YouSaid · the spoken record

Ben Savage

lines on the record: 69
first: 2019-12-17
most recent: 2019-12-17
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Of kindness. I mean, kindness is kind of a funky work. What does it actually even mean to be kind? And one of the things I sometimes say is you learn the real truth about people when you ask them to do something and it costs them something. Like it really costs them something. That's when you really know what somebody's about. Are they going to cost themselves something to help someone else? So maybe that's a good definition of kindness. If kindness costs someone something, you're putting something at risk, whether it's a relationship or some self-image, whatever it is. And so I think most of the moments of kindness that I can reflect on have been people willing to put their self-image or our relationship at risk in some way. I don't know that I can come up with a specific one on the spot though.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's hard to put a specific moment on it as I'm kind of reflecting on it. I feel like I'm fortunate enough to have just been exposed to so many different successful people throughout my life, for lack of a better way of putting it, whether that's personally successful financially successful, spiritually successful, whatever it is, who've just been willing to kind of share advice on what's mattered to them and what they've learned, that there's probably a constellation of these kinds of moments where someone said, hey, this thing you're doing that's working or that's not working. And so I think there's probably a handful of moments I can think about where friends have been willing to say, let me step out of a comfort zone and tell you something that you don't maybe no one's told you or maybe you didn't want to hear or maybe you didn't know about yourself or something you're doing. And I view that ultimately as a sort of action.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Have a way of almost speaking out of both sides of their mouth where they can sit across the table from an investor and say, I'm laser focused on this market. This is what I'm going to do. But by the way, if you just let your mind run a little bit, here's all the other stuff that once I've really crushed this thing, I'm going to take over. And that seems to work over and over again. I love it.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Thing about the cost margin of a business and all you're doing with incremental money is just literally pouring it into top line growth and marketing funnel that then just runs through some economic waterfall at the bottom that if anything you're seeing improving margins to allow the business sort of effective ROE to go up on the business over time. As a practical matter, what tends to happen with these things is you give them more money and actually the ROE goes down because they invest more and more in product because they're not optimizing for the bottom line. And that's very much a symptom of a surfeit of capital that exists in the world today. But yeah, if you start with a niche and you stay focused on it, you kind of figure out what the true economics of the business look like in that category. And then you go, hey, this worked in this thing. Maybe we can do something else. So we talked earlier about landed. We started off focused on school teachers that make sense there, but you can imagine the adjacencies that start growing from that market. And the best entrepreneurs, the absolute best founders.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Some of it's just a practical thing, too, about how are you going to attract capital to keep going because you're not going to make money that fast necessarily. And if you start with something small and can show it's working, you can show faster growth a lot of the time, which then in turn unlocks incremental capital to let you kind of keep going down those paths. And so, yeah, very much things start small and then there's this snowball that just starts compounding. And in some sense, the whole theory of venture capital is, look, we're going to allow some business to grow significantly faster than it's kind of ROE would otherwise let it grow if it retained earnings and just kind of kept compounding at that rate by just pouring money on the thing to let it grow at not the ROE, but essentially the return on margin, the return on marketing margin, a very, very different kind of cost profile. And in some sort of venture capital fantasy, you don't change anything.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Gun stocks or short gun stocks. You can imagine somebody spends time and figures this out and figures out how to market to that demographic at scale, how to serve that demographic at scale, and that kind of thing I think will be a lot of the future of financial service.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Silicon Valley in First Republic, yeah. Really First Republic. And so I think this kind of idea, you'll see this happen more and more. And it changes a little bit of the risk profile if your city or Barclays or Chase or Wells that instead of worrying about the big horizontal players that are going to come after you, now you have to worry about death by a thousand cuts sort of thing. And this is a little bit of a classic kind of innovator's dilemma approach. There's some small group that doesn't seem like a big deal where, okay, I can lose those customers. But then you realize that's happening at scale. And so you talked about investment management in our RAAs and so forth doing a good job. This is a thing you could imagine where somebody says, I'm going to build an RIA that just serves police officers. A lot of police officers in this country. You can imagine the marketing campaign that would work for that. And I don't even know what the investment strategies tailored to police officers would look like. I don't know if they're long.