20VC: a16z's Angela Strange on Why Every Company Will Be A Fintech Company, How Founders Should Think About Niches and Optimal Insertion Points, How To Transition To Become The System of Record & Are We Entering A Period of Bundling Or Unbundling for Fint

Angela Strange is a general partner at Andreessen Horowitz, one of the leading venture firms of the last decade with a portfolio including the likes of Facebook, Github, Slack, Airbnb, Asana and more. As for Angela, she largely focuses on investments in financial services and is currently a board member of Addi, SynapseFi, and Tally. Prior to a16z, Angela was a product manager at Google where she launched and grew Chrome for Android and Chrome for iOS into two of Google's most successful mobile products. In Today’s Episode You Will Learn: 1.) How Angela made her way into the world of venture and came to be one of the leading fintech VCs with Andreesen Horowitz? 2.) Why does Angela believe that every company is going to be a fintech company? What is driving this shift? How does removing the barriers to entry for more products change both product quality and cost? How does Angela think about the role of regulation here? 3.) How does Angela think about what makes the best insertion points? How big does the initial wedge into the market have to be? When do you need to be able to prove you can transition from the insertion to the wider market? How does Angela fundamentally assess market size today? 4.) How does one transition to being the system of record? Do you have to be the system of record from day 1? Which examples are most striking for Angela on becoming a system of record? What are the biggest challenges in making this transition? Which metric tells you if you have become it? 5.) Does Angela think we are in a period of bundling or unbundling? What are the leading indicators of each? How does Angela assess the Fintech M&A market today? Will we continue to see large consolidatory moves in the form of Credit Karma, Plaid etc etc? Items Mentioned In Today’s Show: Angela’s Fave Book: Investing: The Last Liberal Art As always you can follow Harry and The Twenty Minute VC on Twitter here! Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

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

• 0:00Harry Stebbings?

  This is the 20 Minute VC with me, Harry Stebbings, and wow, am I excited for the show today. I've been such a fan of this guest content for a long time. She made headlines with her piece, "Why Every Company Will Be a FinTech Company." It's one of my favourites, and so giving it away there. But I'm very, very excited to welcome Angela Strange, General Partner at Andreessen Horowitz, one of the leading venture firms of the last decade, with a portfolio including the likes of Facebook, GitHub, Slack, Airbnb, Asana, and more incredible companies. As for Angela, she largely focuses on investments in financial services and is currently a board member of Addy, Signapse, Fie, and Tally. And prior to Andreessen, Angela was a Product Manager at Google, where she launched and grew Chrome for Android and Chrome for iOS into two of Google's most successful mobile products. I'd also have to say a huge thank you to Nikhil Basu Trivedi,

• 0:44Harry Stebbings?

  Jason at Tally, Santiago at Addy, and Frank Chen at Andreessen for some fantastic question suggestions today, a real team effort. But before we move into the show today, I want to take a moment to mention HelloSign, a great example of a company that found success in building a product focused on user experience. HelloSign is an effortless e-signature solution used by millions to securely send and request legally valid digital signatures and agreements. They raised a total of $16 million in funding and recently got acquired by Dropbox for an impressive $230 million. Check out hellosign.com/20vc to join the thousands of companies and founders who value fast, secure, and simple e-signatures. And I do have to mention another incredible product-centric business, Digits.

• 1:27Harry Stebbings?

  Digits has spent the last two years building this incredibly powerful financial engine for businesses. Now, they're ready to show you what they can do with it. Back in April, they announced a real-time dashboard to help you manage your company's expenses for free. And recently, a little birdie told me they have some incredible announcements coming up. They've raised almost $33 million from Benchmark and GV, and the team behind Digits is just epic. Personally, I think it's one startup to watch this year, and the next. And last but by no means least, has anyone tried to send a business payment recently? Oh my god, it was easier to get into college. You have reviews, you have this never-ending back and forth between colleagues, which just slows the process down. It's a lot of work that continues to pile up as your business payments scale, and that's where Rudible steps in.

• 2:10Harry Stebbings?

