What goes up should come down


Welcome to The Interchange! If you acquired this in your inbox, thanks for signing up and your vote of confidence. If you’re studying this as a submit on our web site, join right here so you’ll be able to obtain it immediately sooner or later. Every week, I’ll check out the most well liked fintech news of the earlier week. This will embrace every thing from funding rounds to traits to an evaluation of a specific area to scorching takes on a specific firm or phenomenon. There’s plenty of fintech news on the market and it’s my job to remain on high of it — and make sense of it — so you’ll be able to keep within the know. — Mary Ann

Like a lot of you, I’m positive, I used to be caught up final week watching the downfall of FTX unfold. It was a startling growth on the earth of crypto, and whereas I don’t cowl the area immediately, I couldn’t assist however be fascinated by the goings-on — and never in a great way.

For extra on that debacle, take a look at our crypto-focused Chain Reaction podcast right here and our basic protection right here.

I additionally couldn’t assist watching the practice wreck of Elon Musk taking up Twitter and Meta’s letting go of 11,000 individuals. But I digress.

Last week, I ended the e-newsletter saying I hoped this week would include extra uplifting news. Unfortunately, that was not the case.

Real property fintech Redfin introduced on November 9 that it was laying off 13% of its staff, or 862 individuals, in response to the continued slowing of the housing market. This adopted Opendoor’s layoff of 550 individuals, or 18% of its workforce, the week earlier than and Zillow’s cuts of 300 in late October. It additionally follows Redfin’s letting go of 470 workers in June.

Notably, Redfin additionally stated it’s shuttering RedfinNow, its iBuying division. To that finish, CEO Glenn Kelman wrote in an all-hands electronic mail: “One problem is that the share gains we could attribute to iBuying have become less certain as we rolled it out more broadly, especially now that our offers are so low…And the second problem is that iBuying is a staggering amount of money and risk for a now-uncertain benefit. We’ve tied up hundreds of millions of dollars in houses that you yourself wouldn’t want to own right now.”

Kelman went on to say that the corporate’s June layoff was in response to Redfin’s expectation that it might promote fewer homes in 2022. The newest layoff “assumes the downturn will last at least through 2023.”

Redfin’s, Zillow’s and Opendoor’s layoffs aren’t the one ones within the business. Digital mortgage lender Better.com performed yet one more layoff or two up to now couple of weeks. One supply instructed me 240 workers had been let go on November 4. And San Francisco Business Times reporter Alex Barreira tweeted on November 11 that dozens extra employees had been let go, sharing colourful particulars of the corporate’s WARN discover, during which Better.com stated it was not in a position to present notification earlier because the separations had been the results of a “dramatic deterioration” within the firm’s enterprise. When I reached out to the corporate in regards to the layoffs, a spokesperson wrote by way of electronic mail: “Better is focused on making prudent decisions that account for current market dynamics.”

Okay, again to Redfin. One factor that stood out most to me with regard to that firm’s newest spherical of layoffs was Kelman’s candor as he addressed workers. In his electronic mail, he stated: “To every departing employee who put your faith in Redfin, thank you. I’m sorry that we don’t have enough sales to keep paying you.”

Interestingly, Kelman seems to be placing his personal private bets into actual property markets outdoors the U.S. In September, he co-invested in a Seattle startup known as Far Homes that was based by Redfin alums and is targeted on “buying and selling real estate in foreign markets,” as reported by GeekWire.

CEOs as of late have been significantly remorseful as their firms both deteriorate or lay off employees. Besides Kelman, different examples this week embrace Meta CEO Mark Zuckerberg admitting he overestimated how lengthy the post-pandemic income surge would final, saying: “I got this wrong, and I take responsibility for that.”

Also final week, FTX CEO and founder Sam Bankman-Fried admitted he “fucked up” and “should have done better” proper earlier than FTX declared chapter and he stepped down from his position. This is after the crypto trade was valued at $32 BILLION earlier this yr. In Early August, Robinhood CEO Vlad Tenev took accountability for the corporate’s letting go of 23% of its employees, saying: “This is on me.”

Even Better.com CEO Vishal Garg admitted at one level that he had not been disciplined over the earlier 18 months, telling workers: “We made $250 million last year, and you know what, we probably pissed away $200 million.”

What does this inform us? CEOs are human, sure. Flawed people identical to the remainder of us. In some circumstances, choices equivalent to over-hiring had been made out of real (or silly) perception that the individuals employed can be wanted in years to return. In different circumstances, choices had been much less honorable and extra about furthering the manager’s personal agenda.

Unfortunately, both manner, hundreds of workers are paying the value.

Image Credits: Kuzma / Getty Images

Weekly News

Months after buying gamified finance cell app startup Long Game, Truist Financial Corporation has launched the Truist Foundry, an innovation division that it says “will function as a startup within the bank.” The objective might be to ship “game-changing projects” and serve the financial institution’s strains of enterprise. A spokesperson instructed me by way of electronic mail that particularly, the Truist Foundry will work on “building software solutions that drive value and market leadership for the bank.” In different phrases, it seems to be like one of many United States’ largest banks is getting much more severe about its digital efforts.

