Archive for the ‘Uncategorized’ Category

posts moving to

January 13, 2013 Leave a comment

Heads up: I’m moving all my posts to

I’ll keep blogging along similar lines, but just wanted to give all of you a quick heads up.

Thanks for all the support 🙂

Categories: Uncategorized

Contract Negotiation: Case Study in Contingent Thinking, Behavioral Economics

December 27, 2012 Leave a comment

Whether in sales or strategic partnerships, a deal closes once a contract has been agreed upon. As expected, both sides are going to haggle over the nuances surrounding some of the greater business terms. At this point in time, negotiators are brought in to hammer out the final terms. Many would argue that agreeing on the final decisions is an art itself–this is indeed the opinion of many a “closer,” those always-in-high-demand negotiators who are able to harangue the best terms all while tying off the sales cycle quickly. Just as it is very difficult to quantify the distinction between mediocre and great salespeople, it is very difficult to pinpoint a great closer. Most people will say the distinction is intuitive–you just know when you see one.

From experience, I can say that the secret to negotiations is simple (but difficult to practice). The secret sauce of successful contract negotiation lies in understanding your opposing negotiator’s opposing point of view. In other words, the person who most completely understands their equivalent’s point of view–or to paraphrase Jerry Weissman, their WIIFY (what’s in it for you) – will best be able to broker acceptable compromise. Understanding one’s opponents’ WIIFY is difficult to do, but not impossible. What “closers” call intuitive is simply an organized plan of attack in haggling over terms.  In fact, a systematic framework for contract negotiation can be established by understanding the opposite negotiator’s key business goals; once one has understood the other side’s best alternative to a negotiated agreement, one can be in a better position to ink favorable business terms that seems acceptable to the other side.

The framework one applies in optimizing the best terms resulting from contract negotiation can be exemplified in a light case study of behavioral game theory, especially one that draws from the realm of contingent thinking. According to the main tenets of behavioral economics, people’s actions under certain time constrains can be categorized. Behavioral game theory details what people do when playing games (i.e. puzzles, prisoner’s dilemma scenarios, etc.). Normative analysis postulates what people should do (i.e. what people should do to maximize positive externalities). In contrast, positive analysis predicts what people actually do. So in scenarios where two parties are faced with two alternative decisions (in the trite prisoner’s dilemma scenario, “rat on partner” or “stay silent”), the best decision to take can usually be summed up by the Nash Equilibrium. In this situation, the negotiator, having fully understood his choices and those of his opposing party, has no incentive to deviate from the decision he ultimately chooses.  Nash Equilibriums are possible in certain situations, but they are rare, especially if the game is not zero-sum.  For instance, it may be difficult to pinpoint Nash Equilibrium if one plays the game over multiple rounds; in this new case, one’s choice can instead turn into a strategy.  As a matter of fact, a dominant strategy is dominant if it is the best response to any feasible strategy that others might play. In mathematical terms, displaying the utility function of dominant strategy is as follows:

If si = dominant strategy, then Ui(si*, s-i) > ui(si’, s-i) for all s-i, si’ si*

In a game where you can do multiple iterations, your choice of action providing the best result can be difficult to pinpoint unless one keeps in mind what one’s opponent decides. This is contingent thinking in its full form: one has to make a decision based on what one thinks one’s opponent will do. This is exactly what contract negotiation is: one has to hedge one’s bets by understanding what is valuable to the person one is in negotiation with, consequently choosing what to give in to and what to fight over.

