Mr. Taub and Mr. Schonfeld

The Credit Card Killers

With an ever-crowded financial tech market and companies like PayPal and Google Wallet elbowing for industry dominance, the race to kill the credit card is heating up. But among the standouts is Iowa-based mobile payment startup Dwolla, thanks to an innovative pricing structure and a growing New York presence helmed by Michael Schonfeld and Alex Taub. Dwolla has raised money from two New York venture capital firms, Union Square Ventures and Thrive Capital. (Josh Kushner, a Thrive principal, is also part-owner of Observer Media Group.)

Much like PayPal, Dwolla seeks to disrupt the traditional money-wiring business and enable users to send payments with ease. Users set up a Dwolla profile, link it directly to their bank account, and can then instantly send money to friends and businesses through an iPhone or Android app.

The company also processes bank-to-bank transactions, eradicating the need for slow and costly credit card processing. “We’re building a human network based on how we think the future of payments will work,” CEO Ben Milne told Business Insider. “The current model needs to be blown up.”

PayPal, Dwolla’s main competitor, is far more established and is a trusted brand name in online payments, but its fee structure makes it expensive to use. Unlike PayPal, Dwolla doesn’t take a percentage of each transaction, instead charging a 25 cent fee for any payment over $10 (under $10 is free), making it much cheaper for businesses and consumers.

“PayPal is a pioneer, but it can only innovate so much on the backs of these 40- or 50-year-old networks that they’re using,” Mr. Milne told The Observer. “Dwolla is a new conduit to move money in a better way that anyone can use.”

Next: Mike Karnjanaprakorn, Skillshare: The Principal of New York

Back to the beginning

(Illustration: Robert Grossman)

Jack Dorsey, cofounder of Twitter and Square, recently tried to disabuse the tech industry of its infatuation with the word ‘disruption.’ “We don’t want ‘disruption,’ where we just move things around. We want a direction. We want a purpose,” he said on stage at TechCrunch Disrupt, humbly suggesting the biannual conference change its name. But it’s more than just semantics. The tech sector’s claim to produce world-changing products and services often gets drowned out in a chorus of me-too companies solving problems no one ever complained about. The umpteenth nightlife-recommendations tool or empty real-time dating app can obscure the whirr of a nascent robotics sector in Manhattan or a futuristic, even revolutionary, experiment in manufacturing in Queens.

However, there are insurgents in our midst, quietly pushing the city closer to Mayor Bloomberg’s goal of "reclaiming our title as the world capital of technological innovation." To identify those mindful mutineers, we tried to look beyond established leaders (see: Wilson, Fred) to the next class of innovators, who are forcing corporations to come to terms with the mobile revolution or shepherding startups toward making money without selling out. We found investors, developers, educators and agitators. We identified pioneering companies that set off the self-education craze (you’re welcome, Peter Thiel). We spotted a trio of provocateurs in Long Island City and an open-source radical on Roosevelt Island. Looking at this constellation of entrepreneurs, you can start to see the outline of New York’s tech future taking shape.

Valery Komissarova, Grishin Robotics: Rallying the Robots

Phineas Barnes, First Round Capital: the Bottom-Up Investor

Marleen Vogelaar, Shapeways: the Manufacturing Maven 

Anil Dash, Activate and ThinkUp: Amiable Agitator

Alex Taub and Michael Schonfeld, Dwolla: The Credit Card Killers

Mike Karnjanaprakorn, Skillshare: The Principal of New York

Rick Webb, Tumblr: The Undercover Ad Man

Deborah Estrin, CornellNYC Tech: the Entrepreneurial Egghead

Ryder Ripps, Jonathan Vingiano and Jules LaPlace, OKFocus: The Merry Pranksters

Daniel Loeb, Third Point LLC: the Poison Pen

This story appeared on the cover of the November 14, 2012 issue of The New York Observer. 

Mr. Taub

Dang, looks like we missed a couple prime candidate from our spring Poachables list.

Alex Taub, head of business development and partnerships at Aviary--and a familiar face to anyone in the New York startup scene--just announced that he will be starting a new post in a similar role at Dwolla, the online payments company that has investors swooning for its ability to reduce costly credit card interchange fees. After much speculation, Dwolla finally announced a $5 million round in February led by Union Square Ventures, with participation from Thrive Capital* and Marc Ecko of Artists & Instigators.

The fact that Mr. Taub will be setting up a Dwolla outpost right here in New York City should settle any feathers ruffled over Silicon Prairie poaching etiquette.

"You are probably asking yourself, isn’t Dwolla based in Iowa?" says Mr. Taub. "Well, yes it is. To that regard, I will be establishing Dwolla’s NY satellite (location TBD) with my good friend Michael Schonfeld, as he is joining Dwolla as their developer evangelist." Mr. Schonfeld was a former web developer at Onvi Media and most recently cofounded Obesh, a company that lets users try out their makeup obsession online.

As Dwolla's Biz Dev Leader, Mr. Taub says, "I will be tasked with growing out the API platform- similar to what I did at Aviary with their photo API, except now with a payment API."

He's wasted no time rallying New York natives (or updating his Twitter/LinkedIn/About.me/Tumblr), adding, "If your business is creating revenue and you are paying a percentage of that revenue in credit card fees, you should consider adding the ability to accept Dwolla as a payment option." We'll update the post with comment from Mr. Taub as soon as we hear back. In the meantime, check out his prolific contributions to Forbes.com under "Alex's Tech Thoughts."

Checkin in on 4sq? NYC cred in effect.

*Disclosure