Hey everybody, it's your newcomer for the week.
It's Tom Doughton here, joined by Eric newcomer Madeline
Renberger. We got Eric pretending to be at
his home. He's got a fake background, but
I know the real truth, which is that he's in San Francisco.
I love how Tom has this like great deep voice but then his
intro voice is like two octaves up.
Yeah, that's called the energy. I I I bring that high pitched
energy that people like, none of that monotonous low tone stuff.
How? Brings the shrill energy we need
more of on this podcast. You can't describe men's voice
as shrill. It's deeply.
It's. It's just not allowed.
There's a whole TV show about it.
I think we got a lot to get through in this episode here.
But I, I have to start off for those of you not watching on
video, Eric is joining us, as I mentioned earlier, pretending to
be at his home, Although I know the truth, which is that he's in
Union Square at a hotel with cement floors, but he's got a
flat brim hat on. He's a flat brim guy and he
recently just came from an exclusive conference that gave
him this flatburn hat that marks the beginning of conference
season and actually good dimension conferences because we
have the newcomer Breaking the Bank conference coming up next
week. And before we even get into your
private excursion conference, Eric, can you just give us some
details on on breaking the bank? Why should we?
Why should we get people excited about it?
Breaking mega, we're going to have the CEO of Gusto Plaid,
we're going to have the founder of Bridge, which you know, is
bringing stable coins to Stripe. The topic of the day.
We're very fortunate that Chime filed to go public this week and
we had a tech IPO and E Toro. So I think people will have some
enthusiasm. So yeah, we're going to have
some most of the top private fintech companies in the same
room in San Francisco on Tuesday.
Yeah, I believe the slogan of the summit is Fintech is back
baby. So.
Right, which we will get to later in the episode as you just
recently Madeline wrote a whole article about the backness of
fintech. But Eric, I got to hear about
this hat. I got to hear about your
conference. So the the conference I was in
Park City, UT at like very bougie retreat.
The event was under Chatham House rules.
So I am somewhat restricted in what I can say fundamentally,
I'm allowed to talk about the ideas, but not exactly who was
there. The event was, it's the first
year blue sky put on by the venture capital firm Dimension
and the biotech company Recursion.
And you know, it was attended by sort of a who's who of biotech,
pharma and tech people. Honestly, it was sort of a new
crowd for me. I knew some of them, but you
know, I'm not deep in like the biotech world at all.
And then I I moderated 2 panels that were super interesting and
shot some clay pigeons and you know.
You shot clay pigeons? Yeah.
It was actually pretty good. My team in our our little bit 1.
So yeah, clay pigeons. Congrats.
Yeah, that's that's work. You know, I was hard to hard at
work networking while shooting clay pigeons.
You're allowed to describe that. Chatham Health Rules allows you
to describe your pigeon victories, but in terms of
specific attendees in your group.
No, no, no, OK, I can talk about it.
So the big idea is, I think honestly one thing that I
thought was super interesting to come out of it is that, you
know, people in biotech are genuinely concerned about Trump
cutting all this funding to universities because all that
research funding is, is the beginning of, you know, bio and
pharma companies. It's all sort of nice research
that then, you know, the corporate world uses to come up
with their ideas. So there was, there was genuine
concern. Well, yeah.
And, and so what's, what's their response to that, though?
Are they just hoping that, like, wealthy philanthropist donors
are going to fill in those gaps and like they can keep the money
trained for biotech startups rolling?
Or like what's? Well, I think there, you know,
there's one attitude, which is just like we play the, you know,
the game on the field and sort of they'll adjust.
I think there's some belief that schools like Harvard, despite
their stance, will ultimately sort of cut a deal and this
situation won't go on forever. But I think people were pretty
clear that the cuts are going to be damaging and have a long term
effect. So I don't think there's getting
around it. But yeah, there's going to have
to be more private research. And, you know, I guess it's a
win for the likes of what Microsoft Research and DeepMind
and sort of the corporate academia is, is going to be more
important than ever. Do people discuss much?
I mean, the the talent risk also with the policy crackdowns
around immigration, I mean, was that a topic that came out much?
