Weekly Briefing No. 129 | ER Bills Need Fintech Medication & Crypto-Emotions Run High


Welcome to #129. If you want to get your heart racing before the Kentucky Derby, we invite you to check out our week’s mint juleps:

  • Emergency room bills need some fintech disruption
  • Tempers are rising along with the talent levels in crypto
  • Wells Fargo and Senator Mike Crapo on guns
  • BondIt Media Capital, Figure, Diginex, Armanta and Baidu FSG
  • AllianceBernstein; Quantum computing patents
  • Breaking Banks; Mid-life entrepreneurship
  • Jeff Bezos; Daniel Arbess; WeWork


Can someone build a Clarity Money-esque solution for healthcare bills?

Below is a terrific story by Vox’s Sarah Kliff based on an investigation of 1,000 emergency room bills submitted by readers in all 50 states. According to an analysis of Vox’s ER database project, even patients who ultimately don’t get treated at an ER can be on the hook for hundreds or thousands of dollars. However, the amounts can often be negotiated down if you’re willing and able to confront hospitals/ER facilities for the portion not covered by insurance. Yes, we know that fragmentation, interoperability challenges, regulation and other factors make it hard for start-ups to tackle the host of issues surrounding the self-pay portion of the healthcare economy. We also think it’s great that the president supports more healthcare price transparency. However, as an ongoing study by the University of Chicago’s Booth School of Business has shown, transparency isn’t enough to reign in costs. Forceful consumer advocacy is also needed. That’s why we’d love to see AI-infused solutions emerge that level the playing field. Because you can’t fully tackle financial health without addressing the financial asymmetries in healthcare.

A hockey game almost broke out at a crypto panel.

We updated the old Rodney Dangerfield joke to recount the fireworks that occured at the Milken Conference recently. Apparently, two highly successful people exchanged verbal blows on stage over the topic of cryptoassets. With economist Nouriel Roubini on one side (i.e., “all this talk of decentralization is BS”) and investor/entrepreneur Alex Mashinsky on the other, it took the skilled refereeing of US Treasury’s Brent McIntosh and Anna Irrera of Reuters to prevent a boxing match from breaking out. In New York, meanwhile, Bain Capital Venture’s Matt Harris utilized the Fintech CEO Summit ’18 hosted by Bain and Nyca Partners to point out that “many of the best engineers are in crypto.” Although this characterization doesn’t address the core question debated at Milken, it speaks to the reality that highly skilled professionals, who could command attractive compensation packages elsewhere, have chosen to wager their most important career asset besides skill (i.e., their time) to a sector that causes rational, technical people to develop Muskian fervency. Indeed, when you look at the backgrounds of engineers working at many of the companies on this list, there’s no denying that huge talent has big dreams for a decentralized future.

Wells Crapo.

This week, The Wall Street Journal reported that banks and credit card companies may create a new merchant category code for firearms dealers and/or require retailers to provide them with gun transaction data. This deliberation comes on the heels of a decision by the AFT to cut ties with Wells Fargo, which has reiterated its willingness to extend credit to gun makers and called for a “legislative solution” to address gun violence. Leading the charge against financial firms addressing guns is Senate Banking Committee Chairman Mike Crapo. Crapo, Idaho’s senior senator, recently sent nasty letters to Citigroup and BofA because the banks exercised their free market rights to curtail their firearms dealings. A Harvard Law alum with a flawless election track record, Crapo has an A+ rating from the NRA and was one of a handful of senators who vowed to block gun control legislation in the wake of the Sandy Hook tragedy. In early 2017, he also introduced the Hearing Protection Act, which would make it easier for firearm owners to acquire silencers. Apparently, ensuring the safety of assault weapons aficionados is the kind of gun reform Crapo believes this country needs. It’s with this backdrop in mind that we think back to the position of Wells Fargo’s CEO, Tim Sloan. Does Sloan genuinely believe that a robust legislative solution is possible anytime soon? Or is his bank using a nice-sounding rationale to protect its industry-leading gun financing franchise that’s getting less crowded by the week? We sincerely hope that questions like this are raised today during Berkshire Hathaway’s annual meeting.


Interesting deals are everywhere.

