Mobile Payments: Growing Excitement and Establishing Infrastructure

In 2011, a kid out of Stanford University landed $30 million funding for his mobile payments company called Clinkle. Funding came from the most respected Silicon Valley venture capitalists and firms including Andreessen Horowitz, Intel, Intuit, Peter Thiel (co-founder of PayPal) and others [1]. By all accounts, Clinkle’s investor pitch was very impressive, but a pitch is all they had; there was no product. To this day, after much drama that included departure of key staff members and layoffs, the company has yet to publically launch its service [2]. How was a company with an unproven technology and an inexperienced team able to get funding from so many Silicon Valley luminaries? There is no doubt that the allure of game-changing mobile payments technology played a role.

Mobile payments are said to be one of the hottest technology segments right now. Simply looking at the numbers, according to Capgemini, worldwide mobile payment transaction values were expected to be $235 billion in 2013. That’s up 44% from the previous year. By 2015, that value is expected to climb to approximately $670 billion [3]. The real promise; however, is a potential disruption of a $6.9 trillion industry that represents global payments processed using credit and debit cards [10].

Needless to say, companies that can provide solutions in this area can probably do very well. Take Starbucks for instance. Their mobile payments and loyalty programs have been phenomenally successful. In fact, Starbucks’ mobile payments revenue in 2013 was over $1 billion representing more than 6% of their total sales [4] [5]. By the company’s own account, the value added to their brand and thus to its record breaking financial performance by mobile payments and rewards programs cannot be overstated [5]. One of the reasons these solutions can be so successful with consumers is because they combine both payments and loyalty programs in one easy to use app.

By leveraging these technologies, consumers can often collect and redeem points for their purchases in addition to discovering new offers. In turn, retailers gain a better understanding of their customers’ buying habits. While much of this was previously possible without smartphones, mobile payments can offer a more seamless, contextual and essentially “magical” experience.

An example of such “magical” experience is the new Open Table app. The app, which was previously only used for restaurant reservations, can now (in select locations) allow consumers to leave a tip and pay for a meal without ever calling for the bill. Think about it. How often have you found yourself impatiently waiting for a bill after your dinner?

The vision behind mobile payments does not just stop with restaurants and smartphones either. Imagine your car alerting you when you’re low on fuel and offering a list of closest fueling stations. When you arrive at the station, your car recognizes a specific pump you parked next to and allows you to authorize payment with one simple tap. All you do is lift the nozzle, fill up, drive off and the transaction will automatically be settled. While this vision may not be a reality today, it will certainly be in the near future.

Technologies that will make these experiences possible are already in existence and being tested and deployed today. For now we are simply early in the adoption and maturity cycles and widespread use will take some time. It took the magnetic stripe credit card four decades to get to current adoption. This is partly because much of the infrastructure required for any kind of payment system needs strong network effects. In other words, when more people adopt a technology, the more useful it becomes and more people will use.

That’s one of the challenges solutions like Google Wallet face. The app allows consumers to use their phones to pay at retail locations. Unfortunately to use it, the phone must have a special (NFC) chip and the retail location must have a contactless reader. Because only some Android phones have the chip and Apple’s iPhone does not ship with it at all, the technology use is essentially non-existent. In fact, some people proclaim that NFC is dead because it’s unclear whether Apple will ever add this technology to its phone. As a result, countless alternative solutions for mobile payments have been developed over time.

One example is the app from LevelUp that allows retailers to scan a barcode code shown on the app. The barcode represents consumer’s unique account number and lets the retailer settle the transaction with LevelUp systems in the back-end. A barcode scan is precisely the approach Starbucks’ app is taking. Alternatively, VeriFone has a technology, which uses sound that is undetectable by human ear to transmit money from a smartphone to a payment terminal, thus eliminating the need for radio frequency technology such as NFC altogether [9]. Other businesses have developed their own versions of mobile payment applications specific to their use cases. For instance, companies like Uber and Lyft, which aim to replace traditional taxicabs simply charge for their fare at the end of the trip based on traveled distance supplied by the driver’s phone GPS.