China was a big theme. I, I continue, this wasn't set
on stage, but I continue to be confused by the China tensions
overall because everybody, everybody's clearly getting the
cues that like we, we have to be very hostile to China.
And there's this breakup. But at the same time, every
business basically wants to work with China as much as they can.
People don't really seem to understand the intellectual
nature. I mean, I, I think there was a
sentiment on stage that China is a self-sustaining economy.
Even if we cut them off from our own economy, they are going to
continue to develop and make progress.
So do we really cut them off at the knees if if we block them?
So I, I don't think people really sort of understood how
we're supposed to block China in that way.
And yeah, I mean, American labs depend on Chinese talent, so
that that's going to hurt our research capacity.
China is also making it difficult for Chinese
researchers to stay here. You know, AI is a super
important area to them. And so I think they literally
call back some of their people. I wonder where like the American
dynamism thesis fits into that though.
Right. Like theoretically more
homegrown talent, more companies developing biotech or
pharmaceuticals in the US should be part of that.
But I haven't seen any of the end recent people stepping up
and saying the crackdown universities is like
antithetical to the American dynamism.
I know well they want to build new institutions.
Right. They want to build the next
American wave. Yeah.
The University of Austin is not so far like a beacon of success,
from what I can tell on the outside.
That's the yeah, sort of Joe Lonsdale school.
Well, just some quick other bullets.
Biotech is obviously in a terrible downturn.
I think in tech world, we don't see it.
But like, if tech feels like there's been a downturn, biotech
is like, oh man, got destroyed. So that's been brutal.
I think people are really excited like in tech world about
artificial intelligence. And there's certainly a lot of
companies running, you know, AI transcription, but also drug
discovery using generative models.
Yeah, how is how are people feeling about AI boosted drug
discovery right now? Because that was a pretty hot
space that even generalist investors were getting into.
You know, we wrote about that last summer.
Well, it felt like every drug discovery company was AI to some
degree. You know, it's like, oh, you're
old generation, but we're powering up, or you're the brand
new company and you're like, oh, we're gonna do it from the very
beginning. So I think everybody's saying
it. I don't think anybody can claim
that they've fully discovered a drug.
You know, these companies take forever.
Drug discovery companies take forever to build.
And so people will get very excited about companies that
still don't have, you know, a drug that they're actually
selling to consumers. The final bullet is obviously
Ozempic looms large. You know, Ozempic, is that a
metaphor for longevity drugs overall?
You know, when you see a drug that's successful, people are
like, oh, should we be staging out our drugs like that?
Should we have a more, you know, whereas Ozempic, you're getting
different doses, sized doses over time.
And also this sense that it's a drug that sort of helps people
in lots of ways is not necessarily targeting disease,
which and feeds into the overall longevity conversation.
So, you know, people are certainly watching the success
of Ozempic and Wagova and everything and thinking how does
that affect our companies? I like the idea that something
like Ozempic or Wagovi like that.
The lesson to be taken from it is like, it's the way that they
measure out the doses and like it's the, it's, it's the
recurring, recurring product model of it, not that it's like
having actual tangible impact on people's health.
No, it's, it's the weight loss as a subscription service where
we're really. Making a difference, yeah, I
call it the fat shot drug, by the way.
That's my thing. But that's a classic tech
mindset. LinkedIn, LinkedIn brain is like
looking at something like that. What can you learn from Ozempic
success that isn't its actual functionality, but in fact it's,
you know, meeting out doses? In their defense, that's, you
know, the business, the strategy part is the part of the part
this podcast probably understands better, right?
I'm they were also talking about, you know, types of
treatments and stuff. And some of that honestly goes
over my head. So I'm going to come to their
defense a little and say there was plenty of talk of, you know,
pathways and approaches to treatment stuff that pour me
without an MD can't distill for you here.
More MD's than a typical VC conference sounds.
Oh. My God.
Oh, tons of people. Lots of professors you know.
Mini former but definitely well credentialed and educated Crown.
So, so, so if, if, if biotech is in this kind of inexorable
downturn, fintech has actually been looking really strong in
the last year, really strong a couple of years ago.
