“Most punters were not alive during the Dutch tulip craze. Thankfully, they can now experience the Initial Coin Offering (ICO) craze.” Unknown Techno-Optimist.

If you follow Preston Byrne on twitter, you will have read his view on the legal issues facing ICOs: here and here.

If you follow Stephen Palley on twitter, you will have read his views on the silliness and bubble-like moment we are witnessing in ICO land – most of them guppy centric:

If you have not, then you most assuredly heard about the recent SEC comments on ICOs – see here – or the SEC’s recent enforcement action – see here – or the even more recent declaration from the People’s Bank of China (PBOC) – see here for a full english translation – banning ICOs altogether. Basically, winter is here for ICOs, ranging from a benign and restrained SEC winter, to a full blown “Night King riding a dragon” PBOC winter.

If you have not, then you must have just come back from a year long trip to Mars and need to read below attentively.

We are blessed with several “crypto” experiments: a) bitcoin (the reserve asset), b) blockchain technology (in its pure bitcoin forms), c) ethereum (both the asset and the blockchain), d) distributed ledger technology. Any number of projects under each of these main experiments will yield meaningful economic breakthroughs (think what +20 years of internet experimentation brought us). This time around, these crypto experiments are able to propagate at the speed of light thanks to the maturity of the internet as well as the early successes of bitcoin and ethereum – not to mention a little “thing” called globalization. Further, these crypto experiments have to deal with money (whether fiat or non-fiat). All these factors raise the stakes substantially when it comes to either legislation or governance for the greater good.

It is impossible to deny that we are living in a crypto bubble where most, if not all, assets are being bid up based on the triplet effects of the promise of real opportunities (good), FOMO (not so good) and nefarious activities (outright bad). The ICO craze can be filed under the “nefarious activities” bucket at this stage given the overwhelming majority of such schemes are neither legal nor grounded in any sound business reality.

The lack of sound business reality is usually dealt with by the swift and cold application of market forces. Illegality on the other hand has a tendency of being treated with a lag – the long arm of the law, whether legislative, judicial or regulatory, tends to move at a slow pace. This slow pace is usually not an issue, except when the rate of change enabled by a set of technologies reaches such a frenetic pace that unintended consequences become more negative than positive in real time.

I think we can safely state the ICO craze has happened swiftly, over a short period of time, and been very “successful” based on one kpi, the amount of capital raised. We can also safely state the overt activity has been illegal (speculation) and that inevitable failures will occur thereby threatening sound and needed experimentation. Left unchecked such activity may produce even more negative consequences – think of widows, orphans and their precious savings. Thusly, I welcome the PBOC’s definitive action as it will provide a welcome breather to the crypto space and allow, hopefully, sounder thoughts to prevail. Yet, outright bans come with negative consequences too, namely in the form of a chill over experimentation and innovation.

Be that as it may, I also think regulators need to rethink their approach to new technologies and business models in light of the instantaneous, distributed and decentralized properties exhibited by ICOs. Outright bans as well as permissiveness or lack of clarity should be avoided. Clear guidelines and strong enforcement when illegality is patently proven should be prompt and decisive. Yet, this is not enough and I believe regulators also need to upgrade their technology expertise, engage earlier with the startup world and provide continuous guidance along the way.

I do not necessarily believe regulators need to undertake a complete overhaul of their rule books  – I will defer to the specialists amongst us as to the applicability of current rules with regards to ICOs. I do believe regulatory process and discovery need to be rethought in an age where the propagation of a specific technology and/or its use unfolds at a different pace than in a purely analog world. As such, unintended negative consequences will impact a given ecosystem faster. Today, ICOs were able to raise hundreds of millions relatively fast, and other than investors – whose activities are circumscribed to the crypto space – losing money, there is not much of a risk of contagion with the “outside” world. Yet, think of what tomorrow will bring, with a next wave of fund raising around a new crypto-techno scheme. It is not unreasonable to think that one logical outcome could be see tens of billions being raised, even a few hundred billion and that such a raise in the aggregate could have more than an endogenous impact. A “digital ready” regulator engaged and active rather than passive and reactive would be able to foster safe and useful innovation.

