By Monica Mehta
Shopping online just went to the next level. Consumers are already shopping for products in virtual stores using a virtual reality (VR) headset within the experience and then having those products delivered to their homes.
But for first time users can explore and purchase products within that immersive VR experience, and then make a secure, easy payment without having to remove their headsets.
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The company delivering this technology is Payscout, a global payment processing provider. Cleveland Brown, chief executive officer and cofounder of Payscout, says the market is about to explode. In 2016, VR consumer revenue was about US$1.8 billion, mostly in hardware. By 2020, VR consumer revenue is expected to reach close to US$30 billion—mostly in software.
Payscout’s move into the VR commerce market builds upon a strong business foundation. From 2013 to 2016, Payscout’s revenue increased by more than 850 percent and the company has been on Inc. Magazine’s 5000 list, representing the fastest-growing privately held companies in the United States for four years in a row.
Profit spoke to Brown about how he was able to put Payscout at the forefront of this fast-growing market by leveraging his diverse interests and background: knowing how to grow his company through mergers and financial crashes and creating a strong culture upon which to build his business.
Profit: Why is VR commerce at a tipping point?
Brown: If you look back, the technology driver behind ecommerce was a mouse. The ability to point and click made the online shopping experience frictionless, and that’s where ecommerce exploded. Then, the technology of tap and swipe made the shopping experience frictionless on a mobile device, and that’s where mobile ecommerce really took off.
The same thing is happening with VR commerce. Right now, you can navigate a space or environment by moving your head, and you can tap. A few other elements are being integrated as well, including voice and gaze. As the technology makes transactions within that environment frictionless, we’ll see VR commerce explode in the same way.
The difference between online ecommerce, mobile ecommerce, and VR commerce is that the emotional engagement from being in an immersive 360-degree experience is unlike anything we’ve ever seen or experienced, other than in person.
Profit: This technology makes sense in a virtual shopping mall—how about in gaming?
Brown: It absolutely applies in gaming, as well. We’re in discussions with video game developers to enable the purchasing of physical goods—merchandise, for example—from within the experience. So imagine you’re playing a mobile app–based game where you’re building a tank or a fortress using digital currency in the game—and now imagine you’re able to use physical currency to purchase a replication of the tank or fortress and have it delivered to your home.
Profit: Payscout is fundamentally a global payment processing provider. What led you to found the company?
Headquarters: Los Angeles, California
Revenue: US$24.2 million
Industry: Financial services
Brown: The catalyst for Payscout was the globalization of payments in ecommerce. I was working with public school districts in Los Angeles, Texas, and Florida, and we built out some of the first communication and ecommerce platforms between the schools and the parents. They really took off.
After that, I worked with financial institutions and small countries to build ecommerce platforms for them. During the financial crash of 2008, many countries wanted to diversify their risk and think internationally in terms of investments. We merged with another company, and we were able to create a true global platform for merchants to process payments and reach consumers in their local environments, within their currencies and their payment methods.
Profit: What role does Oracle software play in helping you reach those consumers?
Brown: Oracle helps us with automation in globalized payments. The payments data is gold to both us and our customers, and Oracle’s solutions help us with reporting and reconciliation so that we can make informed, analytical decisions about our business as we move forward.
Define the mission. Establish the vision. Articulate the culture’s attributes and beliefs. That’s what builds the foundation.
Oracle also helps us automate our statements in different languages and with different currencies. And the benefit of leveraging Oracle software is that it integrates with our existing card processing and alternative payment method platforms. As a global payment processing provider, we have a network of very sophisticated cloud integrations. Oracle provides that nexus that ensures we can see the whole picture.
Profit: When it comes to selecting IT, is there any question about choosing cloud?
Brown: I would say there’s no question, in terms of efficiency, enterprise value, integrations, and especially innovation. New companies are building value and innovating by integrating APIs in cloud-based platforms. So for me it’s not a question. I don’t believe you can innovate without the cloud.
Length of tenure: 6 years
Education: BA in philosophy, University of California, Los Angeles
Personal quote/mantra: “Define your culture.”
Profit: You have a diverse background that includes philosophy, filmmaking, and banking. How did the diversity of your interests and experiences inform or influence you in business?
Brown: Diversity in any form is what allows innovation to take place. It allows you to take ideas from different elements and mold them together to be able to create and be innovative.
Philosophy was about asking deeper questions, challenging the “why” behind different theorems and models in economics. It was a very unique way to challenge my mind as an entrepreneur, because philosophy is the process of taking ideas and bringing them into reality.
My background in filmmaking was what allowed Payscout to make the leap from payments to VR commerce. We knew that VR was the next stage of evolution of storytelling, and a powerful vehicle for immersive experiences, from the Sundance Film Festival. When VR landed at Sundance, we saw lines form 24 hours ahead to experience the content. People were very excited about it, and seeing their reactions, we knew there was something very specific there.
From that moment, two ideas came together in my mind: virtual reality and the monetization of the experience. I was able to innovate by bringing together these two divergent concepts, filmmaking and payments, to become the first in the world to deliver a true, frictionless VR commerce solution.
Diversity in any form is what allows innovation to take place.
Profit: What would you say is the foundation behind leading a successful company through the startup phase, mergers, and financial crashes?
Brown: The key to being successful in being a leader and growing a business is defining and building a culture that allows it to operate, engage, and grow. That foundation of culture comes from abstract ideas like integrity, trust, reliability, innovation, and fun. It also comes from defined priorities such as “best idea wins,” “feedback welcomed,” “customer happiness,” and “always learning.”
Once you have a culture defined, it guides your decision- making. Take young entrepreneurs who have an idea. How are you going to figure out which direction to go in? Culture gives you a guide to choosing a path. And once you have a guide to choose a path, then your decisions become much more clear, because you have the same foundation to make each decision on.
Profit: What is the most important piece of advice you have for entrepreneurs looking to operate in the current economy?
Brown: What I would tell a young entrepreneur is to lead by example when it comes to inspiring those who you want to follow you. I do that by volunteering my time. I mentor young entrepreneurs and talk to them about the importance of establishing culture. It’s the best advice I can give.
So many entrepreneurs come up with great ideas. The question becomes, how do you build a process to bring this idea to fruition? And the answer is creating culture. Define the mission. Establish the vision. Articulate the culture’s attributes and beliefs. That’s what builds the foundation.
The ideas will evolve through the implementation of culture and take you through that learning curve of making those ideas successful in our current economy. With a strong cultural foundation, everyone is speaking the same language. And when we’re speaking the same language, then it’s easy to follow the logic of the decision-making.
Photography by Raffi Alexander