#668 Building The Fintech Super App with Anthony Noto

Anthony Noto is the CEO of SoFi. He is the former COO of Twitter. Previously, Anthony was a managing director at Goldman Sachs, CFO of the National Football League, COO of Twitter, and head of Twitter Ventures. In this conversation, we discuss SoFi, their vision, building a super app, bank charter, buying bitcoin, ROI of NFL sponsorship, Noto’s personal portfolio, best advice for young people, and most rewarding part of the job. ======================= Cosmos is building the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. Dive into Cosmos at cosmos.network/pomp ======================= Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn bitcoin, ether, and over 40 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. Open a free account in under 3 minutes at gemini.com/pomp and get $20 of bitcoin after you trade $100 or more within 30 days. ======================= Matrixport, Asia’s fastest growing digital asset platform with $10 billion in assets under management and custody, it offers one-stop crypto financial solutions including fixed income, DeFi in 1-click, structured products, Cactus Custody™, spot OTC as well as lending. You can earn from high single digit with fixed income to high double digit yield with their Dual Currency Product. If you hold crypto and look for yield, this is the app you don’t wanna miss out. Go download the Matrixport App and enjoy a welcome offer of 30% APY on USDC here: https://invest.matrixport.com/en

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Anthony Noto is the CEO of SoFi. He is the former COO of Twitter. Previously Anthony was also the Managing Director at Goldman Sachs, the CFO of the National Football League, the COO of Twitter, and Head of Twitter Ventures. In this conversation, we discuss SoFi, their vision, building a super app, the bank charter, buying Bitcoin, the ROI of an NFL sponsorship, Noto's personal portfolio, his best advice for young people, and the most rewarding part of the job. I really enjoyed this conversation with Anthony, and I hope

• 0:44Anthony Pompliano?

  you enjoy it as well. Before we get into this episode though, I want to quickly talk about our sponsors. First up is Cosmos. Cosmos is building the internet of blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. You can dive into Cosmos at cosmos.network/pomp. Again, cosmos.network/pomp. Go check it out. The internet of blockchains marking a new era of interoperability, scalability, and usability. Cosmos.network/pomp. Next up is Gemini. Gemini is a leading regulated cryptocurrency exchange, a wallet, and a custodian that makes it simple and secure to buy, sell, store, and earn Bitcoin, Ether,

• 1:29Anthony Pompliano?

  and over 40 other cryptocurrencies. They offer industry-leading security, insurance, and uptime. Gemini is the go-to trusted platform for beginner and sophisticated investors alike. You can open a free account in under 3 minutes at gemini.com/pomp. Again, gemini.com/pomp. Last but not least is Matrix Port. Have you lost your way in this low-yield environment while searching for a better store of value to beat inflation? Look no further. You can invest with Matrix Port to get out of your crypto, get more out of your crypto. You can invest today and earn high yields. Matrix Port is Asia's fastest-growing digital asset platform founded by crypto veterans. With $10-plus billion in assets under management and custody, Matrix Port offers One stop crypto financial solutions, including fixed income, DeFi in one click,

• 2:14Anthony Pompliano?

  structured products, custody, spot OTC and lending. You can earn from high single digit with fixed income to even higher yields with dual currency product. If you hold crypto and look for a yield, this app you don't want to miss. Go download the Matrix port app and enjoy a welcome offer. Go to matrixport.com or click on the link in the description to get started today. Matrixport.com. Go check it out. All right, let's get into this episode with Anthony Noto, the CEO of SoFi. I hope you guys enjoy this.

• 2:43Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:06Anthony Pompliano?

  Anthony, how are you?

• 3:07Speaker 02

  I'm great. Good morning. Thanks for having me.

• 3:09Anthony Pompliano?

  Of course. By the way, I just got to get it out of the way. Your mother is a genius, just like mine is. If they named us Anthony, then obviously we have smart parents, right?

• 3:19Speaker 02

  Absolutely. And never can I go by Tony or she'd beat the person up.

• 3:24Anthony Pompliano?

  That is exactly the same thing in our house as well. As we grew up, all of my brothers and I have names that could be shortened. So Michael could be Mike, Joseph could be Joe, and you got a spanking if if you were to use one of those terms other than their full name.

• 3:41Speaker 02

  I love it.

• 3:43Anthony Pompliano?

  All right, let's start with SoFi and just help us understand kind of what SoFi is and how you as a CEO really think about the business and kind of what the the vision for what you're trying to build is.

• 3:54Speaker 02

  Sure. I mean, the inspiration for building SoFi, our vision and our strategy is really born in the fact that traditional banks have sort of abandoned lifetime relationships with their customers. They've exited businesses because they can't get a return on them or there's no longer growth. And the fact of the matter is, is if you don't have a lifetime relationship in your financial life, it's really hard to get to the point that you'll have enough money to accomplish your goals. So our mission Is help people achieve financial independence, which means they have enough money to do what they want. That could be buying a house, having children, living in a certain area that's expensive or retiring or having a certain career. And in order to do that, we want to be there for every one of the major decisions in their financial life and every day in between.

