1-Click Everything
Rookie VC #2
Hi, Ulysse here. Rookie VC is a weekly newsletter to share my thoughts about companies and trends I love. Tech and investing will be the primary focus, but nothing’s forbidden.
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Last week’s announcement tweet was probably a little misleading to some of you. The Rookie VC is a generalist newsletter, a medium to share my thoughts on various topics I dig into. It’s not exclusively focused on Passion Economy and what I discussed in the previous issue.
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Today, I wanted to discuss Fast and share some thoughts about “1-Click Everything”.
I have been following the company for a while now, and it seems to have attracted its fair amount of enthusiasm. Therefore, I wanted to dive into the subject more seriously.
This being the second ever short essay that I’m putting out here, any feedback is more than welcome!
Yes, 1-Click is an old idea. In fact, it’s almost as old as e-commerce. Back in 1997, when Amazon still just a tiny online bookstore, early employee Peri Hartman was tasked by Bezos to overhaul design to make the ordering process frictionless.
Ah, 1997.
The title for the patent filed along with the innovation by Amazon innocuously read “Method and system for placing a purchase order via a communications network”. This patent received a fair share of criticism on both sides of the Atlantic, and the European Union rejected it in 2001.
Amid the development of the iPod (launched later the same year), Apple jumped on the opportunity to license the tech. Steve Jobs had recognized the potential, and reportedly wrote Amazon a $1m check over a single phone call.
This innovation was instrumental for Amazon in several regards. More so than the uptick in conversion, the real legacy of one-click lies elsewhere. It prompted customers with a simple, powerful incentive in giving away data, and charging them money incrementally by subscription.
It opened vast avenues for Amazon, including the emergence of Prime, which then evolved into a 150m user strong ecosystem and retention machine, generating $19bn in revenue.
Despite this, there has been little iteration on the concept, both inside and outside of Amazon.
Shopify’s App Store is filled with countless “Fast Checkout” options, that are really just UX shortcuts that will lead you to Shopify’s checkout form. The company tried to solve this by streamlining the checkout process, partnering with Amazon Pay
Magento has implemented an Instant Purchase feature, but only after getting a feature submission from one of its implementation partners and fast-tracking it in a Magento Commerce release
Oyst, which once was a French breakout company in the 1-Click checkout space, failed because of the controversy sparked by its cofounder’s activities and by overpromising and under-delivering on many aspects of its products, including speed of use
In the fall of 2019, Visa, AmEx and Mastercard announced an inter-operable 1-Click checkout system for card holders of the franchises. Yet, only few retailers are early clients, and the future of the initiative remains highly unclear and under-communicated
Why has the innovation in this space been so underwhelming? The reason for this is that most attempts failed to grasp the underlying trend at stake: the need for an identity management layer.
In a 2020 predictions Twitter thread, prominent VC Jeff Moris suggested that one-click shopping was not the endgame, rather the use case that would trigger a massive overhaul in the identity management category:
There is a troubling paradox in the interaction between internet users and any website or application that requires log in.
We have built technology that enables e-merchants to convert anonymous visitors to leads and designed perfect conversion funnels. Yet, the login experience feels like trying to get the bouncer to remember you at a club door. Not impossible but far from frictionless.
The internet lacks a core identity layer. In a 2005 essay “The 7 Laws of Identity”, Microsoft’s former Chief Architect for Access Kim Cameron wrote:
“The Internet was built without a way to know who and what you are connecting to. This limits what we can do with it and exposes us to growing dangers. If we do nothing, we will face rapidly proliferating episodes of theft and deception which will cumulatively erode public trust in the Internet.”
Entrepreneur and TLS Security Standard co-author Christopher Allen described three initial phases of internet identity:
1/ Centralized Identity
In the beginning of the internet, centralized authorities controlled digital identity
Problem: Self-explanatory
2/ Federated identity
Then, organizations like Microsoft tried to organize systems that would allow people to use the same identity on different sites, like Microsoft Passport
Problem: A centralized authority controls the federation
3/ User-Centric identity
Many new methods for Digital Identity emerge, and are based on user consent and operability (e.g. OAuth, OpenID Connect, Facebook Connect, Apple ID)
Problem: The best interface won adoption. And it is Facebook’s, which has since then set a compelling precedent for why it can’t be trusted with your data – cue Cambridge Analytica music
That is why people have been calling for a fourth phase: Self-Sovereign Identity.
“Self-sovereign identity is the next step beyond user-centric identity and that means it begins at the same place: the user must be central to the administration of identity. That requires not just the interoperability of a user’s identity across multiple locations, with the user’s consent, but also true user control of that digital identity, creating user autonomy.”
Christopher Allen
This is where the vision for a consumer identity layer gets a whole lot trickier – Consent and interoperability are already a very tough nut to crack, but then comes transportability.
