Contenture - A different take on Micropayments

Published May 27th, 2009 edit replace rm!

As many of you know I have long been interested in and working with payment systems.

I have never been too much of a fan of most micropayment systems, so when Contenture (the links to them are affiliate links) launched yesterday I was pretty sceptical. Reading their documentation changed my mind a bit and I have now implemented it here on this blog as an experiment.

From a users standpoint he pays a given monthly amount to contenture. This can be as little as $5.95. This is then split on a monthly basis amongst sites using Contenture.

From a users point of view this is kind of similar to other micropayment systems such as Ron Rivest’s ingenious yet failed Peppercoin (PS) system. Contenture is much simpler though, dropping the rigidity in return for ease of user and thus hopefully actual users.

From a site owners perspective Contenture works a bit like google ads in that you place a snippet of javascript on your site. The contenture servers register the amount of pageviews by contenture users on your site and pay you out proportionally your share of the users monthly subscription fee.

So how do you limit non paying members? Well the beauty is you don’t have to and I’m not. It can be purely on the honors system. Signing up as a user for Contenture allows you to budget exactly how much you want to pay on a monthly basis to your frequently read blogs to keep them posting, without having to worry about signing up for each one.

It does allow you to enable or disable parts of the page to paying members through a very simple javascript api. So you could disable ads (which is what I’m doing) or only allow comments to paying users. There are quite a lot of possibilities to experiment with. However I think just doing it on the honor system and disabling advertising should be fine for most bloggers.

Can this system be gamed? Oh yes, do I care. Not at all. People can already install ad blockers etc, so really who cares.

What I would like to see is a bit more information about who they are. Whois tells me they are in Portland, Oregon. According to CrunchBase one of the Co Founders is Alex Wilhelm who’s based out of Chicago.

This kind of stuff should be easily available, at least to provide some basic level of trust in a payment system. I’m sure it’s just an oversite, but I think they should have an About Us page. (Come to think of it so should we at Agree2 ). My investment in using them is fairly small right now, but if it grows I’d certainly like to know more.

Who should look at Contenture? Bloggers definitely. I’d say probably it would be a good alternative payment method for small microsites like all the little twitter web apps that are out there as well. These could easily enable/disable simple features for paying users.

What has been the biggest problem with micropayment systems so far? I believe they have been too strict. The hassle doesn’t seem worth it to the users.

Contenture allows you to mix this up a bit. It’s ok if people don’t pay, lets make it easy for those who want to support you and not treat those who don’t like 2nd class citizens.

So why don’t you try Signing up for Contenture either as a user, blogger or to see if it might work on your own site. It will take you a few minutes to add it to your blog and maybe half an hour on a smaller web application. I am not affiliated with them (besides being a member site with affiliate links of course), but I am pushing them as I do like to see innovation in a field that hasn’t seen innovation since PayPal more than 10 years ago.

A lawyer responds to "What Lawyers could Learn from Programmers"

Published May 10th, 2009 edit replace rm!

A couple of months back I wrote this article What Lawyers could Learn from Programmers. It was meant to be provocative and I had hoped for better responses from the law community itself.

Well now George Grellas wrote a huge fantastic comment to the original post outlining the issues as seen from the eyes of a lawyer. I’d like to really thank George for taking the time. His comments are very good and to ensure that more entrepreneurs see them, I’m reposting it as a full blog post here:

I have been a startup business lawyer in Silicon Valley for over 25 years.
I agree with your broad points that lawyer monopolies are a hindrance to good legal services and that things in law that can be commoditized can and should be for the benefit of consumers.

Six or seven decades ago, lawyers were paid to do title searches when a home was sold. Who would want to pay a lawyer to do that today whatever that lawyer’s real property expertise when title companies do that job cheaply and well.

So too simple incorporations and LLC formations can and should be done through inexpensive online services for many small businesses.

Other areas lend themselves to this as well. And more power to those who set up such systems for the benefit of consumers. They are performing a public service.

Remember, though, that law is a slippery beast.

