Coverage in the Technophile Community

Here is an interview I did with Brian Dillard of Pathfinder Associates, a front-end development company that is leading the Agile AJAX project. See the blog entry here, or read below.

Q&A with Trace Johnson of Chicago-based mobile-payment start-up Mpayy

Chicago isn't Silicon Valley, so it's always interesting to see tech start-ups putting down roots in Midwestern soil. Last night I hit the launch party for Mpayy, a mobile payment start-up that launched just last week. Over a hundred prospective customers, potential investors, and tech and banking professionals hit Fulton Lounge for cocktails, networking and, of course, a product demonstration. Afterwards, I chatted via email with Trace Johnson, Mpayy's product VP, about the launch, the company's future, and the state of Chicago's entrepreneurial culture. (Full disclosure: Johnson and I were once colleagues at Orbitz, one of the Windy City's big tech start-up success stories.)

Agile Ajax: First off, can you tell me the basics about Mpayy? What's the one-minute pitch?

Trace Johnson: Sure, but there are different pitches for consumers, online merchants and mobile merchants:

* Consumers get online and mobile payment processing. Shop online or send money to your friends from your checking account for free and get cash back when you buy.
* eCommerce companies get a secure payment solution with 0% fraud liability and they save 40-50% vs. credit card processing.
* Mobile merchants - taxis, fruit vendors at a farmer's market, Avon ladies, shirt vendors at a concert - get turn their mobile web enabled cell phone into a retail point of sale system.

Agile Ajax: How are you funded, and where are you in your financing cycle?

Trace Johnson: Equity financing is from US Bank, which is doing development and hosting. Private individuals that are friends of founder Conrad Sheehan have also invested.

Agile Ajax: How did last week's soft launch go?

Trace Johnson: Pretty well, with some bugs with the mobile site that have since been dealt with in a maintenance release. We're working on some usability issues to make the forms friendlier, but core payment processing worked like a charm from moment No. 1.

Agile Ajax: How did the launch party go? How was the response from casual attendees and potential partners/investors?

Trace Johnson: Everyone was very enthusiastic. ... [i]ndependent salespeople were suggesting new uses. We came up with a number of leads and opened a number of accounts that at this point in our young company represented a high growth rate.

Agile Ajax: Now that you've officially launched, what's next for your business plan?

Trace Johnson: With the maintenance release in, we've turned on online marketing. We're briefing Forrester's next week and working on a number of other PR efforts. Biz dev, biz dev, biz dev: We're calling on online retailers and roving merchants/direct salespeople to use Mpayy. And we're continuing to look for charities, nonprofits and political campaigns, all of whom we will process payments for free.

Agile Ajax: I know you're preparing to launch a more complete marketing iniative soon. What can you tell me about your marketing plans for the service?

Trace Johnson: In addition to search engine marketing, we're going to do Facebook marketing with a widget. Facebook issued an open call for a payment widget in late December. OboPay has one, but we'll offer a better user experience.

We're using the Clearspring syndication platform, which allows you to deploy to iGoogle, NetVibes, Vista, Os X, Yahoo, Blogger, Facebook, etc. Plus whatever else we'll need to do to get it on MySpace now that they're opening up their development platform. Right now, the functionality will just be Make Payment. We expect two big use cases to be P2P transfers and charities. Darfur Now or Obama for America could add it to their site and take small-dollar donations, which is a real pain point with credit-card processing.

We're also launching a promotion for consumers and merchants centered around NCAA basketball March Madness. Open a Personal Universal or Mobile Merchant account and you will be able to submit your NCAA basketball bracket for a hosted tournament pool for up to $25,000 in giveaways. People submit their brackets, and the top 25% of them will be winners. The winnings will go into their Mpayy accounts. When they use the money, it's good for our merchants and good for the system.

Agile Ajax: The climate isn't so fertile in Chicago for tech start-ups. Venture capital tends to be harder to come by. What's your experience been like in terms of the wider Chicago tech and entrepreneurial communities? Do you think Chicago offers any specific advantages for tech-start-ups, especially financial-services ones? After all, this is a pretty huge town as far as the financial markets go.