The p-beauty game repeatedly tried in behavioral economic case studies best exemplifies the applications of contingent thinking to contract negotiation.  In the p-beauty game (Moulin 1986), all participants are asked to simultaneously pick a number between 0 and 100. The winner of the contest is the person(s) whose number is closest to 2/3 (an arbitrary p value usually picked by the mediator that falls between 0 and 1*) times the average of all numbers submitted. How do you win this game? By choosing a number contingent of what one thinks other people will choose. In this case, one knows that the highest possible mean is 100, so choosing below (2/3)* 100 is a dominated strategy (best strategy one can take considering what you think other people will do). One can do better by choosing as low as (2/3)* (2/3)* 100–in this case one assumes that everybody else had the same reasoning as you and picked (2/3)*100 as the average, so one has to pick (2/3) * (2/3) * 100 to win the game. The same logic applies when one considers if other people think of the aforementioned strategy a step further (as you just did), so one decides to take one’s iterated decision a step further and choose between (2/3)*(2/3)*(2/3)*100 and (2/3)*(2/3)*100. Extending this process N steps results in the following conclusion: the highest possible valuation of the mean is 100*(2/3)^N, so one can do better by choosing at least as low as 100*(2/3)^(N+1). If everyone practices this sort of contingent thinking, then the best possible number to choose is 0. However, we know in the real world, not everybody will be practicing this sort of contingent thinking (I sure didn’t when I played this game for the first time). So one has to take that in consideration, and hedge one’s bets by choosing a number a little more than 0 rather than exactly 0. That gives one the highest realistic probability that one’s chosen number will win.

In the p-beauty game, one has to make a realistic decision by contingently thinking of what one’s opponent(s) may decide to do.  This happens every day when one negotiates contracts. As Roger Fisher and William Ury explain in their book Getting to Yes, arriving at the best business terms comes from negotiating on merits rather than on positions. They argued that negotiators need to focus on the issues and not the people, generate a variety of creative possibilities that can be mutually agreed to, and insist that final decisions be made on a rational basis rather than arbitrary or emotional ones. Ultimately, when one understands the opposing side’s best alternative to a negotiated agreement–BATNA as Fisher and Ury write–then one can avoid negotiating from a bottom line, allowing for flexibility in negotiated terms that are favorable to both sides. Just as in the p-beauty game where one has to make decisions based on what other people will decide, the contract negotiator has to ask for terms that they think can be agreed to by both sides.

Ultimately a contract is a formal approval for a relationship to progress between two sides. The one lesson that I’ve taken away from my own experiences is the following: sometimes it’s worth losing some battles for the sake of preserving the relationship with your business partner. Especially if you are inking the beginning of a partnership, whether distribution or channel, the potential upsell will be more expedient if the relationship begins on good terms. One must  understand what your partner’s BATNA is for the contract negotiation to be fruitful.

Sadly, sometimes each side’s BATNAs is more attractive than any compromise, and one side walks. Sometimes preserving the relationships means discounting the potential utility from future endeavors in hope that the future discounted utility is greater than the present BATNA’s. The relationship is the most important factor to keep in consideration when contracts are being negotiation–sometimes not having that relationship in place is an unacceptable BATNA. This is a card that needs to be played close to the chest when dealing in hostile conversations.

The truly skillful negotiator will prepare for his séances with the other side by meticulously researching what the partner’s BATNA is, and strategize his thinking so that the resulting compromises is better than his own BATNA. Indeed, planning one step ahead–or multiple steps, as exemplified by the p-beauty game–separates the best “closers” from the mediocre.

[*if p=1 then there are many possible Nash equilibria, as there are multiple dominant strategies. ]

App Discovery: Can, and Should We, Open Up the Walled Gardens?

September 24, 2012 Leave a comment

In the last couple of years, we have transformed the way we consume software by placing the app at the center of the user experience. Whether we use mobile apps, add a browser plug-in, or download web platform extensions, we are essentially utilizing pieces of technology that can be accessed on multiple devices, on multiple platforms, and at any time.  Indeed, we have had an incredible amount of success in simplifying our personal and work lives by enabling interaction with apps that perform what we want to do. But with great change comes a slew of problems–the millions of pieces of software we call apps have created a headache on a functional and discovery level.

The functional problem now lies with the structure of the app ecosystem. We access apps through many different stores, platforms, and devices. For instance, the mobile app that you download exists in different versions depending on the OS. Currently, developers want to cater to the user experience–focusing on scaling their apps to the experience contingent on the platform strategically makes sense in the short run. Platforms are even trying to accommodate this: BB10’s new App Store accommodates developers building apps in whichever language they choose. From a portal’s perspective, this makes sense: allow developers to build in the language they feel most comfortable with will attract more users to build apps that can be found within their store.

