If only Qpass Digital Commerce Service had roughed it out.

In the dot com heyday, a company called Qpass operated a fantastic business called the Digital Commerce Service. It was, in essence, an outsourced, cloud-based commerce engine that enabled micropayments. It made it easy for online merchants to sell digital content, and for consumers to enjoy friction-free online purchases. 

In the late-90s the company was hot. It appeared destined to be one of the next great IPO success stories, with A-list clients and A-list investors. The company had raised about $70 million in equity capital, and was blowing through it in a race to the IPO finish line. When the IPO market closed, the shizzle hit the fan. 

Qpass management had modelled and signed up for unrealistic performance. They expected online merchants to join by the dozens. And they expected to merchants to pay a six-figure up-front set-up fee, then about 30% of the value of each transaction. This didn’t fly, for two primary reasons: 1) the market wasn’t ready — there weren’t many companies that had the content management and business systems in place to sell digital products; and 2) those that were ready balked at the fees. What use is a cloud transaction system if it’s cheaper to build in-house?

In 2001, Qpass decided to shut down the Digital Commerce Service and focus exclusively on commerce software for wireless operators. They recapped and cut headcount drastically. The old Digital Commerce Service was left to die. Qpass had an exit a few years later, selling to Amdocs for something like $250M. 

It’s too bad things had to go down this way. The service was brilliant. With patience, parsimony and a tweaked business model, Qpass could have grown into a multi-billion revenue global commerce provider. They had had it right.