A Very Stable “Coin” GENIUS

0:00Hey, everybody. It's your newcomer for the week. It's Tom Doton 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 great deep voice but then his intro voice is like two octaves up yeah that's called the energy I bring that high pitched energy that people like none of that monotonous low tone stuff Tom brings the shrill energy we need more of on this podcast you can't describe men's voice as shrill it's deeply offensive 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 to mention conferences because we have the newcomer breaking the bank conference coming up next week and uh before we even get into your uh private excursion conference eric can you just give us some details on uh on breaking the bank why should we why should we get people excited about it breaking we're gonna have uh the ceo of gusto plaid we're gonna have the founder of bridge which uh you know is bringing stable coins to Stripe, the topic of the day.

1:33We're very fortunate that Chime filed to go public this week and we had a tech IPO in eToro. So I think people will have some enthusiasm. So yeah, we're going to have 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 gotta hear about this hat i gotta hear about your conference so the conference i was in park city utah at like a very bougie retreat uh 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.

2:24The event was its first year, Blue Sky, put on by the venture capital firm Dimension and the biotech company Recursion. And 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 I'm not deep in the biotech world at all. And then I moderated two panels that were super interesting and shot some clay pigeons. And, you know, it was a good time. You shot clay pigeons? Yeah, it was actually pretty good. My team in our little bit won. So, yeah, clay pigeons. Wait, congrats. That's work. I was hard at work networking while shooting clay pigeons.

3:11You'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. Okay. I can talk about it. So the big ideas, 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.

3:47So 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 train for biotech startups rolling or like, what's the plan? 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.

4:25So I don't think there's getting around it, but yeah, there's going to have to be more private research. And I guess it's a win for the likes of what Microsoft research and DeepMind and sort of the corporate academia is going to be more important than ever. Did people discuss much? I mean, 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 continue. This wasn't said on stage, but I continue to be confused by the China tensions overall because everybody everybody's clearly getting the cues that like we have to be very hostile to China and there's this breakup.

5:06But 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 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 we block them? So 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's going to hurt our research capacity.

5:42China 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 U.S. should be part of that. But I haven't seen any of the Andreessen people stepping up and saying the crackdown universities is like antithetical to the American dynamism thesis. I know. Well, they want to build new institutions. Right.

6:15They 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 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, we got destroyed. So that's been brutal. I think people are really excited, like in tech world, about artificial intelligence. And there are certainly a lot of companies running AI transcription, but also So drug discovery using generative models.

6:54Yeah. 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 it up. Or you're a brand new company and you're like, oh, we're going to 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.

7:25And so people 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 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, size doses over time. And also this sense that it's a drug that sort of helps people in lots of ways and is not necessarily targeting disease, which then feeds into the overall longevity conversation.

8:01So, you know, people are certainly watching the success of Ozempic and Wagovi and everything and thinking, how does that affect our companies? I like the idea that something like Ozempic or Wagovi, like 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 is a subscription service where we're really making yeah 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 a zempic success that isn't its actual functionality but in fact, it's, you know, meeting out doses.

8:47In their defense, you know, the business strategy part is the part of the part this podcast probably understands better, right? 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 and stuff that for me without an MD can't distill for you here. More MDs than a typical VC conference sounds like. Oh, my God. Oh, tons of people. Lots of professors, you know, many former, but definitely well credentialed and educated crowd.

9:22So if biotech is in this kind of inexorable downturn, fintech has actually been looking really strong in the last year, which you said a couple of years ago. Really strong is a, I would say. Relatively strong? 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 the bottom. FinTech is back, baby. But it's an aspirational. It's marketing copy. What is the journalist, Madeline, 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 eToro, the stock and crypto trading platform going public this week, which, you know, end of IPO drought, in a sense, Chime filed its S1.

10:12So two major fintech powerhouses, decacorns, like testing the public markets. That's really exciting. One week out from our fintech conference. We didn't plan that, we promise. We didn't collude. But we did. We're talking about the influence. I'd love people to believe that we could plan that. Wait, yes. 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.

10:46And we're not going to be really hitting that sort of 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 neobanks that provide for initial 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 the Stripe Bridge deal, obviously last year was a big exit for the space.