  Rootful apart is not only its focus on digital business payments, but the time it saves on both the accounting and the operations sides. Did I mention that Rootful automatically updates your accounting records, making your finance team's lives so much easier? Request a 15 minute demo and start managing your B2B payments electronically at rootful.com/20vc for free. There's no transaction fees, no seat fees for one full month. Join Rootful in building the best platform for businesses to manage their workflows and send and receive money digitally at rootful.com/20vc. But that's quite enough from me. So now I'm very excited to hand over to Angela Strange, general partner at Andreessen Horowitz.

• 2:54Speaker 01

  You have now arrived at your destination.

• 2:58Harry Stebbings?

  Angela, it is such a joy to have you on the show today. I've heard so many great things from Alex on your team, from Jason at Tally, from Nikhil when he said on boards with you. So thank you so much for joining me today, Angela.

• 3:08Speaker 02

  I have been a longtime listener, so I'm very excited to be here. Thanks for having me.

• 3:12Harry Stebbings?

  Oh, that is so nice of you, Sarah. A little ego inflation always makes me smile. But I would love to start with a little bit on you. So tell me, how did you make your way into the world of venture first? But also kind of most recently come to be a GP at Andreessen.

• 3:23Speaker 02

  Yeah, so a circuitous path, which I think is fairly common for the venture world. I grew up in Ottawa, Canada, and I wanted to be an accountant growing up, followed by a tax lawyer. I used to balance the family checkbook, the physical one, back when those things actually existed. Luckily, some smart friends talked me into a broader way to study math. Went to university for mechanical engineering. Joke that I spent more time there managing and running the student pub on campus. And that is what gave me a pretty interesting lens into what it could be like to start and run a business. I obviously had no idea what I was doing. Right now, if you wanted to solve that problem, you'd go join a startup. Back then, from Kingston, Ontario, you think business school. And so that's what led me to join what is now Oliver Wyman,

• 4:08Speaker 02

  which gave me a broad view of larger companies, but also had a fantastic carrot in that they would pay for me to go to business school, which is what brought me out to California to go to Stanford. Side story. I took a couple of years off after GSB and tried to make the Canadian Olympic team for the marathon. Longer story, but the relevant part to venture capital is that my part-time job while I was running was working for a Stanford professor in making video case studies and interviews of entrepreneurs and how they scaled their companies. So, not in as good a way as 20-minute VC, but got a chance to meet a lot of really, really interesting, passionate people. And that is how I discovered venture. Worked at a venture firm for a couple of years and I loved it.

• 4:51Speaker 02

  And I know that there's many successful VCs who come from lots of different backgrounds and many who grew up through venture. I decided that I wanted to leave and try operating. I got some very good advice, which was if you are technical and you love design, go do product management. And that's where I got a chance to meet a CEO who was about to start his fifth company. And I left to go join him to run product and business development and discovered I loved product. And so we scaled that company. We got bought into Google. I got to be on the founding team that got to conceive and launch mobile Chrome. After several years there, I was ready for my next thing. And that was right when fintech was starting to become bigger and bigger. And I could see this path into financial services, which appealed to me,

• 5:36Speaker 02

  which is full circle how I came back to venture. And I have been at Andreessen Horowitz the last six years focused on financial services.

• 5:44Harry Stebbings?

  And I mean, I have to give you credit because I don't think you often understand how much the things that you say and she kind of resonate, especially in Europe. Because I think I've had about a hundred meetings where you're quoted and it's a fintech founder and they go, oh, but have you read Angela Strange's work? Where she says that every company is going to be a fintech company. But I do want to dig in on it because it's such a kind of seminal piece, as I said, that resonated so much. And so if we take that specific line, like every company is going to be a fintech company, why is that? And what's driving this change? Maybe from the infrastructure perspective?

• 6:16Speaker 02

  Yeah, the best analogy here is Amazon Web Services. And I remember my first time in venture, and this was more than 15 years ago. There were stories of entrepreneurs going to Fry's Electronics, which is a A big electronics store in Palo Alto to buy servers. They probably had to buy her a truck, got to hire some more DevOps engineers to configure them, write more software. You see, very expensive, very time consuming. And this is now completely anachronistic because any person can launch a startup from a coffee shop with a credit card. Well, maybe in coronavirus right now, outside a coffee shop with a credit board. And so if we think of Amazon Web Services as reducing the cost and complexity, it's just what it did.

