The Road to Entrepreneurship...

You’ve been there. It’s a cold and rainy evening here in Chicago as you stand outside a restaurant waiting for your valet parked vehicle to be pulled up for you. While waiting, you realize that you do not have enough cash on hand to pay for your valet ticket (let alone tip the attendant) but you do have a wallet full of credit (or debit) cards.

Why is it that in this day and age, a service operation continues to only accept paper currency as a means of payment?

That is the question I asked myself, and the valet parking attendant who eventually pulled up my vehicle. The answer I got led to an observation that maybe not all business operations want to embrace technology - unless they have to!

I spent sometime digging deeper into why a service business such as a car parking operation would not want to accept credit cards, allow customers to request vehicles ahead of time, or even print out receipts for business travelers who would like to expense a valet tab? Luckily, I was able to get in touch with a contact down in Atlanta who works with a small car parking operation such as one you will find at a Chicago restaurant. His answer was simple. It is most advantageous to the car parking company to remain low tech regardless of the customer experience because it keeps cost down thereby maximizing profits. He goes on to say that a car parking business offers a unique value proposition to its customers to the point where the service itself becomes somewhat of a necessity - especially in cities such as Chicago where parking on a weekend night at a busy restaurant can be a nightmare. It is this combination that provides little incentive to invest in technology that would improve the customer’s experience.

Whether his assertion that these car parking businesses are indeed a necessity is true or not, there is something to his point. Take a look at another business with similar characteristics - the Chicago taxi cab business. How many times have you heard your cab driver say the credit card reader is not working? It took city mandates, companies such as Uber, and visionaries like @chicagocabbie to force the hand of taxi cabs into adopting new technology that serve to improve the customer experience. That is what it is going to take to move the car parking industry as well.

Currently, there aren’t a lot of strides being made to improve the overall customer experience at a valet station - especially at the local restaurant, bar, or night club. This is probably because of the close-knit nature of the industry, or because many of us, customers, are not making enough noise about our experiences. How can we make a better customer experience if the service providers themselves are not willing to do so?

This is the beginning of a Chicago startup. 

This is a new feature of this blog where I highlight new startups that I find interesting along with their products. Square Inc. gets the honors of being the first startup I highlight on this feature.

Square Inc. is a San Francisco-based technology company that is releasing a revolutionary mobile technology that will vastly improve the world of payments. This innovation, while can thought of as sustainable technology, will take the mobile payment a step further by enabling anyone with a smart mobile device to capture credit card payments anywhere - quickly and safely. The technology being introduced is Square – a system that turns any phone into a mobile point of sale terminal.

Square utilizes a proprietary card reader that attaches to a mobile device through its 3.5mm audio input jack. This device then converts the credit card information stored in the magnetic strip of a card into an audio signal that can then be interpreted by the software application running on the mobile device. Upon swiping a card, the application runs through the standard credit card authorization process, similar to one that can be found in a conventional credit card processing point of sale (POS) system. The payer can confirm, and sign for the payment using the mobile phone input device once authorization has been completed. No more paper receipts, instead receipts are automatically generated and either emailed or sent via SMS to the payer along with the exact location of the transaction, and even a picture of the merchant.

I found out about square via Kevin Rose who I believe is an investor in Square Inc. Founded by Jack Dorsey, the co-founder of the Twitter, Square Inc. has been developing this system since February 2009. According to the Square Inc. website, Square was invented out of frustration. They realized how difficult process it is for small merchants to accept credit card payments at events like outdoor art fairs, garage sales. Until now there had been very limited solutions to this pain even though analysis of the payment industry showed that more people paid with plastic. Therefore, Square Inc. started developing a prototype back in February 2009. The system is now in limited beta but it is posted on their website that they expect to release a final version to everyone in early 2010.

The interesting thing about Square is that it is a unique product that offers a lot of customer value. If this were to be plotted in a two-dimensional graph with uniqueness and customer values as the vertical and horizontal axes respectively, Square will be positioned at the top right – very unique with tremendous value. However, with the popularity of smart mobile devices, competitors have released mobile payment processing applications. So even though Square has great value, it is truly not in a Blue Ocean - it is still fighting in the bloody waters for mobile payments.

For more information on Square, check out the website www.squareup.com