What I’ve been up to.

I said it before. I don’t write a lot. I also need to update this website.

I’ve spent the past few months working with an emerging software focused investment firm named Invicta Growth. Invicta is dedicated to breakout companies across a number of themes including enterprise automation, workplace collaboration, data & analytics, fintech, privacy & security, B2B marketplaces, and more.

During my time at Invicta, I had exposure to all aspects of the venture capital & growth equity investment process from sourcing to execution to fundraising and more. My time with Invicta helped confirm my interest in technology investing.

However, my path to investing is far from typical. Filled with self study, hustle, and an innate interest in the asset class, I’ve had a meandering path toward venture, one much different than others at the same level as me. Since college, I’ve had stints in glaciology, technology recruiting, big-tech, consulting, consumer internet startups, and of course, growth investing. These unique experiences have provided me with a panoptic view of the technology value-chain.

Despite my admittedly geeky and innate interest in technology investing, I’ve been doing more than riding public markets post Covid-tailwinds. Since starting at Invicta, I simultaneously have helped 3+ friends apply to and land roles at top technology companies. It began with casual chats about cool companies, roles they’re interested in, and how to break in. After a few conversations surrounding the same few companies, I started putting together research deep deep dives on company x, explaining the company, what they actually build, their market opportunity, who the founders are, where the employees came from and where they’ve exited to, along with more categories that helped inform my friend’s interview prep and eventual decision making.

Since then, I realized that if my friends in technology were unsure of where to find awesome companies, then people even less in-tune with the tech ecosystem would feel similarly. After all, not everyone gets hit up by the folks at Human.Capital while they’re sophomores at Stanford or Georgia Tech, and not everyone has the luxury of knowing exactly what they want to do post-grad. In fact, I found that my friends in consulting, banking, and other industries have all considered startups but have no idea where to look.

This led me to think differently about company discovery and how people find out about tech jobs. If you’re not in-the-know, and even if you are, it’s hard to find out about solid technology companies to bet your career on. If you sign on to LinkedIn, you’ll see a gaggle of jobs shared with users with almost no particular rhyme or reason. AngelList is overly saturated with startup opportunities, yet there’s no way of telling prospective candidates how likely the company is to succeed. These behemoths, coupled with sub-par job search platforms like Scouted, and WayUp don’t do anyone any favors.

I’ve come to learn about other platforms that help people find roles based on their specific values like Key Values, remote only jobs like RemoteFit, and more. Similarly, The Breakout List and Wealthfront’s career launching list is good if you have 50 days to research each company before applying. Alas, these platforms aren’t actionable. They’re poorly curated to attract billboard advertising dollars and don’t really provide value to end users.

Taking creative inspiration from the aforementioned platforms and others like Morning Brew, The Generalist, OneJob, FemStreet, and The Profile, I’ll be launching something soon to combat this anxiety provoking disservice to qualified job seekers!

Conflating the short-term with the long-term

I don’t publish a ton of content. I don’t have a normal writing cadence, nor do I tweet everyday. I don’t really post to Instagram, and I don’t crave the social affirmation of others. Even though I don’t Tweet a lot, I think Twitter is one of the best places to engage with people much smarter than myself.

Yesterday I saw this tweet by Jeff Morris Jr. outlining his prediction for future social products and consumer behaviors:

Looks familiar, right? I linked my previous post, ‘What’s next for consumer social‘, and got some love from random internet strangers and even Jeff himself! It felt good to be recognized and to know that me and a product leader share similar thoughts on how the world works (maybe I do crave social affirmation?).

While my 15 seconds of fame was fun, a new thought popped into my head:
1) Jeff tweeted mid COVID-19 quarantine. 2) I posted my article one month before any sort of pandemic hit the United States. Despite our different leading indicators, we were both inspired to think about how consumer behavior is changing from online>offline>online.

All of this led me to question whether tech people conflate short term events with long term paradigm shifts? Even though I like reading Twitter threads with smart people debating in public, there’s a lot of pontificating and soothsaying that goes on in the Twitterverse. I’m not a fortune teller and don’t know if social products will move from online>offline>online for sure, but this pandemic’s audience seems to think so.

We’ve been social distancing for a little over a week and people have moved happy hours to Zoom calls, group hangouts to Twitch, and the ‘failed’ startup, Houseparty is now the #10 app in the U.S. overall, and #1 in social networking.

