Jordan – your point about cap table management is a pretty interesting one (and actually is the basis for Nasdaq’s “Linq” project: http://www.coindesk.com/hands-on-with-linq-nasdaqs-private-markets-blockchain-project/). However, one issue I’ve had with a lot of the blockchain startups out there is that for most of these transactions, trust is already built in. As a result, there isn’t really any reason why the ledger needs to be decentralized – you could have the issuer maintain a single record of share ownership. Putting “blockchain” in your pitch deck does help get you a meeting with VCs though….
Cool post! Just wanted to comment quickly on the finance / investing use case – we looked at a few companies that do something similar (https://orbitalinsight.com/ and https://www.rsmetrics.com/). We ended up passing on the deals due to an inherent flaw in the market size – although this data can be really valuable, that value dissipates the more widely you distribute it (if everyone has the edge, it’s no longer truly an edge). As a result, I find the intelligence use cases a lot more compelling – interested to see how this evolves.
Awesome post – it seems like Goldman is certainly leading the charge in FinTech among the major US banks.
What I find most interesting about all these moves, however, is how they target a fundamentally different type of customer than Goldman has typically gone after. Prior to the GE Capital / Marcus announcements, the firm’s only retail presence was focused on ultra-high net worth clients (normally $10M+ in assets). Though positioning as a technology company may help them attract talent and younger customers, I wonder if the core PWM business views these moves as dilutive to the Goldman brand.
The point about Open Source is really interesting too – banks have been talking for years about open source, but little has come of it (https://www.ft.com/content/6ee1921c-f14f-11e1-a553-00144feabdc0). I wonder if part of the reason is the approach – to access Marquee, you have to jump through a few hoops to register. Contrast this to a traditional open source project, where the code is easily accessible and open to anyone on GitHub. I suspect most developers who contribute to open source projects will view the Marquee project with a bit of skepticism as a result.
Awesome analysis here! Totally agree with your conclusions about product innovation and talent.
One thing that I find really interesting about Stripe and Braintree is in the nature of their customer bases. Stripe’s revenue is directly tied to the success of its customer base, which is predominantly comprised of other tech startups–some of these will ultimately fail, and some will scale and drive a lot of value for Stripe. It’s unclear if Braintree would have done as well as it did without signing up Uber and AirBNB early on, for instance. As a result, I wonder if Stripe is spending any time optimizing its outreach to focus on the most high-potential companies – almost a “venture capital” approach to customer acquisition…?
To your point about product innovation, I think Stripe is actually leaving a lot of money on the table in providing additional software services. One of our portfolio companies, Recurly, has built a pretty nice business by providing recurring billing services on top of payment gateways like Stripe and Braintree – business that Stripe could be doing just as well.
Thanks for a great post!
I agree with FFF and AC above in that I don’t see Venmo as a threat to banks for a few reasons. First, there isn’t actually a lot of money in P2P transfers (except for those with a cross-currency component) – Venmo doesn’t charge for the service, nor do banks through the ACH network. Also, most Venmo users fund their transactions using a debit card-linked bank account, so the banks still maintain their customer relationships / deposit bases. I think the biggest opportunity for Venmo is in facilitating merchant payments, where they will probably charge the industry standard 250-300bps on transactions – but even here, the threat is to merchant acquirers like First Data and FIS, not to banks per se.
What I’m interested in seeing is whether Venmo ends up rivaling the volume of its own parent company (PayPal), and how the two brands coexist in the future.
Awesome post – I think you captured a lot of the threats and opportunities perfectly here. A couple of comments to add from the FutureAdvisor / Fidelity…
First, I thought it was interesting to read your comment on changing the customer acquisition mix. At FutureAdvisor, the marketing team started off as digital-only, primarily sourcing investors through content marketing, SEO / SEM, and Facebook in particular (spending ~$500 – 600 to acquire a customer worth ~$5,000 in lifetime value). However, they realized over time that these acquisition channels didn’t scale, and as a result had to broaden to radio and other offline advertising–I suspect that Betterment may have seen something similar with its push into TV.
