Weekly Briefing No. 144 | Hello, October: Betterment’s Jon Stein, China’s Social Credit System, Mega Private Rounds and Austria’s Blockchain Bond


Welcome to The FR. Here’s what’s on tap as we enter October.

  • Our new conversation with Betterment’s Jon Stein

  • Private mega-rounds; Avant

  • Genetics tests & life insurance; Elon Musk

  • Veem; StrongBlock and Circle

  • Austria: Mozart, Tortes, PEZ and blockchain bonds

  • China’s Social Credit System

  • Basis Technology’s AI handbook

  • Daniel Arbess of Xerion Investments

  • Michael Ovitz on redefining an industry


We go one-on-one with Betterment’s Jon Stein.

“All of these firms see what we're doing. And I think our vision probably isn't as unique as it was eight years ago because we've moved the industry forward. We've set a standard of what customers should expect. And lots of people are trying to run at that now.” That’s a quote from Jon Stein, who sat down recently with The FR’s Gregg Schoenberg to discuss the highly competitive environment facing Betterment. In a new conversation featured on TechCrunch, Stein also provides candid insights into Betterment’s customer acquisition strategy and how Betterment stacks up against incumbents and newer entrants hanging around the basket like Goldman’s Marcus. Finally, there’s Stein’s take on today’s brokerage price war and the rise of free trading. “People are wise to the fact that companies are making money,” he said. “And if the product that you're being sold is free, well, you know, you're the product.”

Want to promote inclusivity in fintech? So do we.

Sponsored by Fintech Devs & PMs

On October 29th, Fintech Devs & PMs will be hosting a one-day summit of leading fintech entrepreneurs, product managers, engineers and investors to discuss ways to build a more inclusive financial future. Speakers such as Affirm’s Jack Chou, a16z’s Angela Strange and Trim’s Thomas Smyth are in. How about you?

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What do US public market purveyors think about private mega-rounds?

They may be rivals, but we wonder if the folks running new listings at NASDAQ and NYSE ever get together (perhaps on the deep down low) to commiserate over the fact that while major indices are near all-time highs, new listings aren’t. Listings may be just the razor, but without selling the razor to issuers, they can’t sell as much of the other services (i.e., blades) to issuers and other client categories. Eventbrite going public on the NYSE was nice. Ditto for SurveyMonkey. Slack is also rumored to be preparing for an IPO. However, this week, Stripe, perhaps the heir apparent to PayPal, announced a $245 million round courtesy of Tiger Global and others (See below). OpenDoor and Compass, meanwhile, each bagged $400 million thanks to Softbank’s Vision Fund, and budget hotel booking app Oyo raised a $1-billion round from SoftBank along with Sequoia and Lightspeed. Would these start-ups have gone public in the US had it not been for the megafunds? Who knows? But it does make us wonder what listing officials, along with regulators, policymakers and academics think when they see many of our most dynamic companies look at our large and liquid public markets and essentially say, “Nah.”

Avant launches Amount as a separate unit.

Like many online lenders, Avant has had its share of setbacks in recent years. However, it seems to have adapted to changing industry dynamics and appears to be in position to gain momentum with its new subsidiary, Amount. The new company will look to promote Avant’s digital lending platform as a SaaS solution to a growing number of smaller financial institutions eager to up their tech game.

What’s the future of genetic tests and life insurance?

It’s widely believed that if an individual has undertaken a genetic test (even if it’s a DIY kit offered by a so-called genetics entertainment company), the individual has to a) disclose the test and b) reveal the information contained therein if asked by a long-term care or life insurer (See here and here). That’s relevant to note in the wake of news that 23andMe competitor Color Genomics has announced its participation in a major NIH research program alongside MIT,  Harvard’s Broad Institute and Partners HealthCare’s Laboratory for Molecular Medicine. Named the “All of Us” research program, the effort will seek to collect data from over one million participants. The data will be stripped of “obvious identifiers”; however, it will be “responsibly returned” to participants who are interested in receiving it. We are thus interested to know if that data becomes fair game in certain insurance categories.

Hubris secured.

On Friday, reports surfaced that Elon Musk pulled out of a no-guilt settlement with the SEC over his 420 tweet. Reasons cited include the possibility that it would have tarnished his legacy and/or reduce his control over Tesla for a period of time. Instead, the Thomas Edison of our time will now need to lawyer up and allocate brain space to wage a battle that will do nothing to better this world or Mars.