I’m not sure if these consumer behaviors will endure beyond 2020’s COVID-19 quarantine, but it sure seems like people like to predict the future based on immediate events (or at least some VCs do).

What’s next for Consumer Social

With a looming paradigm shift from open sharing to closed networks, there’s currently a fragmentation of the consumer social sector where large, ubiquitous products like Instagram, Facebook, YouTube, etc. are no longer delivering the same value to users. Instead, they are leaving holes for challenger networks and products to emerge. Behaviorally, people are becoming less inclined to engage and share to these overarching and hyper-connected networks, and instead are leaving for newer, semi-private-communities where like-minded people can collaborate over their shared interests, current life situations, desire for new media, etc.’

Once in an arms race with Instagram, Snap has reclaimed its spot in the consumer social market as a social network where friends can communicate without the self-conscious fear of other’s judgment. Coupled with its ephemeral product features, this idea of private sharing has given way for the public market’s appreciation of Snap, and subsequent 81% increase in share value YoY.

In the same vein, tech founders are carving unique niches in the consumer landscape by separating the ‘social’ from the ‘media’ and identifying gaps in large incumbents’ product suites. 

Founders are able to build companies around key themes like: 

  • Interest Driven: Low barrier to entry, opt-in networks driven by trust and information distribution.
  • Online to offline and back again: Akin to Chris Dixon’s saying, I’m claiming my own: come for the knowledge, stay for the network. These can be either IRL, online, or both. 
  • Challenger networks: Attacking the gaps in incumbent social networks with new content distribution and formats.

Below are just a few examples of startups taking advantage of this shift in consumer behavior: 

It’s easy to think about consumer social as a quasi-hierarchy. Instagram, Facebook, and Snap are unlikely to go anywhere. These large platforms make the market by serving as high value advertisement platforms for other companies, acquisition channels for startups, and the guidelines for proving what consumer interests are already in the market. Startup founders assess what products and features are missing from these companies and quickly build better versions.

Reddit, the self dubbed front page of the internet, was one of the first contemporary private networks, but has since given way for startup companies to create more personalized experiences across multiple subreddits. There are a bunch subreddits garnering well over a few million subscribers that serve as an interesting place for budding entrepreneurs to look to for inspiration in regard to what types of future digital products could make sense.

Aside from consumer social fragmentation, I’m excited about advancements in other consumer technologies and the network effects that can come from the increasingly high-quality photo capabilities of the iPhone camera, constant usage of headphones, democratization of fintech, verticalization of marketplaces, and future of work. These technologies can make way for new startup companies to steal market share from incumbents and ultimately change consumer behaviors.

Last Night with Ben Horowitz

I had the pleasure of listening to Ben Horowitz of Andreessen Horowitz speak to a room full of people last night at FirstMarks’s Data-Driven event. His presence alone was palpable. When he entered the room, the only thing you could hear was people’s jaws dropping to the floor. It’s kind of lame to say, but I haven’t been that star struck since I met Mark Tatum, Deputy Commissioner of the NBA. Ben is a living legend and also sounded like a pretty regular guy all at the same time.

He went on stage to speak with Matt Turck right after the VP of Developer Relations for Google Cloud & former CTO of Cloudera, Amr Awadallah. Amr presented Anthos, a hybrid cloud offering from Google. Since Ben’s a busy guy, he wasn’t able to make Amr’s presentation. Without knowing what the other guests presented, he kind of dissed Hadoop right in front of Amr. Amr wasn’t too happy, but everyone in the audience thought it was kind of funny. Ben later apologized.

Anyway, what I found most entertaining was Ben’s conviction and relentless attitude toward creating an unbiased view of the world. He told story after story about how culture develops in companies, families, and friendships. He spoke about folks being blind to talent in favor of seeing ethnic and groupthink demographics instead. He talked about a16z’s search for a partner to lead the Cultural Leadership Fund.

Here’s a little bit about the CLF:

He told a story about an unnamed person who was leading the search for a new CLF Partner. For some reason, like many funds do, the unnamed a16z employee only looked at candidates with an investment banking background. The CLF was started as a means of connecting black leaders in pop culture with black technologists. Nowhere did Ben say there had to be a bullpen full of ivy league history majors turned IB. After hearing that this guy was only looking for people with an IB background, Ben asked, “since when did anyone like investment bankers, let alone black people with no ties to wall street?”  That’s not to say that there aren’t any cool IBers, or that there aren’t any black IBers, but the CLF didn’t need any DCFs. The CLF needed someone who fit in culturally, someone who could make relationships with some of America’s most influential folks.

