Ep. #1088 - Investing in FinTech

Matt DeCoursey 00:00
And we’re back! Back for another episode of Startup Hustle. Matt DeCoursey here to have another conversation I’m hoping helps your business grow. So we’re all familiar with fintech. We use it. We love it. We hate it. We invest in it. We don’t. It’s everywhere, and it’s probably not going away. So, you know, that’s the real question. I mean, as fintech is something worth investing in, I’ve got a subject matter expert with me today. And before I introduce who will be joining us, today’s episode of Startup Hustle is powered by FullScale.io. Hiring software developers is difficult, and Full Scale can help you build a software team quickly and affordably and has the platform to help you manage that team. Visit FullScale.io to learn more. With me today, I have Marcos Fernandez, and Marcos is the managing partner at Fiat Ventures. It’s a venture capital and private equity firm out of San Francisco, California. I have a feeling a few people listening to the show today have heard of that place. So without further ado, Marcos, welcome to Startup Hustle.

Marcos Fernandez 00:57
Matt, thank you so much for having me on the show today. I have been a long-time listener and great to finally be on here.

Matt DeCoursey 01:03
Yeah. And well, I almost want to say glad to have you back because everyone listening doesn’t know that we just had a technical issue. And, you know, we’re kind of like Groundhog Day. So yeah. But, you know, let’s restart our conversation with a little bit about your backstory.

Marcos Fernandez 01:22
Yeah, absolutely. The second time is always better than the down. Yeah, so, you know, a quick backstory on myself. I started my career in management consulting. I was working on large tech implementations in the state and local government space. I love technology but do not like to speed. So I went to business school at UT Austin, where I got to meet a classmate of mine who was just starting to work in this budding fintech ecosystem back in San Francisco. And I was very fortunate to start working with a company that initially started on Student Loan Refinancing. And then expanded called Sophia at that time social finance, then shorting to Sofia, and was really instrumental in helping them launch the next set of products that we brought to market. And the role that I really took was, you know, taking these opportunities under my wing, getting them from zero to one, seeing what that early product market fit was. And then, as we started to scale those with other teams, I just kind of moved on to the next one, and the next one, and the next one. And, you know, from that, I started advising and doing some small Angel checks until a lot of the early fintech ecosystem in San Francisco and got to know my two now, my partner’s now, really, really well. So Alex Harris was the head of growth at chime from series A to D. Jews, that study helping folks in the 1099 space, and they started to advise some companies in that group so quickly that they started doing it full time, and I was an early advisor to what they’re building, and that’s the outgrowth. So Fiat Ventures is a venture capital fund via growth. It is our consultancy. Fast forward to today, we’ve worked with over 100 clients driving over a billion in revenue, and have all sorts of services from go to market all the way to pay, Mar tech stack implementations, data integration, lifecycle partnerships, you name it. And that really kind of puts us in the middle of the fintech ecosystem as operators and advisors. And what we learned really quickly is we have an incredible opportunity to invest in the best companies that are building for the next, you know, future waves of what fintech is. So, less than two years ago, I joined full-time, and I started opening up our venture fund. Fast forward to today, we just announced our first fund was closed at 25 million. We’re actively deploying capital in early stages in early growth stages, and really find ourselves at the center of this, you know, ecosystem. So that’s a quick background on myself. I’ll kind of pause there, but happy and excited to dive into all things fintech.

Matt DeCoursey 03:45
Well, if you’re interested in learning more about the funding, go to fiat.vc. There’s a link for that in the show notes. There’s a link for that down there for FullScale.io. I recommend clicking and checking these things out while you listen to the show. It gives you a little more context. Now. Speaking of context, fintech stands for financial technology and refers to the use of technology to improve and automate financial services and processes. Fintech companies use innovative technology to provide financial services that can be payment processing, digital banking, personal finance management, and investment advice, and the goal of fintech is to make financial services more accessible, efficient, and convenient for consumers and businesses. So there’s a lot of disruption that goes on in that space. And then sometimes I look at the fintech that’s around me, and I’m like, WTF, man, why is this not? Why is this? Why are you the way that you are in fintech? I think a lot of people have, you know, that kind of love-hate relationship with some of it, which is maybe why we should invest more into it. Now, when you talk about, you know, fintech in general. I mean, it’s made a huge, huge leap forward. I don’t know if I turned 48 years old this year. And I remember when PayPal came out and people were like, wow, wow, I don’t have to send a check for that eBay purchase. And it’s, I mean, that was fintech. And that was, but look at, look at the footprint of that lap. I think that was our friend Elon, right? Yes, it was. Back when he was an upstart entrepreneur, but you know, I mean, the term but with the term fintech that’s so broad. And when we, when we narrow it down, as you mentioned, you’ve had history working with crypto and stuff like that is, that is that the current? Still the current thing that everyone’s going to be obsessed about? Because, you know, obviously, Kryptos got? Well, I don’t like today because we’re recording this on February 6, but this doesn’t come out until the end of March. And, who knows, we may get a couple more failed crypto exchanges before then for all we know, but like, you know, as some of that is putting a stain on investing in fintech right now.

