THE EBAY PROXY WAR CONTINUES.As we've reported, activist investor Carl Icahn wants eBay to spin off PayPal into a separate business. Part of Icahn's strategy to make this happen is to get his own people elected to eBay's board of directors and that means getting rid of current board members. Yesterday, Icahn continued his attack on a particular board member, Marc Andreessen of venture capital firm Andreessen Horowitz, in a letter to eBay shareholders.
Here is a quick summary of the latest battle in the eBay proxy war:
- Icahn's Account. Icahn says that Marc Andreessen gained financially at the expense of eBay shareholders when eBay divested in Skype. eBay acquired Skype in 2005 for $2.5 billion. In April 2009, eBay had planned to divest in Skype with an IPO, but instead eBay sold Skype for less than it had originally paid to a consortium of private investors — which included Andreessen Horowitz — for about $2 billion. The consortium then sold Skype to Microsoft in May 2011 for a handsome profit of $8.5 billion. (Shareholder's Square Table)
- Andreessen's account. Andreessen says that he recused himself from all deliberations regarding eBay's divestiture in Skype and that Andreessen Horowitz's 3% share of Skype was insignificant. In addition, eBay still held a 30% share in Skype at the time of the Microsoft purchase — So Andreessen is claiming that eBay shareholders benefited from the final sale and that he didn't play an influential role in the decision making process. (Andreessen Horowitz)
FIVE FEATURES OF SUCCESSFUL PAYMENTS INNOVATIONS. PYMNTS has a lengthy article on key characteristics of successful payments innovations. Here is a condensed version in which we provide our own examples:
- Practical. One of the most striking characteristics of the payments space is how many solutions there are to problems that don't exist. Payments innovations that catch fire are those that solve real problems. For example, restaurants want to accept credit cards without breaking the bank. Square offers an inexpensive, easy-to-use mobile card reader.
- Thoughtful. Lots of players in payments take a shotgun approach to innovation where they create a bunch of different features just because other companies offer them. But that is a waste of time. What matters is thinking hard about the problem that you are trying to solve and then developing a solution specifically for that problem. Starbucks's business lends itself to a loyalty program because coffee is a habitual purchase and that is a big reason why the company's loyalty program is so successful.
- Contextual. Successful payments innovators know that understanding the context of the end user is key. PayPal understands that shoppers don't like lines and that is why its new payments app allows users to make purchases before reaching the physical store.
- Measurable. When the success of a solution can be quantified in a meaningful way it's more likely to succeed. One strength of mobile loyalty and payments app LevelUp is that its revenue is dependent on the success of its loyalty campaigns — merchants always know that they are getting a return on their investment.
- Unconventional. Innovations that resemble conventional solutions usually only create incremental value. Innovations that provide massive value lead to new conventions — Bitcoin solves the problem of data breaches by not transmitting any sensitive data to begin with, for example. (PYMNTS)
INSIDE THE MT. GOX DISASTER. Recently-collapsed Bitcoin exchange Mt. Gox was horribly mismanaged, according to a profile from Wired. One detail that is representative of the entire disaster is that the company did not use a test environment when building new features for its platform. That means that it was standard practice for the company to roll out untested features to users, something you would never see at a credible financial institution. As new details emerge on the Mt. Gox disaster it's becoming more clear that the problems that led to the exchange's collapse had everything to do with the company's business practices and not the Bitcoin network. (Wired)
QUOTE OF THE DAY:"Expediting the move to chip-enabled cards will be vital to curtailing ATM skimming, card fraud, network hacks, and retail point-of-sale fraud, all of which are expected to continue to rise in next year. But financial institutions must approach the EMV migration with caution, as serious risks remain. Institutions should expect increasing fraud pressure during the transition period as criminals attack the weakest points, such as issuers who have not moved to EMV cards and merchants who have not upgraded their terminals," says Mike Urban, director of financial crime management solutions at Fiserv. (Payments Source)
LEAF GETS A NEW EXECUTIVE AND A NEW OFFICE. Boston-based mobile payments hardware provider Leaf announced yesterday the addition of Sarah McCrary as COO. McCrary worked in project development at Heartland Payments Systems prior to joining Leaf — Heartland Payments Systems invested $20 million in Leaf in 2013. The company also announced that it is opening a new office in Cambridge, Massachusetts.(Marketwatch via Leaf)
AMEX ANNOUNCES NO ANNUAL FEE CREDIT CARD. American Express recently announced the release of the AmEx Everyday Credit Card. The card will carry an EMV chip and will give users access to the full rewards program. American Express is targeting young mothers with the card and has hired Tina Fey to endorse the card in a number of advertisements. (American Express)
FISERV ANNOUNCES NEW GROUP PRESIDENT. Kevin Gregoire will now fill the role of president of the Financial Institutions Group at the payments technology provider Fiserv. In Gregoire's new role he will oversee Fiserv's Card Services, Financial and Risk Management Solutions, Investment Services and Lending Solutions business segments. Prior to the announcement Gregoire led Fiserv's Card Services group. (Fiserv)
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