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Conspicuous as you go, Well, don't build a bank for yoga instructors, but build a bank for healthcare providers. That's a big category. Build a bank for first responders. That's a big category. Build a bank for military professionals, which guess what? That turns out to be a big category, and lots of people have done that. Or build a bank for venture capitalists, which has also kind of been done. And that worked out pretty well.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“A good business, the amount of money it would cost you to build that thing is not going to be recouped because the size of the yoga instructor market, well, I'm sure it's growing very quickly, is still not big enough historically to have warranted what it would cost to build the Bank of Yoga instructors. But what if by contrast it doesn't actually cost that much money to build the bank for yoga instructors because you can outsource the ledger that's going to take the deposits to a whole fleet of infrastructure companies that are being started? And you can outsource the marketing and the cap cost to a bunch of players that are really, really efficient at targeting yoga instructors. And you can outsource the user interface design to some firm that's going to cost you a little bit of money, but you kind of get the joke that if you can build that thing way, way cheaper today than it would have cost a decade ago, which is absolutely true. Maybe suddenly the bank for yoga instructors is actually an economically viable idea. And I think where this becomes...”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“That they can turn on some payments functionality and earn incremental revenue from managing payments. And there's a lot of that that's happening in FinTech right now. The last horizontal thing I'll mention is actually what I would characterize as almost a vertical play, which is this idea that you can create through technology more targeted affinity groups as customers. So one of the things I sometimes talk about is a bank for yoga instructors. So you could imagine that at any point, 10 years ago, 20 years ago, or today, somebody at JPMorgan could say, we're going to go build a purpose-built bank for yoga instructors. And whatever it is that the particular financial services needs of yoga instructors are, and they have bespoke needs, I mean, there's software packages that exist for yoga instructors, we're going to go build a bank that just serves yoga instructors perfectly. And you can imagine you spend a bunch of money, you build this bank, and then over time, you get all the yoga instructors in the world to bank with you. Well, that's probably not.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“To get your money faster, even though that's kind of irrational in some ways. And so you could imagine it changes incentives in the workplace if you got paid a little bit faster. So payroll and the moment where labor and value kind of exchange feels like an area of focus for us. So that's one category. The second thing I would say that we're interested in is what I would call emergent financial services. And so what I mean by this is you can imagine software, and we've talked a lot about software so far, that offers financial services almost as an ancillary thing within that context. And so a lot of what you're seeing in payments companies are I'm embedded in some enterprise for one reason or another. And then later I turn on a paying function. And so actually the payroll advance company that we're involved in mechanically does this. They sell software to a particular category like restaurants and shift work things. And then they're paid SaaS revenue for that. And it's a beautiful piece of software. But then behind.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's like there's a much looser connection between what is the work you did and what is the compensation you earned. It makes, it sort of doesn't feel as strange that it shows up randomly every two weeks in the bank because the hours I work today, the things I did today as a knowledge worker are much less connected to sort of the value of my labor. But I think over time, and this perhaps connects to some of the things we were talking about earlier around legibility in markets, there's going to be more legibility around who's actually adding value in your company and what are people doing on a day-in, day out basis that's actually moving the needle. And all of these things have the potential to really change financial services. You can imagine a state of affairs where a company says, okay, we can actually figure out in real time who's driving our bottom line and we'll pay you much more tangibly in real time. And there's something about getting paid faster that people like. I mean, there are literally apps where you just get paid, you pay a fee.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yet most of us settle payroll at T14. Doesn't make any sense. My trade with my employer is I'm giving them labor. They're giving me back money for it. And yet that settlement. There's very good reasons for that, by the way. That makes sense. But yet, you don't have to pay people necessarily when you're supposed to. I mean, in theory, you could run a company if you wanted to, and you chose to pay people T60. It would be a weird state of affairs. I'm actually sort of surprised that some of the investment banks haven't tried to do this yet, where they would just say, yeah, you make enough money. You can cover your cost for the partners. We're just going to pay you once at the end of the year. Because why not? Anyway, all the stuff that happens at that moment of we're going to transfer your sort of earnings back to you. You could imagine a whole bunch of financial services that happen there at kind of the point where labor and value are actually exchanged. And