The whole area of making payments as a group of people, whether it be for joint gift purchases (weddings), or even simple things like housemates paying bills etc. has been an area several startups have tried to tackle.
ShareAGift in the UK focuses on joint gift purchases, but is more an affiliate gift sales model. In the US there is WePay and PayDivvy, both of which err on the side of being deposit account providers. WePay has moved to being a B2B play, trying to woo small merchants away from PayPal. In France there is Leetchi and FriendFund in Berlin. Many have substantial backing from VCs.
Now, Payumi in the UK is poised to come out of public beta and hopes to cover all the ‘group payment’ bases and has sealed a £150,000 ($186,000) round of seed funding taking its total seed funding to £250,000.
Investors include Nick Hynes, CEO of Somo Mobile Marketing, Warren Cowan, Alicia Levy and Andreas Pouros, the founders of Greenlight Marketing, Emma Wilson and Mike Teasdale, the founders of Harvest Digital, Paul Cooper, Partner at Clarity Capital Partners and Patricia Burnett, former Managing Director of The White Company. The latest round adds to the £100,000 initially invested by Co-founder and former i-level CEO Stephen Rust.
Interestingly all these Angels utilized the UK’s new Seed Enterprise Investment Scheme (SEIS) tax policy framework which is brand new as of a couple of months ago. SEIS could well set off a “Summer of Love” for startups in the UK if it manages to take off.
It is integrated with Facebook and all payments on the site are handled via PayPal. It’s free for individual payments of up to £20 and charges a small flat fee of between 50p and £2 for payments over £20. The person collecting can choose whether to absorb these as part of the total being collected or pass the fee onto their friends.
The Hoxton Square / Tech City / Silicon Roundabout / East London (pick your favoured phrase) based startup was founded by founded last summer by Khurram Farooq, Moin Maniar and Stephen Rust, Payumi has been in public beta but launches fully next month.
This is a few days old but it’s well worth revisiting if you haven’t seen it yet. It’s by English rapper Dan Bull and it’s about everyone’s favorite time-waster, TheFacebook. The best part?
He also does a Twitter one. Give it a listen and then download it for free to help Bull hit the record books.
See, Bull is aiming to have the first torrented single in in the UK and global charts so he’s giving the tracks away on BitTorrent and asking for a small donation once you’re hooked. It’s a noble venture and the music, needless to say, is really good and it’s a wild proof-of-concept for future artists.
Editor’s Note: This guest post was written by Amit Runchal, who blogs at Interactioned.
The speculation of what Apple is going to do with all their cash has long been a favorite topic in the tech and financial press. But the thinking along those lines is often akin to the cognitive dissonance one experiences when seeing a billionaire driving a Civic. What’s the point of having all that money if you’re not going to spend it?
That thinking is what we saw when Apple recently announced their cash plans. Two common reactions went something like this:
Saddened by Apple’s plan for a huge dividend. Apparently, they have nothing truly capital-intensive in the product pipeline.
— Max Levchin (@mlevchin) March 19, 2012
@mlevchin But they haven’t been investing it! They’ve been hoarding it. They clearly have no idea what to do with it.
— Henry Blodget (@hblodget) March 19, 2012
The first argument is easy enough to pick apart, as others have explained this past week. In short, even after issuing dividends and repurchasing shares, Apple’s cash reserves will likely grow this year. They added more than $35 billion in cash and equivalents last year alone. There’s nothing “capital-intensive” that they can’t do, short of opening an Apple Store on the moon. That Apple television set that’s rumored to be in the pipeline? That’s nothing. Foxconn’s factories, for example, have a gross book value of $14 billion as of the end of 2010. Apple makes that much in a few months, and only needs a fraction of that to actually get the production lines going on a television.
The idea floating around before Apple’s Monday announcement that they would be buying a company like Foxconn or building factories of their own seems to make sense, since Apple is one of the more vertically integrated consumer electronics companies in the world. And they are, after all, notorious for both control and quality. But they’ve managed to lead the industry on the latter without owning a significant portion of their supply chain. And as for the former: they have the factory owners right where they want them — by the short and curlies. Hence the razor-thin margins Apple deigns to give them. Here’s New York Times reporter Charles Duhigg in This American Life’s recent retraction episode:
Apple’s the gold standard. As a result, Apple has this enormous negotiating power, and they use it, I am told by our sources, very aggressively to come in and basically say, “Show us your entire cost structure, every single part of what you pay and what you… and piece of your, your, your internal economics, and we are going to give you a razor-thin profit margin that you’re allowed to keep.
