The Innovator’s Dilemma: Is It Always About Technology? The FinTech Perspective

fintech innovation

The thing that intrigues me the most is the business model and how it evolves influenced by innovation. Every business I interact with I try to understand how do they make money, what is their unique angle. I had one such conversation with a friend of mine, Antoine Baschiera, cofounder of Early Metrics. They have analysed and scored over 1000 innovative companies in the last two years. We had a debate on what innovation is. Too often associated with just the technology but innovation is so much more. We have agreed on 4 main pillars – process & customer service, route to market, product & service and technology. So how do they all come together?


Technology innovation – embedding new technology into your stack such AI or visualisation to empower the other 3 pillars  

Process & Service – using process and technology improvements to improve customer experience or critical internal processes to gain competitive advantage, such as pricing engine in insurance

Product – creating new products that didn’t exist before, such as Apple Watch

Route to market – addressing new markets, finding ways to reach your customers differently, for example servicing banking clients via facebook chatbot


Let’s look at each of these in more detail:

Technology Innovation

Technology innovation in banking is often trivialised to a simple question – can we use this new technology to remove enough friction from the process that savings/profits would justify the costs, i.e. can we get a positive RoI. Often you can’t, at least initially, quantify innovation as RoI. There are much bigger benefits to technology than just cost saving – it acts as an enabler in the evolution of the company.

Technology in itself normally brings marginal improvements rather than disruption. The disruption comes from a change in the other 3 pillars as a result of this new technology. Let’s take Uber as an example, the company is so disruptive not because of their technology, if anything, it’s pretty basic, slick and well functioning, but basic. What is special about Uber is their business model innovation – creating a marketplace for transportation. This is very disruptive. They couldn’t achieve this without their technology but technology is not the value add here, just an enabler that leads to disruption of the taxi industry supply chain.  


fintech innovation


Process & Customer Service Innovation

Process innovation is less sexy than product innovation. It is not focused on creating new products or reaching new markets but sometimes it can be the best competitive advantage of all. If you can open a bank account in 5 steps while your competitor is taking 3 days you will win that game every time despite how many cool and sexy products your competitor has. Process Innovation is all about improving internal and external processes to provide better customer experience. It’s about improving existing products and business critical processes transforming the business model of the company.

Customer service often defines business models. High touch high-end product with great customer service is associated with low volume high margin business and low touch high volume approach with good price. You rarely get both.


FinTech Customer Service

A true process innovation would be to provide high touch customer service with good price. Some industries are approaching this possibility. Let’s take a look at wealth management industry. Previously we had private bankers who would manage money on behalf of the very wealthy. Then the robo-advisors came around, addressing the gap in the market at the bottom end. But two services are very much different, the end result may be similar – you get a diversified portfolio but the route to that result is very different. Adjusting a dial on risk-meter vs dedicated private banker talking you through all the options available at all hours of the day.

There is a middle ground here, providing good service but cheaper – do you need a private banker with a fancy office? Can his service be provided via skype? Can a good amount of queries be answered by a bot? Could we mash these two together? This would be a great example of using technology to improve your critical processes – customer service to gain competitive advantage. A robo-advisor with a human touch and a similar price would beat robo-advisor without human touch.


Roboadvisor Fintech


Same as with Uber, technology is not the game changer here. The game changer is the application of that technology. The code for a bot is available as open source and is hardly revolutionary but the application of this code is.


Route to Market Innovation

Finding new routes to market can drastically increase your market share. Let’s take travel insurance for example – you can sell it via brokers and price comparison sites but cross-selling it on airline websites is a new route to market. Acquiring customer in FinTech is notoriously expensive. For that reason FinTechs are often exploring different ways to market rather than taking the incumbents head on and the answer is a B2B2C model. A company plugging into existing players back-end and using their channels to acquire customers or add value saves millions of pounds in marketing expenses. The maths are simple here – acquiring customers in FinTech can be very expensive – some of the banks I’ve worked with were looking at anything between £300 and £400. That is a lot of money if you want to scale. Let’s take an example – a company has raised Series A of £10mil, ignoring all costs, this company could only acquire 25,000 customers. This is hardly enough to make a dent in the fintech space. This is why we see banks like Atom raising hundreds of millions of pounds. To achieve any sensible scale you need a very large amount of capital. Few startups will ever be able to raise this kind of money and therefore a much better way is to partner with an existing player, usually a bank, and use their channels to acquire customers. It is lower risk lower reward option but certainly still a lucrative one since you can nearly bootstrap a business that is using a B2B2C model, while it would be very hard to do that with a B2C business, at least in FinTech.


