Capitalogix

Funding Fintech's Future

I think it’s clear that Fintech is getting a lot of attention from the press, investors, and talent.  It is a hot space!

Here is a chart showing the Fintech companies that got the most funding recently.

 

via howmuch

Rapidly maturing sectors are payment processing, personal finance, and blockchain/crypto.

• Payment Processing - Stripe received $685 million in funding last year and is valued at over $20B
• Personal Finance - This is a broad market, but we're seeing the "average joe" empowered to make smarter personal finance decisions with companies like Robinhood, Acorns, and Credit Karma. Credit Karma raised $869M and is valued at approximately $4B
• Blockchain - While crypto is currently out of favor for many, blockchain is still an exciting prospect. Opendoor is bypassing real estate agents and brokers to disrupt the housing market. Receiving over $1B in funding last year, it is currently valued at $3.7B.

These are the sectors getting the most Fintech funding now (with payment processing the clear leader).

In my opinion, real disruption is brewing in the personal finance & Wall Street sectors ... and funding is ramping up there as we speak.

This Fintech sector reminds me of biotech.   Solutions have to be more mature and fully-tested before unleashing them on the public.  But winners will Win!

Wall Street is one of the smaller sections in this infographic.  Nonetheless, I think you'll be reading a lot more about this space soon.  Here are some of the companies worth noting.

• Symphony  does secure communications for companies like JP Morgan and Goldman Sachs. It helps with internal communication, and client-centric communication, and has various bots and apps to decrease decision time. 
• Addepar claims to "power the global financial system".  It's a performance reporting platform meant to provide better insights, and connect assets to goals. 
• Carta does equity management; helping private & public companies manage their cap tables, investments, and equity plans. 

Not seen on these lists are all the smaller companies at the beginning of their innovation cycle, and the companies doing their best to stay under the radar. More competitors and more opportunities mean more reason to keep your cards close to your chest. 

The funding cycle is always two steps behind the innovation cycle, which means ideas we've been hearing about from the likes of Gartner will be seeing increased publicity soon. 

I think 2019  will be a great year for innovation. What about you?

Here Are Some Links For Your Weekly Reading - February 17th, 2019

NASA's Mars Opportunity Rover has officially lost contact with earth after a fierce dust storm. Its last message was "My battery is getting low and it's getting dark." The rover's original mission was scheduled for 90 days ... it lasted 14 years. 

 

via XKCD

 

Here are some of the posts that caught my eye recently. Hope you find something interesting.

 

Lighter Links

• A Quantum Future Awaits. (Science)
• Can We Make Artificial Intelligence Ethical? (Washington Post)
• Life's Secret Ingredient: A Radical Theory of What Makes Things Alive. (NewScientist)
• What Does "Dead" Mean? the Debate Continues Some 50 Years after Harvard Defined Death. (Forbes)
• Scientists Have Built a Real Star Trek 'Replicator' that Builds Objects with Light. (ScienceAlert)

 

Trading Links

• Warning: Stocks Have Only Been Stretched this Thin Once in the past 150 Years. (MarketWatch)
• From the Year When Nothing Worked in the Financial Markets to the Month When Everything Did. (CNBC)
• Mark Zuckerberg Adds $6.2 Billion in a Day, Vaulting to No. 5 Richest in World. (OCRegister)
• American Billionaire Hedge Fund Manager Has Spent $700M on Personal Real Estate in Five Years. (CNW)
• There's a New Movie Coming out about High-speed Trading on Wall Street, and It Looks Bonkers. (BizInsider)

 

 

Presenting at IBM Think! 2019

This week, I spoke on stage at IBM's Think! 2019 conference in San Francisco. Our topic was "Gaining a Financial Edge through Fast Data and Analytics."  I think it went well (both the presentation and our exposure to lots of useful technology, talent, and opportunities).   

