We’re Over-innovating Payments
I agree here with Joe Lonsdale, where he is quoted:
You have all these young people starting companies and they’ll start the company in the area that they’re most exposed to . . .
For example, finance—there’s hundreds of really important problems in finance, it’s a really vital sector for how the world works, and all these kids maybe have seen payments because they’ve paid for things themselves, maybe they’ve never worked with the multi-trillion dollar mortgage backed securities industry or maybe they’ve never worked with credit defaults and all these kind of things. So there’s probably way too many payments companies and it’s not because it’s a bad sector to try to innovate in, it’s just because it’s the one thing everyone knows.
At least from what I see in the Valley, and having been an analyst covering Payments for a time, that there’s too many startups here whether they’re chasing the PayPal dream or not. I used to refer to this kind of thing as “building scoreboards”. When I was a kid in sports-mad South Africa, I thought the coolest thing in the world was going to a live sports event, a rugby or cricket game typically. It was a real treat (as it is for a lot of people globally, especially given ridiculous ticket prices these days!) but when I compared my live sports experience to what I saw on TV in the US, with their Jumbotron scoreboards in the stadiums, I vowed as a 12 year old to start my own company and build the coolest, best scoreboards for South African sports venues ever! These were the isolationist years in South Africa when a lot of foreign companies wouldn’t invest/sell their goods in SA. But clearly, even though I was a keen entrepreneur, I was really focused on something important to me at the time – the market opportunity was almost irrelevant, and the reality was it was a super tiny local one. But hey, I was 12.