By Evan SparksIn 1965, a 36-year-old financial salesman named Dee Hock found himself in rainy Seattle, unemployed, depressed, with three young kids while his wife pursued a long-overdue college degree. He had worked for 16 years in various nonbank financial companies across the West Coast and had no fire for another move.
Hock decided to get a steady bank job—doing what didn’t matter—and “retire in place,” as he puts it. From that point of view, he had the bad luck to end up at Seattle’s National Bank of Commerce (a forerunner of Rainier National Bank, which would eventually merge into Bank of America), where the bank president had different ideas for his new management trainee.
Three years into his job, the president called Hock into his office. The bank was licensing BankAmericard, the first general-purpose credit card, from Bank of America. Would Hock take a break from his work to lead the launch? Hock had no use for credit cards—he and his wife had years before sworn off all non-mortgage debt—but he agreed to give it a shot.
Hock and a colleague flew to San Francisco for training. What they found was a mess. Individual banks like BofA had proprietary control of card networks and participating merchants, and there was no harmonization. (One bank, Hock reports, issued its cards with a hole in the center and a steel peg on the merchants’ imprinting device—to keep those merchants from taking competitor cards.) The biggest obstacles were in clearing the sales drafts across multiple banks, which were sent via the mail, and in incentivizing the merchants’ banks to process transactions for card-issuing banks. “Back rooms filled with unprocessed transactions, customers went unbilled, and suspense ledgers swelled like a hammered thumb,” Hock reflects. Counterfeit card fraudsters and scam merchants sensed an opportunity, and anti-fraud measures slowed the clearing process down even more. When Hock’s bank joined the BankAmericard network, the card transaction back end was disintegrating.
Hock quickly became part of an ad hoc committee of fellow BankAmericard licensees seeking to strengthen the system. They began to brainstorm an entirely new approach to card acceptance and settlement—a distributed, decentralized network with clear rules governing the system and all participants having an equal voice and vote. Hock barnstormed the country, persuading BankAmericard participants—and Bank of America, which despite the strong fee revenue it was collecting was running up against the limits of what could be accomplished—freely to join the new network. In 1970, the new organization formed. Today it is known as Visa.
Successes followed swiftly, including the first electronic transaction authorization, clearing and settlement process systems in 1973, the international launch of the Visa network in 1974 and the first debit cards in 1975. Hock would lead Visa until 1984, retiring to a second career of promoting what he calls “chaordic” networked organizations that combine chaos and order in the pursuit of growth.