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Fintech 🧠 Food - Lending doesn't need banks
Plus; Mercedes in-car payments, Chase blocks Crypto in the UK & Apple does Open Banking in the UK
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Hey Fintech Nerds 👋
Open AI is raising at 90x ARR ($90bn), and Claude at 100x ARR (~$30bn), prompts the question: How much does the market believe a foundational model is worth?
Every CEO needs a story on Generative AI because it feels like a platform shift. Not since 2010 have I felt this level of excitement for new technology. Watching Meta demo “AI agents” and using GenAI in daily workflow feels like magic.
📣 Maybe banks will face a platform shift too? The Rant this week is about how credit and lending rely less on banks.
👀 If there is a platform shift from mobile, what does that mean for Apple? They need service revenue for growth. Their troubled partnership with Goldman has made headlines, but they just launched a very cool Open Banking feature in the UK. Maybe they don’t need to be a bank, and Open Banking is their way in.
👀 Mercedes is doing in-car touch-screen payments, and Chase is blocking access to Crypto in the UK. It feels like we’re in the future, and the future lacks regulatory certainty!
📚 Your good read this week is the new technologist manifesto, and I absolutely loved it. Bookmark it.
Here's this week's Brainfood in summary
📣 Rant: The future of lending might not need banks
💸 4 Fintech Companies:
Roam - 2% "assumed" mortgages.
Galleon - The off-market real estate marketplace.
Level - The Insurance claim fighter AI.
Truewind - The CFO AI
👀 Things to Know:
📚 Good Read: The new technologist manifesto
If your email client clips some of this newsletter click below to see the rest 👇
Weekly Rant 📣
The future of lending might not need banks
Lending is being done less by banks and more by shadow banks.
Private Equity is winning big in this deal.
Apollo, Blackstone, and KKR are up big this year. Apollo is up 80% YOY and 42% YTD. As the banks pull back from lending, Private Equity (PE) firms are pivoting to Private Credit and picking up the lending slack.
For centuries, banks originated loans. You got a loan from a bank, and the bank took deposits to manage the risk of loan default.
But in the wake of the banking crisis, higher interest rates, and the rise of non-bank lending from Fintech companies, the role of banks as lenders is diminishing.
Market share erosion is a malaise that you can see in companies that were once titans. Citi Bank is a poster child for this erosion. The new CEO just announced sweeping cuts to senior leadership and a "simplification" of management as if this somehow will fix the arthritis the company has.
Same old clients, same old products, same old results.
Banks can and will play a crucial role in lending if they get their act together and stop applying 20th-century strategies to a 21st-century reality.
That means new products, clients, providers, and, more than anything, a sense of urgency.
It's far too easy to collect 6 or 7 figures in leadership roles at a corporate and do good enough.
So much of the work is an internal battle to get anything done, and so little is about survival and winning.
But the battle shouldn’t be internal. It’s external. It’s existential.
Going deeper. Obsessing. That's where the win comes from.
Regional banks might be the ones with the ability to capture this opportunity. Unlike larger banks, they’re not stuck in permafrost (frozen) and can execute via partnerships.
Let’s dive in 🏊♂️
Thesis: As lending shifts from banks to fintech and shadow banks, banks must reinvent their role
The decline of bank lending: Why can’t banks lend enough?
Lack specialism and historical data to meet new demand
Resulting in one-size-fits-nobody products
Regulation preventing large banks from taking new risks (post SVB are you gonna lend to new thing?)
The rise of Fintech Lending and Shadow Banks
Defining Non-Bank Financial Institutions (NBFI): Any company “doing finance” but that doesn’t have a charter or license.
Shadow banks are specialist lenders without deposits and the ecosystem of investors that surround them
Fintech and Tech lenders can respond to new demand rapidly
Many investors have an appetite for this type of debt (private credit)
Now some savvy smaller banks are becoming specialists lending to lenders
New lenders and lending innovation is a double-edged sword
Lending innovation like cashflow underwriting has been amazing
Lending innovation like payday loans less so
Therefore lending is incredibly regulated
Fintech companies may introduce unintended consequences for borrowers, but I’d rather have innovation than not.
Shadow banks might also introduce systemic risk. There isn’t a regulation designed for the ecosystem that has now emerged.
The opportunity for banks and others is to build a high watermark of trust
Figuring out how to deploy lending at scale to new markets is non-trivial
Because most big banks are also terrible at new product development
M&A and partnerships could be the way out
The level of scrutiny banks face means they can scale niches meaningfully
Regionals and Fintech companies who can partner well can capture the opportunity
And build a high watermark of trust
The role banks play has to exist, but banks themselves don’t.
