![]() ![]() However, unfortunately a lot of fintech companies are still stuck in the trough of disillusionment - i.e. Revolut started by giving access to cheap international transactions. CashApp started by abstracting away scarcity of P2P payments. Monzo started by eliminating complexity of everyday banking. This model almost perfectly applies to a fintech space which is one of the most exciting new industries of the last decade. Google is free to use because friction is elsewhere, Amazon can pressure prices down because customers are on Prime, etc.Īlex uses the Gartner hype curve to demonstrate the point. High expectations built on top of a great product market fit crumble, and unfortunately many startups fail.īut then someone somewhere discovers a new scarce resource, which then leads to a paradigm shift: Microsoft and distribution, Google and advertising, Amazon and customer loyalty, Uber and drivers, WeChat and identity. New business models replaced the old ones - e.g. However, often these startups get stuck in the old modes of business construction - having unleashed abundance, they struggle to make money. Just think about an array of transportation, food delivery, and closer to home - fintech companies that were funded at the same time along the same verticals. Naturally products that make turn scarce resource into abundant supply have an instantaneous product market fit - customer numbers swell and VCs pour money. All major tech companies of today have abstracted away a previously scarce resource - Microsoft and PCs, Google and indexed internet, Amazon and convenience, Uber and transportation, WeChat and P2P interactions - effectively replacing companies and business models that stood before them. ![]() The walls they built around their treasures disappear. New technologies remove that friction by giving a new access to the scarce resource and that’s how incumbents get disrupted. Incumbents guard the scarce resource as much as they can because that’s how they make money. ![]() I would really love your thoughts, so feel free to comment or DM me!Īlex writes that revenues are made at a point of friction where resources are scarce - money, time, access, convenience are exchanged for a premium. So I am putting together a Revolut thesis. I listened to a couple of interviews of founder Nik Storonsky, who I think needs a separate profile piece (strong personality he built Revolut on his own image, still owns a third of the company and has a skin in the game). On the weekend I stumbled upon some old medium posts from Alex Danco about technology and innovation ( here and here ) - he is excellent and I recommend you read the entire series. So I set out to unpack it because I think it is one of the most interesting companies right now. It is building on a scale and ambition that I haven’t seen others attempt - a combo of Chime, Robinhood, Marcus, and Step for retail customers, and Mercury, Brex, Stripe for businesses, all in 35 countries and counting. I have been thinking about Revolut for some time, but I couldn't really figure it out. Last week Ron Shevlin profiled me in his column and I got a ton of new subscribers - welcome and hope you’ll enjoy the ride! As a reminder, I write deep dives about fintech - there are so many incredible companies building amazing things and writing helps me to learn more about them. Hello everyone and thank you for reading.
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