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SquareTrade certifies the authenticity of sellers on eBay, Yahoo (via Overture), and other online marketplaces.
Interview with Steve Abernethy - CEO, SquareTrade.com
Interviewer: Nate Kaiser
Thursday, April 22, 2004 - nPost: Can you give us an overview of SquareTrade?
Steve: SquareTrade is based on the premise of building trust infrastructure in ecommerce. We have a family of services and technologies that help increase consumer confidence in purchasing. Our services help build trust and authentication of small merchants.
nPost: You also provide follow up services for once a transaction is made.
Steve: SquareTrade provides backend support if something goes wrong with the world's largest online dispute resolution system. We create mechanisms that allow for online transactions to take place in a trusted environment. This helps customers feel more comfortable with buying online and helps participating merchants sell more.
nPost: How does your service work?
Steve: We work with many marketplaces such as online auctions to searching for a product through Yahoo's search function. If a customer finds an item on eBay they need to understand if they can trust that potential seller. SquareTrade integrates into the initial interaction by helping the merchant build trust with the customer.
nPost: How is that trust developed?
Steve: A merchant will display the SquareTrade Seal, which ensures that seller's authenticity through varying degrees of background checks. We verify identification, business credentials, etc. Another key aspect of a merchant being part of our program is that the agree upfront to participate in our dispute resolution service.
nPost: So that you provide full services for merchants using your program. Steve: They also promise to adhere to certain good selling practices and disclosures and present that information to the consumer in a dynamic fashion. On an individual item listing consumers will see the SquareTrade Seal and it will be authenticated with the merchants ID and the current date. The consumer may also click on this information to learn more about the seller.
nPost: What does this provide to the seller?
Steve: It helps differentiate a seller that wouldn't otherwise be recognized. In a format like eBay where there are thousands of different sellers, it is important for them to verify the legitimacy of their offering.
nPost: How does your system work once the transaction has occurred?
Steve: If problems do arise we provide a neutral global infrastructure to dispute a transaction. Consumers can access our dispute resolution system and work with a seller via either our self-service technology or a live mediator to resolve the issue.
nPost: How did SquareTrade itself gain the credibility to begin offering these very services?
Steve: We built credibility in multiple ways. First we affiliated ourselves with leaders in the academic world in the area of dispute resolution and consumer protection. We spent a lot of time working with experts to ensure our service would provide the tools that were required. The fundamental premise was that we provided a place that was built on best practices of neutrality.
nPost: What type of information does your seal present?
Steve: Secondly, we created technology that ensured authenticity in what we do. Our seal program is based upon dynamic patented technology, which serves a seal on a listing. The seal is customized with each viewing, and is a small bit of HTML code that sellers post that dynamically hits our server. It only displays the authentication if the seller is in compliance.
nPost: Is it a one step process?
Steve: We have put a lot of effort and time into creating robust backend systems, because we understood that certification is an ongoing process. Having up front screening is important, but it was also essential to have feedback loops. Otherwise you would have bad sellers denigrating the overall system.
nPost: Did you partner with the well known marketplaces?
Steve: We worked with large marketplaces and associations that give credibility to the system. We are the core dispute resolution system on eBay. We set up specific certification and authentication programs for eBay for their Motors and Travel categories. We are on about 10-15% of all their listings.
nPost: What was the origin for your service?
Steve: The premise originated in 1999 when we started. There were a lot of online markets forming and there were no clear mechanism for recourse that worked in an efficient and accessible manner. We started with the goal of creating an online infrastructure to resolve problems. The certification and verification became a means to get pre-commitments to participate.
nPost: Sellers agree to participate if there are problems.
Steve: We started by creating the online process for handling disputes and stage two was creating the seal program, which signaled to buyers that sellers would participate within the system.
nPost: What is your revenue model?
Steve: Sellers pay a subscription to participate within the seal program. In the event of a dispute we may money when they use our system as well. It is both a transaction model when it is needed. The seal is something that is meant to minimize the disputes that do take place. Our goal is to make money more on creating trust than resolving conflict.
nPost: Is there a conflict of interest if sellers are paying you a fee to be certified? Is there a bias inherent to this system?
Steve: The integrity of the system is the fundamental ability to kick out people who don't perform. Our model is based upon a lot of small sellers, so we aren't dependent on any one seller. Our incentive is to maintain integrity to retain the brand. There isn't a true conflict.
nPost: How do you work with a large partner such as eBay and maintain your independence?
Steve: We were formed as a neutral infrastructure that can be applicable across different marketplaces. That is how we are working today. We are working with eBay, Yahoo via Overture, other smaller marketplaces, and offline as well. Our service's strength increases with the broader adoption of our services.
nPost: The statistics still show that their is still a general fear about purchasing online. What is the size of the need for a service such as SquareTrade?
Steve: The need for trust has always been there. It's still in the very early days on online commerce. Most consumers are looking to purchase from branded, well known merchants. Consumers are afraid of fraud, data being taken, etc. I believe that most of this is perceived rather than being real. We fit quite well into this need to help people feel more comfortable making a purchase.
nPost: Where is ecommerce currently?
Steve: We are only at the tip of the iceberg for people engaging online. A lot of people use the Internet as a resource, but few people materially purchase beyond known commodities.
nPost: Your model necesitates the need to develop a consumer brand.
Steve: Our focus is to present relevant information to the consumer in an authenticated fashion. I do agree that SquareTrade has continued to increase it's brand awareness. Our value is not in being a household name, but in being able to present the key information that a consumer needs to make a purchase.
nPost: What are the key characteristics you target for potential employees?
Steve: We focus on people who are excited about what they do. It isn't a specific attribute, but we look for people who are excellent at what they do.
nPost: What are the key things you have learned as an entrepreneur?
Steve: The fundamental thing that we have focused on is being a real company and solving real needs. We have also been very patient about growing the business and very dedicated to serving our customers. |
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