Ep. 160. State of the Union 3
FILE DETAILS
Audio Length: 		00:55:24	
Audio Quality: 		Good	
Number of Interviewers:		1
Number of Interviewees:		1

Start of Audio
SM:	Welcome to Fintech Insider. This is a special edition State of the Union show, coming to you live from the Southeast Fintech Venture Conference in Charlotte, North Carolina. We’re in uptown Charlotte, which is basically downtown Charlotte, which-, Matt, you’re from here. Why do they call it uptown?
MP:	Apparently, it’s because it’s the highest point in town.
SM:	Okay, that’s stupid. 
[Laughter]
SM:	Anyways, I want to thank Dan Roselli and the QC FinTech team, and everyone at Packard Place, Packard Place is one of my personal favourite tech hubs, I used to visit it all the time. Matt, your second question. Why do they call Charlotte the “Queen City”?
MP:	It was named after Queen Charlotte.
SM:	Oh my God, you know-,
MP:	Two for two!
SM:	Alright, every question goes to Matt [laughter].
MP:	That’s all I have. I’m originally from New York, so that’s as good as you’re going to get from me-,
RS:	Of Germany. Of Germany.
SM:	That’s pretty good. Queen Charlotte of Germany? Rahmi, dropping knowledge. That’s excellent. Let’s hear from our guests, so we know all these voices that we’re talking about. First one, and oh my god, I’m never going to get all these last names right, it’s not going to happen. Rahmi Serageldin. Wow.
RS:	Close enough. Yes.
SM:	Really? Say it. Say it, Rahmi.
RS:	Serageldin.
SM:	Okay, he’s Rahmi, from here on out.
RF:	It sounds better when he says it.
SM:	It does. Amazingly. You know, I watched YouTube, like, five times, and wrote it down, and it’s not going to happen. But Rahmi’s the co-founder and CEO of Honeyfi, I love that name. Who came up with the name, Rahmi?
RS:	GoDaddy. Because we were able to find it.
SM:	Seriously?
RS:	[Laughter]. No, we looked for different ones, and that one was available.
SM:	I like-, I like the name Honeyfi.
RF:	Look at the last-, look at the last text I sent my wife.
SM:	Please, what is it?
RS:	Nice.
SM:	What’s it say?
RF:	It says, “Check out Honeyfi. It helps couples share info about finances, I’m going to check it out for us.”
SM:	That is-, that is a shout out from the-,
RF:	She did not respond though.
[Laughter].
SM:	Yeah, she’s looking-,
RF:	But I really-, I really, really, really liked it.
SM:	Yeah, Rob’s wife’s going, “Honeyfi? Uh-huh. Yes.” Rahmi. So, again, co-founder and CEO of Honeyfi. You were also the COO at Moven. 
RS:	I was. Yes.
SM:	So you’ve got a great background in building companies that have been successful in this space.
RS:	Yes. I’ve been lucky. I’ve been part of good teams.
SM:	And based here in Charlotte?
RS:	Currently now in Charlotte, yes.
SM:	Alright. So, next guest is Rob Frohwein. Rob, did I say that closely right?
RF:	Yes, you got it right!
SM:	I phonetically spelled it.
RF:	It was missaid in stage, which is fine, I mean, I’m just happy if people give a, you know, a good college try.
SM:	[Laughter] I gave it a great college try.
RF:	There you go.
SM:	Rob is the CEO and co-founder of Kabbage. You’ve had a pretty good month, you’ve had a good year, I think it’s safe to say.
RF:	Thank you. Yeah, it’s been a-, it’s been a good year. Years are going by quickly.  That’s why I have so little hair, and what’s left is grey, but-, but yeah, it’s been a-, it’s been an interesting year, for sure.
SM:	$200 million in equity funding from Credit Suisse recently-,
RF:	No, that was not equity. That was debt.
SM:	Debt?
RF:	Yeah, that was debt.
SM:	Which is an important difference.
RF:	That’s important. When you’re in the money business, you’re always looking for inventory, that’s what I like to say, and, yes, we raised-, it was a $200 million warehouse, we just announced last week we had raised $250 million from SoftBank. We announced that back in August.
SM:	So, basically, drinks are on Rob, when we leave here.
[Laughter]
SM:	Based in Atlanta, right?
RF:	We are based in Atlanta, that’s correct.
SM:	And, true or false, you studied Law at Villanova?
RF:	That’s-, that’s true. “Studied”.
SM:	“Studied” [laughter].
[Laughter].
RF:	Practiced, studied-,
SM:	We’ll move on-,
RF:	Studied, actually, studied is probably not the most accurate term for what I did in law school.
SM:	Attended classes? Occasionally?
RF:	Maybe also not terribly-, no, no, no. I practiced law for a number of years, but-, but I don’t practice now.
SM:	Two lawyers are going to be at this-,
RF:	Yes.
SM:	Well, let’s say two people that studied law are going to be on this podcast, folks. Next is Matt, oh, god, Matt Potere?
MP:	Potere.
SM:	Potere.
MP:	You were close. You were close.
SM:	Alright. CEO of Sunlight Financial, what a great name. What is Sunlight Financial?
MP:	We are a residential solar finance company. So, we help customers go solar, by providing them finance.
SM:	And see, I absolutely-, we talked about this, before the show, how much I love that. Because I live in Florida, and also how ticked off I am, that, as a private citizen, I’m not allowed to sell the solar energy I collect, which annoys the tar out of me. But we can talk about that.
MP:	That sounds good, yeah.
SM:	Actually, one of our non-executive directors with 11FS is Lisa Gansky, who is with Mosaic, in this same space, out in San Francisco.
MP:	That’s right, yes.
SM:	Alright. And, our last guest, Alexandra Villarreal O’Rourke, from Mexico, though, originally. I love that name. Yes, O’Rourke is very, very Spanish.
AV:	Yes. You know, it’s an ancient Spanish-, no, my-, that’s my husband’s name. Mine is Villarreal. 
SM:	Which is a great football team, by the way-,
AV:	Yes.
SM:	My beloved Arsenal-,
RF:	Oh, that’s right-,
AV:	That is where my family’s from, from Villareal. 
SM:	Yes. Multiple (ph 04.44)-,
RF:	Arsenal, you’re talking about, right? That’s my son’s favourite-, favourite team. Yes.
SM:	Oh, you are my favourite guest ever on this show.
RT:	There you go. There you go. Yes.
SM:	Yeah. I am a diehard Arsenal fan. Alexandra-, Alex, right?
AV:	Alex. Mm-hm.
SM:	Yes, my youngest daughter’s name is Alex, so this is great.
AV:	It’s a good name.
SM:	It is a good name, isn’t it? You are a Financial Services Partner and FinTech Practice Group Co-Leader at McGuireWoods LLP. Oh my god that’s a mouthful-,
AV:	[Laughter].
SM:	In DC?
AV:	Here in Charlotte, actually.
SM:	Oh, here in Charlotte?
AV:	Mm-hm.
SM:	So, what-, what do you do?
AV:	I advise fintech companies and banks on tech regulatory issues of all sorts, including, you know, hopefully, sort of, preventative, just getting things right, and then, if not, you know, litigation and enforcement, and other-,
SM:	Is maybe, like, Kabbage a client, maybe?
AV:	I, you know, can neither confirm nor deny.
SM:	[Laughter] maybe some of the companies sitting at this table-, you went to Harvard?
AV:	Yes, that’s right.
SM:	And we’re going to get into this-,
RF:	Where is that?
SM:	Harvard? Yeah, you know, that school-,
RF:	Usually when people go to Harvard, they say, “I studied in Boston.” 
