Digging Deeper with Flint: No Dongles, Just Payments

Andrew Barnes’ series, “Digging Deeper” is based in Silicon Valley and focuses on startups and key innovators and how they are disrupting digital payments and commerce.

Flint Mobile, a VC funded Silicon Valley startup, is in the business of leveraging tools that are already in the consumer’s hands to do mobile-to-mobile transactions instead of relying on a closed network approach where you have proprietary apps on both sides. Unlike other players, Flint uses secure proprietary technology to use the phone’s camera to scan card information instead of requiring an external card reader to swipe it.

Andrew sat down with Greg Goldfarb, the CEO & Co-founder of Flint Mobile to talk about mobile POS, the financial and merchant ecosystems being built around Flint, and the role of payments.

Andrew Barnes: Greg, you’re a well-funded, up-and-coming startup. Can you tell me about Flint Mobile’s business model and what you’re disrupting?

Greg Goldfarb: What we’re doing for the first time is bridging the gap between the simplicity and the pervasiveness of pure digital mobile apps with core day-in and day-out business needs. In terms of where we’re disrupting, it’s really around SMB’s traditional payment mechanisms in terms of credit card acceptance and certain separate types of local marketing services that have been siloed and separated.

Our core goal is to fundamentally change the game for businesses who increasingly view their mobile as the hub of their world more so than PC and are operating outside of retail. For example, since 2008 there’s been a 70% increase in freelancers in the US.

The way of engaging that audience is to say, “all you need is your phone, which is what you already have on you”. There’s nothing beyond that. In addition to that, if you’re running a business you need to interact with your customers in a multitude of ways. It’s not just, “Oh I need to accept credit cards.” Sometimes I need to be able to send an invoice and I want to be able to do it from my phone. I want to be able to get paid online. Sometimes yes I want to get paid in person. Sometimes I’m still getting cash and checks and I want to be able to manage that all in one place.

How are you different, and why does it matter?

Unlike other players, Flint uses secure proprietary technology to use the phone’s camera to scan card information instead of requiring an external card reader to swipe it. In our view it’s kind of like how separate digital cameras and handheld GPS devices have been replaced with mobile apps. . . and how that enabled lower friction mass adoption.

Lots and lots of people are trying to figure out the consumer side of mobile payments, the mobile wallet. Flint is demonstrating the power of actually taking an open network approach relative to the merchant and consumer mobile-to-mobile interaction as opposed to saying, “Well the consumer needs to have a separate proprietary app in order to enable mobile to mobile transactions.” Our first demonstration of that is actually with Apple.

With the Flint iOS app today, any business can now create offers that create an Apple Passbook, essentially a voucher coupon on the consumer side just like movie theaters do, just like large retailers do. We’re opening up that playing field to any small business in the US to play in a level playing field with those businesses. They can redeem monetary value from Apple Passbook and the Flint merchant app.

That is notable in the industry; a more open network approach in terms of leveraging tools that are already in the consumer’s hands to do mobile-to-mobile transactions instead of relying on a wall garden closed network approach where you have proprietary apps on both sides. Those are the two big things which we offer that is changing the industry.

Can you give some examples of your target customers and where you are getting traction?

Our strike zone is service centric businesses in the US. It’s no secret the US is actually really a service economy. Small businesses and upstarts that have let’s say ten or fewer employees comprise the vast majority of the specialty local business. We’re focusing on service segments where most of the client activity is not happening in a traditional store or from behind the counter. It doesn’t mean that they sometimes don’t work at a physical location.

Some of our bigger segments include, beauty and wellness, photography and media. Building contractors and then interestingly enough recreation and tourism is a pretty large segment for us as well. The common theme is, these are your photographers, these are your house painters, these are your tax accountants, these are your hairdressers that are in every single town in this country and they possess highly valued client relationships.

A lot of the times they’re either working on a client site or they work from multiple locations. They’re fundamentally businesses that don’t sit next to a cash register day in and day out. That’s what we’re really designed for. We see their needs as being very different from the kind of cash center countertop centric type of businesses.

What we can expect from Flint in 2014?

First is the continued expansion this year on our core themes of enabling true mobility for small businesses. This means the ability to accept multiple modes of payment through the palm of your hand as well as promoting loyalty. These two core themes done in a very low friction way means all the small business needs is an app on their phone. There’s no extra hardware. There isn’t a separate consumer app -we like to work with the likes of Apple Passbook instead of creating our own digital wallet.

Our focus is on businesses that operate outside of traditional retail. That’s one of the key focus areas and really enabling them more and more to run their business from the palm of their hand. We’re also stepping up channel partner development. Last year the majority of our go to market really was around direct and word of mouth and toward the end of the year we started bringing on a number of strong channel partners. I think you’ll see a lot more ecosystem development around Flint coming this year.

You referenced Flint’s 2014 channel strategy. What’s an example of a channel that’s attractive to you?

We’ve seen quite a bit of interest from the financial services and merchant services ecosystem to align with Flint to bring this next wave of mobile business solution to their audience. Currently we have somewhere over 20 partners who are starting to resell Flint to their audiences. We’re seeing a lot of activity out of the ISO channel and the MSP channel where they’ve been in the business of selling merchant services to small and midsized business. They’ve seen and see mobile as a big opportunity. They’re seeing it in some cases grow like crazy in their face. They’re looking for innovative tools and ways to participate.