Marcos Fernandez 06:01
The short answer is absolutely right. I think what has happened in any technology, and especially fintech, over the last two to three years is people get excited about the opportunities that are being created and the possibilities of what can be produced. And then very quickly, you know, folks, folks start to get a little bit impatient, or you have some bad actors, like what happened with FTX, what you were referring to on the crypto side, and the thing that we’ve seen across any type of technology, not just fintech, is people often underestimate, you know, the total impact that it’s going to have, but overestimate how quickly that that impact is going to take place. And this is just one example of that, like a lot of the failures, at least in the cryptocurrency space, wasn’t because of the underlying technology that’s being built. It’s because of bad actors who are central to the trust of those systems. So again, it’s just, unfortunately, human error and a lack of human intervention. And what I hope is a lot more oversight in the crypto space, especially for our exchanges, so that just folks don’t get burned as hard. So that’s a whole separate rabbit hole, but there has been a little bit of a tarnish on it.

Matt DeCoursey 07:06
Well, so much of the discussion in the decentralized nature of crypto has been like no oversight, no regulation. I mean, doing what you’re doing now, the crypto world is not gonna lead to that. So, yeah, I think anytime you have emerging technology, you can get slow adoption. And I think the first thing that I saw that, well, credit payment processing was a big one, you know, you had PayPal and now Stripe is kind of the the big thing and you know, there that’s a multibillion dollar thing I with with fintech as is the very first thing that that while that was solvers Connect will connectivity and payment transactional issues which me as being someone who wants sold physical things, everyone hates that 3% Yeah, and I’m talking about that credit card processing fee but it seems like I don’t understand why they need 3% of my money to give me my money but there’s a lot to go with you know that goes with that and you know, that’s something that’s always gonna get complained about whether it’s a credit card transaction at the at the cash register or on your website, but you talk about Stripe, I think Stripe is probably you know, it was such a pain in the ass and so any kind of credit card processing on a website until Stripe came along and kind of standardize that. You see, a lot of stuff now like plaid has made has done a really good by the way, I have no vested interest and plugging any these any of these things, but this is my own personal observation because, you know, you want to alright, I was trying to connect my FanDuel account to my bank account safely and wisely so I could wager on the Chiefs being in the Super Bowl. Depending on when you are listening to this, you will already know whether that went well or not because I’m a Kansas City Chiefs fan, but you’re looking at something like plaid, which makes that it’s now something I recognize, and it’ll make that connection, and I feel good about it. What’s the next wave of things like fintech? Obviously, we mentioned crypto, but what are some of the other things that we’re likely to see Shake, shake things up over the next 10 years?

Marcos Fernandez 09:22
Yeah, absolutely. You know, the short answer is it’s not going to be what we’ve seen so far. So the repurposing of our existing financial lives through wealth management apps like Robinhood or a neobank. Like a chime or so, what we see it being is really the intersection of fifth financial technology with every industry under the sun. And what I mean by that is embedded solutions that allow everyone, whether you or your healthcare provider is an e-commerce merchant, or if you’re a climate tech focus company, the intersection of fintech with every other vertical out there, and that does a lot of things. One is it makes the UX grants that we have today with our normal fintech interoperable with every other company. And it makes it easier to do things like payments or loans within those ecosystems, which helps those companies and those ecosystems better serve their client base. What you see today is like, even in things like Ed Tech or state, local government, you’re still solving a lot of old problems through traditional, you know, manual intervention, written checks, things going out that are very slow. And we see fintech continuing to proliferate into those areas. So that’s, that’s one big one. We see the future of ownership changing a lot. So the ability for someone like you and I had to take percent ownership in a video recording, a movie, a song, ownership of a team, right? So you’re talking about the chiefs and how they’re coming up to play in a Super Bowl in the future?

Matt DeCoursey 10:48
It’s not the Raiders helmet in the background, though, by the way.

