Net Element, Inc. (NETE)

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Blockbuster CEO Buys Big Chunk of Spindle

Tickers Mentioned: SPDL


The only thing constant is change, and nowhere do we see this better reflected than in point-of-sale (POS) solutions tailored for the retail marketplace. Technology continues to propel POS forward, enabling capabilities that have grown beyond merely accepting payments. Nowadays, you’ll see sleek tablet set ups at every cool coffee shop in America. There is a bright new world at every sales terminal seeking every smart phone.

Investors can often benefit from investing ahead of major technological shifts, and I am intrigued by former Blockbuster CEO Michael Kelly’s purchase of 10% of Spindle, Inc. ($SPDL), filing a 13Din the process, because it relates to an important area called Unified Commerce.

This is not the first rodeo for these senior payment executives who have an extensive intellectual property portfolio,with ninepatents issued/allowed,and fourprovisional patents covering ecommerce, mobile payments and security. In addition to achieving Level 1 Service Provider PCI compliance status, Spindle is a registered domestic Payment Service Provider/Payment Facilitator (PSP/PF), so this is a measured venture,and a clear play on the Unified Commerce space.

Increasing Margins with a Single-Source, Bundled Solution

Think about this: Unified Commerce is the ability for merchants to source a full suite of POS and mobile commerce capabilities, business management solutions, and advanced cloud-based services, all from a single point of contact. It calls for one solution provider that can package these in a single bundle in order to make implementation and management simpler for the end-customer — and increase margins for VARs by allowing them to provide valuable services that complement their existing offering.

Merchants already sell services such as data, networking, Internet, voice communications, accounting systems, and other services that support and comprise their entire back-office environments. It is a logical and even convenient progression, then, for retailers and restaurateurs to purchase a range of POS and mobile marketing services from these same partners.

By offering POS as part of a bundle, the reseller has the opportunity to oversee all elements of commerce for their customers—network design, systems integration, equipment certification, multisite deployment, marketing, sales, service, and back-office integration—thus increasing their role as an indispensable partner. In the process, the reseller will play a major role in advancing the marketplace, making it easier for hospitality end-users to adopt the next-generation capabilities that the latest POS services can deliver.

Capabilities such as mobile marketing services, online business management platforms, ecommerce solutions, and mobile coupon services are all powerful tools, but they are usually available individually through a disparate roster of vendors. The complexity of integrating these offerings has become a barrier to adoption and sales, with too many platforms and partners for retailers to manage.

A more streamlined, single-source “unified commerce” approach is sorely needed to drive adoption of these myriad services. The best party to execute this kind of strategy: The technology reseller, who can streamline and bundle these services along with the data and voice solutions they already sell.

Companies shift and pivot, and I am familiar with the players in and around Spindle, both the exit and the entry. I don’t know Kelly as an investor, but “Angels” in general, I am familiar with. We have one at our company – and they are generally similar, in that they often bite off big chunks and change the direction of whatever environment they enter. This will be no different, so following the story is methodical.

This is “big data” analytics at its best, now accessible even to the modest local merchant. If VARs can communicate these motivations to their customers in the hospitality industry, the impact on sales could be considerable, which is why I am watching this small stock – in many cases, good things come in small packages – plus, it seems wise to hop aboard the train of early adopters and thinkers like Mike Kelly.
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