April 24th: FTT+ Q&A's and Virtual Events — Contactless's COVID Boom? — What We're Reading

What’s up everyone, Ian here.

Big week—we had a ton of announcements this week. A lot of new perks are for FTT+ subscribers only. If you sign up now, the first year’s rate is locked in at $25/month. We’re raising rates soon, so sign up today.

Sign Up For FTT+

We launched:

  • FTT Jobs, a career focused newsletter we launched in a partnership with Tom Guthrie and OneJob. FTT Jobs is $5/month but free for FTT+ members. If you sign up today, the first month’s on us. This is something we’ve been thinking about for quite some time, and it seems like it’s resonated with our audience; we already have 200 subscribers and a number of companies filling up our job board, launching soon.

Sign Up For FTT Jobs (First Month Free)

  • Our first Virtual Event on April 30th from 3-5pm, with the cofounders of Rho, Alloy, and the head of product of Better.com. It’s free for FTT+ members, and $25/ticket for non-subscribers. We’re going to have a different topic every month, and this month’s it’s Shipping Product During COVID-19. All of these companies have dealt with dramatic shits to their product roadmap, and Julie and I are gonna be diving into explore how they handled it and what they’ve learned so far.

RSVP For Our Virtual Event

Sign Up For FTT+

  • Monthly Q&A’s. Our first one, with FTPartners’ founder and CEO Steve McLaughlin, drops on Tuesday, April 28th. This is exclusively for FTT+ subscribers. I’m so hyped for this; all my homies have been making jokes all week because they know I’ve admired Steve and his business for years. FTPartners is the only investment bank that focuses on fintech, Steve’s been widely acknowledged as one of the best bankers in the tech industry, and he’s taken a bootstrapped company from 0 to a (reported) $400 million annual revenue business over the past 17 years. Absolutely legendary. Also his parties at Money 2020 sound sick—Pearl Jam and Snoop Dogg played at the last one, apparently.

Sign Up For FTT+

You can read more about our announcements in detail on Medium.

Playlist of the Week

I’ve now given playlists its own section, because it’s *worth it.*

I love UK grime rap, which is the focus of this week’s playlist. Not sure how exactly I got into it, but it probably started with me listening to Skepta. Skepta’s had some songs that blew up in the US, like “That’s Not Me,” and “Man,” and has also linked up with Drake in the past, on Drake’s “More Like” album.

There’s a lot of Skepta here, but also some other artists like Dave, Chip, and Burna Boy.

The News—By Paige Doherty and Ian Kar

Lending Club Layoffs

Lending Club, a SF-based provider of loans, is laying off 30% of its staff (460 employees, including the company’s president) ahead of quickly dropping revenue expectations. The forecasted losses are a result of investors’ degrading trust in consumer’s abilities to pay off debt in the wake of coronavirus-induced job losses.

The COVID crisis has been absolutely brutal on fintech lenders, and consumer focused one’s in particular. We heard really early on in the crisis that Lending Club had closed off their API’s for partners that would push personal loans, as a way to limit the amount of loans being issued. There’s a lot to dive into here which we’ll probably get into some other time, but basically, if lenders aren’t originating loans, then there’s no revenue generated, so lenders have been getting hammered. Luckily Lending Club has a lot of cash, so they can hypothetically weather a storm, but it won’t be easy. 

Fintech VC’s Talk COVID-19

According to 8 top fintech VCs, the VC investing pace is slowing for a variety of reasons, while investors encourage ‘survival mode’ among their portfolio companies. They’re seeing diverging effects, with some portfolio companies showing rapid growth, some in steep decline, and some flat. Brendan Dicksinson from Canaan remarked, “2020 could be a lost year.”

We’ve seen a lot of documents and memos from VC’s in the fintech space encouraging companies to basically halt hiring and unnecessary spending like marketing. It makes sense—the goal should be to basically stay alive during this time, and VC’s I’ve spoken to aren’t really expecting eye-popping growth and revenue numbers now. 

Facebook Looks To Indonesian Partnerships for Facebook Pay

Facebook is partnering with three Indonesian fintech firms in advance of the pilot of their unified payment product Facebook Pay. The three companies, Gojek’s GoPay, fintech startup OVO, and statebacked LinkAja, in partnership with Facebook will enable pilot consumers to make in-app purchases in Whatsapp and Instagram. 

We’ve written a bit about Facebook Pay, and it seems like the strategy might be more international focused than I expected. That does make sense; there’s already a large demand for online commerce through Facebook compared to the US and established behavior around purchasing items inside “super-apps.” In addition, Facebook and its network of companies have a strong brand internationally, where in the US, things have taken a hit over the past year around data and privacy issues like Cambridge Analytica (remember when this was a big deal? Simpler times.) 