• 4:36Speaker 02

  And why is that the case? Well, first and foremost, you make a bunch of decisions as an individual as you grow older that can really impair your ability to get to the point that you have enough money to do what you want. So how do you fund your college education? Don't over, don't take out too much debt relative to the amount of money you're going to make when you graduate. After you graduate and you get your first job, don't start buying a house or spending your money in ways that doesn't allow you to invest. Because if you don't invest in your twenties, you'll never get to where you need to be in the long term. And then as you start to make big purchases like a home and getting married and having children, are you in the right financial place to buy that size of a home? And still be able to invest in other assets outside the home to be able to pay for education for your children and be able to afford to have children and be married.

• 5:19Speaker 02

  So our goal is to help them borrow better, save better, spend better, protect and invest better. We're the only company that's offering all those activities on a mobile platform, leveraging one technology experience and allows us to give you those products and services, but in a member centric way. In fact, not only do we try to drive best of breed products across all those different areas, but we want those products to actually create more value when you use them together. So when you use SoFi credit card, you generate rewards, will double those rewards if you redeem them in an invest. If you want to redeem the cryptocurrency, you can. You want to redeem them in the fractional shares, you can. Similarly, when you do recurring investments in invest, which is a great behavior and a way to dollar cost average, we'll give you points for that. When you do direct deposit, we'll give you points for that. So,

• 6:04Speaker 02

  and we also bundle the products together to give you better interest rates and better service. So not only are we a one stop shop, but we're doing it with a better value proposition in each product, better interest rates, better returns and better rewards.

• 6:16Anthony Pompliano?

  When you think about this idea of kind of like a super app is how I describe it to people, right? Where you could literally go from saving, budgeting, all the way to investing, refinancing your loans, all the way up to basically retirement. How do you think about the user experience of all that? Because I think, you know, if I take, let's say, my grandparents or my grandparents' parents, they were used to literally walking into a physical bank, sitting down with a banker. That banker had a relationship with them, kind of served as like a personal finance advisor, but also as a banker and would essentially walk them through all these different engagements or mechanisms in their financial life. Today, that's completely gone. And I think that what you all are doing is you're providing this technology to do it.

• 7:00Anthony Pompliano?

  How do you think about being able to educate folks and actually walk them through, not only just being able to use the products, but actually knowing what to do? Because most of the audience, I think that's the big thing is like, should I take a loan? Should I not? What's the right interest rate? How does this work?

• 7:13Speaker 02

  Well, here's, here's the great thing. If you sign up for any of our products, let's say SoFi Money product, which costs you nothing. And, you know, you sign up for that product and you fund it, you get access to our member benefits. And there's a number of different ways we differentiate on member benefits. First, you get access to a free certified financial planner. Right in the app, you can click and sign up for an appointment with the CFP. At that date and time, your phone actually rings and your SoFi certified financial planner is right there to answer all your questions against any of our products. And quite frankly, products we may not have, like insurance. We do have some insurance products, but we don't have a big selection there. So that's one way to help educate you. Second, we have member events. We're constantly creating events across thematic areas for education. Could be investing in cryptocurrency.

• 7:57Speaker 02

  It could be saving for a home, how to decide on an education, how to refinance a car loan. And so we have experts that are providing these live videos. Before COVID, these events would happen physically as well as video. And now we do it with video. So there's a whole treasure trove library of education across all of these topics. In addition to that, we give you free career advice. And then we're just writing content all the time in the platform. And you go to your member home feed. We're trying to personalize your member home feed across educational areas of things you should consider doing. And that member home feed tries to answer proactively through personalization, three questions. What must I do today in my financial life? What should I do today in my financial life? And what can I do?

• 8:41Speaker 02

  And so those are the three vectors in which we're trying to educate our members on making the best decisions to get their money right. And ultimately, that's our goal. We want to give you products and services and education so that you can get your money right.

• 8:53Anthony Pompliano?

  Absolutely. And one of the things that I think I know, but other people may not be aware of is you've got very positive thoughts, from what I understand, around Bitcoin and cryptocurrencies. Maybe talk a little bit just how you see that part of the industry. As a lot of the folks who are watching this and listening to it, they probably have too much of their net worth invested in that sector of the financial world. But how do you look at Bitcoin and crypto?

• 9:14Speaker 02

  Yeah, it is part of my portfolio. And from a SoFi standpoint, you know, we always start with the member and what they want. So when we were launching SoFi Invest, I challenged the team to offer beyond auto investing. The team wanted to launch just with robo advisory accounts. And we did offer robo accounts. We still have them. In fact, one of our robo accounts was just named the best performing robo account by Barron's. But we did a survey of our members and we asked them, what assets would they want? And sure enough, cryptocurrency was on the list as number three. We launched the product originally with robo accounts, also single stocks without commissions. And we started to see our members buying Ford and GE. And I couldn't figure out why our audience, which is millennial and Gen Z, is buying Ford and GE. Like, they're not that

• 9:58Speaker 02

  exciting. I think they're not great growth stories. And sure enough, they were both less than $10. And that was our inspiration to launch fractional shares. We're like, our investors are new, they're trying to figure it out, they want to diversify. So we launched fractional shares. Others have copied us, but we were the first. Then we introduced a bunch of ETFs that are very diversified. So we have six ETFs, some that are at $10 price points that have 500 stocks that are broadly diversified, some that are thematic like the Giga Economy ETF. And then after doing that, we introduced cryptocurrency. So on the platform, we initially launched Bitcoin, Litecoin, Ethereum. We've now added 21 new coins on the back of that. And today, I think

• 10:38Speaker 02

  we're adding another six as of this morning. It's slowly rolling out to members. I believe in Bitcoin as an asset. It's highly risky. It's subject to regulation. It's subject to a bunch of externalities that could impair it. But I believe that investing in Bitcoin is an opportunity to invest in a technology that is going to continue to evolve and then be industrialized and commercialized over the next Thirty years, just as the internet was back in the 90s. But it is highly volatile. Every time someone buys cryptocurrency on our platform, we give them a warning that says this is an unproven asset. You could lose all of your money. About 10 to 15% of my net wealth is in, liquid net wealth is in cryptocurrency. And I just dollar cost averages into it every week.

