Near the eye of the perfect storm

Undoubtedly we are yet in the middle of a very strong storm and, as with any storm, wind follows rain and damage can be observed all over. Most people prefer to find cover while the storm persists and then be surprised by the new landscape expecting them under the shinning sun. In the eyes of a new startup company this could be the perfect storm, the one that will change the landscape in a way that will uncover a real treasure in opportunities, that will move mountains that otherwise where too strong to compete with, that will destroy hegemonies and open the doors for a new player to conquer a significant share of the market before the aftershock of the storm diminish.

Taking a look at the old Credit vs Debit debate, the current situation could be described as the perfect storm for debit oriented payment technologies and solutions. What once was the heaven of the interchange is becoming the hell of the credit card loss and debt. For the first time in history US debit card payments surpassed credit card payment on POS in 2008, in terms of total transactions value, unheard ever before!.

Debit has been the rising star already for the last years, there is nothing new to announce about it. What is new is the way the payments industry looks now at debit instruments under a completely different light. The perceived lower margins are well seasoned with lower risk, lower operational costs and, with new technologies, also with higher security.

One of the most intriguing questions for us has been why in the broadband communications era, online payments have been so far just a “wrapping” of legacy offline payment systems, where the inherent risk and the complexity of switches, networks and terminals have created a cost inneficient value chain that now e-payments bear.

The combination of economic crisis, inneficiency, technological progress and change in payment habits in a very short period of time is an opportunity of once in a century. The eye of the perfect storm is approaching us.

“It was the best of times, it was the worse of times”

The financial world is upside down, crisis follows crisis and the structure of the whole market is drastically changing in front of our eyes. All these is known, newspapers are all over it. But, what this means for an early stage company? Depends who you ask. According to Saurabh Srivastava of Artiman Ventures: “Some of the best companies are born in times of stress.” (quote from here).

If you are in the initial steps of a startup, it may looks confusing. Some are saying don’t do it, some are encouraging you. Your responsibility is to be true to yourself, consider your business potential from the new perspective of the current situation in the market and not according to month-old statistics. This may change your plans, may reinforce them or may discourage you, but it is better to do your math now than later on where money has ran out of your (or your investors) pocket. One advise you will find is repeating over and over again: be cash effective, keep your costs down, funding will not become any easier in the coming times.

Our personal belief is that in our area of business this is indeed the best of times, a one of a kind opportunity. We have been pitching about the debit opportunity and its huge potential for the last two years and, although there is no such a thing as recession-proof, this is one of the few segments in the payments industry that will continue to grow, as it did in the last years, but now with the back wind of the credit crunch it is expected to become the dominant payment instrument in the US as well as most countries in the world.

So….Banks of the World Unite! SeerGate is here to offer the best of breed in electronic debit card processing, a profit centric proposition that is all about benefits. Not all innovations in financial services these days are meant to fail, some are here at the right time with the right value proposition and SeerGate is definitely one to stay.

Our first post ever…

Hi, is Alicia here and I am writing our first post ever. We decided to begin this blog because we believe there are many entrepreneurs out there that could learn from our experience and what we have learned during the 2 years we are working together as co-founders. The first thing that comes to my mind when I think about what I could probably tell a first time entrepreneur is that starting a company together with a partner is not the same as working with a colleague at a regular job. You will hear that you need to know the other person well, that if you already worked together is the best way to continue working together, but I must disagree. Co-founders face many challenges and they need to be ready to overcome personal interests for the good sake of the company’s success. It is not an ego contest, each needs to give up and choose the role that is on the best interest of the company only, let the one that talks talk and let the one that walks walk.

When Eldad and I first met, we did not plan to begin a business together, we were discussing some business issues related to other companies we were involved with. Following a few meetings we understood we had a common interest in our field of expertise, we had complementary capabilities and we were both looking for our next opportunity. The partnership was discussed and one of the first things we did is we decided on the structure of the company. We were just 2 people with a very general idea and yet we gave importance to the responsibilities each of us would take and the capabilities we were bringing to the table and how to take the best out of it. I believe it made the transition from the idea stage to the “real company” stage much smoother.

If you are planning to begin a startup company, choose your partners wisely, it is not your best friend or the one that was more helpful in your last job, it should be the person that complements you in all that aspects you are bad at, you must be critical with yourself, no one is perfect at everything and there is always someone better than us at something. In addition, you and your partners will be working very hard together for long hours, people become less friendly under stress and when undergoing bad times (read the papers…) and here is where your true strength needs to show up, you must be more flexible and patience than ever with your co-founders to survive it. Passing the co-founding test is half of the way, the other half in our next posts….