1. Why can't banks lend enough? 😰
a) Many lack specialism to meet the new demands. The growth in lending comes from new sectors like clean tech finance, products like revenue-based finance, and BNPL for business. The big bank systems, underwriting models, and internal committee structures are not set up for these new products.
Big banks budget annually. The ROI calculation to deliver a new product outside the wheelhouse is much harder, and spreadsheets run the world internally. When the sector is big enough, the big banks will come and play, but not until then. And by then, market share will be expensive, and their only choice will be to compete on price.
Lending to a new sector is hard without historical data. What data points matter for cleantech? That's where agile specialists like Enduring Planet and others are picking up the slack. Often, their capital providers are specialists in lending to lenders, often not banks but hedge funds or private equity.
The Financial Stability Board estimates that banks account for just over 50% of all financial assets. It has steadily risen from the mid-40s a decade ago (excluding the financial crisis). This is also an aggregate and global figure. Imagine this picture in developed markets like the US and China, and especially in rising economies like Brazil or India.
👉 Takeaway: Banks don't address new market segments.
👉 Takeaway: Therefore, banks miss the opportunity.
b) Their products become one-size-fits-nobody. The best products come from a unique and deep understanding of a customer’s context. For business lending, this means understanding the sector, the KPIs, and the market. Banks that operate in a region with a concentration of one sector might offer tailored products. E.g., banks in the mid-west strong in agriculture.
But for new sectors, they don’t know they struggle to offer something tailored. At best, they might offer a generic SMB loan; at worst, they might not lend to a new sector at all.
👉 Takeaway: New market entrants capture the opportunity
👉 Takeaway: Banks erode market share
c) Regulation restricts the role bigger banks can play. Any bank above $100bn in assets in the US or $50bn in Europe has to hold "adequate" capital on their balance sheet. Regulators set this limit to prevent collapses in the wake of the global financial crisis.
(It was briefly $250bn in the US but got reset to $100bn after SVB's collapse.)
The more capital a bank has on its balance sheet, the less can be put to productive, revenue-generating use, like lending. The regulator examinations that come with being in this category of systemically important banks are also much more detailed and frequent than those applied to smaller banks.
This is why Jamie Dimon recently said hedge funds were "dancing in the streets" over the new capital requirements in the wake of SVB.
👉 Takeaway: Banks' risk appetite is limited by constant examinations and little headroom for risk-taking.
2. The Rise of Fintech Lenders (NBFIs) and Shadow Banks 📈
a) Defining NBFIs: a non-bank financial institution is a company that is not a bank, does not accept deposits, and may perform other banking activities like risk-taking or lending. An NBFI might do lending but doesn’t have to.
b) What is a shadow bank? Shadow banks include investors like hedge funds, private equity firms, and fintech companies increasingly participating in bank-like activities such as lending. A key difference is that shadow banks rely more on short-term or wholesale funding than stable depositor funding.
Specialist lenders have existed for decades, even centuries. Everything from auto loans to payday lending would fit in this category. However, Fintech and tech companies lending that’s new. The most rapidly rising segment is Fintech lenders. Think BNPL providers, charge cards from spend management companies, or “revenue-based finance.”
The terms shadow bank and NBFI get thrown around interchangeably. But the above is how I separate it in my head.
👉 Takeaway: Someone has to fund this new type of lending, and new tech has made that faster, cheaper, and more convenient.
c) New lenders can respond to new demand rapidly. Neobanks and digital businesses can distribute lending rapidly. When a new customer demand appears, they're hyper-sensitive and can quickly get it up and running. Neobanks and spend management platforms for businesses have a new revenue opportunity, and entire specialist lenders are being founded and built.
👉 Takeaway: They can originate lending, and there are willing buyers.
d) Many investors have an appetite for this type of debt (private credit).
Private credit is a loan made to a private company by an investor or non-bank lender.
It's not a new idea, but since 2010, it has become an extremely popular one. According to Preqin, an investment data company focused on the alternative asset space, the amount of money raised by investors for making private credit deals has increased from roughly $300 billion in 2010 to $1.2 trillion by 2021, and it is predicted to swell to $2.3 trillion by the end of 2027.
And who is allocating all of this money to these private credit funds?