11:25So we've got neobanks, we'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, there are 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 other things, but offer sort of a broader range of services that I think people are still pretty excited about.

12:12Investors have been telling me that this space of accounts receivable, something that you never think would be like a sexy space is doing incredibly well. And there's lots of early stage fint up companies that are using AI agents to automate a good deal of this 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 subcategory of our AI story is the take a services business, put AI on it and like 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.

12:49So for the accounts receivable, it's basically a bunch of investors and executives who are like, it's time we took down ADP, a company that you otherwise don't think about. These poor guys just like in Arizona that own whatever 80 % of the accounts receivable market. I guess it's primed for the taking. That's who Augusto was going after, right? Right. Oh, my God. Well, you know, all the startup reporters, myself included, want to do a Rippling versus Gusto, you know, or, you know, the payroll versus payroll. But yeah, ADP looms so large. Most companies just use this sort of super old fashioned tech that there's a lot of opportunity.

13:29There'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 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. 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.

14:01Like that's happening with banking, too, because all of these, you know, digital only rails are setting up payment systems. Yeah, yeah. We can tell you're deep in fintech. You're like, oh, yeah, I'm excited about the mobile first banking. The stablecoin thing, we talked about 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 stablecoins in the United States, right? Madeline, what's the latest on that? Yes, that would be the Genius Act, which is making its way through the Senate.

14:37So what does genius stand for? They're always good at coming up with those reverse engineered backronym names. What do you know it? Guiding and establishing national innovation for U.S. stable coins. That's the one I'm talking about. Guiding and establishing national innovation for U.S. 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.

15:11So 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 be... That's pretty much 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.

15:44For sure. And it's also a key distinction for stable 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 that's supposed to add sort of 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 podcast. I know the least of the three of us, like my understanding, like you mentioned, the stable coins is that they're pegged to a fiat currency.

16:26And it provides like a level of or 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.

17:01Despite 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 Staplecoin space when it comes to issuing cards that can link to Staplecoin accounts for payments, especially overseas. So MasterCard made an agreement this week with MoonPay to launch Staplecoin 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 of weeks. So everyone's going full steam ahead on stable coins.

17:38Dollar 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 wild fluctuation in the dollar and also stable coin 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, 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.

18:13If you go to BreakingTheBankSummit.com, you can apply for a ticket. It'll be pretty last minute. But if you're a founder, we will try to get you there. Or you can email. This is the real. If you're listening now, I'll say we're a small enough podcast that I can say an email address on air. Email Riley, R-I-L-E-Y at 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. 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, what have you, was the fact that there has been a loss, a brain drain, would you call it, or a concern about where the talent within the biotech world is going to go in a more combative immigration environment.

19:08And Madeline, you had a great piece the other week that talked all about the worries among startups and 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 H-1B visas, which a lot of tech employees for bigger tech companies, either the largest startups or public tech companies are on, or O-1 and EB-1 visas, which are more common for startup founders and early startup employees to get. So people in the founding team have equity, that tier of early stage would probably go for an O-1 or an EB qualifier green card.

19:51Isn't 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 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'll be changes, but a lot of it is even for the people who are legitimately here.

20:27They 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, um, you know, Sriram Krishnan was being called out by, you know, some of the more intense MAGA types claiming that someone who looks like him, AKA, a, 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 and the white nationalist wing of the MAGA is right.

21:08Well, 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, one, 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.

21:48And 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.

22:23If that's really important for you and American dynamism, a lot of, you know, to this point, your biotech point earlier, a lot of qualified researchers come to do this work from overseas. It's and they're choosing to be here. I mean, so much of the MAGA movement is help Americans at the expense of everyone else. Right. 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 the top engineer in sort of Bangalore to come here. Obviously, I don't know, I feel the opposite.

23:01And most of Silicon Valley does. 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 keep watching and hopefully the situation doesn't get any worse, but I suspect that it will. Look, Eric, on that note of optimism, you know, I really have nothing more to add. I'll only bring the mood down. So I'm glad we were able to go through all that stuff and see everyone back here next week.

23:40See you next week. Bye. See ya.