11:FS Co-Founder Simon Taylor — NFTs, Clubhouse, & The State of Crypto
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Worlds collided as the two gold-standards of fintech content came together on today's episode.
I sat down with Simon Taylor, Co-Founder + Head of Ventures at 11:FS, a challenger consultancy and emerging fintech empire. 11:FS is building the future of financial services in 32+ countries through transformation & advisory services, in-depth research & benchmarking, core banking capabilities, and top-notch content.
As you can imagine, Simon contains an absolute wealth of fintech knowledge. Let’s highlight some pieces of the episode.
Simon’s Foray into Fintech
Simon has been in financial services from the start, climbing his way up at payments giant TSYS (merged with Global Payments) in Europe. When did he first hear about fintech? On Twitter, he saw some noise about a ‘fintech’ conference and started digging around the web. The very next day, Jack Dorsey left Twitter to launch a certain payments company….Simon realized the fintech explosion was coming and decided to cold-email a TSYS exec about the trend. The exec “could have fired him” but instead took the call, and not long after, Simon became their Head of Innovation.
He was later headhunted by Barclays, where he worked on mobile banking, built the Rise platform, became head of blockchain R&D, and immersed himself into the London ethereum community. What was blockchain like in ~2014 at a bank? “The technology wasn’t ready for new products, so all of our efforts were focused on efficiency.”
Is This Crypto Boom “Different?” And What Does It Mean For The USD?
“Bitcoin either goes to zero dollars or it doesn’t. And I don’t really think it goes to zero…So then you have to ask yourself some interesting questions What does it become and why? In order to do that, you need to unpack the role of the USD, dollar printing…and how serious all that is as a threat to the USD as the global reserve currency.”
Common wisdom tells us you know you’re in a bubble when people say “this time is different.” We both acknowledge the bubbly growth in crypto prices, but agree that the pieces are in place for a crypto-heavy future and there are a lot of fascinating questions to ask.
On the consumer side, Simon believes that bitcoin is now ‘part of the window dressing’ and permanently here to stay. We’ve passed the hunters and speculators, but are starting to see the early majority. Once he saw bitcoin on CashApp, PayPal, and the balance sheets of F500 companies, he realized the asset is truly here for good and likely never hitting zero.
Of course, the recent surge was boosted by dollar-printing, stimulus, and a zero-rate environment that made people take higher risk. But looking beyond the usual MMT and inflation topics, Simon thinks the real implication of this rise is the future of the USD as the global reserve currency.
The Chinese are pushing the renminbi further into the global financial system, and the Euro has also seen increased use in global trading corridors. As the USD experiences inflation and disruption, a door can open for a multi-reserve currency system as global finance breaks reliance on the USD.
Is there a chance for a one-world global digital currency, like Bitcoin, where all countries cooperate? Likely not. Simon argues we could be headed for a multi-reserve currency model, much like the multi-internet model, with the US, European, Indian, and Chinese internet models we see today. But the fact that Bitcoin has a ‘chance’ is enough validation for its potential.
On Bitcoin: “Like all things, when it is young, it is loud and chaotic. And it’s drawing in pencil on the walls and you kind of want to tell it off sometimes. But it’s also super creative.”
The Power & Potential of Stablecoins
What is a stablecoin? In Simon’s words, it “Looks and feels like a dollar but it can move at the speed of an email and actually has technology built around it.” Fintech folks are aware of the limits of ACH and wire. The existing fixes for these processes (CashApp, ModernTreasury, etc.) are mostly just building RTP and other tech around the existing process. “The rails they’re using are the same, but they’re just hiding the pain.”
Imagine if the money could go to a permission-less utility that moves it in minutes? Tracked and verified? That’s what stablecoins can bring: increased transparency, coupled with decreased cost and risk.
Right now, stablecoins are predominantly used by crypto traders or people holding USDC in accounts like BlockFi and Celsius that offer 10%+ on USDC balances. So if you’re a young software engineer, Simon argues you could be better off getting paid in USDC and start saving in an interest-bearing account for the long haul.
However, he agrees it’s an apples / oranges comparison. Your USD savings accounts are insured by the FDIC and backed by the government. Stablecoin accounts have higher risk, are not FDIC-backed, and have not been through multiple market cycles. Simon dives into how they can pay these 10% rates at around the 20:30 mark, which is worth the listen.
NFTs & NBA Topshot
If you’ve been spending time on Twitter or in crypto culture recently, you can’t avoid the explosion in crypto art, non-fungible tokens, tokenized collectibles, and NBA TopShot. There’s a lot we could unpack from the episode, but I’ll keep it high level:
What are these things? Leagues like the NBA and musicians like Gramatik have tokenized things like art, music, trading cards, videos, and more. These items are secured on the blockchain and can be easily verified, traced, and confirmed anywhere in the world. They cannot be copied and then stated to be authentic (hence ‘non-fungible’).
NBA TopShot is the simplest example. Instead of buying a Lebron James Rookie Card from a vendor, where you have to trust it’s real or hire a verification service, you deal directly with the NBA. Instead of a cardboard square, the NBA tokenized actual highlights, like a 10 second clip of a Lebron dunk. Once purchased, you get a virtual copy, tokenized and stamped by the NBA forever — It cannot be truly replicated. The NBA has released thousands of these highlights and listed them all on an online marketplace where people can collect and trade. I’ve spent more time than I’d like to admit in February and absolutely love it. If the NFL comes out with one…watch out.
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Simon and I cover a lot in today’s episode, and it’s worth the full listen to grasp his takes, rationales, and predictions for the above. Plus, we spend the end of the episode discussing our shared lament for clubhouse (but pure admiration for a16z). Time stamps below:
- 7:00 His journey through fintech and how 11:FS is building the industry’s top challenger consultancy
- 12:00 The current state of the crypto market and if it has finally ‘crossed the chasm’
- 17:00 The power of stablecoins and interest-bearing accounts
- 22:54 NFTs, Wu Tang Clan, Gary V, sports memorabilia, and NBA TopShot
- 28:10 Our thoughts on Clubhouse
- 31:40 A fun rapid-fire round including his favorite follows on Twitter
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Ryan Zauk
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Ryan Zauk is an MBA Candidate at The Wharton School, where he runs the Wharton FinTech Podcast. He currently works with the US International Development Finance Corp looking at technology impact investments in developing markets. He has a passion for music, media, and all things FinTech.
You can reach him at rzauk@wharton.upenn.edu or on Twitter.