Investors looking for yield, particularly (these days) public pension funds.
e) Some savvy smaller banks are becoming specialists. The US still has over 4,000 banks, creating plenty of space for some to become exceptions to the rule. One smaller bank published this piece in their reporting that shows specialty healthcare, solar, and sponsor finance as their highest-growing segments. It also notes that 44% of lending is either infrastructure or specialty finance.
👉 Takeaway: There is still lending demand, but it's changing shape.
👉 Takeaway: Is this an opportunity for bigger banks and regionals?
3. New lenders can be amazing ⭐
a) Data creates new lending. Cashflow underwriting is the new default feature across the US lending market, with regulators pushing banks to offer this. Instead of relying on your lending past (credit history), you could build a future based solely on your checking account data. If you pay bills on time or regularly save more than you spend, chances are you’re a lower credit risk, even if you have a “low income.” Heck even the "love or hate" BNPL relies heavily on cashflow underwriting.
Fintech companies also innovated payroll-linked lending. This is a lifeline in a world where more people rely on the gig-economy and freelancing for a larger part of their income. Classic underwriting models didn’t allow this.
b) Digital specialists can lend in scaled niches. SoFi made its name in student lending, and now we see a wave of solar and cleantech lending companies being formed. Their digital-first platforms let them sell to any geography, not just where their branch happens to be (like a bank would). Digital means (assuming you have all the regulatory approvals) you’re at least national from day 1.
We want this.
4. Lending innovation is a double-edged sword ⚔
a) Lending innovation can be terrible. Lending has, at its core, an unfairness. Lower-income populations are at higher risk because they lack the capital to manage shocks like a loss of income. They live in poorer zip codes that have a higher history of defaults, and so on. Lenders charge more to these populations because their models show that's what they need to do to be profitable. Worse, communities who were historically discriminated against show up in underwriting models as high risk!
This results in payday lending that targets low-income neighborhoods, with high-interest credit (like credit cards) pushed to people with low credit scores.
b) Therefore, lending is incredibly regulated. Fair lending, UDAAP, consumer duty, and name-your-favorite-here lending is a spider web of different acts, laws, regulations, and examinations exist to try and level the playing field. That makes seemingly sensible innovations (like using machine learning to more accurately price risk) much harder than it could be.
This is a net positive that we have protections, but the regulations were often built in a time and context before new technologies and innovation. Old laws don't die; new ones get added. The legislative debt creates a drag on innovation banks can do.
c) Fintech companies may introduce unintended consequences. It's easier to build a new company with a new product in a new paradigm. Inevitably, there would be a regulatory response if something blows up or becomes a political issue (like what nearly happened with BNPL in the UK). Most founders build new products with good intent but may not always understand the unintended consequences.
My instinct is that I'd rather have companies trying to innovate and learn than not at all. But also, lending is a massive responsibility that any founder or company should take incredibly seriously. Building a sustainable lending business is about obsessing over detail.
d) Shadow banks may introduce systemic risk. There are the Fintech companies, their investors, and new buyers of the asset class to consider. Fintech companies are re-bundling banking but might not have a charter. Most don’t (partly due to the difficulty of getting a charter in the first place). No matter how well 99.9% of Fintech (or tech) companies perform when lending, one bad apple could ruin the bunch.
Specialist lending companies aren’t held to the full swathe of lending standards a chartered bank is. Historically, that’s a known issue, but as tech enables re-bundling, the rules designed for lenders might need another look.
Consider the investors, too. While an Apolo, Blackstone, or KKR might deeply understand buying and syndicating loans, newer hedge funds might not. Will they overlend? Do they know how to diligence lenders? What might be the consequences if they don't?
Further, we now have Fintech companies helping make this asset class (loans originated by non-banks) available much more broadly. Whether it's companies like Moment or the new investment platforms like Titan Invest or Equi, there's a push to make the "family office in your pocket" happen. Does this mean we'll get buyers of credit that don't understand what they're buying? You'd hope the funds that buy these loans have the right due diligence to manage the risk. But hope isn't data.
The embedded lending origination and distribution value chain feels like an accident waiting to happen. Just as we see Banking as a Service “3rd parties” rules being tightened by regulators today, I suspect we’ll see a similar thing around embedded lending in 3 to 5 years.
5. The opportunity for banks and others is to build a high watermark of trust 🤝
Banks need to find a new role in this new reality.