After hearing Ben’s response, the guy running the search stumbled and tried to back up his criterion with the fact that IB churned out people who were detail-oriented, quant-minded, boar, boar, boar… In reality,  a16z didn’t need someone who could bang out a pitchbook, or someone who could do an LBO on paper. They needed someone in-tune with pop culture, and someone who could connect with the Kevin Durants, Will Smiths, Beyonce’s of the world. They needed a relationship-driven person who could connect with black leaders the way no IBer ever could. 

In fact, the guy they ended up hiring, Chris Lyons, was previously a music consultant and worked in the restaurant world. At one point, he even worked at the Cheesecake Factory. Cheesecake Factory employees have a quasi-NPS score calculated by total tips/total bill ratio. The higher your ratio, the better you were ranked against your peers. Chris had one of the highest scores in the national Cheesecake Factory franchise. Nobody really likes their waiter, but people loved Chris.

The point is, I imagined that Ben was going to speak about something like whether AI should be a product or as a feature. Instead, we got to listen to something much cooler. He spoke about meeting people halfway and understanding what talent looks like without a preconceived notion or bias in mind. You can’t fit a square peg in a round hole.

My biggest takeaway from the night is that as cliche as it sounds, your virtues are not what you say or think, but they’re what you do. VCs can say they respect entrepreneurs and want to be founder-friendly, but a16z values an entrepreneur’s time so much that they’ll fine their own investors $10 for every minute they’re late to a meeting.

Hi, again…

My mom’s been recovering from ankle reconstructive surgery. It’s going to be a really painful next few months and I really feel for her. Since she’s laid up in bed, she’s been reading everything she can while I try my best to be on her good side. The other day, after apparently googling our whole family, she called me on the phone with bitterness in her voice. She told me she was ‘pissed off’ I never told her about this blog.

Which reminded me, I started this blog as an online home for my thoughts, ramblings, and weird ideas as a sort of journal to come back to. I never used it for it’s worth. In 2019, I think I published 2 posts. People have created followings and digital personas on the internet that have helped them tremendously in their careers. I don’t intend to do that. Instead, I want to do what this blog was originally set out for. I want to start sharing my thoughts, ramblings and weird ideas. Most importantly, I want to exercise the part of my body that hasn’t been getting enough attention, my writing muscles.

Growing up, I wasn’t enamored with technology. I was usually outside playing sports, or running from friends backyard to backyard. Playstation and xbox sat idly by while I perfected my free throws and curveballs. Books were common, but only until I attended college did the internet, cloud, and tech make a breakthrough in my life. Before meeting some more tech-minded friends, I was certain I would work at the intersection of the arts and something profound. I prided myself on my writing ability and persuasion with the pen and paper. Nowadays, I notice those skills fading.

Even though I get to write my fair share of emails and more short-form twitter literature, I miss exercising my creative and more eloquent writing muscles that have been neglected by limiting myself to only produce what needed to be completed for work.

So let’s hope that this isn’t the only post I make in 2020.  

Kelly Slater didn’t consider product market fit

On May 5th, 2018, The World Surf League (WSL) held a tournament in a peculiar place. Landlocked and over 100 miles from the sea, the top competitors in the world gathered in Lemoore, California for what would go on to create a unique surfing-only type notation system. Since I haven’t seen anyone else coin this phrase, I’m going to make it my own: B.K.E – Before Kelly’s Era.

Kelly Slater is undoubtedly the king of surfing. He’s both the youngest and oldest person to win a world title, amassing an astounding 11 world championships. It’s safe to say his bald head has seen a lot. Kelly is a polarizing figure in the world of surfing – he’s been the driver behind much of surfing’s recent comeback, as well as the sports commercialization and prior downturn. Like Kelly, there are two sides to everything. Surfing is no different. With the advent of high-priced surfing technologies in the form of boards that make wave riding easier, wetsuits that keep surfers warmer for longer, and even earplugs that offset surfers’ ear, technology is segmenting the surfing population.

Traditionalists believe in an old-school view of a wave-riding hierarchy where those who’ve surfed the mush should have priority over visitors when the stars align. To them, surfing is a holistic, spell-binding ritual where surfers interact with an ever-changing wave that evolves with the ocean floor and wind. The boards they ride come from shapers who spend hours meticulously crafting every inch of the foam.

