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Fintech in Flux: Where it's Been and Where it's Going - Eric Sager + Angela Strange

Angela Strange
General Partner at Andreessen Horowitz
+ 1 speaker
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2020 Startup Grind Global Conference
February 12, 2020, Redwood City, CA, USA
2020 Startup Grind Global Conference
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About speakers

Angela Strange
General Partner at Andreessen Horowitz
Eric Sager
COO at Plaid

Angela Strange is a general partner at Andreessen Horowitz where she focuses on investments in financial services including insurance, real estate & increasing inclusivity. She is currently a board observer for the following Andreessen Horowitz portfolio companies: Branch, Earnin, HealthIQ, Mayvenn, PeerStreet, and Point. Angela joined the firm in 2014.Prior to joining a16z, Angela was a product manager at Google where she launched and grew Chrome for Android and Chrome for iOS into two of Google's most successful mobile products. Previously, she was the director of product management and business development at Ruba.com (acquired by Google) and a senior associate partner at Bay Partners where she focused on the consumer internet sector. Prior to that, Angela was a consultant at Mercer Management Consulting in Toronto.Angela is a proud Canadian and served as co-chair of the C100, a non-profit that bridges Canadian entrepreneurs with Silicon Valley, and on the Canadian Finance Minister Morneau's Economic Growth Council. Angela has a Mechanical Engineering degree from Queen's University, in Canada, and an MBA from Stanford. Angela is a world-class athlete and spent two years training professionally as a runner; she has won several marathons and achieved a seventh place national ranking in Canada.

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Eric Sager is the COO of Plaid, the technology company powering the fintech ecosystem. At Plaid, Eric leads the company’s business strategy and operations as well as the go-to-market teams.

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About the talk

A Panel with Angela Strange, General Partner at Andreessen Horowitz + Eric Sager, COO at Plaid talking about growing Fintech industry.


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Awesome. Thank you guys for joining us. I am excited to be here with Eric Castillo sled and you actually have a pretty in-depth syntek background before plaid. You are the chief Revenue officer at bluevine head of sales at Square somebody to come and fly, but will have a much broader conversation also. But to start congratulations on the opposition 5 billion dollars buy Visa biggest fintech acquisition. I think top 5 positions in a little while. So many of you have probably read a lot of the analysis at there and I know the deal isn't closed yet so we

can get totally under the hood. But for what you can tell us, how how do these companies fit together? Why did this happen? But the one thing that we are really happy about it's a fantastic milestone for us at the company and its really been the customer reaction. We were talking a little bit backstage, but the fact that we have so many customers who have reached out to excited about what this combination means would be so I can help bring the Plaid what it means in terms of accelerating a road map us expanding internationally and as providing even better solutions to

all of our customers on the globe is Bill do if they have to deal with all signs. Ecosystem and we have this expression that weighs a lot which is the battle between the startup in the incumbent is rather the startup can get distribution before the incumbent guess Innovation. And that's the same type of world where is startups versus Banks and we'll we'll talk about that you and the other hand need the banks you're extracting data from them and they're very few. Send text that make it into the headlines with Jamie

dimon. Then insert other fintech got our insert other large Bank CEO. So how have you approached those Partnerships in and when is it gone? Well, and what have you done what I've gotten contentious unique relationship with banks, I think from my perspective and I work a lot with our go-to-market teams and one of the things I'll be focused on it really kind of working with the banks as customers rights are letting them actually experience the power applied to the power of the solutions that we bring to the table cuz we think that's what opens up a better understanding on the part of the

bangs to come to recognize the value on all aspects of these cuz it's like if you think about platter the way we think about that. Right, there is the consumer. So we have hundreds hundreds of millions of consumers. I use flat we have tens of thousands of developers and we have 18,000 situations. Right and the magic is about putting all those three kind of net worth in ecosystems together in a way that I should kind of adds value to all three dimensions and once the banks experience that prospective not just from the from the institution side, but they also experienced the value that they

can get from a customer developer side. That's when you start cereal saying kind of those relationships take it to the next level the dump. I thought you said Telco analogy. How do you how do you get them over over that hump is it just I can't do that themselves and convince them. I don't think it's possible solutions for consumers and I think banks understand that as well Ride Like the days are over where you can build this wall Garden where your customers aren't going