Regional banks forced into M&A discussions might be the best place to capture the opportunity.
a) Figuring out how to deploy lending at scale to new markets is non-trivial. For example, big banks talk a great game about cleantech lending but rarely deliver. Every big bank will tell you how much they've committed to lending to new energy sectors and infrastructure in press releases, usually around COP climate summits. But vanishingly few will tell you how much of that has been deployed. JP Morgan (as always) is an exception that came with data. But others have a throwaway line on their corporate responsibility page.
b) Because most big banks are also terrible at new product development. Getting a product live in a bank is a herculean effort involving committees, budgets, sign-offs, and politics. This is not a recipe for feature velocity. Whenever I meet C-suite bankers, I show them what it's like to use Monzo or Ramp or insert-your-company-here. Because they don't use it. They live in a world where someone else does their expenses, diary, and wealth. It's all concierged.
If you can't feel a customer's pain, how can you obsess over the tiny details that make a product great?
c) M&A and partnerships could be the way out. The JP Morgan partnership with Gusto for Payroll is one example that the whole industry has seemingly come around to over the past 12 months. Partnerships rock. Specialist lenders need banks who can offer materially large credit lines. Those banks need specialists to help them win new revenue and growth markets.
d) The level of scrutiny banks face means they can scale niches meaningfully. A large bank can drop $100bn into a new niche and offer a $250m credit line to a Fintech company. Where the smaller banks play today is a massive opportunity for a large bank's trade and working capital division. The problem is those teams typically only work with huge clients. Most won't get out of bed for a company with less than $50m in revenue.
e) The opportunity is for regionals and Fintech companies who can partner well. As I wrote a few weeks ago, regional banks have a perfect storm. The market doesn't like their stock no matter how well they perform. The market wants to see them do M&A and become another big bank. That's not very exciting for shareholders, customers, or the market. I don't buy that the only answer is M&A. A far better answer is to get after the new opportunities like embedded finance and new specialist lending.
f) The opportunity is building a high watermark of trust. Lending innovation doesn’t always go well. Capital for lending now comes directly from investors, many of whom are not banks and are not subject to the same oversight. If regulation won’t fix this, the opportunity for Fintech companies, banks, and investors is to build and demonstrate that high watermark.
Answer questions like
How will transparency and disclosures work?
How will we ensure customers understand what they’re buying?
How will you demonstrate you’re actually building better financial health and outcomes for the consumers and businesses you serve?
Legalese won’t cut it.
“Complying” to the law of the land alone, isn’t it.
Trust is earned and not given.
That’s your opportunity, Anon.
6. The role banks play has to exist, but banks themselves don't 🏧
Sensible risk management is table stakes.
Risk management in new sectors where we lack data is the kind of hard problem the best Fintech companies are attracted to.
By pushing the R&D to startups, banks erode their position as the brand that is doing the lending. But I can't see a world where they're fast enough at product development to get there first.
Specialist lenders don't need banks to get credit.
They need to originate loans and have a buyer.
SMB lending is being unbundled into software.
Who's gonna rebundle?
4 Fintech Companies 💸
1. Roam - 2% "assumed" mortgages.
Roam lets a customer buy a house and "assume" the mortgage rate of the previous owner. This means a more competitive home loan rate can be achieved instead of a new home loan at 7%. All US Government-backed loans are eligible to be assumed, and millions are available. Roam helps buyers identify homes with an assumable mortgage and collects a 1% fee for helping to manage the process. Any seller equity must be covered in cash or with a separate mortgage.
🤔 Great timing and perhaps the right team. My first instinct was this would have to have buttoned up compliance, especially after the job cuts at the large real estate-focused Fintech companies. Then I saw the former CEO of Fannie Mae is an advisor. Very few mortgages are assumable, but if the service can help you find something in your area that's available, that's a huge win. Less than 25% of mortgages are assumable, so matchmaking will be critical.
2. Galleon - The off-market real estate market
Galleon helps home buyers access exclusive off-market inventory and allows sellers to set prices. The marketplace removes real estate agents and avoids "listing" the property. All sellers do is enter their home address and a price they'd be willing to sell for. Galleon then connects the buyer and seller directly.
🤔 It's sort of like the eBay "reserve price" model. As the other Million Dollar man Ted Diabase once said, "Everyone's got a price." Some neighborhoods are now so desirable that buyers will push fliers through letterboxes hoping to get it. Sellers might be willing if the right offer came in, but for the most part, they need prompting. Imagine if you bought a place 20 years ago that has rocketed in value. People change, and kids leave home, but the inertia of being at home is pretty powerful. PS. I imagine there must be some validation that you own the house before selling, but it's not clear on the website.
