🧠 The Rise and Fall of Fast.co

Plus; Monzo's raise and US market entry chances, what Synctera's raise means for BaaS and the Fed's role in Capital One x Discover

Welcome to Fintech Brainfood, the weekly deep dive into Fintech news, events, and analysis. Join the 38,772 others by clicking below. 

Hey Fintech Nerds 👋

In 20 years in financial services, I have never seen banks so open and ready to partner with Fintech companies.

The dynamic is interesting because early movers like Bancorp, Pathward, and Coastal now have more demand than supply. Meanwhile, those who are direct-to-consumer have more competition from Fintech companies hitting their stride.

BaaS isn’t dead. It’s changing shape. Synctera delivered an $18.6m Series A extension this week. (More in Things to Know)

Fintech is here to stay. Nubank’s $1bn profit, Cashapp, and Robinhood's offering savings should all be warnings for banks. Fintech is coming for your profit pools. The Monzo funding and Nubank results this week are a warning. (More in Things to Know)

Of course, Fintech isn’t perfect. 2021 was weird. Perhaps nothing more so than Fast.co.

What’s that you ask?

Sit back. Grab a coffee. Take a read.

Here's this week's Brainfood in summary

📣 Rant: The Rise and Fall of Fast.com

💸 4 Fintech Companies:

  1. Chipp.ai - Shopify for GenAI

  2. Condor - Vertical SaaS for biotech and clinical trial R&D 

  3. Under.io - Typeform for Financial Services

  4. Hyperplane - A Vertical AI (LLM) for financial services

👀 Things to Know:

Weekly Rant 📣

The Rise and Fall of Fast.co

How can a startup founded in 2019, which raised over $100m in 2021, be out of business just 16 months later? 

Fast.com is a cautionary tale for any founder who fails to focus on the basics. The company won attention, VC funding, and a sprint to a $1bn valuation but lost track of the fundamentals.

The company made $US600,000 in revenue in 2021 despite burning $10m per month with a staff of over 400 people.

The problem wasn't the idea or even the marketing.

Faster 1-click checkout is a phenomenal product when executed correctly. Founder-led marketing is the future of B2B marketing. 

The problem was focussing on the wrong things.

Accusations of a founder more obsessed with image than execution led to a company that arrived, burned brightly, and left just as quickly.

Fintech is an F1 race, not a drag race. It's not just about going fast. 

Fintech is about the 1,000s of tiny details that enable you to go faster despite enormous complexity. Like F1, it's a battle for marginal improvements that add up to a victory. There's scope to improve page load, payment provider performance, bank partner performance, and more. 

We can learn a ton from both the rise and the fall of Fast.com

1. The Irresistible Rise

a) The Fast Idea: The ultimate one-click checkout.

Founder Domm Holland recounted to journalists that he got the idea for Fast.com when his mum couldn't remember her password to buy something online. 

The idea was that Fast would follow you around online and allow you to checkout with passwordless authentication. In theory, PayPal's branded checkout button could offer a similar capability, but there had been little to no R&D.

💡 Product: This is the correct problem to solve and almost the correct approach. Even tiny gains in checkout conversion can deliver massive revenue increases for merchants.

b) The Fast Numbers: $124m raised, 400 staff.

The company was founded in March 2019, and 12 months later, it received a $20m funding round led by payments giant Stripe. A $102m funding round followed in January of 2021. The company raised over $124m within 2 years. The service quickly got to 1m users in a time where user growth was everything.

💡 Timing: The timing for this product was perfect. During the pandemic, e-commerce and Fintech reached all-time highs when everything is online. Across the industry, companies added 10 years of growth in 10 weeks. Enormous valuations followed, and we witnessed the ultimate Fintech bubble. 

c) The Fast Founder: "Domm" Holland

Dominic "Domm" Holland positioned himself as the high-energy frontman of Fast.com. He had a gift for marketing, regularly pulling stunts like skydiving or pulling donuts in a NASCAR truck as the "World's fastest CEO." Merchandise like hoodies would be sent out to willing fans and Fastronauts. His social channels gave a steady stream of founder and entrepreneur advice, and social media lapped it up.

💡 Marketing: Fast is a masterclass using social, PR, and FOMO to play the Silicon Valley funding game. The future of B2B marketing will resemble B2C, where "influencers" and the ability to build a personal brand are the most critical tool to grow market awareness. 

2. Cracks that led to The Fall

The mood changed in 2022 when reports emerged alleging limited traction and a chaotic management culture at Fast.

a) A lack of traction. 

