online and very easy to use. There are a range of design programs that you can use to create your MVP (Balsamiq, Bubble, and Appseed all convertyour sketches into app prototypes). This is a great way to show commitment beyond just pitching an idea that only exists in your mind.

Lesson Number 5 – Learn to speak the language:

Similar to when you travel to a new country, you should know at least some basic phrases to be able to communicate. Try to learn the basics of coding and characteristics of each language. It is important to spend some time researching general programming tools, differences between front and back end, APIs and when/how to use APIs. In fact, you can go online and search for potential APIs available that may be helpful for your business. You won’t be a coder in a couple of months but you will certainly be able to impress a technical person and make him more interested in your business.

It’s been a year since I started my journey. The business is going well. I have recently partnered with a CS student from University of Michigan whom I met at a recent Hackathon event. We just started work on creating the back end of our website. In my spare time, I am learning Rails and some other programming languages. Every week, I spend at least 2-3 hours reading about new languages, APIs, integrations etc.

Although, I am still at the beginning of my journey, I feel like I have learned a lot and I am certainly more confident about my technical capabilities.

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