Really strong. Is a that's too.
Too much. Relatively strong.
We have, we have an event next week, but even us, we're not
going to say really strong, but I think it's coming up from a
lot it. Is fintech is back baby but.
It's an aspirational marketing copy.
What is the the journalist Madeline that digging into this
as the journalist How back baby is fintech?
It's mixed. I would say the backness of
fintech is decidedly mixed. On the one hand, you have E
Toro, the stock and crypto trading platform going public
this week, which you know, end of IPO drought.
In a sense, Chime filed its S 1, so two major fintech
powerhouses, Deca corns like testing the public market.
That's really exciting. One week out from our fintech
conference, we didn't plan that. We promised we didn't collude,
but we did. Talk about the influence.
I'd love people to believe that we could plan that.
Wait, yeah, record. Scratch.
Scratch that, it was all according to plan.
So things are looking up. Investors that I spoke to were
seeing those as bull signals. That being said, interest rates
are still pretty high. So any company that's in the
lending space is not doing too hot right now and is not really
predicted to come back. And we're not going to be really
hitting that sort of, you know, 2021 boom anytime soon.
I mean, things pretty much fell off as soon as interest rates
ticked up in 2022 for a lot of these companies.
And that's going to stay pretty low.
And the excitement has really come around both two key areas
like Chime style consumer plays and banking companies that are
more like neo banks that provide financial services maybe in
emerging markets or for mobile first customers or I would say
stable coins and facilitate payments and card payments that
can be back to your stable coin wallet.
So that's right. Bridge deal, obviously last year
was a big exit for the space. So we've got neo banks, you've
got stable coins. I would add the stick AI on it.
I mean, but obviously much more sincerely, I'm excited to have
Rogo there who's reinventing the sort of banking analysts with
generative AI. So you have sort of we're going
to have, you know, they're a bunch of companies that are
looking at old guard sectors and saying how do we rethink it now
that we have the power of foundation models.
Now a fourth sort of category represented by Gusto is just
sort of the non fintech fintech, right?
I mean it's a payroll company, but you have these sort of big
companies that sort of do a lot of business in money paying
people and and other things, but offer sort of a broader range of
services that I think people are still pretty excited about.
Investors have been telling me that this space of, you know,
accounts receivable, something that you never think would be
like a sexy space, is doing incredibly well.
And there's lots of early stage fintech companies that are using
AI agents to automate a good deal of this.
It's work help pump out things similar to kind of the legal
tech boom that we saw a few months ago too.
Like just any kind of service, business can be automated and
agentified, and people are hype about that.
A sub category of our AI story is the take a services business,
put AI on it and like make make an AI startup out of it.
Yeah. I'm always intrigued in the
fintech space of the targets that a lot of these startups
have. You know, so like for the, you
know, accounts receivable, it's basically a bunch of investors
and executives who are like, it's time we took down ADPA
company that you otherwise don't think about.
You know, these poor guys just like in Arizona that own like
whatever 80% of the accounts receivable market.
I guess it's like prime for the taking.
Like that's who like a gusto was going after, right?
Right. Oh my God.
Well, you know, all the startup reporters, myself included,
wanted to ripling versus Gusto, you know, or, you know, the
payroll versus payroll. But but yeah, ADP looms so
large. Most companies just use this
sort of super old fashioned tech that there's a lot of
opportunity. There's plenty of room for these
startups to kind of coexist right now because the incumbents
are so large and unchanged. Over the last 40 years, there's
been a lot of opportunity and also, you know, some companies
are targeting doing the the leap to mobile, but for payments.
So for mobile banking and also, you know, building stable coin
wallets and cards. I mean, we can get into stable
coins. Let's let's that's a whole other
sector people are excited about. But you know, kind of doing the
skipping to mobile connection story where people didn't have
landlines, but they went straight to cell phone, right in
the mobile era, like that's happening with banking too,
because all of these, you know, digital only rails are setting
up payment. Systems.
Yeah, yeah, you're, we can tell you're deep in fintech.