to consider other options and in that world like we're not the enemy, right? Did they find a bank while I'm worried about is I'm worried about you know, the other folks that are coming over starting direct deposit accounts. Right? So it's the end 26 of the world the revolution of the world to manzo's of the world. It's the folks on in the on the US side. They're going about space like so far in Credit Karma and NerdWallet. We just helped make it easier and we hope everybody feels better Solutions including the bank. So I don't know if I'm the bank and I want to go compete against these

new entrance one way of doing that. It's Bashi partnering with plaid working with plaid to make my Solutions better to create a better come from experience. And now actually I have a really amazing you have a bank account at JPMorgan or at city or at Wells Fargo. So ironically the influx of video back from Europe could potentially be a good thing for cloud. Yeah, I think it was more customers but also products right which is where you started but you've done a lot of things since then, can you can you talk us through some of those products and then we'll go

into the future completely different right? They realize that they in order to power that product. They need a good quality Bank information. And so that's how they ultimately kind of went down this path. But the initial product was literally just kind of connecting to bangs and pulling down the account and routing number that was it. Right? And so since then we've expanded in the number of vectors. We've obviously gone from One bank to the 18,000 institution spread. So that's why the second is we've gone beyond just account and routing number

we've now got into transactions and balance and assets and and all the other products that exist out there. It was we ended and that's part of Destroying down more information from those existing connection and then finally found two different types of Institutions, right? So it's not just bank accounts anymore. It's what we call liabilities it so it's your student loans car loans. It's literally anything that sits behind the username and password anywhere in the world. We can ultimately access Aggregate and kind of help consumers and developers build much better

Solutions. In the audience. I imagine there's several view. Yes, you're probably logging into service areas that were built in the 1970s and it's difficult to figure out what the hell's going on. Why hasn't there been more skin texture part of the reason I think it is very difficult to get the data out of those servicers, which is a product that you guys just looking at all times at what do consumers need rights over here lock phone actually kind of end consumers and then what do I develop its need and what are they looking for in terms

of kind of doubting that next generation of amazing Solutions and that's pretty much how we decide what to do next. Give a couple of Android developer applications that have been built that I'm surprised you. Are you think that have been particularly exciting that stepfather's enabled? Not that you're picking favorite children's song. Do you choose, you know between like my children, which is always gets me in trouble. I like my daughter much better than my son right now. So sensitive at home. Look, I mean, I'm going to dodge the question, right? Like I think there are a lot

of great companies have it said that have been built on the kind of pick a favorite out of all of them. I think it's hard, you know venmo who come along way a square where I used to work has come a long way. So there's many many many examples out there. Charlie Bear anybody anybody in the audience for like the folks that are really building something from small, but that's true for everybody at 5. I think we're like a truly like a developer first company and it's not that we don't have a

lot of large customers overtime. But at the end of the day like most of Engineers most of our product Falls, I don't even like what they really love is like seeing these small companies end up like being successful. And so if I had to pick a category is only love what we call start up where should that's actually the category that was it internally and we put a lot of energy and effort behind making sure that those folks have a great experience and can be successful my company started in the US but evidently this developer and customer

need is not a us only phenomenon its Global and the Banking system is regulations very very different in different countries, you know, if we flash over to Europe there's an open making initiative. So there's one school of thought which says well if the banks have to give their customer data so glad they're all going to build apis. You can take the other side which which part is taking that actually this is a positive and products needed even more. Can you talk about your European approach had my fair share of struggles with my my German regulator friends over the years,

but the good news of in Europe is fundamental Europe has decided that like the bank account information or any kind of account information is ultimately the consumer's right. It's your information. It's not the bangs. It's not plowed. It's yours. And so as a consumer you should be able to decide how you want to use that information to see if you want to use that to you. No power of pfm that helps you make better financial decisions. That's fantastic. If you want to be able to use that data to get a better mortgage for a better loan or better car loan. That's fantastic think those

are the things you should be able to do. Plaid it's our job to make sure that it's incredibly transparent to the consumer what they're sharing how they're sharing it. And so what open banking in Europe has done. I think it has once and for all answer the question around who's dated. It's made very clear that it's the consumers data and that at the end of the day Banks out or other institutions in time like are not permitted to prevent the consumer from doing me permission and kind of their access rights to someone like right. That's a fantastic when I think we're heading there in the US

