July 13, 2014

Clinkle crinkle CLUNK

The shine is off Clinkle, the amazing little app that last year landed 30 million dollars for a demo. What were they thinking, people asked? Apparently we now know, they weren't thinking:

“[Executives] came in thinking, ‘OK, this product is launching soon,’” the former employee explains. “Then they realized the back end is not ready, the front end is not ready, Lucas is re-thinking the design, the architecture is not laid out, there’s no security framework, there’s no fraud detection framework, the bank contract is still being signed, the payment processor still needs a lot of work, and they still haven’t figured out who the credit card processor is going to be. These people got overwhelmed.”

Well, there you have it. For the record, I've never done a demo in those terms. All my tech has always been shown in the raw -- when it shows a payment, it is a payment, it's transactional, secure, crypto all the way down.

Investors take note: financial cryptography doesn't really work with screen-shot style demos, HTML5, Flash whatever your poison. If you're looking at ideas on screen, no matter how beautifully drawn or rendered, you're investing in turtles. All the way down.

Don't go there.

Having said that, it takes a special person to even see the entire architecture of financial cryptography and its 7 layers. Hats off to Lucas Duplan for even coming close to building the demo. We don't know what his secret sauce is, and I'd be suspicious that it's even secret or sauce .... but the man can sell.

If he hooked up with a team that could build FC, he'd be dangerous.

But reality is what it is. Second mistake is to believe that he can do it all; the sad sad truth of the startup world is that the Zuckerberg mythology as so aptly shown in the film _The Social Network_ is a one-off. A rarity proven in the exception. It isn't reality, it isn't likely, and it isn't something we should be fooled by. in practice, it takes a serious amount of knowledge to field an FC product, and Declan should hand over the CEO rule and reduce himself to supporting a bigger team, not directing it.

Before that, however, it seems that we have some more hurdles to get over:

For the first time, all Clinkle employees are finally testing out a basic version of the app and moving money.

Alley-oops! No, I really don't think so. You don't go from "there’s no security framework" to moving money just like that.

How do I know that? Well, the thing is that a model for secure payments is so hard that it basically has to derive from someone who's done this sort of thing before. Otherwise, you're asking for a miracle in the making. None of these things are currently evidenced in Crinkle's publicity, so they almost certainly don't have a model for secure payments.

Therefore, Clinkle employees are testing out opportunities for fraud. The real question is, who picks up the tab when the money gets raided? If it is the back-end processor, that contract won't last a week. If it is the consumer, the reputation will lose its shine, and CLUNK. If it is the investor, the question is likely how long they can last while adding the security on later. Etc.

Better off to invest in a complete tech-business-governance model to begin with, methinks.

Posted by iang at July 13, 2014 02:14 PM | TrackBack
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