Delivering $600,000 of annualized revenue is astonishingly poor performance for a $1bn company valuation. 

That's 1,666x revenue.

For context, I regularly see companies entering Series A with ~$3m annual revenue. At today's prices, they could raise $10m somewhere between $50m and $70m, depending on their growth rate and sector. (AI being the obvious exception).

At its height, Fast.com's code was live on more than 1,000 websites, but the checkout button was visible at a fraction of those sampled. Despite having 1m customers, their model relied on enterprise pricing and that flywheel just hadn’t worked.

If you have managed to sell to a company, the least you can do is work hard to get them to use the product.

b) Chaotic management style.

Former employees complain of a founder who would be out skydiving during all-hands calls. This summary overs a company guilty of overraising and overhiring and building a confusing product that led to a high level of churn.

Former contractors in Nigeria also complained of being underpaid by local standards and, later, removed from internal systems without any formal communication. 

The startup was liquidated in 2018.

What can we learn?

3. Creating faster checkouts increases conversion

a) Conversion is the value proposition to disrupt payments. Merchants are obsessed with conversion for a good reason. The drop-off between a customer landing on a website and buying a product is enormous. The quoted industry "conversion rate" is around 2.5%. On average, 70% of users abandon it before completing a purchase. Moving the dial on this number is incredibly valuable. 

Since Fast.com fell away, Shop Pay and Apple Pay have grown dramatically as branded checkouts precisely because they remove the 1,000s of tiny frictions that would cause customers to abandon checkout.

Shop Pay is a "SHOP" branded button that claims to boost conversion by at least 10% compared to all other payment options. Shop Pay, in particular, recognizes a repeat user as soon as they land on a page and offers to complete the checkout with a single click with their last card details and address. 

That makes conversion 4x faster. 

This image from Kaz, who runs SHOP pay, sums it up beautifully. Making the checkout page load 95% faster is a great statistic, but under the hood, every bit of script that runs on the page, every 3rd party provider, and every possible failure point needs to be optimized.

b) Going faster, like in an F1 car, is a process of fine-tuning. Payments are an iceberg. People think the hard part is the data entry (entering your card number, expiry address, etc), but the cause of most friction is under the surface. There could be countless banks, payment providers, cloud hosting providers, and errors that can break the process. A frictionless payment has to run a gauntlet of hidden gotcha's that can slow down a payment that each adds 0.1s to page load or checkout. 

Payment optimization is counterintuitive. 

Take fraud as one example (because I happen to know it reasonably well). Fraud rules sometimes catch legitimate customers, frustrating them enough to rage-quit checkout. Therefore, removing any fraud checks is the fastest way to increase conversion. 

Except that doesn't work.

If you accept any payments that later become a fraud, you end up in Visa or Mastercard jail (AKA, the chargeback program). That means you can't accept any payments. Even if you're under the threshold, you just have a high fraud rate; other banks will take notice and not let the money leave a customer account to go to your e-commerce business. 

Most big e-commerce companies might also have multiple payment providers (like Adyen, Stripe, or Chase). Each has a standard set of fraud rules, card tokenization products, and Geo's they're stronger, etc. A company's default setup might not best fit you and your customer risk profile.

The balancing act is about removing friction for the good users, adding it for the bad ones, and working across the supplier stack to constantly strike a balance. An increase in fraud performance can yield multiple percentage-point increases in payment conversion if you get it right.

That's why solutions like SHOP and Apple Pay that abstract the complexity for merchants do so well.

c) Conversion isn't about a single transaction. The new branded buttons win the most by following an order after the payment. This is convenient for the user with delivery notifications, but it's incredible for future user experience. The service almost feels concierge-like, making clicking that buttonless more painful than dealing with emails or chasing delivery.

Now, if the user lands on another website they've never been to before, the psychological barrier of checkout is reduced. Hey, one click, and I'm done. Nice. 

4. CEO/Founder-led marketing is effective

a) The founder and the company are inextricably linked. The future of B2B marketing is CEOs becoming niche influencers or working with them. 

Domm did well by building a consistent drumbeat of excitement around the company concept. He would regularly share founder-level insights about company building. Not every CEO or founder can be this consistent, but getting closer to it has a huge payoff. I've focussed on it in the day job, and the results are incredible.

TradFi can do it, too. Jamie Dimon is a master of being a CEO who's automatically linked with Chase. His media appearances and annual shareholder letters are old-school influencer marketing in effect. Being better at social in B2B has no downside and massive upside.