Finally, jurisdictional cooperation and collaboration is essential. Clear SEC guidelines and enforcement only impact the US and are undermined by permissiveness in different jurisdictions, given the very nature of the crypto ecosystem. Outright bans can also be undermined by permissiveness in different jurisdictions. In other words, regulatory competition, and its ensuing arbitrage, may not helpful for optimal innovation in crypto. (Incidentally, the same could be said of other technologies such as AI – for different reasons maybe.)

Alas, the world of bottoms-up regulatory cooperation will take a long time to emerge and we are now faced with a PBOC ban and its immediate consequences which I believe will be:

  1. a relative and welcomed cooling down of the price of BTC and ETH
  2. an absolute curtailing of dubious ICO activity both in China and the US (assuming we do not witness a PBOC reversal)
  3. the bulk of upcoming US based ICOs to be fully legal and compliant, more business minded and less focused on the absolute search for empty enrichment.

I remain unsure whether smaller jurisdictions will swiftly follow or play regulatory arbitrage. For the health of the crypto space, I hope all jurisdictions will fall short of the PBOC’s stance and be more insightful and engaged than what the SEC delivered to date.

ps:  thank you to Stephen Palley for his invaluable feedback.





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I landed a full day ahead of M20/20 in Copenhagen to ensure I would be rested and to fully maximize my week in Copenhagen – I used to live in Denmark many moons ago. Restful I was, mournful and despondent also as Loki tricked me, with Tyr‘s help no doubt as the deed occurred on the SAS plane I landed with. I got districated and left my ipad on the plane. Loki’s dirty work for sure. Ensued a full fintech week armed with only an iPhone and my dextrous fingers. I was tech-light in a fintech heavy conference, the male equivalent of Sarah Lund without a gun, ready for the Killing. Imploring the Norse Gods did not help, I was on my own and could only rely on my wits. A tough challenge, so say my most ardent critics.

Be that as it may, let me attempt to relay my impressions and learnings.

First, let’s dispense with the small stuff. “Banks are dead”. There, I said it, and I realize this may sound like pure folly at a time when many seek bank licenses, but more of that latter. Fintech evangelists had said so and no one believed them. Fintech entrepreneurs said so and no one believed them. After all, there was little tangible proof of such outlandish assertions. A year ago, the talk was still about fintech startups partnering with banks, the likes of which would not be out of place with the fairy tales Hans Christian Andersen‘s fertile imagination birthed.

I did not hear many tales of partnership. I did not hear many tales of business as usual. I did not hear many tales of oversold fintech hype or pushback thereof.

I heard many bank CEOs and high ranking executives saying that banks as we know them are dead, each with their own words- and I paraphrase:

 We just launched our corporate venture arm, but frankly, if you ask me, we are not doing enough with startups and with technology

– We want to be a technology company with a bank license

– The future of banking is this intelligent mobile application that will figure out all your needs

– We need to be successful at hiring technologists

– Frankly, what Amazon or Apple is doing gives me much more concern than any other startup or direct competitor we are facing

– We need to learn how to be much more open 

– We are behind technology wise and we need to redouble our efforts

– There is no going back, open banking, APIs, marketplaces are models we need to master very soon

I heard or read similar statements shortly before M20/20 and I am sure I will hear more of the same over the next year. Lest you believe this line of thinking is limited to banking and banks, follow what the major insurers and payment company executives are saying, and the refrains are eerily similar – so said the few insurers present in Copenhagen.

Past the initial mourning phase we all experience after a “close” relative has been pronounced dead, matters tend to get complicated post haste. Although I am now certain most bank executives are convinced a bleak future lies ahead for the complacent ones, there is no consensus for what needs to be done, no universal truth to follow. Succinctly put, the astute observer will have fleshed out two lines of thinking: a) build better with new technology or b) build something radically new.

The former line is equivalent to a wall building exercise – shiny new walls. The historians amongst us will quickly point to the follow of such endeavor. The latter line is equivalent to building bridges, a more exciting endeavor, full of promises shaped in the forms of platform strategies, network effects, “as a service” and so on and so forth. I am inclined to favor the bridge building exercise.

Indeed, we were treated to all sorts of panels and discussions around open banking, APIs, API strategies, PSD2 strategies, bank as a service – yours truly moderated a BaaS panel with a stellar group of panelists.

