On the Fence (1878) by Winslow Homer.


#1: Follow the Leader 

What happened?

A new social investing app raised $9 million in new funding:

If you’d like to invest the same way that fintech influencers, including Austin Hankwitz, WOLF Financial, Breyanna Nava and Patrick Meng do, Follow can help you do that.

The new social investment platform enables users to subscribe to a creator’s financial feed and set up an investment portfolio that mimics that particular person’s investment strategy. And, as Follow’s creator network grows, users can subscribe to additional creators to better diversify their portfolios.

Today, they are officially launching the company with a group of 25 influencers, who the company calls “Leaders,” after raising $9 million in new funding with backing from Atomic, Uncork Capital and Vera Equity. The Leaders typically have wide follower bases on TikTok, Instagram and YouTube.

So what?

This is a weird one! I’ll try to explain how (I think) it works:

  • The company onboards #FinTwit influencers with big followings on Twitter, TikTok, YouTube, etc. Each influencer sets up a brokerage account that the company has read-only access to and starts investing using that account in accordance with their established trading philosophies and risk tolerances. The influencers also publish content through the company’s recurring newsletter (while continuing to publish content through their established channels, I presume).
  • Customers are presented with the option to subscribe to any of the influencers on the platform and receive their platform-exclusive content. Each subscription carries a monthly fee, determined by the influencer (usually between $10 and $15).
  • Customers that subscribe to at least one influencer on the platform have the option to “SuperFollow” that influencer. SuperFollowing entails opening up and investing in a brokerage account that “mirrors” the influencer’s account based on the data that the company gets from the influencer’s account. When the influencer buys or sells stocks or ETFs, the mirror account does the same in the same ratios. This mirroring isn’t instantaneous, meaning that there is a delay between when the influencer buys/sells and when the customer’s account does the same.
  • The company makes money on the subscription fees (it gives a cut to the influencer, but it sounds like it keeps the lion’s share), and it will eventually charge an annual advisory fee of 0.25% on AUM.  

I don’t know. I’m not a member of Gen Z nor am I a rabid follower of FinTwit social media content, but this feels a bit overbuilt. The value prop of merely subscribing to influencers on the platform is terrible (why would I pay $10/month to see a portion of the content created by a FinTwit influencer when I could see the majority for free?), and the value prop of the mirror accounts seems shaky. What happens if the delay in the mirroring causes me to lose money, even though the influencer made money on their original trade? What happens if the influencer decides to manipulate the market by taking the other side of their on-platform trades through a separate brokerage account? (FinTwit market manipulation isn’t unheard of) What happens if the influencer just gets burned out and makes a really poor series of investment decisions in a short period of time?

To its credit, Follow appears to understand many of these potential risks and is working hard to mitigate them. I’m just not sure the effort is going to be worth it. I guess we’ll see!        

#2: The Power of the Customer

What happened?

The former CTO of Gemini raised a $10 million seed round to launch a fintech super app:

Managing your finances can be difficult, especially if you want to try something new like investing or even taking out a mortgage for the first time.

Now meet Fierce, a new company out to change that. It’s developing a finance super app that is bringing together what founder and CEO Robert Cornish calls “the best of fintech for the customer.”

Fierce’s offerings include the Fierce Cash account, an FDIC-insured checking account with an annual percentage yield rate of up to 4.25%, and a debit card with access to over 55,000 fee-free ATMs. The app is currently available for iOS and will be launching on Android later this year.

There is also stock trading where users can purchase fractional shares and ETFs. Users also have an option to profit from their existing stock holdings through a Fully Paid Securities Lending program where they earn income by lending their stocks.

So what?

This quote from the founder and CEO of Fierce is really something:

He said one of the things that stuck with him about working in cryptocurrency was “the power of the customer.”

“If you do a great job on the product build, it really creates that relationship,” he added. “That was the foundation as we started to look at Fierce: taking some of the principles that we learned at crypto and bringing them back to traditional finance.”

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Look, it’s fine if you want to build another neobank with ambitions to one day become a super app. Just don’t tell me that it’s raining!

