Welcome to 131. Here’s what we have on deck for the week:
- VR and AR have an exciting future, even in finance
- Old school mortgage firms can’t partner their way to safety
- An insightful 2016 Google X video is revealed
- Deals: Dashdash, Ladder, Circle, Compound & iZettle
- Blockchain week; Drug price shaming
- An open source insurance policy
- Chicken price fixing; A Copernican Revolution in banking
- Speedcubing and the economy
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VR and AR have a big future in financial services (and baseball).
Will augmented reality (AR), virtual reality (VR) and mixed reality (MR) technology impact the broader economy and financial services in particular in the next few years? Although few people own headsets today, and AR/VR investment capital has been chunkily allocated, we think the answer is yes. How? We’re not sure. But here’s what we do know: thanks to improving Big Tech products (e.g., Oculus Go, Cardboard, Daydream, HoloLens and Hive) as well as innovative start-ups (e.g., Magic Leap, Improbable, Groove Jones and vironIT), increasingly compelling virtual experiences are coming. Of course, the applications in consumer gaming and entertainment are easy to see, but we’re just as excited by the prospects these technologies hold for serious applications in education, medicine, and very importantly, professional baseball.
Hopefully, fintech won’t be left out of the party. Indeed, the home-buying process, banking, comparison shopping and financial advisory services (See below for Fidelity Labs’ recent VR financial advisor demo) would be enhanced by AR/VR. Of course, some of these applications won’t cut it, because as our friend Brad Leimer has pointed out, AR/VR has to add real value in order to go beyond the “Hey, that’s cool” phase. But our look into these technologies has shown us that we’re only scratching the virtual surface of what’s possible. And even if you don’t get paid to hit an Aroldis Chapman fastball in the ninth inning, you may soon find yourself opposite virtual advisors, marketers and workforce trainers pitching you their best stuff.
Mortgage companies should be wary of fintechs bearing gifts.
Now that Quicken Loans (Rocket Mortgage) has surpassed Wells Fargo, Bank of America and Suntrust to become the largest mortgage originator in America, traditional mortgage originators have grown more interested in channeling their inner Dan Gilbert. That’s great, but as FR contributor Marvin Chang points out, incumbents should not be lulled into thinking they can partner with a host of agile start-ups and rest comfortably knowing that they still own the customer and distribution channels. In a new opinion piece for The FR, Chang lays out some suggestions for what incumbents should do in order to protect against a modern-day, tech-inspired repeat of the Trojan War in the mortgage sector.
Google X’s secretive, “selfish” 2016 internal video is no joke.
Last week, we suggested that AI giants like Google hire more “poets” so as to incorporate a greater understanding of human nature and a wider scope of perspectives in their products. This week, The Verge published a highly polished and disturbing 2016 Google internal video, “The Selfish Ledger,” that relies on neo-Lamarckism as its motivation. After viewing it, we’ve concluded that we don’t need more poets in companies like Google. We need more warrior poets who actually understand what tech companies like Alphabet (which has over $100 billion of cash on its balance sheet) are actually doing and constrain their soaring ambitions before these so-called “thought experiments” further influence products we all use.
The week in rocketfuel didn’t disappoint.
This week, plenty of companies backed-up the rocket to get more liquid hydrogen. They include Dashdash, which raised $8 million in its still-stealthy bid to enable non-technical people to build their own interactive web apps, and life insurtech Ladder. Led by CEO Jamie Hale, Ladder added strategic investors Allianz Life Ventures and Northwestern Mutual Future Ventures to its previously announced Series B round. Moving on to blockchain, Circle closed on a $110-million Series E led by Bitcoin mining giant Bitmain to fuel its efforts to launch a US dollar coin, and Compound raised an $8.2-million seed round in a bold attempt to establish frictionless money market instruments for cryptographic assets. Finally, PayPal boosted its point-of-sale expertise (and ruined Square’s weekend) by announcing a $2.2-billion acquisition of Sweden’s iZettle.
Blockchain roundup from New York (and Poland).
New York’s blockchain week has come and gone. With it, we saw loads of fascinating things that ran the gamut from the good, like St. Louis Fed President James Bullard’s sobering, history-laden speech about the current drift to non-uniform currency in the US, to the tacky (See here for a stunt involving suicide-doored Lamborghinis, which has the distinct whiff of 2007 private equity birthday parties). Perhaps the cleverest thing of all came courtesy of the usually humorless SEC, which trolled the ICO phenomena by promoting the so-called HowieCoin to coincide with the week’s activities. Using satire as a regulatory tool to crack down on the excesses of an otherwise important innovation sounds pretty clever to us. Meanwhile, in Poland (producer of the Arrinera supercar), some notable, GDPR-compliant history was made as the country became the first to use blockchain to store the credit histories of 24 million people and over one million businesses.
FDA resorts to public shaming in a bid to lower drug costs.
Generic drug makers typically need several thousand samples of a branded drug to develop a generic alternative. However, many of the major drug companies use a host of filibustering methods to get around their obligations to provide these samples. But this week, in an effort to shame the drug makers into ponying up, FDA Chairman Scott Gottlieb published the list of the foot-draggers. Topping the list is Celgene, which makes the drugs Revlimid and Thalomid for the treatment of multiple myeloma. Amazingly, both drugs are derived from a much older drug, thalidomide, that used to be sold over the counter in Europe. Although shaming companies like Celgene would only save a modest $3.8 billion over 10 years, it nonetheless looks like a good step toward shedding light on the economic runaway train that the US healthcare system has become.
The first open source insurance policy.
Insurtech disruptor darling Lemonade has been at it again. This week, it created a new and improved renters insurance policy template (a.k.a. Policy 2.0 and “the squeezed version”), which is designed to be simple, approachable, relevant and digital. But rather than just release a new template, the company has posted the 2,300-word policy on Github and invited everyone under the sun to contribute to improving it. In a post explaining why he open sourced the policy template, CEO and co-founder Daniel Schreiber invoked Che Guevara, who stated, “The revolution is not an apple that falls when it is ripe. You have to make it fall!”
The Saudi Arabia of chicken: Georgia was on our minds this week upon hearing this podcast discussing the Georgia Dock, which used to be an important wholesale chicken price index compiled by Georgia’s Department of Agriculture (until Wall Street got involved). Georgia, which is huge in the chicken world, was also on our brain after we learned about the inspiring comeback story of Georgia State.
A Copernican revolution in banking: QED’s Frank Rotman is one of the shrewdest people in fintech, so when he posts a deck with an ambitious title linking Copernicus to banking, we take notice.
Understanding the economy through speedcubing: The complicated world of speedcubing (i.e., solving a 3x3 cube puzzle in speed competitions) was explored in a recent interview featuring Phil Yu of The Cubicle in The Octavian Report. The original cube, the Rubik’x43s Cube, is no longer the dominant brand, as newer cubes and an innovative community have pushed the boundaries in this nascent sport.
QUOTE OF THE WEEK
“The tyranny of a prince in an oligarchy is not so dangerous to the public welfare as the apathy of a citizen in a democracy.“
~ Charles de Montesquieu