4 ms·

Union Sq ventures to lead $10m investment in Dwolla

32 points by asanwal 15y ago

loceng 15y ago
Great for consumers, deadly for certain businesses' profits.
citricsquid 15y ago
I'm not in the US so I can't sign up and see how it works, but from what I understand they're more of a "virtual" bank account (like Paypal) but without the ability to use credit / debit cards? So they're competing with wepay and not Paypal?
- troymc 15y ago
  Not exactly. Check out the Dwolla FAQ: http://help.dwolla.com/customer/portal/articles/87210-dwolla-faq http://help.dwolla.com/customer/portal/articles/87210-dwolla...
dangrossman 15y ago
I still don't see how Dwolla is different than a young PayPal. PayPal has offered free, ACH-funded person-to-person payments for 12 years. You only start getting charged 2.9% when you upgrade to accept credit cards; PayPal could drop the fee for ACH-funded payments any time they want to undercut Dwolla. What is Union Square Ventures betting on?
- davidcann 15y ago
  Perhaps they're betting on PayPal's terrible reputation.
- noahc 15y ago
  Dwolla is different because they're not building a PayPal, their building a Visa. Long term that's their vision. That's what USV is betting on that someday you'll be paying with Dwolla at Walmart.
  - gergles 15y ago
    Yet PayPal is already doing that too. http://www.chicagotribune.com/business/breaking/chi-paypal-tests-instore-payments-with-home-depot-20120106,0,3058955.story http://www.chicagotribune.com/business/breaking/chi-paypal-t...
    - noahc 15y ago
      Exactly, they both see the end game. When I referenced Paypal, I meant it in terms of what we traditionally think of as Paypals core business which is online payments made via checks, credit cards, and debit cards.
djb_hackernews 15y ago
It's as if they stumbled upon the hype from a few months ago... What USV wants, USV gets.
- suking 15y ago
  Didn't they get roped right into turntable.fm too? http://siteanalytics.compete.com/turntable.fm/ http://siteanalytics.compete.com/turntable.fm/
  - jean_valjean 15y ago
    It could be worse, they could've invested in StickyBits...
  - jedc 15y ago
    I think a good chunk of the huge step down is when they made it US-only for licensing issues. I was an avid UK user until that time.
    - suking 15y ago
      I don't know anyone who uses it in US. Must be a SV thing - who knows. Definitely not the trend I'd like to see though if I invested at that peak.
thinkcomp 15y ago
I still don't understand how Dwolla is exempt from money transmission laws or why any investor would want to assume criminal liability. 18 U.S.C. 1960(a): "Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both." http://www.plainsite.org/browse/index.html?id=14426 http://www.plainsite.org/browse/index.html?id=14426
- noahc 15y ago
  My understanding is that they are using a bank to front this, thus some legal thinkers see this as not being exempt. You already know this though. I've seen you post in MULTIPLE threads about Dwolla and bit coin. Please stop. I've held my tongue for so long justifying it with "he has a valid point" or "maybe he is on to something" The truth of that matter is you come across as bitter and you are pissing all over your reputation. They found a way to operate in a way you didn't think of so you filed suit against them and now are on a smear campaign to destroy them. I promise you what you're doing will not stop them and only makes me and others think you are very bitter about the whole ordeal. Please read PG's recent essay on resourcefulness. Think about how it applies to you. If I were in your shoes, I'd consider adopting their strategy (it's working after all!) and trying to out innovate them on the front end instead of trying to use smear campaigns and legal action to prevent innovation in a system we so desperately need.
  - thinkcomp 15y ago
    You may not fully understand the situation based on what you wrote. My company is suing California, not Dwolla. You cannot just start doing business in a state where you are suing the same regulators who have already threatened you with jail time for doing business. This isn't a matter of out-innovating. The clever manner that Dwolla found to get around the law was to break it and ignore it and hope no one would notice. That's why I think it's worth writing about. If my lawsuit against California is successful, then my company and Dwolla will be able to compete on a level playing field, which is the ideal situation. The lawsuit isn't designed to prevent innovation, it's designed to allow it. So as you can see, you have the entire situation backwards. Instead of telling me to stop (which I won't, because I'm as entitled to voice my opinion about these laws and the way companies are skirting them as everyone else was to voice their respective opinions about SOPA), some support would be nice. Maybe your company would like to get into payments one day, too, and if so you shouldn't have to run the risk of jail or being shut down arbitrarily.