Marcos Fernandez 10:52
Yeah, yeah, that’s what I tell people that say, you know, I’m a loyal person because it’s been a long walk in the desert. We can’t all have the home stuff.

Matt DeCoursey 11:01
So you’re gonna try to buy what you want to buy, like part of the Raiders through fractional ownership? And in a future world?

Marcos Fernandez 11:08
Would I? I would think so. Yeah.

Matt DeCoursey 11:12
Although they may have to give those out after, I was gonna say I would maybe recommend that you really think that out?

Marcos Fernandez 11:17
Yeah, they pay you for that one. They pay you for that. Yeah. And then the third one, right is, you know, and there’s, there’s plenty more we can dive into. But like the next generation coming on to financial services, so Gen Z is more financially literate than any other generation in history. And the reason why is I know when I was going through school, I’d have an econ class, and they’re like, Great, now go out and do taxes and know how to invest and understand all these things. Gen Z is much more active in thinking about how they make money through side hustles, and then how they manage that money. And so there’s a lot of fintechs that are starting to cater to that generation, the biggest difference being that the background is all the same. So just general Ledger and helping you better manage and invest your money. But the UI and UX are completely different, because they’re trying to showcase it in a way that that generation is used to digesting information. So think about something that mimics like a tick tock scroll or snap type chat, scroll through, really what it is, is it’s providing you value and understanding your financial services. So the relationship with money, the future of work of what’s coming up next will be a huge driver of financial technology, and just general innovation over the next decade. I’ll just kind of pause there that there’s, that’s a lot coming in. And more.

Matt DeCoursey 12:30
Sure, and I had mentioned that connectivity, like you look at a site like plaid that is made, okay, so if you haven’t used plaid, and for those of you, you know, what I found as we’ve had listeners in 194 countries, so there may be something similar to that is not called plaid and Europe or whatever, but you know, so let’s just say you go to buy a Tesla, or something, and you want to connect to a bank to get a loan, traditionally, you have to fill out all these papers, you got to go through all this stuff. And you know, like plaid is something that could let you connect your personal bank account to a lender, it could also be for business purposes, you know, we’ve used it to connect to men a number of different things that just try to make the transfer of data and math a lot easier for all of us. And you know, and that’s the thing is, is, you know, we saw this as you go back to, you know, 2010 or even 2012 10 years ago, and things were still very terribly connected. And you know, you have a billion websites on the internet now. And you’re like, oh, yeah, they can just talk to each other, can they? Because you have all these different systems that run into stuff and you know, fintech. You talk about this convenience of use. And I’ve been preaching about onboarding for five years on this show, because the simplest connections with the fewest number of steps will result in the highest number of successful transactions, and you don’t. And that’s not just my opinion. I mean, there’s a lot there’s science behind that. And it’s why Amazon has invested so much money into helping you buy something with one click. And when we do the same thing on the Full Scale website, it used to take about 10 minutes to answer all the questions. And I was like, we can ask most of these later, you know, and, and so now in under two minutes, we can ask the questions that we need to know to match up a highly technical company with highly technical people right there on our platform. Now, you talk about the connection forward, like we still don’t use things like plaid to collect our payments from people and we have too high of a ticket value to want to charge them on credit cards because that 3% would be huge. I pay a ton of money every month for a lot. I would pay a lot in credit card transactions and you know, so there’s solutions that go in there and You know that other things too is, you know, the nature of my business, I send millions of dollars overseas, in many cases. So you know, the act of doing that is also very expensive. And we’re always open for learning, you know, we’ve looked at a number of different things like ripple, or, or any kind of crypto able to, you know, do that the problem is, is we still have to turn it into the foreign currency. So there’s these weird barriers that ended up in there. And you know, there’s so and I wanted, you made a comment, like, as if fintech dad are investing in it. No, but I don’t want to get into that. I want to remind everybody, first that finding extra software developers doesn’t have to be difficult, especially when you visit FullScale.io, where you can build a software team quickly and affordably use the Full Scale platform to define your technical needs, and then see what available developers testers and leaders are ready to join your team FullScale.io to learn more. So, okay, before the pandemic hit, Ad Tech was dead, and then it went, and then it was like, risen from the ashes like the Phoenix when we all needed it, you know, so these things, these things are ebb and flow. I literally had a conversation with someone, two months before the pandemic, and they said to me, the words ed tech stat, no one wants to invest in edtech. And then I had a conversation with that same person, four months later, that was like, Yeah, we’re really high on edtech right now, like, all right, well, these things change. And you know, what’s the what’s the visit? Why does everyone think fintech is struggling the way that it does from an investment or return standpoint?

