Developing the Starbucks mobile payment app stands as a badge of honor in the career of Chuck Davidson, who is now the head of product for CardFree, where he continues to work alongside several of the experts who helped make the Starbucks app a massive success.
Today, the Starbucks app accounts for 4.5 million mobile payments a week, or 10% of Starbucks' U.S. sales – and a large part of that has to do with the attention Davidson and his peers paid to customer behavior.
"At Starbucks, I knew exactly who my customers were," Davidson says. "It was a great place to be because it was all about customers and products and doing the right things."
The team at Starbucks went as far as making and taste-testing new beverages together, and then applying the same teamwork to technology.
"There was a lot of great talent," he adds.
CardFree CEO Jon Squire led the development of the mobile Starbucks Card when he was at mFoundry, the vendor Starbucks used early on. Squire was also a top executive at CorFire, where he helped establish a similar mobile payments app for Dunkin' Donuts.
Other former Starbucks employees who joined CardFree are Scott Schwan, head of security, and Sen Wen, head of technology.
"The team here is a lot of fun, we are all from similar places," Davidson says.
Part of the reason Davidson and his peers joined CardFree was to apply their skills to a wider range of merchants, he says.
However, "Working together as a team was the biggest driver," Davidson says. "We have history and we are all passionate about" the work.
Even as the Starbucks app gained momentum, many other mobile payment apps have stumbled or outright failed. For example, Google's mobile wallet has undergone several major revisions since its launch, shedding features such as contactless gift card redemption and a virtual prepaid account. Another mobile payments company, Bling Nation, saw some success with a hyper-local model but shut down after making changes that caused its merchant clients to rebel.
Starbucks never had the problem of trying to guess at merchants' needs. The only merchant Starbucks had to worry about was itself, and for that reason it often deviated from the script that rival mobile payments innovators followed.
Those lessons carry over to CardFree, Davidson says. When CardFree representatives speak to prospective clients, they are already familiar with the merchants' major concerns because "we have all been there" as part of the Starbucks operation, he says. "We have a very rich body of knowledge to work from."
That's what Squire had in mind when assembling his team last year to create CardFree, which handles loyalty, rewards and other processes on top of mobile payments.
"A key fundamental is the payment piece, but it's not our core focus," says Squire, who formed CardFree with the help and advice of investor and company chairman Jeffrey Katz.
"We have a strong desire to one-up the competition," Squire says.
CardFree's goal is to improve monthly, weekly or daily spending habits by consumers, he adds. That's where Davidson says his past experience comes in.
Determining how many customers get a cup of coffee a day wasn't enough for Starbucks' standards, Davidson says.
"It's not the only model that works," Davidson adds. "We asked what else our customers do, and what is part of their daily work flow?"
For example, Starbucks observed that many of its customers buy coffee on their way to their office jobs. For that reason, it chose to port its iPhone payment app to BlackBerry in 2010 before addressing Android, since BlackBerry phones were more common in the pockets of corporate workers.
Those kinds of insights are "what made it exciting," Davidson adds.
CardFree aims to duplicate that excitement for its own clients. The company expects to announce major partnerships in the coming weeks, and seeks to make itself known to the biggest players in mobile payments.
The Merchant Customer Exchange, a mobile payments initiative formed by Walmart, Target and many other retail giants, is on CardFree's radar, Squire says.
"We have spoken to MCX about their needs," Squire says. "We consider MCX a friend, not a foe, and we would love to do more with them in the future."
Company executives feel they have a formula in place that would help lure even more friends — even as competition heats up.