FinTech Route to Market


Insurance is another interesting example of finding a new route to market. Insurance as a product is becoming a commodity – people are less willing to buy insurance as a standalone product anymore. They want to buy an insured car rather than a separate car insurance. It is becoming a part of a larger bundle, there are a number of companies looking to enable this. This will have an effect on insurance business model.

Product & Service Innovation

Product innovation doesn’t necessarily involve creating new products like autonomous cars, smart watches or new social media app. A lot of product innovation surround repositioning products for specific verticals and tailoring your product to watch that markets needs – data visualisation for retailer, marketplace loans for SMEs, document management for lawyers.

Because the verticals keep on constantly evolving we can find gaps created in the market by current providers and innovate to fill them; much like Atlassian created a perfect ground for Trello to grow. Dimitri Tarasowski wrote a great post on this, here’s a short extract:

Trello brings a different value proposition to the market. Its value proposition is collaboration and simplicity. Jira’s value proposition is different. It seems that Atlassian is a well-managed company. Its managers did everything according to the books. They listened to their customers, and created a better and more complicated product. By adding new features, they sought to capture new customers. They went upmarket.

While the company’s revenue grew, its product became overly complicated and difficult to maintain. By moving upmarket, Atlassian created a vacuum at lower price points into which competitors with disruptive technologies could enter. This is what Trello did.
Atlassian vs Trello


Creating new services and products will most certainly have affect on the business model as the company will evolve and fine-tune its product offering to suit their desired customer segment, much like Atlassian did.

So what is innovation?

Business model innovation, particularly in FinTech, is not just technology based. The technology is frequently an enabler of other elements rather than the cause of the disruption. When looking to innovate and disrupt, we can’t simply focus on technology. Start with an end goal in mind of what you will show your customers, how will you access your market or what your processes will look like. Fit technology afterward.

FinTech Virality Loop and Why It’s So Scary

How Does Banking Taxonomy Works (Or Doesn't Work)

How Does Banking Taxonomy Works (Or Doesn't Work)

One of the biggest advantages FinTech have over incumbents is the positive feedback loop, particularly for marketplace type businesses such as TransferWise. These new upstarters have the edge – they are pleasant to use and they encourage virality. If people save money using TransferWise they share it on social media (see image below) praising the brand and the service, in turn, advertising it. This gets more users who do the same. By increasing the number of users using its service TransferWise is becoming a more powerful network, and business. This is a positive feedback loop. Can you imagine this happening with RBS or HSBC? I don’t know. Actually, I couldn’t find a positive endorsement on their social media pages at all. That’s why TransferWise is winning.

Thanks for reading; YOU are awesome!

Have a wonderful week,


4 Banking Business Models for the Digital Age
By Ben Robinson

Digitization of the banking industry is making new banking business models possible. But, it is the combination of regulation and technology that is making new business models a necessity. There are 4 strategic options open to banks. These vary in terms of the scope of banks’ own activities as well as in terms of profitability. The traditional universal banking model and the infrastructure provider model are both asset intensive and low margin, which makes them unattractive. In addition, the universal banking model, in that it requires the bank to manufacture and distribute all of its products, is probably unsustainable. The aggregator model offers the possibility for very high profitability with low asset intensity, but will be difficult to defend. Thus, it is the vertically integrated but open platform model which offers the best route to sustainably high margins.