On the other hand, contemporary surfers, believe in almost nothing. There’s no rhythm or rhyme to when someone is supposed to drop-in. Beaches are littered with massively produced assembly-line boards with Go-Pro cameras stapled to the nose. There are meme pages associated with novice contemporary surfer. Often times you’ll see the newest Rip Curl wetsuit on someone holding a board with the fins on backward. It seems like surfers of today resemble a cutout of what technology has done to much of America.

There’s nothing wrong with either segmentation. Often times, traditionalists are assholes and contemporary surfers are dangerously ignorant just trying to have fun. The main point is that technology is impacting surfing in an unprecedented way. However, the debate among surfers as to where they should buy their boards from, or whether or not they were tough enough to last in the cold ocean is over. The new debate is no longer man vs. man, but instead, man vs. machine.

Flashback to December 5th, 2015 when Kelly unveiled his ten-year-long experiment to the world. A video was released showing him surfing a perfectly shaped artificial wave being ridden in none other than Lenmoore, California. The quest for the worlds perfect wave has ended. It’s not in Tavarua or Teahupoo, but in Lemoore California, and it could be coming to your backyard.

When Kelly unleashed the video back in 2015, the world flipped on its axis. The traditionalists condemned it – the contemporaries loved it – but everyone wanted to try it.

Here’s how the wave works. 

  1. A 100-ton hydrofoil – named “The Vehicle” – run down a track with the help of more than 150 truck tires and at around 18 miles per hour (30 kilometers per hour);
  2. When the swell hits specific areas of the lake’s bottom, the wave starts to break thanks to the influence of the contour reefs
  3. Giant lateral gutters mitigate the bounce-back effect that occurs on the pool walls forming the wave
  4. It takes three minutes for the surf pool water to calm down and return to a completely static state

Today, the wave pool costs about $9,500/hour, plus an additional $288 booking fee. A high price for retail, but this is just the beginning. Have the stars all of a sudden aligned for surfings newest innovation? Or was it strategically positioned for global distribution? The 2020 Olympics will be held in Japan, and with surfing on the docket for the first time as an Olympic event, Kelly Slater’s Wave Pool technology is ripe for the masses. 

Normally, surfers head to event locations weeks in advance to prepare for the upcoming tournament. Similarly, tournaments could last weeks at a time because of the sports unpredictable X factor – the waves. In surfing, scoring is subjective and with each wave, rides are incomparable – up until now.

Now, surfers can be scrutinized on a fair playing field, one in which every rider has the same course. Along with its technical predictability for unadjusted scoring, the artificial wave comes with a massive pool – one that’s ~700 meters long and 100 meters wide. At the recent WSL event, spectators came to what could be easily confused as a soccer stadium with big screen televisions publicizing every angle of the event.

Still, the International Olympic Committee, International Surfing Association and Tokyo 2020 maintain that surfing’s debut will take place in the ocean.

Despite being acquired by WSL Holdings in 2016 for an undisclosed price, kswaveco was an arduous project to undergo. It took $30M, ten years, and multiple iterations. Kelly brought the passion, and Adam Fincham, Associate Professor of Aerospace and Mechanical Engineering at the University of Southern California brought the brains. There were no feedback loops, UAT, or product market fit analyses. It’s now up to the consumers to decide whether or not this is something that will complement ocean surfing, or disrupt it. There will either be kswaveco country clubs, or just the infamous one. 

Data + Efficiency + Experience = ?

I’ve been fiddling with the idea that tech enabled products will empower experiences for both enterprise and consumer. People will use tech enabled products to enhance their lives, rather than have tech be their lives.

Whether it be employees using AI to search and categorize unstructured data for insights regarding a customer inquiry, or something as simple as ordering a Sweetgreen salad, the world is moving towards tech enabled empowerment. The above examples illustrate how tech enables consumers to execute ordinarily mundane tasks, quickly and efficiently allowing them to spend time on high value activities.

It’s not all about speed when it comes to the future of consumer tech. There’s value in data-driven products. An already tested hypothesis, but some of the biggest winners of today have taken data to create a unique end product for users. Stitch Fix, Rockets of Awesome, and other retailers like MM.Lafleur have already incorporated data science into their core platform – something previously thought to be too farfetched when pitched to investors.

Between data and efficiency, experience can’t be compromised. Every transaction, purchase and service must be unique, drawing consumers back for repeat sales. Having a sleek and sexy design is a good start, but to truly reach the coveted Unicorn status, startups must create an experience-enabled [whatever] that draws a competitive moat in and of itself. Airbnb is a marketplace driven by experience. Spin classes were around long before SoulCycle, yet they created an addictively immersive experience.