We were treated to some excellent conversations with crucial points being made, such as 1) business strategies for BaaS or open banking are as important as the technology underpinning such efforts, 2) the purpose of open banking or BaaS is to drive down the marginal cost of delivering a product or service to near zero, 3) one can only achieve BaaS or platforms strategies with a complete rethink of core banking systems. The last point is a key learning which I have harped on over the past three years and in previous posts on this blog. Core banking systems are antiquated and in dire need of rejuvenation. Whether new service provider entrants will take the lead, existing ones will overcome their legacy offerings, or new and mature fintech companies such as Zopa or Klarna, to name but two, will take it upon themselves to build new systems from scratch and succeed remains to be seen. What is certain is that all will try. The industry demands it.

A point which I did not hear being discussed, which is equally material, is how network effects are important to any new financial services model. Arguably few if any new entrants have captured network effects and many incumbents are protective of their current business models, which are not conducive to capturing said effects in the digital world. One way of capturing network effects is to build marketplaces, another is via unbundling and rebundling of a given set of products or services. On both counts we are still in the early stages financial services wise. The rebundling which I discussed in a previous post, is slowly picking up steam. Witness, Klarna and Adyen securing bank licenses, or the likes of Transferwise, Revolut, Monese, N26 adding to their initial offerings (apologies for those I am forgetting). Some of these firms vie to capture network effects as they build their platforms, AND, by the way, they should all be viewed as tech companies with a banking license.

We were also treated to the news that Visa had invested in Klarna. Add to the mix MasterCard’s purchase of Vocalink, and post M20/20 Vantiv’s bid for WorldPay, I am now eagerly anticipating the next acquisitions of payment assets with a strong European presence. Which are the next targets? Who will be the next acquirers? Are these plays defensive or offensive? How valuable will these assets prove to be? My bet is more than we currently realize.

We also were treated to excellent conversations around digital identities (there were a number of ID startups in attendance), blockchain, AI, as well as many panels specialized on one aspect or another of payments. We were also exposed to regtech and regulatory sandboxes. All are subjects I was expecting would be expanded upon.

I did note, with some surprise, omissions or under-representation of certain topics which are bound to pick up steam and become of some importance for the industry.

I list them in no particular order:

– The impact of IoT on financial services at large (for insurance, for payments, for lending, for savings)

– The necessary intersection between IoT and digital identities (identities of things)

– The rise of edge computing and its impact on financial services (banking, insurance, retail, wholesale) especially as the industry is finally espousing cloud computing which is by definition centralized

– The tangible threat posed by Amazon, Apple, Facebook, and more particularly by Alexa and its sisters to brands (last I checked banks or insurers are also brands)

– Marketing to millennials (Instagram, Snapchat and organic brand building, Facebook or Google and paid search)

– How the next generation smartphone operating systems, which incorporate AR/VR (think ARkit with iOS 11) will fundamentally change search/discovery/interaction/education and the implications for fintech and financial services.

– WeChat (anything about WeChat) and AliPay (anything about AliPay), learnings, which can be replicated in the Western World, and which cannot (especially in the context of platform strategies, BaaS, marketplaces)

These last two points are to me the most material blind spots.

Finally, although I am sensing a dearth of interesting new fintech concepts and startups in the US, I see no such marked deceleration in Europe, at least for the time being. I also see many more venture funds active in this space, which may lead to either funding of startups that should not be funded, or valuation creep, or both.

That’s about it for me, and I now ask you: What were you learnings? Your observations?

I wonder if Loki and Tyr will visit me in Amsterdam next year. I also wonder if the organizers will outdo themselves next year. This event was very well put together.





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I recently listened to the My little hundred million episode of Malcom Gladwell’s Revisionist podcast in which he discusses elite universities vs non-elite universities. One of the points Gladwell makes, illustrated with the work of Chris Anderson and David Sally on football – see here for their website and here for their book – is that there are strong link activities and weak link activities.

Gladwell contrasts two sports to bring to the fore the salience of his point: Basketball and Football. There are strong link sports and weak links sports. Basketball is a strong link sport in as much as it is decided, more often than not, by the strongest player on the court. The “strongest” player can dominate a game and win it for his team. Football is a weak link sport in as much as it is decided, more often than not, by the 8th, 9th, 10th, 11th best players on the team. The “weakest” players need to be stronger than the opposing team’s “weakest” players. On the one hand the strongest link can win you the game. On the other hand, the weakest links may win you the game.