The Bank of the Future Will Be Invisible
By Finextra

By 2030, technology will have made banks and banking invisible to customers, hidden by Siri-like personal assistants that cull data from our connected lives to fulfil daily personal and financial obligations, claims KPMG. In this vision, there is no “banking app” – access to money is interwoven with health, time management, leisure and other parts of daily life. This means that the “platform layer” – the customer interface – is likely to be provided by global technology players such as Google, Apple and Facebook. Banks can own the product layer – product, balance sheets, security and custody of assets – but a new wave of utilities – outsourcers, fintechs and existing giants such as Visa – will emerge to win the process layer, facilitating things like payments, client onboarding and KYC.


Banks’ Burning Platform is Obvious
By Chris Skinner

There is a burning platform in all banks, and it’s called the legacy system. That’s how I know it’s a burning platform as, for every year that passes, the embers that were ignited by internet banking have been getting more fuel on the fire. Mobile banking; digital reach; new open platforms; blockchain, cloud and APIs; machine learning, apps and analytics; and more. All of these open, internet-based technologies have been attacking that proprietary internal legacy, and the longer it goes on, the hotter the problem is getting. Like a dead fish washed onto the shores, an incumbent bank will go the same way if it doesn’t open up and join the marketplace wave. This has been a requirement for twenty years, since the internet banking age arrived, but is now a burning platform as the opening of finance through FinTech has arrived.


Why Facebook is a Dark Horse in the Financial Services Industry
By Elena Mesropyan

For someone who looks beyond popular news releases of the financial sector, quite different (and often repeatedly) names pop up in the background, and those are not ‘financial’ names at all – we are talking about large technology and code-first companies that were never before considered a part of the financial services industry. For an illustrative purpose, let’s take a look at the biggest social media giant of all times – Facebook. The company has been having big plans for its Messenger App and professionals across industries started paying closer attention to the ever-expanding commercial capabilities of a former chat app. The bottom line here is not that Messenger will push banks out of business, but the fact that users may not need to communicate with a bank to get a financial service if banks channel those services in a more efficient manner through a user-friendly and highly automated channel.


5 things that made me smarter this week

What a computer thought of the presidential debates. A team of grad students showed Hillary Clinton and Donald Trump’s performances to software that interprets emotions from facial expressions. Sarah Slobin and Michael Tabb present the results, which, while crude, are surprisingly revealing.

Meet the Russians hacking the US election. A group known as (among other names) “Fancy Bear” has been identified for years as the culprit behind various high-profile hacks. But only now has the US openly accused it of taking orders from the Kremlin. Buzzfeed’s Sheera Frenkel describes its tactics.

Scientists might have finally found a cure for the common cold. A new vaccine is showing promising results in animal trials.

De Beers is mining underwater diamonds. A powerful vacuum on the ocean floor near Namibia has found some of the world’s most valuable gems (paywall).

Sweden is trying to revive repair shops. It’s offering tax breaks to citizens who fix, rather than replace, broken consumer products.

Thanks for reading – you are awesome!

If you like it send it to a friend. If you hate it send it to an enemy.

How Does Banking Taxonomy Works (Or Doesn’t Work)

How does banking taxonomy works in fintech

How does banking taxonomy works in fintech

The FinTech hype is starting to slowly wear off. The next sexy thing is InsurTech. That’s a good thing. We can stop focusing on the next ‘sexy’ application and start solving real problems. Raising money will become harder than using 4 buzzwords in one sentence. Investors are more educated now, more demanding. The money is still there but it will take a founder with a personal mission to tackle big problems like financial inclusiveness and not ’this cool app that is facebook for banking’. Mark Suster said it really well, and I completely agree with him – ‘When a founder is “mission driven” you get the sense that he or she will do whatever it takes to make an impact in the market they serve and will keep persevering whatever the startup trends of the month.’ I welcome that change.

Thanks for reading; YOU are awesome!

Have a wonderful week,


Platform Banking Taxonomy
By Pascal Bouvier

Like drunken sailors swinging fists at one another, we have been hurling around various terms to describe new ways of banking, new ways to deliver banking services. This post attempts to sort out a taxonomy and clarify the meaning behind the most salient terms, such as API Banking, Platform Strategy, Marketplace Banking, Banking as a Service (Baas) and Banking as a Platform (BaaP). I am using these terms within the context of the banking world in this post. Do note they apply equally to the insurance, asset management or payments worlds, indeed to the entire financial services industry.