• 6:58Speaker 02

  But the way bigger effect is that all of these would be entrepreneurs that might not have been able to raise millions of dollars to try these experiments. Now could get these companies off the ground. So think something like Airbnb, which now we take for granted. Back in the day is like, great, give me millions of dollars so I can create a platform so we can allow strangers to stay in our houses. Like, that sounds absurd. It's totally not absurd. But lots and lots of those different ideas could now get started for much faster and cheap. So bring that analogy over to financial services. The point one, what is going to be the Amazon Web Services? As you know, and many of our listeners know, the banking stack is very complex. So it's not just going to be one company.

• 7:42Speaker 02

  But imagine, just like Amazon Web Services did for compute and storage. New fintech infrastructure companies can do that for all the different layers of the banking stack. Core systems, compliance, picture modern APIs as a service. The second point is, say, what's the impact? Similarly, we are going to see and we are already seeing an explosion of financial services. Which is new neo-banks, new directly, new fintech companies. But then more to the point, all of these consumer companies, all of these business companies are adding financial services.

• 8:14Harry Stebbings?

  Totally agree with you. And that was exactly it, which is like, with the explosion that we've seen in terms of the financial service providers. My concern is twofold, and I don't know if actually either of them are right, so I'd love your advice on this. Like, with the explosion, does that not just mean a race to the bottom in terms of pricing? Because defensibility tends to be reduced, given accessibility increase.

• 8:34Speaker 02

  Decreasing barriers to entry is product quality, I'd make three points. The first being, there is definitely going to be a proliferation of more services, which is great in that it's going to give consumers more choice. Because right now, consumers often have poor product quality, but they don't have that many choice. Yes, I agree with your point that many new experiments tried means that there's going to be a lot of lower quality services. But like in many industries, consumers will now be able to vote with their feet and choose the better quality products. What that will do though, is it will make customer acquisition more difficult for new entrants, and we can talk more about that later. The second point I'd make is, you know, the oft used saying that if you're not paying for the product, you are the product.

• 9:14Speaker 02

  And we've seen that in consumer with a lot of advertising-based models, but now shifting to subscription. And what consumers are showing increasingly is that for a high-quality product, a personalized product, they're more than happy to pay a predictable average fee per month. And we're seeing that business model move into financial services, which speaks to your pricing question. And right now, there's lots of banking services that seem free, but then you get hit with overdraft fees, you get hit with other fees. And consumers would much rather have a very transparent, very predictable service. I guess I'd say the last point I'd say is that some things can seem like a commodity,

• 9:54Speaker 02

  but then you can wrap a better user experience, better developer tools around them, like think payment processing. Like, that was considered a commodity, and then along came Stripe. So I think there's probably a lot of things that can be improved on the infrastructure side.

• 10:07Harry Stebbings?

  Totally agree, in terms of those improvements on the infrastructure side. I guess the question that I then have is, in terms of, when we think about brand, especially connotated to that, it's like, do you think we'll have like Peloton having financial services? And I know that sounds ridiculous, but they're a brand, they're trusted, they're loved. Apple has Apple Cars now. Where does it stop, given it is technically kind of exponential in terms of where it could go?

• 10:29Speaker 02

  I love to provocatively say that every company will be a financial services company. And obviously, not every company is going to be a financial services company. But I think we can think very, very creatively about it, and it will be bigger than we think. And so let's start on the consumer side. Part of the challenge of launching a new financial services company is that people don't like to think about their finances. And so it's very hard to get customers. There's this this expression that we use a lot, which is the battle between the incumbent and the startup. Is whether the incumbent can get innovation before the startup gets distribution. And that applies to any industry, but it applies especially to financial services. Because getting customers is so damn difficult. Like, you can come up with the world's best lending algorithm.

• 11:12Speaker 02

  But a bank that already has their customers could afford to integrate that over five years, and they would probably win. And so the thinking now is what companies already have customers? And financial services can be used to better retain them, better engage them, and drive more revenue. And there's lots of good examples there. One specifically I've been thinking through lately is gaming, which is one of the highest engagement consumer segments around. So how could that work? There's a lot of talk these days around how is the next generation, or Gen Z, or even younger, going to experience financial services? It's probably not going to be, I get a cash allowance every week. I have coins that are accumulating in a physical piggy bank. And at some point, my parents walk me down to the physical branch store to open an account.