David Dudley Field inspired adoption of the California Field Codes in 1872 with the express purpose of using ultra-simple language to permit lay understanding of the law. The theory was to take the law away from esoteric judicial rulings as much as possible and put it in “simple” statutes that anyone could read and understand. As any California lawyer can tell you today, judges and lawyers wound up “interpreting” those simple statues to the point where all the old complexity reasserted itself with the added kicker that the new statues themselves added yet another layer of complexity to the process (the question being not just what judges meant in all their old rulings but what the legislature meant in adopting the statutes themselves). This produced a whole new set of rulings that was more complex than ever, making California’s laws some of the most complex in the whole nation!

Law, therefore, in trying to capture and regulate the whole range of complex affairs, doesn’t easily lend itself to simplicity and standardization. Elements of it do, of course, but as a whole it does not. Therefore, any attempt to reduce it to simplicity must be approached with circumspection.

I personally think Nolo does a fabulous job with its self-help resources of helping consumers take some measure of control of their legal matters.

Yet, when the process is unguided, it can lead to problems.

I attempt to present the other side of this on my website in a couple of answers to FAQs. Why can’t I just use a form contract? ; What are the distinctive aspects of setting up a startup business?.

The latter item illustrates some common pitfalls in parties attempting to incorporate themselves when setting up a startup. Many will fill in their kits and follow instructions. But then they issue stock without restrictions, leaving themselves vulnerable to founders who take large amounts of stock and then walk away from the company. They fail to put the IP into their startup. They combine the “cheap stock” issuances with simultaneous investor dollar contributions in ways that create serious tax problems. These are all serious errors in forming a typical startup. Yet, when founders use kits, they have no idea about these issues. Does this matter? Sometimes not – they just fix the problems later. But often it does lead to real problems. And fixing the problems later is much more costly than doing it right in the first place.

Could the startup process (i.e., involving a team of founders with a tech business model) be systematized much more than it is today? Yes, it can. Can it be handled through online incorporation services who do nothing more than supply kits? Not even close.

When it comes to standard forms, these are useful and every attorney uses templates. But it is very wrong to assume that the process of doing contracts reduces itself to simply filling in blanks. The worst lawyers I ever hired tried to do that and little more (using my firm’s otherwise well-drafted forms) and their work always proved a disaster – I would essentially never let it out the door. Indeed, if I see a situation where a very simple form will solve a client’s needs, I always tell the client it is a waste of time to pay for attorney time for that purpose. But in almost every transaction of note the issues are almost never that simple.

Someone with a discerning eye almost always needs to review custom contracts carefully. This, of course, can be a smart lay person using self-help resources. And some people are inclined to invest time and effort for that purpose in a way that helps them manage their legal budgets more carefully because they pick up a lot of the burden themselves. But it is a burden, and it has a cost attached to it – there is always a cost-benefit component to any such effort. What is worse, many people do not do a good job of thinking through the issues and wind up cutting corners. A contract in their hands can be like a loaded gun in the hands of a six-year old – wildly unpredictable and sometimes dangerous results can follow.

Your point about lawyers’ FUD is dead on. This is a despicable practice. I have spent a long career, though, working directly with thousands of entrepreneurs – smart people who see right through anything that is phony. I always use a direct style with such clients – telling them straight how the law works, how they can manage it, and when they need something more custom. Even with this approach, there is no more than maybe 15-20% of the business law matters I handle that lend themselves to commodity handling.

One further illustration: take standard Series A funding documents drafted by national venture capital associations. These are expertly drafted and very standardized. They can be used in a fill-in-the-blank fashion. And they work beautifully. From a founders’ standpoint, however, such documents seriously distort the picture. They are in “standard” form only because they fit the pattern that VCs like. Many of the provisions in those documents can and should be resisted by founders because they can be seriously harmful to founder interests (even the idea of a reflexive incorporation in Delaware can wind up prejudicing founders). Moreover, many Series A fundings can be done with documentation that is far simpler than that found in the “standard” forms – simpler and highly favorable to founders (we use such documentation all the time when our founding teams go for angel funding, etc.).

Indeed, many “standard” contracts are prepared by interested parties who have a direct stake in slanting them in one direction only. Ever read a 50-page “standard” commercial office lease – beautifully drafted, needing only a few blanks filled in. Yet any tenant who signs such a lease without customizing it will agree to many onerous provisions that commercial landlords have built into such documents.

