Alex's Tech Thoughts

If you didn’t see the news yesterday, Dwolla raised a new round of capital, $16.5M led by Silicon Valley venture fund, Andreessen Horowitz. It’s an exciting time to work at Dwolla and it’s great to finally share the news with everyone.

It’s been a year since I joined Dwolla and every day is an amazing challenge. Building a payment network from scratch is no easy task and I’m happy I get to work with such great people at Dwolla. The rest of 2013 is going to be a rollercoaster and I wouldn’t have it any other way.

Here is a roundup of the press from yesterday:

Bloomberg: Silicon Prairie’s Dwolla Strikes Out West to Find $16.5 Million

Des Moines Register: Dwolla raises $16.5 million, will open Silicon Valley office

Business Insider: This 18-Slide Pitch Just Landed Payment Startup Dwolla $16.5 Million

Silicon Prairie News: Dwolla raises $16.5MM Round Led by Andreessen Horowitz

TechCrunch: Payments Network Dwolla Raises $16.5 Million Series C From Andreessen Horowitz & Others, Expands To San Francisco

VentureBeat: Dwolla raises $16.5M from Andreessen Horowitz to revolutionize banking

The Next Web: Dwolla raises $16.5M from Andreessen Horowitz to help it scale, double staff and open SF office

BetaBeat: Dwolla Raises $16.5M from Andreessen Horowitz and Others, Will Be Expanding to San Francisco

Mobile Payment’s Today: Dwolla raises $16.5 million in Series C funding

WSJ/Dow Jones Venture Wire: Taking on Visa, Dwolla Raises $16.5 million to Make Digital Payments Affordable

Financial Times: Silicon Prairie Attracts Silicon Valley Investors

Ticker:

PandoDaily: Payment network Dwolla raises $16.5 million Series C

AllThingsD: Led by Andreessen Horowitz Payments Startup Dwolla Raises $16.5 Million

Syndicated

Iowa Press Citizen: Dwolla raises $16.5 million, will open Silicon Valley office

AP (Des Moines bureau/Register): Iowa-based Dwolla raises more than $16 million

Investor Blogs:

Albert Wenger’s Blog, Continuations: Dwolla gets a check (to do away with checks)

Scott Weiss’s Blog: How would you start a PayPal or rebuild Visa today?

News Aggregators:

Techmeme

Upward and onward.

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.

Avengers Assemble!
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).

I’m in Las Vegas at the Affiliate Summit today. It has been two years since I was last in Vegas and not much has changed. I think one of the most interesting things about Vegas is that, if you are inside a hotel, it is nearly impossible to figure out what time it is without looking at a watch/smartphone.

Anyways, I am here because the affiliate space has become a very interesting opportunity for Dwolla. Not only affiliate, but all types of payouts (customer rebates, survey incentives, fantasy sports, marketplaces). Anytime you need to pay out to a large amount of people, a quick and cheap way to do so is by using Dwolla. We’ve been seeing many companies paying with Dwolla instead of sending checks. So the affiliate industry is a logical space to spend time and effort.

You can check a short blog post I wrote for the Dwolla blog about the event and why we are attending.

This is my first time here and I’m not so familiar with the event, so if you know anyone going that is friendly, please connect me!

Also, if you or someone you know is at a company, paying out to a group of people, and looking for a cheaper way to do it, send them my way. I’d love to connect!

In life you will encounter challenges. Some of them will have easy fixes, others will be very difficult. I haven’t been alive for very long (only a quarter of a century), but I’ve noticed that nothing that is worthwhile is ever easy.

I joined Dwolla about 9 months ago. There are many reasons I joined, but one of the biggest was that I saw Dwolla as a huge challenge. Building a payment network virtually from scratch. What an opportunity!

Before accepting the job, I sat down with Chris Paik from Thrive (he originally introduced me to Ben Milne, CEO of Dwolla). I distinctly remember Chris saying that I should be aware before I joined that Dwolla was going to be a roller-coaster. There would be ups and downs and it was not going to be easy. We’d have a lot of incumbents and they’d be protecting their war-chests by any means possible.