Moscone Center was filled with people clamoring for information about artificial intelligence, big data, and flexible computing (think of it as being able to do what you want locally, in the cloud, or with a hybrid cloud ... or through hardware or software).  That means solutions are becoming independent of how they are produced, delivered, or consumed.

Here is a picture of our team there.

 

 

Another cool topic that got lots of attention was Quantum Computing.  Here is a picture of me with one of the first Quantum Computers.

 

 

Pretty Cool!  But, remember, the hype cycle precedes the adoption and benefits cycle.  This will be an interesting decade.

The conference was in San Francisco.   That is where my oldest son lives. Lucky for him, the most romantic Valentine's Day dinner is one spent with your dad right?

 

 

I thought it was fun.  For them, at least there was Absinthe involved to dull the pain.

The Bizarre and Surreal Works of Deep Learning AI

One thing that Deep Learning excels in is analyzing pictures & videos, and creating facsimiles or combining styles. If you want to create art with deep learning look no further than the Deep Dream Generator or deepart.io which use Convolutional Neural Networks to combine your photo with an art style (if you want to do it on your phone another cool tool to check out is Prisma). 

via SubSubRoutine

Deepfake is it's exactly what it sounds like ... the use "Deep Learning" to "Fake" a recording.  For example, a machine learning technique called a Generative Adversarial Network can be used to superimpose images onto a source video.  That is how they made this fun (and disturbing) Deepfake of Jennifer Lawrence and Steve Buscemi.

 

via YouTube

While this is a fun example, Deepfakes create very real concerns. They're often used for more "nefarious" purposes (e.g., to create fake celebrity or revenge porn and to otherwise make important figures say things they never said).  It's likely you've seen videos of Trump or Obama created with this technology.   But it is easy to imagine someone faking evidence used at trial, trying to influence business transactions, or using this to support or slander causes in the media.

As fakes get better and easier to produce, they will likely be used more often.  So, as a reminder, don't trust everything you see on the internet. 

But also ... Technology is pretty freaking cool. Right?

 

A Beautiful Rendition of Hallelujah

Sometimes the real thing is worth paying attention to ...

In a world of fake news and technologically enhanced music, this performance of Hallelujah should do the trick. 

Watch and listen to K.D. Lang sing Leonard Cohen.

 

 via Tower of Song: A Memorial Tribute to Leonard Cohen

Masterful!

Here Are Some Links For Your Weekly Reading - February 10th, 2019

Here are some of the posts that caught my eye recently. Hope you find something interesting.

 

Lighter Links

Google's New Extension Tells You If Your Passwords Have Been Compromised. (TheNextWeb)

Yes, There is a War between Science and Religion. (The Conversation)

3 Philosophers Set up a Booth on a Street Corner Here's What People Asked. (The Conversation)

55 Photos of Celebs Hanging with Their Younger Selves.(TwistedSifter)

A Photographer Asked Teenagers to Edit Their Photos until They Thought They Looked 'Social Media Ready,' and the Results are Shocking. (Thisisinsider)

 

 

Trading Links

No One Has Made More Money during Trump's Presidency Than Jeff Bezos. (Fortune)

New Exhibition Highlights Story of the Richest Man Who Ever Lived. (SmithsonianMag)

Meditation App Calm Hits Unicorn Status with Fresh $88 Million Funding. (TechCrunch)

Microsoft Warns Investors that Its Artificial Intelligence Tech Could Go Awry and Hurt Its Reputation. (BusinessInsider)

A Billionaire Investor at the World's Biggest Hedge Fund Says the US Economy is Headed for '20 Years of Ugliness'.(BusinessInsider)

The Blind Leading the Blind: The Super Bowl Indicator

Trying to get rich quick? Want to know if the markets going to be bull or bear this year?

Look no further than the "Super Bowl Indicator".

The theory is a Super Bowl win for a team from the AFC foretells a decline in the stock market and a win for the NFC means the stock market will rise in the coming year. 