In a way, what you're selling is the founder's credibility. Domm was selling a "founder CEO" who had raised much money. But it wasn't delivering revenue. CEO as a brand only works if the business they're in front of delivers.

b) Traditional marketing approaches suit larger companies and don't stand out. SEO, webinars, and conferences still work, but nothing competes with an operator with industry presence and consistency for pure brand awareness. With a large budget, search engine optimization, ad spending, and conference sponsorship are all easier. Smaller companies must generate word-of-mouth among their key buying audience before competing on bigger items. 

The traditional approaches also benefit from a well-known CxO or founder. If you have to promote a webinar or earned conference talk, having a "celebrity" people want to come and see is a great way to drive attention that can't easily be bought.

c) Avoid superficial stunts and focus on being authentic and value add. The stunts like skydiving drove attention and made getting press much easier, but that's harder to replicate and possibly a distraction. The content created has to add value to the audience and give them something they can use in their day job. That builds credibility and trust.

Again, consider Jamie Dimon. I don't agree with all of his takes, but he stands for something compared to his peers. If you listen to him in this interview (around the 14-minute mark), he volunteers points about US policy on planning and government debt which none of his peers touch. By contrast, Citi, Blackstone, and HSBC stick much closer to market events, economics, and client challenges. 

That's not wrong, it's just not brand-building.

Value add isn't recounting what happened; it's suggesting what customers and the market can and should do about it.

5. There's no substitute for traction.

  • The future of e-commerce checkout is faster and more automated.

  • Founder-led marketing is the future of B2B.

  • Traction will always trump hype. 

Fast.com rose quickly because it nailed B2B marketing and appeared to solve a meaningful problem.

1-Click checkout doesn't sound like a hard problem or something novel until you scratch under the surface and realize just how much effort it takes to make it feel effortless. Winning at Fintech is about the thousands of fascinating contradictions and tiny details that add to greatness. 

Conversion is meaningful. Companies like Shopify and Apple are solving the same problem more successfully by focusing on execution and details. They're doing so well that PayPal is now the incumbent, losing market share and market cap because it is getting out-innovated.

And that's what I love about this industry.

Yesterday's giant disruptor is tomorrow's disrupted incumbent. The world is always changing, and there's always a prize for being better at the details.

Winning means getting close to the details to build a better product.

Share that operator-level insight to build a better community around your brand.

Grow and build sustainable businesses that last and change the industry.


4 Fintech Companies 💸

1. Chipp.ai - Shopify for GenAI

Chip helps educators, creators, legal assistants, and personal trainers monetize their Generative AI prompts and GPTs. Users can create assistants or products trained with proprietary files or knowledge and build a branded UI. The product or agent can also be embedded in apps like Notion, WordPress, or Substack.

🧠 Every freelancer can scale and fractionalize themselves as a product with AI. API calls have a cost. Chipp turns every good prompter into a business that can cover its costs and monetize. Popular GPTs can help with everything from coaching students to managing basic legal tasks. Just as Shopify helped everyone sell online, could Chipp do that to help everyone productize themselves?

2. Condor - Vertical SaaS for biotech and clinical trial R&D 

Condor combines multiple suppliers, spreadsheets, invoices, and accounting forms into a single platform for biotech and pharma companies. Users can track clinical accruals and manage trials, budgets, and accounting before providing a complete audit trail to auditors.

🧠 Most biotech research and development is outsourced to build on specialist knowledge, scale, or speed creating complexity. A pharma company might work with trial hospitals, labs, and data science teams. That is heavily regulated activity involving invoices, accounting, and spreadsheets. This is the kind of scaled niche for which Vertical SaaS was built. The founder is ex Big 4 accounting and the team seems to have traction. This might be more of a strategic bet and cashflow business than venture.

3. Under.io - Typeform for Financial Services

Under digitizes onboarding or invoicing journeys to clean user experiences. It has an application form builder and e-signature capture, and it can OCR documents like PDFs and fill-in back-end systems. The service can also streamline processes such as underwriting with integrations to KYB services like Middesk and rating agencies like Experian.

🧠 The design system for companies not digitally mature enough OR too time-poor to build a design system? The heart of small business lending in communities often comes from smaller banks with smaller IT budgets. Even the larger banks' SMB offerings are often quite poor compared to the best-in-class UX you'd find at Mercury or Ramp. Things like this do quite well if they can figure out distribution.