If You Want to Convince The Bank To Change, Read This Blog
By Chris Skinner

The statement is clear: monolith firms are industrial age; platform firms are digital age. It also clearly shows the difference in focus. Monolith firms are heavy lifting physical assets; platform firms are providing open markets. This is why the industrial age firms have 100’s of thousands of employees to generate their market capitalisation whilst platform firms have just a few thousand. After all, an open marketplace has 1000’s of other people doing the work to buy and sell on your platform; a monolith firms does it all themselves. This is almost like an aha moment as, when I look at banks, they are monolith firms. Built for the industrial age, they like to control everything internally. They do everything themselves. Banks are A-Grade Control Freaks. The idea of opening up to all and sundry in a marketplace is like an enema to them, but they will have to do this to survive in the digital age.


Why It’s Critical To Get FinTech Regulation Right
By Daniel Nadler

Some argue that regulations stifle growth; others say they are critical to it. To me, regulation — specifically, sensible, nonobstructive regulation — is crucial to the success of the free market system; nonetheless, the key to maintaining the free market system is not a question of more or less regulation but a matter of getting the regulations right. That means government rules that provide a level playing field. Regulations specifically targeting fintech should seek to reduce the asymmetry of financial information between those on Wall Street and those on Main. They should also strive to make human interactions with the technologies safe. Fintech is too important to the future of the American and global economies to get wrong.


Insurance Sector Worried as Insurtech Startups Cosy Up to Customers
By Oliver Ralph

Losing control of distribution is one of the big challenges that established insurers face from new technology. Metromile, for example, is offering pay-by-the-mile car insurance in the US. Simplesurance, a German start-up, is selling product-by-product insurance via online retailers. What unites these companies — and many other insurtech challengers — is that they are not regulated insurers in their own right. Instead, they sell the policies and then have them underwritten by established insurers. One of the responses to this problem is for the insurers to find other ways to get close to the customers. Here, the big hope is the so-called internet of things, in which anything from your car to your TV to your fridge would be connected to the internet. Insurers see several opportunities here. The first is the chance to learn more about how customers behave. They have been using this principle in cars for years, installing telematics boxes that provide data about how well (or badly) the customer is driving.


5 things that made me smarter this week

We aren’t meant to be happy all the time—and that’s a good thing. Recognizing that no one “has it all” can cut down on the one thing psychologists know impedes happiness: envy.

The world has its first “space nation.” Scientists have proposed the formation of Asgardia, which would, among other things, develop a shield to protect Earth from space threats.

Your favorite TV characters could be reborn as AIs. The digital recreations might appear in new episodes or take over for Siri on your smartphone.

There are 10 times more galaxies than previously thought. The new estimate is at least 2 trillion.

Italy is running out of exorcists. Young priests find the job too scary, leaving 79-year-old Fr Vincenzo Taraborelli to expel up to 30 demons a day.

The Overpopulation Of Unicorns Is Bad For The (Startup) Environment

Startup Unicorn Hunt FinTech

The glorified unicorn hunt… It’s the latest trend on the street to be an entrepreneur. With the increasing supply (number of startups) the number of VCs, Corporate VCs, Crowdfunding platforms et al (demand) is also increasing. Good ol’ economics 101. After all, the second biggest trend and buzzword (second to being an entrepreneur, obviously) is innovation. Everyone wants to be digital. Rightly so. Everyone also wants to get their share of the new Facebook pie. I mean if the guy who dropped out from University can do it…

I bet this guy’s Lemonade Stand valuation is in 9 digits, because, you know it’s on demand, organic, hand made, all American lemonade which is delivered to you by a drone managed by AI, right?

FinTech ecosystem - Adult Managing Lemonade Stand

Well, maybe not, but anyway it’s a ‘cool’ concept. As the number of startups (trying to disrupt lemonade stands) increases so does the noise. As a result, the overall quality of startups has arguably gone down. It requires less capital and risk to start a business. Plus it’s looks sexy on your CV.