[Laughter]
SM:	Very nice.
AV:	I’m Mexican. So, in Mexico it’s a, you know, it’s a big-,
SM:	It’s a big deal, right?
RS:	It’s a big deal here, too, I think.
RF:	Yeah, it’s a big deal.
SM:	Well, what we’re going to love, because we’re going to get into this, in the second segment of the show, when we talk about the news, but, Alex, what I like about you, you were with the State Department, for a time-,
AV:	Mm-hm, that’s right.
SM:	And you’ve also been with the CFPB.
AV:	I have. Yes.
SM:	Yes [laughter]. In the news a little bit, lately, and we’ll touch on that-, 
AV:	I have gotten a lot of calls on it in the last three days.
SM:	Yeah, we’ll touch on that in the second half of the show, when talking about news, but really, what we’d like to do in the first part of this segment, of the show, the first 20 minutes or so, is really talk about the southeast. And one of the things I love about doing this podcast, our Fintech Insider is out of London, and we all know about London, when it comes as a tech hub. London and Silicon Valley, and New York, will argue all day on, you know, who’s the biggest, right? Is it them, is it Singapore, Hong Kong? And, and they have a leg to stand on, when it comes to that. Charlotte’s interesting. And the south of the US is interesting. I worked in Atlanta for about ten years, in the 90s. I watched Atlanta change drastically, right? Rob, I’m guessing you spend your entire life in a car, on either 285-,
RF:	[Laughter]. No, that’s not true, I think that’s a-, that’s just a nasty rumour. 
SM:	It’s not-,
RF:	Not for me, I mean, I don’t-, it’s only about 15 minutes each way.
SM:	Is your office, like, downstairs of your house?
[Laughter]
RF:	Well, you know, you’ve just got to geographically locate, you know, within some reasonable distance.
SM:	Yeah, that’s the secret to living in Atlanta, right? Is be very, very close to work. But I watched Atlanta, in the 90s, change drastically, right? And I remember, in the 90s, they were talking about Charlotte was going to be-, it was either going to be Charlotte or Atlanta that really rose up to be the, you know, the hub, if you will, or the tech hub, in the south. Matt, you’re-, I’m going to say you’re probably the longest-reigning resident here in Charlotte, at least you knew what Queen City meant, and all that other stuff-,
MP:	It’s crazy to imagine that. Six years, and I’m a-, I’m a veteran here. And I could be a native, to this one-,
[Laughter]
SM:	Except for people that live here, right?
MP:	Yeah.
SM:	They’re like, “Where you from?”
MP:	Yeah, no one is from Charlotte.
SM:	Yeah, that’s like Florida, where I live, right? No one’s from there. So, how would you describe Charlotte, Matt, from a tech standpoint? We can start with fintech, but let’s just go broader. How would you describe Charlotte?
MP:	Yes, so, Charlotte’s an easy place to live, it’s an easy place to work. When we founded-, we founded our business up in-, in New York, and we opened an operation centre here, and we’ve been growing headcount here. So, we were very intentional about choosing Charlotte. You know, as a financial services company, having access to all the banks, and the ecosystem around it, just makes it easy to accrue talent. It’s just a-, it’s just a good place to live. When we’re-, we’re trying to get people to relocate, having them come to the warm weather in Charlotte, and the nice people, is a-, is not a tough thing to do. So, it’s been-, it’s been a great place to be.
SM:	Well, we see that where I live in Jacksonville, and Jacksonville’s a tech hub, when it comes to the big banks. So, Citi has a massive-, I think all their IT, for the most part. You could live in Sioux Falls, South Dakota. No-, no, I love you, Sioux Falls, for the three people that listen here. You can live in Sioux Falls, or you can live in St. Augustine, Florida, on the Beach, right? The cost of living is nothing, I know that’s the same here-,
MP:	Yeah, really. Really affordable.
SM:	Yeah, Atlanta’s that way, right, Rob?
RF:	Atlanta’s pretty, yes, it’s very reasonable. I mean, relative to the Bay area or, you know, lots of other areas, from which we attract talent.
SM:	And that’s a big deal for you, right? I mean, talent really is everything. You have Georgia Tech, I know that.
RF:	We do have Tech. Yeah, we have Tech, we have Emory, we have Georgia State. We’ve got lots of schools. Very, very vibrant community, it’s actually been pretty incredible, over the last five or six years, the number of tech companies that have really grown up, I mean, outside of, you know, even fintech. You’ve got companies like MailChimp, and Ionic Security, and Pindrop Security, and all sorts-, all sorts of great companies.
SM:	Is it a fight for talent, on your end? I mean, because what is the name of the-, Transaction Alley, right? Is what they fall it?
RF:	Yes. Atlanta. Uh-huh.
SM:	Yes, with ATP and TSYS and First Data, and take your pick.
RF:	Yes.
SM:	Is it a fight for talent for you with them? Or is it just-,
RF:	No, we got it-, we got it way over them. 
[Laughter]
RF:	No, you know, the biggest thing is, you know, we like to attract talent from other places, too, to relocate to Atlanta. So, we-, you know, we’ve actually built a whole deck, “Why Atlanta?” just, yes, yes, we’ve done that, in order to make sure people understand all of the benefits derived from living in Atlanta.
SM:	That’s a great-, you’re the first person I’ve heard say that.
RF:	Yeah, well-,
SM:	That’s actually pretty cool.
RF:	We-, yeah, we-, we’re nothing if not trying to be innovative [laughter] in the way we-, the way we go about everything.
SM:	Kabbage.com, for your listeners. Rahmi, you’ve-, you live in Charlotte, but you’ve done New York, right, when you were with Moven, you’ve been there. What do you see as the biggest difference? Let’s get past the cost of living.
RS:	Yeah. So, I think it’s interesting, because, in New York, working for a startup is a very normal thing. In the Valley, it’s a very normal thing. So, here, I think it’s starting to become more normal. It’s not the, “Oh, you’ll get a job soon.” It’s like, “No, this is my job.” [Laughter] like, you know, “It’s-, it’s kind of working out.” So, I think there’s a bit of the mentality, also, that you have to get over, when you’re-, when you’re recruiting here, but it’s-, as we start to have more and more success stories, that becomes easier and easier, especially in Charlotte, with AvidXchange, and Sunlight, obviously, moving a lot of their folks here. So, I think that’s, for us, what’s interesting. The other is around bringing in the “young people”, and I’m doing air quotes, for that-, is-,
SM:	If you say Millennial, I throw my coffee at your head. That is banned on this podcast-,
RS:	24 to 35 year-, no. The-, but I think it’s also making it a destination for people coming out of school, that Charlotte isn’t just a big company town. Like, you can work for smaller companies that are doing more innovative things, that have a better quality of life, and you actually feel like you’re contributing to the company, versus-, and maybe the country, but primarily the company, versus just, kind of, a cog in a big organisation. So, I think when you start to sell people on that, they really come around. 
SM:	Yes. I find that-, I do find that interesting, right? Because we’re at-, we’re at a conference today, that’s why we’re all here. Again, we mentioned, at the beginning, the Southeast Fintech Venture Conference, this idea of bringing fintechs together, and venture capital, in the same building. This is how I knew I was in Charlotte. I’m wearing-, we’ll take a picture later. I’m in jeans, Nikes, and my dinosaurs eating a unicorn shirt, my favourite shirt, everyone’s in suits. Literally this entire floor is in suits. No other conference you can go to, I don’t think-, Rob, have you been to another conference where-, that looks like this?
RF:	No, you know, I have a real-, you know, look, I mean, I’m in jeans, I do-, I did wear a button-down shirt-,
SM:	You have a button-down shirt.
