Since January 2nd I’ve spent a majority of my time in Des Moines, Iowa at the Dwolla headquarters. It was not easy being away from my family and friends, but I think it was essential to start the year off working there.
In mid-December I approached Michael and Nicole (from the Dwolla NYC team) about spending an extended period in DSM at the start of 2013. They both agreed and we pitched the idea to Charise (Dwolla’s COO) and Ben (Dwolla’s CEO). They too thought it was a really good idea, and we arrived two weeks later, bright-eyed and bushy-tailed.
I thought of writing a full post-mortem piece about my time spent in Iowa, but I’d rather write about why Dwolla is special, what made me want to join, and why I think 2013 is going to be a very big year for us (without giving away too many secrets).
Building a Payment Network From Scratch
I’m going to be honest; I had a next-to-zero payment background before I joined Dwolla. I’m not 100% sure, but I imagine if you had asked me before I joined, I would have had no idea what ACH (Automated Clearing House) was. What made me attractive to the Dwolla team was my experience with developer platforms and third party integrations. In this regard, Dwolla wasn’t so different from my previous role at Aviary, working with companies to integrate the photo editing API. Except this was a payment API. Transferrable skills.
I remember meeting Ben and Jordan for the first time to learn about the business. There are three things that stuck out to me after we met.
The first, Dwolla was building a payment network, not so different than Visa or Mastercard, from scratch. Using some legacy technology (really only ACH for the time being), but not like other payment companies. They didn’t owe anyone money, as opposed to other payment companies that need to pay the existing infrastructure players just to operate (Think Paypal charging 2.9% + 30 cents. They don’t keep most of that, obviously).
The second was, they were going after a huge market, in fact a 34 trillion dollar market: ACH. There is no bigger opportunity. It is so big, most people are frightened to go after it. If you added up all of retail in the US, you may come up with a comparable number.
The third was that in terms of the API, the optimal integration was anywhere there is a transaction/payment/donation. This means that any business that is operating and creating revenue, whether wildly successful or even moderately successful, could benefit from integrating Dwolla. The sky’s the limit. Other API’s have ceilings. They can be high ceilings, but ceilings nonetheless. Dwolla’s API didn’t have one. That was a huge deal for me.
The opportunity was too good to pass up. I knew that if I didn’t join the Dwolla team, I would regret for the rest of my life.
Why Dwolla Is Special
It is hard to innovate in the payment space. Re-inventing the wheel is easier said than done. So most companies stick to status quo; they push the ball forward in ease of use or convenience. They don’t, metaphorically speaking, look at the plant, say this is not the right way it should work/grow and dig out the roots and re-grow them correctly.
The best analogy I’ve heard about how Dwolla is different from other payment companies (think Paypal, Stripe, Braintree, etc.) is that imagine the payments world was the Apple App Store and the payment companies were developers submitting Apps. Now, you submit an App to the App Store, people start using it, and you are making money. Woo hoo! Well if you create revenue by selling some sort of digital good or service, you are going to have to send Apple 30% of your revenue. This money is for the infrastructure and distribution Apple provided you. You know, and so Apple can make profit- which is not a bad thing, they are indeed a business. This is the exact relationship of those above mentioned payment companies, and Visa/MC/Amex/etc. If you’d like to build on top of them, essentially becoming a payment method aggregator, well then you owe them money. Typically anywhere from 2-7%, depending on how high risk your business is.
Now imagine you are a developer thinking of building the next cool app. You look at Apple’s App Store and you start to understand why things are so. Some things don’t make sense. They are old and slow. They were built before better technology was available. They are asking for a percentage of your business: 3%! Damn. That’s an entire month of operation costs for your business. There has got to be a better way. You can do this better, you tell yourself. Instead of perpetuating the problem, you say, F them. I’m going to build my own infrastructure. I’m going to compete with the App Store. I’m going to build a better App Store. Then I’m going to convince other developers and the developers’ users to use my App Store instead. It is going to be cheaper, faster, and more secure.
So imagine you decide to do that. You buck the trend and build your own App Store. And look at that- you start to gain traction- people start to use it. First it is just a few close friends who are developers, but then you get some developers you haven’t met before. One is in Hawaii. Cool. It starts to grow. You are getting twenty new developers every day from all over the US. Twenty turns into 100. 100 turns into 1,000. Then 10,000, then 100,000. Very soon you have a few million. Now the Apple App store is getting scared because you are encroaching their turf and war-chest.
This is what Dwolla is doing. We are building our own infrastructure. Ben calls it the “ideal network.” A faster, safer, and cheaper way to move money. A massive undertaking that has odds stacked against it. But therein lies the magic. If you can muster the courage (or cojones) to build your own payment network, and you manage to get traction, something beautiful can happen. At the end of the day, you need to think about what would happen if your company reached its full potential. I know that if Dwolla reaches its full potential, the economy, and the way money moves, as we know it, will change— for the better.
This leads me to the next part of why Dwolla is special and that is the team that has been assembled. I’m not going to name any names because we are at 30-40 employees at this point and we’d be here all day. But what I will say is that every single Dwolla employee (or builder as we call it) would be the absolute #1 f’ing rockstar at any other company. You know that girl or guy at your company who just makes things rain daily? That is every single Dwolla employee.
I like to see myself as a problem-solver. I’m solving my own problems as well as always looking to help people with theirs. I try to come up with creative, out-of-the-box answers if the easy-apparent solutions fail. Well, I must say that the problem-solvers who work at Dwolla are next level. The solutions to some of the problems presented can’t really be mentioned on this blog as they are confidential, but trust me when I say that there is never a problem of finding quality solutions to every difficulties presented.
I’m really happy to be a Dwollan and proud that Ben and Charise have put together such a quality group of people to carry out the company’s vision.
What We Accomplished By Working In Iowa
There were a few goals on the trip and I’d say we accomplished most if not all of them. The first was to start the year off right by spending some quality time with the team. Check. The second was to make a case to various members of the team as to why things we are asking for on the API side of the business are important and high priority. As you can imagine, we have a lot of things going on as a company. We have everything from the consumer and merchant experience to the developer portal and financial institution products. Prioritizing where to focus resources is not an easy task. So in the case of presenting why various features for third party integrations are important (and more or less important than other things on the roadmap), we definitely accomplished our goals. While we didn’t get a chance to begin slaying some of the features/products that we want, we did map them out extensively and prioritize them.
This is going to be a big year for Dwolla. We have lofty goals and I’m confident we will power through them. The State of Iowa deal (hat tip to Nicole and Charise on that. Probably the fastest closed government deal of all time) was one of the first fairly big things coming this year. Stay tuned- upward and onward.
And while I have you here: we are hiring at Dwolla! We are looking for engineers (in Iowa), sales and marketing interns (anywhere- paid), and a developer evangelist intern (NYC- paid).