• 11:23Speaker 02

  If you go on the app, SoFi app, and you follow me, you'll see that each week I buy a little Bitcoin, I buy a little Ethereum, I buy a little Doge, I recently added a couple others that you'll see there.

• 11:34Anthony Pompliano?

  So when you just said 10 to 15% of your liquid portfolios in Bitcoin and cryptocurrencies, my brother who's here with me looked over at me and his eyeballs almost fell out of his head. Walk through a little bit in terms of how you think of portfolio construction in general. So you got 10 to 15% crypto. How do you think about the rest of the portfolio? And why, in some people's eyes, 10 to 15% is a high percentage? In the crypto world, people would say, hey, why so bearish? And think of it as a small percentage.

• 11:59Speaker 02

  You know, when I started buying Bitcoin and other cryptocurrencies, it was about 5%. But fortunately, I bought very early and I continued to buy. And that's how it got up to the 10 to 15%. I kind of think about it this way. A lot of my compensation and my net wealth is in SoFi stock, which I'm a long-term believer in. And so the liquidity there is going to be very limited. And so I need to diversify away from that. And I'm diversifying to other asset classes. So I have a lot of consumer holdings. It's probably 20 to 25% of my holdings. And then technology stocks through diversified ETFs are the next significant portion. And cryptocurrency would be last.

• 12:41Speaker 02

  I generally use ETFs to express my point of view in investing. So for example, I own the SoFi Giga Economy ETF. I want to own those companies that are leveraging this Giga Economy to drive value. I also own Big Tech. And so I have some blue chip technology companies through a ETF called P&Q I. And I also want some exposure to just indexing the market with a little leverage. So I have a little SSO and a little SPXL. One is, SSO is a double levered long S and P 500, SPX. Excel is a triple long S and P 500. Those are smaller positions, but that gives me broad based index exposure.

• 13:19Speaker 02

  So I drive my differentiated return through that portfolio construction, some highly vital, unproven, high beta stuff. Some stuff that I know really well, technology, and then some stuff that's going to benefit from broader innovation in the consumer sector and direct to consumer, not necessarily technology.

• 13:38Anthony Pompliano?

  Awesome. I think that's a really descriptive way to kind of walk through it. I asked a bunch of people for questions about SoFi and I just want to read through a couple of the questions and you kind of just give me your thoughts on it. First is the bank charter. Maybe kind of help us understand, you know, what the purpose of a bank charter is, why you all are pursuing this, and then any update on that.

• 13:57Speaker 02

  Sure. So the bank charter is a really important strategic element for us. It does a couple of things. First, we lend quite a bit of money. In order to lend that money, we use our own capital. We also borrow money from traditional banks, 24 banks, which is through a warehouse facility. The cost of that funding impacts how much revenue we generate and how much profit. When you become a bank, you're allowed to use the deposits of your customers to fund loans. And the cost of the deposits of your customers is meaningfully lower than the cost that we pay banks. Because they're actually lending SoFi their customers deposits because they are a bank and they can do that. So they charge me much, much more than they give the consumer.

• 14:39Speaker 02

  So in checking our savings, maybe they're giving their deposit customers in checking 10 to 20 basis points of interest rate. They're then charging me 200 to 300 basis points to borrow that money to then lend to a consumer or member that we have. When we have a bank license, our costs will drop to the cost that they have to begin with. So that allows to give to our members lower interest rates on personal loans and on student loans, which will increase our point of difference meaningfully. The second benefit we get is because our cost of funding is going down, we can actually give a higher rate of interest on checking and savings. And when we first launched SoFi Money, our interest rate was 2.25% on all of your cash, not just what was being used for checking and not just what was in savings. It was on all of your cash.

• 15:23Speaker 02

  And there's no restrictions on your cash, which you typically do have when you put your money into a high yield savings account. So no restrictions on your cash and no fees. And we also offer benefits like ATMs that are free within the network. So high interest rate when we launched, no fees, great functionality, pay from your phone, person-to-person payments, electronic bill pay, we don't even send a physical check for if you wanted us to. And you can do ACH and everything you want right from your phone or your debit card. When interest rates came down, the interest rate we could offer consumers also came down. Because our interest rate was actually being delivered through a partnership that we had because we're not a bank. So as the Fed funds rate went to zero, our interest rate went down meaningfully.