Marcos Fernandez 16:41
Yeah, I think the main reason is because people think of fintech as, like I mentioned, like it as a chime or Robinhood. They see it as being a consumer focused application. And in there, right, like, there’s only so many of those that can come about or be launched. The other thing too, right is public, multiple, so just what public companies are trading at relative to their revenue is coming down for technology as a whole, but especially fintech, that just means that people are realizing companies need to be profitable and generate revenue. The reason why fintech is far from being dead is because it is far from just those consumer focused applications. And there are so many ways that we can embed fintech into all parts of our lives, right? You mentioned plaid, plaid was a fantastic example of an early embedded solution where at that time, we had to integrate into every major bank directly. So this is when I was at five. And because plaid came around and helped create a layer above that. So you can automatically connect and can provide information, you could work within those bounds of requirements for that personally identifiable information, it made it so much easier to be able to interact, or like you mentioned with cross border payments, when I was at ripple and opening up, you know, new markets for us. One of the biggest challenges is that even if you’re sending millions of dollars worth in, I’m sure you see this, you work through multiple correspondent banks, you don’t know where your money is. And the only time you hear back from that bank that you initiate a payment with is if the money doesn’t get there, and it breaks five to 6% of the time, I can’t believe that we’re in 2023 right now. And cross border payments of that size still break that amount. So there’s a lot of innovation to be had, and things that we don’t see quite there yet. And that’s where we’re spending our time and the beauty of what we get to do, Matt, and I know you do this, too, is we’re not thinking about what’s next trend, you know, next quarter or next year, we try to think about what does the world look like in five to 10 to 15 years? And then you want to put money behind those companies that are building for it? Can we think about what that world looks like? Right? Work is very different. Today, you need a W two in order to get a loan from a bank or an auto loan. In the future, people are gonna have multiple jobs at the same time generating income from multiple sources. I know you know this, you know, hosting a podcast and having your own company and advising a bunch of companies, you can no longer underwrite the future the way that you do today. So companies are going to have to adapt, and fintechs are going to be at the forefront of that setting the cadence of like, what does that look like? Talking about tomorrow? We mentioned the future of ownership. Well, what does that look like? And how are you going to manage that? How are you gonna make sure that you can’t, you know, mess with those records? Well, immutable technology from blockchain technologies is what’s going to lead that when we think about, you know, the advancements of broadband and AI. Generative AI is going to be impactful for every single industry, including financial technology, not just from you know, the way that we pick stocks and think about winners, but like, think about everything from like customer service and better interactions with your users, better recommendations engines, creating a bottomless scroll for financial services that you would see in these other social apps. There’s just a whole handful of things that are getting built right now. And pretty soon what we’re gonna see is like financial technologies kind of blend with all these other technologies where it’s not going to feel that much different from what we expect from Just every interaction that we have elsewhere. So, again, that’s kind of a mouthful and a whole bunch of different things. But that’s where we get really excited. It’s not like fintech will die when money dies, right?