In other words: Why buy the cow?
Apple also, more importantly, finances the factories by loaning them cash and buying significant amounts of components in advance. This “Bank of Apple” strategy further establishes control over the factories, locks out competition and seems to be why competitors can’t seem to match Apple’s cost structure for products like the iPad. And let’s not forget that if Apple did own the factories, they’d also have to deal with the additional scrutiny of being responsible for factory employees, which no Western company in their right mind wants to do right now.
This brings us those who think Apple has run out of ideas on what to do with their cash. The fevered result of this are the acquisition talks — hence the recently oft-mentioned and largely nonsensical suggestion that Apple should buy a company like Twitter. But Apple’s approach to acquisitions has always been extremely conservative, especially compared to their brethren. Since 2010 Apple’s bought a grand total of nine companies. In that same period Google has bought 52.
People like Henry Blodget may think that Apple’s been hoarding money Scrooge McDuck-style because Apple doesn’t know what to do with it. But if you take a look at Google’s list of acquisitions, you can make the argument that Google doesn’t know what it’s doing either.
Apple’s acquisitions — with admitted 20/20 hindsight — paint a clear picture of what each of those acquisitions were for. LaLa: iCloud. Anobit: Flash memory components. Siri: duh. In short: tactical acquisitions.
I think there’s a strong argument to be made that you can’t say the same for Google. Perhaps the grand master Google plan hasn’t become apparent to me yet. But given the inability of Google to make real money off anything besides advertising and their continued struggles in social seem to show a company that’s trying to buy a strategy for the future instead of the tools to make their strategic vision happen.
That last point, I think, engenders a lot of the thought behind the conversations we see about Apple and their cash. Five years ago, a frequently discussed acquisition target was YouTube. Everybody wants to watch videos on their iPod! Apple makes iPods! Ergo YouTube. Today, it’s Twitter. Social is big, so Apple should buy Twitter. Everyone’s tweeting from their phones! Apple makes phones!
Ergo, foolishness.
Apple’s strategic vision for their future has always been clear: they want to sell highly profitable consumer electronic devices. Lots of them.
That’s it.
So how does buying Twitter — or any “social” company — help them sell more devices right now? The notion that Twitter as an acquisition target has to be “kept from the hands Google, Facebook and Microsoft” doesn’t scan. Never mind that Twitter has given no indication of being up for sale — even if they were, how does a Google acquisition of Twitter slow down iPhone sales? In this world, does Google block Twitter and third-party apps from Apple products and a significant number of Twitter users? Does that lead to massive amounts of users fleeing iPhones for Android devices?
The answer to all these questions is clear. Twitter’s success at this point is largely dependent on remaining as platform-agnostic as possible, acquired or not. A company still trying to find a serious revenue stream that is highly dependent on mobile can’t afford to cut themselves off from a huge portion of the mobile market. See also: any social network trying to monetize mobile, including Facebook. Apple’s position in mobile means they doesn’t need to spend a penny to give a strongly-worded “suggestion” on how high these companies should be jumping.
That’s why acquisition targets like Twitter don’t make sense for Apple right now. Again: why buy the cow? Apple doesn’t need Twitter or any company like it. Twitter needs Apple. Twitter needs the massive iOS user base and now the system-level integration. Apple is making bit factories like Twitter as dependent on Apple as actual factories like Foxconn are.
So what’s that cash for? Besides the absolute freedom and control that $100 billion gives Apple — a company that probably still remembers the time they had to approach Microsoft, hat in hand — it’s important to remember that Apple isn’t close to achieving the success they want. Tim Cook said it himself:
In our most recently recorded quarter we sold 37 million iPhones. That’s a very large number but it represented less than 9 percent of handsets sold during the quarter.
Apple still has a long way to go with all their products in markets that have been much less hospitable to the company. China, where iPhones are still not available on the biggest carriers, is a perfect example. When you consider the new territories Apple still wants to conquer — and especially in territories where Apple’s current carrier-subsidized selling approach for phones isn’t the norm — Apple’s cash stockpile doesn’t reflect a company that doesn’t know what to do with their money.
It reflects a company that packed an enormous steamer trunk for a long and treacherous journey.
