#HackingFinance [w/ anthemis | group]

welcome to the sixth paradigm

stoweboyd:

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

stoweboyd:

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.”

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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.

Sincerely,

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.”

“Plosser said, for example, that higher capital requirements based on a firm’s leverage ratio, as opposed to risk-weighted measures as mandated under Dodd-Frank, might bring about the same goals of safety and soundness at lower costs.”

justin-singer:

(via Liquidity Project Complete: Introducing the Sacramento Method)

I’d love to see the points on this chart colored by grade. I’d also like to see FICO change in %.

justin-singer:

(via Liquidity Project Complete: Introducing the Sacramento Method)

I’d love to see the points on this chart colored by grade. I’d also like to see FICO change in %.

“Payments Lego companies share some typical characteristics. They all offer simplicity both in the sense of removing redundant processes in the value chain and by being easy to plug into. They all offer speed both in transaction time and ‘go live’ time. They offer transparency in pricing and business models. Finally trust is paramount to these firms. They all invest heavily in compliance and security so that their customers can rely on them.”

“The investors said employees of the defendants would use such names as The Cartel, The Bandits’ Club and The Mafia to swap confidential customer orders and trading positions, and collude to set prices through such tactics as “front running/trading ahead,” “banging the close” and “painting the screen.””

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http://mobile.reuters.com/article/idUSBREA301WC20140401?feedType=nl&irpc=932

Will be interesting to see evidence, in such a big, liquid market are customers all the “same way”? Nonetheless if collusion proven, it will further corrode trust in the street. Wonder how much progress is being made in fixing the broken culture that enabled this kind of behaviour?