Matt DeCoursey 20:14
Yeah, yeah, it’s the idea that fintech at this point would die, then that means commerce and money are also dead, which might be that’s a that’s a whole nother discussion that in a world that I don’t think any of us probably want to live in, let’s go all the way back to banks. Now. I know that people listening to this show have tried to establish a relationship with a probably laughable relationship with a bank. And so this is an example of fintech. Right? Let’s okay, why are banks so freakin’ archaic with the way that they do things? Well, first off, they’re kind of used to that world in a lot of cases. Second off, they’re bound by a lot of rules and regulations that don’t let them do a lot of stuff. And I kind of get my foot all the way in my mouth when I talk about startups and banks, because it’s an oxymoronic kind of relationship on many days, especially if you’re a tech company, you know, the whole thing is, is like, you know, you could have you could have a company that’s worth $50 million. That isn’t profitable, and therefore cannot get a loan from a bank. Because despite its very sizable amount of revenue, cash flow and investment, unless that investment is what they are using to leverage the loan, the bank is going to say, no, I’m sorry. But in the meantime, the bank will give a loan to a niche parts manufacturer that has truckloads of bolts that only serve one purpose on this planet. And if repossessed, it means nothing to the bank. But they can get a loan because that’s something tangible that they can leverage against. This is an example of things needing to change. You know, other things, too, as you mentioned, the immutable ledger that comes with Blockchain. I don’t think people realize how much fraud loss and bullshit occur in the financial services industry, and someone’s got to pay for that somehow, somewhere. And that’s going to come from everything. And look, no one likes paying taxes. But you’re but trust me for what you probably pay in taxes compared to what gets lost in the system or cheated through this or that because the worst enemy of fraud is the eraser. Right? Like, right. And that’s the whole purpose. I think people hate the fact that crypto has currency attached to it. And its name because most of it is not intended to be currency. Like, you know, you mentioned just like some of it, it’s I don’t know, it’s very confusing. I think people tried to look at it and be a little too opportunistic with it. I think there are some idealists they’re like, Yeah, bitcoins gonna replace the Fiat dollar, probably not or not anytime soon, takes way too long to do a transaction still, you know, so that’s where some of the other platforms and things that you see coming out that were, that are faster and cheaper. And, you know, I mean, there’s a weird nature, like, why is a computer sitting around solving useless equations all day? The solution? For some, it’s not, it’s the ledger that it creates, and that that, that well, people have asked me they’re like, well explain Bitcoin I’m like, but people understand, like, with what Wikileaks did, by putting data in like a zillion different places almost instantaneously. So it’s just impossible to erase. That’s an example of that, that’s somewhat immutable, in its purpose, which means that you can’t go back and use an eraser to remove the amount and change something. And, and dude, if you’ve ever done financial projections for your startup, you’re maybe working on your anything, zero, an extra zero turns 100 grand into a million dollars. And that’s a $900,000 error. And that’s nine times the size of the initial amount that’s supposed to be in there. So these things, you know, these are the things now, you can still record that error, and you can see it, I don’t know, there’s a lot of stuff that goes into it. You know, and then another thing, too, is like, I think the term fintech is almost like saying software at this point. And people like, oh, you should build software, what kind like sometimes people I know that are not in tech, there’ll be like so you like build websites or what? To build a website. And really well, not much or not many, like the website itself. It’s about all the backend stuff. So, alright, so you know, when you look at the reasons to invest in fintech, you’ve got growing Mark gets How much does like so I go over to I’m headed back to the Philippines here in a few days. And I look at a lot of the stuff that goes on and there’s still, you know, there’s a lot of, okay, they still give me like five paper receipts every time I buy something. And how much are the emerging markets of the rest of the world, not just the US economy? How much is that considered into, like future growth and like transactional value when it comes to fintech and globally?

Marcos Fernandez 25:30
Yeah, you know, it’s actually Southeast Asia that has led a lot of the innovation in financial technology primarily around payments. And it was started, ironically, through the gig economy. So Jek out of Indonesia and grabbed Singapore, really, were the first ones to connect a lot of people just from that, that classic car and ride sharing, you know, hopping on the back of a moped to hop in a car. And they expanded over time very quickly, to allow people to pay very easily, and then to purchase things. So purchase food and delivery. And they’ve really kind of led the forefront of it, you know, I’ve spent a lot of time in Manila as well, where you’re still paying with hard cash, even the central the city, people are getting in queues for hours just to buy, you know, public transit, and then wait in line for it. So there’s a lot of inefficiency to be had so far. But what we’ve seen is that a lot of folks out there are doing it. And the reason why this is in the US is as you know, if I want to send you a wire, it can sometimes take one to three days, we don’t know where it is. And it can also be expensive. And that’s because our payment rails here were developed at the very forefront of that technology. This is like in the 80s when you’re, you know, putting really big servers together to process these large payments. But in these emerging markets in Southeast Asia, Latin America, India, you’ve had people who have been able to solve those challenges decades after those first systems were implemented, that allow you to do real time payments and rails, which opens up and expands a whole set of new verticals and industries. So it’s just an example of how fintech is really everywhere. And sometimes being the first mover isn’t always an advantage, in fact, being the second or third or fourth mover can actually build better payments, rails and better systems for you in those markets. So that’s an example of that.

