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From: Glenn Petersen9/9/2018 3:45:31 PM
   of 138
LendingTree is the secret success story of fintech

Through acquisitions and a focus on cash flow, LendingTree has avoided the pitfalls plaguing the industry today

Conor Witt
September 9, 2018

For all of the excitement centered around fintech over the past half-decade, most venture-backed fintech companies struggle to acclimate to public markets. LendingClub and OnDeck have plummeted since their late 2014 IPOs after several years of darling status in the private markets. GreenSky, which went public in May of this year, has been unable to return to its IPO price. Square is the exception to the rule.

Sometimes we overlook the companies that hail from the era that precedes the current wave of fintech fascination, a vertical which has accumulated over $ 100 billion in global investment capital since 2010.

One of these companies is LendingTree, which got its start height of the Internet bubble, going public in mid-February of 2000, less than a month before the Dot-com bubble peaked. LendingTree began in 1996 in a founding story that epitomizes the early Internet era. Doug Lebda, an accountant searching for homes in Pittsburgh, had to manually compare mortgage offers from each bank. So he created a marketplace for loans in the same way OpenTable helps you find your restaurant of choice or Zillow simplifies the home buying process. In the words of Rich Barton, iconic founder of Expedia, Zillow, and Glassdoor, this business is a classic “power to the people play.”

The marketplace business model has been the darling that has driven returns for many of the leading VCs like Benchmark, a16z, and Greylock. Network effects are a non-negotiable part of the explanation as to why. Classic success stories that have transitioned nicely into public markets include Zillow, OpenTable (acq.), Etsy,, and Grubhub. LendingTree is often left off of this list, yet, the business sits in a compelling space as consumers and lenders continue to manage their financial lives online.

Insight in a Sea of Ambiguity

The lending process has been defined by significant information asymmetry between borrowers and lenders. Lenders have a disproportionate amount of leverage in the relationship. And that’s not to say it should be different – it’s perfectly logical to require a borrower to prove their creditworthiness. However, aggregation, synthesis, and recommendations modernize a dated dynamic.

Ironically, in an age where consumers are inundated with information, less than 50% of interested borrower’s shop for loans. Most consumers take the first offer they receive. The benefit of a marketplace, however, is price competition and transparency. The ability to shop the market and access the same information that lenders have is a luxury that didn’t exist twenty years ago. The borrowers who do shop through LendingTree reap significant benefits; on average, roughly $14,000 on mortgages and 570 basis points on personal loans. There’s certainly something to be said for comfortability and hand-holding, but at some point the metrics speak for themselves.

LendingTree isn’t a marketplace in the purest sense because of the process that takes place after a borrower clicks “apply.” While a diner can reserve a table at any listed restaurant with OpenTable for dinner tomorrow tonight, she can’t simply take the loan she wants. LendingTree lacks the direct feedback loop between consumers and lenders that characterizes most marketplaces. Instead, the platform aggregates information from a network of over 500 lenders to provide options according consumer’s needs. LendingTree is effectively the onramp for interested borrowers, which necessitates the entry of lenders to fill the borrower’s needs.

As this “onramp” continues to serve a larger audience as more consumers conduct their finances online, banks and lenders intend to seize the opportunity. Digital ad spend in the financial services industry is going to continue to grow rapidly at an estimated 20% CAGR between 2014 and 2020, effectively tripling the size of LendingTree’s core market.

Diversifying away from Mortgages

LendingTree’s revenue mix has change over the years.

For all intents and purposes, LendingTree has been in the mortgage business since its inception. The company experimented with a myriad of business models, including a foray into loan origination through their LendingTree Loans product line, which they ultimately sold off to Discover in 2011. Even in 2013, only 11% of their revenue originated from non-mortgage products.