RF:	Button-down shirt, but, you know, it’s lipstick on a pig.
[Laughter]
RF:	[Laughter] I’m also self-deprecating, if you haven’t figured that out yet, yeah. So-, so, no, you know, it’s really funny, I am part of a-, I won’t go into the details. I’m part of this group that’s supposed to be a tech group, and it’s actually based in Atlanta, and I-, and the meetings are at a very large company, and when I go there, I’m the only one that’s not wearing a suit. And, when I go in there, they give me-, they gave me-, and the meetings happen once every couple months. They give me a slip of paper, and it says, “Your assistant for the next hour and a half will be X.” 
SM:	Wow.
RF:	They literally assign me an assistant, and I’m like, “I don’t really-, I don’t even have a full-time assistant at work.”
[Laughter]
RF:	Like, “Come back with me, please!” Um, you know, it’s-, it’s just-, it’s always amazed me, but no, most of the-, you know, the conferences, the only place I wear a suit, right now, unfortunately, is DC. That’s where you’ve got to still wear a suit, and I’m telling you, that has to fall. That-, that’s the last-, well, there’s lots of things in DC that need to fall, but-,
AV:	It’s a great equaliser in DC. You know, you can be from Arkansas, or you can be from New York, you’re all going to look like the same nerd. I think that’s, kind of, why-,
SM:	What a great segue to Alex. Dude.
RF:	Wow. Wow. What a-, what a cop out, yeah.
SM:	That’s unbelievable.
RS:	New defence of a suit!
RF:	Wow, the defence of the suit. Let’s make everybody-, how about if we just institute, like, t-shirt and jeans, everybody’s got to-, does it have to be a suit? You know.
SM:	That was the greatest segue [laughter] to Alex, because Alex you’re-, I think you’re the newest, right? To come and live in Charlotte.
AV:	I’m the newest, although I’ve got to tell you, so, I’m involved in something called the Carolina Fintech Hub, which I’m sure you’ve, maybe, no? No one has heard of that?
SM:	Anybody?
AV:	So, it’s-, it’s a non-profit group that essentially fosters fintech innovation here in the city. It’s sponsored by a couple of the banks, a couple of the larger fintechs, and we launched this spring, and it’s actually-, we’ve gotten a lot of interest, and I mention it because, what’s-, you know, it’s funny, because you do see-, at our events, you’ll see half the people are wearing suits, and half the people are wearing, you know, logo t-shirts, right, from their company. And that’s what’s great about Charlotte, is that the people who are wearing suits are no longer seeing the people who are wearing the logo t-shirts as, sort of-, I mean, disruptors, but not in a, sort of, scary sense. They really are coming up to these folks and saying, “What do you do? Do you partner with banks?” you know, “What kind of thing could you do for my company?” And that’s-, I think that’s what’s valuable about Charlotte, is, at events like that, we really see, kind of, the old school not only getting comfortable with the new school, but actually saying, “What can we do for each other?” which is, you know, kind of fun.
SM:	Yeah, I think it’s-, I think it’s interesting, from your standpoint. So, for the listeners, if you haven’t figured it out, the lawyer backgrounds would be Rob and Alex. 
RF:	Thank, thank you very much.
SM:	From now on, you’re the lawyer, co-founder guy. Self-deprecating lipstick on a pig lawyer guy. But it is interesting-,
RS:	We have a lawyer on our team, too.
RF:	You do have, actually (ph 15.12).
RS:	We don’t hold it against him, though.
SM:	That’s actually a good thing, right? Because I want to talk about that from a regulator standpoint, because that’s your background, Alex, right?
AV:	That is. Mm-hm.
SM:	I know whenever I’m on a stage, and I’m talking with fintech companies, or giving them advice, I always start at, “And by the way, your second hire should be your regulator, should be your in-house counsel, should be going down that path.” So, Rahmi’s nodding at me, I’m interested, Rob, would you agree with that? Do you think we focus-, that we-, that some of the companies have learned their lessons, and understand the importance of the compliance standpoint?
RF:	Yeah, I think so, I-, you know what-,
SM:	He gave me a look. Everybody. He gave me a look.
RF:	Well, look, I-, look, I struggle, I struggle a little bit, only because, when you start up a company, look, right now, you know, we’re about to hire our sixth in-house attorney. We have probably, like, you know, seven law firms that do various types of work, and obviously have a regulatory firm, thank you very much, Alex-,
[Laughter]
RF:	And we also have, you know, we have, you know, a lobbying group in DC, and in various states. I mean, it’s-, it’s a huge expense. It’s very hard. I mean, it’s one of the-, one of the challenges, I think, for starting a brand new company in the fintech space, is trying to reconcile the whole regulatory and legal side of it. Because, you know, I mean, it should be-, you know, all the-, all the language out there is about how it’s-, how cheap it is to start a technology company now, right? Because of software and everything. But, when you’re doing it within a regulated environment, it’s totally different, and I think folks are getting an appreciation for it. I think there’s-, I think it’s actually even harder today for startups, as they relate to the regulatory side, because, you know, I would-, I would argue that there was a lot of people paying attention to a lot bigger financial players, back in ’09, when we started the company, so we weren’t really on the radar, so we could build our company, and, you know, now, fortunately, we have a very robust regulatory approach. But, you know, it’s really hard for a startup.
SM:	So, I’d be curious, Matt, because you’re in an industry that, one, you’re touching on the utilities side, but also, you know, the-, the tech side of this, the fintech side of it-,
MP:	Yes.
SM:	When you’re-, when you’re looking at the regulatory and the compliance side from a utilities standpoint, right-,
MP:	Yes.
SM:	Are you seeing the same thing? Or is it still-, is that still, kind of, greenfield-,
MP:	Yeah, we-, it’s-, it’s once removed from us. So, we interact, and our partners interact a lot, with the utilities, but we think every day about consumer regs, and-, and I agree with Rob. I mean, one of the things, I think, as a young company starts, that’s really hard, is, you know, you can make your second or third hire an attorney, and that’s fine. I think, more important, is to have founders who really understand what it’s like to be a lender, and understand the regulatory issues.
RF:	I was actually a General Counsel of a bank, in a prior life, so-,
SM:	Bringing that in, it’s just-,
RS:	Did you-, did you wear a nice suit? 
[Laughter]
SM:	A suit! Maybe not nice.
RF:	That’s right. No, but I don’t-, for the record, I own one suit, and I-, and we have-, the only dress up day we have is to our holiday party, once a year, and so it’s just been the same suit for the last five years, so there you go.
RS:	So, I have three from my consulting days, but my-, left, from my consulting days, but my daughter, about a month ago, took toothpaste and ran it across all of them, so-,
SM:	And that’s a problem, why? 
AV:	(? 18.18) you miss it, Rahmi, it’s time to let it go.
RS:	I know, basically, and I was like-,
SM:	So why didn’t you just stop wearing the jacket?
RS:	“It’s frustrating, but, oh well!”
RF:	Does toothpaste not come out?
RS:	Not very well. Well, I also didn’t see it for, like, a week.
RF:	Or was it, like, teeth-, was it, like, teeth whitening toothpaste?
RS:	[Laughter] It was-, it was (? 18.33) kids-,
SM:	Your favourite wide-lapel, double-breasted suit-,
RS:	Totally. It was my-, my Johnnie Cochran, you know, like-,
RF:	That’s right, yeah, there you go.
[Laughter]
SM:		So, we kind of see, if I’m hearing this right, Atlanta’s pretty established, right? I mean, it’s-, it’s got its mark. Would you say Atlanta’s, really the, from a fintech standpoint, or finance standpoint, the capital of the south? Or would you argue with that?