Matt DeCoursey 27:16
Well, one of the things you talked about like, the technological capability is there’s a lot of bandwidth restrictions in these countries. Like I think we’re, we’re bandwidth spoiled in the United States on many days, you know, and I say that because, you know, they’re in the Philippines, they’re like on 3g. Yeah. Yeah. I mean, I don’t even bring that up here. Like, what’s the term 3g even used because I don’t feel like I remember it like 4g 5g. I remember them marketing that, but that was like, a big thing. So here’s the thing: you have to make your systems work within the capabilities. Now, for those of you that aren’t familiar, Grab is Uber, basically. And, and it was weird the first time I ordered one and a dude pulled up on a motorcycle. wanted me to hop on the back. Which is not a good thing for me. Because when I get out of the airplane in the Philippines, I start sweating immediately. And so yeah, yeah, me arms around, and I weighed 260 pounds. Those vehicles are not made for me rather, they are really not so yeah, but that whole mechanism and all of it so yeah, the cab the cab is actually still a thing. I was talking about that the other day, you know, you talked about disruption and people I O disruption can always exist. I mean, would you invest in a cab company right now? Because I wouldn’t. So nothing’s changed. Now but you know, back to these things, it can be hard to get things adopted and this is rapidly changing and growing. And I think you’re right, like the first. The first mover isn’t always the best. I didn’t realize Grab was out of Singapore.

Marcos Fernandez 28:55
By the way, that’s really a quarter out of Yeah, I don’t I actually don’t remember where they started. But yeah, they’re out of Singapore and then Jack is another Uber competitor. That’s out of Jakarta in the show but very similar. moped experiences in either so you got it, right.

Matt DeCoursey 29:12
Yeah, that’s, oh, man. I digress because I could go down a huge rabbit hole on that. Please wear helmets. Just put on helmets and click your baby. You cannot. The thing that drives me crazy as well. I’ll see two people on a moped and have a baby wedged in between them. Yeah. And I felt like if I did that here, I would go to jail and maybe even beyond the news. Yeah, there’s my wife arrested with a helmetless baby on a motorcycle, just like wow, so there’s no lanes there’s no lanes.

Marcos Fernandez 29:44
There’s no speed limit. You just throw up well, there are, but there aren’t.

Matt DeCoursey 29:47
Yeah, yeah, that’s Oh, man. I have a Tesla that drives me around now, which I think is great. And I often sit there and I’m like this would not work. And now you mentioned Manila, we actually go to Cebu City, it’s the sickest second biggest city. But yeah, and so you’ve been there and witnessed that you have to there has to be some kind of order. Before you can have something I feel like my Tesla would probably just like, stop and just say take over now, so Okay, so you know, with with, there’s obviously a lot of increased competition in this stuff. I still think that you take a lot of these things like fintech and you niching down a couple levels, like we’re involved with a company here in Kansas City called lending standard, which they say you say like, where are they at? Where are the in between points, so they specialize and create efficiency when it comes to getting a loan to purchase a multifamily home. So it’s easy to look at something like God, people are buying homes forever. And we never created any efficiency for that specific lane. And you know, because you can buy a commercial property, they found ways to be efficient, although there’s a lot of goofy shit without still and then you can obviously homes still, and this is where you get into that whole thing. Like, I feel like it has gotten a lot easier. When it comes to getting a loan. You know, like that’s where fantastic has really, really smooth stuff out. And, you know, if you did, if you did, for example, like well, we’ll go back to Tesla, you can inside the Tesla app, do all of the stuff like they have like a one panel thing. And I wanted to check out what that looked like. And they asked, there’s six fields to form to get you approved for a loan. They want your name, they want your social status, they want your house that helps, like do you own it, they want you to put in the amount of the payment they want. You’re the name of the company, you work X, maybe there’s seven the name of the company you work your position and, and how much you make. That’s it. Now, I mean, you used to go somewhere and fill out pages of stuff. You’re out of place. I don’t know, I look at Tesla, and I’m like, wow, this is you talking about that? What they have disrupted. I mean that there’s a fintech element in there. Absolutely. Yeah, it goes with that too. And other things, too. It’s like okay, so now you’re now you got now you have your lease or your loan, and now you’re driving and then, you know, I went on a trip to Arkansas. And I was like, shit, do I have to, I’ve already connected my car to my Tesla app, and I pulled up to the charger and got like, 12 minutes worth of charging. I don’t even know how much it charged me until after you know, I mean, I don’t know this, these are the little things that I think you know, you have. So increased competitions out there, you talk about like Uber equals this and another place, that’s always gonna happen. There’s a high demand like, I mean, obviously, like transactions are occurring everywhere every day, it’s when the cash, I don’t know, I kind of see cash on some levels like needing and wanting to disappear. You know, I know we were talking about NFL games, so watching the Chiefs make it to the Super Bowl again, I could not spend cash in the stadium. Like it’s cashless, there is no cash transaction to be had in that joint. So like, I mean, that’s going to trickle down, you look at things like it’s, well send me venmo Venmo even make money by the way.