This strong/weak link heuristic made me think about innovation within an organizational context and more specifically as it may apply to early stage startups and mature corporations both in absolute terms and dynamically as either evolve over time.

It goes without saying that the business of growing a startup is eminently perilous, as evidenced by a survival rate that barely exceed those of male mantises after a male-female encounter. In that regard, and because of the numerous triggers that result in failure, growing a startup over time is a weak link “game” – you are as good as your “weakest” employees allow you to be, and by the same token operating a startup & strategic execution are weak links, the more so as the startup grows.

On the other hand, innovation within an early stage startup usually occurs thanks to the genius of one individual, an exceptional entrepreneur or technologist. The smaller the team, the smaller the organizational friction, the smaller the potential agency issues, the simpler the complexities facing the startup, the more one strong link will shine and carry the day. Innovation tends to live and breathe in rhythm with the strong link.

As startups grow and mature, they start to encounter, in an increasing fashion, the well known issues large corporations are faced with.  As this happens, innovation switches from being a strong link game to a weak link game. Once the innovation function has to live in symbiosis with the legal team, the compliance team, the IT team, the business team, the executive office, the strategy team and myriad other agents across the organization, it becomes as effective as the organization’s weakest link, be it an ill-tempered lawyer, a timid compliance officer or high-charging business leader.

In terms of culture, early stage startups “speak” strong link innovation while corporations “speak” weak link innovation. These languages, with their respective grammatical rules, spelling styles and lexicon inform how innovative ideas can and will propagate or fail. These languages tend to remain separate with minimal overlap until they were forced to intermingle forcefully due to the transformational diktat that has befallen every organization aspiring to thrive in the digital age – under the assumption that one needs an infusion of strong link innovation in order to transform and thrive.

Some corporations have responded to the language barrier by setting up technology transfer filters ranging from participating in independent accelerators, to building their own incubators or business builders, creating their captive venture arms, and/or investing in independent venture funds. Other corporations, and they are few and far between, have successfully retained strong link innovation traits as they have grown into sprawling enterprises – see Amazon’s management culture as a perfect example.

We can assume the rate of technology change will not abate anytime soon which will put a premium on how skillfully any organization will adapt to said change. As such, the ability to master the strong/weak link divide will, in my opinion, become a competitive advantage for startups and corporations alike.

Below is a non-exhaustive short list of what strong/weak link masters will focus on going forward.


  1. Focus on your strong link capabilities and ride them hard! These make you unique
  2. Build systems to enable your strong link culture but recognize that growth will bring complexities and weak links
  3. Prepare for weak links but honor them as much as strong because they will ultimately be your business backbone if you are successful


  1. Analyze your business to make sure that you have strong link actors.  If so, nurture them.  If not, call HR fast
  2. Analyze your support systems to make sure they are high functioning.  Weak links should not be “bad”.  Raise their quality because these weak links make or break the business
  3. Build a culture around monitoring and raising the quality of weak links continuously

Needless to say that I expect more corporations following into Amazon’s footsteps, the resulting outcome being a blurring of the strong/weak divide. Neither fully basketball nor fully football; hybrid organisms are usually more resilient.

ps:  I would like to thank Michael Meyer for his editorial help





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(I would like to thank Maya Zehavi for her invaluable editorial help as she pushed me to clarify my thinking.)


Every technology has the potential to change us in ways we do not understand immediately. Some technologies impact us more profoundly than others. Those technologies that impact us the most are related to how we define, comprehend and organize ourselves around and with the “Truth” (for clarity’s sake, I define the Truth not as THE ultimate Truth but as a group of axioms a given society accepts as self evident at a given point in time).

Take the printing press invented by Gutenberg around 1440. No one would have been able to forecast its far reaching consequences ranging from the mass production and distribution of knowledge to the circulation of information and ideas. Scholars rightly point out that at its core, the revolutionary potential of the printing press centered around who controlled the “Truth” – and ultimately who developed, managed and benefitted from the Truth or  its multiple sub-truths interpretations. The bloody wars of religion that followed Gutenberg’s discovery in Europe prove the salience of this point as well as how societies undergo tumultuous times when an established set of truths are challenged and a new set of truths emerge.

