Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your vote of confidence. If you’re reading this as a post on our site, sign up here so you can receive it directly in the future. Every week, I’ll take a look at the hottest fintech news of the previous week. This will include everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There’s a lot of fintech news out there and it’s my job to stay on top of it — and make sense of it — so you can stay in the know. — Mary Ann
Like many of you, I’m sure, I was caught up last week watching the downfall of FTX unfold. It was a startling development in the world of crypto, and while I don’t cover the space directly, I couldn’t help but be fascinated by the goings-on — and not in a good way.
Last week, I ended the newsletter saying I hoped this week would come with more uplifting news. Unfortunately, that was not the case.
Real estate fintech Redfin announced on November 9 that it was laying off 13% of its staff, or 862 people, in response to the continued slowing of the housing market. This followed Opendoor’s layoff of 550 people, or 18% of its workforce, the week before and Zillow’s cuts of 300 in late October. It also follows Redfin’s letting go of 470 employees in June.
Notably, Redfin also said it is shuttering RedfinNow, its iBuying division. To that end, CEO Glenn Kelman wrote in an all-hands email: “One problem is that the share gains we could attribute to iBuying have become less certain as we rolled it out more broadly, especially now that our offers are so low…And the second problem is that iBuying is a staggering amount of money and risk for a now-uncertain benefit. We’ve tied up hundreds of millions of dollars in houses that you yourself wouldn’t want to own right now.”
Kelman went on to say that the company’s June layoff was in response to Redfin’s expectation that it would sell fewer houses in 2022. The latest layoff “assumes the downturn will last at least through 2023.”
Redfin’s, Zillow’s and Opendoor’s layoffs aren’t the only ones in the industry. Digital mortgage lender Better.com conducted yet another layoff or two in the past couple of weeks. One source told me 240 employees were let go on November 4. And San Francisco Business Times reporter Alex Barreira tweeted on November 11 that dozens more workers were let go, sharing colorful details of the company’s WARN notice, in which Better.com said it was not able to provide notification earlier as the separations were the result of a “dramatic deterioration” in the company’s business. When I reached out to the company about the layoffs, a spokesperson wrote via email: “Better is focused on making prudent decisions that account for current market dynamics.”
Okay, back to Redfin. One thing that stood out most to me with regard to that company’s latest round of layoffs was Kelman’s candor as he addressed employees. In his email, he said: “To every departing employee who put your faith in Redfin, thank you. I’m sorry that we don’t have enough sales to keep paying you.”
Interestingly, Kelman appears to be putting his own personal bets into real estate markets outside the U.S. In September, he co-invested in a Seattle startup called Far Homes that was founded by Redfin alums and is focused on “buying and selling real estate in foreign markets,” as reported by GeekWire.
CEOs as of late have been particularly remorseful as their companies either deteriorate or lay off staff. Besides Kelman, other examples this week include Meta CEO Mark Zuckerberg admitting he overestimated how long the post-pandemic revenue surge would last, saying: “I got this wrong, and I take responsibility for that.”
Also last week, FTX CEO and founder Sam Bankman-Fried admitted he “fucked up” and “should have done better” right before FTX declared bankruptcy and he stepped down from his role. This is after the crypto exchange was valued at $32 BILLION earlier this year. In Early August, Robinhood CEO Vlad Tenev took responsibility for the company’s letting go of 23% of its staff, saying: “This is on me.”
Even Better.com CEO Vishal Garg admitted at one point that he had not been disciplined over the previous 18 months, telling employees: “We made $250 million last year, and you know what, we probably pissed away $200 million.”
What does this tell us? CEOs are human, yes. Flawed humans just like the rest of us. In some cases, decisions such as over-hiring were made out of genuine (or foolish) belief that the people hired would be needed in years to come. In other cases, decisions were less honorable and more about furthering the executive’s own agenda.
Unfortunately, either way, thousands of employees are paying the price.
