Launching New Payments Businesses: The Role of Critical Mass and Ignition Strategies

Hard data are not available but, based on my experience, billions of dollars each year go poof in the payments industry from investments in products that crash and burn soon after launch. These products didn’t have a sound ignition strategy, which should be the foundation of all payments innovation. This book describes what an ignition plan is, why every entrepreneur inside and outside of major corporations should have one, and why investors and directors should insist on seeing one.

Failure itself is hardly surprising. Most new businesses die young and few products become hits. Unless someone really does invent a working crystal ball, that’s the way it will always be.

But a lot of money gets wasted in payments because of the failure to deal with a difficult coordination problem. Many payments products provide value only if they are adopted by both buyers (such as consumers) and sellers (such as merchants). They have to achieve a critical mass of these buyers and sellers to provide a valuable product. If they don’t, they will crash and burn, after early adopters lose interest. If they do, they may ignite as an increasing number of buyers attract sellers and an increasing number of sellers attract buyers. Discover ignited. So did PayPal. Pay by Touch crashed and burned. Hundreds more just didn’t get off the ground.