3. Level - The Insurance claim fighter AI
Level helps consumers who have had a car accident ensure they receive the total compensation they're owed. Users enter details of their claim, insurance provider, and any correspondence they've received. The AI will then generate a letter output to send to the insurance company.
🤔 GenAI is coming for the low-value legal tasks. Insurers often look to discount parts of a claim after an accident to prevent losses. For example, they might undervalue a car or not apply all the benefits you're entitled to. Fighting back historically requires lawyers who might cost as much or more than the repayment. When a consumer has gone to the trouble of sending a legal letter to their insurer, the cost of fighting back is likely higher than the missing amount owed. For insurers, it becomes ROI negative quickly. Unless they hire their own GenAI agent army, too, I suppose.
4. Truewind - The CFO AI
Truewind aims to manage the startup's back office with "AI-powered" bookkeeping, tax filing, tax credits, and "CFO insights." Users integrate Truewind with existing tools like payroll, spend management, and their bank accounts. It outputs financial statements, models, budgets vs. actuals, and models to answer questions like "What is our runway?"
🤔 The sales pitch here is perfect; what young company doesn't hate admin or want to know their runway? If this scales, it competes with a Head of Finance, and an accounting team gets 10x more efficient in the long term. With all these companies, I'm left with two questions. Question 1: How much is GenAI doing things that don't scale, fake-it-til-you-make-it, and how much is real? Question 2: With so many, can they stand out enough and sell well enough to get traction when startup spending is so restricted? I imagine many will. And GenAI becomes the layer on top of SaaS.
Things to know 👀
Embedded car payments are now a thing 👀. Mercedes and Mastercard will let you buy fuel (or electricity) without leaving the car. Users must scan their fingerprints on the in-car screen to authenticate.
🤔 What else might people do with a secure fingerprint sensor in a car? Imagine signing documents, traveling across borders, or getting insurance. Imagine car rentals where you walk in, manage all the paperwork on screen, and load your card by tapping your Apple or Google wallet. Fingerprint match? Device match. Beep. Boop. Done.
🤔 The Android Auto and Apple CarPlay long game is paying off. It's convenient to be able to use your phone in the car. It's 100x more convenient to seamlessly link your identity, driver's license, and payment credentials.
🤔 This would be AMAZING for parking. Drive up, the camera photos your license, go to leave, the camera sees it again, and the payment pops up on your dashboard screen. Authenticate. Done. For street parking, geolocation + 2FA of the car actually being there is also nice.
🤔 In a world of self-driving cars, the car becomes just like any other screen. A place for entertainment, commerce, and work. Payments naturally live in all of those. I wonder what other financial products live there, too.
From the 16th of October, Chase UK will block any payments related to Cryptoassets. Their note to customers says, "If you'd like to buy Cryptoassets, you can use another bank instead."
🤔 The one thing the Crypto crowd doesn't want to admit is that a high number scams and fraud start or end with Crypto. There's no smoke without fire. These bans wouldn't happen unless Crypto wasn’t a great tool for scammers. Sadly, this has more to do with user confusion and vulnerability than the rail. It’s actually a great rail for preventing and catching fraud at the tech level.
🤔 This is an own goal for the UK at a time when it is trying to promote itself as the "Silicon Valley of Europe." The Chancellor Jeremy Hunt is in the US meeting venture capitalists. USA Today has interviews claiming the UK is a Fintech hub. Heck, I wrote a piece for a16z saying the same thing. Now this? We must fix this issue. No more bans. Better collaboration and solutions. It's part of the wider scams and fraud issue.
🤔 But we can do better than outright bans. Notably, Monzo has held the line on allowing Crypto payments. It also has a sophisticated tech, fraud, and risk team that collaborates closely with law enforcement. Finding a crypto-friendly bank in the UK is hard, with most either blocking or limiting the transaction volume substantially. If they put the hard work in, that would be a better result for everyone, especially when fraud is the #1 issue in the industry. There's no excuse for being lazy.
🤔 Nuance matters. Crypto is getting the blame but is caught in the crossfire of liability and being a tool. A tool is neither good nor bad. A hammer can build a house or be a weapon. Crypto is confusing to victims who are elderly or digitally illiterate. Crypto is irrevocable and becomes a tool scammers use, not the cause itself. It lacks a clear liability framework, but in the UK may become "authorized push payment fraud." This would make banks liable, so a ban becomes a way out of that.
