Fintech Is Today Where Social Media Was In 2006
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While Fintech is a millennial phenomenon today, history would suggest that older generations will catch up during the next decade. Today, 42% of 18 to 29-year-olds in the US use Venmo, PayPal’s peer-to-peer (P2P) payment application. Older generations have been slower to adopt, as only 6% of those in the 55 to 64 age group use Venmo today, as shown on the chart on the left below.
Interestingly, millennials have adopted Venmo at the same rate those in the 18 to 29 age group were embracing social media in 2006, as shown in the chart below on the right. Other age groups have followed the young onto social media during the last 12 years, with those aged 65+ nearly reaching in 2018 the adoption rate of the younger group in 2006.
For several reasons, older generations could catch up with younger fintech users at a faster rate than they did with social media. Network effects should be stronger for fintech, especially P2P payment applications, as young people actually want to include parents or grandparents in their Venmo circles so as to receive funds quickly, especially in a crunch. Such was not the case for teenagers on the social media networks where they were posting party pictures. Further accelerating Fintech adoption, mobile penetration is much higher today than during the early days of social media.
Zillow Announces a Hard Pivot to Zillow 2.0
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This week, Zillow named co-founder Rich Barton its new CEO as it pivots aggressively to online home sales. Having scaled the real estate marketing platform for the past eight years, former CEO Spencer Rascoff stepped down but will remain committed to the company as a non-executive board member.
Founded in 2006 by Barton and Rascoff, Zillow aimed to disrupt the US real estate market with online listings and auctions. While it is hugely popular with home buyers, realtors have eyed it warily at times and have accommodated only middling financial success. In 2018, Zillow generated revenue of $1.3 billion—less than half that of Twitter—despite addressing the multi-trillion-dollar US real estate market.
Until this point, Zillow has generated revenues and high margins with sponsored real estate listings but has been limited to marketing, a small slice of the US real estate market. Now committing to the purchase and sale of homes, it is aiming for a share of home transaction values which it estimates at approximately $1.8 trillion per year. Zillow believes that, in time, it will generate $20 billion of home sale-related revenue, albeit at 2-3% EBITDA margins, well below the 12% peak in 2017.
Zillow has entered a high-risk, high-reward gambit. Although the market is one of the last and largest to go digital, Zillow will be holding houses on its own balance sheet, a prospect that could make investors queasy. For now, however, the market appears to approve of this hard pivot, as the stock moved up approximately 20% after the announcement.
Musk Provides Comments on Bitcoin
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On ARK’s FYI Podcast, we had the pleasure of interviewing Elon Musk, who shared his insights on Tesla’s autonomous strategy and his vision for the future.
Naturally, we threw a curve ball question to Elon at the end of the interview, asking him about Bitcoin. In the past, Elon has been cryptic on crypto, so we were hoping for any insightful response from him.
Elon began by providing context on his previous interactions with crypto on Twitter: "Bitcoin and Ethereum scammers were so rampant on Twitter I decided to join in and I said at one point (jokingly), ‘Wanna buy some bitcoin?’ Then I got my account suspended because of some automatic rule blocking those who try to sell bitcoin.”
Musk went on to explain what he thought of bitcoin and other cryptocurrencies, providing an encouraging response to the community. He believes that cryptocurrencies will help consumers and businesses manage around currency controls, that “paper money is going away, and [that] crypto could be a far better way to transfer value than pieces of paper.”
As for underlying blockchain technology, he gave another interesting answer: "I think the Bitcoin structure is quite brilliant. It seems like there's some merit to Ethereum as well, and maybe some of the others.”