In today’s digital age, marketplaces have been commoditized with D2C retailers, pop-up poké stops are on every street corner of NYC, and just about every app has built in recommendations claiming ‘AI’. Competitive marketplaces fuel innovation and the biggest winners of consumer tech will be those that have fully integrated and innovated upon today’s top business models.

The next generation of category defining consumer tech will come from Data + Efficiency + Experience = ?

Data to understand.

 Efficiency to execute.

 Experience to make it real.

Here’s what they might be:

Screen Shot 2018-11-11 at 9.04.02 PM

On purpose…right?

I’m curious if the big consumer media companies of today strategically set out to create these competitive moats, or if they stumbled upon them.

Chris Dixon argues that Instagram is one of the easiest examples to understand. At the time, Instagram was the best place to get free filters for photos. He argues that users came for the filter, but stayed for the network. What started as a tool (the filter) turned into a network (feed). The network enabled a premier online marketplace for programmatic advertising and retail sales.

Snapchat, on the other hand, hasn’t made it there yet. With their recent UI overhaul to cater to third party publishers, and a prophecy to remain loyal to its original MVP; knowing where and communicating with your close friends, I think they’re poised for market differentiation. I’m a big fan of Snapchat’s product and think it has merit in the market, but would love to see it change a bit.

First off, they should focus on creating the one place users can go to communicate with their friends. I’ll often hear my cousin talk about how she only uses snapchat to message and call her friends. Why? Because of it’s ephemeral nature!

Snapchat isn’t going to have the same scale as Instagram, but it could have a unique niche that a larger fragmentation of social media would cater to. Hell, I don’t really use IG, but sometimes am known to send my friends the funny snap…

To answer my own question, I think, as many things, it depends. I don’t know the Instagram story nearly as well as I know what’s happening with Snap. SNAP, if you’re reading this, please invest product time and $ into messaging and keeping snapchat the best small community out there.

Innovation in Banking: Is it working?

Following the 2008 financial crisis, demand for regulation and oversight exponentially increased considering the detrimental role banks played in what would become the largest recessionary period since the Great Depression. Forced to focus on adhering to mandates, banks set aside innovation while technology enabled incumbents recognized an entry point. The 2008 financial crises gave way to the rise of Financial Technology companies (FinTechs) by tackling customer needs in the mobile payments and personal finance space. Dismal approval ratings for banks allowed the introduction of Bitcoin, a means for a trustless, immutable system completely immune to banking and government regulation. The idea behind Bitcoin proliferated an iconoclast point of view towards traditional financial service providers. FinTechs are disrupting the banking system and ten years later, large banks are still playing catch up.

It’s important to note that while financial services may seem out of touch with innovation, they have been on the forefront of technology since the mid 1980’s. However, most of these innovations happened behind closed doors considering the multi-billions of dollars on the line. Starting with low latency cables and the explosion of Artificial Intelligence (AI) in institutional investing, large corporations have kept their most prized possessions locked in a black box. Only until these data-driven quantitatively inclined masterminds left the front office did the idea of a consumer based FinTech come to exist.

Fast forward to present day, mainly all financial services are digitally enabled and provide a wide range of capabilities from peer to peer lending, point of sale innovation, mobile investing, and so much more. Today, one of the most valuable companies in the e-commerce space is a financial service plug-in that allows users to transact as a marketplace directly on any given website.
Originally only seven lines of code, Stripe, the new standard in online payments says there’s an 80% chance any given credit/debit card has been used on the Stripe network1.

Although late to the game, financial institutions are making huge leaps to level the playing field. By taking the back seat for over a decade, leaving it to FinTechs to take risks, make mistakes, and fail fast, banks have watched lucrative market opportunities fly by. Today, incumbents are attempting to catchup through mergers, acquisitions and strategic investment in a range of technologies.

Data Availability

One of the major advantages banks have over FinTechs is the massive amount of data the have collected over the years. A major challenge all incumbents face, both institutions and start-ups, is adequately analyzing the valuable, yet unstructured data. Banks and other financial institutions have expressed limitations in their ability to leverage data as a way to build customer-centric products. Kevin Garlan, Citi Bank’s Head of Innovation for North America, discussed the belief that financial institutions are drowning in customer information. Banks have so much data that large technology companies like Facebook and Google have begun to collaborate in order to share the once off-limits detailed financial information about these institutions’ customer base.

