
WePay's (YC S09) next chapter - stevewepay
https://blog.wepay.com/2017/10/17/wepays-next-chapter/
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erikb
The enterprisiest announcement I've read in a long time. And I work at a big
corp. Wouldn't be surprised if many people who read this actually don't even
understand that it basically says "hi guys, we got bought."

It's also hard to figure out what WePay has actually been doing. Great
enterprise speak again.

So, that's what the banking world looks like? Even more enterprisy than the
Enterprise despite being a start-up?

~~~
gk1
I thought it was fairly clear. Chase wants to get into the fintech space so
they acquired WePay.

~~~
roymurdock
Is there a a good definition for companies in the "fintech" space? Is it
anyone building a product that lets consumers/enterprises receive and send
payments over mobile/desktop/internet rather than physically going into a
branch?

Curious as it seems to me (uninformed) that basically all banks already have
fintech offerings and are built around networking and payments technology at
their core.

~~~
toastking
I think fintech (like "edtech") is a little bit nebulous. I would say anything
involving handling money is fintech. So stuff like Venmo or Robinhood. I would
even go so far as to say certain data science companies are fintech in that
their offerings cater to financial institutions.

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cmer
I had breakfast with Bill a few years ago in Palo Alto. It was clear pretty
quickly that WePay wasn’t a good fit for us, but he still managed to navigate
me through the competitive landscape and helped me figure out which product
was right, pitfalls to avoid, regulations, etc. He even offered his help for
the future, even though we were giving him zero business.

I’m writing all this because I left with the feeling that he was a genuinely
great guy and that he deserved success. I’m glad it has finally come his way!

Best of luck!

PS: stay away from bitcoin.

~~~
Kiro
What's with the PS? Did he tell you that or are you saying he shouldn't waste
his newfound riches on bitcoin? Seems really out of context otherwise.

~~~
Nemisis7654
I believe he's referring to the statements made by Chase CEO Jamie Dimon on
bitcoin: [https://www.cnbc.com/2017/09/12/jpmorgan-ceo-jamie-dimon-
rai...](https://www.cnbc.com/2017/09/12/jpmorgan-ceo-jamie-dimon-raises-flag-
on-trading-revenue-sees-20-percent-fall-for-the-third-quarter.html)

> It's just not a real thing, eventually it will be closed,

> Dimon also said he'd "fire in a second" any JPMorgan trader who was trading
> bitcoin, noting two reasons: "It's against our rules and they are stupid."

~~~
Kiro
Ah, good catch!

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craigkerstiens
This is a pretty authentic and fairly clear note from an acquisition.

It's pretty clear it wasn't the home run that so many set out for when
founding a company. I do expect this is a good landing out of this for many,
yet now there are new challenges to navigate.

Nine years is no short time to labor through, especially when you're taking a
giant risk and giving up things that software engineers could easily get in
terms of work/life balance at an AWS/Google/Microsoft. Yet, you set out to
change something in a noticeable fashion.

I truly hope Chase gives you the chance to do that, yes it's a big company.
But, in the spectrum of big co's in the financial space they seem more open to
innovation than so many others so... best of luck with what's next at Chase.

~~~
tommynicholas
Sources say it's north of a $220m acquisition - I mean I know that's not a
home run but I'm also pretty certain it's not a nothing outcome at all.

~~~
craigkerstiens
That is a solid outcome, but with nearly 80m (publicly) raised, likely not a
giant return based on those numbers and length of company existing. Some may
have done quite well, but plenty of unclear details. There are many notable
home-runs for all players involved, FB, Whatsapp, etc, but those are often the
exception.

This isn't to say it's a bad acquisition or should be dismissed as a failure.
It just re-iterates that it's not all easy, glory, and success.

I do hope for the team involved it worked out just as they'd hoped, but from
their post it feels like many hard years and more of a next chapter than the
end. Best of luck to them all in the future.

~~~
austenallred
A $220m+ acquisition is absolutely a home run, and likely a win for all
involved, even with $80m raised.

FB and WhatsApp are once-in-a-decade type returns. In baseball parlance
perhaps a World Series winning grand slam or a perfect game. You needn’t exit
for $19B for it to be a great outcome.

~~~
elvinyung
I mean, don't common stockholders (i.e. all employees) still basically get
shafted in a down acquisition?

~~~
amorphid
Say investors own 60% of the company. In an acquisition worth $220 million,
60% of the company would be worth $132 million. It's common for investors to
have a 2x liquidation preference, meaning they get up to twice their money
back before anyone other shareholders get $1. $80 million invested means
investors get $160 million, more than the $132 million. $60 million would be
left over for the founders and employees. There's enough money there to be a
life altering amount for many people.

~~~
spullara
If you see a 2x liquidation preference on a term sheet in this market I would
be really surprised. Virtually every term sheet that isn't the one before an
IPO or a recap will be non-participating preferred.

~~~
amorphid
I confess I'm not an M&A/finance/VC-funding wizard. Would you mind giving an
example describing the scenario you describe?

~~~
spullara
Non-participating preferred means that either you are the first to get money
off an exit up to the amount of your investment OR you convert to common and
get your ownership percentage. For example, say you invested $10m into a
company at $30m post and then owned 33%. If the company sold for $20m, you
would get $10m and the common would split the remaining $10m. If the company
sold for $30m you would get your $10m back either way. If the company sold for
$100m, you would convert to common and get $33m.

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mbesto
This is really interesting, because if I understood it correctly, WePay was
basically a layer that sat on top of Vantiv's PayFac and made it easier for
businesses (SaaS) to take payments on behalf of many merchants. In other
words, let's say you setup a SaaS called "GymSAAS" that billed monthly fees
(and took cut of each transaction) and your client was "Globo Gym" . GymSAAS
could use WePay to collect the money for Globo Gym, take a cut and then pay
Globo Gym every month the remaining amount. Using Vantiv's PayFac, it means
you skip the tedious process of assigning a new merchant account for Globo Gym
as they get underwritten in the industry of "gyms".