I think Uber and Gig economy is a really good example of how this works, where it's a much tighter transaction of I did the ride I earned X. I can get paid faster. We know exactly what's happened. And now where I'm going to route that money becomes much clearer. For knowledge workers,”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, yeah, totally. And so there's all kinds of weird inefficiencies that exist because you've needed historically a degree of scale to deliver these kinds of financial functions. And I think all that stuff will evolve. And we're invested in a bunch of companies that do this, like health savings accounts is a good example of something that if you're a freelancer or a gig worker that's been sort of difficult for you to set up those kinds of things. But now technology and startups will make things like that easy. So future of work and all the permutations as it rolls through all these kinds of things, all these categories is an area of interest for us. I think another area that we pay some attention to before I do that, just on future of work, one of the things we also think a lot about in regard to this idea of big corporates and so forth I mentioned payroll. So there's been a big thing in fintech over the past couple years around essentially payroll advances. And you sort of go, okay, in investing, we can settle a complex derivatives trade at T plus four.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“We're cognizant of are like, what are the functions that still exist only big corporates can do from a financial perspective that will eventually make their way down to individuals? Finance turns out to be one of those. Tax turns out to be one of those that's kind of interesting. Big corporations have really sophisticated tax and rich people have really sophisticated tax advice. And yet turbo tax, which is an unbelievably good product and intuit is a sort of remarkable company, it's still not approximating the same degree of sophistication. Right.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“to be a kind of atomization of jobs where you're never going to work for someplace for 40 years unless it's kind of your own thing, most likely. And people will move jobs more and you'll see more and more consulting and freelance type things. And so the example we like to use is payroll. Fifty years ago, there was a payroll department inside big companies, and there was sort of some warehouse full of people. And in the movies, you sort of picture all these women with big glasses shuffling paper around, and you'd call the payroll department and they'd send you paper checks and like, this is complicated calculation. Now it's like you can imagine that. You just software does it for you. And everyone can run payroll. It doesn't matter what size you are as an individual. You can run payroll and do these kinds of things. But there are more subtle things like accounts payable. Corporations still have AP departments. Big companies do. And yet technology is making that easier even at the level of a freelancer where QuickBooks can do this kind of stuff for you.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so we think about the landscape as sort of five categories payments, insurance, capital markets, and investment tech, personal finance, and then kind of banking lending credit. And then we would add margins to that, some things like e-commerce infrastructure, enterprise financial services, and things like that. At the big level, there's something happening in kind of all of those categories. What tends to be more interesting to us are almost more horizontal themes that work across all these things. So one big horizontal theme that we think about is if you imagine 50 years ago what it was like to run a big company and you think about the financial functions that were involved there, fast forward to today, a lot of functions that used to be reserved for just really big enterprises have trickled down to small businesses and ultimately to gig workers and freelancers, which is this real big trend that we don't think is going to change the future of work is going to continue.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Possibly imagined at that point in time. All the limits that anyone would have said about there's no way private equity can get that big. It's bigger. And I think venture will do something similar.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“enough in the minds of entrepreneurs because it's not that transparent of a market. There's not that much liquidity and you don't really know whether somebody's adding value or not, that there's some durability to these franchises, even in the face of steadily increasing price. It remains to be seen, though, if that power will persist as the flows get bigger and bigger and bigger. And I believe we're still in that period, that the net inflows to venture are going to get bigger and bigger and bigger. And I think by analogy, if you imagine the private equity world in the early 2000s, everyone into private equity time was like, wow, this thing's been really big. It's way bigger than we ever thought. And what's going to happen in sponsors or buying deals from sponsors and they're paying these crazy prices fast forward to 2020 from 2001, 2002, and I was doing private equity back then. And it's way bigger than you could have.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Like, okay, now maybe I'll sell to you. But what's fascinating is that actually doesn't seem to work in the venture business. And we have a founder in our portfolio who took money from a venture firm at what he internally believed was a 40% discount to the market to get that firm's brand on his cap table. And it wasn't just getting the brand. He thought they were actually over the long run going to be more valuable. But what's fascinating about it is before he did that, he picked up a phone and he called a bunch of entrepreneurs that that same firm had also backed. And they all said, yeah, yeah, you're going to take a 40% discount here, but you'll make it up on the back end because you'll actually get a premium when you raise your next round of capital. Now, I sort of hear this story, it's obviously impossible to know whether this is true because there aren't good counterfactuals out there in the market because it's always going to be a single idiosyncratic story. It sounds probably not true to me, but the power of some of these brands is strong.