SitDown. StartUp.

Square dongle

Receipt

My square finally arrived in the mail today. Awesome device with a seamless integration on the itouch. I linked my checking account in a few seconds and can start receiving payments. The process is smooth and the dongle is pretty stable when plugged in.

The downside is that Square charges 3.5% on each transaction. This is pretty high, especially for a card-present transaction. Most merchants charge around 1.6%-1.8% on card-present transactions. I believe the reason Square would charge a much higher percentage is due to the potential for chargebacks and fraud. I’ve worked extensively in mobile and e-commerce payments for the past 4 years and chargebacks are mission critical. Paypal dealt with it. Merchant processors deal with. Banks deal with it. The problem is that processors require an extensive application process to mitigate the chargeback risk of a merchant. Square on the other hand is making it incredibly easy for anyone to start swiping away. This increases the chances of chargeback risk/fraud for Square. Needless to say, they probably took all that angel funding and put it in an escrow account to cushion for potential chargebacks.

On the bright side, its fun and is as simple as that hipster demonstrates in the square demo. They even send you a receipt after purchase (see above). Thanks Square. Now I just need to start my taco stand on west broadway.

Posted February 25, 2010 at 12:58am in square mobile payments

John Underkoffler, the co-founder of a 25 person Los Angeles-based startup actually imagined a gesture-based computer interface for Minority Report. The movie producers and Spielberg offered Underkoffler, who was at the time working at the MIT Media Lab, to serve as a science consultant for the movie.

This past Friday, Underkoffler has finally demoed a working prototype of that user interface at the TED Conference in Long Beach, California. Dubbed the g-speak Spatial Operating Environment, the system lets you zoom in and out, push objects aside and bring them to the foreground, rotate objects, etc.

Well I guess this means we are one step away from flying cars and brain implants ;)

This video gave me the chills. Truly fascinating technology. This explains why companies like AOL (that desire to become as innovative as Google) are sponsoring/investing in the MIT Media Lab.

Posted February 18, 2010 at 9:32pm in whoa MIT Media Lab thefuture augmented reality

Amazing video of Johnny Chung Lee from Carnegie Mellon using an infrared camera in the Wii remote and a head mounted sensor bar.

I used to be a huge gamer in elementary school and junior high, but if games start utilizing this technology, I may have reason to start again.

Posted February 13, 2010 at 10:00pm in wii augmented reality vr

My close friends from college just launched a phenomenal new location-based game called Duality. Its alpha is available now for iPhone and iTouch.

You can sign up now by clicking the photo above. You can get points, prizes, and virtual currency by checking in to local restaurants and cafes and building an empire with your friends.

I’ve been playing Duality for the past few weeks on my itouch and it’s addicting on every level. Check it out…

Play Duality!

Posted January 23, 2010 at 5:51pm

listening to "Deadmau5 - Ghosts n Stuff"

Posted January 12, 2010 at 9:20am

Remember TheFacebook (via 2004). Ahhhh…so clean and no privacy issues. The good ol’ days of social networking.

Posted January 5, 2010 at 12:16am in facebook old school od so

listening to "Klaxons-As Above So Below (JUSTICE remix)"

Sign up at Blip.FM….

Posted January 4, 2010 at 2:41pm

listening to "La Roux - Bulletproof (Fred Falke Remix)"

work jams.

Posted January 4, 2010 at 10:42am

The other problem with venture capital: management fees

I have found Chris Dixon’s blog to be an amazing resource for anyone who wants a candid and intelligent opinion on all things start-up. Here is a great post about VC’s and why management fees versus performance based fees aren’t necessarily a good incentive for effective venture financing:

“Bill Gurley posted a really nice summary of one of the main problems with the venture capital industry, and Fred Wilson responded here. I totally agree with their analysis, but would add one more major problem with the venture industry to the list. The fact that most VCs get rich via “management fees” just by showing up every day.

For those who don’t know, most VC’s get paid by so-called 2 and 20. The 2 refers to the 2% of the fund they use to cover operating expenses and pay their salaries. The 20 refers to the (normally) 20% “carry” fee – the percent of the profits they make for their investors that they get to keep.

Now I fully support carry fees – it is very similar to equity in a startup. VC’s should get paid when they make money for their investors.

The problem is the management fees. 2% made sense back when VC funds were much smaller, but not now that they have gotten so large. As peHUB said in their email newsletter today, Benchmark had an $85M fund in 1995 but today has a $500M fund. That seems to be the typical trend for most big VCs.

Let’s do a little math. 2% of $85M is $1.7M. Assuming 8 partners, that means salaries are in the $100-$200K range. Much higher than national averages but, by the standards of finance, they aren’t getting “rich.” 2% of $500 is $10M, so each partner is probably getting $1M+ in salaries. Over the 10 year life of the fund that’s $10M. Even on Wall Street that is considered pretty rich. And they get that money even if they make only bad investments and don’t return a dime to their investors.

This is why you see VCs raising bigger and bigger funds, why you frequently hear them say things like “I need to do 2 deals this year” and, worst of all, why you often see VC’s arguing for larger round sizes even if the startup has no productive use for the additional money – and even for the same percentage ownership. In other words, in many cases VCs argue for a higher valuation just so they can “put more money to work.” Why? If you raise a $500M fund and tell your LPs you are going to invest it over, say, 4 years, then its pretty hard to go back to them after a year and say “thanks for the $10M in management fees, I decided not to make any investments this year.”

VC’s seem to be a big fan of performance-based compensation when it comes to startups. They should adopt it for themselves as well.”

Posted December 28, 2009 at 7:57pm in startup venture capital Chris Dixon Hunch

listening to "Jay-Z - On To the Next One (feat. Swizz Beatz) -

Posted December 28, 2009 at 9:31am