LendingTree has expanded their platform in a few short years to build their non-mortgage products including credit cards, HELOCs, personal, auto, and small business loans. They have also pursued credit repair services and deposit accounts, with insurance in the pipeline. Whereas mortgage revenue made up roughly 60% of total sales in Q2 2016, it dropped to 36% as of this quarter. They wanted to diversify their product mix, but they realized they were also leaving money on the table.

Through strategic M&A activity, LendingTree has acquired a number of leading media and comparison properties to expand into new products. Acquiring CompareCards, a leading online source for credit card comparisons, has allowed them to catch up to Credit Karma and Bankrate, who own a large part of the existing market. Additional acquisitions in tertiary products like student loans, deposit accounts, and credit services have enabled the company to expand their market share in markets that are both ripe for growth and sparse of competition. The inorganic growth strategy emulates that of two of LendingTree’s major shareholders: Barry Diller, who’s company IAC previously owned LendingTree before spinning them off in 2008, and John Malone, who owned 27% of shares as of November, 2017.

LendingTree has made significant acquisitions to expand and grow

Enhancing Customer Engagement

The potential scale and success of LendingTree’s business model is predicated on discovering prospective borrowers. If they’re repeat customers, that’s a big win because their promotional costs drop significantly once a customer is familiar with the platform.

My LendingTree, the company’s personal financial management (PFM) app launched in 2014, has 8.8 million customers and generates roughly 20% of the company’s leads. It offers free credit scores, credit monitoring, and goals-based guidance through a proprietary credit and debt analyzer. At the surface, it’s not especially different from any of the other leading consumer PFM apps. That’s been the issue with these apps: the service is valuable, but it’s very difficult to differentiate beyond UI/UX, which is far from a defensible moat.

However, the ability for LendingTree to lock in customers and accumulate customer data to personalize product recommendations is a breakthrough for both consumers and lenders. Consumers outsource the loan diligence process to their phone, which explores the universe of lending options in order to find the most suitable options.

LendingTree’s new personal finance management app. (Photo by LendingTree)

The leader in this space is Credit Karma, and by a wide margin. They’re estimated to have around 80 million customers. Those numbers appear starkly different at first glance, but it’s important to keep in mind LendingTree is relatively new, launching in 2014. Credit Karma developed a more captive relationship with customers from their inception in 2007, beginning as a free credit score platform. They’re effectively in an arms race, trying to emulate each other’s primary value propositions in order to win over a larger share of customer attention.

By all accounts, the My LendingTree product is still in its infancy. Personal loans make up nearly two-thirds of revenue generated through My LendingTree. Credit cards were integrated through CompareCards earlier this year; deposits will be integrated in the fourth quarter through DepositAccounts. As the platform more formally integrates mortgage refinancing and HELOCs, there are more channels to drive user engagement.

For the consumer, this app reinforces the aggregation and connection between interested borrowers and willing lenders. Arguably more significant, however, is the personalization of individual customer experience that will drive further engagement and improve the recommendation engine. With the continued migration to online and mobile for financial services, this product benefits from natural demographic tailwinds.

If LendingTree can successfully reengage with customers on a more recurring basis via My LendingTree, the app should be accretive to overall variable marketing margin because they’ll have to spend far less on promotional activities due to organic customer. The combination of a market-leading aggregator with a comprehensive PFM tool creates a flywheel effect where success begets success, particularly with a major head start in the lending aggregation business.

Removing the Informational Asymmetry

In LendingTree’s business model, customer demand drives the flow of ad dollars and ultimately origination volume. Lenders follow customer demand. LendingTree helps expedite that process. Lenders can expand their conversions by boosting the number of high-quality leads and reducing obstacles to the loan application process. LendingTree improves both catalysts.

On the lender side, My LendingTree fundamentally changes LendingTree’s value proposition. They used to be responsible for connecting lenders with warm leads to drive conversions. With an existing customer base, the lead generation suddenly gets easier. It also significantly reduces the customer acquisition cost for lenders, notoriously a major component of their expense profile.