Despite being the gatekeeper to sensitive data, government regulation within the European Union mandates that banks are obligated to provide third-party providers access to their customers’ accounts through open APIs (application program interface). This will enable third-parties to build financial services on top of banks’ data and infrastructure. As European Revised Payment Service Directive (PSD2) becomes implemented, banks’ monopoly on their customer’s account information and payment services is about to disappear2.

However, data is often raw, unstructured, and messy. With hurdles such as ownership rights around data privacy, Global Data Protection Regulation (GDPR) and cyber security risks, it can be difficult to manage and grant access to the appropriate people to analyze and transform the data into meaningful insights. Given these roadblocks, the financial services industry as a whole still has some ways to go in deciding how to deliver material recommendations and suggestions for their customers. It’s more likely that customers will see banks competing not only against banks, but everyone interested in taking part in financial services.

For banks, PSD2 poses substantial economic challenges. IT costs are expected to increase due to new security requirements and the opening of APIs. In addition, 9 percent of retail payments revenues are predicted to be lost to PISP services by 2020. And, as non-banks take over the customer interaction, banks may find it increasingly difficult to differentiate themselves in the market for offering loans3.

Rick Winslow, Chief Experience Officer at Kabbage, described a different perspective based on his experience at various banks and consulting firms. One of the biggest challenges he experienced was being unable to actually access the raw and messy data necessary to build data driven products. Instead, the information delivered was transformed and summarized, therefore, unreliable. Winslow agrees that banks have more than enough data about its customers but not enough data about the world in which its customers live. Winslow believes technology companies such as Google have excelled in building data driven products for its customers because “Google has data about your house, about your car, about your street and the barbershop you go to.”

Google invests in transforming large range of raw and messy data to truly help their customers and their needs. What has hindered banks from securing long-term presence beside their start-up competitors is their limited agenda to organize only data adjacent to the banking industry. Winslow believes companies should aim to create products that cater to customer’s interests and habits. By envisioning the various places and scenarios in which customers will use said product, banks can leverage its data that address customer’s problems and pain points.

The likely passage of PSD2 and Global Data Protection Regulation (GDPR) within the United States poses a great threat to banking incumbents. It will be easier than ever for non-banks to enter the market with financial service solutions. The belief that non-bank FinTech companies will play a significant role in the future financial landscape is well established in the investment markets. Cumulative investments globally in financial technology has more than ten-doubled the last five years and is estimated to exceed $150bn the next 3-5 years4. This encapsulating reality forced banks to not only adhere to GDPR and PSD2, but push past industry adoption towards regulation generation.

Token, an open banking platform is disrupting traditional banking using PSD2 for its own benefit. Token facilitates fast and secure payments through Smart Token technology, giving banks a simple and quick path to PSD2 compliance.
Currently, all the primary payment systems in the world were created over 50 years ago, much before the invention of the internet. Instead of sending money over outdated, slow and unsecure payment systems like ACH and wire transfers, Token hopes to disrupt the payments industry through smart tokenization. Token’s platform gives banks, payment service providers and merchants smarter and quicker data aggregation as well as direct payment channels driven by Smart Token technology.
Token is just one example of the many FinTechs working tirelessly to capitalize on financial services’ lethargic push towards innovation.

Future of Banking Infrastructure

While the race between traditional financial institutions and FinTechs to leverage data goes on, there’s another important facet to consider – new technologies that will spur innovation beyond government intervention and mandate approval.

To quote Big Data and AI expert Matt Turck, Managing Director at FirstMark Capital;

“The timing seems ripe for a new paradigm in technology to emerge. What will define and propel the next big wave of computing innovation? There’s a rational for making the argument that “AI, Blockchain and the Internet of Things” is the new “Social, Mobile and Cloud”. Those trends are still very much emerging, but their potential impact is massive. What new giants will emerge from this paradigm? Just like social, mobile and cloud have fed off each other, those three trends have a very interesting areas of overlap.”

When applying Matt’s insights to the financial services sector, it’s easy to see the future of banking is already upon us. While cloud solutions are still being implemented within banks systematically, mobile and social are already saturated markets. Companies like clearXchange have created and sold P2P/B2C payments company Zelle to Early Warning Services, a consortium owned by Bank of America, BB&T Capital One, JPMorgan Chase, PNC Bank, US Bank, and Wells Fargo.

