This 28-Year-Old's Startup Is Moving $350 Million And Wants To Completely Kill Credit Cards
Found via the Corner of Berkshire & Fairfax.
There's a tiny 12-person startup churning out of Des Moines, Iowa.
Dwolla was founded by 28-year-old Ben Milne; it's an innovative online payment system that sidesteps credit cards completely.
Milne has no finance background yet his little operation is moving between $30 and $50 million per month; it's on track to move more than $350 million in the next year.
Unlike PayPal, Dwolla doesn't take a percentage of the transaction. It only asks for $0.25 whether it's moving $1 or $1,000.
We interviewed Milne about how he is building a credit card killer and Square rival from the middle of the nation where VCs and press are scarce.
BI: We hear you're making credit card companies angry. How are you doing that?
Ben Milne: Ultimately we're trying to build the next Visa, not the next PayPal. We're building a human network based on how we think the future of payments will work. The current model needs to be blown up.
Dwolla started out of my old company. I owned a speaker manufacturing company and we sold everything directly through a website. I got really obsessed with interchange fees and how not to pay them. Every time a merchant gets paid with a credit card they have to give up a percentage. In my case, I was losing $55,000 a year to credit card companies. I felt like they were stealing from me -- I was getting paid and somebody was taking money out of my pocket.
So I thought, how do I get paid through a website without paying credit card fees? We pitched a bank, and amazingly enough they said, "We'll give it a shot."
That was three years ago, so we've been working on the project for a really long time. In December of last year we figured out how to legally do what we do.
How many transactions are you doing?
The average transaction volume for Dwolla is right around $500 dollars. We move between $30 and $50 million per month.
What's your story?
I'm 28. I started my first company, Elemental Design, when I was 18. I dropped out of University of Northern Iowa and built that.
I started college because I thought that's where I was supposed to go. I applied to one college, I got in, went, and realized it wasn't for me. I had customers so I stopped going to class.
We grew that company from a $1,200 investment to over one million in revenue in four years with three or four people and without outside investment. The company was running itself and I wanted to work on another project.
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