Money Talks #16: WhatsApp, Backstage, Revolut & Olivia

Dive into payments on WhatsApp, the paradox between investing in underrepresented founders and the current demographics of venture capital, and getting digitally closer to your spending through Revolut and Olivia.

MoneyNeverSleeps

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In this episode, Eoin and Pete dig into pieces of content from this week that are relevant to the cosmic cloud of startups, tech, venture deals and enterprise in which they live and work. At the end of this episode, Eoin announced the big news on the first edition of the MoneyNeverSleeps newsletter on SubStack, more news to come!

The stories covered in this week’s episode include:

Visa, Facebook Link Up For P2P Payments, eCommerce On WhatsApp (PYMNTS.com, 15th June 2020)

• Beginning this week, Brazilian users will be able to pay for things through WhatsApp and can establish an account by adding their card card details to WhatsApp.
• Businesses can receive funds by opening a WhatsApp business account with a 3.99 percent fee applied on top of payments they receive. Finally, WhatsApp making money!

Arlan Hamilton from Backstage Capital on Backstage Crowd (no news available, older story on Arlan)

• “Invest alongside Arlan Hamilton and Backstage to get access to the best diverse deal flow in VC.” Backstage Capital focuses on underrepresented founders and now the deal flow is open to all accredited investors through Backstage Crowd.
• For more background, there’s an excellent 6-part series on the Startup podcast by Gimlet media in 2018 on Arlan’s life story.
• Cross-over connection with Beezer Clarkson from Sapphire Ventures on The Full Ratchet with Nick Moran — in this episode, Beezer and Nick had a short exchange on the the impact of the pandemic on how people get to know each other in the VC/founder context.
• If this change in how people get to know each other will make it harder to do just that, there may be even less money going to underrepresented founders in the startup community.
• What can we do to change this context? It’s a small step, but start by taking a look at your own deal flow channels and filters.
• Excellent insights on this topic on #OpenLP, which is “an effort to help foster greater understanding in the entrepreneur-to-LP tech ecosystem,” including: Black Funding Matters: Time for LPs to Really Diversify — Through Diversity (Different Funds, 8th June 2020)

Revolut launches open banking feature in Ireland — (Silicon Republic, 17th June 2020)

• Revolut launches an open banking feature that enables your transactions and balances data from Bank of Ireland, AIB, UlsterBank and PTSB to be viewable in the Revolut app.
• Olivia’s AI assistant encourages mindful spending and saving — (Silicon Republic, 15th June 2020)
• Olivia AI launches in Ireland and Bank of Ireland, AIB, UlsterBank, PTSB and Revolut are enabled to share your transactions and balances data with Olivia.
• For transparency, Pete’s a non-executive director for Olivia but really, genuinely loves the app — it’s just one of those things, the more you use it, the more dependent on it that you become.
• What’s the difference between Olivia and the new Revolut feature?

Brits go weeks without using cash during Covid-19 lockdown (Finextra, 12th June 2020)

SoftBank invests in Credit Suisse funds that finance its technology bets (The Times, 16th June 2020)

Bankrupt Hertz Seeks Permission To Raise $1 Billion In Preposterous New Stock Sale (Forbes, 12th June 2020 — post-recording note: Hertz halts plan to issue $500mn in equity pending SEC review)

Soundbites include:

• Eoin gobsmacked by the WhatsApp payments opportunity: “The sheer volume of payments that will be processed if people start using WhatsApp for paying for things is massive.”
• Pete looking at the next stage: “What will be really interesting is when those payments are processed not only in the currencies that we all know and love, but also in Libra [Facebook-driven cryptocurrency project].”
• Pete on the WhatsApp payments opportunity: “Regardless of all of the ‘OMG, they’re monetizing WhatsApp’ backlash, it’s about time [WhatsApp did this]. This is a massive opportunity to start making transaction fees off of information flows, and if you can do it in a secure manner, and copycat WeChat, then hell, go for it.”
• Eoin on if he’d use it WhatsApp for payments: ”If it’s running on the Mastercard or Visa network and it’s secure, why wouldn’t you for the smaller stuff in the same way that I’d send someone 10 euro on Revolut?”
• Pete on underrepresented founders: “With COVID-19, if a VC has capital to deploy now, it’s harder to get to know new founders and their teams to do new deals, so they many are just re-investing in founders they’ve already invested in. With the status quo of the demographics of VC investments, their existing investments will likely be in startups led by white male founders, so we’re really narrowing the funnel even more.”
• Pete’s further thoughts: “If this change in how people get to know each other is going to make it harder for VCs and founders to do just that, there will definitely be even less money going to such a vastly underrepresented demographic.”
• Pete on unconscious bias in interviewing — “The approach that a lot of interviewers take is trying to find the common ground with the person they’re interviewing, and the interviewer is trying to find out if that person can eventually take over for them. So [consciously or unconsciously], you’re looking for someone just…like…you.”
• Eoin on investing purely opportunistically, “Even if you step back and take purely a commercial viewpoint, you’re cutting out a large part of the market by not looking at these opportunities, which makes no sense.”
• Eoin on UX with banking apps: “You see a lot on robo-advisory and wealth management [apps] in the US, but it hasn’t really creeped into Ireland yet. Now with what Olivia is doing and with Revolut’s announcement today, I now expect that not only can I get better insights from my bank or someone else, but also [an app] to help me manage my finances better, make the right suggestions, and do that for me automatically based on my track record.”
• Eoin on Softbank’s news this week on their ‘circular reference’ investing: “Softbank are like the gift that keeps on giving with the stories that come out about them.”

To listen to more, please visit https://www.moneyneversleeps.ie/ for all of our other episodes. Also, follow us on Twitter @MNSShow, @PeteTownsendNV and @EoinFitzgerald9 for updates and more information.

Finally, If you’d like an intro to Pete, please click here. If you’d like an intro to Eoin, please click here.