It’s Time to Build… in Public

In 2020, I set off to build a new company. At the time, I never would have imagined that we’d end up building one during the largest pandemic in a century.

Lao Tzu said that a journey of a thousand miles begins with a single step, and I count myself fortunate to have made the best first step possible in finding a truly world-class co-founder. Alejandro is one of those rare talents that makes Silicon Valley special, a true builder and an inspiration. Together we set off on a journey to turn an audacious mission and vision into a reality.

We have been very fortunate. Despite building this company during the COVID-19 pandemic, we have been joined by an incredibly talented team. Each member of our founding team has taken a leap of faith that together we’ll be able to build something out of nothing. So many investors have also been willing to take that leap with us and fund our early efforts.

Today is the day. Not an ending, but a beginning. We’re coming out of stealth, and we’re ready to start building in public. It’s hard to explain how exciting and terrifying this moment is.

Introducing Daffy

Daffy is a community and platform built around people willing to make a simple commitment to regularly put money aside for those less fortunate than themselves. At its heart beats a fintech core: a new modern donor-advised fund built from the ground up for this purpose.

Daffy is the Donor Advised Fund for You™.

Unlike most financial products, giving is inherently social, and we see immense opportunity to bring people together around the causes and organizations that they support.

You can read more about Daffy here, learn more about our team here, and get a quick walkthrough of the product here.

Who Taught You To Be Good?

Alejandro & I are big believers in talking to customers, and so we spent a lot of time talking to people about how they think about giving to charity. Through the course of that research, we came to two important insights:

  1. Moral Compass. Almost everyone has a person in their life — a parent, a relative, a teacher, a priest — who instilled in them a strong sense of what it means to be a good person. Some people even say that they can still hear that person’s voice when they decide to do the right thing. Invariably, that person taught them the importance of giving to those less fortunate than themselves.
  2. Guilt. Almost everyone has an idea of what they believe they should be giving to charity every year. Interestingly, there is very little agreement on what that amount is, but for almost every person we spoke to, there is a number. Unfortunately, very few people live up to that ideal. Our lives are too busy, and giving often falls off people’s immediate to-do lists. The can gets kicked down the road. As a result, people are not able to be the type of person they want to be. The person that their moral compass would be proud of.

Technology Can Help

We believe that technology has a role to play in solving this problem. Why can’t we use the same techniques that we have used to help people shop and save to help people give?

By automating giving, we believe that technology can help people be more generous, more often. We can help people be the good people that they want to be.

In some ways, it is not surprising that a company born during the pandemic would focus its efforts on one of the biggest problems caused by the pandemic. There are millions of people struggling, and we believe that there are millions of people who want to do something to help. We believe that there are millions of people who want to take action, who want to support the causes and organizations that will help build a better world.

We believe that there are millions of people who are willing to make a commitment to give.

Come join us.

Fintech 2025: The Next Wave

When I first joined Greylock at the end of 2011, Fintech wasn’t even a word that was commonly used in the venture capital community. Less than a decade later, however, Fintech has become almost ubiquitous. The category has not only proven that it can generate real revenues and scale, but also that it can create a large number of multi-billion dollar companies.

Unfortunately, when you are looking at seed stage opportunities, you have to think clearly about markets where there is the potential to build new multi-billion dollar product & companies.

When the bubble burst in 2000-2, there was a lot of thought put into what had worked and what hadn’t worked with Web 1.0, and those insights formed the basis of the next wave of software companies (Web 2.0 / Social). Some of those same issues have plagued Fintech 1.0, and may instruct how to think about Fintech 2.0.

As 2019 drew to a close, I took the opportunity to spend some time thinking about exciting new opportunities in consumer fintech. These continue to be areas that I’m investing against both as an angel and as a founder.

Beyond Millennials

For the last decade, a vast majority of consumer fintech startups have focused on millennial customers. This really isn’t surprising because the traditional financial services industry is so heavily invested in their older customers. By the numbers, households tend to build income and assets as they age, and the incumbents have spent decades servicing this customer base.

Young people, on the other hand, were the perfect market for new, unproven products and services. Young people are less tied to existing brands and services, more likely to be technophilic, and have simpler financial needs.

As we enter the next decade, however, consumer acceptance of new financial products & services will continue to grow, leaving new demographics open to new products & services. This would have been true regardless, but it seems clear that the COVID-19 pandemic has accelerated this opportunity.

These customer segments will be more competitive, but also potentially more valuable, as they collectively are much larger than the millennial market.

Single Player to Multiplayer

Traditional financial products & services are single player, which makes sense since people tend to expect a high degree of privacy around their finances, and products built for individuals are much simpler to design, market, and activate.

However, many new fintech services are built around a subscription-model, where three numbers tend to dominate: acquisition costs, average revenue per user, and churn rate. The last, of course, is a heavy determinate of lifetime value.

Multiplayer products & services have a number of advantages. Multiplayer products are inherently viral, pulling more people into the system and lowering average acquisition costs. More importantly, multiplayer products are fundamentally stickier, leading to lower churn rates and higher lifetime values.

One of the big shifts from Web 1.0 to Web 2.0 was designing products & services to be intrinsically multiplayer. This was one of the fundamental differences between the design of LinkedIn (Web 2.0) and Monster.com (Web 1.0).

Novel Products & Services

When web development began in earnest in the 1990s, most initial product concepts were just moving existing products & services online. Mail order catalogs already existed, but we put them online. Yellow pages already existed, but we put them online. There were a few novel products (eBay), but for the most part, we collectively just moved a lot of products into the cloud, with all the advantages that global reach & distribution brought.

Fintech 1.0 has also mostly replicated existing products, put them on modern technology platforms, and made them broadly available to customers (like young adults) who have been mostly underserved.

However, one of the great opportunities in Fintech long-term is leveraging technology platforms and distribution to create products & services that were not viable, or even possible, in the physical world. With Web 2.0, we saw a large number of products & services that just couldn’t have existed offline.

2020 Examples

Not surprisingly, ambitious founders have already started building products & services along these new dimensions.

Carefull is a novel service that connects Millennial & Gen X adults with the finances of their aging parents. Once connected, it provides peace of mind for customers that if anything unexpected happens with their parents’ or grandparents’ finances, they will be alerted.

PaceIt, led by Prof. Shlomo Benartzi, is working to tackle the problem of retirement income directly by building a service designed with retirees (or near retirees) in mind. This is one of the most challenging and potentially valuable financial services, and PaceIt believes they can deliver a highly differentiated service based on sound insights from behavioral economics.

Braid is a novel debit card designed from the ground-up for households and small groups (e.g. roommates), providing a standard way to transparently share expenses between groups of people.

Pillar Life is a digital platform that helps people protect and care for their aging loved ones. Pillar replaces outdated & messy physical files with a secure online vault where you can easily store, organize, and share all your family’s most important information like financial accounts, legal documents, medical records, and more.

2020 may have been a terrible year on most dimensions, but as an angel investor for over nine years, it turned out to be my most active one yet. Hopefully, this bodes well for the future of Fintech, and for the financial products & services we’ll all be able to enjoy in the coming years.