LFP206 – Rearchitecting Trust: FS, Crypto and CBDCs w/Omid Malekan

Financial services – whether mainstream or alternative – depend entirely on Trust – trust that the pieces of paper and coins in your pocket will be taken in exchange for goods (no longer 100% true), trust that a piece of plastic in your wallet will “tap and pay”, trust that you do “own” those securities a website says you do etc etc. However Trust is at a real premium right now and indeed ever since 2008. Who can you trust with your wealth? The State? Central Banks? Banks? The dollar? Sterling? The Euro? Stockmarkets? Your pensions? Crypto? “Stablecoins”?

In this episode Omid, a decade-long veteran of the crypto world who as well as lecturing on said same at the Columbia Business School is the author of “The Story of the Blockchain: A Beginner’s Guide” which gets an impressive 4.5* from 82 reviews on Amazon. He is also the author of his upcoming “Re-Architecting Trust: The Curse of History and the Crypto Cure for Money, Markets, and Platforms”.

So we dive into the nature of Trust per se – how that has worked, or not, how it is underwritten in the FS system, how it works in crypto and how the existing system and crypto might coalesce/crash together with CBDCs.

Unless you have precious metals in your hand the shocking truth is that all of your wealth is dependent on “the system” and trust in that so this is a core topic.

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LFP205 – Fintech and FX Hedging for SMEs w/Seth Phillips CEO Bound

Over time the Fintech wave reaches ever more complex topics. FX per se was one of the earlier low-hanging fruits to be digitised – a simple, near immediate transaction that everyone understands as they do it all the time when going on holidays. However its taken much longer – a decade or perhaps two – for Fintech to touch the more challenging topic of hedging. Hedging is far more challenging as it is one that even FX professionals find challenging to decide upon/recommend. I think this angle is best summed up by the adage “one mans adage is another mans position” – history is replete with examples where so-called hedges turned into actual positions in all sorts of markets.

It is into this challenging area that serial entrepreneur Seth Phillips is taking Bound “a digital FX broker built for the 21st century” who are looking at ways to make FX hedging available in much lower ticket sizes than MegaBanks find it profitable to deal.

As we discuss in this show it is not just the classic case of an SME who have expenses in one currency and revenues in another – with both being uncertain – that is affected by this. Many startups might have for example dollar funding of capital but operate say in the UK in sterling. FX is very volatile these days and swings of 10% or so can easily flip a company from profit into loss. But traditionally many SMEs faced with the complexity of hedging and inaccessibility of hedging products end up taking this unwanted and hedgable risk. In a world where there are plenty of business risks that they are voluntarily running adding an additional unwanted risk is not ideal.

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LFP204 – What Can We Learn From Nearly Twenty Years Of The P2P Experiment? w/Jaidev Janardana CEO Zopa

“P2P”, invented by Zopa in 2005, was one of the main unique business models that was at the core of the early success of Fintech businesses in disintermediating banks and offering better/cheaper/faster experiences to both lenders and borrowers. Over the past nearly two decades  P2Ps have had many fates – variously succeeding, going bust, committing fraud, listing, being sold and transforming into banks

In this episode we dive into the lessons learned from this history with Jaidev Zopa’s CEO who oversaw the transformation of Zopa from a pure P2P model to one mixed with banking and then more recently dropping P2P altogether.

What lessons can be drawn from the whole experiment? What worked well and what did not? What was it in the end. what set of circumstances, that led the firm that originated the whole idea to abandon it?

In this conversation Jaidev and I discuss the two-decade arc from both our perspectives from P2P not existing, through P2P existed but we didn’t know of it, through to hearing about it and initial reactions with a deeper dive into Jaidev’s years starting in 2014 first as COO and then as the CEO who drove the recent changes in business model.

We end with reflections on not just in what ways is the current Zopa different but also in what ways is it the same? One may change an engine in a car without affecting the car’s appearance, appeal and indeed destinations it drives to.

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LFP203 – Fintech in Scandinavia/Nordics – Deep Origins and Reasons for Success w/Erik Bennerhult, CEO Naktergal

Scandinavia (Sweden/Norway/Denmark) and the Nordics as a whole (Scandinavia +Finland +Iceland) have massively outperformed most parts of the world in Tech and Fintech when considered compared to the relatively small sizes of the populations. Why is this and where is it all going?

In this episode Erik who was part of creating the world’s first online mortgage bank in the late 90s, has been a CTO of many leading regional banks and is now founder and CEO of Naktergal discusses not just where the region is placed now in Fintech but the deeper origins of tech success before wrapping up with the outlook for Fintech in the region.