Whether this strategy is valid in the long run is still subject to discussion, but the ramifications in the short term are clear. For now, app stores will cater to the current fractured ecosystem by maintaining the structure of the market place for apps. Aside from Facebook, which is the only global distribution channel, a universal app store that captures the whole ecosystem of apps, providing a catalogue of software that can live on all platforms, will not come to existence any time soon. As a direct result of the duopoly between iOS and Android, app discovery continues to be a problem .From the perspective of the end user, finding the right app is a nightmare–try scrolling through Apple or Google’s top ten lists and categories where only the top apps within each set is ever listed. This only captures the tip of the iceberg: there are hundred of thousands of apps that don’t make it into those top lists, and as a direct result, never get found. We have made it difficult for everyone to distribute and find apps.

Indeed, both consumers and developers suffer in this model. From the consumer side, we do not get enough options. It’s great that Pandora is the most popular app to listen to streaming music, but is there an other apps that performs a similar function, but can do it even better? It is in the eye of the beholder to decide that, and having the freedom to choose the app that best fits the way you envision broadens your horizons and your experience as a user. From the developer’s standpoint, getting discovered is difficult if not impossible: imagine building an app, but unable to market it because the channels are so congested. On top of that, passive browsing as it enabled now makes it difficult for a developer’s app to be found; they have to put in much effort to appear in one of the categories that only show of twenty top apps in a vertical where thousands exist. The bottleneck effect has dire effects on both consumers and developers.

The issue of discoverability, in conjunction with the fragmentation of the app ecosystem, reiterates that our access to functionality will continue to be reduced to the type of device and the sort of OS we have been given access to. Our app stores are in essence walled gardens: inwards looking, taking in consideration only its plot of land (the OS), controlled by an oligarchy of gatekeepers (Google, Apple, Microsoft, RIM).

From afar, the solution appears quite simple: in a world where people want to be able to do anything, from anywhere, at any time, breaking down the walls of the garden will restructure the broken app ecosystem and return power to users everywhere. Splintering the oligarchy of the gatekeepers and allowing for other major players to create their own portals will democratize the access of apps. The arrival of HTML5 will derail the current structure of the mobile world by allowing web apps to be a new standard (even though this may take a while, I’m optimistic). Ultimately, it could open up the ecosystem and enable other players to innovate. Just as a monopoly sees itself forced to lower prices and return surplus to users when competition enters the market, opening up the playing field to allow other players such as carriers, search engines, web platforms, handset manufacturers to create new paradigms for finding apps will balance an inefficient market place.

But this is easier said then done: how exactly do you break down the walls? By creating more app stores? That experience is already fragmented as it is, and adding another one convolutes the ecosystem further.  Even carriers, who are desperate to innovate at any level, seem to moving away from creating white-labeled app stores. We could argue that users need to be reeducated–they need to learn that there are other ways to discover apps. Dissenters would counter that providing an alternative experience is fruitless, as the app stores are here to stay. Regardless of the system’s architecture, they would say that users are comfortable with the current discovery experience even though it is flawed.

In the long run, innovation can dynamically change the user experience; change can happen either within the stronghold app stores, or outside of them. Improving the browsing experience, whether by ameliorating passive search or institutionalizing an active process, should be the end goal. Creating a new architecture to a system that finds apps (a toolbar? a pre-installed app? A widget?) is also another direction which could and probably should be investigated. In the end, we should not deprecate users. Within the last years we educated ourselves on how to access apps, so if app distributors tweak that experience by placing a tool within our field of vision (i.e. the real estate on a phone) that draws and captures our eye, we can be persuaded to hop onto another discovery model. Users will try out this new access tool as long as it is compelling and can easily be found.

Making it compelling enough is now up to us.

Categories: Uncategorized

What Lies Beneath the Surface: How College Water Polo is Like Working for a Startup

August 24, 2011 Leave a comment

I’ve been playing water polo since I was in middle school, and I can tell from experience that this sport reaffirms all the trite adages you hear. “There’s no I in Team” – I wish I could get a penny for each time someone has said that to me; “Leave it all in the pool” – At least four different coaches have told me that. “Now begins the aquatic phase of your workout gentlemen. Please get in my pool, NOW” – Ok, that last one I only heard from only one coach, who was really eccentric. So when he consistently said “Play with heart!” and “Push your teammate!” well, voila, you have a recipe of corniness that even Madame Popp can’t even use for her dinner dishes.

