Square upgrades Cash App into a payment processing powerhouse, completing the loop between the consumer and merchant side of the house. Goldman Sachs acquires GreenSky, adding a lending business at the point of intent. This analysis connects these symptoms into a framework explaining the increasing integration between commerce and finance, and the increasing role that demand generation plays. That in turn explains how the attention and creator economies interconnect with financial services.
The world is on fire with talk about Uber going public. First, let's talk about who makes money and when. It is becoming a truism that companies are going public much later in their vintage, and as a result, the capital that fuels their growth is private rather than public. The public markets are full of compliance costs, cash-flow oriented hedge fund managers, and passive index manufacturers -- not an environment for an Elon Musk-type to do their best work. Private markets, on the other hand, are generally more long term oriented with fewer protections for investors. This has a distributional impact. Private markets in the US are legally structured for the wealthy by definition and carve-out. As a retail investor, your just desserts are Betterment's index-led asset allocation. As an accredited investor, you get AngelList, SharePost and the rest. I am yet to see Uber on Crowdcube. Therefore, tech companies are generating inequality both through their functions (monopoly concentration through power laws, unemployment through automation), and their funding.
In this analysis, we explore an overarching framework for the M&A activity in the fintech, big tech, and crypto ecosystems. We discuss acquihiring, horizontal and vertical consolidation, as well as the differences between growth and value oriented acquisition rationales. The core insight, however, is about the arbitrage between the fintech and financial services capital markets, as evidenced by the recent transactions for Starling and Figure.
How do the Americans and the Chinese have such different ethical takes on privacy, self-sovereignty, media, and the role of government? We can trace the root cause to the DNA of the macro-organism in which individuals reside, itself built over centuries and millenia from the collective scar tissue of local human experience. But there is more to observe. The technology now being deployed in each jurisdiction -- like social credit, surveillance artificial intelligence, monitored payment rails, and central bank cryptocurrency -- will drive a software architecture into the core of our societies that reflects the current moment. And it will be nearly impossible to change! This is why *how* we democratize access to financial services matters. We must be careful about the form, because we will be stuck with it like Americans are stuck with the core banking systems from the 1970s. But the worry is not inefficiency, it is programmed social strata.
At $13 billion of revenue and 800 million users in 2016, Office 365 roughly generated $20 per user. That's like Monzo, but with the user foot print of Ant Financial.
You might think the comparison is daft. But let's dig a bit deeper. Excel, and spreadsheets more generally, are the default behavior for managing personal finances. Even for financial advisors, who are supposed to be the precise niche leveraging financial planning software, Excel is the default "do nothing" option. If you are not paying for digital wealth software as an advisor, you are doing it in Excel.
Finance is everywhere, and everywhere is finance. Smart city supply chains, self driving car insurance, video game real estate markets -- no matter which frontier technology you touch, it will have embedded implications on the delivery of financial services. And why wouldn't it? Like the use of language, finance is a human technology that allows societies to coalesce and compete with one another (in the Yuval Harari sense). It lifts people out of poverty and into entrepreneurship through microloans, providing generational sustenance for their families. And of course it also throws them into pits of corruption and greed, as they drink too deeply from the rivers of securitization and political power.
But enough poetry! I want to talk about augmented reality, attention platforms, and the re-formulation of payments and lending propositions in a global context.
This week, we look at a breakthrough artificial intelligence release from OpenAI, called GPT-3. It is powered by a machine learning algorithm called a Transformer Model, and has been trained on 8 years of web-crawled text data across 175 billion parameters. GPT-3 likes to do arithmetic, solve SAT analogy questions, write Harry Potter fan fiction, and code CSS and SQL queries. We anchor the analysis of these development in the changing $8 trillion landscape of our public companies, and the tech cold war with China.
In this conversation, Max Friedrich of ARK Invest, Will and Lex break down Ant Group’s highly anticipated IPO.
Ant, a spinout from Alibaba and the parent of Alipay, one of China’s leading payments companies, filed papers to IPO in Shanghai and Hong Kong.
Max, Will and Lex dig into Ant’s business, from the origins to today, discuss growth opportunities and potential headwinds and explore the multi-faceted relationships between Ant and other big tech companies and national governments.
We cannot understate how impressive Ant Financial has become, connecting 700 million people and 80 million merchants in China, with payments, savings, wealth management and insurance products integrated in one package. The company also highlights the likely road for traditional banks — as underlying risk capital, without much technology or client management.
Facebook is building towards a Metaverse version of the Internet, in both its hardware and software efforts. What are the implications? And further, how does one acquire status, work, and social capital in such a world? We explore the recent NFT avatar projects through the lens of Ivy League universities and CFA exams to understand some timeless cultural trends.