Veem, StrongBlock and Circle.

This week, Veem, a San Francisco “multi-rail” platform that combines blockchain with traditional bank infrastructure, announced a $25-million round that included Goldman Sachs and Google Ventures. Also, word hit that four founders and two contractors have departed from Block.one, the publisher of the EOSIO blockchain software protocol and seller of the EOS Token, to create StrongBlock, a stealthy Santa Monica initiative led by David Moss. Finally, Circle and the CENTRE open source consortium announced the launch of the USD stablecoin. As detailed in a blog post published by Circle’s founders (See below), enrolled individuals and institutions will be able to use the USD coin to deposit US dollars from bank accounts, convert those greenbacks into tokens, redeem those tokens and cash out to bank accounts (thus creating a circle).

Austria is set to make blockchain bond history.

In 2017, Austria blew away capital markets pros when it issued an historic 100-year bond that was sold directly into the Eurozone’s public markets at the eye-popping rate of 2.1 percent. Next week, the Austrian Treasury is set to turn heads again when it issues ten-year federal bonds yielding .75% and zero coupon securities with the help of Austria’s OeKB bank. OeKB, in turn, will use the public ethereum blockchain to store the transaction data and hash values associated with this auction.


Brave new social credit system.

Lacking a centuries-old tradition of jurisprudence that levels the playing field, Chinese 99 percenters, who have never held high expectations of privacy, may embrace a rule of "Business Rule” in which the population gets graded on explicit criteria. Such a system could be preferable to the current arbitrariness that all too often benefits those at the top. That’s the take of our friend and FR contributor Marvin Chang in analyzing the fintech-infused Social Credit System that is being implemented in China.

We accept Chang’s informed perspective on China’s history and culture. We’ll also note that when it comes to privacy, US supertechs like Google and Facebook, and even bike-sharing start-ups, have taken troubling stances. Still, what’s being implemented in China, perhaps fueled by the country’s 2013 decision to create a public debtors blacklist, is a whole other level of disturbing. The system, known in pinyin as shèhuì xìnyòng tǐxì, has been evolving to measure (and make public) a citizen’s reputation score based on a variety of factors including shopping and spending habits, bill payment histories and, remarkably, social behaviors such as video game playing habits and smoking frequency. In doing so, the PRC, with the help of Ant Financial’s Sesame Credit, computer vision leader SenseTime, video surveillance specialist Hikvision and others, is building an AI-infused society that is arguably reminiscent of a Black Mirror episode. The outcome of this system will be a kind of neo-Pavlovian FICO that will seek to exert pressure on Chinese citizens by regulating their access to credit and dating opportunities, and even hospital waiting lines. Think we’re exaggerating? Think again.


The Amazing, Anti-Jargon, Insight-Filled, & Totally Free AI Handbook.

“Do you work in a heavily regulated industry like financial services or healthcare? Are you interested in AI and the key issues surrounding the technology? Do you work for a regulatory organization? Are you a fan of cool robot art and interesting ideas? If you said yes to any of these questions, then this handbook is for you.” That’s the pitch offered by our friends at Basis Technology, who have provided a terrific AI explainer. For a sneak preview, FR’s readers can download it now.

Fighting the last trade battle.

“Xi Jinping may be uncomfortable with the domestic criticism the trade wars are attracting at home, but it would be a mistake to bet that he will be bullied into a face-losing capitulation anytime soon.” That’s the assessment of our friend, Daniel Arbess of Xerion Investments, in a new opinion piece that’s been shaped by Arbess’ experience as a multi-asset class investor who carefully incorporates geopolitical, technological and economic trends into his investment process.

Michael Ovitz on redefining an industry.

“Anything you could read, see or hear was controlled by about 25 companies around the world.” That’s the perspective of Michael Ovitz in describing the competitive landscape he faced when launching CAA. In a fantastic conversation with a16z’s Ben Horowitz and Hanne Tidnam, Ovitz talks pointillism, the cutthroat nature of entertainment, a movie in which the star is a dinosaur, organizational culture in the context of a firm’s strategy, “agenting” family members, the value of artificial deadlines and the “crazy” idea of telling the truth.


“Fortiter in re, suaviter in modo.”

~ Claudio Acquaviva