🤔 The big banks are being lazy. Crypto has a lot of fraud, primarily because big bank tools can't detect it! Why do you think I work at a fraud prevention startup? Because I am certain digital assets are the future, but we can't get there without preventing the scams. We can detect scams before they happen. The tech exists. Let's get on with it.
🤔 The bans won't work. Fraudsters will still find ways to trick users by opening an account elsewhere, funding that, and then funding Crypto. We need visibility across the network and collaboration. Bans are such a lazy, frustrating "solution" that makes the problem worse / moves it somewhere else. The scams start on social media, email, and SMS and end in Crypto. The banks are in the middle. We need to join the dots.
🤔 Chase UK had done well but is losing ground. It came to the UK with the best savings rate and is now expanding into multiple products. But the headlines have gone quiet amid rumors of supplier issues.
As part of iOS 17.1, the Wallet app will now show the user's account balance from their bank and a history of deposits and payments. Balances will also appear when buying something with Apple Pay.
🤔 This is a nice change from Apple's Fintech features being US-only. Apple is a financial services juggernaut in the USA, with deposits, lending, credit cards, pay later, and more. Apple Pay is live in over 80 markets.
🤔 You have to wonder what the blocker to Apple's Fintech features launching faster is? I imagine it's regulation. Apple famously loves vertically integrating and controlling its supply chain, but that's much harder in financial services. Each jurisdiction's regulation means there's no such thing as a global supply chain.
🤔 First signs of life after the Credit Kudos acquisition. Apple acquired UK Open Banking provider Credit Kudos in March of 2022, and since then, it's been typically hushed from Cupertino.
🤔 Will Apple Pay Later be next in the UK? Credit Kudos' use of open banking data for cashflow-based underwriting made it unique in the UK landscape. This is now common in the US but still very rare in the UK. Apple can now underwrite, but does it have the partnerships and regulatory understanding it needs to execute?
🤔 Any data from the API is kept only on the device. Given the worries about open banking and data sharing more broadly, you have to wonder if 3rd parties will be allowed to do this in the future. Scratch beneath the surface of tokenization open banking payments, and there's a battle between payment companies, card networks, banks, and everyone else.
Good Reads 📚
Is tech a force for good, or does it just claim to be? In a post-social-media world, is Big Tech just as bad, if not worse, than Big Energy or Big Finance? This manifesto creates a set of principles to orient what we mean by "good." It serves as warnings and a guardrails for anyone working in technology with the aim of "progress."
🤔 There are the beginnings of a true masterpiece here. I'd love to open-source it and get it on GitHub.
🤔 This needed to be said. Tech is in the midst of an identity crisis. Social media is being abused, and consumers are the product being sold. The nerds won, and there were plenty of unintended consequences. Tech is lost in identity politics, lobbying, geopolitics, and more.
🤔 One part speaks to the person.
"The new technologist believes in the power of good critique. We believe that there is no progress where there is no narrative. We believe major human efforts need a creative director."
🤔 But the description of the new technologies and how they're reshaping the world are the best I've seen. If you read one thing this week, read this paragraph.
"The four most important areas of next-gen / post-internet technologies are hardware, spatial, Crypto, and AI. The new technologist spends their time advancing ideas, products, capital, and systems in these arenas. Why? → Because hardware and spatial represent a shift in "containers" for software, and AI and Crypto represent a shift in what software is. These four areas will converge into new metas."
🤔 Atoms are becoming bits. The container for software is now any physical space or device. The world around us is becoming programmable. You can see this in simple things like Mercedes adding payments to their cars and bigger themes like VCs investing in micro-nuclear, space, and defense.
🤔 Software has two new primitives:
Generative AI allows machines to handle probabilistic reasoning. This reasoning is poorly handled by classic computer science techniques or boolean logic. This is a huge unlock but could have unintended consequences on "truth," exacerbating our post-truth social media issue.
Crypto creates a global "truth" or shared deterministic computer for the world. Engineers would call it a state machine. It uses various methods to reach a consensus about facts and perform logic based on that input.
That's all, folks. 👋
Remember, if you're enjoying this content, please do tell all your fintech friends to check it out and hit the subscribe button :)
Disclosures: (1) All content and views expressed here are the authors' personal opinions and do not reflect the views of any of their employers or employees. (2) All companies or assets mentioned by the author in which the author has a personal and/or financial interest are denoted with a * (3) Any companies mentioned in Rants are top of mind and used for illustrative purposes only. (4) I'm not an expert at everything you read here. Some of it is me thinking out loud and learning as I go; please don't take it as gospel—strong opinions, weakly held.