RF:	Oh, of the United States, I would say-,
SM:	Wow.
AV:	Oh, I don’t know about that.
[Laughter]
SM:	Well, from a transaction standpoint, right? Yes.
RF:	Yeah, you know what? Look, I-, you know what, look, is it the capital? I don’t know, but I know it seeks to be. I’m on the Fintech Atlanta Taskforce, whatever that-, you know, that and 3 bucks buys you a coffee at Starbucks, I guess, but-, not even a good one. You know, I mean, it’s certainly striving to be, but I really do believe that, I think a lot of people are-, are confused about the term “fintech”. Right? Because a lot of the payments companies, and I have a lot of respect for them, but that’s not new technology.
SM:	No.
RF:	Right? That’s not new technology. So, of the new, you know, financial services technology-oriented companies, you know, where-, you know, where do different cities play? And I think that’s going to be really what’s going to define folks. You can’t just say, “Hey, we have a lot of banks, so we’re a fintech centre in Charlotte!” or, “We have a lot of payments companies, so we’re fintech, in Atlanta!” It’s about really backing that up with, sort of, the latest best of breed companies out there.
SM:	So, Alex, from your standpoint, I find it interesting, right, bringing that experience from DC.
AV:	Mm.
SM:	Every time I say “DC”, Rob winces, by the way, which I think is very, very funny, right? Rahmi just-,
RF:	It’s more of a twitch.
[Laughter]
SM:	Yeah, he’s got a nervous twitch. Rahmi just rubs his head, and-, and Matt looks out the window and cries-,
[Laughter]
SM:	And we’re going to talk about this, when we come out of the break, right? Because I think three out of four people at this table-, oh, there’s five people at the table. Alright. I’m not an engineer. Damnit. Four out of five-, no. 
MP:	It’s hard to tell if you were counting yourself or not counting yourself.
SM:	I literally never count myself. So, four of the five people at this table, I think, are going to say, and I’m speaking for all of us, that the pendulum, kind of, swung pretty far, when it came to compliance and regulation, alright? We’re-, we’re coming up in 2018, we’re recording this in the back end of 2017, so we are a good ten years outside of that wonderful period of time when Rob decided to found a company, good on you for doing that. But, Alex, I’m going to be really curious, when we come out of the break, to talk about your experiences at the CFP-,
AV:	Mm-hm.
SM:	Right? And being on that side of the pendulum, right?
AV:	Being the pendulum? [Laughter].
SM:	Yes! I think-, well, being the pendulum, yes [laughter].
MP:	Pushing a pendulum?
SM:	Good way to put it. Right. I think that’s a great way to put it. And when we come out of the break, that’s where we’d really like to jump in to a little bit. We’ll talk about some of the stories that are relevant right now, and I think how they apply, and I think it’s really interesting for Matt and Rahmi, right? You both have younger companies that you’re starting up. Rob, you’re considered a success story, just go with it, you are. And, you know, so, we have-, we’ve got a little bit of an evolution of companies’ lifespans, right? And the regulatory side, and how it plays. So, when we come out of the break, that’s where we’re going to start. In the meantime, let’s all go get a drink, and then let’s hear from our sponsors.
[Advert break]
SM:	Alright. Welcome back to Fintech Insider State of the Union show, recording from Charlotte, North Carolina, it is uptown, which is downtown Charlotte, we’ve established that. We had a great break. Rob spilled Coke literally all over-,
RF:	Diet Coke.
SM:	Okay-,
RF:	Just for the record, Diet Coke.
SM:	For his wife, and we’ve talked about how to remove toothpaste from a suit with Rahmi, that was a fascinating conversation, thank you, Rahmi. Listeners, you can give us your hints, send them to FintechInsiders.com, we’d appreciate it. Coming out of this break, one of the things we want to talk about, because I’m-, I’m incredibly happy that we have Alex as a guest, because this is first-hand experience. We’re not talking theory. You-, you worked at the CFPB for three years, I believe?
AV:	Three years. Mm-hm.
SM:	Alright, so, I mean, this isn’t stuff we’ve read, this is first-hand experience. And-, and I want to talk a little bit about your time there, and the changes that are coming. Because, again, with, you know, the three, you know, founders that we have sitting at the table, are all impacted, and Matt, we talked about this. Even in, you know, the solar utility space, you’re under the guidelines, right?
MP:	Yeah, absolutely. We’re-, we’re lenders.
SM:	Alright. So, I mean, all three of you are affected by this, but your experience over the past three years-, because what I want to read is a story. So, change happens, right? We had an election in the last year, and, you know, we’ve talked about Dodd-Frank, and some of the other things, but we-, just with the recent news, that-, the resignation, that’s coming up, I believe, at the CFPB, and for our listeners over in Europe, and I apologise, what is the CFPB?
AV:	So, it’s the Consumer Financial Protection Bureau, and it regulates, essentially, bank and non-bank lenders. But for consumer issues, for the most part.
SM:	So, President Trump has tapped the Office of Management and Budget Director, Mike Mulvaney, as the Interim Head, with the resignation announcement that came, and so, these are some of the quotes, he’s a former congressman from South Carolina, I used to live there, he’s been a pretty fierce critic, while he was in congress. These are some of the statements for the organisation that you-, you worked at. Rob, Rahmi, Matt, I’m just turning your mics off, because we’re going to let Alex go on-, on her mini rant here-,
RF:	Woo! Party time!
SM:	But he has literally-,
[Laughter]
SM:	[Laughter] yeah, he just poured another Diet Coke all over his shirt. Alright. So, Mike Mulvaney has said, “The CFPB is a sad, sick joke, and one of the most offensive concepts I think in representative government. We have created the worst kind of government entity.” And this is going to be your Interim Head, of that organisation that you left recently.
AV:	Right.
SM:	So, one, how would you respond to that, and what would you-, what would you say about your time at the CFPB?
AV:	So-,
SM:	That you’re allowed to say. You know, I get that, I know you signed-,
AV:	Um, so, it’s hard for me to respond, because I-, I had a very-, a super interesting experience at the CFPB. A lot of my job really was to try to get regulation right, but to try to get tech regulation right, specifically. So, I had a very, I think, kind of a unique and kind of odd experience, in that, really, the folks I was working with, you know, when they didn’t understand something, they’d own up to that. When they wanted to learn it, they sought out folks like, you know, the people at this table, for conversations. They were at big tech conferences, talking to people about their models, and talking to people about their fears, and how regulation was, you know, impacting them-,
RF:	I can second that, by the way.
AV:	Yes.
RF:	It was fantastic, there was a whole (? 25.44), we had great relationships with a bunch-, Dan, and other people at CFPB.
AV:	Right. Exactly. At Project Catalyst, exactly. 
RF:	Yes.
SM:	That’s a big statement. 
AV:	So, you know, it was-, I think I had, maybe, and look, you know, you could say that it was a myopic view, but my job was to get it right, to get tech regulation right. And, you know, I worked with a lot of people that could have been doing a lot more profitable things, some real true believers, and some really smart people. I think, unfortunately, that, you know, obviously the agency has-, has a lot of political twitch points, and [laughter] and has a lot of-, has, you know, frankly made a lot of enemies, right, and gone after a lot of industries that, you know, in controversial ways. But I would say that, when it came to fintech, I’ve-, I’ve yet to meet somebody, and I meet a lot of people that are very happy with the Bureau. Those quotes, you know, would-, pale in comparison to what I’ve heard, from some folks. I have to tell you that I’ve yet to meet somebody in tech that feels 100% like they were, you know, completely run over by the Bureau. Even-, even folks who have been the subject of enforcement actions have said, “It was terrible, and I feel like they got it wrong, but, you know, I feel like they, you know, made an effort, I feel like they tried to understand my market,” I-, you know, I’ve yet to hear somebody in tech say, you know, “Completely, you know, hands down, that place is terrible.” So-,
SM:	When was it founded?