Pleasantries aside, ten years of competition has reaffirmed my conviction that playing water polo teaches valuable lessons. My high school coach always made sure that if you were tardy to a practice or a game, there would be repercussions, regardless of whether you were a starter or bench player. Even if you were the captain of the team, you still weren’t going to play in a heated league division quarterfinal game. It didn’t matter if you were 2 minutes late or 2 hours late…And let me tell you, I’ve never hated sitting on the bench more than I did that day in 2007.

Now that I’m nearing the end of college and getting ready to enter the real world (or rather, appearing to be ready), I can also say that two passions of mine, water polo and startups, interestingly have a lot of overlap. When I worked for a startup my summer after sophomore year as a Business Development intern and during my junior year as a Product Marketing intern (aka I did everything and anything, from planning a marketing campaign, dealing with consumers, redirecting traffic from our blogs and Twitter accounts to our company website, to strategizing potential partnerships, to taking phone calls from the CEO at 11 pm at night), I didn’t realize that the months I was dedicated to these startups were similar to the hours I was putting into water polo over the last couple of years. Two years since working for my first startup, I have come up with a concise list of how playing for a college water polo team is just like working for a startup:

1-Love your team: you always work harder for the company you keep

One of my freshman put it best today when we were grabbing breakfast at 6:20 am before a five hour day of swimming, treading, lunging, and more swimming (see what I did there?) He said, “Popp, I love this team. Even when I’m dying during a swim set, I get so excited when I look over and I see Evan (another teammate) crushing the workout. I’m so motivated that I can’t wait to play with you guys in a real game!” Freshman, so naive and succinct…but so right. If you don’t love your team, if you don’t trust the guy sitting next to you (or in my case, swimming next to you), you won’t be able to push yourself to your maximum. Your team won’t reach its goals, and won’t plan on making new ones. The same can be said for startups.

When I interned at Wisemuv, a social recommendation engine (think Hunch, Quora), our CEO brought on a team of 12 interns. Most of them hailed from UPenn, Princeton, Harvard, CalTech…I was so excited to talk to these interns, and learn from then, that I was willing to do anything. I really thought we could build something exciting, and make an impact, that I loved working on the projects I was assigned to. I never realized that working on Twitter or writing a new blog post past two in the morning was out of the ordinary. If the other interns were developing algorithms, I could make sure that people were coming to our website to check it out; if my teammate is swimming as hard as he can down a 30 meter pool, I can undoubtedly make a dime pass and assist him in making a great play.

2-Reach out to your teammates because constructive criticism only makes you better

As a senior on the team, I did not walk into preseason thinking I would get my starting job back as goalkeeper. Even though I’ve been the starter since sophomore year, that didn’t mean that I would be guaranteed my job. The other goalie, a sophomore from Hawaii, is a very skilled goalie as well. He’s big (a lot bigger than me, I’m 6″0′ and he’s 6″4′), strong, and moves well in the cage (for you non-water polo people out there, being able to move around in the cage is essential considering the high pace of the offense taking place right in front of the net). He came into preseason in shape, and ready to take my job. During preseason, I realized that all I could do to get my job back was to push myself and improve every day.

I’m not going to improve by simply sitting in my corner and analyzing my mistakes: I can’t catch them all. So I reach out to my teammates, asking them for their honest (and yes, sometimes brutal) criticism. Am I not moving well to my left? Am I consistently getting beat by this type of shot? What kind of read am I not making on the counterattack? Once I have figured out what I can do better, I incorporate immediately into the next practice and build from there. The same goes for startups: I was always in constant dialogue with our CEO, and repeatedly asked him for advice. He had over 15 years of experience, while I had only one summer of work under by belt. If I didn’t take advantage of his experiences, I would never grow as a startup enthusiast. Whenever he gave me a pointer, I wrote it down, and did my best to improve on it. If you improve, you add value to your startup; if you perfect a skill set, you add another weapon to your team, and are one step closer to a championship ring – or a $1 billion valuation.

3-We talkin’ about practice: Try out new things whenever you can

My college coach always tells us to take risks during practice. That is, don’t play “And1” water polo ( Instead, take practice shots that you wouldn’t usually take. Step out of your comfort zone. In water polo, you could practice your “Hezi,” where you pump fake a couple of times, then break the rhythm of your fake before taking a shot at cage.