This conversation stuck with me, and Chris has been 100% right. There are days that seem like we are poised for world domination. There are also days where it seems like we are climbing a hill that keeps growing and there are people throwing arrows down to block our path.

All in all, life is good and while I experience daily challenges, I remind myself that nothing worthwhile is easy.

Today I’m heading to Iowa with Nicole and Michael from the Dwolla NY team. We all purchased one-way tickets and will probably only return at the end of the month. 

We have really lofty goals for 2013 at Dwolla and to make sure the year starts off right, the NY team decided that we wanted to kick it off with an extended period of time working at the DSM headquarters.

I’m really excited about all the things we hope to accomplish in Iowa. Happy New Years!

I’ve been thinking about tools I use everyday and wondered how they stacked up to others.

Here is what I use:

1) Twitter (news)

2) Facebook (distribution of my blog and keeping up with friends)

3) LinkedIn (getting updates on who moved jobs, looking up people, connecting with others)

4) Google+ and Skype (google hangouts with Dwolla team for daily meeting and skype for other calls)

5) Google Docs (I rarely use Microsoft Word or Excel- only if I’m in a spot with no internet)

6) Tumblr (post my blog on Tumblr)

7) Gmail and Gchat (to email and chat)

8) Instagram (when I take photos)

9) Foursquare (using Explore to find places around me or to let friends know where I am)

10) Citibank and American Express (check on my finances)

11) Reddit and Hacker News (I’m mostly a lurker, but peruse both each day)

12) Dwolla (I work there and I pay people back with Dwolla)

13) Eventbrite (I typically have an event going on, so I check Eventbrite frequently)

14) Verizon, Time Warner, Con Edison (check my bills almost daily)

15) Games: Angry Birds, Derby Jackpot (Angry Birds played typically in the subway if no internet)

16) Spotify (I listen at my desk and with mobile app- easily worth the $10 a month)

17) Brewster (I have found it to be a much better address book)

18) Dropbox (sharing files and such)

I’m sure I am missing a few, but that is a good high level overview.

What am I missing? What do you use that is awesome and you can’t live without?

Leave it in the comments below.

I often have people ask me how they can start their own blog and what they should write about. I always try to tell them that they need to find a vehicle to write about. Once they find their vehicle it will be easy to produce content.

Some example vehicles are - startup newbie, startup VC, lawyer turned startuper, learning programmer, entrepreneur sharing knowledge, VC/entrepreneur combo, etc.

When I was last out in Iowa, I had the pleasure of sitting down with Kate Wagner from the Dwolla team. She has been writing a personal blog for quite some time, but wanted to crossover a bit, find a larger readership, and have it relate back to startups.

After some discussion she decided on reviewing female targeted startups and companies as a female in the coveted demographic (18-35) and geographic (Midwest). She is calling it Review Me Kate.The first review is called Go Try It On and you can find it here.

This is a great example of finding a vehicle. I wish Kate luck and know she will do great.

As you may have seen on the Dwolla blog this morning, on November 28th, Dwolla is teaming up with Derby Jackpot to throw and awesome event in NYC.

We have rented out a bar, Tavern on Third, and will have a night of horse racing with your favorite people in NY tech. Derby Jackpot is a completely legal and safe way to bet on horses online and we have partnered in way so that you can deposit money from Dwolla into Derby Jackpot to bet on horses.

We’ve also upped the ante, so that anyone that comes with a Dwolla account (you can create one here) and a Derby Jackpot account (you can request it here and they will push you through before the event)- will get a free $10 to bet on horses and drink! 

So in summary- come to Tavern on Third + get free $10 + bet on horses + drink alcohol + hang out with your friends + meet new people in the tech scene = profit! 

You can RSVP here.

One of the hardest strategies in partnerships, business development, and when building companies is betting on growing with partners. But when it works— it can pay off in spades.

Think of Zynga. They bet on the Facebook platform and it paid off handsomely. Other ideas that jump to mind are any popular App that benefited greatly from the iTunes App store.

While I was working at Aviary, there were a few small Apps that we definitely benefited from as they were growing with us (and fueled even greater growth). Betting on and putting time into those relationships improved the company’s situation and, I’m convinced, had a positive effect on building an even greater product.

At Dwolla I try to find companies that are already doing big things, as well as looking out for the up and coming opportunities so that we have the opportunity to grow our payment platform with them. I think this will lead to big things happening in the upcoming months. 

This blog is normally for thoughts I have about technology, startups, and business development. But every once in awhile I venture out to write something different. This is one of those times. I’m putting out a PSA of what I am looking for right now. Readers of this blog might be able to help.

I’m currently working on a project (at Dwolla, obviously) and I’m looking for companies that accept payments online. Any website that has a payment/checkout/donation aspect to its site. It could be anything from an ecommerce and gaming to nonprofits, marketplaces, and accounting tools. The entire idea here is for savings. If you accept payments and like to save money then you are someone I’d want to talk to.

I can’t go into too much more detail here but if you or someone you know fits the bill (it could be a small, medium, or big website) please feel free to email me or intro at AlexT@dwolla.com. This should only be for launched products/companies, not pre-product.

While on this topic, I think that it is good to ask for things you need/want in life. People can’t read your mind and it’s best to be direct as good things come for those who ask.

We have added another full-time employee to our team in New York City. It is my pleasure to welcome Nicole Cook to the business development team at Dwolla. She will be based in New York City with Michael and me.

Nicole interned with Dwolla during Summer 2012 in between the first and second year of her MBA at Wharton UPenn. She made a big impression on the team in New York and in Iowa and we knew we couldn’t let her go back to school. Anyone who was involved with eCommerce Hack Day knows what I am talking about. If you were there you would have seen how much she killed it while organizing and running the event. 

Even more interesting, and I think perhaps an upcoming trend in the startup space, is the fact that she is leaving school before finishing her MBA. It takes a lot of guts to do that and I salute her. The only two reasons, I can think of, to actually do an MBA is either if you are looking to switch careers or if you are looking to advance in your corporate position.

In Nicole’s scenario, she was looking to switch careers, having been in banking for five years. Once she found a great startup and something she loved doing, it made sense to jump to it. I think we will be seeing many MBA folk doing exactly this in the next few years as they are looking to switch careers and end up figuring out their passion before they complete their degrees.

Anyway, welcome Nicole Cook to Dwolla. You can find her at @niccook on Twitter.

Lastly, we have two other awesome people, currently Community Builder Interns on team Dwolla NYC: Carleen Pan, and the recent addition of Brian Kil. Welcome Brian!

Dwolla NYC is a-growing…

For the past few months, on and off, I’ve been working on a project called Reddit Donate at Dwolla. We teamed up with the good folks at Stripe and received some great guidance from the team at Reddit. We are launching it today and I’m really excited about it.

The general idea behind Reddit Donate is that we give subreddit moderators the tools to help their favorite nonprofits raise money. For those who aren’t familiar with Reddit: they are one of the most vibrant communities on the web, with user-generated news links and sub-communities ranging from Christianity and Atheism to gaming and science. 

We are launching Reddit Donate with 12 nonprofits: they are charity: water, Donor’s Choose, Fuck Cancer, hackNY, Girls Who Code, Pencils of Promise, She’s the First, goods for good, CFY, iMentor, Kiva, and United Way NYC.

Way awesome.

One of my favorite parts of Reddit Donate is the viral component. Once you make a donation you get a share page. This is similar to when you back something on Kickstarter and tweet out- “I just backed X on Kickstarter- (LINK),” we have an I just donated to X on Reddit - (LINK). We are adding the hashtag #give to the end of the tweet. We are hoping to make it go viral today.

Go check out Reddit Donate and let me know what you think.

Dwolla and Etsy organized eCommerce Hack Day yesterday. It was awesome. I’ve written posts about hackathons before, but never about how to win one. After starting and running Photo Hack Day 1 and 2, and being involved in 5-10 more hackathons, I think I now have the experience to point out some do’s and dont’s for hackathon winning.