Nearly 50% of all consumer interactions with banks and financial services companies occur online. It’s not controversial to say that figure is likely heading in only one direction. Currently, credit cards and personal loans are the most automated online application processes because the decisioning occurs relatively quickly. Of the expansive network of mortgage lenders on LendingTree’s platform, only 40 currently enable borrowers to continue their application online. As mortgages and small business loans become more automated through partnerships with third-parties like Blend and Roostify, LendingTree will benefit from more seamless integrations and likely, higher conversions.

The real value proposition for the lender, however, is in the headcount consolidation. Just as the number of stock brokers and equity traders has diminished significant, the role of the loan officer will follow a similar trajectory. LendingTree initially supplemented loan officers in their borrower sourcing from a marketing perspective, which drove loan officer commissions down significantly.

Doug Lebda’s next conquest is to supplant the entire sales function. In response to a question about LendingTree’s impact on lender headcount, Lebda responded: “what will happen is [lenders will] be able to reduce commission. So the real competitor, if you will, to LendingTree…is the fully commissioned loan officer…In the future, you’re going to have LendingTree convincing the borrower through technology and then you’re going to have an individual lender just basically processing and getting it through.”

The relationship between a loan officer and a prospective borrower is marred by informational asymmetry. Incentives aren’t aligned. Soon enough, the pre-approval process launched through their new digital mortgage experience, “Rulo” will help to solve a problem that has plagued LendingTree since its inception: an exhaustive pursuit from loan officers.

With Rulo, LendingTree sorts and filters the list of offers and provides a recommendation based on the best option. Then, the app allows you to contact the lender directly, offering the consumer the freedom they historically haven’t had. Commenting on the early success of the new experience, Lebda said “[the conversion rate is] literally about triple what it is on the LendingTree experience.” LendingTree is streamlining a low value, yet operationally costly element of the lending business that has remained more or less stagnant for half a century.

Seeing the Forrest through the Trees

The fawning over fintech companies has driven exorbitant amounts of global investment from venture capitalists and private equity firms who are ultimately looking for exit opportunities. Two things are happening: first, most of the major fintech companies aren’t going public, although that is beginning to change. Second, and perhaps more importantly, the ones that do go public don’t fare particularly well.

The tried and true strategy of most emerging financial technology startups is to focus on user growth and monetize later. LendingTree did the opposite; they created a cash-flow generating platform that served a critical purpose, simplifying a historically complex landscape for consumers, while simultaneously driving directly attributable revenue for lenders. They have proved their original value proposition, connecting borrowers with lenders, and now they’re playing catch up to provide supplementary tools to add more value for customers. It’s a rare pathway, but a productive one that more fintech startups should consider.

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From: Graystone9/27/2018 11:29:58 AM
   of 138
Instant payment confirmation

Electroneum is a crypto-currency that was forked from Monero, it retains the same ring signature cryptography and runs the original cryptonight algo but is now ASIC based after the release of the Baikal ASIC's for cryptonight. Monero forked again and announced they would fork on a regular basis to keep ASICs off the Monero blockchain, ETN embraced the more powerful solution (better transaction speed, more hashpower). On GPUs Electroneum was a .10 cent coin, on ASICs it quickly fell to a low of .004 cents. Recently they announced an API for ETN that provides instant confirmation of funds, it appears they sandbox the funds internally to prevent a double spend. The API is a standard API that any merchant can integrate. A company has adopted the use of ETN for purchases (Blublokr Sunglasses, haven't even looked at the details but I did read they now accept payment in ETN online, whowouldathunk).
Now almost quadrupled back to .02 cents (all USD) ETN is trading very strongly, mainly on the Kucoin and Crytptopia exchanges. Hard to say if it is going to be a widely adopted API but the cryptomarkets are giving it a test flight for sure, ETN/BTC pair on Cryptopia is at 355 BTC volume for the day (2.17 million USD) and it continues to trade strongly.