Fierce is apparently planning to launch a credit card, crypto investing, and eventually insurance, personal loans, and mortgages. If it manages to do that (no guarantee!), it will still be way way behind SoFi (and countless other banks and fintech companies) in building out a financial super app. And they may be surprised to learn this, but all of those other companies also understand the importance of doing “a great job on the product build” and respecting “the power of the customer”.

I don’t understand how Fierce raised a $10 million seed round to build this in this environment. I’m happy for them, but I don’t understand it. 

#3: An Unexpected Challenge for Embedded Lending

What happened?

Affirm had a really bad quarter:

Affirm announced it’s cutting 19% of its workforce Wednesday. The news came as it reported second quarter earnings that fell below analyst estimates on both the top and bottom lines.

The company reported a loss per share of $1.10 for its fiscal second quarter of 2023, while analysts were anticipating a loss of 98 cents per share, according to Refinitiv. It also missed on revenue expectations, reporting $400 million in revenue for the quarter compared to analyst estimates of $416 million, according to Refinitiv.

So what?

Affirm has done a really good job managing credit losses, which is the obvious first place you’d look for trouble in BNPL.

Funding costs, which is another area that you’d look at for any non-bank lender in a rising rate environment, has been a problem, but not the problem.

The problem for Affirm is revenue. The company makes money primarily by charging interest on its loans and fees to its merchant partners. According to Affirm, its pricing hasn’t kept pace with its rising costs:

Affirm acknowledged to analysts and investors this week that it hasn’t yet sufficiently raised prices via merchant deals and consumer borrowing rates.

The company described it as “a matter of underestimating complexity” in pricing discussions, as well as having those conversations with retailers in the busy holiday fourth quarter. “Our pricing initiatives were not far enough along to offset deteriorating funding market conditions,” the company wrote in a shareholder letter about the recent quarter.

Part of that complexity is inherent to BNPL (and embedded lending broadly), which relies on partnerships for distribution. Those partnerships are efficient from a customer acquisition perspective, but they can also make it more difficult and time-intensive to adjust pricing when rates are going up.


#1: Merge Or Perish: 25 Struggling Fintech Startups (by Jeff Kauflin & Emily Mason, Forbes)

This list was the source of some drama in fintech last week, with plenty of fintech founders and VCs opining that the article was unfair and/or mean-spirited.

I understand where they’re coming from, but I disagree.

This is an important story. The macroenvironment around fintech has shifted dramatically in the last year, and the result of that shift will be a lot of fintech startups getting acquired or going out of business. It’s unfortunate, but that’s the reality. Journalists’ job is to report on reality.

Ideally, you’d want to report on a story like this by asking private fintech companies, on the record, if they are struggling and then sharing their answers. Unfortunately, no fintech founder that you speak to will be honest. Nor will any of their investors. It’s simply not in their interest to do so. Again, that’s just the reality of the situation.

So instead, these stories are pieced together using a combination of off-the-record interviews with industry insiders and publicly available information. It’s not perfect, but it’s also not malicious. Everyone is just doing their jobs.

And to the founders of the companies on this list – channel that Draymond Green energy and prove them wrong!   

#2: A Call for a Better Bureau (by Jeremy Solomon, Nyca Partners)

This is part 3 in what has been an excellent trilogy from Nyca Partners exploring the cracks in the credit reporting and scoring infrastructure in the United States. This essay focuses on the key problems that new credit reporting and scoring infrastructure would need to solve for in order to represent a meaningful step forward for the lending ecosystem.


I think the vast majority of research into the generational differences between consumers is complete crap. Most of the differences identified by market researchers between Gen Z and older generations are the same basic differences that have existed between young adults and everyone else since the beginning of time. Young consumers love technology and hate credit cards. Blah, blah, blah.

That said, I do think there are some legitimate and lasting differences between generations, and I’d love to get your thoughts on this question – what makes Gen Z truly different from prior generations?

Alex Johnson
Alex Johnson
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