Author here.
Every week was better than the last, and I didn't expect all the bank/third-party stuff to get SO bad. It felt manageable in October 2021, but for most of H1 2022, the period of our best growth, it got a lot worse.
The greedy part was waiting for a "perfect" time to raise.
I think this may be obvious, but no such thing exists (as you probably know).
I've been thinking about writing some sort of white paper on this, because a lot of what we did was relatively unknown and may benefit the larger financial community. "I guess I'm convinced it's possible" is a great first step! I'll take it!
We had four revenue streams (interchange, instant send, credit card loads, and float on deposits) but IMO to really make this work it needs to have a subscription fee as well. That's a whole OTHER controversial topic in payments, but outside the scope of this discussion thread :)
Hey there - I'm the author of the essay, happy to weigh in.
First, your initial reaction makes sense, and we spent many years (and as noted in the piece, millions of dollars) creating a structure that stayed within the bounds of every reg. That's why we didn't have many competitors.
To address your points:
1. The ownership of funds is mapped pro-rata to every user's contribution. If three people contribute $10, $10 and $20 dollars, and then the pool gets spent down to $10 total, the technical per-dollar ownership is $2.50, $2.50, $5. It was critical to have a down-to-the-cent mapping of individual ownership of every dollar in our system at all times. While funds availability is dictated by Federal Law (Reg CC), funds ownership was something we were allowed to establish in our own Terms of Service. It's still live and available to read here (Section 4): https://braid.co/legal/tos if you'd like. Funds ownership was not related to spending permissions, which could be decided by the pool admin (for example, maybe you want all users to be able to spend all available funds, that's up to you).
2. Every individual who signed up for Braid went through our KYC/CIP process. We had a very robust (and expensive) waterfall to verify every indiviual, and screened the entire customer base every time the OFAC list was updated. I was never on board with concept of "treat the group as a single entity" for exactly this reason. For consumers, a group is not a business or an entity, it is a group of individuals and should be treated as such. There are always false negatives and these systems aren't perfect, but if you're on the OFAC list you wouldn't be able to simply sign up for Braid and slosh money around. That's illegal.
3. We built from-scratch internal anti-money-laundering software that was designed to catch exactly the kind of money laundering that could only happen in a pooled account structure, in addition to all the standard money laundering tactics (circular transfers, flow-through, structuring, transaction frequency, and more)
4. From my perspective, a product like this makes sense within the existing regulatory environment IFF the startup (us) was willing to do the hard work to figure it out. We absolutely were and had the time and money to get it right. But yes, it was very complex and at times infuriating.
5. As noted in the piece, the bank off-boarded every fintech they had -- debit cards for college kids, small business banking apps, neobanks for different consumer groups. I know this because we had a phone chain/support group by the end of it. It wasn't about our business model, it was about getting out of fintech sponsorship entirely.
6. We've gone through detailed compliance reviews with multiple banks, and worked with a handful of well-known legal experts (at least that's how they billed). Especially by the end, we had a good sense of the regulatory constraints and what the regulators care about these days. I've met with the OCC personally a couple times and gotten their perspective as well. FINRA regulates investment products, not deposit accounts.
In sum, while there is no such thing "move fast, break things" in fintech, the idea that we shouldn't fight for what consumers want and do the hard regulatory work to make it happen is too depressing for me. I have to believe new products are possible, and still do.
Hey all -- Co-founder of Braid here. I'm a YC alum (S2010). Excited to share Braid w/everyone today.
We are building a group account with a debit card and permissions. It eliminates the need to track expenses after-the-fact (no more spreadsheets) and hopefully makes shared spending easier. The only product for this currently is a joint bank account, but that’s not ideal for a bunch of reasons. In the app, you can set permissions to specify who can spend the money and how, and use the unique account/routing numbers and virtual cards to pay for shared expenses.
Some usage we've seen so far from early users:
-Couples using it as a lightweight joint account
-Roommates using it as a house account
-Sharing money with family members as a way to help/support everyday expenses
-Divorced co-parents who share childcare expenses
-Social envelope budgeting
The product is totally free. U.S. only for now. Would love to hear your feedback.
Compound is a new P2P payments app currently in stealth. We are building a brand-new P2P payments network from scratch, and have designed the product to target pain points real people face when sharing money. We believe there should be more flexibility, personalization, and transparency in the financial products we all use each day.
Tech Stack: Our frontend is React Native for mobile, and we’re experimenting with React Native Web on the web side. Our backend is currently Java deployed using kubernetes, but we have a polyglot approach to problem solving, and we will likely end up with a backend that reflects that.
Compound is a new P2P payments app currently in stealth. We are building a brand-new P2P payments network from scratch, and have designed the product to target pain points real people face when sharing money. We believe there should be more flexibility, personalization, and transparency in the financial products we all use each day.
Tech Stack: Our frontend is React Native for mobile, and we’re experimenting with React Native Web on the web side. Our backend is currently Java deployed using kubernetes, but we have a polyglot approach to problem solving, and we will likely end up with a backend that reflects that.