The next space race in financial services will not only be between banks and FinTechs, but encompassing all parties interested in financial solutions. The opportunity to leverage immutable secure automation will allow true structural economics to provide benefits to operational inefficiencies, cost saving measures, and innovative business solutions.

While other blockchain startups attempt to tackle use cases related to payments and trade finance, the most realistic opportunities for banks to merge blockchain with AI sits in infrastructure. Blockchain startups like Cambridge Blockchain, whose architecture resolves the competing challenges of transparency and privacy, leading to stronger regulatory compliance, lower costs and a seamless customer experiences are challenging traditional back-office operations. The implementation of this technology coupled with Robotic Process Automation, and Conversational AI could eradicate most menial back office jobs while improving the overall process.

Axoni and Clearmatics have collaborated to successfully demonstrate a derivative contract modeled using Axoni’s domain specific language, AxLang, and the subsequent cross-chain settlement of the resulting two cash payments using the interoperability protocol, Ion, across currency chains built by Clearmatics designed to provide settlement finality.

In the demonstration, an option exercise was modeled in a smart contract coded in AxLang, a new Scala-based programming language developed by Axoni which supports functional programming and enables formal verification of smart contracts for Ethereum-compatible networks. Widely publicized incidents involving faulty smart contracts have emphasized the necessity of secure application development. AxLang’s design and its support of formal verification were driven by the need of its clients, the world’s largest financial institutions, for whom Axoni is implementing the broadest reaching and most ambitious permissioned ledger production projects in the world, including post-trade settlement for $11 trillion notional of credit derivatives.

Symbiotically using blockchain and AI on one platform proliferates a technical solution to a psychographic problem. Contemporary enterprise solutions often lack AI security, Turing, automation, and overall scalability of financial service clients. AI Assistants, search optimizers, and CRM toolkits have the opportunity to transform financial services beyond what we currently consider to be ‘solutions’. An enterprise grade AI enabled solution secured on the blockchain alleviates the above problems. Creating a blockchain infrastructure unique to the solution that can learn and adapt to all enterprise grade solutions regardless of the client will decrease Turing and training time while increasing overall usability of the AI while delivering fast and secure insights.

Innovating Business Models

Ten years after the financial crisis, incumbents are finally making innovation a priority and entering markets in which they don’t currently have brick and mortar presence. More and more banks are considering to instead partner with FinTech companies. Previously, some predicted that FinTech companies would put large banks out of business, however collaboration between banking and FinTech is more realistic.

TD Bank has created a budgeting tool called MySpend, built by neo-bank, Moven. JP Morgan has partnered with TrueCar and Roostify to improve the process of securing financing for purchasing automobiles. Wells Fargo created its Well Fargo Startup Accelerator to explore emerging technologies in analytics, payments, and consumer lending.

Collaboration allows banks to reach a larger range of users and may be the best path towards long-term growth. While FinTechs take advantage of the scalability and brand recognition of large banks, banks can take advantage of the agility and customer-centric perspective FinTechs provide.

Winslow cites Kodak’s demise to which many attribute the company’s inability to enter the digital camera business. He counteracts that Kodak ultimately failed because of tech companies such as Facebook and Instagram which introduced a way to more conveniently take and share photos to social media. He explains that companies have to, “be like an athlete in training that is prepared for whatever hurdles comes.”

Financial institutions must be forward-thinking and seek opportunities for growth. With their plethora of data, banks should be able to extract customer insights to develop personalized offerings that meet their customers’ needs. Many banks already recognized mobile commerce and open banking as their biggest opportunities for growth. With the help of data analytics intelligence, blockchain, and AI, banks must take advantage, not scour away from innovation and collaboration.


1. Merchant Maverick. 23 May 2018 https://www.merchantmaverick.com/stripe-payments-competitors-and-alternatives/.
2. Deloitte: Payments disrupted – The emerging challenge for European retail banks. URL: https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/financial-services/ deloitte-uk-payments-disrupted-2015.pdf
3. FinExtra, CA Technologies (March, 2016): Preparing for the PSD2 – Exploring The Business and Technology Implications of the new payment services directive. URL: https://www.ingwb. com/media/1609662/preparing-for-psd2_vroegh.pdf
4. FICO (2014): Millennials and Their Banking Habits. URL: http://www.fico.com/millennial-quiz/ pdf/fico-millennial-insight-report.pdf UXPin
5. Let’s Talk Payments (January, 2014): T-Mobile launches Mobile Money an un-carrier style app, card, account, Personal Finance… URL: https://letstalkpayments.com/t-mobile-launchesun-carrier-style-personal-finance-product-mobile-money/
6. Accenture (September, 2015): Digital Disruption Nordic Retail Banking. URL: https://www.accenture.com/t20150924T055551__w__/se-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Strategy_7/Accenture-Digital-Disruption-Nordic-Retail-Banking-Study.pdf
7. Zelle (Payment Service). URL: https://en.wikipedia.org/wiki/Zelle_(payment_service)

