Founder: Christian Taylor and Joelle Musante
Three years ago, there was a race across Silicon Valley. Tech start-ups went head-to-head, each trying to work out how to bring e-commerce to Facebook. Venture capitalists invested millions of dollars but one start-up emerged as the market leader. That company was Payvment. Currently launching 1,500 new Facebook stores every single week, the start-up founded by a husband and wife from Connecticut not only hosts 150,000 small businesses’ e-commerce operations, it helps them get discovered online by driving traffic to their shops. Watch out for the new giant of the world wide web.
The market opportunity
With more than two billion people now online, and 50% of those expected to use Facebook by August this year, the market opportunity for a start-up that can connect businesses to that body of customers is enormous.
As it is, Payvment already facilitates 80% of all retail transactions that take place on Facebook, but powers only half of the shops – demonstrating good potential for further growth. With a Payvment store taking just 15 minutes to set up and the start-up boasting further discovery opportunities through its shopping mall (where Facebook users can shop across Payvment’s entire 150,000 store network) the business is in a strong position to woo further customers.
However, Payvment does face some barriers to growth, such as in China – one of the fastest-growing consumer markets in the world – where Facebook is banned due to censorship laws. The majority of Payvment’s current customer base comes from the US, Australia and the UK – a significant growth market.
Of the start-ups that launched their e-commerce solutions at the same time as Payvment, some are still in business, but Taylor claims that “most are dying off”. He adds:
“Our competitors today are other shopping destinations that see Facebook as a real threat and are interested in coming into our space. Ebay just launched shopping on Facebook, but we’re not scared of that. Start-ups innovate quickly. We’re going to win because we move faster than those large businesses.”
Payvment has raised $7.5m (£4.6m) to date, although as Taylor says, “we’re a start-up so we’re always raising money.”
The first $1.5m investment came from Bluerun Ventures and 500 Startups in March 2010, followed by a $6m Series B round from Bluerun and Sierra Ventures eight months later.
Taylor adds: “It’s not much money considering what we’ve achieved. Even five years ago, it would have cost three times as much to do what we’ve done today.”
The growth strategy
Payvment's growth strategy can be summed up with one name: Jim Stoneham. Formerly of Yahoo, Flickr and Apple, Stoneham joined the team in March 2011, using his vast experience to accelerate the company's growth.
Taylor compares their relationship to that of Mark Zuckerberg and Facebook's COO Sheryl Sandberg, explaining: "I'm the Zuckerberg, good at developing product, but he is the person who can really focus on modernisation. He knows how to scale the company."
That will involve maintaining the company's free product, but seducing existing and new customers with the introduction of a $30 premium package and other bolt-ons, through which businesses can make contact with more potential customers online.
In many ways, the business model is self-serving, for at the bottom of every Payvment shop is a small link reading 'Click here to get your free store' - a simple marketing tactic which is responsible for the start-up's success to date, eliminating the need for costly advertising budgets.
Following recent brand extension onto Twitter, and plans to break into Google+ and Pinterest, Taylor is confident that Payvment is going to be "a billion dollar business." Furthermore, he sees the firm as not just an e-commerce solution, but a whole new social network in itself. Watch out Zuckerberg. Taylor's coming for you.
Already leading the e-commerce revolution on Facebook, this unsung hero of online retail has experienced meteoric growth in the last three years with its mission to help small businesses start trading on the web.