September 3, 2021
Photo: Kimberly White/Getty Images
Hello and welcome to Protocol | Fintech! This Friday: Robinhood's under fire once more, Makara's CEO on raising capital, and Revolut's IPO game plan.
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Robinhood had a few more arrows shot in its direction this week, one from a key regulator and the other from a potentially serious challenger. It was enough to spook investors.
On Monday, SEC Chairman Gary Gensler said in an interview that the agency could ban payment for order flow, the lucrative but controversial compensation scheme that makes up a big chunk of Robinhood's revenue.
That same morning, CNBC reported that PayPal was thinking of rolling out its own stock-trading service, which could mean the fintech powerhouse might soon join Robinhood's growing list of rivals.
The double whammy sent Robinhood's stock sliding as new questions emerged about the newly-public online brokerage's future.
A complete ban on payment for order flow is "on the table." Robinhood makes a ton of money — 75% of its total revenue in 2020 — from rebates it receives for sending trade orders to market makers.
Is PayPal about to crash Robinhood's party? Robinhood, which already faces competition from the likes of Public, Square and SoFi, could find itself going toe to toe with another fintech powerhouse, PayPal.
Robinhood faces a bumpy road ahead. Robinhood's "success and challenges have created significant competition," Jonah Crane, a partner with Klaros Group, told Protocol. Robinhood blazed the trail in commission-free investing, but now there are clearly cracks in its business. Regulators are watching. And rivals are eyeing the huge market opportunity it uncovered.
-- Ben Pimentel
Ransomware victims paid over $416 million worth of cryptocurrency to attackers in 2020, more than quadrupling 2019 totals. As of July 2021, we know that ransomware attackers have taken in at least $210 million worth of cryptocurrency from victims. Shouldn't we just ban crypto? The answer is no. Cryptocurrency is actually instrumental in fighting ransomware.
A strange journey from Apple to bitcoin: Ian Rogers recalls his odyssey from helping launch Apple Music to serving as the top executive of a crypto wallet maker.
Affirm's Amazon-scale ambitions. Affirm's new partnership with tech giant Amazon is a huge boost to the BNPL pioneer.
From speakers to phones to cars, voice control has quickly become ubiquitous. How can the entertainment industry craft new voice-powered experiences, what kind of new business models are emerging in a voice-first world and how will voice control evolve in a world with multiple assistants?
On Sept. 9 at 12 p.m. PT / 3 p.m. ET, Protocol's Janko Roettgers will gather a panel of experts from across the industry to discuss what's next for voice. RSVP here to save your spot.
What do you see as the biggest challenges in fintech?
I think it's a talent problem. You have domain expertise that is valuable in the specific financial services domain coupled with the technology expertise required to deliver a lot of these applications. It's already hard to find technical talent to begin with. Coupled with the lack of domain expertise, it makes it very challenging for firms to grow aggressively.
What fintech company have you been most impressed with this over the past year?
We've been pretty enamored with Plaid. Obviously we've used them for integration. The moment you begin to deal with any kind of traditional bank infrastructure, you realize how fragmented and broken those tools are. So for an organization like Plaid to create a modern interface on top of an incredibly legacy infrastructure, the deeper we've got the more impressed I become.
What's been your biggest professional blunder, and how did it help you?
I had anticipated when we started this business that it would be easy to raise capital for the hedge fund and challenging to raise equity capital. I very quickly discovered it was actually inverse. Raising hedge fund capital proved to be very challenging, up until about Q3 of 2020, and raising equity capital was much simpler. I think we put the wrong amount of effort on the wrong side, originally. It took us a while to sort of figure that reality out and redirect energy appropriately.
That's the volume of sales of non-fungible tokens on OpenSea in August, which was more than 10 times the prior month, as meme-stock traders and bitcoin buyers moved on to digital collectibles.
Thanks for reading — see you Tuesday!