Checking in after a year of building

Checking in after a year of building

We paused our regular programming a year ago while I worked on BELLA. It was right after Gamestop. Bitcoin was spiking to $60k, Dogecoin was minting millionaires, Robinhood was riding the hype cycle toward IPO, and decacorns were still quaintly rare. It all feels so long ago now!

I have to admit that I was happy to shift focus exclusively to BELLA. I was getting a little tired of breaking down what felt like reruns of the same show on neobanks, embedded finance, banking-as-a-service, free stock trading and everyone adding a buy crypto feature. When were we going to start seeing audacious new innovations again?

Be careful what you wish for. One year later, we're living in... a different world?

The break from constant analysis and dissection to observe and reflect has provided perspective, which I'll explore more below and probably in future writing.


A quick look back over the past 12+ months reveals general chaos.

To quantify the memes and cut through the noise, let's consult the Oracle a.k.a Google search data.

  1. 2021 was the year crypto & NFTs went mainstream, much more so than during the ICO boom of 2017.
  1. NFTs have achieved similar relevance to crypto by now. Fintech, in name at least, is no more than an afterthought in the minds of the general public.
  1. Leading non-custodial crypto wallet MetaMask has significantly more search interest than decacorn Chime, with an infinitesimal fraction of the media spend. Chase still trumps all, royally, showing just how much ground we still have to make up in the mainstream market.
  1. Meme coins > meme stocks. This chart surprises me the most. Coinbase massively outstrips Robinhood in search interest, which I did not expect. Perhaps even more surprisingly, in the context of the dominance of Chase in the chart above, Coinbase generally outpaces Fidelity in search relevance. Side note, interesting to see Fidelity announcing bitcoin in 401(k)s last week.
  1. One more, just for fun. Crypto clearly dominates over TradFintech interest. Interestingly, everything has been trending down over the past few weeks. We're an industry highly correlated with euphoria and cheap money.


The past 12 months have been a roller coaster in financial markets. 2021 saw a boom in IPO & SPAC activity, especially in fintech, thanks to COVID tailwinds for the industry (and stock prices in general). In late-2020, we connected with Olympus Acquisition Corp, a SPAC that subsequently combined with Payoneer. How did the SPAC boom turn out?

According to the Wall Street Journal, "Nearly half of all startups with less than $10 million of annual revenue that went public last year through a special-purpose acquisition company, known as SPAC, have failed or are expected to fail to meet the 2021 revenue or earnings targets they provided to investors." According to the Journal, as of March 2022, companies that fell short of their 2021 projections did so by over 50%.


Fintech SPAC stock performance, over the last 12 months to 5/6/22:

Payoneer: -58.9%*
Dave: -67.5%*
MoneyLion: -81.9%*
Better: Combination pending
Aspiration: Combination pending
eToro: Combination pending
Acorns: Combination cancelled

Non-SPAC listings didn't fare any better:

Nubank: -50.2%*
AvidExchange: -66.0%*
Robinhood: -71.1%*
Remitly: -82.6%*

Neither did a selection of previously listed fintechs:

Coinbase: -59.7%
Paypal: -67.4%
SoFi: -71.5%
Block (Formerly Square): -57.1%

For reference:

Nasdaq: -11.2%
Financial Composite ($XLF): -8.2%
JPM Chase: -23.8%
Visa: -12.6%

Facebook: -36.0%
Amazon: -31.1%
Apple: +20.9%
Google: -3.1%
Tesla: +29.3%

Crypto majors:

BTC: -36.5%
ETH: -23.5%

*All-time performance shown, as listed for less than 12 months.

So much to unpack sometime about the dynamics of private vs. public markets, the stock market as a mechanism for capital allocation, valuation methodologies for growth companies and more.

Of course it's not just SPACs. We're all exposed to the markets, so we're well aware of what has been happening over the past few months. Suffice it to say the music has stopped, at least for the moment. We're observing the painful (though overdue) impact of QT and rising rates, coupled with zero nuance around quality of revenue streams & management across fintechs.


Great, so crypto + web3 are up, traditional fintech is down, and markets are in freefall. What can we learn here? A few things stand out to me, which I'm starting to dig deeper into.

We built this rollercoaster we ride.

Cheap money, valuation maximization, the attention economy, growth metrics, blitzscaling. This is the world we live in now. We know that, because we built it. No judgment. But we have a responsibility to deliver positive outcomes.

The foil of crypto can help traditional fintech clarify its purpose.

Iterating around interest rates and transaction notifications doesn't move the needle in an era of web3 disruption. Fintechs should focus on the highest value problems they are uniquely positioned to solve. These are the opportunities that will persist in a fickle, 140-character world, and where durable value can be built.

Value is created for opportunists in bull markets and society in bear markets.

Simply put, if your fundamentals are designed for bad times, they'll work in good times. The opposite doesn't hold.

Incumbents increasingly aren't playing our game.

A few years ago, every incumbent was writing a press release about blockchain and scrapping their traditional dress code. Now, because of the speed of startup innovation and the growing generational gap between old and young, most incumbents are dropping out of the innovation game.

What is the purpose of the stock market?

Given present capital allocation & value creation dynamics, how well-suited is the stock market in its current form? How would it be built today, from first principles?

The coming regulatory response to crypto will shape the next 100 years of geopolitics.

The way governments regulate crypto/web3 over the next few years will inform the balance of technological and economic power and influence for generations. It's not obvious how to balance risks and opportunities, and there won't be much time to figure it out.

There's a lot more to unpack here! Until next time.