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, and I think the really interesting thing is that in a typical market, you would go, that sort of access privilege, which you describe and I think is true, would disappear in the face of a capital flow because somebody would just push the price enough and say, yes, I understand that you awesome entrepreneur X. You don't really want to sell to me because I'm not as cool as those other people. But what if I just pay you a heck of a lot more?”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. The entire beta. But again, if you could pick the top half of it, you'd clearly want to own it. And I think that's a reasonable assumption to make that somebody sophisticated could pick the top half of it.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and an angel less like there are Angel List has tried to do it. I mean, the challenge is venture as an asset class in aggregate. It's not obvious that you'd want to own.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Because the way the market works, it would be too hard to actually get to the underlying assets. But an allocator could actually do the indexing work and buy an index of venture. And they could say, we're going to get out of the manager selection business in this asset class because we don't need to do it. What we really care about is actually just getting the underlying beta innovation and capital formation in this space. Now, if somebody”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Of sort of venture managers, which feels like, man, if you can't do that, get out of the job. So if all you did then was say, okay, I can determine what the top half of the distribution is. All right, bang, I'm at 50 billion. So what would it cost to buy 1% of every manager of all that every year? Okay, it's not that much money. It's $500 million, which is a tremendous amount of money. But if you're a $200 billion plan sponsor, $500 million a year over a three-year cycle is a billion five. That's a one and a half percent position for you, which is not a big position in your aggregate portfolio. In fact, if you were to look at the endowment models where they run anywhere from five to 25% in venture as an asset class, it's still a tiny position. And you could probably execute on this strategy. I don't think it will be a manager that does this kind of thing.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a market for that just like anything else. But I do think you hit on one of my favorite ideas, which is who's trying to build an index of these kinds of markets? And if you take venture capital as an asset class, it's not a big asset class. It's like $100 billion a year in the US. And so you can kind of go, well, huh, what would it take to really index that asset class? And there are lots of allocators that are call it, let's say, I mean, I've actually had this conversation with a pension that's like a $200 billion pension. I was like, let's say you wanted to index not the entirety of the venture asset class, but let's make a simple assumption and say you as an allocator can figure out whether a manager is in the top half or the bottom half of the quality distribution. And that is the only assumption. That's the only prior we're going to make that you can figure out whether manager A is in the top half or the bottom half of the quality distribution.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Very few less than 10 for sure institutions that have durably reliably delivered extraordinary results in venture over time. It could just be that something about the asset class, it could just be people check out and retire. Who knows why that is? So it's hard to identify which firms could command real premium prices. But I think the flow of capital into private assets and in particular private alternative managers will prevent that fee compression. One of the things that drives fee compression is, well, money is walking out the door. Let me lower prices to kind of attract it.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“And how you think about that? Yeah. So I think all that's true. And I think that will make fee compression in private markets a little slower. So public markets, obviously tremendous fee compression. And we are involved in the hedge fund world as well as the private markets world. substantial fee compression that's not going away. I do think you're starting to see a clearer bifurcation though in liquid markets where the premium alphas actually are going up in price interestingly because there's a scarcity value to it. They're durable and so there's just more demand than supply. So people can charge kind of whatever they want for it. You might see the same thing happen on the private side, but I think the discontinuity in the distribution of returns that you articulate is actually in some ways more extreme in private markets at the moment. And so it's harder to identify what that durable source of alpha is going to be. And kind of the dirty secret about the venture industry in particular is that there's almost no institution that's one in Sequoia.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“And while the commissions may go to zero through Robin Hood and Schwab and whatever else, I think Schwab can look at it and say, all right, we can take commissions to zero. We're still going to make money on a different set of people who are going to pay us something for the advice. The advice isn't free, and that's harder to make free. So there are these kinds of trends, but I think it's just a fruitful path for entrepreneurs to go down.