• 16:05Speaker 02

  When we have a bank license, we can offer whatever interest rate we want as long as we're within the regulatory requirements. So right now in this environment, if I was a bank, I could offer 1% interest on checking, one and a half percent interest on checking, no restrictions, full functionality from your phone, debit card, person-to-person payments, et cetera. So the bank license also gives us an ability to be even more competitive. Today, we offer the things I just mentioned, plus two-day early paycheck, plus free roundups. In addition to that, we'll give free overdraft protection. We can add to that equation, high interest rate, once we become a bank, and really drive direct deposit acquisition of our members. And once we have their direct deposit, we then can help them understand that their interest rate they're paying on credit cards is too high. Maybe they have a mortgage interest rates too high.

• 16:47Speaker 02

  They're not investing the cash that's sitting there, they should put into investing, sign up for a free certified financial planner account. So the the bank is a game changer in our ability to really, really differentiate versus everybody else.

• 16:57Anthony Pompliano?

  What's fascinating to me about this is I think most banks that have a bank charter are trying to figure out the technology game. You all are almost doing it in reverse, right? You've already figured out the technology game, you've already built this, you have the customers. Now it's can you get the bank charter in place so that then you can have that vertically integrated technology in bank charter versus, I think it's harder to go bank charter than tech if you're not, your DNA of your company isn't actually a tech company.

• 17:20Speaker 02

  That's correct, completely. And a lot of the big banks have built their businesses by consolidating through acquisition. And we endeavor to build on one common technology platform in the cloud. And that allows us to not have silos between our business. So if you apply for unsecured personal loan right now, which we offer, and our average personal loan is around $30,000 to $35,000, and it's unsecured, so you can use it for whatever you want. We'll give you an interest rate on that of around, call it 10 and a half to 11%. But if you also do direct deposit with us, we'll lower that interest rate even further. And so we're constantly looking at ways to use technology to bring together product bundling that best meets your needs. So you have the lowest cost of interest and the highest benefit

• 18:01Speaker 02

  on the return side. And we can do that because we have one common technology platform and we have all of your data in one place. The more we know about you, the more we can personalize it. And so, you know, today, we make offers to people about their mortgages because we could see the interest rate they're paying through a connection that they have on Relay.

• 18:19Anthony Pompliano?

  When you think about international plans, I think right now, the product only available in the United States, one of the biggest questions we always get is international expansion. How do you think about that?

• 18:27Speaker 02

  Yeah. So from a SoFi business brand perspective, we have focused on Asia. And we bought a very small company in Asia, rebranded it SoFi, and then launched SoFi Invest there. So in Asia, our primary business is SoFi Invest. We'll continue to expand throughout Asia with SoFi Invest. We have a great product there. We've done a phenomenal job of growing assets and gaining members. And so we think we can be very differentiated in that market, and that will be the focus for us in Asia. First, SoFi Invest to other countries, and then we'll add other SoFi products on top of it. The second geographic area, that's a priority, is LatAm, starting with Mexico. Through our acquisition of Galileo, the payments platform, we're instantly in Mexico, and we're signing up a, you know, a number of

• 19:11Speaker 02

  new partners in Mexico. We're also starting to expand into other countries in LatAm. So those are the two continents that we're going to focus on in addition to the US. So, you know, in North America, LatAm, and Asia. Over time, we'll look to go to other continents, but we want to make sure that we're planting seeds now. So five years from now, we still have compounding growth at a really high rate because we're planting the seeds today that will take over the growth rate in three to five years versus the US business today. And there's still a ton of growth in US business, but this is about making sure we have compounding growth for decades.

• 19:45Anthony Pompliano?

  Yeah, makes a ton of sense. One of the big things that you did over the last 12, 18 months is you all signed a deal to have the SoFi Stadium, the sponsorship deal. I know that you are the, I believe, former CFO of the NFL. And so I'm assuming that you know quite a bit about these types of deals. Every single picture, video, friend that I've had go already says that it is absolutely beautiful. We've got a bunch of them that we're pulling up right now. How do you evaluate the ROI on an NFL stadium sponsorship? Is there a way, like a framework that you use to kind of think through what would make this a success for you all?

• 20:20Speaker 02

  Yeah, their first framework was what would be our cost per impression? So today, we spend a significant amount of money on marketing, on television, marketing, broad scale, marketing, direct marketing, performance, marketing. And each one of those decisions comes back to sort of cost per point of reach, or in simpler terms, cost per impression. And so the cost per impression that we generate from the stadium is meaningfully lower than how we used to spend the money. So when we were looking at SoFi Stadium, we knew it would cost X per year. We had another area, we were spending money on sponsorship of things like X Games, the US Open Tennis Tournament, the US Open Golf Tournament, Big East Basketball Tournament, Big Ten Football Championship. And we looked at total money we were spending there and the inherent number of impressions

• 21:04Speaker 02

  and calculate a cost per impression from all those activities. And then we forecasted and calculated a cost per impression with the stadium, and it was a significantly more efficient vehicle. The second thing is how big of a unique aggregated audience can we drive in one viewing? And a Thursday night football game or Sunday night football game, national football game or Monday night, they average between 15 and 20 million unduplicated unique viewers. And so now we're getting great impressions, but we're getting even greater reach. And so those are the two primary ways that we evaluated it economically. More broadly, we'll evaluate what changes over time from our native brand awareness. We want to be a household name. Why people need to trust SoFi in order to give us their money, give us their personal information.