• 11:56Speaker 02

  So what's that next equivalent? We were joking with some of my partners that their kids keep asking for Robux on Roblox. So imagine, you're 12, you're addicted to this game. That becomes your first financial experience. Your allowance is paid in Robux. You get a spending card attached to it. You can imagine all sorts of gamified ways to help understand financial services based on something that you really want to earn and spend. I think we're going to start to see a lot of creative examples.

• 12:23Harry Stebbings?

  I totally agree. And I just remember trotting down to the bank from my first banking experience. How I wanted it, like Pokemon at the time, I think, for me. But I don't, in terms of that kind of first interaction being with something maybe that we wouldn't expect in that respect. It's interesting you mention gaming there, because you've also aligned fintech before to Google Maps. And I spoke to one of your founders, Sankin, at SignUp before the show. And he mentioned your chat on fintech being used as this engagement layer for social networks. How do you think about that also? And how does that tie in to how we think about the next generation of financial services?

• 12:57Speaker 02

  Yeah, I like the Google Maps analogy because again, we put no thought into how we're going to get somewhere and what is the best route. Right? You type in your destination, it tells you how to get there, how long it's going to take. Oh, by the way, you should take this route based on traffic and you could probably just add in a coffee shop. You take something in financial services and it is infinitely more complex. I know you've talked to Jason at Tally, who's been on the show, but let's take, I want to get out of credit card debt as an example. The US infamously has a trillion dollars of credit card debt. You talk to people with this debt, they often have three, four, five cards and are just paralyzed with anxiety, along with not knowing how to go about the process.

• 13:39Speaker 02

  You've got four cards, that's four times 12, 48 due dates per year. The cards all have different interest rates, so you pay off the card that has the lowest balance. You pay off the card with the highest interest rate. Oh, by the way, what was that card again? And so, yes, we should all better understand the financial ecosystem and know how to do this. But I'd make a strong argument that software can do a much, much better job. They should understand all of your cards, understand your finances, pay them off for you, make recommendations, and actually move money in terms of how you should better optimize your financial life. And that's just one example. There's many, many more. And as we get better at this, and as consumers start to trust new software companies more, I think our financial lives will become more and more automated and just optimized in a much better way.

• 14:24Harry Stebbings?

  Totally agree with you and I love that in terms of that alignment to Google Maps where now you almost kind of completely forget directions and it doesn't matter because you're just directed by this kind of central, like being the phone. I'm super interested about one thing that not concerns me, but I think about is like, when you think about that first interaction being with gaming or with being driven by software being, as you mentioned there and as Tally often solves, to what extent does regulation put a barrier up in terms of requiring KYC, requiring AML, requiring any of the traditional financial restrictions that make the process cumbersome? Like to what extent do we need a regulatory infrastructure change to allow for this seismic change on financial services for consumers?

• 15:04Speaker 02

  Yeah, and regulation is, when done right, is very Important, right? You don't want some new company coming in and fraudulently taking advantage of consumers. And so the regulation is in place, when done well, to protect consumers. But over the years, especially in the US, it has become exceedingly, exceedingly complex. Getting all of the regulatory systems in place has been a very large barrier to new innovation in this space. And so the new companies have to take regulation very, very seriously. The question is, how can we be compliant and still launch in a reasonably fast way? And this is where we've seen some of the smartest and best infrastructure-type entrepreneurs going after this space,

• 15:48Speaker 02

  such that they can translate thousands of pages of regulatory code into modern APIs that the new companies, both pure fintech or consumer or business companies can launch.

• 15:58Harry Stebbings?

  I think one way also that I've seen in terms of kind of running at speed and still complying with regulations is by choosing very specific kind of niches and market segments and going hard at them. And I always kind of think of like Carter as a great example of a fantastic insertion point with kind of cap table ownership. And obviously, you know the story and you know that kind of you'd laugh at like, oh, you're gonna do cap tables, really? It's like, is that a venture play? And now, obviously, you look at the expansion over time that they have with now their financial services teams. My question to you is, how do you think about what makes exciting versus unexciting insertion points?

• 16:31Speaker 02

  I think I'm at two stages. Like, the most exciting insertion points are insertion points where you can become the system of record. And that is very hard, because usually, even if it's a shitty system of record, one exists. It's been building up over the years. It's got tons of data. It's very hard to rip out. But if you can do that, very, very sticky. And then the second stage is, can you then become the centralized data sharing network? So let's come back to Karta. Cap table seems very unsexy, but most companies, it wasn't done very well. You have to get approvals. It's sitting in spreadsheets. And so Karta had the advantage of, one, recognizing this problem, but then also, they have the advantage of there's all of these new companies that are going to need cap table management.

