Building a $10M+ revenue business on the Dwolla ecosystem

The Dwolla ecosystem is now big enough that businesses can be built around it and start generating substantial revenue.

I was talking to a friend the other day who was thinking about starting a new company and I laughingly mentioned the fastest path to revenue I knew of right now was to build around the Dwolla ecosystem. The threshold we used was something big enough to get to $1M in revenue fairly quickly that could get to $10M+ in revenue by executing on the initial idea and not shifting the company to something else later.

About a dozen ideas came to mind but we really dug in on 3 specifically.

Build an engineering organization that builds software applications for specifically for Dwolla clients

As an API focused company we are constantly coming into contact with big companies who are building new product lines or small companies getting off the ground. An app normally costs a lot more to build than the spend is on a programmable payment partner. If you can build performant apps in Node and 3-6 month projects are ideal, you can probably start picking up business pretty fast.

How did I arrive at $1M+? Some of these projects are massive. I can think of 2 currently that would exceed this so I’m taking some liberties. We’re also starting to see applications built for specific use cases. For example, dividend disbursements or an insurance company back end. Once built, these specific apps can be re-used across various companies dramatically reducing the time to get each client to market.

How to get the first clients?

Build a SEO strategy and integrate with the Dwolla partner program.

Build a payment gateway with an embeddable iFrame for collecting card payments

It’s not a secret that Dwolla doesn’t do credit cards. Many platform application owners other providers to enable cards but do not use those providers for back end functionality. It’s an often requested transfer type and that leaves opportunity on the table.

Competitively differentiated with funds flows you’d get adoption merely by saving people time. Today application owners have to manage funds from their merchant provider and settle them through their company bank and then bring them back into the Dwolla platform. A card solution that automates funds directly to the Master Balance would be able to save time and lost efficiency. As opposed to competing on cost you can compete on speed and reporting advantages. Reconciliation challenges between providers is a real problem and there will always be many providers. Why not be one of them and help solve a pain point?

How did I arrive at $1M+? At 1% margin on a card payment it’s very simple to see how one could arrive at acquiring $200M-$300M in payment volume a month. That $2-3M a month. The path to building a $10M+ revenue company on simply integrating with Dwolla isn’t rocket science. It’s all execution.

How to get the first clients

Build it and get an integration app listed. Make your onboarding super smooth and let it rip.

Enable operating lines of credit with a bank partner

When a software developer is programming payments with Dwolla, there can be a scenario where a processing window doesn’t match the need to send funds somewhere else. This creates various situations where someone can step in to fund the amounts for a short term without taking a lot of repayment risk. Business lines of credit make perfect sense for enabling this with a cost of capital attached. Partnering with a bank or lending provider to enable that liquidity is in constant demand.

You could build a partner application that has rules built in so that when a balance goes below a certain threshold the funds are automatically swept to the client application in realtime. They could even be held in on a VCR if you wished.

How did I arrive at $1M+? Interest adds up across tens of billions of dollars. It wouldn’t take long for there to be a go to liquidity provider across the entire platform if a great one emerged.

How to get the first clients?

Build it and get the integration app listed. Make your onboarding super simple, decision quickly, and automate the funds flow and repayment. One of the painful experiences with lines of credit is the administration and it doesn’t have to be that way. You could help solve for that by simply automating the best practices for repayment through a partner integration.

There are so many possibilities

Eventually we ran out of time and parted ways. I’m hopeful she builds one of those companies or someone else does. If someone reads this who is already working on one of these ideas I’d love to know about it so I can help find you some customers!