• 21:49Speaker 02

  And so we have to become a household name. One way to know you've gotten there is to get your unaided brand awareness into the top 10 in the country from a bank standpoint. So that's a second way that we'll measure it on a non-economic basis. And then last, what I would say is, you know, we're learning every game that happens in the stadium. We're iterating quickly and So this is a multi-year investment. We'll be much better a year from now than we are this year, two years from now than we are this year. And we're real, I'm really pleased with what the team has gotten us and the amount of impressions we've gotten so far relative to expectations. But we're going to keep iterating and really innovate. I think of SoFi Stadium's social handle as a media company, and I want that social handle and that brand to be like ESPN where

• 22:31Speaker 02

  we're doing interviews and we're posting content from the stadium. And then artists, athletes, any type of performer are going to want to be part of that brand and want to be on that most ambitious stage in the world. I thought of it as, you know, a destination where every major act, every major sporting event would want to be there. And the stadium is going to host the Super Bowl in February, and then it's going to host the opening and closing ceremonies for the Olympics.

• 22:55Anthony Pompliano?

  Is it fair? I haven't heard you describe it this way. The first thing that popped into my head is like Madison Square Garden, I think is like the Mecca, right, for basketball. And everyone thinks about MSG as that place. For you all, you essentially are building not just a place for football, but also one for culture and entertainment and all of these other types of activities where people go into stadiums. Is that a fair way to kind of think about if successful, then every single concert will want to stop there? And you kind of just continue to drive those impressions up because you've done such a good job of driving awareness of the stadium and the experience?

• 23:27Speaker 02

  Absolutely. I think what Stan Kronke has built there will become the number one entertainment platform in the world, where people will want a national television when anything's happening there. And every major act, every major sport entity is going to want to play on that platform. The additional benefit and insights that I had was Stan wasn't just building a stadium. He was building, in my view, the equivalent of Disneyland for entertainment. The NFL Network is now located right outside of the stadium on the grounds. Steve Ballmer is building his new LA Clippers arena across the street. The Forum is there. Hotels are being built and erected, and retail is being built. So it's going to be a destination for not just

• 24:12Speaker 02

  the event, but for the hours around the event, and just seeing all that is being delivered in terms of the entertainment and sports activity in this Disney-like, my analogy is it's a destination like Disneyland, but for sports and entertainment.

• 24:26Anthony Pompliano?

  Anthony, that's the single greatest pitch I've ever heard for a building. That was pretty good. Makes me want to go. Let's talk about regulatory changes. One of the questions I thought was really interesting, the audience asked was like, what are the top three regulatory changes that could better help SoFi serve customers? So regardless of what component, whether it's banking, crypto, stocks, whatever, or even international, what do you think are some of those changes that could really unlock an ability for you to better serve your customers?

• 24:50Speaker 02

  So this will sound counterintuitive. I actually think the Durbin bill on interchange is an inhibitor for all Americans. It's something that doesn't exist outside the United States, something that doesn't exist in Mexico or LatAm. And the economic disadvantage that banks have, or companies like us that are going to have assets over $10 billion, it just results in a poor consumer experience. So causing the Durbin, and I don't know if you're familiar with it, but basically if your assets go above $10 billion, the interchange that you get on debit goes from around one percentage points down to about 25 basis points. And that causes big banks not to have revenue streams, or large asset companies like SoFi, revenue streams that others do, and

• 25:34Speaker 02

  it results in consumers that want FDIC-backed deposits not getting as much value as they otherwise would get. And so lifting that Durbin restriction, I think would be drive more innovation in the industry and drive more incentive and benefits to the consumer. I think the second thing is just understanding all the different regulatory bodies. And so today, we are regulated by 50 states for lending, about 35 states for mortgage, about 35 states for what's called money transmitter license for cryptocurrency. And then in addition to that, we're regulated by the CFPB. We're also regulated by Finner and the SEC, which is one entity. And we also are

• 26:14Speaker 02

  regulated, if we become a bank, by the Federal Reserve and the OCC. As we become a bank, a lot of the other regulatory stuff goes away. But there are still a number of different bodies that are regulating the industry, and simplification of the regulatory regimes would also be helpful. And it's not that I'm saying regulation should go away. It shouldn't. Like, I'm all for regulation. In fact, I think it's a bear Entry for other companies against SoFi because we are, you know, so regulated in so many different industries. We have a vast amount of individuals and technology and resources going against that, and it's a huge cost. So I'm perfectly fine with the regulation. Having it streamlined and sort of defining the swim lanes would also be really beneficial. And then the last thing I would say is

• 26:57Speaker 02

  there just tends to be a swing in the regulatory environment when we have different administrations. And that's pretty challenging. Imagine you're in one regulatory environment for four years and you build your business at the center of that field. I always talk to the team about, think about a sports field, a soccer field. And the lines, the boundaries are the regulatory lines. And some people like to play really close to the edges of that regulatory environment, really closest to going out of bounds. We need to play in the middle of that field. And the reason we have to play in the middle of that field is because it could change every four years. The size of that field could get smaller with the new administration or get wider with the new administration. And that type of volatility and swing is just really hard to run

• 27:40Speaker 02

  a business that's trying to drive growth that compounds over decades. So, you know, making sure that these regulatory bodies are driven by nonpartisan points of view and that are the best for our economy and the best for new Americans.

