Weekly Briefing №95 | Going One-on-One With Fintech’s Big Dogs
Several of the nation’s leading financial innovators and entrepreneurs have spoken in depth to The FR’s Gregg Schoenberg this year. We’ve got more to come in the fall, but until then, we’ve cherry-picked some of the highlights of those conversations. Here’s what we learned from the top dogs at firms including:
- Betterment
- SoFi
- Fundrise
- Funding Circle
- PolicyGenius
- Hixme
TECH COMPANY OR NOT?
Do leading fintech entrepreneurs view their companies first and foremost as technology businesses focused on financial services, or financial services businesses that place technology at their core? It turns out it depends on the CEO.
Jon Stein, CEO of Betterment:
“We’ve always been a technology company that happens to be in financial services. We have a bunch of employees with significant financial services experience, but we are a tech company.”
Mike Cagney, CEO of SoFi:
“Technology is necessary, but you have to remember that technology is not a moat. You can copy technology, so while it’s necessary, it’s not a sufficient condition to win. I mean, calling us a technology businesses is really a disservice to what we’re trying to build.”
ON THE MENTALITY OF INCUMBENTS
Both Fundrise’s Ben Miller and Funding Circle’s Sam Hodges argued that the mindset and approach of incumbents in their respective sectors are central to the problems/opportunities they are addressing.
Ben Miller, CEO of Fundrise:
“Real estate professionals do not want to be in the services business. Most of them feel like it should be enough to own the real estate. And if you look at a city like L.A. and say, ‘Why is that block such a mess?’ Well, it’s been owned for 50 years by the same person, and that owner hasn’t changed the space. But today, that’s becoming less true. You have to be in the services business to capture the premium of the location… If you’re just selling the commodity, the internet will crush you.”
*Note, Fundrise is an advertising client of The FR.
Sam Hodges, Co-Founder of Funding Circle US:
“I believe that inferior user interface technology isn’t the primary reason banks aren’t able to solve the small business credit gap. I think there are lots of other constituent factors involved… Plus, banks often don’t have the data models necessary to underwrite loans. So unless they make a massive change in their approach to the market — which I don’t see — we are quite confident we can build a company that will continue to grow in the long term.”
ON THE BATTLEFIELD
Strapping on your gear and waging the battle each day can be rough stuff. That’s why we’re always happy to obtain the wisdom of executives who have survived and thrived in several kinds of roles.
Nino Fanlo (formerly of SoFi), now CFO of Human Longevity Inc.:
“I believe that to be really great, you need to understand the sacrifices and the pain involved. This is an incredibly competitive country, and if you think you can excel and have a swimmingly balanced life, you’re wrong. For twenty years, I’ve told really motivated people to pick two things in life that you’re absolutely committed to being great at… Your job is one, and maybe you’re going to be a great husband, wife or parent. Or perhaps you’re going to be in amazing shape or play the piano or excel at mountain biking. But you know the problem you have if you’re scattered? You’re competing against a person who is not interested in anything else other than in building a great business. How are you going to outwit a company that has twenty people like that when you’re focusing on a bunch of things? I mean, this is a dog fight every day, and if you don’t have the burning desire within, you need to get out of the way because you’re holding everyone else back.”
ON OFFERING HEALTHCARE INSURANCE
As our longtime readers know, we believe that you can’t have a robust discussion of our financial system (or ways to disrupt it) without taking into account healthcare’s rising (and alarming) share of GDP. That’s why we’ve sought out the perspective of innovators looking to improve the way healthcare insurance is purchased and selected.
Jennifer Fitzgerald, CEO of PolicyGenius:
“We learned that when it comes to healthcare, people don’t trust black box recommendations and if you’re making a judgment call for them. So what we decided to do was break open the healthcare insurance selection process and walk people through the tradeoffs.”
Denny Weinberg, CEO of Hixme:
“Choosing healthcare isn’t like picking a source for a checking account, where the products are basically the same. For some insurers, it was just too much, so they decided to focus off-exchange. Most carriers also feared that the loss of enrollment control would result in abuses on-exchange. For example, sick people were able to sneak onto these exchanges literally on their way to open heart surgery or dialysis.”
