November 10th: Unpacking the Apple Card Credit Limit Fiasco— Rumor of the Week

A new Moves of the Week section, & sign up for our Discord Chat too

Happy Sunday everyone, Ian here. It’s really effing cold in NYC. I’m already contemplating where I’m going to escape to after the holidays. I grew up on the East Coast and ever since I was a kid I hated the cold. 

I’ve been oddly in a rut this week, mainly cause I’ve been overthinking a bit too much—something I do often and am working on. I did do something productive over the weekend: I made a 🔥 rap playlist.


Going to try something new this month btw: A Discord chat! It’s probably going to be a digital office hours, where you can ask questions and we can talk about fintech things. I’m still looking for a few industry experts (around 3-5); if you’re interested, email me at iankar874@gmail.com.

If you’re unfamiliar, Discord is basically a live group chat app online. It’s a lotta fun. Fill out this form if you want an invite!

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This issue of Fintech Today is presented by Galileo Financial Technology

Galileo had some big news recently: the firm announced a $77 million Series A, led by Accel. The stats are wild: $26 billion in annual payments processed—a 130% increase from the year before. Galileo powers Chime, Monzo US, Transferwise, and more. As a core banking product, Galileo allows their customers to develop high quality fintech products with some unique flexibility for their clients.

Galileo’s also hiring a product owner for API’s and developer tools.

“We need a product owner to help build the API platform and developer tools that enable our clients to integrate with Galileo. You will collaborate with our engineering, design, and customer-facing teams to discover user needs and build innovative solutions. As a product owner at Galileo, you will be empowered with ownership, given autonomy to make decisions, and free to explore new ideas.” If you’re interested, reach out to Egan Anderson at eanderson@galileoprocessing.com.

To learn more about Galileo, click here. If you’re interested in working with Galileo, email eanderson@galileoprocessing.com (and mention Fintech Today!)


Viral Tweet About Apple Card Leads to Goldman Sachs Probe—By Bloomberg’s Sridhar Natarajan and Shahien Nasiripour

Ok, so I swear I have other interests in fintech besides consumer payments (they were how I first got interested in the industry though, back in 2014… I’ll tell y’all that story another time.) 

But honestly, it’s the most interesting and there’s always something going on. Like this tweetstorm about Apple Card from David Heinemeier Hansson, the co-founder and CTO of BasecCamp, and how it was “discriminating” against his wife by providing her a lower credit limit, even though they shared assets and had similar financial details, and she had a better credit score.

Ugh, I hate this. Not just because it’s probably wrong, but I’m now forced to defend Goldman Sachs which is… something I don’t do *that* often. Everyone knows I’m not the biggest fans of banks — a mentor told me recently that I shouldn’t even bother applying for jobs at banks because they’d never hire me after a quick Google Search which… is fair — but this accusation that Goldman’s discriminating on credit limits is incredibly unlikely. 

I spent most of my Saturday on the phone with friends that know a lot more than me about credit cards and here’s what I learned: credit card approvals and credit limits are really effing complex. 

There are a few main things to consider here, but we just gotta get this outta the way: There’s no way Goldman Sachs nor Apple — two of the biggest companies in the world — didn’t vet the shit outta their cobranded credit card prior to launch. Goldman’s not made up of idiots that just skirt regulation whenever they want. And Apple isn’t the type of company to just allow gender discrimination (or any other type) on a financial product they put their name to. And, as Aaron Suplizio pointed out, that’s also very illegal.

How likely do you think it is that Apple and Goldman Sachs rolled out an illegal credit card? Odds are slimmer than the Warriors winning the championship this year (really damn slim, sorry Warriors fans).  

(Publisher’s Note: Before anyone says that GS did this during the financial crisis, sure, but that was more around sketchy and risky financial maneuvering that they knew would pose a systemic risk to the financial system, but not something that’s *outright illegal.* Mortgage securitization is still happening today.)

Also, discrimination is a tricky thing of course, but there have been a few instances (also on Twitter) that show that the opposite of DHH’s experience, namely from my buddy Alex Cohen. 

The second bit: I’m not DHH’s accountant nor am privy to his financial situation but it’s safe to assume that the founder of a successful software company is more wealthy than the average person. But the Apple Card was designed to be a mass market credit card for the average American. Retrofitting that for the ultra-wealthy—like DHH, Steve Wozniak, and others—is difficult and something that’s not really scalable. And yelling at GS customer support people won’t do much—they’re not privy to all the details, (like, you know most customer service teams.)  

The most likely issue here is around spending behavior: credit card limits are designed to enable spending within your means. If you spend $5,000 a month, what the hell are you going to do with a credit card with a spending limit of $30,000? If anything, those credit card systems would be irresponsibly: they’d be enabling users to potentially fall into debt. These are also unsecuritized credit lines. A bank isn’t and doesn’t want to be in the business of repoing assets to pay back credit card debt, so its unlikely things like assets matter that much. 