To present an analogy about Susan Fowler with "if a journalist with no experience..." is to present an analogy that is factually incorrect regarding her experience.
If a person created an open-source project on nights and weekends that received industry-wide acclaim, regardless of day job, he/she would most certainly be getting job offers.
She is currently running a magazine at Stripe (as in, she is the EIC). She was hired for this job in January, before publishing her blog post. She is represented by InkWell, a well-respected, elite, non-technical literary agency. She published a book through O'Reilly, arguably the number one firm for tech-related publications, in November of 2016. And she is the founder of a monthly book club (seemingly, for fun).
Amex flooded their signed-in experience with awful pop-ups: upgrade your card! get a personal loan! It's distracting when, as a user, I'm simply trying to see how much I need to pay.
IANAL, but I do not believe you can file an 83(b) election for options. You can only file an 83(b) for NSOs or restricted stock. I am not sure if, post-exercise, the options become "owned options" or "restricted stock" and how the IRS views the difference between the two.
Generally as a startup, many applicants come through current employees, friends, investors, etc. This generally encourages the cycle of the same people getting the same jobs. Don't rely on your website to widen the diversity of your funnel, even if your jobs list is current...most startups I know are not great about keeping this current anyway.
A few (relatively easy) ideas:
1. Join a few "______ in tech" email lists, and if you don't feel comfortable joining the list or it is not allowed, at least email the moderator and ask if they take job postings.
2. Send someone from your company to attend to a "____ in tech" meetup. There are a lot and they happen often. Ask people at these meetups where they get their information, what email lists they are on, etc. Then, act.
3. Interns. People have mixed thoughts on interns, fine, but the "lack of experience" trope happens because it's really hard to get that first chance. Take a chance on someone in a lower-risk way.
4. Host some kind of public-facing community event one or two times per year. Advertise it on your website and your twitter. Generally as a woman I am more comfortable attending something like this rather than cold-emailing a company for a position that I am not even sure they are hiring for. See: "Code as Craft" at Etsy. Tech-centric topic, inclusive and public-facing way to see the office, meet employees etc.
While convertible notes and SAFE documents have made seed stage financing much more streamlined and straightforward, employee equity is still a hot mess in terms of the legal, financial and tax difficulties that only present themselves after it's too late.
The biggest issue IMO are those scenarios when private, completely illiquid stock gets taxed as ordinary income. There should be a way to pay the tax with the same shares, though counting on the IRS becoming "flexible" is probably a longshot.
While I agree with the other points mentioned, that is one the largest and most painful when it presents itself. I do think there's also an opportunity for companies to be creative about exercising mechanics as well.
My point is that these business are a lot larger than people realize, and that the phase out is going to be a lot slower than people think because it's primarily enterprise recurring contracts that are powering their sales.
That said, I use the printer at my office maybe 1x/week, so I agree that it's not long-term sustainable. This is why consolidation is a good bet for short-term viability and the deal is a good one for Staples for right now.
These businesses are most certainly NOT "on their way out". Office supplies is one of the largest categories in ecommerce. Staples and Office Depot are each doing billions in annual sales online. The idea that Amazon has already won in this category is simply not true (yet, but still).
Staples did ~$10b in online sales last year and Office Depot did ~$6b. Online only.
Staples sells more online in pure dollars than Apple, Walmart or Dell.
I saw Mikey Dickerson (in the video) speak to a group of ~200 people last summer about the work that he and his team did on healthcare.gov. He was at Google for nearly 8 years and left to run the recovery team for healthcare.gov. Their team is the real deal -- they saved the site in just a few months and now over 6 million people have signed up. Read the Time Magazine story for the full account.
He does not seem like the type of guy that willingly puts up with government b.s. He gets it, and after seeing him speak I believe in him.
When their talk was finished they got a ~5 minute standing ovation and even a few stray tears.
I know it's cheesy but the government simply needs to catch up and I think they are finally ready to try.
I applaud the effort and hope to help out in some way.
As someone who just went through an acquisition I hope that people will begin to write more about the acquisition process -- there's so much out there about raising financing, especially a seed round, and very little about M&A.
What I enjoy most about Greg's writing is the honesty. Here is someone who appreciates that software is a relatively young industry and many best practices are still a work-in-progress.
I am a female born in 1983 and have always been deeply interested in computers, but have nonetheless felt inexplicably out of place for it. I was in advanced math classes my entire life and placed out of calculus in college. I took a summer programming class at a different university in 2000 and fell in love with programming. But when I got back to school, I took another CS class that was exactly as described in this article. I can't quite articulate the feelings of isolation and frustration I felt in that class, but they were strong enough to drive me away from CS and engineering for a long time.
Amanda here, Grand St. co-founder. Jason's story is factually incorrect on a few things. To be clear: no threats were ever made or implied in deal meetings. Etsy is one of the most genuine and good-natured companies I have ever encountered.