You're like, Oh, yeah, I'm excited about the mobile first
banking, the stable coin thing. You know, we we talked about,
you know, the IPOs, which I think are good for the timing of
this event. The other thing is there's
legislation working its way through Congress trying to
formalize how we treat stable coins in the United States,
right? Or Madeline, what's, what's the
latest on that? Yes, that would be the Genius
Act which is making its way through the Senate so.
What does genius stand for? They're always good at coming up
with those reverse engineered backronym names.
What do you do? You know it.
Guiding and establishing national innovation for US
stable coins. That's the one I'm talking
about. Guiding and establishing
national innovation for US stable coins.
So that's that's the backronym for it.
So basically the Genius Act is currently in the Senate and it's
basically exists to establish federal safeguards that protect
stable coin holders, kind of like the FDIC insurance of
stable coins. So that and the rails can get
more standardized within our existing financial system.
So it basically further legitimizes and integrates
stable coins into our system. They're already legal.
It's just, you know, making them a little bit more stable for
stable if you will, for trading and you know, being an asset
that people can hold and exist within the rails of our
financial system that's regulated.
And stable coins are the crypto for people who don't like
crypto, right? I mean, it's like you don't
need. To use their pitch.
Right. It's like it's not about the
speculation. We're not trying to get
consumers to buy random coins. It's like move money easily cut
out fees. For sure.
And and it's also key distinction for staple coins is
that they are tied to a Fiat currency.
Most of the ones that we're hearing about with this act are
tied to the US dollar, but they can be back to other currencies
too. So, so that's supposed to add
sort of a another level of stabilizing for them.
Of course, with the tariffs and how monetary markets are doing
right now, it's not looking as stable, but that's, you know,
not something that the boosters are really advertising front and
center right now. I'm.
Probably the crypto dullard on this, this podcast, I know the
least of three of us. Like my understanding, like you
mentioned of the stable coins is that they're pegged to a Fiat
currency and it provides like a level of or it's a, it's a hedge
against the volatility of crypto.
And we're at a time now, I mean, I guess things have stabilized a
bit, but like the dollar has never been more in flux.
Like the tariffs have been a disaster for the value of the US
dollar. I mean, I guess they're happy to
get this bill passed regardless, but like, it's not exactly like
the strongest case that like pegging something to the US
dollar suddenly makes crypto like a more reliable investment.
Yeah. Like talk about timing for this
bill. It's really, you know, coming in
at this moment of great financial uncertainty.
Despite the sort of fluctuation with the dollar, it does seem
like a lot of both startups and existing mainstream financial
institutions and banks are jumping into the staple coin
space when it comes to issuing cards that can link to staple
coin accounts for payments, especially overseas.
So MasterCard made an agreement this week with Moon Pay to
launch staple coin cards for customers.
Obviously there's Bridge and Stripe have this service with
Visa as their partner there, and then Ramp is also doing this as
well, which was announced in the last couple weeks.
So everyone's going full steam ahead on stable coins, dollar
insecurity be damned. That's what people voted for.
That's what that's what. This was the vote.
The stable coin coalition was strong and mighty.
I voted for a wild fluctuation in the dollar and also
stablecoin act. A lot of Silicon Valley's
support for Trump, I do think, was rooted somewhat in crypto
support. And so the Silicon Valley crowd
throwing their money at Trump in it, this is sort of what they
voted for. Oh yeah, I wasn't joking.
I was not joking. Listen, if you're excited to
understand what's going on in fintech right now, there's one
place you should be breaking the bank on Tuesday.
If you go to breakingthebanksummit.com, you
can apply for a ticket will be pretty last minute, but if
you're a founder, we will try to get you there.
Or you can e-mail This is the real.
If you're listening now, I'll say we're small enough podcasts.
I can say an e-mail address on air.
E-mail rileyriley@newcomer.co and he's the person to beg for a
ticket if you're going to try and sneak your way in on
Tuesday. Well, we will be burning a bank
in effigy at the end of breaking the Bank, Burning Man style to
get people reminiscing about. All right.