as well, but in the US it's still exist in a gray area, right? So there is no law on today on the books that would prevent the bank even if you want flat taxes that they don't even if you want to use venmo if you want to use square if you want to use acorns, there's no law on the books that would prevent the bank from actually trying to keep that from happening until from that perspective. It's it's issued when now in terms of Y Plata still valuable. Nobody really wants to invest in doing that across all the different situations. They would have to do in Europe, right? So you still would

have to connect to a hundred the banks spouse. Do banks in order to have a good experience and you have to be able to do that in a way that converts that's secure that's all the things that we literally invest Blood Sweat and Tears every single day to just make it a little bit better for having lunch. Right and so does every company there has a different Core Business. That's what they want to focus on and so as long as we can come in and we can make it incredibly easy for them to tap into that information to do social security and to do so in a way that helps their customers convert and a

in the most efficient way possible. I just think there's a lot of value that we can still come to the table of other ecosystems where the centech ecosystem is just not as well developed. I spent a lot of time and let him and often will look at it and you take a country like Columbia 14% credit card penetration 80% smartphone penetration. We're just very very early days of a spintech ecosystem cropping up. There's no plaid there. Yes, how do you see that

infrastructure layer developing and In other countries around the world, I think it's crucially important. I do think that over time and I feel like I've seen this a number of times in my career, right? We're like the inside itself. Isn't that clever? Right? It's like when I first joined Square you look at like Mobile point-of-sale versus like old-school cash registers like it doesn't take much to figure out right then. I'll go over like any meaningful. Of time. It's not going to be old school cash register going to win out. And so I think the same is true here, right like overtime

consumers everywhere, but want to use these tools they want to use these products and so that infrastructure layer that we've built in the US and Canada where the process of building in Europe I think will become crucial you at the end of the day, we will certainly with Lisa now as well. I think I have every intention of kind of expanding more quickly globally, but I'm also very much Pro anybody else. That's locally doing that. Right? And what do we do with a male partner with them or we take some other kind of approach like the faster we can get to a world where people can enjoy these

products the better, right? I like that's what drives us from emission perspective. Always about like improving consumers Financial Health around the world and we view ourselves. We only have like the plumbing and like the service provider underneath that helps make that happen and it's all of you guys that are the stars right? You got the door the amazing apps on top of it, you get all the glory and the publicity. Like I generally try to avoid situations like this why I'm up on stage. I would much prefer it to our customers and other through our building thing, but but I love that. That's

why I joined the company, right? It's because it we really view it as like where the service were the plumbers but without us obviously, you know, the world isn't nearly as smooth and so from that from the other side, you know plaid has been on this meteoric rise. So for the last few years, what do you think is the biggest risk to find success? The biggest risk, I think the wrist always change right? I think right now it's certainly one risk and I don't think it's a big one. I've been really impressed with our team. But anytime you have the kind of success that we've had you can you can

cut yourself and be like, hey I've one right at the post is just one more Milestone on building something really really great. And the analogy I've used a lot with my things like think of like sports ride. Like there's plenty of sports teams. I'm driving. So I love soccer more than but like I use basketball and football to make it easier but like this plan seems right that one like one championship and then they were never heard from again. Right and that's not how I want to be thought about right until ultimately. It's on us the kind of really come back to work every single day with the

same kind of Relentless effort that got us here and continue to make our products are solutions better for a customer's for consumers and if we can do that, I think we will build something like really phenomenal and something that will have a long-lasting impact on the industry as a whole, but that's a challenge. Black Russian on Platte and then we'll go a little brighter. We were talking a bit about this like backstage how you been taking data out of these walls Gardens, but then the next step is to provide sort of broader Solutions what opinions around you can talk about about the future of

plants product roadmap sectors and institutions more types of data are doing an internationally continuously kind of improving the quality of that but over time the other valuable thing as actually providing answers right to all of you guys, if you think about becoming a customer, you know, when you trying to make a decision, like should you give me $10,000 yes or no and today's world. I can give you data that you didn't have access to before that helps you make a much better