“To accomplish this, a self-sovereign identity must be transportable; it can’t be locked down to one site or locale.”
Christopher Allen
Many proposed that this step should be achieved by leveraging the decentralizing power of blockchain, to propose an open-source self-sovereign identity protocol. The debate about the relevance of such a system sure is open and interesting (feel free to hit my DMs to discuss 😉).
I was an early and hardcore fan and adopter of products like Dashlane. Their approach to password management, at least in terms of user experience and interface, was top of class. Some of my closest friends became power users and even went to work with them as a result.
There is a huge paradox in the emergence of password managers. Most will advertise how they mitigate messy password management and needless redundancy. Ironically, they still profit from the very existence of passwords.
APIs, much like software, have eaten the world (This makes for another essay, but do watch a16z’s Martin Casado on this topic here). Yet, we lack a universal API to quickly push data to suppress all forms once and for all, instead of passwords managers that fill the existing forms.
The next frontier in identity management is not about reducing friction around passwords and data entry. It is to completely remove the need for forms and passwords in the first place.
That is why I wanted to share my thoughts on Fast, and why I think their approach to competing for this layer is interesting.
An insane culture of speed. If there is a single, most important value to your company, make sure it perspires in every single aspect of your business. Inside and out. In Fast’s case, this value is speed elevated at cult-like levels. Their culture is centered around the belief that momentum is a moat when you’re going after an intensely competitive market, dominated by incumbents with plenty of resources. Founder Domm best stated it in this issue of his public updates, underlining how such a culture can help nudge your external partners to put you on top of their priorities: investors, prospective hires, suppliers and potential partners.
Built-in scale and speed challenges, and the infrastructure to tackle them. While I’m not familiar with Fast’s infrastructure stack, I think their strategy is interesting. They chose to rebuild the core infrastructure before releasing their second product (Fast Checkout), because they knew it would be key to delivering on the 100ms rule of instantaneous interaction (originally coined by Gmail creator Paul Buchheit, and recently revived by the email client cult Superhuman). So far, their capacity has been ramped up to 1m transactions per minute, with plans to expand capacity 100x (!)
Clever go-to-market strategy. Fast knew that it had the momentum to pre-register a small group of large merchants that people use regularly (think food retailers), then start to onboard smaller shops with >$30m in GMV. If the experience proves superior, then adoption flows from the giants onto the masses and helps democratize the product. Thus far, the combined GMV of merchants that have engaged with Fast is over $100bn. The sheer scale of the opportunity.
A focus on independence from “Identity Incumbents”. As I mentioned earlier, user centric identity providers such as Facebook Connect, Apple ID are all initiatives to federate identity from market incumbents, which have shown time and time again to the public why data can’t really be trusted in their hands. Apple rolled out a “shield” protecting user email via a random iCloud decoy address, but how would partners react to this, were the system to generalize outside of their ecosystem? My guess is that most would chose to fetch an email in all cases.
An unreasonable ambition to solve simple problems with exponential upside. I mentioned in the introduction how One-Click changed a lot for Amazon. The scale of the sole upside of the eCommerce use case outside of Amazon territory is misunderstood. As my fellow Frenchman Alex Dewez pointed out in his essay on Shopify, at the bare minimum 65% of the market still has nothing more than a meh experience when it comes to one-click checkout. Notwithstanding the fact that online retail sales are still growing quickly (+20% YoY to $3.5 trillion in 2019), and people are spending more time than ever on the internet (average 6.5 hours per day, not COVID-adjusted) .
A carefully chosen realm of partners. In a little over a year of existence, Fast has attracted investment from Tier 1 venture capitalists (Index Ventures, Kleiner Perkins, Global Founders Capital, Susa Ventures), prominent angel and diehard fan Harry Stebbings. Now what’s more interesting is that Stripe led their $20m Series A round earlier in March. While Stripe has mastered the B2B case by democratizing online payments for virtually any business, partnering with Fast paves the way to creating a gateway for payment and login across the board. Not to mention the technical and business expertise Stripe will share with the team
If you liked this issue, don’t forget to embark on my email list and spread the love on social media !
Thank you to my döppelganger Ulysse Couerbe reviewing drafts !
Ressource list:
📰 The Path to Soverign Identity, Christopher Allen
📰 7 Laws of Identity, Kim Cameron
📰 Fast CEO Updates, Domm Holland
📰 Why Amazon’s ‘1-Click’ Ordering Was a Game Changer, Knowledge @ Wharton
📰What is Latency ? , AKF Partners
📰 Stripe leads $20M Series A into Fast, which is building a universal checkout service for e-commerce, Techcrunch
📹 The World Through an API, Martin Casado