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Distribution costs where, and you've already seen this, by the way, that everyone kind of looks at insurance and says, wait, why am I going to buy, I mean, young people are very confused about this idea of walking into a state farm branch to buy insurance from an agent? And on the commercial side, people who run small businesses are really confused when a broker shows up and kind of wants to take them out for a steak dinner to sell them a small business policy. And so you've seen tons of startups get formed that say, well, no one's ever going to buy it. These people are just never going to buy from brokers. Let's try to distribute it totally online and give them that kind of direct-to-consumer Amazon-like experience. And that kind of stuff of distribution is a pretty good natural endpoint. I think financial services, though, are a little bit resistant to some of these trends because just think about the word financial services. To the extent you're interested in it, you're paying for some kind of service at the end of the day.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Is going to be a thing. It's already been a thing for 30 years. Let me just jump to the end and say I'll build those portfolios for you for a very low price. I think in insurance, there are probably lots of these kinds of threads that have been working their way through the system, which is more and more refinement of risk pools, I think, is a good example of it. So Gico has been this sort of incredibly successful company because they have both a much lower cost of manufacturing premium and sort of they're just a more efficient operating entity, but they also select a very specific risk pool to be a Geico driver. They're just sort of picking the good drivers off out of the risk pool. I think technology is allowing us to put more and more precisely underwrite and define risk pools in sort of tighter and tighter bands. And so I think you will start to see that happen more broadly in a set of insurance risks as an example of that. I think the other thing in insurance is.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. I think it is a powerful way for a startup to address a market is say, take a big existing market and find a trend that's already happening or has been happening for a long period of time and just push it in your mind to the logical conclusion and then just make that your business model. Just go right to sort of zero commissions totally free trading. I don't know exactly, I mean, if I had a long list of these, I probably should go build one of those instead of doing what I'm doing. But I think within financial services, there are lots of these kinds of trends that you can think about. And one of the ones that's already happened is just actually a very similar thing to Robinhood. It's in banking where the fees on banking services have largely come way down. And so you see a whole bunch of challenger banks that have said, no, no, it's zero fee banking. We'll make money in some other way on the payment scheme. And so you've already seen that happen and certainly betterment and wealth front and robo advisors like them are examples of this too, of saying, wait, passive indexing.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Were envisioned in the beginning of truly permissionless trustless setups. They're still very, very gated. And that might work, but that's just a distributed database with a handful of key masters, as opposed to the idea of a truly permissionless.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's hard for me to see that many good use cases outside of actually, okay, maybe we want to have some store of value that can be traded in that way. And Bitcoin's actually not terrible for that. And I think there's a reason that Bitcoin has the market cap in crypto, because that seems like a reasonable thing that there exists some digital gold that's outside the sort of fiat currency system, that's outside the banking system, that is really hard to get access to short of me having a gun to your head and forcing you to tell me your keys, which is a whole other set of problems. This thing's been around a while now. Most of the time with technologies that are actually going to be foundational 10 years in or whatever we are, you would start to see some use cases. And there are some. The banks are doing things on blockchains. Again, I think their versions of blockchains don't look like the kinds of blockchains that”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. That's right. That turns out, though, to be a kind of funny idea. I think of it in terms of markets, and you sort of go, well, what do you want from markets? Do you want a centrally cleared market or not? And the interesting thing is centrally cleared markets are, there's more liquidity, they're in some sense more efficient, and they're safer places to trade. You pay for that. There is a cost for that. But there are a lot of advantages of centrally cleared markets, and notwithstanding the point I was making earlier about public markets versus private markets, there is a value in centrally cleared markets, whether it's a card swipe on a Visa or MasterCard network, or it's a futures trade, there's value in this. And so when you put things on a blockchain, and it's a true trustless, permissionless blockchain, it's not, oh, yeah, it's a blockchain, but there's actually five nodes and they're controlled by big companies, which is just a distributed database and not what the real sort of crypto people.