Lastly: Every bank has a team rigorously testing the system to prevent these kinds of issues and unintended biases, as the ex CEO of Simple Josh Reich points out.  

There are a thousand nuances I’m not mentioning here. But the NYDFS investigation will probably end this way: “After a careful review, we’ve come to the conclusion that Goldman Sachs and Apple did not discriminate against certain criteria, but they can improve in the following ways:...”

One area I’d improve is around transparency and messaging. If you track the replies on DHH’s tweetstorm, there are a number of other people that have the same issue. And it doesn’t seem like they’re asking for much—they just want a bit more visibility into the decision making around the credit card approval and credit limit process. The way financial institutions are designed now don’t allow for that: credit underwriting programs are inherently propreitary and making that public would be akin to Google making it’s search ranking algorithm public. But just because something’s done one way doesn’t mean it’s right. Even fintech startups in the credit world haven’t been into the idea of transparent underwriting, but in a world where everything’s becoming transparent, it not only makes sense but it seems like something that users want too. 

All this brings me to a larger point too. One of the hottest things to talk about in fintech nowadays is about how non-fintech companies will be fintech companies. Which, I think, to some extent is true. But this hoopla around the Apple Card discriminating against certain users isn’t first time a financial product from a tech company has gotten ripped apart in the press/Twittersphere. Two examples come to mind: Facebook and its Libra debacle, and Uber and its short-lived car lending business. The reputational effect a financial product has on a company’s brand might be one of the biggest risk factors non-fintech companies have to consider. If you take a look on Twitter, many, including DHH, are blaming Apple, not Goldman. 

Money is inherently emotional, and the systems that power it are inherently opaque and that won’t change anytime soon. And because finance is so personal, it’s incredibly hard to develop a product that satisfy every single individual user. But being transparent about your process—underwriting or otherwise—develops a unique level of trust with your users and, in today’s world, is something that users expect across the board.

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Rumor of the Week

I have zero idea if a) Michael Bloomberg will run for president b) if he’ll sell Bloomberg if he does. I’m not a reporter so I don’t do that kinda stuff anymore. 

But Ryan Selkis, founder of Messari Crypto, wrote in his weekly newsletter that there were unsubstaniated rumors about a big company buying up Bloomberg LP prior to his presidential run, with Microsoft in the running. 

I’ve been fascinated with Bloomberg for years: when I was a reporter, I really wanted to work there (if I did though I probably wouldn’t have gotten into product, which I think was a better move in the long run). It’s also one of the first financial technology products ever if you think about it. 

When Merrill Lynch sold its 20% stake in LP in 2008 for $4.5 billion, the company was valued at $22.5 billion. If Bloomberg were to sell Bloomberg LP, I’d hypothesize there would be way more suitors than Microsoft. Course, with $135 billion in cash, they could offer quite a bit. But so could other tech companies. 

The real value of Bloomberg LP is the terminal business—it serves as a data repository for almost every financial professional, and a messaging platform as well. In some ways, it was a professional social network before the concept of social networks even existed. 

There’s also the fact that LP has dominated the finance industry too. For years, tech companies have been trying to develop technology tools for financial services firms. Since, you know, they have a ton of money to spend. But for some reason it hasn’t taken off—using Bloomberg Terminals as a wedge to sell things like cloud software or other tech products would dramatically reduce the customer acquisition cost and the sales cycle too. 

Tweetstorm of the Week

If you’re a consumer fintech company, growth is probably the top thing on your mind. How to grow faster while maintaining efficiency (read: how to grow without spending millions of dollars on TikTok ads) is a difficult, nuanced problem. Fintech is a bit unique too, because of the amount of information users need before they can actually use the product. 

This tweetstorm from Lenny is great because it covers so much about growth, from the high level to the granular. It’s from the end of October, but definitely worth checking out. 

Moves of the Week

This is a new section! Yay! People moves jobs pretty frequently in Silicon Valley, and in fintech. Here we highlight some people who got cool new jobs:

Michael Gilroy is now a GP at Coatue, investing in fintech and SaaS. He was previously an investing partner at Canaan Partners, and invested in companies like Bond, .

Follow Michael on Twitter

Allison Barr, who was on the Uber Money team and is an active angel investor in companies like Avenify, joined Fast as its COO. Fast is focused on a super..fast…login and checkout experience and is hiring a lot.

Follow Allison on Twitter

Can Duruk cowrites Margins, a great newsletter on the intersection of business and tech (and also hosted on Substack). He just joined Very Good Security as a product manager (VGS also recently raised a round too.)

Follow Can on Twitter

Sam Gerstenzang joined Stripe to lead Stripe for Checkout and is moving to NYC (Stripe’s hiring a lot in NYC, btw). Sam used to be the cofounder of Umbrella, a membership service for people 65 and older.

Follow Sam on Twitter