Even though retail, restaurants, and taxi alternatives are the most cited use cases for mobile payments, they are not the only ones using these technologies. In fact, just about every industry that sells to consumers is currently building or testing mobile payments. For instance, Cumberland Farms, a popular convenience-store retailer is using their app to let consumers pay for gas and in the process allowing them to save 10¢ gallon, as well as to collect loyalty points [7]. Similarly, Gilbarco Veeder-Root reportedly plans to develop a mobile payment solution based on Bluetooth beacons. According to Parker Bruke, director of marketing for Gilbarco, this technology will drastically reduce the number of steps that need to be performed before fueling begins, thereby creating a more seamless experience at the pump [8]. That’s because Bluetooth beacons such as the Apple iBeacon can detect consumer presence not only at the gas station, but also in front of a pump.

While it’s clear that mobile payment technologies are in their infancy, while there is a lack of standards and clear winners have yet to emerge, it’s also clear that this new breed of technologies will eventually make inroads with consumers. For now it may still be easier to simply swipe a credit card, but companies like Starbucks have shown that if mobile payment systems provide a seamless experience coupled with loyalty programs, consumers will use them. Ultimately, it will come down to the ease of use and the benefit for consumers. Once someone perfects that formula, the world of mobile payments will change forever.

 Also seen on FuelMarketerNews - http://fuelmarketernews.com/mobile-payments-growing-excitement-establishing-infrastructure/

Technology for the Real World

I recently had an opportunity to ride with a driver delivering full truckloads to commercial fuel customers.  The driver who works for one of our customers (as well as the company itself) graciously allowed me to share his day and let me observe. Perhaps like many typical technologists, I have often lived in a bubble where I can create products, understand them on an intellectual level, but have never really connected with the very people who will use them.  However, having an opportunity to ride with a potential user allowed me a chance to better understand his/her world and hopefully really understand the problem and the solution.

By really understanding, I don’t mean having just some intellectual knowledge about the problem domain — it’s to deeply understand the problem we are trying to solve, as well as deeply understand the users who will be using the product. In both cases such insight is not created in a vacuum. It’s not even created in meetings. It’s done by observing users and asking a lot of questions. Even better, it’s done by walking in their shoes and doing their job.

Unfortunately, this approach is not how typical technology products are created. If you are unlucky, the product you may be using will be created by someone who simply took down some requirements from a potential user. If you’re lucky, that someone is at least an experienced business analyst, designer and User eXperience (UX) expert. This so-called expert understands how software should function so it’s easy for the end-user to operate. He/she gains such understanding by having design meetings and asking users about the requirements, needed features and UI implementation. However, the problem is that inevitably there will be a loss in translation. The designer and the user may be speaking the same words, but their understanding of those words comes from a different context that’s not carried over.

This problem is well understood by many great consumer and enterprise products companies.  Perhaps as a result, the way companies like Apple create products is not by conducing bunch of focus groups with users to tell them what to design and how to design it.  Apple creates awesome products loved by the entire planet (or at least those fortunate enough to afford them) by creating products for themselves. They are the users and builders all at once.  They deeply understand the users because they are the users.

Whether it’s creating consumer software, enterprise software or some other piece of technology, designers can follow the same principles practiced by Apple and other great companies. In a best case, they need to be the users. In a worst case they need to be with the users. 

Doing that will hopefully eliminate below strategic mistakes technology companies often make:

•  Product is not actually solving a real (must solve) problem. The problem is perhaps nice to solve, but does not create a necessary value for the business to adopt a solution.
• Designers have a poor understanding of the problem. Designers were told what the problem is, but only understand it on a superficial intellectual level. If someone tells them something contrary to what they “know,” they will probably believe that too.
• Designers have a poor understanding of the user. They think the product will be easy to use, but have actually no real understanding of how the product will be used in the real world.
• Expectations are not aligned (within business, between customer and vendor). Different people within the problem / solution domain have a slightly different understanding of the problem and the solution. Not everyone is fully aligned.