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“The word blockchain anytime you hear it for alternative database technology, which is sort of a cheat, is there magic in it when you stop saying the word blockchain and suddenly you say alternative database technology in it? It turns out I don't think there really is. Because what you get with blockchains, the foundational idea is this idea of a trustless”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Give a high conviction view. What I would say is I've yet to hear, and so I'm going to circle back to your question, which was about cryptocurrency. I don't make a meaningful distinction between, or some people are like, well, it's not about cryptocurrency. It's about the blockchain. I think that's kind of a silly distinction. Tradable instruments on a blockchain is a specific use case for a blockchain. I think it turns out to actually be the best use case of a blockchain is some kind of tradable store of value. And I say that because we have not heard a single pitch in our history and in fairness we don't focus that hard on this stuff. But we've not heard a single pitch where I kind of heard it and somebody said, we're going to do X, Y, and Z and we're going to do it on a blockchain. And I've said, well, if you didn't do it on a blockchain and you just did it in a SQL server, is it really that different? What's actually better? Because you're doing this on a blockchain. And that question seems to throw blockchain people sometimes. But I find it helpful if you substitute.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, I would say we have been wrong about this stuff from inception. Okay. So I'm a little hesitant to give a stroke opinion.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Technology kind of commoditizes a lot of these functions. And you get the elimination of a lot of jobs. And then you get a small number of, a much smaller number of humans required to kind of keep the machine running. Those people end up making a lot of money. And they essentially, in some sense, will capture the wage that all the other people sort of had to lose. But it ends up being the technology where I think most of that value goes over time, more so than a lot of people kind of pushing paper. And that's fundamentally what financial services has been is a lot of paper pushing. And that's just one of the big things happening in the venture world is that identify any human paper-based process, that's going to go away through software. It doesn't even have to be fancy AI machine learning stuff. It's just pure workflow software will kill those kinds of jobs and kill those kinds of processes over time.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“And it's hard to know exactly why it was such a high paid piece of the system, but it seems like you're going to see just tremendous wage pressure in the financial services business. Downward pressure. Downward pressure. Yeah, tremendous downward pressure across the board because”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Kind of combined with the fact that most active managers have not done extraordinarily well over the past decade, I think has driven a search for So, I think that's kind of the biggest change in the front office. I would say in the middle and back office in asset management, one of the things that's happened partially as a result of blockchains being a meme over the past five years is that there's a renewed focus on, wait a second, there seems like a really inefficient and high cost stack here to just execute and settle transactions. Maybe we can drive a lot of cost out of that stuff and sort of free up capital for better productive uses within the investment management business, kind of get back to this kind of war for alpha in the front office that it seems like has largely not gone very well for most folks over the past few years. And so you're seeing a tremendous amount of investment there technologically. And again, this kind of continued lift out of talent. The financial services industry, big chunk of GDP, it's between 15 and 20% of GDP. Part of that is because it's a really lucrative, high paid sort of sector historically.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. So I think on the one hand, things are moving very, very quickly, and on the other, it's unclear whether it seems to matter. The big thing I would say is the convergence of traditionally discretionary investment strategies with more systematic and quantitative approaches has happened much, much faster than I would have predicted five years ago. Some of that's just been a function of younger people taking on jobs and anybody who graduates from college today can code effectively. They're getting jobs on Wall Street. And that is just a cultural shift in what is expected in any of these jobs across the board relative to the people who've inhabited those jobs for a longer period of time. I sort of think back on myself, I graduated college as a philosophy and political science double major, didn't know how to code, not especially quantitative. I don't think I could get a job at an investment bank today. Although maybe because those jobs are a lot less desirable today than they were 20 years ago. But the skills are just quite different. And so that.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“The sort of fee extraction is really too high for what most people are getting, which is largely a commoditized kind of service. And technology will drive that down. But for some people, they're happy to pay the fee because it's functionally like therapy. I mean, so I think they're doing an okay job, but there's room for improvement.