One thing that will help their asset gathering in the future is the new business lines they’ve launched (e.g., Betterment for Advisors and Betterment for Business) – financial advisors and retirement plans are both huge markets, and few other roboadvisors have made as much progress in targeting them. These lines may be what ends up differentiating Betterment over the long run.
Either way, Betterment has a long way to go. They listed $6.1B in AUM as of their last ADV filing, and at 25bps are earning ~$15M in revenue per year; we estimated they would have to get to at least $50B in assets the reach IPO scale. They’ve already raised $200M+ in VC funding at pretty high valuations, so I’m skeptical they’ll be able to get there without a down round in the future.
Fascinating post – I was surprised by the sheer scale of Apple’s sustainability program (I had no idea they were the world’s #1 owner of solar farm, for instance).
I feel like Apple is in a unique position to take the lead in promoting sustainability–they are one of the largest and most well-capitalized companies in the world, and I would imagine the core US customer base skews towards the wealthy urban consumers that care deeply about the sustainability of the products they use. However, I wonder if their competitors (in particular, Xiaomi) are operating with the same sustainability agenda in mind, and whether or not Apple can remain cost competitive if not.
Thanks for the great post. Ultimately, I agree with Kelly’s cynicism regarding the lower emission car line–it is clear from the success of Tesla, BMW and others that there is a lot of consumer demand for electric cars, and Ford’s play here may be more business-oriented than altruistic. What surprises me is that Ford isn’t making the same types of investments in supporting electric car infrastructure as others in the space (e.g., Tesla’s Supercharger network).
Regardless of the cynicism about their products, I do think Ford’s improvements to internal operations represent a great example of how a company can take the lead in addressing climate change, and they have been fairly rewarded with PR and goodwill to that end.
Really cool post – like Alec, I don’t think many people truly consider all the IT infrastructure that supports the average Netflix-binge session…
The one solution that seems immediately appealing is the idea of offshoring datacenters to take advantage of lower cost power sources (e.g., iceland). The challenge here seems to be twofold–first, will consumers be willing to accept the incremental latency in their applications? Is there a way to solve this problem by storing the most important types of content closer to the consumer (sort of like the Akamai Content-delivery-network model)?
Second, I wonder if regulation poses an unnecessary roadblock to offshoring data centers. For instance, EU data protection laws require that personal data is stored locally within the EU (or in third country datacenters that comply with EU standards – but few cloud providers meet these standards: https://www.skyhighnetworks.com/cloud-security-blog/74-of-cloud-services-do-not-meet-european-data-residency-requirements/).
Great post – based on Dan Routh and Ship Mate’s reaction, I’m left wondering if there’s a policy-oriented angle to this question as well. A good example is the National Flood Insurance Program, a public-private partnership run by FEMA that imposes flood-plane management guidelines on communities and insures property owners against losses, up to a certain cap. Perhaps similar programs can be put in place for other types of severe weather events as well (although of course, the irony is that any legislation to expand such a program would require at least a tacit admission from politicians that climate change is real).
To Dan’s point about where Allstate chooses to do business, I am reminded that often those who are most prone to climate change-related damage are the ones least capable of recovering from extreme weather incidents, as lower-income families are least likely to invest in improvements to their properties and are unable to easily move to lower risk areas. I realize it is not Allstate’s responsibility to protect these customers, but if not private insurance, then who?
Interesting post! My biggest question is related to competition and first mover disadvantage in the airline industry–which seems somewhat reflective of the broader debate around who should bear the cost of achieving carbon neutrality. Is American Airlines unique in facing this issue due to the age of its fleet or its routes? Do some airlines (in particular, the gulf-state sponsored airlines like Emirates and Qatar Airways) have a natural advantage in being able to internalize costs instead of passing them on to end consumers?
One point I had about the analysis above – the fleet and route optimizations you mention seem like it they would result in a positive ROI, regardless of climate change regulations (it strikes me that “dynamically adjusting which planes are scheduled on which routes and trying to optimize the number of seats on that route” is something AA should be doing anyways). I wonder if climate change is then just a catalyst that allows AA’s management to sell new capital and operational projects to its investors and other stakeholders.