“Standard” contracts for the sale of a small business, in turn, are prepared by broker organizations whose main motive is to make sure a deal closes and does not have too many complications. Such documents are very professional and very easy to use – again, just fill in a few blanks. But any buyer who uses such forms in buying a business of any significance whatever will easily wind up losing the vast majority of protections (especially relating to warranties) that go into any custom contract to buy a business. Again, I try to educate consumers about these issues on my website, using not FUD but a reasoned explanation of what the issues are and where the risks lie.

I hope you don’t interpret my comments as critical or self-serving. They are not meant to be. The issues you raise are important ones and your discussion of them is very helpful. But any such discussion has to take realistic account of the true complexity of legal issues and of the limitations of standard forms and procedures.

Lawyer monopolies need to be limited or even abolished. Law needs to be made more consumer-friendly. Standardization needs to occur as much as possible. But skilled handling of the law and its complex aspects will never reduce itself to simple forms or procedures. Any balanced discussion of this topic needs to take that into account. Legal complexity cannot simply be wished away, no matter how gifted the people trying to program the standard algorithms (to borrow the programming analogy). And the motives of interested parties who stand to gain from such standardization cannot be ignored.

Sorry for burying what amounts to a 1,500 word piece within the scope of comment. Please accept this in the spirit of my validating the importance of the issues you raise and wanting to further that debate by taking all important factors into account.

Please visit George’s firms website as it really seems to be a fountain of knowledge for small business and early stage startups.

My main comment is that this is exactly what we as startups wish for from our lawyers. A sparing partner, who understands our needs and is able to explain the issues that most of us non lawyers don’t instinctively understand.

Most entrepreneurs I know complain about the lack of transparency, the FUD and all the things I complain about in the original article.

George Grellas associates seem very transparent. Even their billing practices page page would make me feel more confident about making that initial phone call. Maybe us programmers could even learn from that as we often end up being not too transparent in that end.

Moved to Miami

Published April 21st, 2009 edit replace rm!

South Beach

We’ve just moved to Miami, well Miami Beach, FL. I arrived back in the US (San Francisco) about 2 years ago and it was time to try something new again. So we drove here from San Francisco and saw (and tasted) a lot of this great country.

Why Miami? I’ve been asked this a lot. While Miami is extremely popular with in particular Europeans and Latin Americans, it does seems to have quite a bad reputation amongst most American’s. I don’t know if it’s Miami Vice or just that “Anglo’s” are the minority here?

Weather

Better weather for my taste. I like the tropics and heat. Winters here are even a tad too cold for me. I know people love the Bay Area weather, but it’s just too cold for me most of the year.

Housing

Miami has been hit by the housing crisis, which sucks if you own here, but as a renter this is brilliant. Apartments that would easily cost $4000/m in downtown SF go for $1500/m in down town Miami. With much better views to boot. You can also find plenty of apartments in that price range in Miami Beach just without an ocean view. Expect to pay $500-1000 more for that. Miami Beach is a great walkable town that actually reminds me a bit of a Palo Alto that never sleeps with an amazing beach and tons of great restaurants and clubs.

I have long been pushing the idea of bootstrapping globally by which I mean founding your startup in a place with low cost of living. Miami currently allows you to do just that while staying within the US. OK it’s not quite as cheap as Argentina, but housing in Panama is more expensive than Miami now (other costs are still cheaper).

Culture

I really like the Latin American influence – from Cuban Ropa Vieja to Colombian night clubs, the only place that comes close in the world as true Latin American melting pot is Panama.

The west coast also has a large Latin American community, but it’s pretty much a mono culture, with 90+% being from 2-3 northern Mexican provinces. Here you get lots of people from all over with resulting fantastic things to try:

Uruguayan Chivito restaurants, Argentine Pizza and Steak houses, Venezuelan steak houses, Cuban-Spanish soups to which I am addicted, Colombian hot dog joints etc. etc.

Outward business culture

Business wise, I think Miami is more focused on the rest of the world than say San Francisco. I have always been interested in technologies that make a difference in the poorer parts of the world. Miami being one of the 2 most important centers for business in Latin America (the other being Panama) is by default outward.