• 27:54Anthony Pompliano?

  Before I let my brother ask a couple of questions, the last one that I thought was really interesting is this idea of NFTs, DeFi, kind of all of the, maybe the fringes or the newest things in the cryptocurrency industry. How do you think about that, given a majority of the business is kind of legacy services, right? Legacy, not from a negative standpoint, but just these are tried and true things that people need to better their financial lives. Is there a balance or do you think about kind of paying attention to them but not yet ready? Or how do you look at it?

• 28:22Speaker 02

  I'm definitely paying attention. I joined a lot of Twitter space conversations every night on NFTs and I'm tracking what's going on with OpenSea and others. You know, one of the differentiators we have for SoFi Invest is that we're the only place that you can buy all five asset classes, the only place you can buy single stocks, fractional shares, ETFs, robo and cryptocurrency. And we want to continue to extend that differentiated selection.

• 28:46Speaker 02

  For alternative asset classes like real estate or private equity or hedge funds and other alternative classes and NFTs in that in that zone of alternative asset classes and you know, when we offer and how we offer it has to be safe. It has to be responsible for our members. So we don't have any current plans, but it's an asset. We absolutely will evaluate with all the others that we currently don't have that we could offer our members. I love the innovation. I love the digitization of the world. I think it just creates more value for everyone. And there's an ecosystem being built, just like the gig economy was built around NFTs. And I'm listening to these spaces at night on Twitter and it's remarkable to hear the people that are building a business through their creativity and leveraging this technology. And it's the

• 29:30Speaker 02

  American way. And I am sure people thought, you know, back in early 1800s that people that were investing in industrialization and other innovations like vehicles and airplanes and railroads and ships really, really thought it was crazy and way out there on the spectrum. And that's the same case today. And that will always happen with innovation, which is why you should spend as much time learning about it as you can, because what people are afraid of is generally what they miss out on.

• 29:57Anthony Pompliano?

  John, what questions do you have?

• 29:58Speaker 03

  Yeah. Hey, Anthony, thank you for doing this. I actually follow you on the SoFi app. I enjoyed a lot. So it's awesome. I'm curious. So a lot of our audience is kind of younger professionals. What advice would you have for someone that's just getting started in their career, kind of in their first few years of their professional career?

• 30:14Speaker 02

  Yeah, from a professional standpoint, I always like to say, do something you're passionate about, something that's going to leverage what you're strong in, and something that you're going to you're going to learn a lot from. But sort of, you know, beyond that, to be very specific, you know, there's a couple of attributes that if you can show day in, day out in your career, it's going to create more options to you. The first is making sure that you do the right thing. Like that's table stakes. Do the right thing. If you're not sure, do the harder thing. The second thing is work as hard as you can. No one has ever been dinged because they they were the hardest worker on the team. And working hard as you can doesn't mean you put in crazy hours. It means you decide how much you're going to put.

• 30:56Speaker 02

  Into your career and you maximize the impact of that and you make sure you're a great team player. You always anticipate what's coming, you look around corners, but work, work as hard as you can and falls in that bucket. And then last is take care of other people. If you take care of other people, you'll be known as a team player. You'll be known as someone that's selfless, someone that's a missionary. And so do those three things. We have a couple of core values at SoFi that are great advice. You know, run after problems. When there's a problem and no one's focused on it, you run after it. You take the initiative. It's part of working hard as you can. Make your footprint bigger than your foot. Well, that's about taking care of other people and making them better. When you have a grand idea, you share it with other people. And so those are things that I've learned over the years that have differentiated.

• 31:39Speaker 02

  You know, the people that I've worked with and instances myself and they're good, basic things to do. And on the financial side, what I'd say is save a dollar a week, invest 50 cents of it, find a way to start learning how to invest as early as you can. I started investing when I was 17. It's made all the difference. You can't make up for lost years on investing. And if there's anything that you do when you're working is taking those dollars that you earn, make sure you're spending prudently. But make sure there's a little bit left over so you can invest because that will give you more options in what careers you choose down the road. And it may not sound like that's obvious, but I'm telling you by the time you're 30, if you're investing in your twenties, the career options you have will be bigger because you've put some away and it could take a little bit more risk.

• 32:23Speaker 03

  That is amazing advice. So I appreciate that. And then my next question would be, what's next for SoFi, right? Do you guys kind of continue at your core products? Are you guys expanding into different products? Can you talk about SoFi's future?

• 32:35Speaker 02

  Yeah. So, you know, in the United States, we're really focused on building awareness and adoption. So we're in acquisition mode now. We were in launch and acquisition mode before, and now we're really stepping on the gas and making sure there's greater awareness and greater adoption, more cross buying. And so, you know, our product growth is, is a member and product growth are the priorities and you'll see us continue to innovate on making those products best to breed, getting them to NPS scores over 70 and also showing how they work better together. So we're in that mode of execution now. In the US and there are some more product classes that we want to add and so we'll be opportunistic there. In Mexico, we really want to step on the gas and enable more and more financially oriented

• 33:17Speaker 02

  companies, both neo-banks and non-neo-banks use Galileo's platform. We have a great product roadmap for Galileo. They primarily enable debit and ACH payments now with APIs that allows a developer to build a mobile financial app right on top of it. We think there are opportunities to do a host of other products that SoFi is already doing and so we want to make those available to other companies, both neo-bank companies as well as large financial institutions that don't have the technology, then large branded companies that need to be in the financial services sector. And then in Asia, we'll continue to increase our footprint there with SoFi Invest and look for opportunities to add other products. I would say the biggest game changer for us in the next, you know, six to 12 months will be the benefit of the bank, which will allow us to really

• 34:02Speaker 02

  differentiate their products and increase the awareness that we have in the US and adoption and our ability to innovate on products even more.

