#HackingFinance [w/ anthemis | group]

welcome to the sixth paradigm

“This is just the tip of the iceberg however, as we get into the next wave of digitisation with the internet of things and wearable computing. Think of all stock items communicating their whereabouts and pricing all the time. Think of store thieves being tracked as they not only remove items from the store, but being traced to where they live. Think of the ships, containers, items within the container and component of items within the container all shouting “I’m here, and my name, rank and serial number are Samsung Galaxy 5 SNE4-1X98-20H1”. Obviously, that is the technology piece, but the financial app inside the items will also be a key part of the process. This container contains $5,256,174.75 cents worth of goods, and we know that because we can track the 19,714,142 components inside, their values and serial numbers.”

“To Rifkin, we are entering the age of the social commons, where ownership of goods is less essential to consumers than merely having access to them, pointing to car sharing services like Zipcar, apartment sharing sites like Airbnb and Courchsurfing.com, and children’s toy exchanges like Baby Plays and Spark Box Toys as pioneers. Expand this kind of behavior to other parts of the economy — peer-to-peer renewable energy sharing and crowdfunded personal and business loans, for example — and all sorts of companies may soon end up selling far fewer goods and services to even fewer people. You would need to put aside measurements like GDP and profits to gauge the success of such an economy.”

“"We need to speed up the transition from an industry to information economy by creating a sandbox, a new venture approach to financial regulation for new business models, and by hacking financial regulation," according to Sean Park, a former trader and founder of Anthemis.”

“This means the common stockholder, whose interests the board member is supposed to protect, gets the short end of the stick. Not only does this situation make no sense, it flies in the face of well-established corporate law. No one wins — except the activists, who take their money and move on to the next playground.”


Gordon Ross interviewed me as a preamble to a Future of Work panel session that is coming up 29 April 2014. I spoke about the future of work in general terms, and more specifically about the skills needed for work in the new postnormal economy.

Stay tuned for the remainder of the Future of Work series featuring Dave Gray (author of Gamestorming and The Connected Company), Megan Murray (Moxie Software), and David Ascher (Mozilla) in coming weeks.

Socialogy Interview: Anne Marie McEwan


So what we need are technical specialists with polymathic tendencies who are also increasingly skilled in the social capabilities that allow them to engage in co-creating transgressive, boundary-breaching knowledge - communicating, cooperating, able to “crack cultural codes”. Perhaps we need to be thinking in terms of a new knowledge discipline? A sort of systems thinking 2.0, which specifically reflects boundary-breaching social complexity, cultural diversity, uncertainty and mess?

“(On analysing bank earnings:) “We don’t strip out litigation as one-offs from the earnings any more as it has simply become a cost of doing business,” Mr Wheeler said.”

“The new labour market means micro businesses are becoming ever more important while large employers shrink, thanks to automation and globalisation, and fragmentation of industries. Lawmakers should make it their business to understand how these phenomena are altering the electorate’s priorities, and adjust their policies accordingly. Currently the self-employed are a highly dispersed community, but as their numbers grow, they will use technology to become more assertive, to ensure their voice is heard in parliament the same way truculent union bosses represent state workers such as teachers or Tube drivers.”

“The problem with being so dependent on processing revenue is twofold: First, the profit margins aren’t great. Competition and the commoditization of payment pipes have driven down the fees payments companies charge merchants, while the cut paid out to credit card companies has remained largely the same. Secondly, the public markets today would likely be forced to value Square at a lower revenue multiple than if it made revenue from software sales, which typically come with better profit margins.”


Google, Apple or IPO: What’s Next for Square? | Re/code

It’s not that the margins aren’t great, it’s that a merchant acquirer can only take so much off the top before either the merchants walk or Visa/MC/Amex lock you out. One of the great misconceptions of this investment cycle has been to treat processing volume as revenues (see: Uber, AirBnb, Square). But revenue isn’t the money a processor handles, it’s the money it handles on which it has a claim. In Square’s case, as in the case of most all merchant acquirers, that number is around 0.5% of transaction volume, which for $30b in transactions yields ~$150m in net revenues. That’s nothing to sneeze at, surely, but it’s also not Earth-shattering.

The public markets value merchant acquirers at anywhere between 1/50th and 1/100th of transaction volume. If you believe Square is worth $8b, then you should also believe that it will reach $400 - 800b in transaction volume. And that’s just to break even; if you expect a positive ROI, those numbers have to go even higher. Now, that’s certainly possible, but I’ve yet to see an evidence-based argument explaining how Square can capture 10-20+% of the total US transaction volume, especially considering the strength of its competition.

Payment volumes make for misleading, but exciting, headlines, which is exactly why they’re used so often. I like Square. I think offering payment processing services to individuals and small businesses who otherwise face discouragingly high barriers to those services is a terrific business idea. I think their execution on that idea has been excellent. But I also think the valuations being assigned to the business—and the qualitative justifications undergirding those valuations—are just plain silly, and very much a sign of the times.


Debbie Downer

(via justin-singer)

(via justin-singer)

“So for all you guys talking about “channels,” you are dead meat. You are stuck in the last century. Start talking about how to digitize everything and stop talking about adding another channel to your old branch network, please.”