So what does this mean for Chase? Do they gut all of the plumbing out with
Vantiv and move it over to Paymentec for processing? Does Paymentec even have
a PayFac capability built into it?

~~~
joering2
No its not. What you describing is called "collusion fraud" and if caught it
can land you/your company on MATCH list.

~~~
ianhawes
No, you're wrong. Collusion fraud is (generally) when a merchant uses stolen
credit cards to process payments then absconds with the money before the
customer disputes the charge.

What the parent is describing is PayFac (payment facilitator) which is where
the card network and acquirer are aware of the merchant/sub-merchant
relationship. You can determine if a payment is through PayFac by the tell-
tale asterisk after the first 2 characters on the statement descriptor. For
example, Square transactions process as "SQ*[Merchant Name]"

~~~
joering2
You are spreading misinformation. Collusion fraud occurs when you are approved
for selling ebooks and you endup selling e-cigs, for example. Has nothing to
do with using stolen credit cards, which obviously is a crime.

Source: 12 years of experience processing cards in CNP/MOTO environment.

~~~
mbesto
> Collusion fraud occurs when you are approved for selling ebooks and you
> endup selling e-cigs, for example.

This has literally nothing to do with what I originally posted.

Source: The parent comment.

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latchkey
Early WePay customer. Implementor of a Java WePay API.

Huge congrats to the team!

One feature that stood out for me was the ability to issue refunds without
fees. It was not common a few years ago. This allowed me to build an event
ticketing platform where promoters could sell tickets. If an event is
cancelled and we had already paid out funds to the promoter, my business could
have been 'on the line' for the refunds.

Even though we were never a huge customer, the business didn't succeed, they
still always treated us like we were important. This was a stark contrast to
PayPal, whom they were originally trying to take down.

I suspect this merger is also about their fraud detection system. I hope Chase
can put it to good use, they need it.

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JoshTriplett
Chase _just_ finished switching their "Quick Pay" infrastructure over to
"Zelle", and now they're buying WePay. I wonder what they intend to _do_ with
it?

~~~
kevinr
Zelle is not really the same thing as what WePay does. Zelle is peer-to-peer
payments, competitive with Paypal, Square Cash, Venmo, etc. (P2P is a term of
art in the industry; it's not P2P in the Bittorrent sense. :)

WePay is about providing payments infrastructure to marketplaces and
crowdfunding platforms (Lyft, GoFundMe, etc.). WePay are competitive with
Stripe's Connect product (disclaimer: my employer). Braintree and Adyen also
have similar products.

Congrats to the WePay folks. I hope this new chapter works out well for them!

~~~
DaiPlusPlus
Zelle is more than that: Zelle is a new interbank network for free and instant
money transfers that avoids the Federal Reserve ACH system that PayPal,
SquareCash, etc use which takes 24-36 business hours for money to move.

I'm surprised that Zelle is moving so slowly - it's a great selling point for
a bank/CU. Alas, the system doesn't allow for non-personal payments, so the
banks want to preserve their commercial payments processing income.

~~~
jdmichal
Zelle is not new. Zelle has existed as clearXchange since 2011. The Zelle
branding is new as of 2016, but the underlying service has not changed. Most
of the participating banks individually branded the service prior to the Zelle
rebranding.

[https://en.wikipedia.org/wiki/ClearXchange](https://en.wikipedia.org/wiki/ClearXchange)

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nedwin
Pumped for these guys. I had a few different interactions with them in very
small capacities over the years and they were always humble, genuine and
supportive of the different projects/businesses.

Just nice, smart, unpretentious guys.

Congrats.

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sanj
I met Bill and Rich a decade ago in the Andala Coffee House in Cambridge.

They were kind, warm, quick with a joke, and even quicker to offer support,
insight, and help to the fledgling group of young entrepreneurs.

I've taken vicarious delight from watching their success!

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100k
Congrats Bill and Rich, and good luck at Chase.

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willow9886
More consolidation in the age of corporate monopoly... I'm sure a nice exit
for the founders and their investors.

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aytekin
Congratulations to the WePay team! As a partner(At JotForm, we integrate forms
with WePay), we are excited to hear that Chase is planning to grow WePay.

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joering2
Congratulation to Bill, Rich, Mark and Tina! I'm sure everyone else involved
deserved this success as well.

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wdr1
A bit of trivia: Chase was founded by Aaron Burr.

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pbreit
“WePay and its employees will operate as Chase's payments innovation incubator
in Silicon Valley"

Uh, oh. Does such a thing ever work?

~~~
csours
The current wisdom is that if you leave yourself weak to disruptive
innovation.

In the automotive world, everyone has a bet on self driving cars, for
instance. Ford has Argo AI, GM has Cruise Automation.

For a contrast, look at Kodak. They pioneered the tech for digital camera
sensors... and then did nothing with it, because they made money on film.
Digital camera sensors killed film.

If you want a longer discussion on this, The Innovator's Dilemma is highly
recommended. Here's a short summary:
[https://www.youtube.com/watch?v=yUAtIQDllo8](https://www.youtube.com/watch?v=yUAtIQDllo8)

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Animats
Congratulations on exiting.

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propman
Congrats, well deserved.

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umeshunni
tl;dr - Their Incredible Journey (TM) ends at Chase

~~~
dguaraglia
ROFL, this reminds me of Google Fiber's infamous "Advancing Our Amazing Bet"
blog post, which was essentially an announcement that they were giving up on
actually advancing the amazing bet. It became a running joke internally (at
Alphabet) for a while.