AV:	2010, 2011, so, you know, it’s new-ish-,
SM:	But it sold, if I’m not mistaken, Rob, pretty much around the time you founded your company? 
RF:	It was our fault.
[Laughter]
SM:	Damnit.
RF:	Pretty much, pretty much. No, yeah, right around the same time, and we actually engaged pretty early. They had-, you know, there were, sort of, and correct me if I’m getting the vernacular wrong, Alex, but there was an enforcement division, but there’s really a, sort of, research information division-,
AV:	Yes, there is. Right. Exactly.
RF:	And that-, we-, we engaged with that group quite a bit, and we actually became, you know, friendly is maybe a strong term, but it might not be, we actually got to know, and provided as much information, and got a lot of information back, and, actually invited the CFPB on part of a group called the CFDR, which is focused on data rights, and CFPB has been a leader in trying to, you know, let banks know that they need to provide data access for their customers, provide data to third parties, and we’re really appreciative of that. We actually had the CFPB come in and speak to our group. That’s led by a whole bunch of people, including Anil Arora, from Yodlee, and others.
AV:	Yes.
RF:	It’s been great. Very helpful.
AV:	Yes, and look, I don’t want to paint rose coloured glasses, like, I wouldn’t say that-, you know, part of my job, frankly, was to work with enforcement attorneys on-, on legal theories (ph 28.38) that I might have disagreed-, or, you know, that I wanted to, sort of, work through, and we had some interesting discussions. So, I-, I don’t want to say that I-, that I don’t think any of the enforcement actions have ever-, I mean, now that I’m on the other side [laughter] I get a much clearer picture of how hard it is to comply with some of the requests, how difficult it is, to-, to, you know, meet some of the expectations that are set in Washington, outside of the context of what actually-, how things actually work. So-,
SM:	And you could say that, what you just said, how it works in Washington, outside the rest of the country, I mean, we could apply that to, let’s be honest, every industry-,
RF:	(? 29.11), yes, of course.
SM:	Well, including who wears suits, or not.
RF:	Yeah, exactly. I totally agree. It’s the only place in the world, literally in the world, that I go, and I wear a suit, too. Because it all makes us seem like we’re the same-,
AV:	Yes.
RF:	According to you, Alex.
[Laughter]
AV:	I tried to make the point for it being that great equaliser-,
MP:	That is one of the most tenuous theories I’ve ever, ever heard promoted.
SM:	Yeah, that’s a-, that was interesting. But, it’s funny, because we keep-, we keep giving Rob all this credit. Rahmi, during the same time, you built, or helped build, a very successful neobank, in Moven, in NYC. So, what was your experience with-, with this level of regulation that was coming out, and trying to build a challenge-, let’s be honest, Moven was a very new concept, (? 29.55) when it came out.
RS:	Yeah, I think-, I think, for us, we, you know, Moven’s goal was to help people understand their financial health, right? We were probably one of the first to pioneer financial wellness, and that-, that concept. And so, that obviously aligns very well with the mission of the CFPB, right? They want to make sure people understand-, at their core, understand what they’re getting, when it comes to financial products. I don’t think the mission is to make as many regulations that are onerous as possible. Like, I’m pretty sure that wasn’t-, wasn’t written on the walls.
AV:	[Laughter] that is not on the window when you walk in, no.
RS:	But I think the challenge we faced was, you know, as we started to expand our product set, we spent more and more of our limited startup time, and limited startup resources, on making sure that what we were building was compliant, and that’s, unfortunately, not what you want to be doing, as a-, as a startup. So, I think, to the extent that, and this isn’t necessarily just on the CFPB, this is more of a general-,
SM:	Yes, general (? 30.47)-,
RS:	Regulation, kind of, comment, then the extent that we can help startups with that effort, then it will make everything work better, right? Make sure they’re compliant, make sure the customers are taken care of, and we foster and accelerate that innovation, which is, really, at the end, what we want, I think.
RF:	It’d be really cool if the CFPB had a sandbox, like, maybe literal-, you know-, like, literally, I mean-,
MP:	Well, I mean, other countries have it. Well, Singapore-,
RS:	Singapore has it.
MP:	Singapore are doing it.
RS:	Dubai has it.
RF:	Yeah, I know, it would be fantastic, but, I mean, why not-, why not outsource, this sounds really, kind of, crazy, because it may not work in practice, but outsource, sort of, the regulatory compliance, say, “I want to accomplish this,” and CFPB says, “This is how you do it.”
AV:	Yes.
RF:	You know, and actually design it for you, in a way that doesn’t kill the innovative aspect of it.
SM:	Yeah, I mean, everything we’re talking about, which is interesting, when we talk about the CFPB, I know in Europe, in the UK, where I used to live, and in Europe, they’re like, “I don’t understand what the issue is.” [Laughter]. I’ve-, again, I worked over there, I was working for TSYS, at the time, I understand, you know, the role government plays in the regulatory side. And yet, if I look at the UK, how many banking licences in the past two years? Right? Starling, Tandem, Atom. Yes. I mean, the innovation that’s happening specifically in the UK, and the adoption of fintech solutions.
RF:	And not only that. I mean, the government’s supporting companies like Funding Circle.
SM:	Yes.
RF:	A small business lender. I mean, literally are promoting the heck out of them, in order to get more capital to small businesses in the UK. Very, very good.
SM:	So, what’s the difference? Is it the politics?
AV:	Well, so they’ve tried-, you know, the Bureau has put its toe in the water with the No-Action Letter, that it issued last month, right? So, it issued a No-Action Letter to a company that was using, you know, what I think some folks would call fairly controversial educational data. I mean, it’s not-, the data itself is not controversial, but the use of such data has, in past years, been a big issue. And the bureau issued a letter saying, “We don’t intend to bring an enforcement action against you.” Now, that sounds like very little, but I have to tell you that it’s a huge-, for the bureau, it’s a huge-, yeah.
M:	It’s a golden ticket.
AV:	Well, I don’t know about that [laughter]. It can be cancelled at any time, and it’s not actually binding on anyone [laughter].
MP:	Yeah, I mean, one of the things, for us, so, if it’s hard for us to go face to face with the regulator, it’s also hard for regulators to go face to face with the public, and it’s such a politicised environment that it makes it-, it makes it hard for them. We want common sense regulations, and I do believe it swung too far in one direction, but we need to do a better job of minding our own shops, and doing a better job of thinking about the end-, the end mission. You know, we’re-, we’re sitting here, a few weeks after the Equifax breach, and, you know, so, on one hand, we’re going to talk about how the regulations are too onerous, but we had most people in the country have their data breached. And, whether or not there’s a direct connection doesn’t matter to the public, and that’s part of the problem. It’s hyper political, and we need to stop-, in my view, we need to stop thinking about what we’re allowed to do, or not allowed to do, from the regulators, and we need to just step back and say, “What’s the objective? What’s the right thing? What’s the fair thing?” and if you follow right and fair, we’ll get into the right spot, but it-, but it’s really tough. It’s really political, and it’s really, really adversarial right now.
SM:	I was on stage at Sibos, as part of the Innotribe, it’s a part of Sibos I really enjoy, the big banking conference up in Toronto, and, you know, I talked-, I was talking a lot about the changes we’re going to see, especially with APIs, and the opening up of customer data, and you look what’s happening in Europe, right, and coming this way, and Rob’s suddenly got excited, because I said “API” and he’s like, “I did that years ago!” But-, and I was giving a speech about, “Guys, you’re going to have to open up the gates,” right? “It’s coming.”