Marcos Fernandez 33:32
We’re looking at alternatives to Venmo over time. There’s an app out there right now that allows you to be able to send people money just through text message based invoices. And it sounds like a really small piece of technology. But what’s really interesting with something like that is that for their economy, particularly service workers who don’t have access to the vendors who don’t have accounts that they can open up, it allows you to process payments in a much more seamless way. And I think when it comes to fintech, like we talk a lot about, you know, a lot of the companies that we know and love for we spend a lot of time to is understanding how does financial technology serve those from more underrepresented backgrounds, right, so financial services as a whole, as primarily in these large banks is catered to the top 10 to 15% of America, because that’s where they can make the most money. But there are a lot of opportunities to help out those, you know, throughout that spectrum. And so, we’re just huge proponents, and this is something else that you might not hear everywhere if you know, doing so isn’t just like the right thing to do. But it provides a huge opportunity for those founders who understand those challenges, and can build better credit building solutions, investment in saving solutions, alternatives to brick and mortar stores and payday lending, things that are ultimately going to help provide that type of financial empowerment and just aren’t existing in those spaces today. And so I you know, like you said, like, yeah, like there’s going to be continued to be alternative So Venmo and in ways that we can do that, but a lot of the things that are really exciting to me the things that folks like you, and I may not see as much, but are really helpful in particular areas of us that just don’t have access to the resources that the folks like you and I do have?

Matt DeCoursey 35:17
Well, I think you when you talk about underserved markets, those exist here. And I think on many levels, those are still a lot of the emerging markets that you get outside of the US as well. It’s the same kind of need, in a lot of regards. And, you know, you see some of that you hear about countries as well. All right. So you mentioned you had been down in Sao Paulo, but right next to that you have Argentina, where the Argentinian peso is worth 20% of what it was three years ago. And the you know, there’s levels of like financial stability that deflate for a lot of citizens like how, okay, so All right, if I was outside looking at, if I had bought property there as an American three years ago, I’d be like, Wow, I just got an 80% discount, I run into some of this stuff in the Philippines, too, you know, and then there’s, I don’t know, we could see, hopefully see a stabilization. And some of that, because I’ve watched the US dollar go up and down like a yo yo over the last year compared to foreign currency. And here’s the thing that makes it really difficult for me to be a global entrepreneur on a lot of days. And then semester two is I don’t understand why, why it costs 1000s of dollars for me to send the same wire that it would if I only sent 1/10 of the amount like it is the trend that someone disrupted out, I’ll be your first, I’ll be your first customer. But yeah, some of the stuff like stabilization or predictive making some of this stuff a little more predictable, or hedgesville, or something would be really good. Because if you don’t realize it, but there’s just money flying internationally, everywhere, all day, every day, and there’s this like, I don’t know, you talking about that one to three day thing for a wire, like by the time that money gets to another place, it could be worth three or 4% less total, or this is what we’re working on when I was at ripple, red is better efficiency for cross border payments.

Marcos Fernandez 37:03
And one is here in the US, we have a phenomenal access to the US dollar, which you I admit I did took for granted, you know, grew up here, you get paid in dollars. But in places like Argentina or Manila or Turkey, where you see these credible points of inflation, to your point like you send a transaction, it may be a very different value by the time it gets there. No. And then to kind of circling back to Bitcoin. One of the main reasons why Bitcoin first took off was because it helps you hedge currency inflation, like if I’m in Argentina, and the pestle is going up by an incredible percentage, I still have access to Bitcoin, where I can purchase it and hold on to it and still have some relative stability. So that again, it’s another way of how financial technology is not just needed here on US soil, but certainly when you’re making transactions internationally and for those emerging markets.

Matt DeCoursey 38:02
Yeah, you know, I like to start, I like to end my episodes of Startup Hustle with what I call the founders freestyle. And you know, you’re a founder of a fund. So you qualify. And you know, we’ll get into that. I think that, you know, and like I said, I’ll give you the mic here to mention or discuss anything that you think we left out or any key points or I don’t know, maybe you just want to rap or sing or it’s a freestyle. So you got man, here’s the mic.

Marcos Fernandez 38:28
I love that I can’t rap or sing.

Matt DeCoursey 38:32
So I’ll keep it to just these are the people that did on the show before. So you’re good.