Reimagining payments with Token

A few weeks ago, I spoke with Co-Founder and CMO of Token, Marten Nelson. I was introduced to Marten after expressing interest in learning more about their patented Smart Tokenization technology. Following our conversation, I realized that Token is uniquely positioned to take on both sides of the banking ecosystem.

Unlike many of its digital bank counterparts Token is disrupting both open banking and the traditional banking ecosystems. Token facilitates fast and secure payments through Smart Token technology, giving banks a simple and quick path to PSD2 compliance. Allowing for data integration and direct payments. Token is a multifaceted approach to fixing the payments and banking systems.

Currently, all the primary payment systems in the world were created over 50 years ago, much before the invention of the internet. Instead of sending money over outdated, slow and insecure payment systems like ACH and wire transfers, Token hopes to disrupt the payments industry through smart tokenization. Token’s platform gives banks, payment service providers, and merchants smarter and quicker data aggregation as well as direct payment channels driven by Smart Token technology.

Token works directly with banks, merchants, peer services providers and developers to move money swiftly and securely. Currently, Token offers banks a simple way to comply with PSD2. Simply put, PSD2 mandates that EU banks build API’s or interfaces for third party use. This will likely result in a confusing mess of banks scrambling to comply with the impending regulation. By aggregating third-party API’s, Token solves a huge problem for EU banks. Founded in late 2015, Token already has 3,918 banks on their aggregated API platform.

PSD2 levels the playing field between banks and merchants, allowing third parties access to data previously monopolized by banks. This directive is the first opportunity for traditional merchants to implement financial services solutions, cutting out third party middlemen. Merchants can retrieve account data from the bank with account holder permission, cutting out the Visa’s, PayPal’s and Stripes of the world. Allowing merchants access to user-data not only accelerates technological innovation but leaves banks open to disruption.

Token made history on June 1st, by becoming the first licensed Payment Initiation Service Provider (PISP) to conduct an end-to-end payment through a public bank API.

The payment of £4.99 was confirmed as the first of its kind by UK Open Banking (the Open Banking Implementation Entity). Token fired the starting gun on the new age of API banking in Europe, driven by the recent introduction of PSD2.
With the infrastructure operational, banks, merchants and other providers of payment and data services can now leverage open banking to reduce costs, generate new revenues, increase security and deliver a simpler, more convenient digital payment experience for the end user.

Moving forward, it’s important to understand their go to market strategy. When you visit Tokens site, this chart is displayed:

It’s unsurprising that Denmark and Finland are next on the list. Right now, all retailers in Denmark must accept cash, but that hasn’t stopped huge numbers of Danes from embracing digital options.

Nearly 40% of the population use Danske Bank’s MobilePay, which allows money transfers between people, as well as purchases in stores or online. Token is specifically targeting digitally enabled countries.

When I spoke with Co-Founder and CMO, Marten Nelson, he said Token was strategically speaking with North American financial institutions to create partnerships and revenue streams for when PSD2 hits the United States and Canada. Partnering with banks and other FinTech’s is key to unlocking the key to both open banking and digital banking. To date, Token’s payment services run deep within n26, a leading digital bank.

Token has positioned itself to disrupt the banking industry through years of experience. Token’s led by serial Silicon Valley entrepreneur Steve Kirsch whose had successful exits from FrameMaker (acquired by Adobe Systems), and Infoseek, (acquired by the Walt Disney Company), as well as former Global Chief Technology Officer of Citigroup, Yobie Benjamin.

Token’s most recent funding round occurred on April 24, 2017 for $15M of Series A, pushing them to $18M total from EQT Ventures, Octopus Ventures, and Plug and Play. After speaking with Marten, it was clear that he was interested in adding investors to their next round.

In total, Token is a contrarian play hedged with regulatory serendipity. Their open banking platform and API aggregator serve as a great opportunity for Bedrock as it fits your thesis well. The team is top notch as is the technology behind them. I’m excited to see where Token goes, and the profit that follows.