Instacart has tapped Dutch funds big Adyen to function “an additional payments processing partner.” As a part of the brand new partnership, the businesses stated in a press launch that Instacart will leverage Adyen performance, together with PINless debit enablement of transactions “to further optimize and improve authorization rates for an even more seamless customer experience.” Pymnts has extra here.

Another instance of fintech for good. Banking-as-a-service startup Synctera is partnering with Solvent, a fintech firm that’s constructing “affordable financial services” to help those that had been beforehand incarcerated. One side of the link-up is Synctera’s just lately introduced Smart Charge Card, which doesn’t require a credit score evaluate or an organization to fund its prospects’ balances. Overall, Synctera says it’s serving to provide Solvent with “a suite of personal finance and banking tools, products and services aimed to empower and build wealth among ex-cons, a group of Americans often underserved and overlooked.”

BNPL participant Affirm final week reported mixed financial results. While its fiscal first quarter income of $361.62 million beat analysts’ estimates, its internet lack of 86 cents per share was higher than anticipated. Its inventory tanked to a brand new 52-week low of $11.94 final week earlier than rebounding to $15.88 on Friday morning on the time of writing. The firm tried to place a constructive spin on the outcomes, sharing by way of electronic mail that lively shoppers grew 69% year-over-year and complete transactions elevated to 13.3 million, representing 97% progress year-over-year. It additionally claimed that delinquencies and internet charge-off charges remained at or under pre-pandemic ranges through the quarter.

From Sarah Perez: “Elon Musk last week detailed his vision for Twitter’s plan to enter the payments market during a live-streamed meeting with Twitter advertisers, hosted on Twitter Spaces. The new Twitter owner suggested that, in the future, users would be able to send money to others on the platform, extract their funds to authenticated bank accounts and, later, perhaps, be offered a high-yield money market account to encourage them to move their cash to Twitter.”

Also from Sarah Perez: “Google announced it’s expanding its user choice billing pilot, which allows Android app developers to use other payment systems besides Google’s own. The program will now become available to new markets, including the U.S., Brazil and South Africa, and Bumble will now join Spotify as one of the pilot testers. Google additionally announced Spotify will now begin rolling out its implementation of the program starting this week. The company first announced its intention to launch a third-party billing option back in March of this year, with Spotify as the initial tester.” More right here.

From Tage Kene-Okafor: Kuda, the London-based and Nigerian-operating startup taking over incumbents within the nation with a mobile-first and customized set of banking companies, is increasing to the U.Okay. by providing a remittance product to Nigerians within the diaspora. The digital financial institution has seen some success since launching in Nigeria in 2019. Kuda claims to have as much as 5 million customers, greater than thrice the quantity it had final August throughout its $55 million Series B spherical, cash it raised to enter into different African international locations like Ghana and Uganda this yr. Expansion into these international locations is but to materialize; as an alternative, Kuda has opted to launch within the U.Okay., a transfer the corporate says is a part of a serious world growth drive.

Elon Musk with dollar signs in his eyes, twitter logo pattern in the background

Image Credits: Bryce Durbin / Thealike

Funding and M&A

Thomson Reuters to amass tax automation firm SurePrep for $500M

Pet insurance coverage startups chase the market as pet possession booms amongst Gen Z and Millennials

Yassir pulls in $150M for its tremendous app, led by Bond

Quona Capital sinking $332M into startups centered on monetary inclusion

Former Tink workers launch Atlar, a cost automation startup

Travel app Hopper raises $96M from Capital One to double down on social commerce

Blnk, a fintech that gives instantaneous shopper credit score in Egypt, raises $32M in debt and fairness

A16z-backed Tellus desires to supply shoppers a significantly better financial savings fee. Here’s how.

And elsewhere:

Savvy Wealth completes $11 million capital raise:

Ritik Malhotra (CEO) and Muller Zhang (CTO) based Savvy after Malhotra got here right into a windfall of money after promoting his two startups (Streem was acquired by Box in 2014, and Elph was acquired by Brex in 2019). Long story brief, he was suggested to hunt out a monetary advisor, and after sampling a number of completely different choices, he was impressed to start out Savvy in 2021 — a nationwide registered funding advisor (RIA) constructed on what the corporate describes as “a digital first wealth management firm centered around modernizing human financial advice.”

Before I shut, only a reminder that we right here at Thealike love scoops. So in case you’ve got a news tip or inside details about a subject we have now lined (or haven’t but however ought to). I’d love to listen to from you. You can attain me by way of Signal or DMs at 408.204.3036. Or you’ll be able to drop us a observe at [email protected] If you favor to stay nameless, click on right here to contact us, which incorporates SecureDrop (directions right here) and numerous encrypted messaging apps.

That’s it from me for this week. Here’s to extra good news than unhealthy subsequent week! Until then, take excellent care…xoxo, Mary Ann


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