Late last year, we interviewed John Sheldon, who joined MasterCard Labs from eBay. Sheldon, Group Head of Innovation Management, talked about some of the initiatives that Labs is involved with, and explained how the group collaborated with Whirlpool to reimagine the venerable quarter-fed washers and dryers at the neighborhood laundromat.
MasterCard also shared with InnoLead an overview of what it hopes to achieve with its Start Path program for financial services and payment-related startups.
• MasterCard has had a Labs program since 2010. I came in with a real intention to help scale this capability across the organization. How can we sprinkle this fairy dust around? For the first three years, a big focus has been on getting some wins, getting credibility inside the organization.
• My boss is Gary Lyons, the Chief Innovation Officer of the company. He’s responsible for MasterCard Labs and the innovation agenda. ?I run Innovation Management, one of the five key areas inside of Labs. (Other groups include R&D/tech development teams, and the Start Path accelerator program.) We’re responsible for generating ideas, piloting, and prototyping — all the way up to when we make a commercialization decision.
• Once we decide to commercialize, we treat it like its own startup. It gets funding like you’d manage a portfolio of VC-funded startups, including hiring an Incubation Executive Officer, who is the CEO of that idea. We have a tech team that supports it.
• But we recognize that we don’t have all the great ideas. So that’s why we have Start Path. (See below.) We’re testing different ways of engaging with startups, from investing in startups, like with Techstars, to having seven businesses co-habitating with us at our Dublin Innovation Lab. We don’t know what the right way to work with them is — it may be a combination of two or three approaches. But we’re looking for these startups to meet their metrics, get funding, and get some market validation for the problems they set out to solve. One example of a startup doing that is the Nymi band, which is using your heartbeat to uniquely identify people. (Click the image at right for a more detailed view.) We’re primarily focused on startups that are changing the commerce experience and payments.
• When I present to merchant partners and banking partners, they often want help innovating the way we do. So we’ve started “Labs as a Service,” within MasterCard Advisors. It’s a joint venture between the Labs group and MasterCard Advisors, to bring our innovation programs to others.
• Over the last four years, we’ve produced 300-400 prototypes. We’ve had four public incubations, and one of those has just graduated back into the core business. We got it to substantive operational scale that it became time to reinsert the organ back into the body, and make sure it doesn’t get rejected. That is called Simplify Commerce, and it is a way to easily accept credit cards through a website.
• In November, we completed an innovation tournament that we call Ignite. We identified two briefs, and asked the company to generate ideas. One of them was, how do we better leverage the data we have to create new services? The second was, how can we innovate on our internal processes to be more efficient? We have just under 10,000 employees. For that tournament, we had over 430 ideas from 550 people. The winners get a prize — that includes $25,000 for several ideas. In this case, one idea was substantive enough that we’re looking to change that person’s job to take this on full-time. Some of the business units jumped on board with auxiliary prizes for the best ideas within their business units.
• A big part of engaging the company with innovation tournaments is to culturally prepare the company, so when we go to reinsert these innovations into the core business, they’re ready for it.
• We’ve done a lot of different innovation events, and they’ve been different lengths. Some are three hours, some are a day, some are 48 hours. We do Innovation Express, when we fly people from all over the world for a four-team competition, or Launch Pad, which is a week-long event. We tried an intense event that was a month in length, trying to turn something into a diamond over a month. That was too hard on the team. The difference between what we got in a week and a month wasn’t that different. In almost every case, the innovation events are all-consuming. So we create separation from participants’ day jobs. (Below is a video that captures a 2012 Innovation Express event in Turkey.)
• We did some work with Whirlpool recently. They came to us and said, ‘The payment process is pretty painful at a laundromat.’ I led a team of folks — a handful of their engineers and some engineers and designers from MasterCard Labs. We isolated ourselves near Philadelphia, at a customer’s warehouse where we had access to laundry machines and people who knew the machines. We committed to fixing the problem. We went to laundromats and showed people paper prototypes, to make sure we were producing something of value. We ended up redoing the entire payment system on a commercial laundry machine to be able to do the whole thing on your mobile phone. Not just payments, but notification when a cycle was finished, ways to find available laundry machines near you. That project is moving to a pilot with 1000 machines in the New York City area, and we’ve announced that it will be in-market in 2015 in Maytag machines. We’re going to go to market in under a year and change.
• The moment of payment is shrinking in time, motion, and activity. You get out of an Uber car, and there’s really no payment moment at all. We’re trying to surround that payment moment with value before, during, and after the transaction.
Background on MasterCard Start Path
We established MasterCard Start Path as a way to formalize the support that MasterCard provides to those in the innovation space outside of the company, specifically by early stage startups developing the next generation of technology solutions.
We see a global transformation happening that goes well beyond payments, and extends into elements that occur before and after the transaction.
Early-stage startups across all regions are creating solutions that aim to improve the entire consumer experience by making it more secure, more relevant, and increasingly frictionless. Through MasterCard Start Path, we are looking to bring those leading-edge technology solutions to customers and partners across the commerce ecosystem.
There are three main key areas where we can provide value:
- Knowledge. We connect startups with our global network of MasterCard experts across a broad range of topics including product development, user acquisition, compliance, etc.
- Access. We enable startups to explore potential pilot opportunities with MasterCard customers and partners across the globe.
- Solutions. We allow startups to leverage and innovate on top of existing MasterCard solutions, largely through our APIs.
Also, we offer multiple ways for startups to work with us. This includes our own Start Path programs or the relationships we have with key partners including the Commerce. Innovated. program with Silicon Valley Bank. Our focus is on building lasting partnerships with each startup that extend beyond the short-term duration of a specific program.
Value for MasterCard
Start Path brings benefits to MasterCard in several areas. First is our interest in potentially becoming a customer of selected startups that have solutions that fit our own strategic priorities. Second is the value we provide by bringing leading-edge technologies to our global set of partners and customers that are actively looking for these types of capabilities. Finally, by enabling startups to build and innovate on top of the solutions/assets we have – we continue our tradition of being an integral part of the broader commerce space.