• 17:13Speaker 02

  And so the opportunity to grow up through the ecosystem, prove the points a little more. More and now they're capturing businesses of all sizes. Stage one, becoming the system of record. Stage two, which they're starting to execute on now is how can you be the centralized data sharing network? And they've written about this, but the vision for Carta X is right now you can be public and very liquid and private and very illiquid. What would be the platform or the stock exchange, so to speak, of private and liquid? And who best execute on that? Then the company that has the system of record for all of the private shares across thousands of companies.

• 17:48Harry Stebbings?

  On the system of record, Blake, every startup today truly claims to be building a system of record or transitioning to becoming the system of record. It's a tough question to ask, but how do you fundamentally determine whether they actually are? Or whether it's kind of fundraising BS or a real stretch?

• 18:03Speaker 02

  I think it is like when you're starting off, you're obviously not a system of anything because you've barely built the product. But I think a lot of great entrepreneurs have a strong thesis around that. And so for instance, coming back to your question of market size, which I think is very related to the system of record. One of my favorite examples here is a company called Sentalink, which helps deal with synthetic fraud. So what is that? The founders were part of the risk and fraud team at a firm. And here's what they noticed one day. They're looking through the database and they see a fairly obscure name linked to 13 different social security numbers. Like, okay, this is going to be an easy thing to solve. Like which of these pairs has a credit profile?

• 18:47Speaker 02

  Turns out all 13 have a credit profile. I was like, well, that doesn't make sense. Turns out fraudsters can pick a nine-digit number seemingly at random. Go apply for a credit card, you get turned down. But then your profile is created in the credit bureaus. And so it looks like you exist. This was a big problem for a firm, which they solved cleverly. But this founding team was like, well, if it's a problem for a firm, it's a problem for lots of other fintechs. And oh, by the way, it's a problem for tons of banks out there that don't have the engineering resources to hire best-in-class risk and data science folks to tackle this problem. They spun out and started a company called Sentalink. And this gets back to your system of record, which is. Problem one, help everybody with synthetic fraud.

• 19:31Speaker 02

  But then what does that do? Every company starts to ping Centrelink with, is this a real user? And Centrelink gets to be the central repository of all of these different requests from all of these different companies. And what does that create all the time? Over time, a new type of credit bureau, specifically around this type of fraud.

• 19:50Harry Stebbings?

  Got you totally. And so that's when it transitioned into becoming a system of record.

• 19:54Speaker 02

  Becoming a system of record can be stage one of your business, which Carta very cleverly figured out. But it could also be a stage two of your business, which is solve a very valuable problem for a customer that they're willing to pay for. And over time, you either earn enough customer trust such that you can supplant their existing system of record. Or you gather enough data from a network of customers using your stage one of your service, such that you can become a new system of record. And both of those strategies work.

• 20:25Harry Stebbings?

  Got you totally in terms of those two strategies. Yeah, no, absolutely. It's something I think about a lot, just given how often we hear the declaration of wanting to be the system of record. I do want to touch on another thing. A system of record is like one mental framework that I think a lot about. Another one that I think a lot about, like all the time, actually, just in everything, not just in financial services, but especially in fintech is like unbundling versus bundling. And it's like, if we start on consumer, with many consumer like fintech plays it, wealth management, lending, savings, pots, you name it. I instantly honestly lose excitement because I just go, ah, it's an ancillary product to chime, or it's an ancillary product to revolute. They'll build it out over time. Not interesting because they've got distribution already and they can just integrate it into their existing stack. Is that fair? Am I being glib?

• 21:08Harry Stebbings?

  And how do you think about that bundling versus unbundling, especially with like the neo-banks holding the distribution?

• 21:14Speaker 02

  Yeah, I'm smiling because the unbundling graphic of Wells Fargo's homepage with all the startups eating it, pretty much every different set of products that they offer is the most used graphic in every fintech presentation, including some of ours. So what I would say is that, at least in the US, there's probably around a hundred banks that have more than 10 billion in assets. They're sitting on old core systems. Poor mobile experiences and some of these will get a lot better. But I still think that there's room for many, many new financial services plays here, even though there's been a proliferation of neo-banks in the last year, but I still think we're still getting started. That said, you can't just unbundle, pick a product and go.

