Venmo Five Years Ago
I find it really fun to look back on the history of successful products and companies to see what came true from their plans and what didn’t.
I was lucky to capture the rawness of Venmo over five years ago when my tech club at Penn’s campus hosted a product demo with founder Iqram and early team member Shreyans. There’s so much I love about looking at Venmo back then compared to where it is now, because I think it exemplifies what ends up being important in the long run and what doesn’t. It’s a long video, but I include links to good soundbites below.
By the way, did you know that Venmo means Mobile + Vendor?! (See more at 28:22)
As you may be able to tell, the entire product around Venmo was not sexy whatsoever. The logo, the website, the way in which you had to text a 10 digit phone number to sign up- no veneer here. The way venmo worked was purely over telephony. Sign up by texting their 10 digit phone number, receive a phone call to input your credit card information over touchtone, and send money to any username or 10 digit phone number over text thereafter.
At this stage, venmo was focused on building a small ecosystem comprised of students and their favorite food trucks where the currency could be spent . The use case was around solving the hassle of collecting membership dues or spring break trips via check or paypal, enabling kids to use their preferred devices (phone) to pay up in a matter of minutes and value the liquidity of their balances through the partnerships with food trucks that accepted it. The grand vision was to build out a network of places where you could spend your Venmo balance without having to withdraw to your bank account (37:12).
Yes, I made that ugly flyer and yes there’s a major typo in “meet.” Here are some things they point out in this video that I think are important :
-The product just has to work (28:00): Venmo launched on twilio, which is an SMS microservice for developers. It was riding the twitter wave in letting you interact with handles (usernames) over SMS. You don’t need a sexy app. The product you launch just has to deliver whatever it promises.
-Low friction invite (26:49): I’m not entirely sure if this actually was a driver of early growth or not, but you could easily request or send money to/from non-Venmo users by including their phone number and the amount owed. This is a similar viral tactic that PayPal did with email addresses, creating an opt-out relationship between the PayPal user and the target recipient.
-Anchoring to PayPal: kids knew what PayPal was, but never liked using it because they didn’t have a mobile-first approach. Iqram would draw similarities to PayPal in his explanation of how one might withdraw a balance to her bank account. Funny enough, Venmo is now owned by PayPal via a Braintree acquisition…
-Learn from one market and replicate (23:38): The plan in 2010 was to take the findings from the market on Penn’s campus and roll the service out to other geographies. Venmo was curious to learn how the product was being spread before doing a full-on public launch. This is smart because it enabled them to surface valuable use cases like charities, which used Venmo to raise tens of thousands of dollars in minutes. Venmo never ended up focusing on the merchant side of the ecosystem, instead only focusing on the consumer side.
-(36:27) Iqram hints at how big retail chains like Starbucks could be using the platform. Now that there are tens of millions of users on Venmo in 2015, it has a deep enough consumer network to start tapping merchants to accept it. The way Iqram explains how this transaction would work is quite brilliant in my opinion — venues charge consumers at the end of a transaction, who can trust them or manually approve just as they do with their friends. This fundamentally changes how commerce is transacted on a physical level by flipping the relationship, putting the responsibility on stores to identify and charge their patrons vs. have patrons take out a phone or credit card.
In summary- it’s so awesome to see how they went from scrappy to a must-have product that does around $1.6bn in transactions just in Q2 of ’15 alone. The core idea hasn’t changed from the SMS product to the powerhouse it is now. In the very near future, you can clearly see how there may be a beacon at the merchant level that picks up on a Venmo customer’s presence and verifies that they owe $4 for a cappuccino.