Ideas for Facebook Coin; Can Robinhood & Acorns grow into their Valuations; Goldman's Bogus Journey -- via Autonomous ?NEXT

Hi fellow futurists -- here are our top 3 favorite thoughts. 

What could Facebook Coin do?

Let's get the facts out fast: Facebook's David Marcus used to runFacebook Messenger. He also used to run PayPal, after selling to it one of his startups. And now he is going to run the Facebook blockchain team. Did we mention he is on the Board of Directors at Coinbase? And did we mention that Facebook has a PayPal integration that lives inside Facebook Messenger? So let's test out some ideas.

Idea 1: Bitcoin as a native payments coin inside of Facebook. The social media network doesn't like ICO advertising because that implies promotion of financial products, Bitcoin is very much not a security and has financial industry maturity (see Goldman, CME, CBOE) like no other asset. If you're making an argument for payments or store of value for a Facebook wallet, why not start with Bitcoin and put it into Messenger as a form of payment. This would the PayPal line of reasoning. Our verdict: unlikely, commercially unnecessary and regulatory nightmare.

Idea 2: Empower users with their data in response to Cambridge Analytica and GDPR. Create Facebook wallets and tokens, where the tokens hold all user data on a distributed ledger, and users can control granular permissions about how their data is used and monetized. Perhaps this merges with the Brave browser, such that attention tokens are backed by deep user data. Our verdict: unlikely, undermines core model.

Idea 3: Create unique digital collectibles that are somehow tied to user profiles and interactions that can be purchased, shared or stored. Unlike selling digital goods from a central data base (which can be wiped anytime), a Facebook version of CryptoKitties could work. Casual gaming like Farmville was practically born on the Facebook graph, and the customer segment is correct. The question is, will customers understand that blockchain-based tokens have real scarcity? Our verdict: possible, easy experiment.

Idea 4: Take the enterprise blockchain approach by finding an industry oligopoly and build common infrastructure. For example, create a common platform for advertisers, that uses smart contracts to execute workflows and is transferable between providers. Replace cookies on people's computers with tokens they are paid to hold, which will allow advertisers in the consortium to target audiences better. Our verdict: possible, though coordination problems.

Idea 5: Launch Facebook Coin, like Telegram did. Just copy/paste Ethereum and its top 10 apps into a white paper description, tell a story about how many users you have, and raise $10 billion from venture investors. Out verdict: never going to happen, we hope. 

Email us anytime David!

Source: Facebook

Can Robinhood and Acorns grow into their Valuations?

Microinvesting apps got a massive boost last week in credibility and funding. We've written before about the difference in model between web-born roboadvisors and mobile-born microinvesting apps, with the key being a focus on attention versus a focus on assets. How do you monetize $500 accounts? You get millions and millions of them. How do you do that? Give out free candy.

Take Robinhood, the free trading app just reached a $5.6 billion valuation, based on a $363mm round. Autonomous partner Vincent Hung looked at the stats: Robinhood has 4mm users, which is higher than E*Trade’s customer number of 3.7mm. But so far, the company's focus on Millennials, and potential for these accounts to eventually become lucrative, does not seem to have impacted any of the large e-brokers in terms of growth metrics or industry economics. This implies that Robinhood is comprised of low asset value / high turnover accounts. We also wonder whether the 4mm user figure is also the active account number.

The investment was led by DST Global, Sequoia and Kleiner Perkins. These are smart venture capital names, but we are starting to have doubts. Robinhood has been raising money like it's their only business, burning through that cash to fund growth, and raising again. This is the social network growth strategy -- burn until you become a monopoly, and then control the market. But is that worth $1,400 per user, nearly all of which pay nothing to consume services that have positive costs to manufacture? If premium subscriptions costs $10 per month, then it will take more than 10 years for a user to justify the acquisition cost. Or perhaps this investment is just a probability-weighted bet on finding the next Coinbase, which runs at a $1B+ in revenue. 

Another example in Acorns, with 3.3 million users, which just received a $50 million investment from BlackRock. BlackRock has been explicit about building out a digital wealth platform of the future. They are owners of FutureAdvisor and part owners of European roboadvisor Scalable Capital. So it's not a surprise they continue to invest in digital wealth solutions that could distribute their products. Today, much of that distribution is done through advisors and financial planners, but this investment suggests they want to get closer to the consumer, directly through an app. It's a hedge in case Millennials change behavior and rely on apps and chatbots, instead of advisors. 

 We like Acorns and the behavioral hack of how it helps people save intelligently, but such an investment has to be analyzed in context. And this context is the shut-down of Learnvest inside Northwestern Mutual -- several years after Northwestern bought Learnvest for $250 million. Attempts at changing investor behavior are difficult and expensive, as are attempts to integrate innovations into large financial institutions. So while the Acorns deal is not as absurdly priced as Robinhood, it still highlights the need for Fintechs to grow up and build out their own business models. Because raising money isn't it.

Source: Learnvest, Acorns

Goldman's Bogus Journey to Retail Fintech

Brands are funny things. They are hard to create, and expensive to boot. You need about $100 million to create a financial services brand with the consumer, not to mention the maintenance cost. And then when it's built, the reputation can get away from you. Only so much can be done to manage how people respond to what you put out into the world. Brands also have to adjust to the shifting sand of cultural change underneath them.

Which brings us to Goldman Sachs, infamously dubbed (by an angry populist Rolling Stone article post the 2008 financial crisis) as a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. Of course, Goldman is also one of the most competitive investment banks in the history of finance. When it gets into a market, it tends to win. In the past, most of its markets were institutional -- for asset managers, family offices, hedge funds and endowments. From derivatives to capital markets to wealth management, the Goldman brand stood for prestige and exclusivity. But that's not cool any more.

Today, Goldman runs the digital lender Marcus which has issued $3 billion of loans, just bought Adam Dell's personal finance app Clarity Money, is partnering with Apple on a retail credit card, and is jumping head first into crypto trading. Let's trace the trends. Apple has democratized the miniaturized personal computer, empowering the masses to leverage technology. Fintechs like Lending Club and Mint popped open the gates of Wall Street to help regular people get credit, information, financial literacy and planning. Crypto assets intend to decentralize the very manufacture of money and financial products, from the intermediary to the end user. Populism, anarchism, chaos.

So while many are dissecting whether Apple+Goldman is better than Apple+Barclays, or whether Jamie Dimon will walk back his Bitcoin words now that his biggest competitor is in the game -- we sit back in wonder. This is Goldman Sachs. And they are in at the ground retail level, following the generational shift to Millennials whose values reflect a different world -- not wealth of assets, but experiences, convenience, connectivity and globalization. Instead of prestige, it's technology, Fintech and crypto. 

Source: Goldman Sachs via LendAcademy, Clarity Money

Events & Podcasts

• Register now for the Pillar Unconference in Vilnius in July. We plan to talk about crypto valuations, ICO developments and the crypto fund ecosystem. (Free, Promo Code: LEX)
• Join us at  Vivatech in Paris, discussing crypto with Tim Draper and Pascal Gauthier
• Check out last week's Rebank Podcast on Artificial Intelligence, where we discuss the application of AI to finance with Ricky Knox (Tandem), Will Beeson (CivilisedBank) and Charlie Delingpole (ComplyAdvantage)

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