• 34:09Anthony Pompliano?

  Anthony, a couple more questions then we'll let you go. First is probably the number one question that we keep getting from the audience is around the crypto wallet and the ability to withdraw and have the wallet support. Maybe talk a little bit about kind of where you guys are from a product standpoint and then what that looks like moving forward.

• 34:24Speaker 02

  Yeah, so I'll talk about crypto options and margin. All things that we hear crypto wallet, margins and options, all things that we hear from our members they want and, you know, options and margin, we've said publicly are on our roadmap and we just had to make sure we prioritize those in the right order. We don't, we don't want to enable day trading. We don't want to enable people taking too high risks. So we've prudently launched the other products before margins and options to make sure that we weren't giving people products and services they weren't ready for. It's clear now our members are ready for it and we just want to do it in a responsible way. As it relates to crypto wallet, I do endeavor at some point to be a custody and clearing platform for cryptocurrency and have a wallet. But in order for us to run as fast as we've had,

• 35:08Speaker 02

  and we've launched seven products in the last two years, plus a native mobile app, plus two continents, we've had to make some decisions on Infrastructure investment versus not. So we're vertically integrated in loans and it gives us huge competitive advantage on pricing and profits. We're now vertically integrated in SoFi Money through the Galileo acquisition and our other, other technology. At some point, we'll have the same situation with Invest and with cryptocurrency. Those are two more challenging areas to do that in, in the regulatory environment which we live in. In order to be a customer in clearing in crypto, you know, you're going to have to really spend a lot of time with bank regulators. For them to understand how you're managing anti-money laundering, how you're managing fraud and other nefarious activity.

• 35:53Speaker 02

  And because that's an area that's not proven, we've chosen not to build that yet. To eliminate that risk and that's the risk that Coinbase takes, who's our partner, as well as Bitco, who's our second partner. So we don't actually take possession of the cryptocurrency, which I know causes some anxiety among our members. I buy cryptocurrency through SoFi. I have a significant amount of money in cryptocurrency because I trust Coinbase. And the ability for them to custody and clear it and we have insurance behind that and a bunch of other safeguards from our own risk management standpoint. But people that want to move cryptocurrency off of SoFi, we don't enable that. We just allow dollars in and dollars out to get exposure to cryptocurrency.

• 36:32Speaker 02

  But a digital wallet down the road that's crypto, crypto enabled in addition to other products is something that we will have at some point. It's going to be out in the distance.

• 36:42Anthony Pompliano?

  Got it. And then the question that naturally comes up whenever you talk to a publicly traded CEO and mention Bitcoin, everyone wants to know. Jack Dorsey, Elon Musk, they went and bought Bitcoin, put it on their balance sheet. SoFi have plans to do that?

• 36:56Speaker 02

  We have, we have, we have to have some Bitcoin on our balance sheet to facilitate trading and we do rewards in crypto, but it's very de minimis. It's not huge. It's, it's very small and it's really just there to help facilitate the rewards that we provide and the, and the trading that we provide. We're not using it as a balance sheet asset management. I actually think from a regulated institution standpoint, it would be imprudent. No different than us going out and buying a bunch of risky stocks or that are unproven, they're not generating cash flow or a bunch Of you know, low, low grade debt. Our, our cash is king on our balance sheet. We need it to fund our loans. So we put it in highly conservative assets, sitting in cash or treasuries. Cause we need to preserve that to be able to fund our loans. And so as a regulated entity,

• 37:42Speaker 02

  we wouldn't put that cash into anything that's risky. And as I mentioned earlier, cryptocurrencies on the far end of, of risk. Companies like Tesla and Twitter, they're solving for different elements on their balance sheet, but our balance sheet is critical to our service to our members and they need to trust us and we can't put it in places where it could disappear overnight or they wouldn't trust us.

• 38:02Anthony Pompliano?

  So my last two questions are more fun. The first one is, uh, I get the sense that you're having fun doing this. You're really enjoying it. What's been like the biggest surprise that you took over as CEO or what, what's been like the moment where you're like, man, this is really enjoyable?

• 38:13Speaker 02

  Um, I would, I would say two things. First is just the satisfaction I see in our members. I never would have guessed how impactful we could be to our members' lives in, in ways that are indescribable and unexpected. And that's emotionally rewarding for me. I mean, most of the positions I've had over time have definitely had an economic benefit, a professional benefit and an emotional benefit. The emotional benefit here is greater than any other business I've ever worked on. And, you know, I can't tell you the number of times I tear up. I'm 53, I'm getting older, so maybe that's part of it. But when I hear our members describe what we've done for them, it, it gets me choked up. I have trouble expressing myself without getting choked up. So that by far is number one. I would say number two is if you had asked me when I joined in 2018, would we be able to launch a native mobile app?

