Vinod Khosla on Retail & Emerging Payments

It was Vinod Khosla’s Cliff notes on “What makes entrepreneurs entrepreneurial” that turned me on to Dr. Saras Sarasvathy’s brilliant paper and other works on effectual reasoning vs causal reasoning. Likewise, he is prescient in his post on Techcrunch about the areas in mobile and internet today that are silent performers. And alongside the well known areas and ideas such as Big Data, Data Reduction, Internet of things, I found the following section(s) that I have reproduced below:

From Vinod Khosla’s post “The “Unhyped” New Areas in Internet and Mobile” on TechCrunch:-

For instance, what’s the potential impact on local merchant expertise getting supplanted by mountains of behavior data, curation and social recommendations? I wonder what will happen to local or hyper local products; will that be the domain of the traditional large players or Internet players given their scale and greater access to data versus the local merchants? That question is in the hands of the data analytics and data reduction applications. Will some local merchant expertise get supplanted by disruptive data analytics and reduction in some categories, while other services and certain products from local merchants get enhanced?

Then there are payments; I think it is possible that we are seeing just the tip of the iceberg in a potential rethink on payments. We as investors have seen Square take off at an unprecedented rate (so far) for a payments startup, but in terms of relative scale, even Square is dwarfed by Mpesa — it is 20% of Kenya’s GDP already (using a totally different model than Square). Meanwhile in India, their UID system could remake the concept of “cash”. Feel free to include or exclude payments and even next-generation currency from the “new new” categories that are emerging.

With over 90% of commerce still occurring offline, much ink has been spilled and there are many a startup that attempts to retrofit antiquated retail POS systems or replace them wholly, in an effort to counter the threat of showrooming. One cannot simply wish away the inadequacies of a retail environment, and meanwhile the inequities on part of current payment stakeholders who were negligent in building a competent merchant framework that enables merchants to do more than simply accept payments, has manifested in the form of an ever growing e-commerce marketshare.

And also notice that Khosla gives much prominence to the success of M-Pesa. Would it be that Mobile Payments will find faster adoption and much relevance in emerging nations where a lack of retail banking infrastructure will grease the wheels? And less so in the case here, where there is much to disrupt but little desire. With more and more m-payment and mobile remittance startups looking beyond US and Europe, it seems that this trend reflects the lack of desire on the part of startups to take on the uphill task of dealing with regulatory boobytraps, an apathetic public and financial institutions & carriers who dont exactly see eye to eye. And talking about a bank led P2P initiative, where is ClearXChange these days anyway?

What do you think? Sound off below. And do share this post if you like

If you read this far, you should follow me on Twitter here. Connect with me on LinkedIn here.

Board of Advisors at SimplyTapp - creators of Host Card Emulation driving democratization and open access to NFC in Android. Mobile Commerce & Payments Lead at Experian Global Consulting, serving Experian's clients in Banking, Retail, Consumer Credit & Payments. A strategic adviser w/ over 17 years of international Tech & Business Strategy consulting, advising firms in banking, retail & asset mgmt that seek clarity & insight in to the myriad business models around payments, fraud & commerce. Founded DROP Labs, a mobile payments/commerce strategy & advisory practice. Tweets here. I'm on LinkedIn here.
Cherian Abraham
View all posts by Cherian Abraham
Tagged , , , , ,