How does O'Leary account for companies that are eating Paypal's profits, like Stripe and Square? Are they being fried like chickens in a microwave?
The idea that "X has 90% of the market, so X can't have a competitor" is incredibly idiotic. With that logic, companies like Google wouldn't exist.
He is right about one thing though - this is not the guy who'll beat Paypal.
That's not what they're saying, what they're saying is that he doesn't have a value proposition given Paypal's dominance.
Why would someone use his service instead of Paypal? It does exactly the same thing, except probably has a tiny percentage of the features, given the investment to date.
Stripe and Square are totally different, and innovative. All he was doing was trying to remove their 30 cent fee. Something which only really affects small transactions in any noticeable way. I'm trying to even remember the last time I used paypal to send someone less than $5-10...
He also made ridiculous claims that immediately destroy credibility, like saying he's built the most secure payment processor on the net with his investment to date, which was sub 6, let alone 7 figures.
They summed it up perfectly, he's not the guy that's going to disrupt paypal.
On both Dragons Den and Shark Tank I noticed that the investors suck when it comes to evaluating internet ideas. I was hoping they'd ask him a relevant question, like:
- Who programmed it and what language was used? What programming standards were used to ensure maximum security and encryption? What's his monthly traffic? How many users does he have in his database? How does his service compare to other players in the industry such as 2checkout, moneybookers, Google checkout, etc...
but instead they just decided to flame him based on his 2k/month sales volume. (which I think is not bad considering he was a newcomer with very little dollars spent in advertising)
Why is the programmer/language relevant? Why should an investor know specific programming languages, or about encryption methodology? They're investors, not developers. It either works or it doesn't.
Monthly traffic is irrelevant if no one signs up / uses it. Users in his database, sure, slightly more relevant, as you can at least market to them.
It was his fault then for only trying to compete with Paypal on price. How the hell are you going to compete with an industry giant on price alone? Does he even economics?
His $2k/month sales volume is also pathetic, remember that's not commission, but total transaction volume. I transmit more than that a month through my Paypal account and I'm
one person. His commission on that $2k is a pretty laughable ~$58.
In summary: no value proposition, weak USP, no traction, no revenue, idiotic comments proving his lack of knowledge of payment security. Entirely deserved to get flamed out of the room. He needs someone to wake him up and stop him from throwing more of his hard earned cash into some ridiculous dream that will never make him a penny. Unfortunately he's not in a mindset where he's willing to accept that. The best thing he can do is shut down the business and start something else.