Take this example from my experience working for Wisemuv.  Looking back, I can confidently say that my coding skills were the weakest on the intern team (not to say I’m not interested in coding! Looking into it as we speak…stay tuned). That didn’t mean, however, that I wouldn’t code at all. One of my friends told me that I should create a widget, so that it could be embedded in any website that was related to recommendation, crowdsourcing, advice-related blogs, etc. The point was to increase brand recognition and make Wisemuv recognizable, so why not try to make it go viral? Since BD was my responsibility, I decided to spearhead this project. It didn’t matter that I had no clue where to start – I did my homework and tried my best to build the widget. While I failed, it was a valuable experience for me because I realized that I needed to improve my skill set in order to be better be able to contribute to my team in the future. For water polo at Harvard, I realized that I was never going to be a presence in the cage if my leg strength was subpar; goalies need to be able to tread and explode out of the water to get to the cage’s high corners, and without strong legs, a goalie is going to look like swiss cheese in the cage. So I hit the weight room, put on 15 lbs of muscle, and came back junior year with a vengeance.

4-Always go the extra mile.

When you do more than is expected from you, everyone will notice. And once they do, they too will go the extra mile. In turn, everyone will push their boundaries, and the team will move forward. If you see one guy crush a swim set with an ear infection after having been put on bed rest for three days straight, and then lead counterattack drills for the rest of practice, you’re going to get fired up.

This goes without saying when working for a startup. You’re working in such small teams that everyone is already working long hours, wearing many hats at once, getting things done left and right. But if someone does something on their own, or takes the initiative to start a project no one else thought of, that can inspire a whole team…When you love your job, you’re willing to go the extra mile: so true for water polo and startups!

5-Take care of yourself

Since my freshman year, I’ve been battling groin and hip injuries on and off. This year I’ve made an effort to make sure that I do not get hampered by a nagging injury, or get afflicted with a new one. In the last couple of months, I’ve taken steps to strengthen my lower body. For instance, I started doing a lot more stretching to increase flexibility in my hamstrings and back. I did physical therapy all summer long, doing weighted step-ups so that my hip flexors and abductors become more resilient. During season, I plan on meeting the physical therapist once a week for deep tissue massage as to break down the fibrosis building in my hips. Hopefully (knock on wood), this will keep my body healthy, and allow me to make it through the last three months of my water polo career.

I feel that the the same is applicable for any working environment. If you’re not getting enough sleep or aren’t eating right, you’re taking away from yourself; you’re not 100%, and you effectively bring your team down. That is not to say that you can’t pull a couple of all nighters here and there to bring important projects to term. But don’t do it all the time-your body will wear down on you, and you can’t contribute when you’re running on 4 hours of sleep over 3 days.

6–You will make mistakes. Don’t dwell on them; internalize them, and move on.

As a goalie, you always wonder what would have happened if you had blocked that extra shot. For me, I wonder if I had blocked that last second shot in the second overtime of my section championship game junior year of high school, would we still have lost 9-8? Sometimes I ask myself, what would have happened if I had blocked that 5 meter shot in the fifth overtime against Iona my junior year of college–would we still have lost 11-10? Water polo, just like in life (can I have some wine with that cheese? I think Madame Popp might have some red in the back somewhere…), can’t be played by hypotheticals. All you can do is accept what went wrong, analyze it, and try your best to make sure that it doesn’t happen.

I’ve failed many times academically, personally, and athletically. But I’ve also succeeded because I have tried to make sure that I would not repeat the mistakes I committed in the past. When you’re working for a startup, if you realize that something you’re doing is not going well, then you have to accept that your approach isn’t the right one. I worked on Twitter for  three weeks trying to get our team’s Promoted Tweets to gain traction only to find that our followers hadn’t grown by more than 2%. I realized that I was not generating enough content in the Twittersphere, so I started a couple of blogs, interacted with as many people as possible on any web publishing platform that I could find, and followed thousands of people. One week later, original web site visits had grown substantially and our follower base grew 300%. Point of the story: learn, or else you’re going to lose more games than win.