decision are fundamentally all the work of like you having to come up with that answer. It's still yours, right? I could start complimenting that with what I would think of a solution which can draw on like a much broader view that we have. Of the customer right or all the ecosystem as a whole that can actually end up allowing you to make a much better decision around should you give me $10,000? Yes or no? And so it's hard to get into like specific but there's a number of things that were working on there that I think we will help people build much much better outcomes much more quickly

because we're not just getting you the data and like asking you to go figure it out what actually helping you give the cat the answer some more of the work is going to happen on Plex I'd do something. So I think there's always work that happens on that. There's always ways you'd want to distinguish it. I mean, I was a customer parts for many years at square and it for the vine and so did the the key there is even if you give me better like that the last five 10% still matters, right and ultimately like that still the difference between winning and losing like in the marketplace, right? And so

it's not like anybody's absolved of doing that in many cases. If you end up having to spend like the first 80% I think that's hard and you see this across Industries not one more and more. It's not like you're building something from zero all the way what you're doing is you're taking many many different. Things off the shelf it going from 0 to 80 very quickly do uniquely combining them and then in certain key cases, you're taking it from that 82 the 92 the 95 for the 99 whatever and that's what creates the magic know, it's like a big piece of what you guys have done is unable smart on

for nurse to focus on the unique customer inside of the unique product inside that they're bringing not rebuilding infrastructure more broadly about infrastructure. We often use this expression. Now that the Amazon web services moment is coming to financial services and the analogy. I like to use as if you think what did it take to start an Internet company 15 years ago like you might actually drive to Fry's and buy some servers and put them in your truck in front and back to your office and brought them in a server room that long ago that that was happening today many of you probably

experience as to build a financial services company. You're still kind of doing that like you're finding a bank sponsor your finding a court system that was built for years ago and in in an aunt Leslie You're not innovating with banks all by yourself anymore. He's got plaid. Where do you see like for the rest of that stat? The big opportunities are the areas that we should be excited about that are going to be so I'll call it Spotify. But next time it does a lot of different pieces to it. Right like this kind of the Hawaiian Petrel are around like even like things like kyc. It's that are

like the ultimately and he got exactly what you wanted. We end up trading at ourselves away and upgrading. Through Partnerships what we want to be able to get there. If we want to have the golfers come right and we want to kind of do then away like right now, it's it's all the rage right by some kind of a chopper fire in some ways you can square has been able to do right where it's like, hey, I'll give you all the solutions they kind of work out of the box and its really again dislike 028 kind of analogy where you can do that across many many many different things and then you can build

like your own special kind of Magic on top, right? And so that's the road that were on and that's what I mean, even buy Solutions like where we start reading some of those things until there's a lot of categories like that right like kyc is one like But he's kind of been debating in those areas. But I think that's where your head at. Like, you don't want to be in a position of it as an entrepreneur you why you have to have 25 different relationships right to get this thing off the ground you'd much rather just have like a few key relationships have them kind of bring you the

solutions that you need to going to build on top of kind of as one overall integrated package and then go from there within the decade and they're providing you the service as a service in those apartments and you think I like a company like time is a scale is not going to be their future. Hopefully not hopefully many of you were going to build this illusion. Everyone is using scented products, right? But I think there's more more studies being done that show just the benefits of like sentext Solutions like on consumers broadly. And so that Trend will only continue I think there's no doubt in

my mind that like 20 years from now like pretty much everyone is going to have fintech jobs as their means of my kind of managing in front of their financial life, right the idea that you're still doing it like with a spreadsheet somewhere like on pen and paper. I think we'll be completely Obsolete and that that is amazing. I mean that is what we did at square, right Million Dollar business ads on like a spreadsheet would like a very low level of kind of

support right? And so now you can provide these tools to people all both consumers and others in a way that like a it again takes every single consumer from 0 to 80, right like it gives you the right recommendation said make sure you're not investing your money and like high-cost ones that are ripping you off and make sure you're paying off your hide interests that first like all those type is the level of sophistication that I think might conduct was going to be able to bring them. I'm going to unlocked I mean billions and billions That

you glean from talking to you in the first five minutes is just how passionate you feel about Plaza Mission, which is ultimately no enabling developers to help consumers. What areas are we from the consumer perspective? Where do you think the areas that are still ripe for more entrance are there problems that are unsolved that you're excited about I come from a country where we actually got a college paid for or university paid for it. So it's a little different but in the US, I think that's a huge opportunity. There's a lot of these opportunities around making sure that

