A little over three years ago, a skyrocketing startup called Groupon was ready to enter the European market. There was just one problem: while Groupon had been building its American business, a trio of German brothers named the Sawmers were building an analogous one in Germany called CityDeal, hastening to copy Groupon’s success. And so Groupon had to pony up what was reported to be around $100 million (later reported to be in the form of a huge chunk of Groupon stock) to acquire its German clone and competitor.
Setting aside the many woes of Groupon today, the lesson still stands: if you’re building a successful service or product in America or in any country today, there will be someone ready to copycat your service or product in other countries. Fortunately, says Bill Ready, the CEO of payments company Braintree, there are tools in place to enable you to scale internationally much quicker than even three years ago.
“Why didn’t Groupon expand internationally quickly?” asks Ready. For one thing, the Sawmer brothers and their practices weren’t as well known a phenomenon as today. But secondly, says Ready, it’s just “really hard, and one of the hardest things is the payments aspect.” Each country has its own regulatory issues and payment networks. But what if someone could help smooth over all that bureaucracy for you? This is one of the things that Braintree does; it gives e-commerce companies access to 140 different currencies. That’s why, Ready says, Braintree clients like Airbnb, Fab, and Uber have all expanded internationally much more quickly than Groupon before them. Companies today “are in a better position against the copycatting phenomenon than Groupon was three to four years ago,” he adds.
Braintree’s movement into the international payments space is a relatively new one for the company, which wants to be for e-commerce what Square is for in-person transactions. Braintree now processes about $8 billion in payments a year to Square’s $10 to 15 billion–for reference, PayPal processes something like $150 billion.
The core functionality Braintree offered was to create smooth payment experiences for its clients. Ready uses an analogy from cell phones to illustrate: before the iPhone came along, he says, developers could make apps for phones if they wanted to, but they’d have to learn all the ins and outs of how the signal from AT&T differed from that of Verizon and other carriers. Butt he launch of the iPhone meant that coders simply had to learn iOS–and an explosion of app innovation followed. For Ready, Braintree lends a similar smoothness.
“Imagine if at the end of an Uber ride you had to sign into your PayPal account,” Ready says, explaining the kind of smooth payment experience Braintree powers. “It would kill the magic.”
“We give access to the best aspect of the payments network,” Ready continues. “Why should you have to understand all the crazy ins and outs of Visa and MasterCard and how they’re different from one another? You shouldn’t have to care about those things.”
In addition to its international push, Braintree has likewise expanded into mobile. Ready felt strongly that mobile commerce would be the future when he joined the business as CEO two years ago, which led to Braintree’s acquisition of mobile payments company Venmo in August. Venmo services may soon help fuel your in-app impulse buys: registering your payment information with Venmo can create a one-touch checkout experience in apps, so no more awkwardly punching in your credit card number on your iPhone’s tiny keyboard.
Many people told Ready he was crazy when he placed a bet that people would make large purchases on mobile, but the people who told him he was wrong two years ago have since recanted. “It feels great when it turns the other way, and people think your idea is crazy-good rather than just crazy.”
And this idea of pushing your young startup to expand abroad rapidly–is it crazy or crazy-good? After all, the reigning wisdom in the startup world is to start local and only then to carefully expand.
Ready clarifies: “I would still say it’s sage advice to really figure out what you’re doing before you mash on the accelerator,” he says. Specifically, be sure to nail your business model on a small scale first. “But I think as soon as you figure out your model, that means everyone else is seeing your model as well. As soon as you figure out your model, you should hit the accelerator quickly to take your business international.” So it’s not exactly that you should be opening a Paris office while you’re still in your parents’ garage. “I don’t think it’s so much saying that you should do it at a different point in time,” Ready clarifies, “just that you should do it faster.”
So get ready for a meeting pitching your co-founders that the idea of building a Berlin branch is crazy-good. After all, says Ready, “entrepreneurship is an act of insanity.”
[Image: Flickr user vox_efx]