Money 20/20

The EIP team is here in Las Vegas for the largest fintech conference in the world, Money 20/20. There are over 10,000 people gathered at the Venetian this week! The following are some of the key thoughts/comments/observations that have come from the first day.

Financial Inclusion

  • 45% of global SMEs without access to credit
  • $2.38 tr estimated credit gap globally for SMEs
  • Emerging markets – lack of funding is 2nd biggest business obstacle after electricity
  • Need to get regulators, banks and mobile operators to work together to make it work instead of each defending their own piece of the pie
  • India has 900m biometric IDS Connection at the switch. Easier for KYC
    • Universal ID with biometrics is huge, plus Smartphone with biometrics, regulation moving in the right direction
  • Today there are 2 billion people that have no access to financial services
    • They use cash every day for their financial needs
    • It is “expensive to be poor: and to deal with cash
  • Gates Foundation – one of 5 big bets, increasing financial inclusion as a way of reducing poverty
  • Every country/community has its own competitive advantage. Mpesa has done great innovation, but that was appropriate for Kenya it cannot be utilized in the same manner in Bangladesh (where bCash has been successful for example)

Vinod Khosla Keynote

  • What Khosla is most excited about
    • Nexus that has enabled innovation
    • Analytics, sophisticated machine learning – makes traditional credit risk scoring ancient (like FICO and BOA)
    • Blockchain – changing transaction cost of services
  • Regulation as a barrier
    • In this case, regulation generally favors the startup, its meant to increase innovation
    • Traditional banks/institutions are smart/astute but are trying to protect their large profits. Though they are testing and trying
  • What’s the Value that Khosla Ventures provides to portfolio companies
    • When dealing with innovation, an investor can help since they can run numbers
    • For most innovative early stage startups, there are no numbers to run. When investors try to do that, it leads to sub optimal outcomes
    • Startups need advice and help more than money
      • Who to recruit?
      • Strategic pathways?
      • Network to build partnership?
      • Credibility?
    • Most investors due to proclivity of investing, tend to hurt companies.
    • Board members should only be there if they have been entrepreneurs themselves. They need to have earned the right to be there
  • Lessons
    • Build great teams. There are never too many great people
    • Smart entrepreneurs have passion for a vision and obstinate about vision, but are flexible about their tactics
      • Smart entrepreneurs innovate on their strategies and tactics, they iterate on their tactics
      • Be obstinate about vision, flexible about tactics, keep iterating
    • Establish base camp. Find a place, build with a smaller vision, and then they expand it
  • EMV
    • EMV is a bastardization. When many large banks get together and agree on something, its usually a compromise
    • EMV experience for consumer is not a great one
    • Believes NFC will takeover within 5 years and make EMV irrelevant. Does the same thing and its better for merchants