Weekly Briefing No. 145 | Amazon, Credit Karma, Crypto Insurance Coverage, Muni Bond Fintech


Welcome to The FR. Here’s what’s in our deck this week:

  • Your minimum shouldn’t be an opportunity

  • Credit Karma; Square; Blockchain in real estate & fromage

  • Aon’s crypto coverage; Big Apple on Campus

  • Guardian Life’s CEO Deanna Mulligan on AI

  • The anti-cannabis movement; Leon Lederman

  • SeedInvest, Ziprecruiter, Coolfire, Cover & Brex

  • Reason Foundation’s Marc Joffe; Outvest’s David Barse

  • Goldman Sachs vs. Choice Hotels

  • Unconventional Ventures on empathy in finserv

  • WWLWT: Betterment & China’s social credit score


Amazon: Giving credit where it’s not due.

They say you never forget your first bête noire. This week, Sen. Bernie Sanders demonstrated that by co-introducing legislation that could lead to a break-up of the nation’s largest banks if it were ever passed. Firms targeted include JP Morgan, Wells Fargo, Citigroup and Goldman, who, with a combined market capitalization of about $900 billion, aren’t small fries. But maybe the senator left his reading glasses back in Vermont. Indeed, Sanders quickly jumped on Amazon’s $15 minimum wage hike by lavishly praising Jeff Bezos, giving “credit where credit is due.” In doing so, Sanders overlooked the fine print. On Wednesday, though, Bloomberg’s Spencer Soper pointed out that print when he reported that the wage hikes would be partially financed by eliminating incentive compensation plans. Yes, Amazon created a more predictable wage stream for its workers and removed the incentive for the terrible lavatorial choices forced upon them. But munifencence is not in Amazon’s DNA, and as the week wore on, it became increasingly clear that Bezos had once again outfoxed his critics. After all, Amazon’s market cap (and power) is greater than the cumulative total of the banks mentioned above. And yet, somehow, the world’s richest human (with one possible exception) is the “good guy” in the eyes of America’s only prominent Democratic Socialist and superhero. The banks, meanwhile, return to his crosshairs just in time for election season.

Credit Karma, Square launch new business lines.

“If you’re like most people, you don’t feel great about your car insurance policy. You probably aren’t getting the best deal and likely have the wrong coverage, but shopping for insurance is really painful and confusing.” With that salvo, Credit Karma, which has already been collecting DMV information, launched a new effort that uses vehicle and other data to attack the auto insurance market. Also this week, Square danced into consumer finance with its new installment plan solution for purchases between $250 to $10,000.

Can blockchain make New York real estate tastier?

After years of good times, real estate prices have been gooey for a year. But now, there’s something new that could cause a welcome buzz. A group of real estate and blockchain firms have coalesced to tokenize a Manhattan condo project on the Ethereum blockchain. The building, located in the East Village, is also just a golf drive away from arguably the foremost melted cheese restaurant in America. Perhaps down the road, after tokenized real estate becomes de rigueur, blockchain tech can be used for something really important, such as putting cheese on a ledger to enhance traceability.

Aon steps up to provide crypto coverage.

AON, which means “oneness” in Gaelic, has gotten onesie with the twosies behind Gemini Trust Company. The giant broker announced that it arranged insurance coverage for digital assets held at Gemini and its custodian service provider. Although Gemini, via the FDIC, already provided coverage for fiat funds, the new coverage seeks to provide similar comfort for crypto.

Big Apple on Campus.

This week, America’s largest company launched a new push to bolster its education presence by integrating a “second wave” of growth for Apple Wallet on college campuses. Specifically, Apple Wallet will integrate student ID cards in an effort to more closely tie collegiates into Apple’s world. That’s nice, but if Apple really wanted to do something bold, it could peel off one of its $244 billion in cash to endow some kind of debt forgiveness program — let’s call it the Stay Foolish fund — to help college seniors pursue their foolish dreams as opposed to jobs that will service their debt. Now that would build long-term customer loyalty.

“Soft” skills to become “hard” in our AI future.

“We have a number of PhD scientists, and they are wonderful... But they may not understand the problems a call center representative might have on the floor.” That point was asserted by Guardian Life’s CEO Deanna Mulligan recently at Fortune’s Most Powerful Women Summit. In a roundtable discussion, the humanities fields were given a boost as it was argued that students trained in subjects like philosophy and psychology were better prepared to confront the unintended consequences and dilemmas posed by AI.