There is one big caveat ... it counts the Pittsburgh Steelers as NFC because that's where they got their start. 

If you accept that caveat, it has been on the money 33 years out of 41 - an 80% success rate. Sounds good, right?

Come on ... you know better.

Here are some other "fun" stock market fallacies:

• January Indicator
• Aspirin Count Theory
• Hemline Indicator
• Sports Illustrated Swimsuit Indicator
• Men's Underwear Index
• Big Mac Index

Back to Reality

Rationally, we understand that football and the stock market have nothing in common.  And we probably intuitively understand that correlation ≠ causation. Yet, we crave order, and look for signs that make markets seem a little bit more predictable.

The problem with randomness is that it can appear meaningful. 

Wall Street is, unfortunately, inundated with theories that attempt to predict the performance of the stock market and the economy. The only difference between this and other theories is that we openly recognize the ridiculousness of this indicator.

More people than you would hope, or guess,  attempt to forecast the market based on gut, ancient wisdom, and prayers.

While hope and prayer are good things ... they aren’t good trading strategies..

As goofy as it sounds, some of these "far-fetched" theories perform better than professional money managers with immense capital, research teams, and decades of experience.

I have a thought experiment I often ask people that come into my office. 

What percentage of active managers beat the S&P 500 any given year?

... Now, what percentage beat the S&P 500 over 15 years?

The answer is about 5% (and that's in a predominantly bull market).  That's significantly worse than chance. That means something they're doing is hurting, not helping. 

via Gaping Void

There's simply too much information out there for us to digest, process, rank, and use appropriately.

Every second you spend looking at a market is a second wasted.

There are people beating the markets — not by using the Super Bowl Indicator ... they're doing it with more algorithms and better technology. 

There will never be less data or slower markets.

Onwards.

The 2019 NFL Playoffs (Told by In-Game Win Probabilities)

This year's playoffs have been ... dramatic to say the least. 

Here's an interesting DataViz that relives the key moments that led to this year's Super Bowl matchup. 

(Click to see an Interactive Version) J_dataviz via Reddit

 

From the missed Parkey kick to the call that gave the Rams a chance to get the win, the visualization tells an interesting story.

Who do you have winning the game? 

Here Are Some Links For Your Weekly Reading - February 3rd, 2019

Here are some of the posts that caught my eye recently. Hope you find something interesting.

 

Lighter Links

• An Incredible New 3D Printer is 100X Faster Than What Was Possible. (Inverse)
• 10-Year-Old Says He Proved Tom Brady is a Cheater, Wins Science Fair. (Theepochtimes)
• Leadership Lessons from NFL Football. (KevinEikenberry)
• How CRISPR Lets You Edit DNA - Andrea M. Henle. (YouTube)
• Any Rubik's Cube Can Be Solved in 20 Moves, but It Took over 30 Years for Anyone to Figure that Out. (BusinessInsider)

 

 

Trading Links

• Davos Predicted the Stock Market Selloff of 2018. (Bloomberg)
• What I Learned from Jack Bogle. (AWealthOfCommonSense)
• World's 26 Richest People Own as Much as Poorest 50%, Says Oxfam. (TheGuardian)
• The Stock Market is Too Damaged for a Sustained Rally, Strategist Says. (MarketWatch)
• Wall Street's 'Fear Index' is on Track for Its Biggest One-month Plunge in Nearly 3 Years. (MarketWatch)

From 7.7 Billion to 100 People

If you were to distill the world's 7.7 billion people into 100 people ... What would that look like?

Here is an infographic.

via Jack Hagley

 

Some of the data seemed inaccurate so my son Zach did some additional research. On the image, 75% have cell phones, but only 30% can access the internet. He found a more recent statistic indicating that now 55% of people can access the internet. 

Also, the 23% who "have no shelter" makes more sense if you change it to "who lack 'adequate' housing". Only approximately 1% are homeless.

Pretty interesting. 

I'd love to see updates to this.