E382: Why Dwolla lets you transfer $11 or $11 million for just 25 cents

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Dwolla got its start from a simple idea: that credit card fees are too expensive for merchants and consumers. CEO and cofounder Ben Milne took his frustration really far, building an entirely new payment network to get around credit cards and PayPal. Rather than charge a percentage, Dwolla is free for transactions under $10 and just 25 cents for anything over that amount. Over a billion dollars has changed hands through Dwolla in 2013 alone, and the company has the backing of top investors including Union Square Ventures and Andreessen Horowitz. Plus, why it’s keeping its headquarters in Des Moines, Iowa.

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Highlights

3:10 Dwolla — when did you start it and why?

3:40 How can you get paid on your website without paying the credit card fees?

4:20 So am I connecting my Bank of America account with Dwolla? Or am I creating another bank account with Dwolla?

4:50 How hard is it for a consumer to connect their bank account?

5:30 So you send a 17 cent and 7 cent deposit (to connect your bank account) and that in a way is a fraud protection.

6:15 If I am not in the network, and I come to a site that accepts Dwolla or uses Dwolla, can I still pay with a credit card? Or is Dwolla a separate system entirely.

6:58 Were you intimidated as an entrepreneur taking on payments? If you think about how complicated this is, no sane person would take this on.

7:25 How did you gain all that knowledge about banking technology and moving money around?

8:13 How big is the network now?

8:55 You’ve publicly stated you’ve had a billion dollars this year, in 2013, go through the system. But the key is the low fees. You came into the market with what some people were absurdly or unsustainably low fees.

10:00 How does that compare to Paypal?

10:49 When you shared this with VCs and investors, did they try to convince you to change this, be greedier?

13:52 In your A round, did you do an angel round?

14:49 $250,000 in Iowa from the angels there. Is there a big angel community there?

15:25 They were in this 5 years ago? Since then, Union Square Ventures did your A Round?

16:04 And then your B round Andreessen Horowitz? How did your angels do?

16:55 Did anybody say I’d like to cash my chips in and get out of this?

17:32 Paypal has been kinda stagnant for the past few years. What’s your take on Paypal and their ability to compete in this space? Are they a formidable competitor or a big lazy competitor?

19:01 Why do people pick Dwolla over Paypal?

19:36 A merchant can’t give a different rate for a Dwolla customer than for Visa or Amex, correct?

20:35 Building in Iowa: advantage/disadvantages? Pros/cons?

21:36 You have offices in NYC and San Francisco now. How’s that going?

22:05 With $22-23 million raised, you only have 50 employees. Do you have a plan to deploy that?

23:10 There are some people doing some fancy stuff with the API. What are you seeing that’s cool?

24:25 A lot of people have looked at that easy way for friends to send money to each other. Do we in the tech industry overestimate people’s utilization of peer-to-peer payment?

25:25 The peer-to-peer use is sexy, but when you have to pay 500 or 5,000 remote workers… what would you call that bulk payments?

26:25 I remember in the Weblogs, Inc days, I use to write manual checks. And at first it was 10 checks, then 20 checks, then 50 checks, and then I remember being at a conference right before we sold the company, and I was sitting there signing 150 checks while listening to the speaker.

27:00 Is there a natural resource of technologists you can tap into in Des Moines?

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