Steve McLaughlin. He’s one of the founders and CEO of Financial Technology Partners. He is a former senior banker at Goldman Sachs, covering fintech for over 20 years. He was recently named Investment Banker of the Year, ranked number 2 banker in Silicon Valley by The Information, and he’s top ranked on Institutional Investors. Online Finance 35 listed him as one of the most influential people in fintech.
Famous Five:
Favorite Book? – Jack: Straight from the Gut What CEO do you follow? – Jack Dorsey Favorite online tool? — Uber How many hours of sleep do you get?— 4-5 If you could let your 20-year old self, know one thing, what would it be? – “I wished I knew where all the stocks are going”
Time Stamped Show Notes:
01:40 – Nathan introduces Steve to the show 02:27 – Steve’s company advises firms across the entire fintech landscape on raising capital and M&A—they’re on the sales side helping people figure out where to get money, how to get money, what the valuation is, what the structure is 02:53 – Total transaction volume you were involved with last year 02:58 – Financial Technology Partners transaction volume was around $10-15B 03:09 – Which of these 3 industries are you most excited about, like where your most interesting deals would be in? 03:34 – It’s really across the board, anywhere from the B2B payments to consumer payments to online lending companies like Prosper or GreenSky and the payment space like Marketo 04:08 – Any other players you see in the space besides those two, Betterment and Wealthfront? 04:11 – Steve appreciates Riskalyze who are behind the scenes providing the same kind of technology to RAAs and other advisors or someone like BlackRock who he advised last year 04:45 – FutureAdvisor is a startup going initially after the consumer side, they pivoted a little bit to be a B2B player 05:23 – Blackrock acquired FutureAdvisor for a $150M back in August 27, 2015 06:32 – FTP generally gives advice for doing large transactions and are paid on success 06:47 – It’s either commission or a percentage based on the value of the deal 07:38 – Deal size varies. On a multi-million dollar deal, it can be a percent and a $100M deal, it can be 7% depending on the scale and deal size 08:02 – Nathan asks: How do you value a wealth technology company like Betterment? 08:29 – Steve looks at start the factors affecting Wealthfront or Betterment and what they think the companies will look like in 7 or 10 years 10:08 – Andy of Wealthfront was in Episode 498 10:20 – The growth of Wealthfront and Betterment are the ETFs in their assets and management 10:37 – Steve would use ETFs as a metric to try to predict what Wealthfront and Betterment are going to look like in 5 to 10 years 11:03 – Steve personally thinks that they can have a lot of winners—there are a lot of companies in the mutual funds industry that didn’t win and a lot that are dead 11:15 – So there’s no saying that the guys who invented the popularized robo advisors are going to be the winners 11:28 – Steve also thinks that Wealthfront and Betterment are going to do quite well and he sees them from afar, he’s a big fan and he anticipates they’re going to be winner 11:34 – Wealthfront and Betterment have already proven that at some extent, they’ve outlasted lots of other guys 11:55 – Steve thinks Wealthfront and Betterment care a lot about the consumers behind the platform and they realized that their people actually manage their money correctly over the course of time 13:05 – Riskalyze has various risks tools and robo advisor tools that they sell into RIAs 13:15 – RIA stands for Registered Investment Advisor 13:55 – All the models could succeed, there’s hundreds of mutual fund companies that did incredibly well 14:17 – These are fintech companies 14:59 – Nathan is a big fan of Warren Buffett who goes to all the annual meetups and just sticks to his advice 15:09 – “I’m not going to be active. I’m never going to beat the market. I’m never going to do this stuff and just going to put it in a passive, low exchange ratio, Vanguard, SMP and 500 index and that’s what I do” 15:19 – Nathan was hoping that Andy or Jon could convince him to take a shot at one of them, throw $10K in both rooms, see what happens over a few years and do a comparison 15:45 – Why isn’t Warren Buffett recommending Betterment and Wealthfront? 15:47 – Steve thinks that Warren Buffett probably doesn’t know much about Betterment and Wealthfront 15:52 – What Steve likes about Betterment and Wealthfront is they’re going to have really forensic case studies on stats of the population 16:21 – There will be perfect comparable data on which is better 18:36 – The Famous Five
3 Key Points:
Wealth tech companies are becoming more difficult to valuate, thus a need for case studies and empirical data. Empirical data can help inform your decisions, but the FINAL decision rests on your judgment. How do you value a company? Look at the factors affecting their growth over a period of time.
Resources Mentioned:
The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences Organifi – The juice was Nathan’s life saver during his trip in Southeast Asia Klipfolio – Track your business performance across all departments for FREE Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible Audible– Nathan uses Audible when he’s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books Freshbooks – Nathan doesn’t waste time so he uses Freshbooks to send out invoices and collect his money. Get your free month NOWShow Notes provided by Mallard Creatives