• 21:56Speaker 02

  You've got to find a high consumer pain point wedge that is going to enable to get you customers cost effectively. And I think you can do this two ways and a couple of examples. One is start with something that banks don't do. And my favorite example is a company called Propel. And Propel's first product is they help the forty million Americans who are on food stamps to better manage their spend. And the experience that the founders and one of whom grew up on food stamps saw was you would get to the grocery store with your food stamps card and you'd have a basket of food in your cart. And then you'd flip over your card. You would call a one eight hundred number to figure out how much money you have to spend on food for your family. Terrible, terrible and stressful user experience.

• 22:40Speaker 02

  Now, there are millions of users that can go to Propel's app, see exactly how much money they have to spend. And oh, by the way, they should go to grocery store over here because they've got better deals, they can make their dollars go further. Not a product that banks offer, but a very natural place now that Propel has acquired millions of consumers to launch more and more financial services. I think a great example of unbundling by starting with something that banks don't do, but then rebundling, but thinking very much this is not the high net worth consumer. This is a consumer that might have a different set of financial services needs as I rebundle more things in. I think another example on the SMB side would be tax withholding. So start by solving a very specific problem for them and then you can rebundle more services in.

• 23:25Speaker 02

  So I think the unbundling and rebundling in banking still has a long road to go, but we won't see things rebundled in exactly the same way.

• 23:32Harry Stebbings?

  I totally agree in terms of being a net is gen of how it kind of comes together in the rebundling. On the business side, there may be finances as service models. And we spoke about this actually earlier when you said about people being willing to pay like monthly subscriptions and not just kind of the existing kind of transaction models that existed, but like finances. The service has risen so much over the last five years as well. You know, Massive Problems, Oracle, NetSuite, Intuits of the world, all have kind of their ancillary markets being attacked. You mentioned it in terms of Wells Fargo. In terms of like the rebundling on the business side, do you think we'll see this period of rebundling on the business side? Or do you think the unbundling will continue there also with your expansifiers, pleos, everyone attacking every element of their core business?

• 24:09Speaker 02

  I think the finance CFOs are like, oh, thank God, people are finally building software for my function. It's been very much focused on sales, marketing, other verticals over the years. I think of software for the finance suite as less of a unbundling, rebundling story and more of a new functionality or real time story. So what do I mean by that? If you think of what does the finance team do at the bottom of the pyramid, they acquire the data, they structure the data, they scrub the data. And there's just a ton, a ton of time spent there to at some point bubble it all up to enable business leaders to make decisions. And I think the limitations of so much of the software suites right now have come to the forefront,

• 24:51Speaker 02

  given what we've been going through with COVID, like hits in March, every company on the board on goes through very different cash flow planning scenarios, like what is my customer pipeline going to look like? Do I still want to hire those people? I'm a lending company and my defaults have gone through the roof. And what became very, very prevalent was the existing tools don't enable us to do that in a fast and dynamic way. So step one is often being a layer on top of the general ledger, some of the other services and hooking in and just providing a better viewpoint for business leaders and the finance suite. So step one is very much solving that problem. And it's things like, think of the questions that businesses ask that they would want to be able to answer instantaneously.

• 25:35Speaker 02

  And why the existing systems don't enable them to do that. And there's lots of companies playing there. I think the interesting question in the future will be, which you brought up, like, will there be a new general ledger? And either that starts to happen with new companies that are looking for something, they're adopting something for the first time and are open to new types of software that already incorporate that. Or it's potentially some of these layers on top of existing ledgers that earn the right to move further down the stack.

• 26:02Harry Stebbings?

  With the awareness of the incumbents of this, we've always seen huge amounts of kind of M and A in the space, more generally, but also with your plads and with your honeys and everything that's occurred over the last 12 months. In terms of like periods of consolidation versus non-consolidatory periods, how do you think about the period we're in? And how that will look like over the next couple of years?

