Regular PandoDaily readers know there’s a revolution budding in payments. And while all good revolutions need a cause and foot soldiers and an enemy — they also need cash.
Today Braintree, one of the promising upstarts in this battle to create a modern alternative to PayPal, is announcing a $35 million series B, lead by NEA. This matches the size of Braintree’s whopper of a series A, lead by Accel.
Chicago-based Braintree is one of those Accel finds from middle America that had bootstrapped its way to a nice tidy business but needed more cash to move faster. Indeed, unlike the bulk of the consumer Web, profits have never been an issue for Braintree.
On top of the pricey to-do list is going international rapidly enough such that the company keeps distance from fellow startup Stripe but not crazy Groupon rapidly. The reason that CEO Bill Ready decided to do this round is the same reason the company decided to do the first one: to become dominant quickly. “We really do think we have the opportunity to create the next PayPal here,” he says. “We need a very strong balance sheet to do the things want want to do. We have a three to four year window where this space is going to be completely turned on its head.”
Chief among them is going international rapidly enough that it keeps distance from fellow startup Stripe but not crazy Groupon rapidly. Braintree is already available in 30 countries, and it wants to get to “a bunch more” quickly, Ready says. He compares the vision to being the iOS of the payment world. You write for it once, and it just works everywhere for startups and large companies alike.
Stripe is gunning to be that same global standard. Each has its strengths and weaknesses, but the truth is that both Braintree and Stripe have their followings with developers, and both have well-heeled investors backing them. It’s an interesting battle to watch.
One area where they’re likely to diverge — particularly now that Braintree has $35 million more in the bank — is a focus on who they are marketing to. While Stripe’s co-founder and CEO Patrick Collison told us last week that he’s focusing squarely on sellers, Braintree is building a brand with sellers and buyers. After all, Ready wants his company to be the new PayPal. One of the things that’s still powerful about PayPal is its consumer footprint, as evidenced by all those little “Buy with PayPal” badges littering the Web. People may not love PayPal, but if they have an account already, it’s a convenient way to pay. Even most Braintree customers have PayPal buttons on their sites.
Braintree is trying to pull off the same thing in a far less intrusive way. Last August, Braintree purchased digital wallet Venmo in order to roll out a new universal checkout that allows anyone who has ever purchased anything via a Braintree customer — like Uber, Fab, or LivingSocial — to make one-click mobile purchases with any other Braintree seller. Ready says the company is working on the beta now. He also noted during our conversation that he has “big news coming later this quarter.” Might those two be one and the same?
“We’re going to be building out the consumer side of this, and this gives us a strong war chest to help with that,” Ready says. That “help” could include more point-product acquisitions, as long as they play to Braintree’s obsessive theme of taking as much friction as possible out of mobile payments. He also aims to aggressively hire engineers at Braintree’s offices in San Francisco, Menlo Park, and New York. Expect a European office to open soon, too. The company has no intention of moving from Chicago, but right now it has as many employees outside of its home city as inside. “We need to be close to where the engineering talent is and close to our customers,” Ready says.
More product development is essential to Ready’s mission to help convert traditional ecommerce vendors into mobile commerce vendors. On average, 20 percent of their traffic comes from mobile but their sales conversion is some 75 percent worse on phones. That trend is only going to grow, and it gets pretty ugly for even the largest ecommerce companies quickly. (Just ask Facebook whether you can ignore mobile for long.)
I’m not sure how you can get much more frictionless than Uber, but I shudder to think of the time when I smile at an item on Fab, and Ready somehow deducts it from my bank account.