Buying selling crytpo requires an crypto-exchange account that offers FIAT/CRYPTO pairs. Most exchanges offer Bitcoin, Ethereum and Litecoin pairs ie BTC/USD, LTC/USD, ETH/USD. Open an account on one of these exchanges to move fiat into the crypto-world, then transfer the purchased BTC to a crytpocurrency exchange. Be very careful, almost every Altcoin is worthless. I would suggest evaluating coins based on the USDT (Tether) pair or TUSD (True USD Dollar) pair availability rather than just BTC pair availability. Every exchange will offer a USDT or TUSD market and that will offer a limited number of pairs to altcoins. These pairs can act as parking spots generally unaffected by volatility. I like these cryptocoins - BTC, XMR, CEFS, UBQ. That is it. I have mined just about everything that can be mined. I accumulate XMR and CEFS. I mine UBQ and XMR. TUSD is a stronger version of Tether for the truly skeptical, fully backed and audited and 1=1 to the USD.

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To: Graystone who wrote (115)9/28/2018 12:18:45 AM
From: Graystone
   of 138
Up 40% on 778 BTC

Anyone watching the movement on ETN has to be impressed. ETN has a lot going for it and may do quite well on this run at the FIAT wall. No crypto has cleared that wall yet but ETN has a solid base from which to jump. Fully compliant and widely distributed with an active user base, ETN has forged a unique relationship with mobile phone users and has the possibility of being adopted by telecom companies for instant payments. The adoption of ASICs has powered the blockchain to new levels of capability. The ETN API greatly increases the chance of this happening if it works well.

This is a solid move on ETN's part and could continue for awhile, it could well accelerate as reports of API integration and adoption filter back to the community.

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From: Graystone10/1/2018 10:37:21 AM
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Consolidation at 300 satoshis
High over 400 satoshis

After hitting a high of 410 satoshis ETN fell back to 270 satoshis. It has consolidated at 300 satoshis and is still trading strongly at that level. (has been for the last couple of days)
I think the next move for Electroneum will be up again.
This price action certainly could be the result of manipulation by a whale and it could turn into a massive crash at anytime if it is (ie something like EVR (Everus), recently pumped then crashed for a 90% loss to all holders). It doesn't smell like a whale to me though. I actually converted a few hundreds of UBQ to buy some ETN. If you don't have a cryptonight ASIC it is very difficult to mine ETN today.

Used antminers are cheap and make about the same amount of money as you spend on electricity (in a favourable electrical pricing regime). If ETN pops though, what you mine today could become worth much more.

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To: Graystone who wrote (117)10/2/2018 11:33:44 AM
From: Graystone
   of 138
Crypto whales

The interest in cryptocurrency has created a brand new problem, whales. A whale is a person who controls a large amount of crytpocurrency and consequently the price of that crypto. Whalecoins are a new peril for the uninitiated. A whalecoin can have really massive moves, like $1 to $20 over the course of a few days, if you are in, it can be rewarding. That action is however, not designed to enrich you but to strip you of value. ETN is not a whalecoin, LGS looks like a whalecoin to me. ETN has solid volume across all the cryptomarkets offered on Cryptopia, LTC, DOGE and BTC, LGS has solid BTC volume and that is it, almost no LTC or DOGE volume. ETN has a solid community, a development team that has matured a lot since inception, many downloads of the app from both Google and Apple sites and a reasonable whitepaper outlining what they hope to achieve. LGS has a whitepaper that appears to be written by a drunk communicating in a foreign language. If you do invest in crypto it is very difficult to find real value. Watching for whales is another skill required to avoid being swamped.

Most cryptocurrency exchanges offers pairs for other cryptocurrencies. You need an account at an exchange that has crypto/fiat pairs to move money in and out of the cryptoworld. A small investment today could pay off many times over in the future as public ledger transactions gain momentum. In the beginning, most people thought email was a novelty that would never gain traction.

