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WePay (YC S09): Innovating Where Banks Won’t
- raheemm 16y agoIt does not seem like WePay will compete against Paypal. Why aren't there more paypal competitors? What are the barriers to entry?
- sstrudeau 16y agoI think the fact that only big players (Amazon, Google) have had any success at all in this area is illustrative. Regulatory barriers plus ability to deal with fraud at scale sets a very high hurdle. Not the kind of thing you can easily bootstrap.
- dkuchar 16y agoMassive. http://news.ycombinator.com/item?id=1492098 http://news.ycombinator.com/item?id=1492098
- illumin8 16y agoGreat article. I particularly liked the discussion about how they took their business through the YC process and to market. It seems like WePay is a service that has a lot of potential. It also seems like it might have some potential for fraud and money laundering, so I hope that doesn't happen to the service.
- narrator 16y agoI read a bit of the history of PayPal. It seems like they spent an enormous amount of time dealing with fraud and security issues.
- edash 16y agoMax Levchin is a WePay investor, though. Fraud and security will be a headache, but they have access to smart people who have handled these issues before.
- wugunz 16y agoWow, I feel like a total asshat. I did this years ago and called it GroupBuy. The idea came to me when I was gathering money for a batch of shrooms my friends and I were buying. Its good for buying large quantities of drugs with friends. Idea #2 for me that I slept on. Fuck me.
- jrockway 16y agoI agree with you, the tone of the article made it sound like the founders (and the VCs that funded them) cured cancer, solved world hunger, and eradicated all disease and unhappiness. When in reality, they just found a way to take a cut of transactions. Just like every other financial institution. Innovation indeed.
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- powrtoch 16y agoSo... how awesome is it that the founders of this money-handling system are "Rich" and "Bill"?
- sachinag 16y agoIf you've ever met them, the actual awesomeness is just how bad-ass Rich and Bill are.
- kiba 16y agoPretty please describe an anecdote showing how bad-ass and awesome Rich and Bill are. Thanks, in advance.
- pg 16y agoTo make it hard to quit they got a dog together. It's supposed to be the company's dog, not either of theirs individually. The idea being that now the company can't go away or there's no one to take care of the dog. Increased the burn rate a little but turned out to be a net win.
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- apu 16y agoI know it's not really the same situation, but this reminds me of couples who have a child to help protect/save their marriage. This usually hurts, rather than helps the marriage.
- ekanes 16y agoTrue, but it's not as bad as that. In the end, if you had to, you can give away the dog to a good home with a lot less paperwork. ;)
- iamelgringo 16y ago
- fjabre 16y agoIt's about time they started innovating in this sector. The banking industry as of late seems like nothing but fraud and arcane outmoded banking policies (i.e. Why the hell do banks still close on Sundays???) I hope WePay branches out into other services. It'd be a miracle if I could manage my bank account like I manage my other web 2.0 services.. It'd also be nice if the bank I was with gave a shit about having me as a customer. Banking hasn't fundamentally changed for over a century and as the article points out, Paypal has been pretty lackluster in terms of innovation as well.. Banking is screaming for innovation and I can't wait to hear about more startups innovating in this space..
- sachinag 16y agoIf you're looking for an actual bank, BankSimple is going for this. The founders are smart ex-finance dudes, and Alex Payne is the guy in charge of the web app.
- fjabre 16y agoI'm anxiously awaiting for them to come out of private beta. I've been following them for a little while now. It's exactly the kind of thing I hope to see more of..
- jakarta 16y agoI had a conversation with the best banker I know about BankSimple. This is a guy that founded a bank in a major US city that had absolutely -0- non-performing loans, through the crisis. That is amazing when you compare it to the rest of the banks in our nation. The only one that come close in terms of performance/size is First Long Island. Here's what the banker said about these online bank start ups: "One of the main problems with "online" banks is how do they make money. Most if not all have loan volume from somewhere else and are trying to find deposits to fund it - ING is an example. They try the internet route instead of opening expensive branches. ING has kind of dropped off the radar lately because they have credit problems (and I think it is a Dutch bank and you have read about the European problems). If these people want to start an internet bank with no fees and make it up on the NIM, they need to invent a way to get people to borrow on the internet. No one has been able to do that yet with the exception of some payday lenders. Also, most of the internet banks so far have competed on price. They offer higher rates - which tend to attract "rate-shoppers". If they are not the highest rate, the rate-shopper will go wherever the highest rates are." For a start up, I'm not sure if they will be able to compete on price. Banks like Wells Fargo benefit from their economies of scale because they are able to gather cheap deposits by cross-selling products (which is attributed to their success).
- yanilkr 16y agoA great Idea, but there is no secret sauce here. I wonder how difficult it might be for someone like Facebook or Google to rip this.
- nickpinkston 16y agoAt SxSW this year, there was a session on "Banking 2.0", and they (Mint, LendingClub, etc.) all agreed that their philosophy is to treat banks as dumb institutions - mainly to avoid regulatory pit-falls, etc. WePay is following the same path, however the risk management side isn't seeing much startup activity at all. This means consumers win in experience, but systemic risk is largely the same.
- mattmichielsen 16y agoI wonder how legal it is to accept donations for beer brewing supplies from my friends "in exchange" for the beers I provide for them. The donation jar on top of the kegerator works, but a lot of people don't carry cash these days. I guess I'll find out.
- johnrob 16y agoOur first 30 beta testers were all Y Combinator founders This seems like a powerful feature of YC!
- pg 16y agoWe deliberately encourage it. We learned about this technique from Google, who use their own employees to beta test everything. In fact, this is part of the reason we've grown so fast. As we continue with YC it becomes increasingly clear how valuable the alumni network is (not just in this way of course but in others too), so the bigger we can grow it the better.
- edash 16y agoOn a single-page: http://www.xconomy.com/san-francisco/2010/07/08/innovating-where-banks-wont-talking-with-rich-aberman-about-wepays-vision-for-group-payments/?single_page=true http://www.xconomy.com/san-francisco/2010/07/08/innovating-w...
- InclinedPlane 16y agoWon't or can't? How much of the lack of innovation in banking due to regulation?
- Baldy 16y agoI don't know about regulations, but I've heard some horror stories from a friend of mine who works for a major bank. Most of the efforts his department has made -- toward rethinking and redesigning online banking -- have been thwarted by office politics.
- ig1 16y agoBecause innovation comes with risk, and people by-and-large don't want to bank with a high-risk bank.
- mkramlich 16y agoI want a bank with a CLI.