GoCardless tries to disrupt the credit card industry
For small business owners, frustration with credit card companies is nothing new.
“You are a slave to the lender,” said Doris McMillon, owner of a communications consulting business, in a recent Reuters article. “What some of these banks have done to small business owners is unconscionable.”
Luckily for entrepreneurs like McMillon, one UK based startup, fresh with $1.5 million in venture capital, is trying to shake up the credit card industry. GoCardless is building a way for UK businesses to cut out the credit card middleman, and instead allow customers and businesses to deal directly with banks by tapping into banks’ APIs, which were previously reserved only for larger companies and organizations, reports Wired.
GoCardless joins the ranks of companies, like Square and Dwolla, that are trying to challenge and out-innovate traditional payment/credit companies like Visa, Mastercard and even PayPal, which was acquired by eBay in 2002. With the ubiquity of mobile devices, and new technologies like the Square payment system, the credit/debit payment space seems wide open and ripe for innovation.
“As a merchant, card companies are a rip-off and the application process is eye-wateringly complex,” said Matt Robinson, founder of GoCardless in an interview with Wired. “We charge 1 percent per transaction — a step-change cheaper than alternatives. We can do this and still have attractive economics because we’re able to cut out the cost and complexity of the card networks.”
To read the full Q & A with GoCardless founder Matt Robinson, click over to Wired.
Angel investor makes a Mint
At 5-foot-8, Dave McClure calls himself “one of the smallest” venture capitalists in Silicon Valley, either “by height or by wallet size”. But he was walking tall after Intuit announced it was buying Mint.com recently for $170 million.
That means McClure, who invested $25,000 in Mint two years ago as part of a Series A funding round, is in line for a healthy payout. At the time McClure was actually on Mint’s payroll as a consultant, but was so impressed with the startup’s founder, Aaron Patzer, that he took the money they were paying him and “turned it right back around and wrote them a check.”
Mint is the first big win for McClure out of the many companies he’s invested in since cashing out from his part in PayPal’s $1.5 billion sale to eBay. “I’ve been doing angel investing for almost five years now and this is the first full exit I’ve had,” said McClure, who first found out about the deal in a 4 a.m. email from Patzer.
A few hours later McClure was hi-fiving fellow investors Rob Hayes (First Round Capital), Mark Goines and Jeff Clavier (SoftTech VC) at the TechCrunch50 conference in San Francisco, where McClure said they were all walking around “with big-ass smiles on our faces.”
Prior to its exit, Mint had raised a combined $30 million – half of that coming in a Series C round led by Benchmark Capital that just closed in August. Some have questioned whether Mint’s $170 million sale was high enough given the amount of VC capital it raised, but McClure disagreed.
“From the angel and A round point of view it was a great outcome,” insisted McClure. “For the B round investors, I’m not sure how big a win Benchmark was expecting, but just looking at it from an IRR (internal rate of return) basis it’s still a pretty good story for them. For the C round investors, I don’t know anyone that makes that good a return in 30 days or less.”
Blogger Jason Fried, of 37Signals.com, didn’t take umbrage with the sale price, but in a post said it was an example of the “VC-induced cancer that’s infecting our industry and killing off the next generation” and that Mint’s exit was likely forced by investors. Union Square Ventures’ principal partner Fred Wilson countered Fried’s assertion in his own blog titled “Who Decides When To Exit?”
What the Tesla founders’ feud can teach entrepreneurs
High-powered electric-car startup Tesla Motors has hit a speed bump with the filing of a lawsuit by former CEO and founder Martin Eberhard.
The libel suit, filed on May 26 in San Mateo County, Calif. Superior Court, alleges current CEO Elon Musk falsely portrayed himself as the founder of the company and orchestrated Eberhard’s ouster as original CEO in 2007. In the lengthy 22-page document, Eberhard accuses Musk and Tesla of, among other things, libel, slander, breach of contract, negligence and failure to pay wages. The suit doesn’t even refer to Musk as a co-founder, but simply as one of “various investors,” who joined the Tesla board in April 2004.
Eberhard’s suit claims that from the moment he came on board, Musk “began a campaign to appropriate control of Tesla Motors and Eberhard’s legacy as the company’s founder and visionary.” The suit further alleges that Musk “began a pattern and practice of defaming and disparaging Eberhard in various widely distributed media outlets,” a few of which included The New York Times, Newsweek, USA Today and NPR.
Musk has responded to the accusations in a lengthy blog posting on Tesla’s corporate website. According to Musk, the posting is an attempt to “correct several misconceptions propagated by Eberhard that are now being reported as truth.”
While claiming he was “pushed out of the company he founded,” Eberhard agreed to leave because he felt it was “in the best interest of Tesla” and that he hoped his “vision for the company would be realized and his spirit would continue even in his absence.” Something Eberhard now feels never happened.
In a further bizarre twist, Eberhard accuses Tesla of giving his own personal Roadster – the second model off the production line and one valued “as high as several million dollars because of its historical value” – to one of Musk’s friends. His suit claims when Eberhard eventually received his own Roadster, it had been “smashed into the back of a truck.”
I’m excited about electric cars news but tired of hearing about Tesla Motors- until they start producing cheaper models. For electric cars to be serious contenders, they need to be mid-priced economy vehicles that most households can by with tax incentives etc. According to new reports, up to 1/3 of cars buyers want to go electric- which would reduce oil dependency, green house emissions, foreign oil dependency, health care costs, and create jobs. For more information about electric cars, I suggest checking out the website http://www.twocentspermile.com or http://www.bit.ly/2centspermile
from MediaFile:
A familiar name in real time search
The Musk name is famous among techies thanks to high-profile companies like PayPal and Tesla Motors, the electric car maker, which were founded or funded by entrepreneur Elon Musk.
Now another Musk-backed start-up is looking to make a splash. Only this time it’s younger brother Kimball at the helm, as CEO for OneRiot.
OneRiot is launching a real time search engine on Tuesday that combs through the flood of messages and Web links that are shared through services Twitter and Digg, as well as in OneRiot’s existing browser toolbar product, to determine the hottest topics on the Internet.
Real Time search, of course, is all the rage right now, thanks in large part to the success of microblogging service Twitter, which allows users to search the “Tweets” generated on its service and to zoom into what people are saying about a particular topic that very moment.
Musk says that Twitter searches the conversations people are having, while OneRiot cuts through the “noise” and focuses on the content at the center of those conversations.
OneRiot analyzes the links people share to determine which news article or video is getting a lot of buzz; the company’s algorithm ranks the importance of the content according to criteria like the influence of the person sharing the link and the momentum the link has gained through re-Tweets.
Twitter recently said it was developing new features for its search engine that sound somewhat similar, and there’s plenty of other rivals in the nascent field of real time search.