7-Have fun; nothing lasts forever

While my coach has told me that I can’t get nostalgic this early in the season, I can’t help myself. Maybe it’s because I’m French and I’m sensitive to everything (this is according to my teammates, who always like to have the last laugh), I consider myself more analytic than lugubrious. Sometimes that’s a plus, and at others it is detrimental. If you get too caught up in what you’re doing, if you see every game in the pool or every project at work as a life and death battle, you will never be happy.

Sometimes I get too wrapped up in the competition and forget it’s just a game. Hopefully when I graduate, I’ll have figured out how to balance out work with everything else in my life, as I’m pretty blessed to have a great supporting cast. As Madame Popp told me when I turned eighteen, “Faites que le rĂŞve dĂ©vore votre vie afin que la vie ne dĂ©vore pas votre rĂŞve.” Act so that your dream may devour your life so that your life does not devour your dream–Merci, St. Exupery.

Indeed, may your dreams, whether they be found in the form of a yellow ball and two cages or in the design of your startup’s new product, amplify  your happiness. Finding that fine line between letting it consume you and letting it push you to do something meaningful is up to you.

Categories: Uncategorized

Mobile Payments: He Who Owns the Back End Owns All

August 15, 2011 Leave a comment

I don’t want to be redundant and talk yet again about how online payments has transformed the business model for retail. I just have to walk down to University Avenue in Palo Alto to see how Amazon has cannibalized book store’s small local niches; my favorite bookstore growing up is going down and under…It makes sense though-why would consumers go buy books at local stores and pay sales tax when they can go online and circumvent that extra charge? Disclaimer: shipping and handling could cost more than the tax, but the positive externality from staying at home and saving time outweights driving over to the store.

Background aside, I thought in this post I’d map out the competitive landscape as to get a better sense of who the major players are. In any strategic scenario, I find it best to fully scope out and understand who the major players are in an ecosystem. As it is important to find out what their core competencies are, it is equally, if not more, paramount to unearth what value-added services they offer. These might be new services that the major players think have a lot of potential to drive new revenue, so they are rolled out in conjunction to their “cash cows”.

In mapping out the competitive landscape of online payments, I found that payment gateways play an under-rated role. Here’s what happens:

Transactional Flow

So what exactly do payment gateways do? I put this little diagram together to give a succinct answer:

Payment gateways are not going anywhere in the online shopping experience because they’re irreplaceable in the transactional flow. In the mobile space, this has important ramifications. Payment gateways will continue to be in the back end of mobile transactions as they link merchants with acquiring and issuing banks. Visa owns CyberSource; Google owns Google Checkout. While the payment gateway brand is transparent in NFC transactions, they work in the back end. So if NFC takes off, that means that Google can drive pure payment gateways out of business.

In the end, whoever controls the back end, or whoever controls the mechanism by which payments are processed in the mobile space,  takes home the prize.

Categories: Uncategorized

Future of NFC?

August 13, 2011 1 comment

As you can tell from my last couple of tweets, I am really interested in the payments sphere right now. The competitive landscape is already so complicated with a plethora of OS and payment platforms. From a strategic point of view, it’s really interesting, and challenging, to think where the industry is to go. There could be a play-in by security players (yes, I apologize, I interned for Symantec’s Strategy group, my first instinct is to think security), yet most concerns have been tackled already, as seen by efforts the likes  of VISA’s “Verified by Visa,” which attempt to deter identity fraud and pfishers (granted, it isn’t perfect, but it’s one of the more trusted security solutions). The major card networks are going abroad so that the payment business model, which maintains the card network’s supremacy, continues to be the de facto method of transaction. So where are the growth opportunities? In my opinion, the most exciting development in the payments industry, more specifically in the mobile landscape, is the rise of Near Fields Communications (NFC).

Some background: in the US, consumers are moving away from an SMS-based protocol and are increasingly adopting NFC. Near Field Communications can not only be used for mobile payments, as Google (see Google Wallet) and PayPal (see commercial PayPal Phone-to-Phone transaction capability) have shown in recent months. For instance, NFC devices can be used to purchase rail, metro, airline, movie, concert, or even event tickets. A NFC device can also be used as a boarding pass, thus reducing check-in delays and staffing requirements. NFC enabled devices can even be used for social networking purposes: a user can tap one NFC device to another to instantly share a contact, photo, song, application, video or website (in this regard, arguably the most popular and successful application is iPhone’s “Bump”).