Recently, BondIt Media Capital (one of the more entrepreneurial media financiers in Hollywood) closed a new $20-million credit facility with hedge fund Revere Capital. Moving north to San Francisco, more details emerged this week on Mike Cagney’s new company, Figure, which we wrote about two months ago here. The company’s new $50-million round was co-led by DCM Ventures and Ribbit Capital. Also this week, alcohol distributor Madison Group Holdings revealed that it bought a 51% stake in Hong Kong-based cryptocurrency miner Diginex Limited, because nothing goes better with a haunting yet playful bottle of Valbuena Tempranillo than a high-performance GPU mining rig. Finally, IBM announced the acquisition of Armanta, and Baidu said it was selling a majority stake in its fintech group to a consortium led by TPG and Carlyle for $1.9 billion.

AllianceBernstein opts for BBQ & Bobby Braddock over bagels.

This week, the $500-billion fund manager said that it will make Nashville’s Central Business District its new HQ and will soon start moving over 1,000 FTEs southward. CEO Seth Bernstein indicated that while his firm is “no Amazon,” he was wooed by Tennessee’s hospitality, lower cost of living and shorter commute times. Oh, and one more thing: Tennessee is one of nine states without an income tax. We question whether AB can cut its way into AUM growth, but moving to this tax-friendly, catfish-slinging state is not nothing. And besides, two brisket tacos at Edley’s are just eight bucks. Good luck finding a deal like that on Sixth Avenue.

You can’t mark to market moonshots.

That the conclusion of recent conversations between The FR’s Gregg Schoenberg and FR contributors Marvin Chang and Sultan Meghji. The background for these discussions was fueled by our growing interest in quantum computing, and, more specifically, China’s significant edge in quantum computing technology patents for encryption, which could take years to produce tangible benefits (if ever). Still, China’s long-term, robust investment in quantum technology could one day call into question much of the cryptography upon which many blockchains rely. However, this week, famed mathematician Matt Visser and his student, Del Rajan, issued a proposal to solve the future security threat facing conventional blockchains.


Breaking Banks: Lies, Damn Lies and Metrics: Breaking Banks had us with its Disraeli-esque title for a recent podcast hosted by Jason Henrichs and co-sponsored by yours truly. Our favorite segment was a compelling interview with blockchain expert Thomas Power, covering how brands use and fail to use transactional data on their customers. Power explained that in his view, most companies are still arrogant and naive when it comes to how they earn and compensate end-users for their data. The reason? They are still operating under the paradigm of free and a short-term, transactional mindset.

Affluent, educated, accomplished and struggling: We’d ascribe these adjectives to multitudes of mid-career financial professionals who remain ambitious enough to do big things, but are probably too old to become OCaml samurai. Many of these people think they’ve missed the boat on starting something themselves. But if that’s your perspective, you need to give that mindset the finger, in our view. Because as the NPR podcast below asserts, executives in their deep 30s, 40s and 50s are more likely than their younger peers to make their plunge off the boat successful.

Future trillionaires are people too: It’s easy to forget that Jeff Bezos is mortal. But in this recent interview he did with Axel Springer CEO Dr. Mathias Döpfner, Bezos reveals his humanity. Some interesting Bezos tidbits: His a) father was a Cuban immigrant; b) Houston elementary school played an important role in his career; c) brother is a volunteer firefighter in Scarsdale; d) wife MacKenzie, an accomplished novelist, was Amazon’s first accountant; and e) Blue Origin is “the most important work” he’s doing.

A chill pill in April?: Public equity markets face a “matrix of challenges” as the short-term candy of QE, tax reform and other catalysts subside. This perspective is courtesy of Xerion’s Daniel Arbess, a keen observer of and investor in markets, who is taking a cautious view of public markets for the time being. In a recent Bloomberg interview, Arbess discussed America’s long-term fiscal situation and an “unforgiving” earnings season.

Is WeWork a friend or competitor to real estate giants?: The answer is both, according to a CB Insights analysis of the earnings calls for Boston Properties, CBRE and others. But thanks to WeWork’s recent issuance of $702 million worth of  seven-year unsecured bonds carrying a 7.875 percent coupon (which have already traded below par), its frenemies will have more insight into partnering with and/or competing against the space-arbitrage giant in the future.


“A confession has to be part of your new life.”

~ Ludwig Wittgenstein