A further fuel to the fire (in a very positive way) is the shift in mindset of the large corporates towards startups. They are much more willing to engage in a working relationship with an unknown company, or an early stage startup, often becoming that crucial first or second client. While the fee of anything under £10,000 is usually less than the cost of a coffee breakout session at their quarterly town hall, large corporations are still careful. You don’t want to bet on the wrong horse and let the winner runaway with your competitors.

Lack of information on startups is an issues stopping the corporate partnerships from forming. 

The Startup Stack Is Changing

Lucky, the startup stack is changing to address that. Here’s how I imagine it.


The first layer is the actual startups delivering (better) solutions to existing problems targeting retail customers or large corporations. Roughly 5 years back, we started seeing a new layer forming, the support platform for the startups, i.e. startups who are trying to solve problems that other startups create or face. Think of services like airbnb letting agency or products focusing on startups, such as Xero the, accounting platform.

With the choice so vast we are seeing the third layer forming to help navigate the treacherous sea of upstarts. It’s the discovery and validation layer:

The discovery layer – one of the more prominent here are ProductHunt, an aggregation site with popularity contest element of reddit (upvotes and karma).

The validation layer – the companies that can provide a badge of honour or a golden star to help companies stand out from the crowd.

The example for the latter would be Early Metrics, the first rating agency for startups and innovative SMEs. I was very intrigued by their business model so I have met with the co-founder, Antoine Baschiera, recently to discuss how it works and where he thinks Early Metrics come in (you can read the full interview here).

The company is a rating agency for startups that helps to ‘score’ their business potential and innovation. I found their business model intriguing. They avoid the usual conflict of interest (at least in my eyes) of the party being scored also paying the fees to the agency (as is the case with Moody’s, Fitch etc). Startups don’t pay to get rated. Early Metrics charges the decision maker who are looking to engage or invest in these startups. They then get a monthly report with the rating of a selection of startups in their selected fields and/or the analysis of startups they are particularly interested in. I think should help solve the information asymmetry that exists right now.

The Decision Process – Is It Going To Be Yes or Next?

The process of how large organisation would approach working with an early stage company is very linear. A simplified version would look and like this:

FinTech Ecosystem - corporate partnership steps

That’s the happy path, either company can pull out at any stage before the commitment happens. The hardest hurdle to pass is the stage two – will the large corporate allocate any resources to investigate this opportunity. What information would they use?

Frequently, the counterparty could be tempted to judge the quality of the startup by their VC investors and the stage and size of their latest funding rounding but this can be misleading. Bad VC investment does not equal bad company, neither does good VC investment guarantees a good company.

The reason is simple, VC has a goal to return x5 their initial money invested over 10 year period. As it is difficult to deploy VC funds quickly, and accounting for potential delays on exit, a typical VC firm is looking for an exit within 5 years. Often, if the company has great potential but the exit may be 10 or 15 years away, VCs will shy away from such investment. Hence the public outcry from VCs about Uber’s decision to stay private for so long.


So What?

This is why I think valuing the upstart for its business merit is so critical. Independent rating agencies can improve the quality of the startup ecosystem, analysing companies for their business merit not the potential to produce x50 return to its investors.

After all, if you’re a large bank looking to implement a middleware solution to stitch your current two systems together, you care about how sound the business is, not how rich their investors/founders are going to be in 5 years time.


This is a welcome change at the times of a constant chase of the unicorns and ludicrous obsession with higher and higher valuations. At the end of the day, the startups used to be about solving real problems not cramming as many buzzwords in your product description and trying to grow a horn on your forehead, and if that’s the only goal then I can save you the pain – you can buy one for $50 here. Why wasting 5-10 years of your life? 🙂

Thanks for reading! 🙂

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FinTech and Chill – How Fintech Can Have The Netflix Moment

FinTech and Chill - New Post by FinTech Summary

FinTech and Chill - New Post by FinTech Summary

There has a lot of talk about Uber moment for FinTech. Or how disruptive Uber is. Yes, it is, but to more original, I would like to discuss a different parallel – a Netflix moment for FinTech. The streaming company has a winning model and is quickly catching up with its incumbent rival – HBO.