 Also seen on FuelMarketerNews - http://fuelmarketernews.com/technology-real-world/

You’re running a technology company. If you’re not, your business is dead.

You’re running a technology company. If you’re not, your business is dead. Yes, you have read this correctly. No matter what business you’re in, you are (or should) be in a technology business. I am not just referring to productivity tools like spreadsheets or email. I am talking about a fundamental way you use technology to operate your organization.

Technology can be deadly

Simply put, if your company does not embrace technology, it will eventually perish. Take a look at what happened to Borders. In 2001, Borders, a nationwide bookseller simply handed over its online book sales to Amazon because it considered online books as unimportant and non-strategic. After all, they were a company that was selling physical books, right? Why worry about online books? Well, by 2011 the company filed for Chapter 11 and today it simply does not exist. In short 10 years this major bookseller went from a nationwide company to a liquidated company largely because it ignored a major technology shift as well as a shift in customer expectations.

Technology can save you 

While the above example does not exactly paint a positive picture, there are always two sides to a coin. Companies that embrace technology and actively listen to their customers can flourish. As Marc Andreessen, one of the fathers of the web browser said – “Software is eating the world”. In his article he points out that virtually every industry in a modern world is using technology and particularly software in some fundamental way. Many leading organizations that would traditionally have nothing to do with technology like booksellers, video distributors, music companies, or direct marketing companies are actually software businesses. Which businesses am I referring to? I am sure you’ve heard of Amazon, Netflix, Apple, and Google. 

So how can technology save you? Here is how:

Provide a radically better value. 
Competition has a tendency to commoditize everything. However, if you figure out how to provide a radically better value for your customers, you can delight them, but at the same time create a significant competitive advantage that could be difficult to replicate. This can certainly be done without technology, but in our modern hyper-connected world, that’s less likely. Take a look at the example of Borders. They did not focus on a radical value that e-books provided, but their competitors certainly did.

Don’t implement technology for technology’s sake. 
Instead better understand your customer. Deeply understand them and envision a world in which their life is better. Then think about how you can leverage technology to make that a reality. This will allow you to use technology, but not just for its sake.

Look at other industries. 
Most industries suffer from a notion that since business was done a certain way for years or decades, there is nothing that can be improved. However, in most industries that’s simply not true. To help eliminate this myopic view, look at other industries or similar businesses. For instance, a fuel carrier should be looking at transportation leaders like the UPS or FedEx to see how they are running their operation. How are they using technologies to better serve their customers?

Look at consumer technologies. 
Every one of your customers uses technology in their personal life. Whether they are using a website, a mobile app or some gadget, they are increasingly used to a new world with instant access to information and insight. They expect the same level and quality of technologies in their business world. If you don’t provide that, someone else will.

Hire a business savvy CTO (Chief Technology Officer). 
It used to be that technology departments reported to CFOs. Historically accounting departments needed computers to crunch numbers so IT (Information Technologies) was managed by accounting or finance. That’s no longer the norm. Today, every company no matter how large or small needs a business savvy technical leadership. Maybe your CFO is that person, but chances are his or her concerns are more with the financial aspects of the company and less with how technology can transform your business.

Also seen on FuelMarketerNews - http://fuelmarketernews.com/tech-savvy-survival/


References
Software is eating the world –http://online.wsj.com/article/SB10001424053111903480904576512250915629460.html  Borders bankruptcy – http://www.slate.com/articles/business/moneybox/2011/07/readers_without_borders.html Borders bankruptcy – http://www.businessweek.com/news/2011-09-26/borders-to-sell-intellectual-property-to-barnes-noble.htmlhttp://www.businessweek.com/news/2011-09-26/borders-to-sell-intellectual-property-to-barnes-noble.html

Run a second instance of Skype on a Mac

I'm in a process of moving from Windows 8 to a Mac. On my Windows box I run both a personal and work instance of Skype. To have both running on Windows just execute the command "Skype /secondary" and you're done. As it turns out, on a Mac it's not much more difficult. The "secondary" option does not exist; however, there is still a nice way to solve this. Simply run "sudo /Applications/Skype.app/Contents/MacOS/Skype &" in a Mac Terminal (if your Skype is installed in /Applications).

