FinTech’s Zeitgeist




Recent conversations have led me to think that some of the zeitgeist of fintech is changing.

I think the focus on the hype and funding levels is shifting as both startups and mid-stage firms are pivoting from aspirational, even naive plans, to more strategic conversations.

For me, the decision of FutureAdvisor and its investors to fold its cards is but one data point. It’s arguably been both a case of capitulation on both sides, recognizing the challenges to achieve scale, and the difficulty of innovation at incumbents.

honest dollar

More than ever, it’s a card game, and playing your cards right can mean holding them close to your vest. The CEO of Honest Dollar, for example, spoke candidly on the gap between what people think they’re building versus what they’re actually building.

There’s smart and right out of Steve Jobs playbook. There’s a time and place for putting it all on the table – and it’s best not to do so too early.


I wasn’t able to attend the recent Finovate event in New York due to a last-minute conflict, but was able to see themes from afar and through conversations with those in New York.


Mobile continues to be the key driver of the conversation. As Karen Webster, one of the most compelling voices on payments today, says: “More than any other, mobile is the ecosystem that has given rise to the sea change taking place in payments today.”

As she wrote on the @PYMNTS blog: “You can’t talk FinTech without talking payments, and you can’t talk payments without talking FinTech. They’re an inseparable marriage.”

I thought it was interesting that we both had seen Sprint Money’s partnership with Urban FT was one piece of news from the event.


As mobile gurus like Benedict Evans point out, although we in the US don’t often grok it, outside the US, telco companies operate more like banks or have a closer relationship with them.

In developing markets, phones can serve as the de facto means of payment. It will be interesting to see if the model will come to the US.

I think it will be a challenge given the Sprint brand and other options in the US, but demographic changes and aversion to banks might make it work in certain segments.


Payments News

Outside the marketplace lending space, other big news was the huge growth in payments processed by PayPal‘s Braintree unit. Just two years after its acquisition by PayPay this week it announced its authorized payment volume will be $50B this year.


Impressive, but with that growth factored in, the stock is still trading broadly flat to down from its IPO in July. The open question is whether the Dan Schulman can get PayPal to a place where it can compete with Stripe.

It’s interesting that Dan’s professional career includes little time in financial services (with time at AT&T, Sprint and Virgin Mobile vastly exceeding his time at American Express). I wonder what Dan thinks of  Sprint Money? I suspect his attention is elsewhere.

Only about 1.6% of retail purchases are made online, though a majority research prices online or with our phones before making a purchase decision. That behavior may be changing….

Recently Stripe announced Stripe Relay, which reduces friction for in-app purchases. It’s big news, and could usher in more online and in-app purchases over time.

stripe relay

The New Zeitgeist

Today’s zeitgeist is shifting from how big the opportunities are to being smart and strategic. (For that reason, there was a wariness about many startups at Finovate this week.)

Honest Dollar’s whurley going beyond what many think are its modest plans is one example. Being ambitious and holding your cards close is the mark of a company you want to work for – and a startup that the best  venture firms want to back.

I like the story he tells of an employee at Honest Dollar being asked what he’d done to achieve a big win for the startup, replying: “My job,” and walking away.

So here’s my advice to startups: don’t get caught up in the hype; focus on the job; and don’t show your hand too early.

It’s a smart strategy that will work better than raising too much, too soon and tilting at windmills. Remember, it’s business – you’ll need to think a few moves ahead.

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Despite Apple Pay Buzz, Don’t Forget Venmo

After hearing more than enough chatter about ApplePay, not to mention bitcoin (and the crucial distinction between Bitcoin and bit coin) at Money 20/20 last week, it may be time to shift gears to more of focus on the consumer.

I’m not targeting the same topics covered by magazines on the payments industry or banking technology. I’m inspired by sites, such as Jason Clampett’s that covers travel in a unique way by blends an insiders view (i.e. what people who work in travel biz) with what consumers want to know.

OK, so what’s interesting to consumers? Well, although most of the press has covered more recent entrants (ok, one especially big new entrant based in Cupertino) to payments, I think there’s a lot to say about consumers and Venmo.


The service launched in 2009, and went live to the public about two and a half years later after shaking out in beta, seems to be tracking its projected growth rate. As reported by Business Insider this summer, Venmo is picking up traction:

Venmo vs. Starbucks

So, what started with students in their early 20’s is shifting to other demographics and usage is evolving from peer-to-peer (“I owe you $20”) to wider retail use in places like Starbucks (see above).

Helen Jewitt, who looks at in trends in financial services for Wolf Ollins, a leading brand consultancy, says that “everyone is using Venmo in San Francisco” and making paying by check look like whipping out your BlackBerry 9900.

As San Francisco sometimes goes, so goes the Nation? Square and Google Wallet are in many ways ahead from a brand and reach perspective, but Venmo is social and has clearly established itself as one of the services to watch in mobile payments.

This isn’t the place to find the latest product reviews, but I recommend the excellent this year’s WSJ review of the category. Note:  Square has been catching up this fall with features (such as pay by text, evolving last year’s payment innovation, where you could simply email someone and cc to transfer money).

What’s telling is after PayPal acquired Braintree last year, instead of rebranding Braintree (or its Venmo product), PayPal continued to use the more credible Braintree brand – especially on billboards targeting developers in the Bay Area.

Venmo has been called the ‘killer app’ and has certainly given new life to PayPal, and that’s significant.

And for those who don’t follow FinTech closely, PayPal’s been adrift for years. In 2014, of course, PayPal announced its spin out from eBay – after years of saying it was strategic – which led to rumors of acquisition by everyone from Apple to Alibaba, although Reid Hoffman said at the Technonomy event this week that any Alibaba/PayPal tie up is unlikely.

From me it said a lot that on day the spin out, Stripe tweeted eBay now had an opportunity to improve its payments…..

There’s much to learn from the likes of Venmo and Stripe – a company I’ll cover in a separate post – but it’s worth listening to Stripe’s co-founder Patrick Collison’s predictions on the future of payments at Techonomy this week.