“Banking on Disruption” — Published in the 2015 Olin Alumni Magazine

Two Fluent Co-founders and Washington University in St. Louis graduates were featured in the 2015 Olin Business School’s Alumni Magazine in an article titled, “Banking on Disruption” by Kurt Greenbaum.

2015 Olin Alumni Magazine
Bill Gates and David Letterman, 1995

In a grainy video from 1995, recently retired talk show host David Letterman tells Microsoft founder Bill Gates that he doesn’t own or use a computer, but he’s curious.

LETTERMAN: “What about this Internet thing? Do you know anything about that?”

GATES: “Sure.”

LETTERMAN: “What the hell is it, exactly?”

“David Letterman couldn’t wrap his head around why something like the Internet could be important,” says Dave Sutter, AB ’14. “Even Bill Gates couldn’t understand the magnitude of what the Internet would do 20 years ago.”

Sutter believes the new blockchain technology is as baffling and misunderstood by the general public today as the Internet was two decades ago. Sutter and three WashU classmates won the 2015 Olin Cup entrepreneurial competition with a software product based on blockchain that drives virtual or cryptocurrencies like bitcoin. He and his fellow entrepreneurs are convinced that blockchain technology has the potential to disrupt the global finance industry by changing the way money is transferred between buyers and sellers, and lenders and borrowers.


To say the definition of blockchain is technical is an understatement. In simple terms, blockchain is software that maintains a continuously growing list of data records that are protected against tampering. This database is hosted on computers running the software. It’s essentially open-source software based on highly sophisticated mathematical algorithms that make transactions: 1. seamless, 2. virtually instantaneous, and 3. without the personal information required by credit card transactions. In essence, blockchain replaces conventional banking’s “trusted third parties” by creating a public ledger of all transactions that are continuously and publicly verified as safe. This eliminates the cost and delays of third-party verification typical in traditional banking transactions.

“Sending money around the world is going to drop in price,” explains John W. Ratcliff, a St. Louis software developer and member of the St. Louis Bitcoin Users Group. “It is about to become obscenely cheaper,” says Ratcliff, who has written extensively on the blockchain phenomenon.

Ratcliff calls services such as Western Union “dead men walking.” Such financial intermediaries, he says, will be increasingly irrelevant as blockchain technology grows.


Dave Sutter and Casey Lawlor, AB ’14, first heard about blockchain software from WashU classmates who were dabbling in the nascent blockchain exchanges for the cryptocurrency bitcoin. They were intrigued. Never mind that Sutter was majoring in political science, and Lawlor was majoring in psychology with a minor in marketing. They steeped themselves in the world of bitcoin and blockchain. They learned all they could about the virtual currency, the complex mathematics behind it, and its potential to disrupt the existing banking system.

“Once we really got into it, it kind of consumed us,” said Sutter. “This entrepreneurial spirit was born in our college dorm room, and we went for it.”

The Bitcoin Society was Sutter and Lawlor’s first startup in 2013. They, along with a team of WashU students from Olin and other disciplines, were bent on aggregating and sharing news about the new technology — as well as providing consulting services to potential users. Sutter and Lawlor eventually connected with a Lexington, Kentucky-based startup called “Love Will Inc.,” founded by software developers Lamar Wilson and Lafe Taylor. The developers had created a bitcoin “wallet” application necessary for anyone who wants to transact business with bitcoins. Sutter and Lawlor pitched a version of this bitcoin wallet in the Olin Cup competition, but eventually abandoned it for another one of Love Will Inc.’s products called “Fluent.” In simple terms, blockchain is software that maintains a continuously growing list of data records that are protected against tampering.


Unlike most other blockchain-powered applications, Sutter and Lawlor’s Fluent application allows users to transfer dollars, not virtual currency. According to Lawlor, business-to-business cross-border payments amount to $22 trillion a year globally. Those transactions come with delays, poor information about the status of payments, transaction fees, currency exchange fees, exchange rate volatility, and potential cybercrime. By using Fluent, global businesses could bypass conventional banking and eliminate more than $1 trillion in annual transaction fees worldwide, according to the product’s pitchmen. Fluent will charge customers a flat subscription fee, and currency exchange fees will be substantially lower than those charged by the traditional banking system. Lawlor and Sutter predict Fluent could generate $60 million in revenues within three years.

“A lot of banks are starting to hire talent in the blockchain space,” Lawlor said, acknowledging the race to apply the technology commercially. “It’s not if. It’s when. Obviously, we want to be the first to do it.”

Old System for International Payments


“Banks are certainly investing time in exploring the implications of the bitcoin-blockchain and blockchain technologies,” said economist David Andolfatto, a vice president for the Federal Reserve Bank of St. Louis. Andolfatto has written and lectured about cryptocurrency. “Money service businesses are constantly trying to stay ahead of their competitors.”

There are several recent examples of traditional financial institutions experimenting with the new technology. Investment firm BNY Mellon has created its own cryptocurrency to operate an employee recognition program. The venture capital arm of Citigroup is mentoring startups that work with the technology. A wing of the Nasdaq stock market is launching blockchain technology to issue, transfer, and manage private-company securities. And earlier this year, Goldman Sachs co-led a $50 million investment in blockchain developer Circle Internet Financial.

Stuart I. Greenbaum, former dean and Bank of America Professor Emeritus of Managerial Leadership at Olin, said, “The banking system is certainly not a model of efficiency, especially when you layer on the levels of regulation they’ve been required to submit to. It’s an area of the economy ripe for disruption,” he continued. Still, Greenbaum and others are skeptical that virtual currencies will be the disruptive force that rattles the financial world.

In fact, Bitcoin has had some challenges. For one, in its brief life, bitcoin has been a notoriously volatile form of currency, ranging in value from $2 to $1,000 over the past five years. And like other forms of currency, bitcoin has been used for unsavory practices, including the recently dismantled Silk Road black market site, which only accepted bitcoin.

“There’s definitely a lot of public perception issues with bitcoin and blockchain technologies at large,” Sutter acknowledged. “This is really only five or six years old. These public perception issues spawn from people, not the technology itself. There are always going to be bad people using good things for bad purposes.”

Blockchain-based System for International Payments


The good news is that tech startups creating applications with blockchain and other alternative payment systems like PayPal, Apple Pay, and Square are attracting interest from investors. Love Will Inc. has successfully graduated from two startup accelerators — Capital Innovators in St. Louis and Boost VC in San Mateo, California. This fall, the company has been selected to participate in the St. Louis-based FinTech accelerator SixThirty, where entrepreneurs with a working product focus on sales and pipeline management, marketing, use of social media, and fundraising.

To date, Fluent has raised close to $1 million from investment funds managed by Tim Draper, Thomson Reuters, and early-stage venture firm 500 Startups. Fluent has recently doubled its team, bringing on five developers and four advisors, including Tom Niermann, former head of technology and partnerships at Google; Andre Trudell, managing director of capital markets, and Dave Bauer, vice president and regional manager, both with UMB; and Beth Schulte, a senior financial executive. Fluent is currently in talks with several large firms and banks about establishing pilot programs and partnerships in the St. Louis area and beyond.

“We are very sure we can execute on this plan,” said Lawlor. Momentum is building, according to the confident 23-year-old entrepreneur. “We are tremendously excited to apply bleeding-edge technology to a very large problem and help rewire the world’s financial circuits.”

Originally published on December 15th, 2015 in the Olin Alumni Magazine. http://www.olin.wustl.edu/EN-US/News/Pages/OlinAlumniMagazine.aspx

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