What makes the model tick? If you look at the top 10 TV shows most of them are on Netflix. But does Netflix truly deliver the best content? Or is it simply delivered through a more convenient platform? Or perhaps it is simply the better packaged and cleverly promoted within the platform by positioning it on the ‘eye level’, just like supermarkets do with their promoted shampoos and soaps. Finally, the audience itself, has Netflix managed to attract a more valuable audience that is growing and sticky?

While, on the surface, Netflix has nothing to do with FinTech, once we look deeper, it is quite similar.


Netflix – Some Background

Netflix is a great company. They have always been one step ahead of the competition. I recall when Blockbuster used to laugh at the DVDs-by-mail notion — right up until they tried to clone the business in a last-gasp effort to stave off extinction. By then, Netflix was already well underway in terms of more closely fulfilling its name, moving to streaming over the web.

But even then, it’s easy to forget now that the Netflix streaming service started as a way to stream movies, and not exactly new releases either. Thanks to the Starz deal, it was sort of like a worse HBO without any of the great original content. Then, as the film deal lapsed, television content quickly took over. Then, of course, the company did what seemed almost unfathomable at the time and moved into its own original content.

Each of these moves was genius because it was a step ahead of the curve. With 54 Emmy nominations this year, second to only HBO, Netflix is seemingly closing in on what they set out to do once again. They’ve become HBO faster than HBO has been able to become Netflix. Just see their share price below.

Most of us agree that Netflix has been a success story but how did it achieve its success? Is it the packaging? Is the content? Or is the delivery?

I say Netflix content is damn good (House of Cards, Orange Is The New Black, Narcos, Making A Murderer, Stranger Things). There is, however, other fantastic content out there that we simply don’t discover because we are too busy binge-watching (packaging) Netflix on all of our devices, synced (delivery). It’s easy to see why Netflix has been the prime cause for gray hair on the Time Warner board, the owner of HBO.


Is It FinFlix Time?

Let’s talk about FinTech now. There are many similarities between FinTech and Netflix. I call it the FinFlix time, after all, some of these companies growth stories worthy of a movie script. FinTech companies are picking up steam (SoFi $3bn, TransferWise $1bn, Funding Circle $1.1bn – NY Times).

But we have to ask – do they provide better ‘content’, or simply package and deliver it better than the banks? Clearly even with the latter there is enough scope to cause trouble to the incumbents (Netflix has a market cap of nearly $42bn vs. $60bn Time Warner).

Let’s take TransferWise as an example – their ‘content’ is money transfer, the quality would is measured by two factors – amount of money preserved after the transfer (amount sent minus fees) and timeliness of the transfer. I say they are doing quite well on that – check. Delivery? App or online. Pretty convenient – check. Packaging? It’s simple to use – check. Looks like a winning business model to me.

They know it and are sending a pretty strong message to the banks (picture taken in front of Bank of England)

Transferwise FYCK ad

Time Warner didn’t fear Netflix early on because Netflix relied on the content produced by others until they decided to enter the big league and start producing content of their own making Time Warner sit back and nervously seat in anticipation of what’s to come.

Alternative lending is a good example here with flagship deals like BofA & ViewpostJPMorgan & OnDeck and others. Moreover, some estimates suggest that in the US, around 80-90% of the capital lent through the two largest P2P lenders – Prosper and Lending Club – is institutional money and if they close their taps FinTech will suffocate.

Time Warner thought the same. This is dangerous assumption, all it takes is for one of the current or new players to enter the market and position themselves as FinTech friendly, with the cross-promotion power and the access to the right demographics that FinTechs have these can be the ‘original content’ of FinTech moment.


What Does This Mean?

Once the firms are not dependant on content from the institutions all they need to do is simply package and deliver it better than the banks, which they already proved to be capable off. Content is not enough to dominate the market anymore – you need the distribution network and appealing packaging, which FinTech are great at. I think we will see a Netflix moment in FinTech soon.

