Fintech Feed #5 — Venmo Sucks and Espresso Rocks

[This article originally appeared in the email blog The Fintech Feed.]

Good evening, Feedsters!

This weeks’ issue is brought to you by Espresso — the only thing not surprised that August is as hectic as February. Love you all and hope you are enjoying the Feed. It would mean the world if you’d share it!


The Clouds

This week’s Clouds is a long overdue post about the Jobs Act which passed the US Congress on March 25th of this year. It forever changes the landscape of public/private financing for companies and the investment environment for US citizens.

But before we get into that we need to take a step back, actually several steps back, to the years following the Clutch Plague and the Securities Act of 1933.

I know that sounds really boring but I promise it applies to us today. And you can bring this up at parties and sound smart. If you don’t get invited to parties then… well, I’m sorry. Maybe share this newsletter and get yourself invited to one! (shameless plug)

The Great Depression rocked everyone’s world. I’m sure I don’t need to reiterate your sixth grade history class. The years following were understandably terrifying. So Congress passed the Securities Act of 1933 with two objectives:

  • require investors to receive financial information on stocks and bonds offered to the public
  • prohibit lying, misrepresentation, or other fraud in the sale of those stocks and bonds (and other stuff)

But what about stocks not offered to the public? What about investing in private companies (i.e. startups)? These investments were restricted to…

An accredited investor was any person or company that could afford to risk large sums of money without worrying where there next meal would come from.

But that was 82 years ago! Thanks to the Internet, companies can be started for $0 and some sleepless nights! So on March 25th, 2015 Congress passed Regulation A of the Jobs Act, which is often referred to as the Startup Act. Now, private companies (startups) can raise up to $50 million from non-accredited investors!

What do you think that will mean for business creation in our economy? Will it bring about some companies that otherwise wouldn’t have been created? Are we looking at the dawn of another pyramid scheme avenue?

What do you think?

The Dirt

I hate cash. I do. And I live in New York City where snooty waiters often refuse to split a bill! The solution that most people have used for this problem, for settling rent with their roommates, and begging for money from parents while away from school has been an app called Venmo.

Looking for the link? I didn’t add it — I hate Venmo more than cash. Why?

1. PayPal

Venmo is owned and operated by PayPal. Now congrats to PayPal for the recent spinoff from eBay and it’s initial success gave us some of the world’s greatest entrepreneurs ever (if you ever want to feel inadequate just Google “PayPal Mafia”). But the biggest thing I want in a money app is security (which, is also why I hate Android). Paypal gets hacked fairly regularly.

2. Limbo Accounts

When you send money in Venmo it doesn’t actually deposit to your account. It deposits to your Venmo account. You then can elect to withdraw the money to your own personal account after a waiting period. Really? This takes away from the benefit of not having to carry a wallet laden with cash. And after reason #1 I’d rather not risk a malicious bug or the PayPal Pope deciding my limbo account doesn’t exist.

Enter Square Cash

Square Cash is by far my favorite money transfer app. Stupid simple interface, private messaging, automatic deposit, unbelievably painless to set up, and the same timeline for transfers across currencies or across the table.

At the bar with new people and need to settle up? There’s a “nearby” feature that identifies other Square Cash users.

And don’t worry about security. Cash is built by Square, the Point-of-Service company started by Twitter co-founder Jack Dorsey that first let you charge a credit card from your iPhone’s headphone jack. 256-bit level encryption, two factor authentication, use of your thumbprint scanner, and an end-to-end system that sent thousands of dollars to Nepal following the devastating earthquakes.

There’s also some other cool stuff where you can set up a $Cashtag to receive money while playing guitar in the subway or for the backyard BBQ.

https://cash.me/cashtags — Check it out!

Question of the Week

What are you doing this week to become a better, fitter, happier human?

I’m headed to a hackathon this weekend but will promise to send out next week’s Feed on time. Thanks for subscribing!

Stay curious, stay brave, and we’ll make the world more awesome.

Daniel


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