32 points by asanwal 15y ago

Great for consumers, deadly for certain businesses' profits.

I'm not in the US so I can't sign up and see how it works, but from what I understand they're more of a "virtual" bank account (like Paypal) but without the ability to use credit / debit cards? So they're competing with wepay and not Paypal?

troymc 15y ago
Not exactly. Check out the Dwolla FAQ: http://help.dwolla.com/customer/portal/articles/87210-dwolla-faq http://help.dwolla.com/customer/portal/articles/87210-dwolla...

dangrossman 15y ago

I still don't see how Dwolla is different than a young PayPal. PayPal has offered free, ACH-funded person-to-person payments for 12 years. You only start getting charged 2.9% when you upgrade to accept credit cards; PayPal could drop the fee for ACH-funded payments any time they want to undercut Dwolla. What is Union Square Ventures betting on?

davidcann 15y ago
Perhaps they're betting on PayPal's terrible reputation.
noahc 15y ago
Dwolla is different because they're not building a PayPal, their building a Visa. Long term that's their vision. That's what USV is betting on that someday you'll be paying with Dwolla at Walmart.
- gergles 15y ago
  Yet PayPal is already doing that too. http://www.chicagotribune.com/business/breaking/chi-paypal-tests-instore-payments-with-home-depot-20120106,0,3058955.story http://www.chicagotribune.com/business/breaking/chi-paypal-t...
  - noahc 15y ago
    Exactly, they both see the end game. When I referenced Paypal, I meant it in terms of what we traditionally think of as Paypals core business which is online payments made via checks, credit cards, and debit cards.

djb_hackernews 15y ago

It's as if they stumbled upon the hype from a few months ago... What USV wants, USV gets.

suking 15y ago
Didn't they get roped right into turntable.fm too? http://siteanalytics.compete.com/turntable.fm/ http://siteanalytics.compete.com/turntable.fm/
- jean_valjean 15y ago
  It could be worse, they could've invested in StickyBits...
- jedc 15y ago
  I think a good chunk of the huge step down is when they made it US-only for licensing issues. I was an avid UK user until that time.
  - suking 15y ago
    I don't know anyone who uses it in US. Must be a SV thing - who knows. Definitely not the trend I'd like to see though if I invested at that peak.

thinkcomp 15y ago

I still don't understand how Dwolla is exempt from money transmission laws or why any investor would want to assume criminal liability. 18 U.S.C. 1960(a): "Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both." http://www.plainsite.org/browse/index.html?id=14426 http://www.plainsite.org/browse/index.html?id=14426

noahc 15y ago
My understanding is that they are using a bank to front this, thus some legal thinkers see this as not being exempt. You already know this though. I've seen you post in MULTIPLE threads about Dwolla and bit coin. Please stop. I've held my tongue for so long justifying it with "he has a valid point" or "maybe he is on to something" The truth of that matter is you come across as bitter and you are pissing all over your reputation. They found a way to operate in a way you didn't think of so you filed suit against them and now are on a smear campaign to destroy them. I promise you what you're doing will not stop them and only makes me and others think you are very bitter about the whole ordeal. Please read PG's recent essay on resourcefulness. Think about how it applies to you. If I were in your shoes, I'd consider adopting their strategy (it's working after all!) and trying to out innovate them on the front end instead of trying to use smear campaigns and legal action to prevent innovation in a system we so desperately need.
- thinkcomp 15y ago
  You may not fully understand the situation based on what you wrote. My company is suing California, not Dwolla. You cannot just start doing business in a state where you are suing the same regulators who have already threatened you with jail time for doing business. This isn't a matter of out-innovating. The clever manner that Dwolla found to get around the law was to break it and ignore it and hope no one would notice. That's why I think it's worth writing about. If my lawsuit against California is successful, then my company and Dwolla will be able to compete on a level playing field, which is the ideal situation. The lawsuit isn't designed to prevent innovation, it's designed to allow it. So as you can see, you have the entire situation backwards. Instead of telling me to stop (which I won't, because I'm as entitled to voice my opinion about these laws and the way companies are skirting them as everyone else was to voice their respective opinions about SOPA), some support would be nice. Maybe your company would like to get into payments one day, too, and if so you shouldn't have to run the risk of jail or being shut down arbitrarily.