Anti-cannabis group gets aggressive.

“The banking industry was protected from taking illegal proceeds, despite the marijuana industry spending a lot of money to sway politicians.” That’s a quote from anti-cannabis group SAM, which is gearing up to battle legalization bills around the US. You can be sure, too, that SAM will seek to push financial hot buttons as a way to scare off federally minded banks and payments companies from working with cannabis companies.

Leon Lederman dies at 96.

Sadly, the 1988 Nobel Prize winner, physics professor, author, Super Collider advocate and jokester just passed away in an Idaho nursing home. By all press accounts, Lederman led an amazing, productive life that should have led to his financial security. But with America’s average daily hospital stay exceeding $5,000 and the average monthly private nursing fee reaching $7,700, that was not the case. That’s why Lederman’s wife ultimately had to sell his Nobel Prize medal for $765,000. Maybe healthcare costs aren’t eating the world. Maybe it’s better to characterize our healthcare system as a black hole.

Brex raises a big Series C.

In M&A land, Circle, which seems to have been on a roll as of late, announced its intention to buy crowdfunding platform SeedInvest. In financing news, ZipRecruiter, which has run some clever advertising campaigns and posted over 430 million job listings, announced a $156-million Series B that was led by Wellington and IVP.  Also, Coolfire, maker of the situational awareness Ronin platform, closed on $11.5 million, and insurance marketplace operator Cover took in $16 million of fresh capital. Finally, there’s Brex, a rising San Francisco start-up founded by two 22-year-old Brazilians who already have one success to their name (Pagar.me) that became known as the Stripe of Brazil. This week, the company, which issues next-generation corporate credit cards to start-ups, announced a $125-million round that was led by Greenoaks Capital, DST Global and IVP.


Muni bond fintech should be a thing.

“Municipal finance data sets, potentially combined with socioeconomic data from the US Census, could be used by fintech firms to automatically score municipal bond issuers. Such scores would be a less expensive alternative to credit ratings, which are only available for a fraction of municipal issuers.” That’s the perspective of Marc Joffe, a senior policy analyst at the Reason Foundation and a respected thinker/practitioner on numerous topics related to public finance and innovation. In a new opinion piece for The FR, Joffe takes a hard look at the underappreciated benefits of extending XBRL to the US municipal market.

Jurassic Stock.

There are living dinosaurs within our midst. Finding them and “outvesting”these technology laggards from the S&P 500 index is the aim of our friend David Barse, co-founder of Outvest Capital. In a recent Bloomberg Oddlots podcast with Tracy Alloway and Joe Weisenthal, Barse discusses the innovative and “flipped” strategy associated with his firm, GE’s woes and the importance of the S&P 500’s GICS classification system. He also provides terrific insight into lessons he’s learned from serving as CEO of Third Avenue Management.

We’re long on Goldman and short on Choice Hotels.

Every time we see Choice Hotels’ assaulting commercials, we get hot under the collar. What value to the viewer is derived from hearing the stiff, single-minded “corporate man” repeatedly tell his marketing department that “Badda Book, Badda Boom” is the ideal tagline to every campaign? It’s inane, tone-deaf and makes us root for the ongoing health of the La Quinta corporation. Contrast that with Goldman Sachs, which has made CEO David Solomon its chief pitchman. Unlike the “corporate man” spots, Solomon’s “Catch-Up With David” series is informative, nuanced, humanizing and fun. Why isn’t every major firm trying to add value like this?

Humanity, Algorithm, and Empathy: The Future Model of Financial Services.

That’s a big title. Fortunately, our friends Theodora Lau and Bradley Leimer of Unconventional Ventures are up to the task. In a new BrightTALK, the duo discusses how AI and data can be utilized by firms to create new value for customers. “Financial institutions must anticipate customers needs,” said Leimer. Lau added that AI-infused financial services should be a catalyst for greater financial mobility.


Betterment, China’s reputation score.

Our recent one-on-one with Betterment’s Jon Stein in TechCrunch took last week’s crown (See below). But coming in a sprightly second was our reflection on China’s fintech-infused reputation scoring program, “Brave new social credit system.” Not everyone agreed with our opinion, but we’re grateful to have received several thoughtful comments.


“Be notorious. I have tried prudent planning long enough. From now on I’ll be mad.”

~ Rumi