When people talk about the difference between online and offline advertising, one of the big themes is accountability — you just can’t get the kinds of data about, say, a TV campaign, that you can about an online banner. (Though the online world isn’t entirely transparent, either.) A startup called Convertro is trying to change that.
Until now, Convertro has analyzed the effectiveness of online marketing. Today, it’s launching a product that offers similar data for TV campaigns. Instead of relying on surveys, it promises to actually track the link between TV ads and traffic to your website.
There’s a lot of technology involved (or at least a lot of jargon). It took several tries for CEO Jeff Zwelling and COO Armen Avidissian to explain it to me. On the simplest level, Avidissian says Convertro can track TV effectiveness based on time — if, after an ad airs in a certain area, and there’s a surge of web traffic from that area, you can probably assume the ad was pretty effective.
Not that Convertro’s data is that basic. Zwelling says the TV product includes modules for measuring direct response (traffic that the ad drove directly to a website), the halo effect (an ad causes increased awareness, leading to more traffic), and the impact of different creative mixes in a campaign.
Avidissian says this data can be useful even if your main goal isn’t selling products off a website. For example, a big box retailer could use TV ads to drive traffic to their website, and then give that traffic a special discount offer that customers bring in to the store.
There’s something interesting going on over there on Fab. The design shopping site found that some of its best customers – that is, those who convert to paying customers the quickest, those who spend the most, and those who return the most often – are mobile users.
The company has known about this data for some time, but wanted more in-depth analysis, so it hired software-as-a-service firm Custora to help them dive in and figure out the lifetime value of the mobile customer, specifically those using the iPad. The results are impressive.
Since the beginning of the year, Fab says it has known that customers with mobile apps are more engaged. The company launched its mobile apps on iOS and Android in October, and by the time it reached one year post-pivot, the company found that over 40% of usage came from mobile applications. Could it be that mobile applications, with their addictive, time-sensitive notifications about Fab’s flash sales draw users in? Or is there something that’s inherently more enticing about the Fab experience when using a mobile device or tablet?
By the start of 2012, it became apparent that mobile customers behaved differently. They purchased more than two times faster, bought more often, and had larger basket sizes than online shoppers.
But Fab noticed just a few weeks ago that iPad customers’ behavior really stood out. With help from Custora, the company discovered that iPad customers convert to making their first purchase exponentially faster than non-iPad users, with over 40% making a purchase by month 3 and over 70% purchasing by month 7.
Fab was also seeing impressive conversion rates for iPad users.
“A lot of really good businesses build their business model around getting to 10% conversion rate to purchasers within 6 to 12 months,” says Fab CEO Jason Goldberg. “It’s simply amazing that we’re seeing 10% conversion to purchase within the first week for iPad users.”
In terms of revenue, iPad users were found to be worth twice as much two-year revenue as non-iPad users. And, even though only 15% of Fab users are iPad users, those customers are expected to generate 25% of Fab’s revenue over the next two years.
That last figure is really remarkable, especially because, in the grand scheme of things, the tablet market is still in its early days. What will these figures look like three years in? Five?
And more importantly, why are iPad users such great shoppers? Is it just that they can afford to be?
As it turns out, that’s actually one of Goldberg’s explanations. iPad users have more disposable income, he notes, and are “just more likely to be design lovers.” But it’s more than just the person on the other end of the device, he says. It’s the device itself, too.
“The tactile touch experience of the iPad more closely resembles being able to physically ‘touch’ a product like physical-world shopping versus the web which can feel more distant when browsing with a mouse or track-pad,” says Goldberg.
Plus, the Fab iPad app itself has been designed to take advantage of the device’s form factor, by focusing on one product at a time, while the Fab web experience allows users to browse across sales and products. The iPad app will soon get another major improvement too – the company is developing its Retina-ready application, which it plans to have out in a few months’ time.
But all this almost makes you wonder if perhaps online shopping sites should begin taking their cues from the iPad to better improve their own experiences. Although computers don’t typically have touchscreens, there are ways that online stores could somewhat mimic the tablet experience through layout choices and navigational flows. Would users balk at a tablet-like interface on the regular ol’ web, or will they eventually come to expect it?
It’s far too soon to know the answer to that, but as far as shopping sites go, expect them – and maybe even Fab – to experiment with the concept in the months to come.