So one thing that we mentioned earlier in the podcast during
Eric's take on the Chatham House Rules biotech, you know, what
have you, was the fact that there's been a loss of a brain
drain, would you call it, or a concern about where the talent
within the biotech worlds is going to go in a more combative
immigration environment? And Madeleine, you had a great
piece the other week that talked all about the worries among
startups and the the status of their immigrant workforce.
What did you learn there? Yeah, I mean the crackdown that
sort of happened around the first Trump administration on
immigration did cause a slowdown in the startup and tech
ecosystem around H1B visas, which a lot of tech employees
for bigger tech companies, either the largest startups or
public tech companies are on, or O1 and EB1 visas, which are more
common for startup founders and early startup employees to get.
So people, you know, like in the founding team have equity.
That tier of early stage would probably go for an O one or an
EB qualifier. Green card isn't.
The core, the core problem that I took away from your story is
just Trump is scaring the shit out of every immigrant in the
United States. And so if you have any ambiguity
about your immigration status, you're not going to go home to
India for your cousin's wedding. You're going to stay here.
You're not going to go, you know, and and you're sort of
worried. And if you have a choice
between. Going to work for, I don't know,
Klarna in Europe or in the United States.
You're going to go in Europe because it's like they seem to
want you more. There are a lot of rules and
there will be changes, but a lot of it is even for the people who
are legitimately here, they don't know if you know the rules
are going to change. If we're seeing students, you
know, get hassled for their for op eds that they're writing and.
It's kind of like an ugly resurfacing of that fight that
played out at the end of last year when, you know, Sri
Ramakrishnan was being called out by, you know, some of the
more intense MAGA types claiming that someone who looks like him,
AKA, you know, not white, shouldn't be the face of, you
know, the MAGA right policy. And you have this huge fight
between tech and you know, you know, the MAGA hardcore, which
it seemed like it was resolved when Trump kind of came out in.
The white nationalist wing of the Magas.
Right. Well, I was going to say that
the more openly racist part of the coalition, and that's more
extreme, is not a fan of this and it's very at odds with the
tech community's support of the current administration.
I would say to your point, Eric, there's been a slowdown in
visas, but the real shift is cultural and how people feel
about practicing their business or, you know, taking the risks
of hiring a new employee that's also an immigrant.
They may not want to do it because of 1.
The paperwork getting complicated and the risk of
their employee, you know, getting stuck somewhere or
deported. We saw this happen with an open
AI researcher who was pretty senior within the company, just
had her visa denied. And the administration said, you
know, it was for paperwork irregularities, but she had to
leave the country and is working remotely out of Vancouver.
And obviously, they're accommodating her right now.
But if this happens in mass, it has a chilling effect for any
talent that wants to come here. I mean, when Vinod Khosla
actually shared the story on X, which was, you know, great,
great to get that reach out there.
But, you know, and it kind of fit into his message and what
he's been in support of making immigration easier for startup
founders and employees. But to his point, you know,
scaring qualified immigrants away is not what we need in our
technology race with China. If that's really important for
you, an American minimism, a lot of you know, to this point here,
biotech point earlier, a lot of qualified researchers come to do
this work from overseas. It's and they're choosing to be
here, but. I mean, so much of the MAGA, the
MAGA movement is help Americans at the expense of everyone else,
right? And, and I don't even think
that's a hostile way of putting it.
It's like we're not trying to do USAID, we're trying to help help
Americans. And so I think a lot of them
sincerely don't want, you know, the talented, the top engineer
in sort of Bangalore to come here.
Obviously, I don't know, I, I feel the opposite and, and most
of Silicon Valley does that. The whole engine of Silicon
Valley and why American exceptionalism works is that
America has a very expansionist identity and you can join it if
you're hungry and ambitious. And that's the way we stay on
top. So I think it's good for
business and I think it's a moral good and certainly a
theme. We'll, we'll keep watching and
hopefully the situation doesn't get any worse, but I suspect
that it will. Look, Eric, on that note of, of
optimism, you know, I, I really have nothing more to add.
I'll only bring the mood down. So I'm I'm glad we're able to,
to go through all that stuff and see everyone back here next
week.