• 38:58Speaker 02

  Launch SoFi Money, SoFi Invest with all the different assets we have. ETFs, robo accounts, uh, SoFi credit card, um, SoFi in-school loans and SoFi home loans and then be in Mexico. I would have said that it would take 10 years and we've done it in three years. So how fast our company has moved, our ability to attract talent, our ability to leverage a technology platform, leverage partnerships to blitz scale at a rate I've never seen, um, that, that's incredibly fun. And I, I love sort of like running hard every day and hanging on by my nails. And we have a great team that's enabled that to happen. And you know, what we've launched in the last three years is stuff that everyone else has talked about launching, but no one's done. Not one company has other than so far. And that's because we have a phenomenal team and we're doing it the right way. We're not perfect, you know.

• 39:44Speaker 02

  I joke with the team, I said, I know like in a given quarter, we may only accomplish sixty or seventy percent of what we wanted to. But that sixty or seventy percent is like eight X what anyone else does. So don't, and my goal is to make sure we are so aspirational, we're only accomplishing sixty or seventy percent of what our goal is. Because our goal is going to be higher than anyone else's and sixty to seventy percent is meaningfully higher than other people. And so at the end of each quarter, when I sort of go through the board deck and it's all there, what we accomplished, I'm like, holy shit, the team is just crushing it. So that's the second thing.

• 40:14Anthony Pompliano?

  I did not know your first answer was going to be that. And earlier, somebody, I unfortunately forget who said this, but I highlighted it and pulled it off to the side. He said, how do I thank this guy for the opportunity he's provided for my wife and I to pay off our student debt? Right? And I think that like there's this element of when you serve a single feature or a single kind of part of the life cycle of finance. Sure, maybe you can help somebody with student loans, or maybe you can help somebody save some more money or invest in a specific asset. But when you put it all together, I'm assuming that there's a very, very big impact that people have and a very deep emotional connection they have to the technology in the company, given that you are their partner as they kind of go through this, this financial life. So it's pretty cool to see that.

• 40:55Speaker 02

  Yes, it's amazing feeling when you get those emails and those calls. And I went back to West Point last weekend for my thirtieth college reunion. And many of my classmates have been serving in the army for thirty years, so they haven't made any reunions. And we now have children and we're at different stages of our lives financially. And so many of them came up to me and said, I love your company. It helped me refinance my daughter's student loan debt, or we're able to help my children buy a house that are now young adults. Or it fixed my finances and it's rewarding with people you know, and you care a tremendous amount. Can be helped by the business that you're building every day. One plug, I will say from my class of nineteen ninety-one from West Point, there, there are ten units in the army that have commanding generals.

• 41:38Speaker 02

  So like CEOs, there's ten companies that have a commanding general, two-star general, and the eleventh is special forces. My classmates occupy six of those 11 seats. And the people that could sit in those seats could be from ROTC. They could be the class of 90, they could be the class of 89, they could be the class of 92, they could be the class of 93. So it could come from any of those different organizations or those class years. And six of the 11 are from the class of 1991. And, you know, I know them all personally and I couldn't be prouder of what they've achieved and how they've represented our class and defended our country. And it's just unfortunate what's happened with Afghanistan, but to talk to them about that and see the angst on their face and the lives that were lost along the last two decades and, you know, how things have unfolded over the last couple of weeks. So I gotta give a shout out to my classmates.

• 42:23Anthony Pompliano?

  I appreciate that because my last question, having been in the Army myself, you went to West Point, as you mentioned, I was gonna give you a softball to end this, which is Army versus Navy, who wins this year?

• 42:35Speaker 02

  Army every time. Gonna be a three-peat. Coach Monkin, I was, I had a chance to walk in the locker room after they, they beat UConn on the weekend and I'm telling you, I've never seen a stronger team, a more fit team, a more together team, a more passionate team. And Coach Monkin has really, really built a great tradition there for those, those players. They call it a brotherhood. I think they can be anyone in the world.

• 43:00Anthony Pompliano?

  I love it. People in the comments, of course, immediately all have opinions, but I tend to think that you, you got the right pick there. So where can we send people to, to find you on the internet? Or, or actually, hold on, I owe you an apology, by the way. I'll do this publicly, which is one of the first episodes we ever had, we were trying to figure out who, how we were gonna pick a winner. And I told everyone to go tweet at you. And then I looked and there was a couple hundred tweets and then I felt bad. So my bad on blowing up your mentions that day.

• 43:26Speaker 02

  No, no, you blow up my mentions anytime you want. I, I'm an avid user of Twitter, avid shareholder. I love using it. I loved, I loved that day when I got all those notifications and hopefully I answered all of them as well. So you can find me on Twitter at Anthony Noto. Go to sofi.com or our SoFi app and you can follow me and see what I'm investing in. And in real time, we'll show you my portfolio, the percentage ownership across my portfolio and then any activity as, as it happens in real time. But, you know, we really appreciate the support that you guys are giving us and helping people get their money right.

• 44:01Anthony Pompliano?

  Absolutely. Listen, thank you so much for doing this. We'll definitely do it again in the future. Everyone who's watching, make sure you go, you download SoFi and follow Anthony. I just put the link to his Twitter in, in the chat. So thanks so much, Anthony.

• 44:12Speaker 02

  Thank you. Take care.