The security concerns for NFC are not that daunting. Yes,the RF signal for the wireless data transfer can be picked up by antennas, and in consequence, the information being transmitted between devices can be stolen by a third party (similar to man-in-the-middle attack). Moreover, when data is being transmitted from one NFC enabled device to another, it becomes relatively easy to destroy data by using a RFID (Radio Frequency ID) jammer. “Relay attacks” are also quite common. The third party can then simply forward a request to victim (i.e the NFC enabled device user) and relay back its answer to the third party’s reader while pretending to be the owner of the victim’s smart code (very much similar to man-in-the middle attacks). Lastly, NFC enabled devices are single-factor authenticating entities; requiring a secondary, physically independent authenticating facor has not been forced into compliance by any regulatory agencies. Nonetheless, these concerns have not precluded anyone from belittling NFC. More likely than not, self-certs or PKI technology can preclude these sorts of security breaches (in my own humble opinion, I don’t see myself walking around the street with a RFID…too conspicuous?)

Nonetheless, for NFC–and inextricably, mobile payments, as its future hinges on the adoption of user friendly technology–to become consumer’s preffered method of processing transactions remotely, two big plays need to take place. Consumers first need to move away from using credit cards for purchases and begin to use their cell phones or mobile applications for processing payments. For this to happen, card networks like VISA and MasterCard, who play central roles in the payments space, need to instigate this paradigm shift. This second phenomena cannot occur if the card networks do not envision this new business model to be profitable for them in the long run.

The barriers to entry (i.e infrastucture costs, brand recognition) are high enough that non-established players are discouraged from carving out a niche within the payments sphere. And even if smaller companies decide to enter the market, differentiation is hard to come by. For instance, FaceCash, a mobile payments platform trying to turn consumer’s cell phones into digital wallets, only differentiates itself from other platforms (such as Square, founded by Jack Dorsey) by charging lower transactional fees. And if these startups want to gain any sort of traction, they may have to ally themselves with the card networks. Just as young startups enter new verticals by whitelisting their product, start-ups like FaceCash have to negotiate with the larger card networks so they can leverage their already established infrastructure and network of clients.

All in all, this means that the crown players, the VISAs and Googles, dictate the future of mobile payments. As long as  card networks decide to be tenuous in their efforts to make mobile the go-to method for processing payments, and while we wait for NFC to become more wildly adopted, the window of opportunity remains small for companies not already established in the payment space.

1-18-11: note- Square is the exception to the list of startups trying to disrupt mobile payments space. They’ve been so innovative that they’ve actually partnered with retailers such as Apple, Wal-Mart, Best-Buy so that Square users can be accepted in those venues. It will be interesting to see whether they completely change the balance in the mobile payments industry; if they become the preferred payment method, their presence could null and void the growth of NFC. Hence why Square PR has already decried that NFC won’t take off: they think they’ll overturn the balance in the industry before NFC can gain traction.

Categories: Uncategorized


August 13, 2011 Leave a comment

Welcome! This is my first blog post…I guess a quick introduction is in the works, right?

My name is Alex Popp, and I am a rising senior at Harvard University. I’m studying Intellectual History, and pursuing a secondary field in Economics, all the while trying my hand at as many subjects as I can…isn’t that the beauty of college? Studying everything and nothing? Forming lasting friendships, in my opinion, is also up there in things to do in college. Being on the Varsity Water Polo team for four years (now going on playing the sport for a decade), I’ve had my share of those, and those have my made my experiences at school that much more memorable.

I am son of French immigrants who’ve lived in California for over 20 years…Fear not, I still was raised by my mom’s French cuisine and by worshipping the French national soccer team! Growing in Menlo Park (right next to Palo Alto, aka think Stanford University), I was always really interested in what was happening in Silicon Valley. I guess you can say I caught the startup bug when my dad co-founded his own back in the late 90s, but the last three years have really opened my eyes into how exciting and rewarding working for tech companies can be.

In that spirit, I thought that I’d take a shot at blogging…at sharing my thoughts and inner musings…from discussing the “mega trends” to expressing my own opinions…I’ll maybe even talk about French cuisine (Madame Popp may guest star!), water polo, the future (deep right?), the past (nostalgic?), and everything in between. Enjoy, be entertained, and, please, think and reflect!


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