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Has actually gone up a great deal. At the bottom of it, what do most people actually want? Most people don't really want to beat markets. They just want to make sure that their neighbors not beating them at the end of the day. I mean, that's really what drives most, I think, of retail investment. And somebody's going to show up at a cocktail party and their neighbor's going to talk to them about this super hot stock they're in or this angel investment they're in or maybe it was buying gold when that was a nouveau thing to do and maybe it will be buying income share agreements at some point and that'll be the cocktail party chatter and then you'll see it sort of become a thing and rias will get hit with weight why aren't i in an isa fund and half the ars what's an isa fund and then to have big funny you should mention it i have one on the shelf through this platform and so on and so forth but i think for most people they're getting something decent they're just overpaying for it from ras and technology will drive all those costs down and i think that's really the challenge for most of the investment industry is that”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Discretionary FX trader on Wall Street. Those jobs are vanishing. That was a great path to making a lot of money if you started doing that in the 80s and 90s. Today all those people are being fired from their jobs. If you're a discretionary bond trader, no one is hiring you. No one's hiring you out of college to do that job. No one's hiring you if you're 10 years, 20 years, 30 years into a career. And so if you're a young person thinking about starting a career, or even if you're 10 years into your career, I think these things start to become relevant. But if you're an RIA and your job is managing a bunch of money for those doctors whose wages may decline over the next generation, I think they largely do a decent job. And I think the technology industry has delivered a lot of new solutions for them to access lots of asset classes. I think the challenge in those jobs has actually gone up because there's been such a proliferation of information and of opportunities downstream to people that the complexity as an investor in those jobs.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Their businesses and their job, in some sense, is just not that kind of timescale. So if you're talking about a five-year return target, which is already, that feels like a really long time for most people, I actually think most of these players are not doing a terrible job. I think they're doing okay because a lot of these changes that we've been talking about, I think really will obtain over a very, very long period of time. And so unless you're in the business of trying to capture alpha associated with those changes, which we are and other sort of venture investors are, it's less relevant for you. But I think, let's say you're starting a career in the investment management industry. I think it's very relevant for you. Because if you're saying, hey, I want to be an investment professional for 50 years of my life or 30 years in my life, suddenly this stuff does matter. And there's not a lot of people today who sort of are really excited to start a career as a”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Are charged with running money on a 30 year timescale. And then there's a subset of that that are actually succeeding at that mandate of running money on a right.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I love that phrasing, and it's actually phrasing we talk about internally of seeing around corners. One of the things we're cognizant of, though, is sometimes in venture, you can almost see around too many corners. And you get sort of too far forward because change can be very discontinuous. Some things just kind of keep happening and 20 years on, the trend has been the trend. I mean, e-commerce, it's sort of just this steady thing that's been happening for 20 years. Markets didn't price it continuously. Markets priced it very discontinuously. But the underlying has been very continuous. Then you see other sorts of changes where you're just never expecting it and you sort of wake up a year or two years later and there's been this enormous inflection. Social media is probably looks more like that than something like e-commerce. So one of the things I would say is the investment industry isn't actually responsible, I would say, for seeing around two or three corners because unless you're actually running money on kind of a 30-year timescale and there's very few people that even form”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“Go long tech businesses. You can imagine a million of these kinds of things, and that's actually a really good example. Let's say you wanted to bet on wage inflation in the San Francisco Bay Area long and short it in New York. You could never make that bet today, but if ICES existed, you could at scale. And I think this will happen because almost every player in the student loan infrastructure doesn't like the way the system's set up today. From the colleges to the government, the debt providers, the only people who actually like it are the servicers. And even they are starting to realize that the business is starting to sort of topple over under their own weight.”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source
“And we're doing it in a way that is hopefully much higher resolution than you would get even just applying for a personal loan. This exposes investors at scale to different kind of beta than you've been able to get before. Because student loans are pretty large part of the capital ecosystem you can buy student loan securitizations. You can buy student loan debt. But if you imagine that I can buy different kinds of income share agreements across different geographies, across different age groups, across different majors, different career choices, I could get exposure to a beta that was the earnings of doctors in the United States. And what an interesting way to express a thesis about healthcare. So today, if I have some view of what's going to happen as an alpha view,”
2019-12-17 · Invest Like the Best · Ben Savage – All Things Fintech Investing - [Invest Like the Best, EP.152] · IDENTIFIED FROM THE TRANSCRIPT · source