The advent of the internet, as many have pointed out, is as momentous, or even more so, than the printing press, not only as a new engine of economic growth but also as a vector of change in relation to the Truth. In an era where everyone has access to every data point, where everyone can opine on every piece of data, where a plethora of tools make it ever so easy to share, augment one’s opinion or distort someone else’s, we are left bewildered and lacking obvious, dependable and anchoring truths onto which we can hold on to and trust.

We see this unfolding with the tug of war between old myths such as traditional media outlets and new myths such as social media and the epiphenomenons that are “fake news” and cyber propaganda. We see this unfolding with the promising and threatening gifts AI bestows upon us. We see this unfolding with the rise of crypto currencies and blockchain technology while questions are asked of centralized monetary systems and fiat currencies. We see this unfolding with our diminishing trust in traditional institutions, which, much like the Catholic Church circa 1439 held somewhat of a monopoly on Truth.

Whether entrepreneurs busy crafting tomorrow’s solutions, incumbents (or existing intermediaries) busy protecting yesterday’s solutions, state actors busy ensuring control over a set of emerging solutions, we are all involved in building new truths. The systematic and systemic destruction of yesterday’s truths which the internet enables mires us in a transition phase where we frantically search to realign and rebalance truth.

What does this all mean when it comes to fintech? Most of fintech to date has preoccupied itself with efficiency, the concrete bedrock of technology promises – “We shall build better products and services and deliver them faster and in more transparent ways.” Indeed, the first waves of fintech were enthralled with creating a direct to consumer nirvana articulated around a “better, faster, cheaper”  Olympian paradigm which, as an unintended consequence obnubilated the important disruptive trends assaulting truths.

I contend the real promise of “fintech” lies with rebuilding truth and that the early assaults on the commanding position financial intermediaries have enjoyed is only the beginning of a transformative process.

To be clear, Bitcoin idealists as well as blockchain/distributed ledgers aficionados have always asserted similar views. How can it be otherwise, when so many traditional business models find themselves on the wrong side of new Pareto laws. Yesterday credit bureaus had their hands on sufficient data streams to somewhat accurately deliver truth to score credit. Yesterday, banks owned proprietary distribution channels that allowed them to somewhat control the truth of credit intermediation. Yesterday, the physical truth of your identity was sufficient to give you access to a variety of services with little to no friction to you or the service providers you dealt with. Yesterday, the truth of fiat currency was enough to cater to 100% of your needs.  Yesterday, the truth of actuarial tables was enough to somewhat accurately cover any risk behaviors with some degree of certainty. Finally, yesterday any and all of these above truths were girded by “easily” digestible ethical constructs that helped us navigate gray areas.

Today, we are faced with a Cambrian explosion of data bolstered by ubiquitous modes of distribution. Credit bureaus may only master 20% of available or relevant data. Banks have lost our attention along with a dominant distribution channel position. Our identities have exploded in myriads of sub-atomic particles which we try to use while others try to manipulate them and us. Currencies are metastasizing in front of our very eyes, sometimes in a good way – loyalty points, tokens, crypto currencies, digital currencies, private currencies. Insurers face new behaviors and new risks to cover. Last but not least, ethical issues abound when it comes to how technologies will be deployed to help us rebuild trust.

As an investor, the more meaningful fintech opportunities I see on the horizon center around enabling a new truth equilibrium. This is why core banking systems or policy management systems for insurers are so exciting. This is why digital sovereignty – digital identity schemes, privacy schemes  applying equally as direct to consumer solutions and b2b solutions – are so exciting. This is why distributed ledger or blockchain tech is so exciting, when appropriate. This is why solutions that allow us to make sense (truth) of data such as new generation data marketplaces are so exciting. Any and all of these hold the promise of anchoring us with new truths we can trust. Therein lies the real signal. The efficiency part is only noise.

Four parting thoughts. First, these fintech solutions are much harder to build as they require intense collaboration between various stakeholders – as opposed to the simpler fintech solutions of yesteryear. Second, emerging properties cannot be forecasted easily which is why, although it is relatively easy to “bet” on blockchain or AI or new core banking systems, it is eminently more difficult to accurately predict how tomorrow’s bank or tomorrow’s insurer will look like. Third, not one but many technologies will allow us to build new truths, thusly rendering the endeavor of rebuilding truths eminently complex. Fourth, as a thought experiment, try to imagine what a Truth seeking financial services entity would look like by extrapolating from Wikitribune, Jimmy Wales’ new endeavor.