However, if you want a nice application icon in your /Applications or your Dock, you'll have to create a Mac package. It's quite simple, but to save you some time, check out this package in GitHub: https://github.com/vcollak/SkypeSecondaryMac

Building mobile apps - build once, run (almost) anywhere

For those of you who are interested in mobile application development, I would highly encourage taking a look at Sencha. I spent the last two days at their SenchaCon annual developer’s conference and cannot resist being completely impressed by their products as well as people.
During the conference they introduced several updates to their current frameworks including Ext JS, Sencha Touch, and Designer. They also introduced a new cloud offering called Sencha.IO. However, while Ext JS is a great framework and Sencha.IO is a very interesting new cloud offering, the real story here is Sencha Touch.

As everyone knows, mobile development market is fairly defragmented. To build mobile applications for leading platforms such as iOS, Android, and BlackBerry, developers need to build the same application in completely different frameworks and languages. To support all three, developers must literally write the application three times. What a waste of time. To solve this issue, one can use a third party framework. Several months ago I evaluated three leading JavaScript frameworks including Appcelerator , JQuery Mobile  and Sencha Touch . To create complex mobile apps quickly and with the least amount of pain, Sencha Touch was hands down a winner. While the other two have a potential, Appcelerator was simply too buggy and JQuery Mobile while easy to use resulted in UI differences between platforms. What looked great on an iPhone was terrible on Android when built by jQuery. Sencha Touch does not suffer from these limitations. While its learning curve is much steeper than jQuery, I feel that benefits outweigh the downsides.

As a result, Ignite standardized on Sencha Touch and we are building mobile applications in that framework now. Our own findings as well discussions I had with people around SenchaCon reveal that Sencha Touch really is a great framework. As the same time, when building large mobile applications not everything can be solved with it.  For instance, because the framework leverages Webkit browser on the device, developers may need to use something like PhoneGap to access native APIs such as camera, contacts, geolocation and others. Also, some of the developers talked about leveraging PhoneGap to improve speed of the application and moved some of the business logic to it. One other exciting product in their mobile ecosystem is the Sencha Designer. In 2.0 developers be able to build mobile apps using their UI builder. What takes us hours now can take us minutes. The resulting code will be MVC. Something we are very excited about, of course. To be honest it’s not all roses even with Sencha. Multi-platform mobile development is tough and many developers have to deal with workarounds just to support multiple devices within the same app. However, I think Sencha Touch is clearly a leader in this space.

Organizational star performers

Interesting research covered on an HBR podcast:

• It seems to be more productive to develop star performers internally compared to hiring them from the outside. This is because outside stars leave behind them a support structure, which they need to develop at the new pace. It often takes up to 5 years for stars to become productive again. (Vlad: Hmm, I am sure one's mileage varies here, but I guess the point is that star performers are not immediately as productive at the new place as they were at the old.)
• Star performers are less likely to leave employment. In fact, the turnover of stars is half the rate of non stars
• People don't leave companies, they leave managers. If companies change management, expect some turnover
• Stars are less likely to leave if there are other stars around

Generation X and workplace

Interesting podcast about Generation X and their struggle to find their place in corporations. As the podcast explains, Gen Xers grew up in an environment full of corporate layoffs, which caused them to be "light on their feet" so to speak and much more opened to options than other generations. They are entrepreneurial, fed up with Boomers not getting of their way and worried about the new cool Gen Y.