RF:	Yes.
SM:	Just, you know, “It’s coming.”
RF:	Yes.
SM:	And, somebody asked me a question, they said, “Do you really think that’s a Great idea?” Right? “To, kind of, open those walls up?” And I went right there, right, I said, “Alright. So-,” and I couldn’t help myself, and I went on a mini rant. I said, “Alright, we just came out of the Equifax breach, right? Which will be investigated to some degree, with some of the stock shares that were sold by the SEC,” oh, God, damn, they got breached, right? They got-,
RF:	Actually, I think-,
SM:	They got hacked.
RF:	Well, I think they actually resolved that. They found no-,
SM:	No evidence?
RF:	No evidence.
MP:	The internal audit resolved it. 
SM:	Their internal audit resolved it? Was that by Deloitte? 
[Laughter]
SM:	Sorry Deloitte, you (? 34.51). Just saying. And no, we’re not editing that out, because it made me laugh, but you know what I mean-,
RF:	Wait, they’re not a sponsor, are they?
SM:	God no.
MP:	Not any more.
[Laughter]
RF:	Well, they’re not going to be a sponsor-,
MP:	Note to selves, take them off the list!
SM:	I think Deloitte is a fantastic organisation, has done a great job, in what they’ve done, but, however, right, I mean, I worked at TSYS for years, right? Our-, our-, we had two things we were terrified of. Downtime, the datacentre going down, and a breach. Terrified of that. And in this day and age, you know, the breach-, I mean, the breach is going to happen, right? I mean, that’s life. It’s how quickly can you get there, and how quickly can you stem-,
MP:	Can you deal with it.
SM:	And deal with it. 
RF:	It’s-, it used to be-, my father-, my father is a retired, unfortunately, because he’s 90, OB-GYN. So-,
[Laughter]
RF:	Yes, how’s this for a segue? But, you know, he used to say, there are two-,
SM:	I have no idea where we’re going.
RF:	There are two types of doctors, right? Those who have been sued, and those that will be sued, you know? So, you know, you can look at the world of data breaches the same way. You know, those that have been breached and those that will be breached, right? I mean, I remember, after the Equifax breach, we got an inbound from a-, from a well-known publication, they said, “Well, you know, how are you guys reacting to this, as people apply?” I go, “We’ve always assumed that all the data we get is compromised.” [Laughter]. You know, if you-, if you always go with that assumption, then you-, then you handle it in a totally different way, and I think that’s the-, that’s the real world right now, is, you have to assume that the information you’re getting is compromised, so you’re going to have to figure out other ways to validate it.
RS:	Absolutely. I mean, we-, we faced that at Moven, just, I mean, on, obviously, a different scale, but opening consumer accounts, right? We-, we built our own in-house augmented KYC, basically, because we knew that 90% of the data was probably out there, with somebody, and let alone now, when it’s, like, 100%. Like, we got that last 10%.
RF:	Yes, but only 143 million in the US. Oh, wait, wait, they found more.
[Laughter]
RS:	What I don’t understand is, like, what-, you know, of all the things that gets regulated, or talked about regulating, at no point is identity ever on there.
SM:	Oh, that’s a massive topic, isn’t it?
RS:	Where, you know, you look at India, you look at some other countries where, you know, even Estonia, they’ve got digital identities, and they’re, like, it’s just the way that they’re-, that things are going, and that has to be a government pushed thing, in my opinion.
RF:	Why can’t a system that was designed in the 1930s still work today?
SM:	Yes. Right.
RS:	Well, it’s-, but that’s the thing. It’s like-, everyone’s like, “Oh no, well it’s a private enterprise, you know, country,” like, “Some company has to build this,” like, no, no, it doesn’t have to work that way. You know. That’s what I would love to see come out of this, if anything, because then you take off a lot of the challenges that we face, when you’re onboarding new customers, when you’re just moving customers from-, from whatever they’re on, to your company, right? And that’s-,
AV:	But we forget that the federal government, I mean, in the last few years, had massive breaches, of which I was a victim [laughter] you know, several times.
SM:	Me too.
AV:	They were just updating the records, at that point, you know, so [laughter].
SM:	Yeah.
AV:	So, I mean, I don’t know that-, I mean, I think part of the reluctance is, they’ve been struggling to get it right themselves [laughter].
RS:	No, no, totally, but I think, you know, you look at, kind of, the problem with the SSN is it’s, you know, it’s the password and the username-,
AV:	Yes.
RS:	In one, right? So, it’s just a broken system, inherently, from the beginning.
SM:	My-, my favourite tweet of all time was right after the big breach-,
RS:	Is this your own tweet?
SM:	Yes, my-, no, no, no.
RS:	Are we self-promoting?
RF:	This-, this small guy, he-,
MP:	At Sam Maule (? 38.13).
[Laughter]
SM:	No, it wasn’t by me, it was actually from Diana Biggs over in the UK, right after the Experian breach, she went, “Ah, damn, I’ve got to change my social and mother’s maiden name again.”
[Laughter]
SM:	That made me laugh!
RS:	Yeah, that’s very funny, yeah.
SM:	That’s the truth, right? I mean, it’s just the stupidity of the system. And so-, and Alex, I don’t mean this-, I don’t mean this as being sarcastic or anything-, no, don’t be worried, I think this-, and this is for everyone here. Again, we’re almost at 2018, so we’re ten years on. Are we any better off, from a financial system, outside of the stress tests, right, outside of that, are we better off? Are the-, well, I guess we-, I should frame that better. Are consumers better off?
AV:	Here’s what I would say. If-, if the CFPB shut down tomorrow, let’s say, you know, somebody comes in, and they say, “Everybody go home,” what will be left is its imprint on the state regulatory system. Right? And which will, I think, live forevermore. We have seen State AGs really, really pay attention to consumer issues, just in the last, you know, five, seven years. Now, whether that happened because of the Bureau, or whether, you know, that was coming anyway, who knows, but I do think that if-, even if the federal government, you know, the CFPB were to shut down tomorrow, companies like the ones sitting at this table, like all of my clients, would still have the incentive to do the right thing by consumers, and I think that’s a good thing. I can tell you, when I go see clients today, usually when I meet with the CEOs, one of the first things they will tell me is, “I just want to do what’s right. I want to do the right thing by consumers. Now, if it also keeps me out of trouble, that’d be excellent,” you know, but I think that shift in thinking is-, is going to be part of its legacy.
MP:	Yeah. It’s a shift in mindset, too. So, we’re having this conversation. Ten years ago, we wouldn’t have. And at banks and financial institutions across the country, they’re having a conversation that they otherwise wouldn’t have. So, are we better? Somewhat. Was it an expensive way to get there? [Laughter]. Yeah, it was probably an expensive-, do I love that, you know, you try to get a home equity, and it takes you two months, because you have, you know, unbelievable piles of paperwork to go through? Probably not the most efficient way to protect a consumer, but I go back to, if we do the right thing, doing the right thing cuts through a lot of that, and-, and for a while, leading up to the crisis, there was too much of not doing the right thing, and too much of blind ignorance.
SM:	So, I’m curious, Rob-,
RF:	Yes.
