Author: Elizabeth Woyke
From the beginning, WePay planned to continue accepting donations for the Occupy Wall Street movement. Clerico stated that the company had not suffered any serious adverse effects from its role in this matter, explaining: "We are just a practical tool that anyone can use."
Co-founders of WePay, Rich Aberman and Bill Clerico, are located at their startup headquarters in Palo Alto. (Photo by Forbes Eric Millette)
In early September last year, the startup WePay discovered an unusual new account on its online payment site. According to the description on its webpage, this account named "September 17 Event" was set up to raise funds for food for the upcoming "Occupy Wall Street" event. The description also read: "Any amount of donation... will be greatly appreciated."
WePay then sent a letter to the account creator and received an explanation that a group of people planned to gather on Wall Street to protest against the greed of American corporations — they would need sandwiches to tide them over. After confirming that this event did not violate any laws, WePay decided not to close the account.
The gathering on September 17 eventually evolved into the "Occupy Wall Street" movement, which has spread from New York to California, Oregon, and even overseas. Currently, more than 700 accounts related to the "Occupy" movement have raised funds on WePay. WePay has processed $725,000 worth of credit card and check donations, transferring them into various "Occupy" movement accounts on WePay (these funds can be transferred back to bank accounts).
Organizers said that other payment processing platforms, such as PayPal, seemed to collude with the corporate world that the movement opposed, and had previously frozen accounts related to social justice movements (WePay indicated that the dispute between PayPal and the humor blog Regretsy regarding charitable donations in December further solidified WePay's positive anti-PayPal image).
"WePay is simply the perfect solution," said Chuck Kaufman of the Alliance for Global Justice, a non-profit organization based in Washington D.C. that sponsors the Occupy Wall Street movement.
The fee revenue WePay gained from this was not very high, estimated by Forbes to be around $26,000. What excited the three-year-old company more was the publicity it received as the favored donation platform of the movement. The main website of the Occupy Wall Street movement featured a link to WePay, and the media frequently mentioned WePay when reporting on the movement.
WePay's Chief Operating Officer, Rich Aberman, referred to this attention as a "blessing from heaven," because the media coverage seemed to create a virtuous cycle of viral spread: people heard about the movement, came to the site to donate, and told others, sometimes even opening their own accounts.
Before the Occupy Wall Street movement, WePay was already operating successfully through its partnership with Facebook and a loyal customer base consisting of small businesses, fundraisers, and student organizations. Since its establishment, the monthly compound growth rate of the website has been 30%, and recently the monthly growth rate has exceeded 70%. The company claims that based on the revenue level at the end of 2011, the annual revenue for 2012 could reach several million dollars. It is expected that the revenue for 2012 will be eight times that of 2011.
At first, WePay was a group-buying optimization tool. Aberman and current CEO of WePay, Bill Clerico, founded this startup in 2008 — one year after they graduated from Boston College. Both had experienced headaches trying to raise money for events like bachelor parties or vacations.
The two spent a year refining their ideas in a low-rent apartment in the suburbs of Massachusetts. In the summer of 2009, after being accepted into the well-known startup incubation program Y Combinator, they moved to Silicon Valley.
The following spring, WePay launched. Now its business includes ticket sales, non-profit donations, and supports small online stores. Its ambition: to go beyond what it currently calls the "unstructured economy" and become the primary way people pay and shop online.
To thrive, WePay needs to innovate beyond PayPal, owned by eBay, which handles transactions exceeding $100 billion annually. Since WePay cannot yet match PayPal's brand recognition, it is focusing on providing more attractive designs, faster account opening speeds, and better customer service.
To speed up the creation of new accounts, WePay verifies identities by checking the social network profiles of registrants. Users can obtain identity verification in less than a minute. WePay does not outsource its customer service but employs eight internal staff members — three of whom previously worked at Apple stores — at its headquarters in Palo Alto, California, to answer phone calls and reply to emails.
These efforts make WePay's fees quite competitive, but not the lowest in the industry. The company charges a fixed fee of 3.5% for credit card transactions and $0.50 per transaction for bank account transactions. PayPal charges merchants 2.9% of each transaction plus $0.30 per transaction.
WePay stated that its website has helped nearly 25,000 charitable causes raise funds, and its online tools have been used in 900 university campuses. It will take about two years to achieve profitability, mainly because WePay is currently investing a large portion of its revenue into hiring new employees, product upgrades, sales, and marketing. The company has raised $9 million in funding from venture capital firms, including August Capital, Highland Capital Partners, SV Angel, as well as angel investor Ron Conway, entrepreneur Max Levchin, and Dave McClure.
CEO Clerico stated that WePay currently has ample cash reserves, but may need more for rapid expansion, with going public as its ultimate goal. "At every board meeting, I say we can streamline a bit, but the main idea is still to grow, grow, and grow some more." He added. By the end of 2012, the team, currently consisting of 35 people, is expected to hire over 100 employees.
This startup has several heavyweight products in the pipeline. WePay's first mobile application is expected to launch later this year. A new software tool will allow merchants to conveniently use WePay as a payment processor while accepting orders on their own websites. This API (Application Programming Interface) is scheduled for release this spring. If successful, WePay will be able to compete with PayPal and Authorize.net for business and establish itself in the e-commerce sector.
WePay also relies on a more comprehensive electronic billing system to be launched in February to help it challenge companies like Intuit and FreshBooks. This product is an update to WePay's current invoice/billing software, aiming to further facilitate the process for service providers and small vendors to send bills and accept online payments.
From the beginning, WePay planned to continue accepting donations for the Occupy Wall Street movement. Clerico stated that the company had not suffered any serious adverse effects from playing this role, explaining: "We are just a practical tool that anyone can use." (However, the site will close accounts attempting to sell pornographic products and drugs.)
Another point that pleases WePay is that the Occupy Wall Street movement describes its services as more responsive and intuitive than its competitors. "We are not an entrenched, rigid bank or processing platform," Aberman said, "We are a small company run by passionate people, and people see that."
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