• 26:21Speaker 02

  I think this period is fascinating. Like in some ways, we're seeing a lot of consolidation in the way that you would think, where incumbents are acquiring new players. Most recently, Visa with Plaid, Intuit with Credit Karma. Maybe a little less intuitively for people not in the space is it's going the other way around with new fintechs and insurtechs acquiring the incumbents. Hippo acquiring Spinnaker, Lending Club acquiring Radius Bank. So I think it's really interesting that we're seeing M and A go both ways for very different reasons. And then in other ways, it's doing the opposite of consolidating. All of these companies that were in financial services in a small way are very much expanding.

• 27:02Speaker 02

  Like ridiculously, like Amazon has done a billion dollars in S and B loans since last year. Or new companies that are completely entering the space. So it's this consolidation within traditional and new fintech and then dispersion across much, much broader industries.

• 27:16Harry Stebbings?

  Totally get you. Actually, I find it fascinating when you look, as you said, at your innovators acquiring the incumbents or kind of the incumbents of old. And so I think that's a fascinating lens to kind of see it through. I do want to move that into my favourite Angela, which is the quick fire round. So I say a short statement and then you hit me with your immediate thoughts. About 60 seconds or less per one. Are you ready to dive in?

• 27:34Speaker 02

  Let's do it.

• 27:35Harry Stebbings?

  Okay, so I'm always looking for more to read because, funnily, I don't actually like most of the suggestions I get. So help me, what is the favourite book and why?

• 27:42Speaker 02

  Many books. I'll pick two over the last year. So Red Notice, which I'd be surprised if it wasn't recommended before. True story of Bill Brader setting up one of the first private investment funds in Russia. Reads like a thriller. And then the second one I read recently, which is Investing the Last Liberal Art, which is just a great reminder of the power of being knowledgeable in several fields and the unique insights that can come from making parallels between them. And in venture, that's especially relevant insights.

• 28:08Harry Stebbings?

  Wow, that's never been suggested on the show before. I like the sound of that one a lot. What would you most like to change about the World Adventures Day?

• 28:14Speaker 02

  Our industry has evolved, I'd say, more in the last two years than in the decade before. And we still have a long way to go. And I think what started as a very homogeneous business is finally becoming more and more inclusive. We do have a long way to go, but what I'm starting to see is entrepreneurs are demanding more diversity of their investors. Investors are recognizing that entrepreneurs and investors from different backgrounds uncover and are attracted to a much broader set of opportunities. So I really hope that this trend just keeps accelerating and making the industry open to a much broader set of people, which will benefit everyone.

• 28:51Harry Stebbings?

  Now, this is one where most people do a politician's answer and fail to identify one person. So I'm sure to these days, who's the best board member you've sat on a board with and why? And it doesn't have to be best, it can be most memorable.

• 29:02Speaker 02

  Oh, I'm going to be a politician, but I'll try and do one better because there's so many, I can't just name one. But I'll say this, the best ones have these two things in common. One, they ask really good questions from a unique point of view. So that's either their world-class sales, the basket-building brands, or they prescribe to the Charlie Munger worldly wisdom and just look at the world in a very different way and bring up like very important things that you're not thinking about or don't want to be thinking about and should be. And the second point is they work really hard on behalf of the company and without necessarily being asked. Like, there's a lot of ways that investors can help and move the needle around the edges. And best investors have both these two characteristics.

• 29:41Harry Stebbings?

  Tell me, what do you believe that most around you disbelieve?

• 29:44Speaker 02

  I believe that there are large for-profit businesses that consumers will love that are still to be built, that are going to serve the bottom 25% of the economy.

• 29:53Harry Stebbings?

  Do you think that's contrarian?

• 29:55Speaker 02

  I do, because I think that there's still a strong belief that consumers that don't spend that much money, it's too hard to make the business models work. Like, there's a reason that banks don't serve the bottom 25% very well at all, it's just not cost-effective. But I think we're starting to see better products, creativity and customer acquisition, way lower cost of infrastructure and new business models, Propel being an amazing Example here and we're gonna see more and more of that.

• 30:20Harry Stebbings?

  This is always my problem with like, you know, wealth management providers where it's like, you know, average like deposits is like, you know, two hundred dollars and it's like the cats are like three hundred dollars. And you're like, okay, and then the churn is like fifty percent and you're like, it just doesn't make sense. There's always wealth management providers.

• 30:36Speaker 02

  Exactly.

• 30:36Harry Stebbings?

