If you saw my last blog post, about five major trends, then you may remember that #2 was paying money for something and not getting anything, the so-called Virtual Goods business and Farmville creators Zynga lead the charge on that front.
So when I was reading the paper this morning about Coinstar, talking about something I blogged about weeks ago, but also in that five trends blog, I saw a reference to a company I hadn’t heard of called Rixty.
As I have learned, Rixty has done some really clever rethinking in the world of credit cards and they have very cleverly placed themselves smack in the middle of the virtual goods world and their customers are on the one hand the greatest credit risk (by definition – which I will explain shortly) yet on the other hand the greatest consumers of virtual goods.
As the article in the paper described, Rixby targets people who can’t get credit cards (which I thought was an oxymoron these days), younger kids and people with bad credit, and it allows them to use Rixby to pay for their virtual goods. That by itself is really smart, but the piece that really cracks me up, is that with virtual goods, if somehow the person fails to pay, it’s virtual goods, so it’s not like Zynga has to write off a sale. There were no real goods exchanged, so a bad debt is really pretty meaningless. Clever.
I expect that on the back end of it that Rixty is actually reporting behavior to credit agencies, so that if you stiff them, you will never get a credit card from anyone, but I still love the model of having a credit card company helping people buy fake stuff. It’s one of those case studies that if I were to try to explain it to my grandfather, who doesn’t even’t know what the internet is, I just don’t know where I would start, with any hope of him saying “I get it.”
Well done Rixty.
-Ric
P.S. Fingers crossed for those folks trying to cool down the reactors in Japan.
Back in 2003 as an MBA student with no money I identified that it should be technically possible to build the solution and distribution network to address this market need.
I tried to pitch this idea of trying to make online retail like a bricks and mortar retail where you can walk in pay cash — to a leader in online e-payments in the UK — thinking that maybe I could get a job helping them build up a whole new global business.
Their website – http://www.epayworldwide.co.uk/
They understood the idea, but it went nowhere…
So it is funny to see that finally eight years later someone – in this case http://www.rixby.com – is finally addressing this market need.
You can find the original pitch I put together here on my web site:
http://www.business-strategy-innovation.com/epaycasestudy.pdf
This is a great example of how even if you get the solution and the timing right, the inertia of an organization and the belief in the status quo can still prevent an innovative idea from taking off.
Happy Innovating!
Braden Kelley
Author, ‘Stoking Your Innovation Bonfire’
@innovate