Trace Johnson: There is money in Chicago, but very little early-stage cash. There's a lot more private equity, like "I'll give you $5 million as long as you have at least $5 million in EBITDA." So, there's a much smaller appetite for risk. Most everyone is willing to do a few hundred thousand dollars as part of a syndicated investor group, but no one wants to be a lead investor, and they want ridiculous slugs of equity. They move slowly, having a vested interest in getting more information about the company. If you're more desperate, they can force you into more compromising positions on terms.

But Chicago has a growing tech community that is pretty tight-knit, I think. At least, I was lucky to have worked at Orbitz, which was really the only legitimate ecommerce company in Chicago until Mpayy came along.

However, if you look at things like Crain's Chicago Business, it's heavily real estate focused. The folks at the Tribune and Sun-Times still feel burned from the tech boom and move really slowly. It's not a heavily weighted tech town.

Agile Ajax: Mobile payments are an idea that's been ambient in the marketplace for a while now. How has Mpayy balanced the competing priorities of speed-to-market and polished consumer experience? How crowded is the field you're entering, and how are you positioning Mpayy in relation to its competitors?

Trace Johnson: We're competing on price, security, value to consumer and universality of our mobile offering.

There are companies like Obo-Pay and TextPayMe. Obo-Pay came out with a fat client solution, and its thin client doesn't work on all devices. TextPayMe requires a phone call authorization. Most people who approach it come at it from the tech side and want to put a chip in the phone (NTT DoCoMo, the BART experiment), or a fat client - which forces you to deal with all the operating systems and the networks.

We have the advantage of Conrad Sheehan having spent his entire career in payments. We are first and foremost a payment processing system that has been enabled over the cell phone, and we will make our money now mostly through the ecommerce sites. The Mobile Merchant product needs a critical mass of consumers to really add a lot of utility. We will get plenty of P2P transfers with the cell phone, and that is one way we are subsidizing the consumer side of our network, adding value to their lives. Our payment processing system was created by developers who worked on the IRS's system, and have built previous mobile sites.

Agile Ajax: How is the company structured, and what are your growth plans in the short term?

Trace Johnson: Right now, there are two employees, myself and the founder. We have a customer service person ready to start, but we're not [going to be] a huge company even at scale. We will need a credit risk person. We're looking for someone with deep experience selling into large retailers. As we get more big retail clients, we'll hire account management execs.

Agile Ajax: Tell me what you can about your technology platform and partners.

Trace Johnson: US Bank is our primary partner. We use Java for the core application. The entire application sits within a single account at US Bank, and we leverage the Automated Clearinghouse Network. We are agnostic to mobile device, network, and operating system.

Agile Ajax: I know you have big plans for building out the user experience of both the website and the mobile experience. What can you tell me about the future of your user interface? How do you plan to leverage Web 2.0 technologies - Ajax, social networking, etc. - to build and market your service?

Trace Johnson: The widget we're launching uses Ajax to allow authentication and payment. We're also looking to allow merchant partners to call our services directly into a secure Ajax lightbox. Our services were built in a very modular fashion, so we want to make two features available on partner merchant sites:

1. Sign up: Lots of folks are concerned about the session transfer from their site, somewhat naively, but in a very real fashion. So, we want users to be able to open an account in an Ajax lightbox on the merchant partners' site. Whatever development we have to do for that, we will.
2. Checkout: We similarly want the payment features to be called within an Ajax window to simplify the checkout process. So, you're looking at Brian Dillard's new treatise on Agile Ajax at IngeniusBooks.com. From the Product Details page, you should be able to pop a modal window, specify to use the shipping address you have at Mpayy, and authorize the transaction instead of having to set up an IngeniusBooks account, give them all your personal information and go through any number of cart summary screens.

In terms of our own site, our front end needs a lot of work. The HTML evolved from a perceived necessity to sign someone on immediately. We're going to do a full site redesign that includes newer front-end development techniques. We want to do real-time inline validation on all of our forms. We want to use vector graphics, move more styling to the CSS, remove tables and use standards-compliant markup.

The mobile web experience is also changing to meet Ready.mobi's guidelines: doing more with CSS, adding access keys and input restrictions. It will also get more of our capabilities than just payment.