San Francisco is extremely international, but in a strangely inward almost insular way. Smart people from the whole world congregate in San Francisco, but it seems to me that once they arrive (including myself) they naturally focus too much on what the SF digerati thinks, assuming the rest of the world will follow. Granted this has created things such as twitter and github which the rest of the world pretty much ignored until recently.

Growing Tech community

The Miami tech community is growing. It is clearly not as large as San Francisco’s and probably will never be. That said, the community is vibrant and everyone seems to know everyone else. Many foreign entrepreneurs are moving to Miami as well. I’ve run in to more Danish (and of course Latin American) web entrepreneurs here than in San Francisco.

Last night I went to the Miami Ruby Brigade meetup which was pretty well attended. Refresh Miami a cross disciplinary group of people interested in technology has become an institution and I’m looking forward to attending my first next week.

What about San Francisco?

I still love San Francisco. Living there was a good experience and I certainly recommend any tech entrepreneur or programmer spend some time there. The best thing about being there is the killer tech and startup community, but thanks to twitter and google groups you can easily keep up with much of that from where ever you are in the world.

Anyway I’m looking forward to spend a couple of years here in Miami.

How to go about getting a credit card processor

Published March 24th, 2009 edit replace rm!

Just came across this great article by Daniel Tenner on How to get a Merchant Account.

Considering how many businesses there are out there, one would think this process might be smooth and painless by now. Just apply for a merchant account, sign on the dotted line, and receive your merchant id in the mail a couple of weeks later. Unfortunately, this is not the case. Obtaining a merchant account can be a long and complex process, particularly if you’re a new, small business that’s going through this process for the first time.

Go read his article now if you think you ever need a merchant account. He describes the process very accurately. I thought I’d add my 5 cents to this as well, with a few other things you need to worry about before picking a processor.

Originally the Merchant Account and Credit Card processor were separate companies. They still are, but most processors now hide this fact by offering a bundled merchant account through a partner bank of theirs. You may end up not even knowing what bank that is.

At Agree2 we opened our account last year with Braintree who have been very responsive. The paperwork did take a lot longer than we thought and involved a few changes to our site. They also did want to see a prototype of our credit card payment page as well.

Don’t use a proprietary api

If you use ruby be sure to use ActiveMerchant. It provides a really well designed API for dealing with most kinds of payment processors. I’m sure there are similar libraries for other languages.

The reason why this is important is that it helps protect you against lock in to the processor. If for some reason you can’t open an account with your preferred provider or they close you down, you don’t have to rewrite your code from scratch. These things happen to good companies.

So start your search for a credit card processor from the list of supported gateways on the ActiveMerchant page.

Use a Vault

I would say that if you are building a SAAS kind of business with recurring payments, you absolutely need a processor that supports some sort of vault. A vault is a secure store of credit cards numbers on the credit card operator’s own servers. Several of them do that now. Braintree for one.

Due to new security requirements from the credit card associations (Visa and M/C) it really is not feasible for small operators to store the card details locally anymore. So if you are developing your application with credit cards stored in your database, be aware you will need to change this.

Also never, ever store the CVV anywhere. It is completely against credit card association rules.

Briefly the way the vault works is that when a user gives you their credit card details you store it in the vault, even if you don’t need to charge it straight away. In return they provide you with a vault id. This you DO store in your database and you provide it to them every time you charge it in the future.

Updated Fixed some language issues and explained the Vault further. Thanks to Travis for his feedback.

Refactoring the Consulting Agreement

Published March 11th, 2009 edit replace rm!

Consulting Agreement between client company and consultant name - Agree2 agreement template

Over on the Extra Eagle Blog our company blog, we are trying to create a new simpler and shorter Consulting Agreement.

If you’re a consultant, work freelance or even if you hire freelancers why not check it out. We’re looking for your input on creating the perfect general purpose consulting agreement.

About me

Pelle gravatar 160

My name is Pelle Braendgaard. Pronounce it like Pelé the footballer (no relation). I live in wonderful Managua, Nicaragua. I work with Clojure, Bitcoin and Ethereum.

More about me:

Popular articles

Topics: