Ryan Falvey of Financial Venture Studio

Welcome to the Puck, Venture Capital and Beyond. A show that explores the evolving landscape in the venture capital world. We'll have candid conversations with today's VCs and entrepreneurs who are shaping those changes. I'm Jim Baer, the managing partner of Baer, Negron, and Troff and the president of CMEG Advisors. This podcast brings change makers to the table to discover the inner workings behind their decision making strategies and ultimately to how they got to where they are today.

And I'll tell you the best investments we've ever made have been companies that started growing before the founder had any idea why. They just took off. And that means that you have a product that's in demand. And when that's happening, everything else you can solve. I'm excited to have Ryan Falvey here today who is the cofounder and managing partner of Financial Venture Studio.

And what's exciting about this episode is that while we've highlighted other industries, we have not highlighted fintech and looked at where the puck is going with respect to fintech. So, Ryan, welcome. And why don't you take a minute and tell us a little bit about your background, and we'll go from there. Yeah. Thanks for having me here, Jim.

Pleasure to be on the show. Yes. So, you know, I actually got my start in what's now fintech probably about fifteen years ago. I started out working in a background in startups and technology and started out working in emerging markets and spent the first five or six years of my career developing mobile banking and mobile payments platforms all over the world. I took a job in The US in mid-twenty twelve, twenty thirteen, and was working for a bank that was trying to do a bunch of stuff with financial services.

And I had assumed, just naively, that The United States was pretty advanced as far as payments infrastructure and how consumer financial services was developing. And I was shocked just to see how far behind the eight ball The US is, and really how much opportunity there was here to really rethink financial services by whole cloth. And so I started out investing. I ran an investment fund that was backed by JPMorgan Chase called the Financial Solutions Lab, which was a partnership with a nonprofit. I did that from 2015 until 2018, and then I launched this business in early twenty eighteen with my partner, Tyler Griffin, who was the founder of another fintech payments company that had been acquired.

What we're really trying to do here is really create a home for the founders who are building the future of financial services in this country. I think there's a really a, you know, once in a multigenerational opportunity to to rethink almost every element of the financial services industry. And so we wanna help founders who work in the forefront of that really accelerate their growth and take their business to the next level. We have spent some time on the puck talking about things like cryptocurrency, for instance, and I know that you've looked at that space as well. Do you see fintech and cryptocurrencies kind of coming together as a big new part of where you see the puck going, or is crypto not part of the future?

I think it's part of the future. They tend to kinda orbit around themselves with each other a little bit. I think historically, and so I say till today, you know, you see the biggest connection on the two, where you often have strong technical teams will come around to work on something in the crypto space, and then may often pivot away to work in something more traditional fintech. I think with a lot of the innovations we're now seeing in DeFi, and more of that third generation of crypto, you're seeing more obvious connectivity points with the traditional financial services ecosystem, and I think that that will lead to more crossover between them. If you look at what Square has done, so PayPal has done, Robinhood incorporating crypto into their core offerings, It's a great way to drive engagement and activity.

So far, we haven't seen a lot of utility outside of the you know, mostly speculation or investment, but I think that that will evolve. So in terms of the companies that you're seeing and the changes that technology is bringing to fintech, can you help us understand where you see fintech evolving in the next few years? Yeah. I I don't wanna speak with too much hyperbole, but I think we're really in the midst of what I would describe as a once in a multi generational transformation of financial services. We remember mostly the last two hundred years.

The way banking and insurance has worked is you were extremely well connected. You went out and bought or rented the most expensive piece of land in your town or city, you dragged some granite there, and you put on a suit and tie. As long as you followed the rules, you were able to get a license to be an oligopoly, or a financial service, in that area. And what's happened, really, over the last decade is you now have the ability that nexus of competition has moved to the internet. So someone with a great design and a new sense of thinking about product, which has been happening since the advent of the mobile web, those people are coming up with completely new ideas for financial services, and are no longer constrained by physical barriers.

Increasingly, consumers are looking for digital options. What that's meant is you've seen a mass migration to the tune of tens of millions of consumers. First, it was every year. Now, it's probably a quarterly basis moving from physical financial services to digital financial services. It's leaving behind most of the banking infrastructure.

Most of the I think most insurance companies are going to be pretty heavily disrupted and creating new multi billion dollar platforms kind of left and right. And many of these businesses are competing on a completely different set of rules than the traditional incumbents have. And I think it's it leads to a really exciting time for anyone who's using financial services, but certainly anyone who's investing in this industry or building new businesses. So for someone like myself who has seen the evolution where we started with obviously going into banks, and then we had cash machines, and then we're seeing PayPal, and we're seeing the Robinhood now, and then you've got online banking and Venmo and these different abilities to make payments and otherwise. You mentioned things like insurance, for instance, and other disruptive technologies coming in.

Can you walk us through some of those, as you said, once in a century disruptive technologies that some of us may not have been using? Like, what about technologies that are just coming up that the younger people are starting to use, for instance, like in the area of insurance and health care, but that may not be as mainstream yet, but that you see peaking their heads, so to speak, that you see coming out of the next couple years? Yeah. I think insurance would be a great example. We have, in the last several months, we've had two companies go public in parts of the insurance market that most people probably never heard of.

So the title insurance industry, the company called DOMA, which you speak in those days title, which is really trying to rethink title insurance and has created a multibillion dollar business here in about five years in a market that I would venture, I guess, isn't home to many multibillion dollar businesses. And then Hippo, which probably has a fraction of the homeowner's insurance policies in this country, but probably commands a premium of the equity valuations in that industry. These are two relatively sleepy industries where incumbents were taking advantage of regulatory capture and capture and pretty standardized product that was mostly sold through commissions and kickbacks, and created a product that's actually better, and actually does the same thing, which is cheaper than what the existing incumbents provide. Consumers are rewarding it by purchasing it, and investors are rewarding it by giving it a premium valuation. I think on the consumer side, there's really no shortage of new products.

The most well known is probably Chime, which I think, at this point, probably has about the fifth most customers of any financial service company in the country right now. And most of them are low- to middle income consumers who were not only underserved by incumbents, but were actively discouraged from banking with them. You now have a company that's come in there and really just found a way of creating a transparent product for them that they love, and are using, and telling their friends about. Again, investors are rewarding that. And when you have these companies that are able to raise billions of dollars at a time, I do think incumbents should be aware of that.

There are very few banks in this country that are capable of raising that kind of money. And so when you have a series of startups kind of across the board coming at various angles, it's probably time to start paying attention. I hadn't followed the Chime story, for instance. Is that an online banking company? I mean, what's Chime doing?

Yes. So Chime is essentially a it's a debit card, just like a checking account. And you sign up online. They send you a debit card just like you might get from Wells Fargo or JPMorgan. It has very few fees, really doesn't have any really low risk of being an overdraft, which is a big deal for many consumers.

It's just a simple checking account, really. There's a lot more to the product. I think at the core, it's just a really easy to understand, simple product that gives you what you're looking for without really having to worry about some sort of hidden fee or something else in a in a background that might come in to get you by you. So using that as an example, like, I mean, I don't know if you're familiar with the company Green Dot Mhmm. Yeah.

Which was also when people were buying debit cards, but they were buying them at convenience stores or gas stations or otherwise, and then they could reload them in an economy where a lot of people don't have access to traditional banking arrangements and, for instance, are unable to get a credit card. Green Dot was solving that particular challenge. Does Chime and this online banking, is this the next evolution of the green dots of the world, essentially? I think so. You know, Green Dot has increasingly shifted to become a payments platform that powers a lot of other players.

So Green Dot could be powering Chime. We and I think this is kinda how I think about how these fields evolve is, oftentimes, we'll have something. So Green Dot, you grip point out, it's been been around for, I think, about fifteen years now. And one of the first to really think about how to create a processor for prepaid cards. Before that, these were not particularly common, and they were not particularly efficient.

And so the first iterations of Green Dot's products was, you know, powering a bunch of prepaid cards that could have hung on a local Walmart or Target shelf. As you've seen the shift away from buying those products at your local Walmart or Target, to seeing it on the Internet and downloading it on your phone, Green Dot has also shifted its business to enable that infrastructure to happen. This isn't what Chime is doing is to a degree derivative of the Green Dot business model. And, you know, Green Dot has a bank now, and so they think about banking, I think, very differently than the conventional bank. They really think about it as banking many, you know, fintech companies.

Not to sound like a dinosaur, but in the old days where you go and you get a credit card or a debit card, and it would physically sit in your wallet. And then, obviously, the next generation is you make a copy of it, and you put it on your iPhone. And then you're at the market and you wanna pay with your credit card. You can do it. It sounds like what you're saying is we've now gone where you don't need a physical card.

You download the card into your wallet already. It's linked to an account that you've set up. You never had even go into the bank to open up the account. You've got essentially a checking account online. You've got a debit card on your phone that you downloaded from the Internet.

You didn't have to physically buy anywhere. And that is, for us, people that are learning about this, That's the next generation of essentially your ability to buy things in a supermarket or online or otherwise, and it's all being done electronically through the Internet. That's all true. But they also send you a physical card too. So you would still get a physical Chime card, or we're investors in a number of these companies.

It's a company called Daylight, which is focused on LGBTQ populations. We're investors in what we call Point, which is a debit card that's targeting younger Gen Z consumers who we are looking for points programs. We're actually a company called Avella, which is focused on couples. So what you're really going towards is a much more curated universe of fintech, where you can select a product that's right for you. Chime might not be the right debit card for you, but Wells Fargo might not also be the right debit card for you.

You might have a Wells Fargo card because there happened to be a Wells Fargo branch close to where you lived, and that was the only way to get into the banking system, was to go down to this branch and go through all the rigmarole and filling out paperwork and whatever else. Well, now you can look on the internet and say, Okay, what's the right product for me? And you can purchase that product, and you know what you're getting, and it's going to get sent to you, and it should work. It's not dissimilar to the impact streaming services are having on entertainment, cable, movie production industry. You had an ecosystem before this where I owned all the distribution in the country, and so you watched what I showed you.

And if you didn't like it, you probably would start to like it, because you didn't have a lot of other options. What you have now is, Well, no, actually, I'm not interested in that at all. I only want to watch horror movies all the time. And there's a streaming service that will give that to you. And the entertainment industry has then evolved to create more horror movies, and the talent in that industry is being rewarded for it.

And the loser are the incumbents who own the pipes, and who own these networks, and are increasingly running out of customers. And I don't think the threat I think the threat from fintech is more existential to the incumbents than that than what you have happening in streaming in that part of the market. In the same way that, theoretically, at least, before Amazon took over the world in terms of building warehouses and getting you with Prime locked in and your ability to get products the same day or the next day, which in a sense is a barrier to entry because it would cost billions, if not trillions of dollars to catch up to Amazon. In the fintech space, it sounds like there's room for these smaller companies to be very disruptive. Is that because the regulations have become easier to navigate?

I'm assuming at some point there'll be consolidation. But at least right now, what do you think is creating this opportunity for these small companies to come in and be so disruptive? That's a great question. I think it is threefold. One, the market changed.

And if you look at when financial services companies are created throughout history, it's when the market changes. Wells Fargo and American Express are legacies of American expansion to the West. Bank of America is a legacy of an increasingly diverse population moving to The United States. We started out as Bank of Italy. Every great financial institution, you go to their headquarters, will tell you some story about how they were solving a problem for people who were not well served.

What's happened in the last ten years is and if the financial crisis was a big spark that really accelerated this And I think we'll look back at, unfortunately, I think COVID has also had an equal impact for very different reasons. People are like, Yeah, I I don't really need to go to the bank anymore. And actually, like, these products are super confusing and hard to understand, and I don't even I don't even access half of them. Why do I want to deal with that when I can just get what I want on the internet, just directly, and get it instantly fulfilled to me, and I don't have to worry about it? That's happening broadly.

I think every player, whether you're the most cutting edge crypto company to the most dinosaur financial institution, they're operating in that market. What's unique about The United States is it's vast. The scale of The U. S. Economy is hard to fathom, but this is an incredibly rich, giant country.

And so, you have the ability here to go pick off what seemingly be really narrow demographic groups, and they have tens of millions of people in them, and they're all pretty wealthy compared to the global population. It makes for a really right market for new entrants to come in. And then one of the legacies of the financial crisis is that it's turned the market upside down. So a lot of smaller banks have have some advantages over bigger banks, probably not worth getting into the details of, but that make it easier for them to compete with the larger financial solutions, and many fintechs are able to take advantage of some of that framework. And then, you know, the largest banks we have in this country are really no longer able or willing to continue to innovate to serve more customers, just because they are so big.

And so their shareholders are pushing them to grow into invertor they were until very recently when fintech came on the marketbut they were pushing them to grow into investment banking, and global banking, and whatever highfalutin thing that had higher margins. It is a classic innovator's dilemma, where the biggest players are looking for bigger and bigger chunks of revenue, even if they know the margins are going to get smaller and smaller and smaller, and they're unable to invest in what are currently seemingly small markets, but have pretty significant margins. And so what you'd expect is as these startups come along and take advantage of, quote, small markets with high margins, they tend to grow quite fast, and before long can present a pretty significant threat. And I think that's what's happening now. I mean, it's really a classic innovator's dilemma dynamic.

I will say that the regulatory market has not become easier for fintechs. And so a lot of what we do here at the Financial Venture Studio is really meet these founders at a very early stage, and then try to help them connect to that market. This is the ecosystem. And so when we think about what it takes to build these fintech companies, you have to have relationships with regulators and policymakers. You have to have relationships with these bigger incumbents who you're competing with on one hand, but you often need to work with on the other.

You need people to tell your story to the media and digital influencers. And then these businesses require a lot of capital. And so a lot of we try to do is help our founders raise the money they need to be successful and take advantage of these new relationships. One of the things I'm hearing is that there is a lot of liquidity out there. And as you just pointed out, when you're starting a widget company, there are certain issues you're gonna have to deal with.

But when you're starting a fintech company, there are a lot of strategic issues that you're going to have to wrestle with, whether or not, as you said, it's these regulators that you have to deal with and navigate, but also these large companies that they need to partner with and otherwise. It sounds like one of the things you're doing to differentiate yourself from your competitors is in a world where there's a lot of capital, you're smart money. You're giving people money, but you're also mentoring them and helping open doors and get them to a place so that they can actually be effective in what they're trying to do. That's exactly what we're trying to do. And that makes sense to me because in terms of where the puck is going, we believe that there is a bubble right now we call the everything bubble because the essentially corollary to printing all this money and avoiding the downturn of 02/2009 was, quote, quantitative easing.

And so we've created trillions of dollars that have flowed out there. And when we handed them out out of airplanes, they had to go somewhere, and they've gone into technology more than they else and the VCs and the non banks and the banks. And so there's this unbelievable liquidity out there, in a sense, chasing too few deals. And one of the things smart guys like you are doing is you're saying, look. Yes, you may be able to get money here, but if you can't put it to work and be effective, you're not gonna win the game.

It seems like you're at that cross section where you're taking advantage of the fact that there's list liquidity out there, but you're also being smart in helping them guide themselves so that, again, they can actually execute their plan. Yeah. I I think that that's totally right. You know, there's certainly a lot of money in this space, but that money requires, to take advantage of it. You need to have a plan.

And so what we really are trying to do is help our founders develop that plan. And so we're often first money into companies. We'll invest pre incorporation, or we'll commit to investing pre incorporation, and we'll be there kind of right on day one. And a lot we're trying to do is quickly help our founders connect to that ecosystem. And I think one thing about fintech that is different than some of these other areas where you've seen a lot of disruption, it is extremely heavily regulated.

The reach of those regulators is expansive. Their time horizons are long, and the tools in their toolbox are extreme. They can very easily put you out of business, or send you to jail. So it's really important that these businesses don't make unforced errors early on, And beyond that, really take advantage of the fact that, you know, among incumbents, there's a lot of energy and excitement for new innovation. And as regulators, we bring our seed stage businesses to meet regulators.

We have about 100 people in the room because they're excited to see what's next. There are very few people in this country who think our financial services system works well. And so, when you're showing up and saying, Hey, I can make this part of it better, people tend to be pretty supportive. And so, what we want to do is help our founders take advantage of that. You know, because I think we do a good job on that.

You know, we tend to have a lot of success and be lucky to work with really talented founders. Who've gone on to build some really significant businesses in very short order. We enjoy really good relationships with a lot of the much larger follow on investors and, you know, multi stage global venture funds that we need to back our companies. And then, you know, with the regulatory and policy making community, we're able to help introduce them and kind of explain what's happening in, I think, a constructive way. And we see that's really critical to the success of the space.

When you're looking at these small companies that are starting out and you want to get in there, as you said, even pre incorporation, are you geographically bound, or are you investing all over the country? We'll invest all over the country. I mean, especially now, we've seen a real dispersion of founders across The United States since the pandemic started. We certainly see the locations as a hindrance in any way. Without giving any, proprietary information out, we're talking about things like these debit cards, and we're talking about insurance and title insurance and so forth.

Are there new things that you think are coming, whether or not they're new lending programs or new financial management programs or new ideas that you expect to see in the next few years? Totally. Well, so we're gonna start to see fintech companies coming after core functionalities of the traditional incumbents. By that, getting involved in algorithmic decision making, moving increasingly into higher value transactions, so wealth management, commercial investment banking. As the universe of what's possible in fintech start to expand and the benefits of having really strong technology become even more pronounced.

So one example, a company, I think we were the first investors in this company called Fairplay, and what they do is eliminate bias in algorithmic decisions. So if you're lending, or offering an insurance product, or even marketing an insurance product, a lending product, you need to follow a whole host of laws in this country around fair credit and anti discrimination, and on and on, in the bucket of fairness. What happens now, many of these algorithms that lenders use to make these decisions are biased, is the plan you go and write a report about how your decision making is biased. You then say, I can't fix it. It's too complicated.

And then you identify something else you could do that's completely unrelated that would theoretically make up for the bias you have in your core business. What Fair Play does is looks at the algorithm that you have and says, Actually, just change this thing, and it wouldn't be biased anymore. And then, also, while you're at it, you discriminate against all these people that you should have lent to because they were credit worthy borrowers, or you charge them too much, you should charge them less, and allows you to retarget those people. That's a product I mean, I think all of us agree that the fact that our financial services ecosystem is biased and unfair is a bad thing, and this is a software that's getting to the core of the problem. We're no longer just papering over some issue.

We're actually solving the problem. I think there's a lot of parts of financial services ecosystem where we could solve the problem. I think that could open up a lot of new innovation. In terms of people that are traditional business people and they have a relation their neighborhood banker and they wanna take out a loan or get a mortgage for their house or they wanna take a loan out for their business, is lending online and fintech the wave of the future? And is it already hugely here and gonna be taking more and more money away from the Wells' and the BofAs of the world, or do you not see that being a big part of it?

It's been here for years. I mean, you go to your local community bank and you wanna take a loan for a couple million dollars, odds are that they're gonna go syndicate that loan with other banks in the area, maybe banks all over the country. So banks have been doing this for decades. I mean, this is a pretty well understood part of the banking ecosystem. What's happening now is you're having FinTech companies come in and do that too.

And they're no longer reliant on knowing you from the local rotary club. It works in areas where you have relatively standardized products or products that are not well served by the existing incumbents. And so good example of that would be the PPP loan program that they rolled out last year. Obviously, there were some flaws in areas that that could have been improved, but But if you look at the actual distribution of loans, a significant percentage, if not the majority, were actually distributed by fintech companies that were not in the business before, but as was nobody. I remember reading about a few fintech companies that literally when the PPP money came out, they pivoted and they became portals to then broker those loans to the traditional banks and literally in a year made over $1,000,000,000 because they were able to be fast adapters.

They move quickly. Yes. But that was specific to PPP. I recently heard you can't make this up, but I heard that a defense company that was small got this huge amount of loans, several, because there's a a government program that was designed so that defense contractors couldn't go out of business. Well, one, you have to know about those programs.

But number two, are they fintech products now that are available? Yeah. I'm assuming there are a lot of these programs out there that our listeners may not even know were available. Mhmm. You're 100% right.

We we have a portfolio company called Farmraise. Very early, and what the two founders are trying to do is help medium sized farmers access USDA programs, their grant programs. I mean, it's essentially free money, but there's a million hoops you have to jump through to get it. So, of course, no one takes advantage of it. Agricultural lending is one area where there's a lot of money to be made in making these loans, but they take a lot of specialized knowledge.

And so what the team at Farmerize is doing is, you know, hey, we can really understand this market. We can help these farmers access better financial products, improve the financial health of that family farm, and also make money by putting them together with a better financial package. And so that's a great example of where, in most cases in fintech, you're seeing incumbents go after what seem like small or abandoned markets, and very quickly realize that they're quite large. The best example of this is Stripe, helping people who have an online presence take credit cards. I think incumbents thought that that was like, Well, whatever.

PayPal solved it. Not that big of a deal. Actually, they hadn't come close to solving it, and it was a huge deal. Stripe is now $100,000,000,000 plus company. People simplify that story to eight lines of code.

There's obviously a lot more than that to it, but that's a lot of why you end up oftentimes having this kind of small wedge, and that wedge can can be quite a bit larger than even the most optimistic can imagine. You talked about title insurance. We talked about these new platforms for PPP money or otherwise. A person goes out and they wanna buy a house, or they go in and they wanna buy a duplex, or they wanna buy an apartment building. Essentially, they typically would have a broker show them the property, and then the broker may have them introduced to a mortgage broker, and then the escrow company introduces you to the title company, and everybody's scratching each other's back.

If I'm a 30 year old that's going out to buy my first investment property or my first house, how is the world look differently to that person? Is it because they're starting on Zillow to find the house that you're using a bot instead of a broker? How is fintech, for instance, going to take over or change that environment, or is it going to change the habits of young people that are going out now and buying their first time house, for instance? I mean, the answer is absolutely. You know, let's take this real estate example.

There are platforms. So let's say you want to buy a fractional share of a home. You could use roof stock right now, and probably be done with it in a few hours, and you don't have to worry about anything. You're just going to get a piece of the action on that home you bought, or you want to buy the whole thing yourself. There are now platforms cropping up that will actually go out and do all this work for you, identify the right city to be in, where the demographic trends, where the economic trends are really strong, and actually take you through the process of just purchasing it and financing the product for you, helping you with tax reporting.

There are companies like your nest egg, which is one of our portfolio companies that you could then put your property on and they'll take care of all the management and servicing of it, you know, from mowing the lawn to collecting rent to solving kind of the emergencies that come up as a small landlord. I mean, there are already startups doing this right now. Some of them are quite large, and that would be on that. On the purchasing your own home, you know, that's interesting. That's one area that we've seen some innovation around and tended to be on kinda helping people qualify for mortgages or kind of work their way into a first time home.

So, you know, there's a company called Divvy Homes, which does this and will essentially, you know, buy the house and rent it back to you as you slowly start building up equity and then eventually transfer it over to you. There's more options there. The mortgage market in this country has kind of one buyer. That's the US government. And so it tends to lead to some interesting innovations on the front end.

It has not led to quite as many as one would think. There are some big examples of businesses there that are just making that process easier. So, you know, Rocket Mortgage, which is a public company worth 20 or $30,000,000,000 at this point, has quickly became the largest originated mortgages in the country over the last decade. Blend Labs, again, public company, helping the Wells Fargo's and the JPMorgan Chase of the world actually process these mortgages faster and use technology to do their own processes. So you probably aren't seeing as much on the front end consumer side yet, but I would suspect as we get hopefully good to a more normal credit market in the mortgage space, whenever that happens, that you'll you'll probably see more of it.

So we've seen going back to before the housing crisis, you know, we saw all these syndications of different types of products, and we had contingent valuation rights, and we had all sorts of different ways to syndicate different products. When you talk about people being able to buy fractional interests in houses, we always had timeshares where you could go out and buy a week in Maui. But what I think you're saying is just like I wanna buy a share of Tesla, I can go buy a share of Tesla. If I wanna play the real estate game and I think homes are going up in price or otherwise, instead of having to go out and buy that same home, I can go out and invest, it sounds like, through some of these new fintech products, a fractional interest in a house that a company has put together and bought a portfolio, and then they're letting me buy that. And assuming I qualify as an accredited investor or there's an exemption, I'm able to buy into this new product that was otherwise not available to me.

Is that correct? That's totally right. Yep. Okay. We've seen inflation in house prices.

We've seen cap rates at crazy levels. And you heard me say we're in this everything bubble. From a supply and demand perspective, at the end of the day, there was a limited supply of houses. There was a certain number of people buying it. But when you introduce new methods of investing in houses by fractional interest, is that a material enough number of people and enough money chasing it that it's having an effect on housing prices?

No. Okay. I don't think so. I think your everything bubble is probably flowing through Blackstone, before I launched it, I think, a bigger impact there than it is in, you know, with the, you know, the individual small investor. Right.

I do think in the stock market, when we look at these historical PE ratios, if a stock's trading at $50 a share Mhmm. And it's got huge volume, it's one thing. But if it's a thinly traded stock, it doesn't take that much incremental money to move that stock up. I think when you take PPP money and you send everybody $1,500 checks and you give them Robinhood accounts, Yeah. To say that it's not had an effect on stock prices or Bitcoin, I think is naive.

I'm wondering in the real estate space where you've sent all this money out to people, people have all this disposable income. I mean, again, I haven't followed this. Like, I'm not aware of how many people are actually buying fractional interest in houses right now. Yeah. But is it a material amount of money going into that right now?

Not compared to the broader real estate market. I mean, I again, this is one of those things where the scale of these markets is kinda mind boggling. You know? I mean, it's like the average mortgage backed security is, like, $30,000,000,000. Oh, huge.

I would think that the entire universe of fintech enabled real estate is probably on the order of magnitude what, like, a Blackstone's doing daily. I mean, if you're looking at where the inflation would come in real estate, it's gonna be big PE funds that are in there with these, you know, multi billion dollar strategies to just go buy everything in an area that comes up to market, clean it up, and put it on the front of the rental side. I mean, that trade's been going now for I don't there are people who know that better than I do, but it seems like pretty much started shortly after financial crisis and has kinda let up unabated as long as interest rates are low. I think for many smaller investors, we're probably doing this opening up the aperture a bit to people who can do it. Real estate is an asset class that a lot of people kind of intuitively understand.

It's not the stock market. Robin has done a lot to raising awareness in the stock market. I'm not sure they did a lot to educate people about the stock market, but they certainly raised awareness of it. Right. I think even if you're buying a fractional home, I mean, we're still talking about something in the order of thousands of dollars or maybe tens of thousands of dollar investment.

Sure. And I think you have a lot more people who are maybe they might have been, let's say, the average second home buyer was 55 years old twenty years ago. Now these are platforms that are allowing somebody who might be in their early forties and have a little bit of extra disposed bloom come looking for some other passive income sources to do it. I think we're still pretty far away from this having a material impact in any kind of any kind of real estate market. That makes sense.

In terms of changes that you see happening or if I'm a small company and I haven't raised a billion dollars and you're helping them get through the regulatory framework and you're helping them figure this out, are there tricks that you can help these small companies with in terms of getting noticed out there? Because the acquisition cost of customers is expensive. You know, you can be the best kept secret in the world until you get out there. So any tricks or do you help companies with their social media presence to get out there so people find out about them? Yeah.

We have a pretty bespoke approach. We make about 10 to 15 investments a year, and for every company we're investing in, we make a plan that's specific to that company of how they can be helpful. And then there's a number of touch points that we'll have over the course of, you know, the first six to nine months after we invest to try to bring them together with some of these shared groups. So we'll have a meeting where we bring together regulars. I'll have a meeting where we bring together investors.

We'll have a meeting where we bring together media and digital influencers. And we'll use that as a way of having just a lot of touchpoints and helping raise awareness to companies. But from a day to day, every company is different. Some companies, they have a great product, and maybe they need the help kinda raising awareness of it, and that's an easier problem to solve. More frequently, you know, these companies, they have something they're working on, and we're helping them, you know, raise additional capital, or they need to figure out a bank partnership Most of the work we're doing is much more blocking and tackling than just general maxims for success.

By and large, if you're a founder, you should be getting the product out to people. I would never encourage someone to be a stealth startup, and think that's a ridiculous concept in fintech. You're stealth until you have a million users, more millions, and what you give up by hiding from customers and investors and potential partners is information about whether the product has a utility. It's far more likely, and I'll tell you the best investments we've ever made have been companies that started growing before the founder had any idea why. They just took off, and that means that you have a product that's in demand, and when that's happening, everything else you can solve.

That's kind of the ideal situation, as you figure out product market fit, you figure out some inkling of it, and then you can find people who can help you with the rest. That'd be my generic advice if I could give some of you for your founders. You really do your best to try to figure that out. Everything else tends to follow if that happens, but it's pretty rare. It's interesting because one of the trends we're looking at is in the space of augmented reality and virtual reality.

We spoke to Verizon about five gs technology a while ago. But with the Zoom revolution because of COVID, people are talking about if we don't go back to the office in the same traditional way we did, people are going to be still looking for connection in communities, and there's going to be these virtual worlds or augmented reality worlds where people are going to be able to interact. And we saw that in the game space where people are playing games all over the world and they're buying skins and they're trading skins and stuff. As people are talking about virtual goods and the ability to buy things in these virtual reality markets, I would think from a marketplace perspective, fintech is going to have a role to play there because if I'm in there with my friends and I'm interacting or I'm in this virtual world, if I can go to a virtual bank or do a virtual financial transaction and it's all connected together, I could see that as a huge opportunity for Bebo. I think you're right.

And I think, you know, going to your earlier point around crypto, I think that that's where there's been a tremendous amount of innovation kind of the crypto space just in the last couple of months. I mean, you've seen the growth of DAOs and NFTs, and some of these Discord communities that are cropping up around them are kind of proto versions of what you're describing, and are really for the first time. You do have commerce occurring that's similar to that. It's not just like, I'm buying a virtual good from a company, which a lot of was happening before. Yeah.

You're now buying it from somebody else who might be creating it because of demand within the community. And and that, I think, is a very different dynamic, and it's one we're we're monitoring really, really closely, because I think that that probably has the potential to have some fundamental impact on some payments more broadly. Well, I know this is fantastic. And I think it for those people that are trying to navigate these challenging waters, especially in an area that's highly regulated, which is very intimidating to people. What it sounds like is you're taking these complex challenges for these entrepreneurs and you're saying, look, you've got the technology, you've got this idea, but we're gonna get this back end cleaned up for you, and and it's not gonna be as stressful as you think it is.

But we're giving you a place to call so that you can help them through this. Mhmm. Yeah. We're always looking for new startups. And so to the extent that your listeners are working on something in fintech or they know somebody who is, they encourage them to reach out to us.

We actually will do an application for our investment program every about six months or so. So you can always follow us on Twitter, check out our website, finventurestudio.com, or just reach out directly to one of us. We're always looking to meet new startups, really no stages too early. I think that's fantastic. It's certainly an area that people are gonna need to take advantage of.

And so I have thoroughly, thoroughly enjoyed this conversation. Thank you. Me too, Jim. Thanks for having me on. The world is moving so quickly right now.

And guys like you who are keeping up on these trends and the state of the art stuff, it's very inspiring. So thank you.