Do:

• If you are a good developer, team up with a designer. If you are a good designer, team up with a developer. You need both to be successful at the hackathon. This past week ShopPapaya (a one-click tool that helps you shop smarter) won second place. The team was an awesome developer and designer (that met each other that morning). I would say that the designer is much more needed for those final touches

• You have typically 2 to 3 minutes to demo. Either show a killer designed and functioning product and let it speak for itself or make sure you have a funny spin to make them laugh (chance to win a people’s choice).

• Work on something that does one thing really well. Show it off- focus on it for your demo.

• Tell a story. If you think you are solving a problem (big or small), tell everyone about the problem and how you solved it. People like stories. If you are solving an interesting problem and have a cool/working product you have a high chance of winning something.

• While you might not win the top place, by focusing your project on a specific API you may come away with the best use of the API. I’ve seen people enter hackathons saying they want to win Face.com or Twilio’s prize (whether an iPad, Kindle, etc) and focus their project entirely in that direction.

Don’t:

• To be successful at the presentation you need to be able to get through your demo. You can slave away all night working but if you can’t clearly express your project/hack you won’t have a chance of winning anything. Make sure you don’t waste time talking about pieces of the project that aren’t essential to the crowd’s understanding of what you have built.

• Don’t bet the house on a project/hack joke. They are always seemingly transient and don’t have a high chance of lasting after the weekend, which is traditionally one of the criteria that the judges use when voting. You should make jokes during your presentation, but just be wary of making your entire pitch a joke.

If you follow these do’s and dont’s your chances of winning will definitely increase.

Any other tips? Leave them below.

We have an exciting summer coming up at Dwolla and the first thing we announced was eCommerce Hack Day with Etsy on August 4th and 5th .

After having been involved with some hackathons I realized a theme that was occuring. Many great people were getting together, but there was a sizable faction of people coming to the events who didn’t know how to develop (myself included, but I was always an organizer- very rarely a participant). 

Now, this wouldn’t be too bad if the people who didn’t know how to code wouldn’t continue to ask for help to learn from the people who did.

I’m all for helping the community and for people learning how to program, but it needs to be in the right place and time. (Side note: interesting idea here would to put together a midnight intro to programming class at a hackathon, but I digress)

So, when planning eCommerce Hack Day with the folks at Etsy we decided to have a filter process for developers. Michael, my (other) life-partner at Dwolla, thought up a really neat puzzle that he could insert in the source code of the homepage. This puzzle would essentially make developers prove that they can program before getting a ticket.

Once it went live it was on the front page of Hacker News and over 1,000 people tried to solve it in the first 5 hours. Michael is going to write a blog post about how he built it with Redis To Go and Sendgrid. We’ll be sending out invitations to developers soon!

Good developers are not only judged by their programming work but also by how they document that work. Good documentation helps bring others up to speed and makes a company more efficient. 

The same can be said with business development. Good business development people keep track of all their meetings and developments by making meeting summaries and updating their pipeline.

When initiating new people on your team or leaving deals over at a job you are leaving, having poor notes or information about the deals you were working on can have major negative ramifications on the business.

I haven’t always, but now currently do a few things every day that will help when we eventually bring more people on board in business development roles at Dwolla.

Here are two important things I do:

Meetings Of The Day

Every night before I go to bed I write up a meeting summary for each meeting I had that day. This consists of the company name, people in attendance, summary of what happened, and next steps. I have one google doc running of all the meetings I’ve had since Day 1. If someone would join now their first order of action would be to dive in and read these notes. 

Highrise

I used Highrise at Aviary, and after a few weeks I decided it was worth getting for Dwolla. The only thing I am doing with Highrise is bcc’ing all my business emails to keep tabs on all the companies we are talking with. I go in once a night and tag the emails with who the people are, their company, and their industry. This way if I ever need to follow up on, let’s say, the e-commerce industry, I can go in and get a quick list of companies.

If you do anything else that helps you document your biz dev efforts please let me know by leaving them in the comments.