SM:	Because I go back to-, I love reading about Kabbage, in the early days, right? And even earlier, when he was a DJ, as we learned on break. You know, and we’re going to find-, I’m going to call your wife, and tell her I’m from Honeyfi [laughter]-,
[Laughter]
SM:	And then say, “Can I have some of those-, can I have some of those tapes?” So, way back when, right, and the same with what you did at-, at Moven, Rahmi, right? Well, that concept of utilising APIs to-, to build one heck of a great product set, right? And taking the best in breed that’s out there, and-, and bringing them on. So, we’ve got PSD2, that, at some level, is going to-, at some level, I’m going to ask the table, I’ll ask you all. Do you believe we’re going to get some version of PSD2 here in the US?
RF:	Yeah, but look, I actually do think we’re going to get a version, and Payment Services Directive, for those that are not familiar, the ability for-, the requirement, really, that banks provide open access to their data, for third parties who want to leverage their services, on behalf of the-, the customers. And I think that’s-, for us, we’re huge fans of that. Maybe a little less so the CFDR, and-, and broader, broader context-,
SM:	Yes, that’s different, right? Yes.
RF:	But, yeah, I think we’re going to get there, and, look, the whole group that-, that we formed, the CFDR group, I mean GDPR before, as far as PSD2, so, sorry, I’ve got all my four-letter acronyms a little mixed up here, but, the CFDR is really focused on making sure that, you know, effectively, PSD2 happens here in the US. We have a-, you know, we have a real concern about banks, sort of, dictating the-, the technologies that will be utilised, to be able to provide access to-, to data, here in the US, and doing it under the guise of security concerns. And, so, we think we’re going to get it, but we want to make sure that, you know, it’s a-, it’s-, it’s really driven by principles, as opposed to specific technical requirements. And so, we’re pretty focused on thinking through that.
SM:	So, Rahmi, you’ve got to be a big fan, I would think, right, you’re hoping that this comes across. Because it’s-, it’s the ability to get your hands, in a good way, hands on that-, that level of data, right? To-, to make your product that much better.
RS:	Absolutely. I mean, for us, it’d be a-, a gamechanger in a good way, right? And I think the banks, ultimately, would want something like this, from a-, from a security perspective. Even if they’re using it as a-, as a card to play in the negotiation, I think, ultimately, they don’t want to be screen scraped. They don’t want to have, you know, different connections.
SM:	No, I-, the whole concept of screen scraping makes my head hurt, just because of previous life, and being a product owner, and going down that-,
RS:	Totally, but I think also from, you know, and we definitely don’t want it, but also from a consumer perspective, right? You want to know that you’re signing up for a service that your bank has created a way securely for them to connect you, right? You know, because you’re going to feel much more confident in this startup that, of course you know about Honeyfi, that’s amazing, Honeyfi.com-,
SM:	Amazing!
RS:	You know, that you-,
SM:	Rob Frohwein’s a massive fan.
RF:	What is-, what is that-, what is that again?
RS:	It’s Honeyfi.com. No-, 
RF:	Okay, “fi”, F-I? Alright, great.
RS:	But, you know, honestly, you know, what I see, as this becomes more and more the norm, then we’ll see much more innovation, right? Which, of course, means some competition for us, right, it gets easier, but it would make our lives so much easier, and customers’ lives so much easier, you know.
AV:	Well, and to me, the huge promise-, I mean, obviously that’s a huge promise, but the really, sort of, overlooked promise is the idea of using this data to score and underwrite folks who were not going to get loans otherwise, right? Who have no FICO scores, who are recent immigrants, who are, you know, new to the credit market. This data could actually open up a floodgate of totally creditworthy people, who just don’t fit the regular, you know, measures. And I think that’s-, that’s a huge promise, not-, and I mean it’s not just for fintechs. I mean, banks want those folks, too. You know, it’s sort of-,
SM:	Yeah.
AV:	Getting-, getting at a market that, like, could be a great credit risk, but it just has never had a chance to show it, I think is going to be a huge part of that.
SM:	I think that’s a huge issue, I mean, we can look at this globally, we can talk about wealth distribution, right, and the disappearance of the middle class, but the-, that-, that entire concept, right, of bringing the unbanked, or underserved, more and more into the space, you know, I-, I, personally, as a father of four, and a grandfather of one, I love you, Grace-,
[Laughter]
SM:	I-, I want to see these types of products-,
RF:	But you look so young.
SM:	Oh God, Rob is my favourite founder ever. Kabbage, guys. Just, beautiful product. It-, and that’s-, that’s for me. I look back ten years, right, so I’ll go back to 2008, and I want to look forward ten years, and say, what is the environment going to be like here, in the US? I think going forward ten years is impossible, personally. I hate when people do that. “What’s it going to be like in ten years?” Maybe two might be interesting, and that’s going to be the challenge, because that’s what I want to throw out, and that’s what I’m going to close with. Looking at our current environment, both politically, from a regulation standpoint, from what we’re seeing come across, the massive change that’s happening in Asia. Right? I mean, we-, we didn’t even touch on China, and we could just have a field day there. But what we’re seeing work its way, coming over to the US, what do you see the environment like, say, two to three years from now? And, actually, I think where would be an interesting place to start is with you, Matt, because you’re in a new-,
MP:	Yeah!
SM:	It’s really a new area.
MP:	Yeah, solar finance is relatively new, the last seven or eight years. I think what’s going to be interesting, over the next two, five, whatever, ten years, is-, is what happens with the credit cycle, and how do all of these young companies deal with it? And so, we’re in the-, the best credit cycle any of us have ever lived through, any of our parents or grandparents have ever lived through. It’s been really good, and it’s been really good for the last seven years or so, seven, eight years. And, so, we have these companies that are three, four, five years old, that are all hitting adolescence, and think they’ve seen it all, because they’ve seen, you know, three years of data, and it’s going to change. And it’ll be really interesting to see those that really understand consumer lending, and how they adapt in a changing credit cycle, and a changing rate environment, and it-, it should be interesting. I think we will see separation of companies that are-, that are thoughtful, and those that were, kind of, chasing a-, chasing a wave.
SM:	If only we had somebody on this podcast who has, like, some kind of background in lending and-, because-, hey!
RF:	Hey!
SM:	Rob! How are you doing?
RF:	Well, yeah, no, I’m fine-,
SM:	(? 46.55).
RF:	But I tell you, we suffer from the same accusation as well, about not, you know, having gone through a credit cycle. I’m like, “Yeah, but all my guys who focus on that have. So, we know about that.”
SM:	That’s a good point. Yes.
RF:	You know, I mean, it’s not, you know, not-, and look, you know, there’s-, there’s lots of answers, and I actually think data’s the-, is the great equaliser out there, and we’ve talked a lot about data during this podcast, but, ubiquitous access to data provides many, many things, and one is, it hopefully provides you with early indicators. And one of the-, I mean, the lifeblood of Kabbage is ongoing, persistent access to data. So, hopefully you see things. There’s not-, let me tell you, the small business owners that we serve, they’re not the folks who are buying the, you know, latest Tesla, and the, you know, and the big fancy house, and going on the big trips. These are folks who are, you know, basically running the-, the lifeblood of the economy. The drycleaners, the restaurants, the folks, you know, mowing the yards, and doing all of that, kind of, hard work, and trying to put food on the table, and take care of their kids, and buy books, and, you know, live a-, live a-, you know, live a great life. And-, and so we have hardship in our audience at any given time. It might not be 90% of the audience, but 10 or 20%. And we’ve gotten really good at understanding how those businesses are performing, at any given time, and so our system should self-correct. And I think that’s the key. So, I think data is the key, you asked for two to three years from now, I think it’s the key to not only surviving, but thriving during the credit cycle that we’re definitely going to go-, I’ve been predicting it’s 18 months away from now for the last three or four years.
[Laughter]
RF:	That’s number one. Number two-,
SM:	You’ll be right.