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From: Graystone10/3/2018 10:31:03 AM
   of 138
The practice account
Crypto trading

A lot of people haven't taken the time to learn what a public ledger transaction is so they have trouble comprehending how this technology is going to change the world. I still hear people saying they would never invest in stocks, too risky. I remember the practice account days, learning new stuff can be daunting. In the crypto-world the perils are very real, your money could easily be lost. The number of dollars that have been stolen in crypto-land is astonishing. Every day someone loses all the money they had in their crypto-account because of poor security practices. Use 2FA if you have a crypto-account. Use strong passwords. Use unique passwords. Don't download new software (wallets etc..) until it has been vetted by experts. Don't believe what you read, do some research and get involved before you buy any crypto. All that said, you can use a small amount of fiat to open a crypto account and practice trading with cryptocoins that are worth next to nothing. This exposes you to crypto-exchanges which are very different than stock exchanges. It will take a while to learn the players, the difference between SKY and DGB, why DASH is that price, what Bitcoin Cash is, why does Ethereum work the way it does, will DAPPS ever become a reality.

I have mined all the crypto I trade with, this option is available for the technically savvy. Once you have the crytpocoins in hand you can avoid the fiat process entirely by sending crypto to your crypto account and trading on a crypto-exchange. ETN is a cryptocoin still trading big BTC volume on Crytopia and still at 300 satoshis. I think it will go up again but that is just what I think.
Many people think Satoshi Nakamoto was actually a consortium of Asian companies that created the public ledger world. SAmsung, TOSHIba, NAKAmura, MOTOrola. It is just one theory, Satoshi has effectively disappeared.

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To: Graystone who wrote (119)10/9/2018 10:03:36 PM
From: Graystone
   of 138
ETN at 378sats
Steady buying

ETN is still strong and has excellent volume. It is the volume leader (or top 4) again on all Cryptopia markets again today. It has been trading strong volume everyday and is moving up. I explained ETN briefly in another post but the action and price rise is the result of the ETN development team creating an API that can be integrated in any merchant software. What it means is that any merchant can integrate the ETN API and people can pay that merchant with ETN. That may not sound like a lot but it is the first cryptocurrency API and they have instant notification of funds for the merchant, no waiting for confirmation. ETN has created an instant notification system that uses a sandbox to stop a double spend. Again, doesn't sound like much but it is important that any merchant know the funds are there right away, merchants cannot wait for the confirmations from the blockchain, that can take a while. As feedback comes back to the development team we may see some more price action. I cannot handle any community rah rah anymore so I watch the markets rather than haunt Discord, Slack or Telegram. Most communities exist on one of those sites. Telegram is also widely used by P&D crypto traders and cryptowhales so caution is required.

If you haven't got an account on a cryptoexchange then you may want to try it out. Very different from the stock market. I am a big fan of Cryptopia and think it is the world's best cryptoexchange, it has many features that are unique (and many have been copied). Cryptopia is in New Zealand. CEFS (Cryptopia Exchange Fee Share) is an ERC 20 Token hosted on the UBIQ blockchain. CEFS tokens were initially given to the B Class shareholders of Cryptopia so they could participate in the growth of the exchange. Each month a percentage of the trading fees paid to Cryptopia are divided up among the 6300 CEFS tokens. So every month you get a payment of the following cryptocoins BTC/LTC/DOT/DOGE/NZDT/USDT, you get some of each. The yield is OK, there are a few cryptocoins that allow you to participate in the growth of crypto this way.

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From: Glenn Petersen10/19/2018 10:44:03 AM
   of 138
The SEC Is Setting Up a New Division to Talk to ICO Startups

Nikhilesh De
Oct 18, 2018 at 18:30 UTC | Updated Oct 18, 2018 at 22:42 UTC

The U.S. Securities and Exchange Commission (SEC) is launching a new division with the goal of making it simpler for fintech startups – including those launching initial coin offerings (ICOs) – to navigate the legal implications of their products.