Stripe Opens Up Card Issuing, and More

A week after Stripe’s $600m investment announcement, it rolled out three new announcements: its new self-service card-issuing services for businesses, a broader infrastructure of local payment network infrastructure, and machine-learning tool to better analyze fraudulent charges. According to Stripe, these new features will help support the surge of businesses turning to ecommerce. 

Even Financial Buys Life Insurance Startup LeapLife

Even Financial acquired LeapLife, a digital life insurance provider. Life insurance agencies are now seeing a spike in applications as consumers seek coverage. Even’s an interesting business—it provides an API for companies to easily sell branded financial products on their platform. Now, Even customers will be able to sell life insurance to their customers too, which is traditionally not a business that has thrived online, but my guess (and Even’s, I’m assuming) is that that’ll change. 

Only 6% of life insurance sales in the US takes place online according to Even’s CEO Phil Rosen, but the ingredients are ripe for that to change. First, COVID has put things like life insurance and estate planning/wills top of mind for a large swath of Americans (companies like Trust and Will have seen a ton of interest over the past few weeks.) Secondly, traditional sales channels are virtually shut down with quarantines and shelter-in-place orders all around the US. Now, LeapLife doesn’t have to worry about distribution; it can focus on developing more insurance products and Even, as a B2B2C product, will find the right distribution partners to get it into the hands of users. 

Guest Post Of The Week

Ayo Omojola is someone who’s writing I’ve admired for quite some time. His thoughts on vertical neobanks and banking-as-a-service over the past two months were extremely thought provoking. 

We’re honored to cross-publish something he wrote recently on focusing inside large organizations, which is something that you don’t really think about, but can make all the difference. We published it in FTT Jobs earlier this week, which you can read here, but here’s a link if you didn’t get a chance to read. 

Read "Focus is the scarcest resource"

What We’re Reading:

I’ve been doing research on investment memos recently, for semi-obvious reasons. There isn’t that much out there. I found a few posts that were really insightful, but it seems like the strategy might be to create your own investment memo for companies you’re interested in. (If you’re interested in learning more, email me at ian@fintechtoday.co.) 

When I was in product (and, obviously running product at Fintech Today for things we’re working on), I was a firm believer in product specification documents, or specs. We have our own spec template here that I may publish eventually, but I think creating documents around your thinking helps in a few ways: a) it can help make your own vision and concepts more concrete and concise, b) you can find holes in your argument much more easily; if you can’t tell a story around it, it’s not ready to be developed and c) you can go back and see what went wrong and learn from your mistakes in the past. 

On the investment side, here are some docs that I’ve been reading: 

There’s been *so much chatter* about how the future of payments is contactless because of COVID and how no one wants to touch anything anymore. Usually if a lot of people say the same thing, I run the other way, but I’ve been a firm believer in contactless payments since Apple Pay (its what actually sparked my interest in fintech.) I do think it’s going to be easier said than done—there’s still no user benefit around using contactless payments besides the possibility of contracting COVID like rewards, for example. But more importantly, there are two big issues that I see with this theory: 

  • Contactless payments aren’t truly contactless: you still need to enter your PIN code on the terminal, or sign a receipt with a pen. The Bank of International Settlements, an institution owned by 62 central banks, published a report on this recently, and cited a scientific report that indicated “the probability of transmission via banknotes is low when compared with other frequently-touched objects, such as credit card terminals or PIN pads.

  • This just further exacerbates the problem around the unbanked and underbanked. You can’t get a contactless payment method if you don’t have a bank account. There are still millions of Americans who are unbanked, and this evolution will further disenfranchise them. 

It’ll be important to see how this develops. In the meantime…

Tweets Of The Week

Interesting note and article that Seema highlighted for me…totally makes sense.

Listened to bits and pieces of this interview, thanks to Sar posting this. Great highlights in the screenshot here too.

A lot of smart people I respect posted a link to this article on the future of internet companies. As the internet matures, so do the companies that power it. This can have a lot of effects, which John Luttig analyzes in this piece, highlighting aspects like hiring, growth, financing, and other areas. Def worth your time.

Somehow, Justin Overdorff summarizes the effect an economic downturn can have on small businesses and its relationship with larger companies in a tweet. Helping small businesses manage accounts receivables risk (AR, in Justin’s tweet,) will be important in the new future.

I feel like Jai’s been in Tweets of the Week for like 5 weeks straight or something…he probably should get some kind of prize from us. But totally missed this App Annie report, and Jai posted some great highlights:

Funding Of The Week

Digits, a fintech startup focused on expense management for companies, launched this week and announced a $22 million Series B round led by GV (Google Ventures.) The company previous announced a $10.5 million Series A led by Benchmark and features 72 angel investors (yes, 72.)