Marcos Fernandez 38:35
Yeah, good. I’ll practice next time No more. No one is. Listen, fintech is one of the most exciting spaces that you can be paying attention to. So for any of you who are listening, and maybe this is a newer topic, read and research, there are some phenomenal resources out there and pay attention. And the great news is it’s going to make all of our lives easier over time because, you know, financial technology is by far the greatest driver of financial mobility and access. So for those of you who are listening in, maybe you’re thinking about how things can get better, whether you’re in a different country or just in an underrepresented part of the US. There are some incredible solutions available to you, if you’re the entrepreneurs yourselves start building. And there is the world in which we note is going to change a lot in financial technology is going to be a key part of that change. So get excited, because, you know, it’s gonna be a very, very different world a decade from now. And, you know, I just feel very lucky to get to talk with people like Matt and to get to work with some incredible founders who are leading that change because, at the end of the day, as a venture capitalist, my role is to set the stage I’m the roadie, I’m not the rock star, but I get to work with some incredible rock stars out there. And so I truly feel grateful, as I’m sure you knew Matt, to just be able to work with some incredible founders and help set the stage so that they can go out there and, and yeah, so Don’t bring the house down. That’s not the right word.

Matt DeCoursey 40:03
That was the most non-VC statement. Like, I was like, Man, I’m gonna actually shop this out because I have a record of VC saying I’m the roadie and not the Rockstar, which you might go, viral man, I might have to, I might have to apply on real or short and five years later.

Marcos Fernandez 40:25
Yeah, please, do people forget the order of it. What we do is it’s been done before. And it’s not easy. But we’re not the ones who are bringing this to the forefront. Some might disagree that we’re not those people.

Matt DeCoursey 40:38
Had. It depends on who you ask. Right? Yeah, I think on the way out, I think the thing I need to bring up and tell everyone is, you know, as long as entrepreneurs can spot a problem. And the best way to solve that spot problem is just to say listen for the echo. You hear the same thing come up over and over. And there’s this resounding echo that begins to ring in your ears in your head, and you’re like, wow, this is theirs. That’s how I spot a problem that is worth solving. And you hear people complaining about the same things and look like you look at something like fintech, and you get to niche it down a couple notches. I’ve mentioned Lending Standard, being one of our more venture-backed companies here in my hometown of Kansas City, and like them solving the specific lane, like finding what that lane is in and around an industry or something you’re familiar with. And you’ll know, cuz I think he probably could have looked at something plaid years ago and been like, why do I need this? Well, now everyone uses it. Same thing with Stripe like Stripe. Okay, some of the best advice I ever got on this podcast was not the advice that Stripe followed. And that was being a coward. And, like you say, be a coward. That means finding something that no one else is doing and going somewhere where you can be left alone to get really good at it. Don’t be a hero. This is the cowardly part because it took me a second to kind of sort of sort this out. But don’t be a hero and try to take on the Giants because you’ll get squashed underfoot now. Stripe said I don’t think we’re gonna listen to you on that. And they have this specific niche. And I mean, I’ll tell you what, man, I see people building platforms all the time. And that’s the only point of financial connectivity. So you know, it takes a while, it takes time and, you know, with that, you know, embrace. I like to use a phrase I invented called Demo occasion to demonstrate and educate what you do at the same time. I think I invented that. I mean, I’ve never heard anyone else say, No, it’s not worth anything I didn’t copy. It has no royalties behind it that I’m aware of. But you know, with that, you have to sometimes you have to demonstrate and educate the solution that you’ve created. And what that’s built for. Everything in its early stages requires demonstration and education. So be aware, you’re gonna have to do that because I think some people build things that are a little bit ahead of their time. They’re like, Man, I don’t understand why everybody doesn’t get it. Because not everyone gets it. They’re not in the business of getting it. They’re, they’re in the business of trying to make a transaction one way to the next, and the fat is better, faster, and cheaper. It has to do with the market option you’re gonna get, so it’s just pretty much something that simple, and no, investing in fintech is not dead. It’s not going any fintech in health tech are two things you’re not going to ever get. I mean, those are those whales that are never going to be swimming in the seas. And if either one of them were to go away, then I think the rest of everything else would go away.

Marcos Fernandez 43:40
So to be healthy, we need to make them spend money and transact 100%.

Matt DeCoursey 43:44
Right or spend more money being healthy.

Marcos Fernandez 43:47
And that’s participating.

Matt DeCoursey 43:51
I’m gonna get busy cutting out this clip of the VC saying that I was the roadies and not the rock star, so I have gotta get to work. Thanks for joining me.

Marcos Fernandez 44:01
Yeah, thanks so much, Matt. It’s been fun getting to chat with you. I appreciate you having me off.