Thanks for reading! 🙂

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And now I have to go catch up on the latest season of Narcos…

P.S. if you haven’t yet, subscribe to my newsletter for the best FinTech content once a week.

FinTech Weekly Summary | Aug 01 – 08

There is a lot of talk about FinTech and the dreaded b-word. However, whether it’s a bubble or not (yes I just said it) it doesn’t matter. FinTech is enabling breakthrough and changing the industry that has hardly changed for the last century. I would like to share an extract from Tom Evslin‘s blog post (as highlighted in a recent Fred Wilson post) from January 2005, when the investment world was just waking up to the fact that the Internet bubble wasn’t the end of things, but just the beginning that really sums it up well:

“Historically, the results of bubbles have usually been more empowerment for more people.  Historically, bubbles have provided an explosion of funds which blasted away the entrenchments of an old oligarchy not only to the benefit of entrepreneurs but also to the benefit of consumers in general.  Think of the constantly falling price of transportation and communication. If we should find a way to stop bubbles, if we were to put the genie of irrational exuberance back in the bottle, the winners will be whoever are the incumbents at the time and the losers will be all those who could benefit from another great breakthrough in infrastructure like railroads, canals and the Internet.

Bring on the next bubble.  And invest in it at your own risk. I will.”

Have a fantastic week,


Crypto Tokens and the Coming Age of Protocol Innovation
By Albert Wenger

Historically the only way to make money from a protocol was to create software that implemented it and then try to sell this software (or more recently to host it). Since the creation of this software (e.g. web server/browser) is a separate act many of the researchers who have created some of the most successful protocols in use today have had little direct financial gain. With tokens, however, the creators of a protocol can “monetize” it directly and will in fact benefit more as others build businesses on top of that protocol.


The Golden Age Of Open Protocols
By Fred Wilson

Protocols are a geeky topic. It’s way more interesting to talk about applications. Open protocols are at the heart of many of the most important systems that we have. These are open systems that developers can build applications on top of. On the other hand, proprietary protocols tend to lock in users and drive value to the owners of the proprietary protocol, like Microsoft, Apple, Google, etc. One of the problems we have had in tech is that there aren’t large monetary incentives to create and sustain open protocols. If they are open they cannot be easily monetized by traditional means. However, that is changing with the emergence of blockchain technology and crypto-tokens. I believe that business model innovation is more disruptive that technological innovation. Incumbents can adapt to and adopt new technological changes (web to mobile) way easier than they can adapt to and adopt new business models (selling software to free ad-supported software).


The Three Value Propositions of Ethereum Classic
By Michael del Castillo

The value propositions for ethereum classic break down into three categories – moral, strategic and opportunistic value. Though the functionality of the two networks (Ethereum classic vs Ethereum affected by hard-fork) is at the moment exactly the same, the symbolic power of a ledger that hasn’t been modified proved enough for one developer to take lead on keeping the chain alive. I think it is very fortunate for ethereum ecosystem that there is now a choice for these people. Instead of giving up on the ethereum altogether, they self-selected into a separate ethereum community with a distinct set of values. For those looking to turn back the clock on the potential investment opportunity of early ethereum, ethereum classic has proven an enticing way to do so. Of course, with an increased susceptibility to a 51% attack and only a small number of developers actually building anything on ethereum classic, not everyone agrees that classic ethers could be valuable at all.


A good idea isn’t enough. 3 lessons from building Skype and TransferWise
By Taavet Hinrikus

A seed depends on a whole host of factors to grow — from the fertility of the soil to the right mix of rain and sun to not being eaten by a passing bird. The same goes for an idea. For an idea to really take hold, other factors come into play from timing to the emerging technology that makes it possible. In fintech, it is the perfect storm of a loss of trust in the banks, the rise of mobile and the experience of better in other sectors that means that consumers are willing and ready to embrace non-bank alternatives. But you can only reap what you sow. The most important thing is to just get on and plant the seed. 


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