We hosted our second event of the year in Vancouver (our first in Canada) earlier this week and had a great time. I have been going to Vancouver for 20+ years and have been thinking about doing something north of the border. It is also one of my favorite cities in the world. By strange coincidence, all 3 of our MBS cities outside Seattle have been Olympic cities – Atlanta, London, and now Vancouver. I guess we will have to go to Beijing or Seoul next.

With the help of my good friend Pankaj Agarwal and his team at Optimus Information and Wavefront, we were able to plan out a sold-out event. We continued the theme of Mobile Commerce and Payments given that it is such a hot topic right now and brought together three startup CEOs who are right in the middle of the action.

 

The mobile ecosystem is evolving exactly we envisioned it in our 4th wave paper in 2012. The 4th wave is becoming the most dominant portion of the revenue stream as was witnessed from the revenue results in 2014 in the US.

As I have said before in various public forums, one of the metrics I use to track progress in any segment is the number of $1B businesses being created each year. In 2012, there were only 9 companies mostly large enterprises like AT&T, Apple, Google, and Amazon that had > $1B digital businesses. However, in 2014, this number jumped to 37 with several new entrants – from known brands like Twitter, Walmart, and Xiaomi but several companies unknown to the western world like WeChat, FlipKart, Otto Group, GungHo, Suning Appliance, and others. While most of the concentration of digital wealth in the US, China is emerging very strongly as a player to reckon with. In fact, how China and US companies interact and play will perhaps define the next 10 years. While other economies like India, EU will play a role, I find China and US to be the most fascinating.

The speakers were:

Sam Gadodia, CEO & Co-Founder, Lotusflare

Sam co-founded LotusFlare with couple of his colleagues from Facebook with the objective to make mobile internet more accessible across the globe. Prior to LotusFlare, Sam worked at facebook and worked with Mobile Operators’ on SMS, Zero rating and other initiatives to drive growth on FB mobile app. Before this, Sam built and scaled TeleSign, one of the leaders in mobile authentication and verification space. Sam also co-founded and successfully built Global eProcure, a leading SaaS based SCM analytics Company with operation spanning from North America to Asia. While at Global eProcure, he received the Stevie award and was named by American Business Awards as Best Operation Executive.

Michael Gokturk, CEO & Founder, Payfirma

Michael Gokturk is the kind of entrepreneur who takes a company public in 3 years then launches a new business 3 days later. In 2011, Michael founded Payfirma with the goal of disrupting the highly competitive payments market by creating a solution to merge online, in-store and mobile payments. He has since grown Payfirma from the first company to introduce mobile payments in Canada into one of the top multichannel payment platforms. Before Payfirma, Michael founded and was the CEO of Versapay. A payments company specializing in point of sale systems and electronic bill presentment and payment (EBPP).

Ajay Hans, CEO and Co-Founder, Mobetize

Ajay Hans, Founder of Alligato Inc. and Co-Founder of Mobetize Corp brings over 15 years of diverse experience in the development, marketing and implementation of complex billing and payment related software technologies dedicated for MNO’s and MVNO’s. Ajay has overseen Mobetizes’ strategic vision and tactical execution since inception. He has held senior executive positions with leading telecom software technology companies where he successfully implemented solutions for brands including SaskTel, Sprint and AT&T.

Chetan Sharma, CEO and Founder, Chetan Sharma Consulting (moderator)

The three panelists are involved in advertising, payments, and commerce working with all parts of the value chain – banks, operators, startups, credit card companies, retailers, etc. We had a very interesting discussion that covered a breadth of topics.

The salient points of the session were:

• 30% of ecommerce is mobile. In the emerging markets, 90% of the users do topups daily. 30% of the consumers in the US are unbanked or underbanked so they need new and different kinds of financial services.
• 80% of the mobile population have limited data plans.
• The journey of a customer to the final transaction can be a long one. Before we get to the transaction and payments, we have to make sure that there is engagement, consumer interest and a friction-less process.
• While the western and developed markets are generating the bulk of the current revenues, the growth is coming from the emerging markets like China, India, Philippines, Indonesia, and others. The number of mobile transactions in Asia are outpacing the transactions in the west.
• 30-40% of the smartphone consumers in the emerging markets don’t have data plans which of course is a big friction point and needs to be addressed. There is a huge net neutrality debate around providing access using “Zero-rated” initiatives and the critics generally miss the point that some access is better than no access but that discussion is for some other day.
• Apple Pay hasn’t really penetrated Canada due to the concerns about fraud and other issues but this likely is going to get remedied in due course.
• Money fraud is always going to be there. Humans will always find ways to cheat the system. When does the fraud exceed the pain thresholds before the financial institutions who are on the hook for writing off the fraud losses worry about it too much.
• It is expensive to be poor. If you want to do financial services, it gets very expensive quickly. The likes of Western Union charge way too much fees and mobile has the opportunity to disrupt but the efforts have been plagued by cumbersome value-chain. New startups are changing that by offering app and messaging based solutions that charge a 1-2% fee to transfer money esp. remittances.
• For mobile remittance to become a much market, regulations will have to come up to speed with the pace of technology change.
• While Bitcoin is interesting, it might be the friendster of the digital currency ecosystem. There will be new virtual currencies that will launch that will learn from the mistakes and propagate a truly new way of doing transactions. Overstock was the big digital retailer to embrace bitcoin and it did see a jump in transaction but since the early splurge, the interest has gone down
• The answer to data and privacy breaches is not regulation and the government but technology solutions and industry collaboration to address the issue. But hasn’t the industry had enough time on this already? I suspect that governments around the world will have a lot to say on this issue in the coming months.
• The market for data exchanges might be coming up.
• As I mentioned before, the Chinese companies are coming up strongly, the latest one being China Union Pay or CUP which has over a billion cards in circulation.
• Companies like Transferwise, Worldfirst, and Xoom are emerging who are taking a bite out of the big exchange rates adding to big savings for the customers.
• Social biometrics is emerging as a way to assess credit risk for users who don’t have bank accounts or credit card history. In this case, the firm doing the risk assessment underwrites the risk.
• Consumer trust is a big deal and once the trust is gone, it is very hard to win it back. Some of the privacy issues can be tackled with better policies and compliance.
• Lot of discussion and questions around whether the traditional incumbents like operators and banks can become viable digital players. Some are trying themselves (and that might be the problem in some cases) while others are partnering with agile startups to bring solutions to the market. They definitely have the reach and distribution which startups need. There is clearly a play for them in the ecosystem but will they extract the highest value. Unlikely.

In summary, mobile commerce remains a hot area and we are approaching a tipping point wherein mobile commerce dominates ecommerce in all parts of the world. I really enjoyed the moderation and questions from the audience. My thanks to Optimus Information and Wavefront for being our partners for the event. and thanks to the Vancouver mobile community for embracing us with open arms.

Our next event is going to be in our annual mobile summit – Mobile Future Forward on Sept 29th in Seattle. Stay tuned for announcements and details.