Naktergal offer a range of digital lending platforms for banks and Fintechs as well as modular add-on solutions for the inevitable weak-points in different existing legacy/big-brand tech solutions in banks.

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LFP202 – Fintech Corporate Finance w/Aman Behzad Managing Partner Royal Park Partners

The fact that today we are talking to Aman, the co-founder of specialist Fintech Corporate Finance boutique Royal Park Partners which has done over 30 transactions is a great sign of the maturation of the Fintech market. In this episode we discuss the origins of Fintech Corporate Finance in Europe – not that long ago it didn’t exist as A Thing and how it is similar to MegaBank CorpFin and how it differs.

I was fascinated to see that whilst Fintech is one of the hottest, newest, trendiest sectors in the world the boutique CorpFin model is way more similar to oldskool, pre-Big Bang CorpFin models – in particular in it’s principal focus on integrity and long term client relationships rather than product pushing. In other words the oldskool model was more advisory and the modern MegaBank model more transactional.

In this context we also discuss how the Corporate Finance market itself has changed over the decades as well as the vital question of when a Fintech should move away from the DIY model to fund raising et al and move on from using the lawyers or accountants to support such processes and when they should use a professional CorpFin house whether of a MegaBank or a boutique.

Topics discussed include: Continue reading

LFP201 – Rethinking Investment Risk & Deep Dive Into Investing in VC w/Alan Vaksman co-founder Digital Horizon

Investment risk has changed radically from what regulators and the media propound. A prime example is that with negative real interest rates and at the end of a secular 40 yr bond bull market the idea of bonds being “low risk investments” is nuts yet widely followed in asset allocation. Furthermore as we touched on in LFP197 on the dollar, hyperinflation and much more and LFP199 on Gold the trend to invest in real assets is growing. As we haven’t yet covered VC from a “how to invest in it” we also dive into this important topic – especially during a tech bull market when most of the value creation happens before the IPO.

So throw out your textbooks and so-called modern portfolio theory (from the 1950s a long long time ago) and start thinking afresh.

Alan is a great guest to discuss this topic with having been a CRO as well as a banker and consultant and now head of Digital Horizon, a VC and Venture Builder firm.

We discuss investing in the 2020s with a particular focus on understanding what investment risk is now, what key new investment risk exists that was never really a thing in recent decades but is now and wrap up with the practicalities of retail investment in Venture Capital. Key points discussed being: Continue reading

LFP200! The Philosophy of Technology & Technique & their Existential Impact on People, Society and Civilisation w/Oswald Spengler & Jacques Ellul

Technology pervades our world more than ever and conditions us and our existence ever more. But I believe it is not well-understood at a philosophical level, nor are its impacts at an existential level. Two great thinkers about technology and its impact on man, society and civilisation in the 20thC were  Oswald Spengler and Jacques Ellul. The whole panoply of problems we face now from depression to global governance would not have surprised these gentlemen in the slightest. Indeed despite writing about technology – and its parent technique – in 1931 and 1954 respectively – their analysis and projections have proved spot on. Neither, I believe, would be in the slightest bit surprised by the world in 2022 and all its challenges for humanity. Indeed I believe they would perhaps been more surprised if we were not experiencing many of the damaging phenomena we are seeing now.

How could they have been so prescient writing 91 and 68 years ago, well before any of our “modern” technologies had been invented? Simply put, apart from having plenty of history of society and technology to examine in their day, I believe they penetrated to the very essence of what technology is – notably the embodiment of technique. Technique sounds so bland, so neutral, so essential. And from one perspective it is, after all, as Ellul writes, a lion uses technique to catch its prey. Technique is very necessary for all animals seeking safety, food, shelter and offspring. Continue reading

LFP199 – Gold, Have a Personal Gold Standard & Pay in Gold #Fintech #GoldTech w/Jason Cozens CEO Glint

Gold has been much in the news recently with Russia putting a Gold-floor under its currency to spectacular effect (almost as if desire for infinitely printed fiat paper is wearing off…) and offering to accept payment for exports in Gold the US sanctions/de-SWIFTing/and theft of Central Bank Assets (never happened in history) has spectacularly backfired. But what if you too could have your own personal Gold Standard, backing your cash with what has been real money for millennia? What if you could pay buddies directly with Gold? Is Gold the ultimate anti-CBDC? Glint’s mission is to create a gold-based alternative to banking and money and so is highly relevant right now.

In the bigger picture this episode can be seen as a part two to LFP197 with maneco64 which was snappily entitled: “Money in the 21stC: Ballooning Printing of Fiat/QE/”MMT”/Govt Debt, CBDCs, Crypto, Dedollarisation, Hyperinflation and Gold” in which we only had a short time to touch on Gold.