4. Hyperplane - A Vertical AI (LLM) for financial services

Hyperplane is a "specialist LLM" trained in customer data to help banks and their customers better understand financial behavior. This enables better audience segmentation on incomes, churn, conversion, or credit risks. The company already has traction with several large banks in Brazil.

🧠 LLMs aren't suited to the use cases they advertise. The website is marketing an LLM, but the API docs read like they're segmenting users with more traditional ML modeling techniques. Perhaps the LLM is doing something new, and it's clear most traditional financial institutions struggle to get cutting-edge value out of their existing data. Personetics has been doing this for a decade; the real value of Hyperplane could be the market they're bringing this to.

Things to know 👀

Monzo, the digital-only bank in the UK with 9 million customers and 400,000 business accounts, says it is planning to expand to the US with the new funding. The round was led by Capital G, Google’s venture arm, and follows the bank's profit announcement in March 2023.

🧠 The revenue potential of Monzo is still untapped. With 9m customers they only recently turned on lending and added stock trading. To be profitable with this little cross sell speaks to the low cost to serve and acquire customers. The majority of which still sign up through word of mouth.

🧠 Monzo customers love the product in a way that’s hard to describe. When they burst on to the scene in 2016, it became a movement for a generation of people starting work in the shadow of the financial crisis. They back that up with Apple-like attention to detail in how they build product.

🧠 They will grow comfortably in the UK. Even if they don’t acquire any more customers, even basic cross-selling is a huge opportunity. But I suspect they’ll win ever more younger customers and retain their older cohorts to slowly become a dominant UK bank.

🧠 Is US market entry smart or just an investor story? There’s no lack of competition from CashApp, Chime, Dave, SoFi, etc. I doubt they’d get a de-novo charter, and the Banking as a Service space is a mess. Although even in a market where sponsor banks are saying no to 30 Fintech programs for every 1 they say yes to, you have to imagine a regulated bank like Monzo would be front of that line.

Banking as a Service was supposed to be dead, not completing funding rounds. The raise has taken many by surprise as “Banking as a Service” has been in the headlines for all the wrong reasons. Banks in this space have received consent orders and pushback from regulators, putting pressure on the ecosystem.

🧠 Banking as a Service is lucrative if done right. The Bancorp a first-mover in this space just reported 26% Return on Equity (RoE). Smaller banks don’t have a lot of options to compete with Fintech or bigger banks. Banking as a service can be it.

🧠 Sycnctera is diversified into Canada and LATAM. Canada’s 5th largest bank led the Series A and has been able to get into embedded finance across Canada. BTG Pactual, the Brazilian bank, can also serve its US customers with Synctera. This isn’t a usual mix, but it’s big partners with low churn risk. In a market where banks are exiting BaaS, that’s useful.

🧠 Regulatory actions are disproportionate. Konrad at Klaros has a great stat. Banks doing “embedded finance” represent 3% of the market by assets but 40% of regulatory actions. That’s more than the savings and loans crisis or post-2008.

🧠 Regulatory actions are also *warranted*. Many community banks hadn’t set up the right controls, oversight, or processes to manage the kind of scale (Wrote about this at length in embedded finance in crisis).

🧠 This period is painful but good. In three years, the companies and banks left standing will have raised the bar on risk and compliance. Many early movers are exiting consent orders.

🧠 My fear is we lose some magic along the way. I heard one partner bank CEO last night say, “Many of the biggest customers we have at scale now were very small when we first partnered. Today we’d probably decline them. For every 30 partnership applications, we might accept 1. That’s bad for the ecosystem, but the reality.”

🧠 Congratulations to Peter and the Synctera team. This is the good news story the industry needed. There will be more bad news, but in the long term, we're building an entirely new industry, and the opportunity is enormous.

Good Reads 📚

That's all, folks. 👋

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(1) All content and views expressed here are the authors' personal opinions and do not reflect the views of any of their employers or employees. 

(2) All companies or assets mentioned by the author in which the author has a personal and/or financial interest are denoted with a *. None of the above constitutes investment advice, and you should seek independent advice before making any investment decisions.

(3) Any companies mentioned are top of mind and used for illustrative purposes only. 

(4) A team of researchers has not rigorously fact-checked this. Please don't take it as gospel—strong opinions weakly held 

(5) Citations may be missing, and I've done my best to cite, but I will always aim to update and correct the live version where possible. If I cited you and got the referencing wrong, please reach out