Announced Thursday, the Strategic Hub for Innovation and Financial Technology (FinHub) will act as a central point for the securities regulator to interact with entrepreneurs and developers in the financial technology world, in particular with groups focusing on distributed ledger technology (DLT), automated investment advice, digital marketplace financing and artificial intelligence.

As envisioned, FinHub will both publicize information produced by the SEC, as well as let innovators ask questions or clarify regulations. The new division will also collaborate with other regulators, both domestic and international, on work that involves emerging technologies. Additionally, FinHub will host a FinTech Forum focused specifically on DLT and digital assets next year.

FinHub will be run by the SEC's senior advisor for digital assets and innovation, Valerie Szczepanik, and be staffed by SEC officials who have previously worked on fintech-related issues, according to the agency.

Szczepanik, who is also the associate director in the SEC's Division of Corporation Finance, said in a statement:
"SEC staff across the agency have been engaged for some time in efforts to understand emerging technologies, communicate the agency's stance on new issues, and facilitate beneficial innovations in the securities industry."
"By launching FinHub, we hope to provide a clear path for entrepreneurs, developers and their advisers to engage with SEC staff, seek input and test ideas," she added.

SEC chairman Jay Clayton noted in a statement that the agency is looking to work with investors and other market participants on issues such as capital formation and financial services, while also maintaining investor protection.

"The FinHub provides a central point of focus for our efforts to monitor and engage on innovations in the securities markets that hold promise, but which also require a flexible, prompt regulatory response to execute our mission," he said.

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From: Glenn Petersen5/25/2019 8:28:04 PM
   of 138
Robinhood Is Set to Raise at Least $200 Million in New Funding

By Julie Verhage
May 24, 2019

-- Round values the fintech startup at more than $7 billion

-- Talks with investors are ongoing and the round could grow

Robinhood Markets Inc. is close to securing at least $200 million in fresh funding, according a person familiar with the matter. The round is said to value the company at between $7 billion and $8 billion, although the details could change.

The cash infusion is coming from existing investors, said people familiar with the deal, all of whom asked not to be identified because the details are private. The funding talks are ongoing, but the company’s valuation could climb to as much as $10 billion in a subsequent round, these people said, adding that the numbers are subject to change until the deal is closed.

A Robinhood spokesman declined to comment.

The Menlo Park, California-based startup, which offers free app-based trading, last raised money in mid-2018 at a valuation of $5.6 billion. On top of the new funding, the company is working on launching its retooled cash management service later this year, the people said, after it was forced to temporarily shelve the product following backlash over how it was marketed, and whether it would be insured.

The tech website the Information earlier reported some details of the deal.

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From: Sr K12/15/2019 6:25:55 PM
   of 138
WSJ yestoday:


Venmo Glitch Opens Window on War Between Banks, Fintech Firms

Fintech firms accuse banks of blocking their access

5:30 AM

Fintech companies say they need access to customer account information held by banks and other traditional financial companies. To protect their own turf, banks and brokerage firms have resisted.

PNC customers are getting a front-row seat on the rivalry between the banking industry and financial technology companies.

Many of the Pittsburgh bank’s clients are having trouble connecting their accounts to their Venmo apps, cutting off access to PayPal Holdings Inc. PYPL’s popular mobile payment service. When they have sought help, they have found the two companies blaming each other for the disruption.

PNC Financial Services Group PNC suggested in tweets that customers switch to Zelle, a rival payment app that it and other big banks jointly operate.

Venmo countered by urging its users to tweet their complaints, suggesting they tweet: “Hey @PNCBank…Let me use the financial service apps I need!”

The skirmish is part of a war over access to customer financial data. Fintech companies—nonbank firms that use apps and other new technologies to provide financial services such as digital payments, loans and financial planning—say they need access to customers’ account information held by banks and other traditional financial companies. To protect their own turf, banks and brokerage firms have resisted.

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