Me and my friends we got money to spend – Plaid roadmap edition

Plaid is rumored to have raised a massive post-visa-breakup funding round last week. Since lending is something that I get excited about in fintech, here are some product suggestions and ways Plaid can spend that money! Want to own these ideas? Also listed as an NFT, Start bidding!

To organize our discussion, it is helpful to have a mental model of the core constituents of any lending business.

Lending Building Blocks

What follows below is an outline of the use cases and opportunities in each area and initial ideas on how Plaid can solve those use cases. Plaid has the opportunity to be the core provider of data to every lender on the planet. This is the north star worth shooting for.

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2021 Market musings and predictions

Whew, 2020 what a year. I’m glad that it is behind us. What does the future hold for 2021?

TLDR:

  • 2021 most likely a strong bull market – think roaring 20’s.
  • Violent inflation overshoot is the most visible risk, however, black swans are a key risk and nobody can predict them.
  • I’m a reluctant bull – willing to invest in pre-tax accounts, but staying out of the markets in taxable accounts. Wheel option strategy to enhance cash on cash returns.

Let us take a deeper dive. What is going to make markets melt-up in 2021?

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One interface to rule them all | The next frontier in fintech? Part 2

In the last post, we explored what drives an economy (spending) and the levers that a government can use to restart the economy after a crisis (monetary and fiscal). Since 2008 monetary policy has paid the dominant role, but in 2020 fiscal policy is finally making a comeback. Fiscal policy has a direct impact on consumers’ lives as the main objective is to get cash into consumers’ hands so that spending continues unabated.

Fiscal Policy Goals

How to get cash to citizens?

It is logistically impossible for a government entity to show up at every citizen’s doorstep with a truckload of physical cash. Besides the obvious problem of logistics, there are also problems with confirming identities and physical record-keeping. Especially when governments are handing out money, they want to be very particular that only their citizens are getting the cash and there are no cases of freeloading (via fraud, etc). Direct transfers are a politically charged issue – there are always allegations of a slippery slope, nanny state, and communism that get thrown around! You have to get this part right.

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Jedi or Empire | Buy Now Pay Later competitive dynamics

We’ve been taking a journey through the BNPL space, we looked at the history, the product, and the go-to-market. I’d like to close the series with a view on the competition and where I think the industry is headed. Warning speculative discussions and opinions ahead.

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To market to market | How do BNPL players go-to-market?

Continuing the deep dive on the BNPL players, the next thing I wanted to look at is their go-to-market strategies. How do they get their customers? Links to Part 1 and Part 2. A word of caution, all the research and numbers are from an outside in perspective and based on publicly available information. There is a possibility that I’m completely wrong in my analysis!

My simple mental model for go to market is,

  • Who is the target customer? Are there many target customers?
  • What is the narrow sub-segment of target customers?
  • What is the value proposition and positioning for this customer?
  • What are the channels that are used to reach out to this customer? Is there a low-cost acquisition channel in the mix?
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Optimistic PM, Pessimistic PM

“I’ve never seen a monument erected to a pessimist.” – Paul Harvey

We live in interesting times, the world around us seems to be constantly on fire – physically and metaphorically. It’s gloom and doom all around. Morgan Housel touches on this extensively in his latest book, The psychology of money. He makes a convincing argument on why pessimism appeals to our emotions more than optimism. We tend to be more fearful than optimistic as losses hurt more than happiness from gains.

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Old ideas, new packaging – is embedded finance worth the hype?

Sooner or later, everything old is new again

– Stephen King

The thesis expressed today is that financial services are no longer a separate vertical component in consumers’ life. Consumers are going to be better served where they already hang out. So the natural extension for business with a large number of customers is to start offering financial services to their user base. In this model, financial services transition from a vertical component to a horizontal capability that all businesses will offer to their users. Hence the popularity of the term embedded finance.

Is this thesis valid? I’ve been thinking about this for a few years and this post is an attempt to work out a mental model and answer this question.

Short answer – this thesis is wrong. Long answer- it’s nuanced.

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Premature optimization is the root of all evil

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An antipattern that I see in startups constantly is Senioritis. This normally happens when the startup finds some success and wants to upgrade its product and engineering teams. Typically at this stage, new leaders are hired and there is a we need to grow up vibe. These new leaders typically are hired from established companies/startups and bring with them their approaches. Continue reading “Premature optimization is the root of all evil”

Brand Delusions – SMB Fintech edition

We need to have a great brand
– Every startup
Tell me if this sounds familiar. It always begins with a workshop. We all gather in a room and talk about the mission of the company. We talk about who we want to be when we grow up as a company. We discuss how we want our customers to feel when they interact with us, we talk about how we want to feel. There are brainstorming exercises, discussions with word-clouds, and visceral debates on logo design. What is our brand identity? what is our company identity? – deep deep discussions. This culminates with a big fat book with detailed instructions on how the logo should look, what type of font you should use, what type of words to use, and the approved color palette.
 
Does the customer care?
 
Dilbert-1

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