Venmo Handled $101bn in 2019 — Here’s What You Can Learn From Their Story

Ryan Fan

from mohamed_hassan at Pixabay

It seems like I use Venmo to pay for things more than I actually use cash or credit cards. I use the app to pay rent, to pay utilities. to pay back my friends or my girlfriend. I don’t even carry cash anymore. I just use my credit card, and actually, find it a major inconvenience when I do need cash for something — and Venmo is a large extension of that culture.

For people who don’t know, Venmo is a U.S. mobile payment service and app where people transfer funds to each other. Currently, Venmo is owned by Paypal, and in the first quarter of 2018, the app handled $12 billion in transactions, according to Emily Bary at Market Watch. In 2019, Venmo processed $109 billion in transactions. However, it had humble beginnings from two guys who met as freshman roommates at the University of Pennsylvania in 2001.

Kortina started out as a computer science major but then decided to major in creative writing and philosophy. He wanted to maximize his tuition by studying what he wouldn’t get to do after college since he felt like most computer science classes were just programming exercises — he enjoyed discussing books with other students and professors more.

Iqram Magdon-Ismail moved to the United States when he was 14 after spending his early childhood in Zimbabwe, Zambia, and Uganda. At a keynote address at Columbia Entrepreneurship, Innovation, and Design, Magdon-Ismail said he studied theatre and computer science at the University of Pennsylvania, always having an interest in entrepreneurship. In 2010, he was named one of Inc.’s 30 Under 30 in 2010 with Kortina and honored as a “Great Immigrant” by the Carnegie Foundation in 2016.

The two of them, to this day, are great friends and express a great deal of comfort working together. Magdon-Ismail emphasizes the power of the relationship between the two and a desire to work together again. He described the two as “polar opposites with perfect complements.” The two of them clearly have a great relationship, and Magdon-Ismail says their long-standing relationship makes him comfortable being himself.

Magdon-Ismail attributes a large part of his and Kortina’s success at Venmo to long-term consistency and wants to dispel a commonly held misconception that Venmo was a quick, overnight smashing success. He cites a story of Pablo Picasso doing a quick, five second sketch of a lady. It is a brilliant and beautiful sketch. She asks him how much she needs to pay him for the sketch, and he says “$5000,” which flabbergasts her since he didn’t take that long to paint it. Picasso responds:

“It only took me a lifetime.”

Like Picasso spent his whole life learning to paint and practice painting, Magdon-Ismail said his whole life and his experience at different companies all led up to Venmo, even if the app’s simplicity makes it seem like a short project that became very successful. Part of that long-term consistency is attributed to the close relationship between the two.

According to Kortina, the two of them started Venmo because they thought the idea of paying people back with cash and checks was very silly. He thought people should be using PayPal to pay each other back, but not many people used PayPal back then, and PayPal isn’t usually associated with casual use. Kortina and Magdon-Ismail wanted to design something that felt “right” and sat well with other mobile tools, like SMS, Gmail, Facebook, and more.

However, it would be a long road after college before they came up with the idea.

Life before Venmo

During their senior year of college, Magdon-Ismail and Kortina made a college classified site called My Campus Post. Kortina credits the project for teaching them both about grassroots marketing and retention challenges that arise from having products with seasonal use.

However, despite his entrepreneurial mindset, Kortina had trouble finding a job after graduating from college. He thought after a conversation with his mom that “I have no idea what I want to do with my life,” but Magdon-Ismail found a cheap apartment in West Philadelphia. The two of them would go door-to-door to help people build websites and try to pitch the idea to strangers. Most people told them no, and to this day, Kortina’s biggest regret is that he couldn’t close a deal on an amazing Pakistani restaurant named Kabobeesh, that served a chicken kabob sandwich on naan bread for $3.50. They offered to sell the restaurant a site for 100 chicken rolls but failed to convince the store owners.

While working with multiple other startup ideas, Kortina and Magdon-Ismail realized that execution mattered much more than the idea itself. They started a New York City company called, which turned into a casual games company. They left since they weren’t the most interested in games. Kortina and Magdon-Ismail would work at different places (Magdon-Ismail at Ticketleap, and Kortina at for a while before working together again. They started to work together on weekends and work on different startup ideas in the process.