Months after acquiring gamified finance mobile app startup Long Game, Truist Financial Corporation has introduced the Truist Foundry, an innovation division that it says “will function as a startup within the bank.” The goal will be to deliver “game-changing projects” and serve the bank’s lines of business. A spokesperson told me via email that specifically, the Truist Foundry will work on “building software solutions that drive value and market leadership for the bank.” In other words, it looks like one of the United States’ largest banks is getting even more serious about its digital efforts.
Instacart has tapped Dutch payments giant Adyen to serve as “an additional payments processing partner.” As part of the new partnership, the companies said in a press release that Instacart will leverage Adyen functionality, including PINless debit enablement of transactions “to further optimize and improve authorization rates for an even more seamless customer experience.” Pymnts has more here.
Another example of fintech for good. Banking-as-a-service startup Synctera is partnering with Solvent, a fintech company that is building “affordable financial services” to support those who were previously incarcerated. One aspect of the link-up is Synctera’s recently announced Smart Charge Card, which does not require a credit review or a company to fund its customers’ balances. Overall, Synctera says it is helping supply Solvent with “a suite of personal finance and banking tools, products and services aimed to empower and build wealth among ex-cons, a group of Americans often underserved and overlooked.”
BNPL player Affirm last week reported mixed financial results. While its fiscal first quarter revenue of $361.62 million beat analysts’ estimates, its net loss of 86 cents per share was greater than expected. Its stock tanked to a new 52-week low of $11.94 last week before rebounding to $15.88 on Friday morning at the time of writing. The company tried to put a positive spin on the results, sharing via email that active consumers grew 69% year-over-year and total transactions increased to 13.3 million, representing 97% growth year-over-year. It also claimed that delinquencies and net charge-off rates remained at or below pre-pandemic levels during the quarter.
From Sarah Perez: “Elon Musk last week detailed his vision for Twitter’s plan to enter the payments market during a live-streamed meeting with Twitter advertisers, hosted on Twitter Spaces. The new Twitter owner suggested that, in the future, users would be able to send money to others on the platform, extract their funds to authenticated bank accounts and, later, perhaps, be offered a high-yield money market account to encourage them to move their cash to Twitter.”
Also from Sarah Perez: “Google announced it’s expanding its user choice billing pilot, which allows Android app developers to use other payment systems besides Google’s own. The program will now become available to new markets, including the U.S., Brazil and South Africa, and Bumble will now join Spotify as one of the pilot testers. Google additionally announced Spotify will now begin rolling out its implementation of the program starting this week. The company first announced its intention to launch a third-party billing option back in March of this year, with Spotify as the initial tester.” More here.
From Tage Kene-Okafor: Kuda, the London-based and Nigerian-operating startup taking on incumbents in the country with a mobile-first and personalized set of banking services, is expanding to the U.K. by offering a remittance product to Nigerians in the diaspora. The digital bank has seen some success since launching in Nigeria in 2019. Kuda claims to have up to 5 million users, more than thrice the number it had last August during its $55 million Series B round, money it raised to enter into other African countries like Ghana and Uganda this year. Expansion into those countries is yet to materialize; instead, Kuda has opted to launch in the U.K., a move the company says is part of a major global expansion drive.
Funding and M&A
Ritik Malhotra (CEO) and Muller Zhang (CTO) founded Savvy after Malhotra came into a windfall of cash after selling his two startups (Streem was acquired by Box in 2014, and Elph was acquired by Brex in 2019). Long story short, he was advised to seek out a financial advisor, and after sampling several different options, he was inspired to start Savvy in 2021 — a national registered investment advisor (RIA) built on what the company describes as “a digital first wealth management firm centered around modernizing human financial advice.”
Before I close, just a reminder that we here at TechCrunch love scoops. So if you’ve got a news tip or inside information about a topic we have covered (or haven’t yet but should). I’d love to hear from you. You can reach me via Signal or DMs at 408.204.3036. Or you can drop us a note at email@example.com. If you prefer to remain anonymous, click here to contact us, which includes SecureDrop (instructions here) and various encrypted messaging apps.
That’s it from me for this week. Here’s to more good news than bad next week! Until then, take good care…xoxo, Mary Ann