you're actually likes Done paying down like the right kind of debt, right? And so it's just shocking like how often people are like making again and it's it's not that they just don't have the time right like our lives are busy you have family is like my whole chopped kids, right? Like I don't have the time to like go spend like well am I should I pay off the 17% first or the 15% first of the 13% first, but all those small decisions of a time actually really add up right? When you think about we living in a time like half the people in the US don't have access to a you know, $1,000 and so a

lot of these tools could very easily kind of help people save that and much more and it just becomes automated and I think more you'll see that we're like, they will be Brands out there that just felt such trust that essentially consumer say look you do it for me. Right and whether that's ultimately powered by artificial tennis or other types of pollution, you literally are doing it for me and then I just kind of live my life the way I want to and knowing that I have somebody that's basically like an automated financial advisor with like a God Like You of all my assets right like making sure

that everything is the way it supposed to be. No, I'm looking for it software. I'm going to make much better decisions than humans in this case and we're getting there. I'm not one to say it has to be soft. But like I was at the consumer myself, I would love the option to just a little put this on autopilot, right? I got trust whatever the brand is and they're going to help me get to a much better outcome much lower cost much better returns, etc. Etc. New you look at the trillion dollars of credit card debt depressing statistic in the US most people who have credit card that have it across

325 cards all of variable APR rates. You don't know what the APR rate on what time it is. And so this is exactly the problem was very very much for software. I remember like when I first came to do as my first credit card was $200 and it was like 30 something for Sunday PR and it was the only way I could get access to the system in the United never been able to get a car like an apartment even when you credit check me for an apartment. The number to live anywhere if I didn't have the credit card and sell now not only do I think with tools like plaid you can get much better date on

people, right? So you can see what's in my bank account. You can see what's in my investment accounts. You can see why I had that I paid my student loans, you can see some of these other kind of data points and as a result you would get I would get a better product. But if I came to the US today, I would get a much much much better than I did back then what are the other big trends? I think that's going on in the spaces. We've seen thanks a lots of new ground up send text but we're now seeing in the vein of every company wants to become a centech company many consumer companies B2B

companies figuring out that it makes a lot of sense to launch financial services for the first time. I've examples being a uber and Lyft like they might be a Rideshare company. But if your drivers are also your bank, what have you seen in this vein? And how do you see how do you see that Trend progressing a lot of people that are approaching us? An opportunity for anybody starting a business today, right? It's like if you can figure out how to provide kind of that service and make that easier I can it's not your business isn't right to try to make sure that's like

their drivers get paid fast enough that's crucial to them because they need to grow both sides of their their Marketplace. But if they had like a really great solution that someone else had felt for them. They would absolutely take advantage of that. Right and so lift would do the same and on and on it goes and so I agree. I think that this for a long time I do think every company is on his way to becoming a fintech company, but that doesn't mean every company is going to like build it themselves most of them. I think at the end of the day are actually going to look to others to

kind of help build the hell up and do the right Solutions in so there's a ton of opportunity in that space in general future infrastructure companies, and I know there's a lot of entrepreneurs in the audience may be sent a constant aspiring since I contest winners. Any advice you give on new company starting up in the space or just smart people looking to get him. I always give a very German answer to this which is like I find that like when people talk about this like people over raise the idea portion of it why people always talk about like I need the right idea. I'm ideas and

good enough or like I don't even have the best idea and at the end of the day, I just think that's nonsense like most of the great companies that you've seen felt like it wasn't even the idea that they were to restart a quest number one and number two, even if it was it wasn't like that unique of an idea right that had the same idea so much of it just comes down to execution Can you hire the right people? Can you go off the light customers? Can you bring on the right investors? Those are the questions that ultimately matter and it's less about like the idea that began with him. So first

people to do is like if you have something that you're passionate about right and you have a team that you think you can go exeggcute well with go do it, like don't overthink the idea portion of it. Like you're still be talking about it 5 years down the road and then you're going to be like That one person was like well I had that idea, you know, and now it turned out it was somebody else that they didn't they have Uber or they have you know, whatever company else is out there for your ideas. Awesome. Thank you so much for the

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Angela Strange
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