Cambrian

Prediction markets are the big winners from the election. Markets are truth seeking machines. In an age where faith in many institutions is failing (especially the media), we need new institutions than help us reliably make sense of the world. Prediction markets are a big part of that. Here’s my interview with Founder and CEO of Kalshi, Tarek from 3 years ago. The 1st fully regulated US prediction market. I’m doing a follow up interview with him next week. What questions do you have? https://lnkd.in/gVyQcR7N

Newest fintech fund is $184 million from the ex PayPal ventures team. Chatted with my friend Jay Ganatra about what he and the Infinity Ventures team are up to. One of the best things about fintech ecosystem is how much better the investors have gotten. It used to be incredibly hard to find specialists who actually understood how things work. That’s not longer true. Infinity is a great example. Now on their second fund. If you want a team who is deep on payments and commerce in particular, it would be hard to find anyone better (paypal has 100s of million monthly actives and is live in 150 countries). They’ve been an awesome partner to me and companies we’ve backed together like SimpleClosure and Vinyl Equity. If you want to hear more about who they are, what they do and some great stories from the PayPal days (their team did the Braintree and Venmo acquisition among others)…check it out!!! https://lnkd.in/gcvKCmUY

*Fintechs $300 trillion Opportunity* Financial services revenue is $30 trillion globally Fintech has captured around 1% of that or $300 billion. The problem with a lot of financial services revenue is that it it requires a lot of ppl and is low margin. AI is starting solving for the margin issue. Things that used to require lots of ppl won’t anymore. This won’t happen overnight. But it is very likely to happen in the next decade. That enables several things - higher margins - better products w/ more things bundled together. Today, financial services companies in aggregate trade a little around 1x revenue (I’m bundling in a lot of things you won’t see in public markets like tax prepares, CPAs etc. public market companies tend to have different quality revenue and trade at higher multiples). Today the market cap of all financial services company is around the same as the revenue but revenue (around $30 trillion each) is largely low margin. When software starts replacing ppl we are going to see rebundling on steroids. We will also see revenue multiples expand to software like multiples, call it 10x. So Market cap for all financial services companies powered by better software could be $300 trillion. There are a number of objections to this. - Won’t incumbents benefit too? Yes, but I think startups are better at rebundling and rebundlers will get most of (but not all the gains). - Won’t software lower the cost of intermediation and reduce revenue for financial services shrinking the category? Yes to an extent. But again, I think more things will get bundled in. When you start replacing ppl and automating flows you can charge the same (or more) bc you provide more value. - $300 trillion is a crazy number you must be an idiot. Ok, maybe that’s a bit excessive. Even if I’m off by an order of magnitude there is still a ton of enterprise value up for grabs. Looking forward to fintechs most exciting decade.