A good example would be Payline Data. It’s one of the top ISOs who has incorporated the Flint offering as one of their core product offerings. NexGen is another big MSP that’s along those lines. That’s one segment. It’s the financial services, merchant services channels who are looking for simple yet differentiated and powerful mobile offerings to bring to their base where it’s easy to get up and running. We have attractive partner economics.

Also there’s no additional hardware to deal with in terms of inventory, in terms of shipping, in terms of support, in terms of cost. This makes for a low friction distribution and support on their front. We are also are seeing quite a bit of interest … I can’t talk about specific names but from other companies that have small business applications and services that are adjacent to payments that are again looking for additional tools that more broadly will engage their audience that bring additional revenue streams and so I think that’s an area that will be interesting to watch as that evolves.

You were a start-up without a track record, how did you develop and leverage early customers?

Hearing from real prospective customers and real prospective partners is helpful to navigate through the bumps. In the really early days there are so many things that day by day are like “Wow! We made so much progress,” and an hour later could be like “Oh my God! This thing is going to be really, really tough.”

Even if you can’t serve them immediately, I found that to be a huge asset in terms of just getting through the ups and downs. At the end of the day I could say, “I can’t tell whether or not this is going to come through but fundamentally it’s not just me that sees there’s a market opportunity.” I’m hearing it from real people. That is a huge value to you as an entrepreneur personally just in terms of your fueling your resolve. It is also valuable in the fundraising process.

How do you know what to build as part of your growth and go-to-market plans?

It’s easy to get stuck and say, “We can’t do anything because we don’t have a banking relationship yet.” What actually is important is focusing on making progress on the areas you can control especially if you can demonstrate your innovation and being able to tell that story and show that story through the fundraising process even though you might not have a launchable product yet.

That was hugely important for us because it enabled us to ultimately accelerate our go-to-market dramatically because we created the user experience platform right down to the payment gateway layer. It was essentially beta ready before we actually ever had an acquirer or signed up. That was pivotal in being able to launch the company and being able to raise money. PowerPoint will only go so far. Early on, figure out the things that you can actually do and build that. Be innovative without relying on having a particular partner in place.

A lot of companies start off “Oh we’ll build the back end. We’ll build the infrastructure first and then we’ll think about the user experience second.” I think in financial services in particular it’s challenging. It’s challenging for startups just from a timing point of view because getting infrastructure partnership deals done in a lot of cases takes time. Every week matters.

You came to market after Square. Did that matter and how were you perceived?

In our case it’s no secret we launched after Square was in the market. There were lots of naysayers saying, “Oh you’re crazy. You’ve got this giant company out there in front of you, how are you ever going to compete?” PayPal is getting in the market. For us it was figuring out a certain segment in the market that wasn’t having its needs met.

How do you see the mobile and payments coming to together in the U.S.?

Well in the US in particular, on an industry level, there are a number of things that can fundamentally change the shape of how mobile and payments come together. There’s the EMV card transition in October 2015. The interesting thing there is that it requires a POS hardware refresh for merchants to be EMV compliant.

That also may have an impact on hardware for mobile devices. That could change distribution and the cost of the devices. Since we’re a pure software player that could wind up being somewhat of a catalyst for how the Flint platform operates in the hands of merchants and partners. That could be interesting. In the last couple of months you’re seeing some of the top ten if not five consumer electronics and consumer internet and commerce companies start to get more and more interested in not just payments but in merging customer interactions which are happening on mobile

Can you offer any insights to other entrepreneurs from the lessons you’ve learned in founding Flint Mobile?

One is working with people that you know and you’ve worked with before. The core team is huge - not just from a trust point of view but there are so many ups and downs and sideways that, that it makes a huge difference to have a comrade, to navigate even if they’re not full time, it makes a huge difference. If you don’t know somebody you’re not going to call them at 11 at night and be like, “Hey, how are we doing on this? What do you think of this?”

Thanks Greg. This has been great.

You are very welcome. Great to talk with you Andrew.

About Flint Mobile

Flint is a mobile payment service for small businesses that makes it easier than ever to accept credit cards and increase customer engagement. Designed for businesses that operate outside of traditional retail stores, Flint’s iOS and Android apps allow users to take credit cards without a card reader – by scanning instead of swiping – or via online invoice payments. The all-in-one platform offers digital coupons to facilitate customer loyalty and referrals as well as a merchant portal to track transactions, payments, invoice management and more. Founded in 2011 and based in Redwood City, California, Flint is backed by top-tier Silicon Valley investors and mobile operators. For more information, visit www.flint.com.

Greg Goldfarb, CEO and Co-founder, Flint Mobile

Greg brings over 15 years of experience leading new products and building cross functional teams. Prior to Flint, he was Vice President at Ribbit, where he created its flagship application with Salesforce.com and served on the management team from Series A through acquisition by BT. Previously, he was Sr. Director of Products at Polycom and played an instrumental role in driving $100m+ growth.

Andrew Barnes, Senior Executive Writer, Emerging Markets

Barnes is a self-confessed payments and commerce “geek” working in Silicon Valley and San Francisco. He utilizes c-level relationships in tech, startups, retail, and financial institutions to identify emerging market opportunities and analyze challenging business models. Barnes recently launched “Digging Deeper,” a published series focusing on startups and key innovators that are solving digital payments and mobile commerce problems worldwide. He has held executive business development positions in Asia with Sprint, Global One, and 2Roam Mobile, and is an Advisor to the Electronic Transactions Association (ETA). Barnes has an MBA from Waseda in Tokyo 早稲田大学大学院 and a BA from Penn State. He can be reached on Twitter @AndrewinSV and Linkedin.