March 20, 2015
Why are we beating a dead horse? Softcard has been dead for a while now - we even wrote a respectful eulogy. Does anyone even care about Softcard, and how much Google paid for it? If you are reading this, you probably do want to know, perhaps because you are looking for closure or may be just a juicy water cooler conversation, so let’s get that out of the way and move on to other more important things.
Yes, Google got a really sweet deal for Softcard. One could argue that Softcard investors and management got an even sweeter deal because they got away with spending hundreds of millions of dollars without any accountability. In any case, the latest reports that are emerging in the aftermath of the ‘strategic encounter’ confirm that there were indeed 3 separate deals as we had indicated, and contrary to what we had initially estimated, the deals were not worth tens of millions of dollars, but somewhat lower than that: more like $0. To be precise, Deal Value = 3 x $1 deals (there had to be a nominal number) + revenue share (x% of some trivial number) - fees paid to high caliber consultants = most likely a negative number! [We cannot count the $5 per new Google Wallet activation and its preloading on the 3 carriers’ handsets because that really has nothing to do with Softcard. They would have had to pay that to the carriers anyways. And of course, this is not an ROI calculation, where we would need to include many other things such as the ‘sunk cost’ that the carriers invested into the JV over the past few years, or even the value that was destroyed in the rest of the ecosystem.] So, yes, looks like the carriers actually paid money for Google to take away the carcass, and unfortunately those who poisoned the horse probably got paid to do the last rites.
Really sad...now moving on to a more productive aspect of this saga…
Where does Google go next with its payments and commerce plans? As usual, just as we publicly shared our wishlist for the space when Google first announced its new wireless service, here are a few thoughts on what Google can do with the millions it saved in this strategic encounter with the carriers. [No, we are not looking to make a few consulting bucks in return for our recommendations - it’s our small reciprocal gesture in return for the free search and free analytics from Google that we enjoy - thank you!]
Now, Google has some of the smartest people in the industry, so we won’t attempt to be smarter, but as our contribution to the common cause of a healthy mobile payments ecosystem, here’s a suggested 5-point program in preparation for an announcement at Google I/O in May:
Most of the building blocks for the above program are already available to the company in-house without having to make any more acquisitions, real or fake. But the right packaging and outreach strategy can easily make or break this next attempt at payments and commerce from Google.