Coin And The TechCrunch Effect


By now, you’ve heard of Coin, a programmable mag strip card that holds up to eight card details at a time, accessible via a button and miniature LED screen on the card.

For anybody who has heard Dynamics present at the last 37 Finovate conferences, the concept isn’t anything new. 

And for anybody involved in the world of payments — and the emerging promise of mobile payments — the announcement of something involving mag-strip technology should be sleep-inducing.


Good thing I didn’t predict this coma-producing effect two weeks ago. Man, would I have been wrong.

Per NetBanker:

“In the week since Coin was announced, the 105-second demo video has racked up more than 6 million views, 26,000 likes, and almost 9,000 comments. The company said it’s original $50,000 crowdfunding goal was hit in 47 minutes.”

Wow. Why the excitement? Well, NetBanker does go on to quote someone posting on Quora, who listed five reasons for the response:

“1) The product solves a real problem, too many cards in the wallet; 2) Coin implies there is a limited supply; 3) It was selling at for a limited time at 50% off; 4) It appealed to early adopters with a blend of “old” meets “new”; and 5) $5 referral credit (against the $50 cost) with a built-in sharing button at the end of the purchase process.”

Sorry, but these reasons don’t cut it. 

Plenty of new products meet criteria 2 thru 5. Anybody can “imply” a limited supply, sell that limited supply for 50% off, and offer a referral fee. That can’t be the reason for the “success.”


So Coin’s success must be because “the product solves a real problem, too many cards in the wallet.”

Hate to disappoint you, but that doesn’t survive scrutiny. 

Yes, it’s true that many people have multiple payment cards in their wallet. 

But as a (more or less typical) guy, it isn’t just payment cards I have in my wallet. I have my driver’s license, my health insurance card, and my building ID card. Going from 6 cards to 3 or 4 cards isn’t really solving the “problem.” 

If my wife is in any way typical, going from 3 or 4 payment cards to 1 does absolutely nothing to solve the “problem” of carrying all the things she carries around in her bag (which is nothing more than an incredibly over-priced leather “black hole” with a fancy logo on it).


Coin’s initial “success” has little to do with rational, logical reasons like solving a “problem,” referral fees, or appealing to early adopters with a blend of “old” and “new.”

Coin’s initial “success” is due to the TechCrunch Effect. That’s it, folks. The one — and only — reason for Coin’s “success” was coverage on TechCrunch.

With coverage from TechCrunch upon its pre-launch, Coin was perceived as “cool.” And apparently, there are people out there who want to be perceived as “cool” themselves by associating with “cool” products. 


Please note that these aren’t “early adopters.” In fact, I’d bet that many of these people stop using the product shortly after its release next summer. Once everyone can their hands on it, it will cease to be cool. And that will ruin it for the pre-release buyers.


Personally, I’m not very bullish on the product.

Not only do I think there’s no real problem the product is addressing, the price point is the other nail in the coffin. 

When banks discontinued free checking and implemented a $5 monthly charge, people revolted. How dare they charge me to use my own money! How dare they charge me for the convenience and security of writing checks, paying with a debit card, and taking money out of ATMs at 3:00 in the morning!

But Coin wants $100 for the “convenience” of storing multiple card information on a single card. Yet, we don’t hear anybody yelling “How dare they charge me to use the cards I’m already using!”

(Note: Please don’t try to convince me that this convenience is worth $100 but the convenience of a checking account with ATM access and debit card usage isn’t worth $60. You’ll be wasting your time.)


The marketing lesson here is the TechCrunch Effect. Creating “cool” creates awareness, and even demand.

If Coin had pre-launched at a Finovate conference, we would have heard crickets. Creating cool within the banking industry isn’t the same as creating cool among TechCrunchies.

Had a bank been the first to launch something like Coin, I can just imagine the reaction.

There’s no way TechCrunch would have written about it, with its general anti-bank stance. The product would be seen as an evil attempt on the part of an evil bank to capture more of a consumer’s payment data, in an evil effort to sell that data to other parties.

But as a start-up, Coin gets press in TechCrunch, gets the cool factor, and goes on to sell $50k worth of its product in 47 minutes.  


TechCrunch wrote that Coin’s selling out its $50k pre-launch goal was “a testament to the desire for folks to leave their plastic at home.”

Nonsense. It’s a testament to the TechCrunch Effect.

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