RF:	I’m (? 48.34). Like, even a broken clock is right twice a day, they say, right? So-, so there’s that piece. I also think it’s the-, it’s the-, it’s the key to what I call scaled hyper personalisation, right? We-, you know, and so, data allows us to understand you on the same level that you used to be understood 100 years ago, when you worked into the corner shop, and they-, and they knew you. And so, you know, I am just data, data, data, and the more ubiquitous access we have to data, the-, the better we’re going to be through a credit cycle, the better we’re going to be in-, in terms of serving companies in ways, and, by the way, on a regulatory side, it’s going to be a great equaliser there, as well, because you’ve got all these great fintechs who want to do right by the customer, and they’re forcing the big players to be more transparent with information, be more transparent with, you know, pricing, and-, and terms, and, you know, customer service, and all of these things. So, anyway, that’s my crystal ball, sorry for the longwinded-,
SM:	No, you’re fine-,
RF:	Answer.
SM:	Because I already know what Rahmi’s going to say. It’s going to be, “Honeyfi is a unicorn.”
[Laughter]
RS:	Thank you-,
RF:	H-o-n-e-y-f-i.com.
[Laughter]
SM:	He has paid me so much money to be on this show, and to hype it up-,
RS:	And get our ICO-,
SM:	Yes, exactly.
RS:	No-,
SM:	Oh God. 
[Laughter]
MP:	Wow, that’s bold.
RS:	I think, you know, and I’ll just make two points. One, I think, is, to follow up on Rob’s point around the hyper customisation, I think you’re going to see a lot more services that are geared towards certain customer groups. I mean, you know, obviously it’s a bit self-serving, but I think those banks that enable themselves to partner with companies that are serving those needs are going to be much better positioned, long-term. And part of that is open APIs, and part of that is just being open to those partnerships. I think the other thing, just on a pure consumer sense, I think when we hit the other end of this credit cycle, you’re going to see a lot of these big companies hit rough times, and, unfortunately, that comes with a lot of job shedding. You know, Charlotte just lived through that, in ’08, and it looked a lot like it does now, there were a lot of cranes building a lot of high-rise buildings, it’s not on this side, but on the other side. And, when the-, when the crash hit, a lot of that construction stopped, and a lot of people lost their jobs, and you can just see a lot of people who are-, are desperate, and are looking for ways to-, to support their families, and you see, one, a lot of different needs, from a credit perspective, but, two, a lot of people starting up their own things, and, and trying to solve their personal financial situation by starting their own companies, whether they be drycleaners, or whether they’re startups, right? So, I think it’s going to be interesting to see what comes out of that, just like we saw in ’08.
SM:	You know what? I lived through that, meaning I-, I moved to the UK in 2006, I came back toward the back end of 2010. So, when I left, and I was in Atlanta, I left Atlanta, came back to Atlanta. And when I left Atlanta, it-, you’re right, the boom was going on. When I came back, the executive rental properties, I could get my hands on for nothing, by the way, Rob-, [laughter]-,
RF:	Yes.
SM:	 Out in Alpharetta, and, you know, and that side, it was shocking what I saw. And, by the way, the UK got slammed through that, and I, kind of, lived through that. So, alright, Alex, you’re going to get the last word on this, and it’s interesting, from your perspective, right? Because you’re in the private sector-,
AV:	I am. Mm-hm.
SM:	So, coming from, you know, one side of the table, to the other, if you were to look out, two to three years from now-,
AV:	So, here’s what I’m finding now, and I think it’s going to just become much more prevalent, which is, when I talk to regulators about things that don’t make sense for my clients, they no longer say, “I don’t care,” like, “That’s the law.” They say, “Come in and talk to us. We want to understand why it doesn’t work, we want to figure out what it is in the market. We want to work with other regulators. I think we’re going to see more consolidation, and more, I don’t want to say, “regulation as a service” [laughter] but, you know-,
[Laughter]
SM:	You can say that. Go there.
MP:	Wow.
SM:	Go there.
AV:	But, much more understanding that you either, you know, help people follow the law, or people find a way around it. And I think much more-, many more regulators will say, “Come in, let’s talk, let’s coordinate, let’s be on panels together, let’s be on, you know, workshops together,” and I think that’s going to-, that’s-, I think it’s going to really help consumers, in the end. I think in the-, you know, the easier you make it to do the right thing, the better it is going to be for everyone, and I think we’re seeing that today, and we’re going to see it much more in the next two to three years.
SM:	And, Rob, you actually touched on that, right, when we talked about the CFPB-,
RF:	Yes.
SM:	And-, and the-, the way-, I went through this around, you know, 2010, when prepaid was, you know, a four-letter word, right? And it was the idea of going in, in (? 53.02)’s eyes, which means it still is, but I-, I was part of the team from TSYS, right, where we went in and-, and worked to try to educate. We’re doing the same thing now. Don’t you think that just has to be a massive part of this? Is continually, from-, from the tech community, you know, look at solar, right, you can look at what you’re doing with Honeyfi, yet another shout out, but to work with the regulators, and educate-,
RF:	Shameless promoter.
SM:	Shameless.
RF:	Yes.
RS:	If he hits ten, he gets an extra bump.
[Laughter]
AV:	Honeyfi.
SM:	I get bumped to first class on the flight home. But-, but that idea of educating Washington, putting the damn suit on, Rob, as much as you hate doing it, but going to DC, and educating, and-,
RF:	No, no, I think so. Look, I mean, you know, nothing works in a silo. I think we’ve learned that, whether you’re in a corporate environment, you’re in a, you know, global environment, a regulatory environment, you’ve got to, got to communicate. Communication is the number one challenge we all have in our personal lives and our professional lives, and, you know, communication’s going to solve that.
SM:	So, where’s the best place-, we’re going to wrap up now. So, we’re going to start with Rahmi. Best place for listeners to learn about Honeyfi.
RS:	Thanks for asking.
SM:	What’s the name of the company, one more time?
RS:	Honeyfi.
SM:	Excellent. Where’s the best place to learn?
RS:	Just go to Honeyfi.com, or the app stores.
SM:	So, that was just for Rob’s wife. Rob, with Kabbage?
RF:	Rob with Kabbage. Kabbage.com, with a K.
SM:	With a-, yes, that’s very important.
RF:	It’s very important. K-a-b-b-a-g-e.com. The vegetable you love.
SM:	Is that literally the tagline?
RS:	Yeah-,
RF:	No, no, no. That one got voted-, that one got voted down.
RS:	Yeah, we tried to make our tagline, “Couples’ finances, sweeter,” and then that got voted down, so-,
SM:	Yeah, you get very corny when you do that stuff.
RS:	Yeah. Yeah, ironically, it was our-, our wives that-,
AV:	I’m telling you!
SM:	Oh, no, that’s not ironic whatsoever. Yeah. My wife corrects everything I do, and she’s always right. Matt?
MP:	You can check out Sunlight at SunlightFinancial.com, and learn more about going solar and saving money.
SM:	And for those that really need advice on-, on walking, and working with compliance folks-,
AV:	McGuireWoods-,
SM:	Alex?
AV:	McGuireWoods.com. I’m on the website.
SM:	There you go.
AV:	[Laughter].
SM:	Everybody, thank you so much for doing this, I really appreciate it. Rob, send me the dry-cleaning bill, we’ll-, we’ll fix it, alright?
RF:	Nah, don’t worry, I don’t even see it anymore. It’s gone now! It’s blended in. It’s gone, it’s been absorbed through my skin.
SM:	Excellent. Well, I’ve enjoyed the time with each of you. Thank you.
RS:	Thanks for having us.
RF:	Thank you.
MP:	Thank you.
End of Audio