The formation of the idea

In 2009, Magdon-Ismail wanted to move on from Ticketleap, and Kortina moved on from They explored another idea when they went to a local jazz show, and they thought:

“It would be awesome to be able to download this show by sending a text message to this band right now, and then have an mp3 show up in our email.”

The origin of the name “Venmo” came from this idea. In Latin, the root word for “sell” is vendere, while “mo” is for mobile. But a bigger reason they chose the name was that it was short, could be a verb, could be spelled easily, and it was cheap. They looked up the name on GoDaddy, a website for finding a domain name.

The idea then got adapted to money. On one weekend, the two of them were hanging out, Magdon-Ismail left his wallet in Philadelphia while visiting Kortina in New York City. Kortina covered him the whole weekend, and Magdon-Ismail had to write his friend a check back, which was very annoying for both of them — one person had to find a checkbook, while another had to go to the bank to cash a check. They thought:

“Why are we still doing this? We do everything else with our phones. We should definitely be using PayPal to pay each other back. But we don’t, and none of our friends do.”

And so the Kortina and Magdon-Ismail wanted to tackle the problem of paying people back without it being a complete hassle. The only other version of the app was something called Obopay, which was how people could send money to each other through cell phones. However, that product didn’t have the right “feel” and felt clunky.

The execution of making the app

Magdon-Ismail and Kortina started developing a prototype to send each other money over SMS, where people would see messages showing that other people would pay them. To them, it started looking like a news feed containing information about how and where they were spending their time. They decided to capitalize on the social aspect, and they added a code that would make it so everyone would see their friends’ feeds of who was paying who for what. The initial website never showed amounts, just senders, recipients, and a self-made description.

They started talking to investors and were still working part-time at their day jobs. They were having trouble getting investors since there wasn’t much traction for the idea yet. At one meeting, an investor said he was only looking for “billion dollar, home run opportunities.” Magdon-Ismail said, “this will be a trillion dollar company.” While they didn’t have many fundraisers, they did find two entrepreneur advisors who gave them introductions and product feedback. One company advisor, Sam Lessin, became the company’s first investor.

Eventually, sending people money back and forth transitioned from SMS to the Venmo app we know today.

Kortina and Magdon-Ismail then worked full time at Venmo, and it has only been successful from there. Braintree acquired Venmo for $26.2 million in 2012, and then Paypal acquired Braintree for $800 million in December of 2013. After January 27, 2016, PayPal said that Venmo was going to work with select merchants that would accept Venmo as payment, and recently, PayPal announced that Venmo would be allowing people to use cryptocurrency.


People are lazy, and anything you can do to indulge their laziness will be successful. I’m just kidding — but the lesson from Kortina and Magdon-Ismail is to build something that improves people’s lives.

Venmo is one of the most popular apps for electronically transferring funds, especially among young people. From Kortina and Magdon-Ismail, we learn inspiration comes from the most unexpected places, and every part of their journey helped them make the app. Their lackluster startups and projects in college and shortly after college may seem irrelevant, but were priceless learning processes that led them to creating Venmo.

What makes Venmo so popular among myself and my friends is that there’s no fee to send or receive money. That made me wonder — how does Venmo even make money? Well, there’s an option to get money wired from your Venmo account to your bank account sooner for a fee.

But another part of what makes Venmo appealing, especially to young people like myself, is that there’s a social aspect to everything. Venmo is the only app that makes financial transactions and unpaid debts social. I know people generally have mixed feelings about the social feed, but there’s an option to make transactions private. I can see which of my college friends still hang out with each other, and who’s hanging out with who in a time of a pandemic. You can even like and comment on your Venmo feed.

Of course, I think the biggest takeaway is that if you see a problem to be solved, take initiative to solve it. Not every attempt is going to be a slam dunk, but 99.9% of people observing the inconvenience of having to pay back friends or family with cash and checks would have just accepted it. But Kortina and Magdon-Ismail took initiative to make people’s lives easier and more convenient.

So whenever the question “why are we still doing this?” arises, think about how to get people to stop asking it.

Originally published at Entrepreneur's Handbook on November 22, 2020.

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