  Yeah, no, totally with you. Okay, tell me, more fun one. If you were a cocktail, what cocktail would you be and why, Angela?

• 30:42Speaker 02

  Harry, this is your hardest question. I would say I'm gonna be a big glass of Cabseve. And why? Because it is the best partner for problem solving at the end of the day.

• 30:52Harry Stebbings?

  I like that a lot. It's also the most revealing question that you get in the whole interview. Tell me. I know that you're a big believer in Latam. I am too, but why is Latam the next great hotspot for fintech innovation and opportunity?

• 31:04Speaker 02

  Sum it up. So I've got a few investments down there. I hope to make more. If you wanted one chart, you would look at credit card penetration per country. So let's take Colombia where I have a great team there. It's about fourteen percent. It's been stagnant for years. Smartphone penetration is now eighty percent, growing very, very quickly. How is everybody going to get banking services? It's not going to be waiting for physical branches. It's going to be delivered via their mobile phone. There's just such a strong need in many of the countries down there. That combined with great entrepreneurial talents, often that grew up in the country, had some experience at often financial services companies in the US or elsewhere. And are bringing a lot of that expertise back to Latam to launch new businesses.

• 31:45Harry Stebbings?

  Totally with you and I haven't actually seen that chart, so I would love to see that chart. And then final one, Angela, but what's the most recent publicly announced investment and why did you say yes and get so excited?

• 31:55Speaker 02

  So here's exciting for you, mortgage servicing. I have been looking for a company here for years. It's a space built on nineteen sixties technology, but it is very, very difficult for new players to enter. And I finally met this team, which is the unicorn combination of getting excited about thousands of pages of regulation. And building the code in a way that it'll adopt for many more thousands of pages of regulation. But then also having deep understanding of capital markets and importantly, the relationships to convince owners of mortgage servicing rights to try an unproven platform. And very excited about what's gonna happen in that space.

• 32:30Harry Stebbings?

  And listen, I absolutely love this space to myself, actually. So I wish that realm was still open. But Angela, listen, I so appreciate you joining me today. As I said, I've been such a fan of your content for a long time. So thank you so much for joining me.

• 32:40Speaker 02

  Thank you for having me.

• 32:43Harry Stebbings?

  I mean, I just so enjoyed that discussion. As I said before, if you haven't checked out Angela's incredible content, then that really is a must. It really is always some of my favourites and musteries. Also, if you'd like to see more from us behind the scenes, you can on Instagram at H Stabbings 1996 with two Bs. I always love to see you there. But before we leave you today, I want to take a moment to mention HelloSign, a great example of a company that found success in building a product focused on user experience. HelloSign is an effortless e-signature solution used by millions to securely send and request legally valid digital signatures and agreements. They raised a total of $16 million in funding and recently got acquired by Dropbox for an impressive $230 million.

• 33:21Harry Stebbings?

  Check out hellosign.com/20vc to join the thousands of companies and founders who value fast, secure and simple e-signatures. And I do have to mention another incredible product-centric business, Digits. Digits has spent the last two years building this incredibly powerful financial engine for businesses. Now they're ready to show you what they can do with it. Back in April, they announced a real-time dashboard to help you manage your company's expenses for free. And recently, a little birdie told me they have some incredible announcements coming up. They've raised almost $33 million from Benchmark and GV, and the team behind Digits is just epic. Personally, I think it's one startup to watch this year and the next. And last but by no means least, has anyone tried to send a business payment recently?

• 34:03Harry Stebbings?

  Oh my God, it was easier to get into college. You have reviews, you have this never-ending back and forth between colleagues, which just slows the process down. It's a lot of work that continues to pile up as your business payments scale, and that's where Rootable steps in. What sets Rootable apart is not only its focus on digital business payments, but the time it saves on both the accounting and the operations sides. Did I mention that Rootable automatically updates your accounting records, making your finance team's lives so much easier? Request a 15-minute demo and start managing your B2B payments electronically at rootable.com/20vc for free. There's no transaction fees, no seat fees for one full month.

• 34:41Harry Stebbings?

  Join Rootable in building the best platform for businesses to manage their workflows and send and receive money digitally at rootable.com/20vc. As always, I so appreciate all your support and I can't wait to bring you a fantastic Founders Friday this coming Friday.