Jason’s Glint has, after thousands of years, provided a new functionality (or perhaps two or three new functionalities depending on how you count) to the gold would you believe it. Fintech (GoldTech?) at its best.

Back in the early days of the podcast 2014-15 I spoke to one or two folk who were working on gold and fintech in one way and another but no-one really cared much. Perhaps everyone and especially me should have as since 2014 Gold is up 60% (and in passing about 60-fold since the US came off the gold standard in the early 70s).

I’ve been looking into Gold since and it is far more weird/complex as a market than I ever realised… When we were young we would have known gold as perhaps rings on our mothers finger. A little later we might know it as something in the periodic table with certain properties. But that leaves much unsaid – what is golds function in society? If we want to invest in it how do we do that – ie what are the investable forms of gold? Indeed is gold an investment as such or a store of value? How well does it fulfill either role? Can we use it for payments (an amazing functionality Glint Pay puts on your phone)?

So for some of you out there this might not be just another podcast but one that makes you consider whether you should invest a certain part of your portfolio in Gold – whether through Glint, bullion dealers, ETFs, coins or many other ways.

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LFP198 – Tech/Fintech in Central and Eastern Europe w/Adam Niewinski co-founder OTB Ventures

There are at least 70 cities in Europe which have at least one unicorn in them – a very different pattern from the US/UK ecosystems. Over 20 of these cities are in Central and Eastern Europe (CEE). There is thus far more to CEE than a place to near-offshore your tech or dev team. In this episode Adam gives us both a tour de force et tour d’horizon of the vast region that is CEE –  – I was certainly impressed with my lack of knowledge of the tech landscape in the region which has developed super-fast. 

Adam is a rara avis having been a multiple-times founder, bank CEO and now long-term regional VC so has a super-good 360 degree perspective on the area which he leads us through.

Five years ago Adam co-founded OTB Ventures, an early-stage CEE VC based in Warsaw, who invest $1-15m in their CEE portfolio companies,

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LFP197 – Money in the 21stC: Ballooning Printing of Fiat/QE/”MMT”/Govt Debt, CBDCs, Crypto, Dedollarisation, Hyperinflation, Gold w/Mario Innecco (@maneco64)

Where money in major economies is and where it is going is very concerning right now – look at the list of issues in the episode title, let alone the impact of the ongoing globalist putsch and UN Agendas 21 and 2030. This is a topic that will affect not just FS but the lives of everyone we all know we are more than overdue a dive into this essential topic. In particular we end with practical investment/monetary strategies to survive and thrive in an age of – inter alia – serious monetary risk.

I have been looking for a guest to talk about this for over two years there being some polarisation between the ~ “it’s all fine, needs the odd tweak” and ~ “Jacob Rothschild owns all the central banks and tells them what to do” camps. Mario is someone who being a long-term FS-er himself understands FS and markets deeply but also as a consequence of deep understanding and deep study has for some time been raising the red flag for some time. It is worth noting that all fiat currency systems have eventually collapsed. There’s a simple reason (before we get into civilisational collapse and venal politicians angles), as Graeber points out in his magnum opus on Debt if everyone repaid all their debts to banks there would still be an astronomical amount owed to the banks simply as when banks lend money they create that money but do not create the interest margin they charge. Fiat currency is thus a Ponzi scheme. 

In the UK it took 300yrs for the money supply to reach £1trn but only 8yrs to go from there to £2trn and another 4yrs to reach £3trn. A dollar a century ago is worth something like 2.5 cents now and as Charlie Munger the veteran Chairman of Berkshire Hathaway said recently “I think the safe assumption is that over the next 100 yrs the currency is going to zero”.

Mario has a very successful YouTube channel since 2015 where he is better known to 60,000 subscribers as maneco64 “the home of alternative economics and contrarian views”. And just in passing contrarian has a special meaning to us fund managers it doesnt mean your stroppy teenager who disagrees for the sake of it but rather long-term proven investment wisdom that you don’t make money by agreeing with the market. Rather to make money you need to stand against the current consensus.

Money is naturally at the heart of FS but most FSers don’t really understand what it is (they leave that to their treasury departments). Furthermore a 2014 Bank of England publication stated that the nature of money is widely misunderstood including in one important respect even in university textbooks (!).

But money isn’t just something of concern for FS folk. As John Kay notably explained when he was on the LFP, Finance is like a group of guys going into a pub and gambling with one exception namely that the outcome of their game extraordinarily affects everyone’s life outside the pub. That’s super-weird when you come to think of it.

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