What goes up must come down • TechCrunch
Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your declaration of confidence. If you are reading this as a post on our site, please register here so that you can receive it directly in the future. Each week, I’ll take a look at the hottest fintech news from 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 up to date. — Mary Ann
Like many of you, I’m sure I was caught up last week as I watched the downfall of FTX unfold. It was a sensational development in the crypto world, and while I don’t cover the space directly, I couldn’t help but be intrigued by what’s going on—and not in a good way.
For more on that debacle, check out our crypto-focused Chain Reaction podcast here and our general coverage here.
I also couldn’t help but see the train wreck of Elon Musk taking over Twitter and Meta’s let go of 11,000 people. But I digress.
Last week I ended the newsletter by saying that I hoped this week would bring more uplifting news. Unfortunately, that was not the case.
Real estate fintech Red fin announced on November 9 that it was laying off 13% of employees, or 862 people, in response to the continued downturn in the housing market. This followed Open doors laying off 550 people, or 18% of the workforce, the week before and Zillow cut of 300 at the end of October. It also follows that Redfin let go of 470 employees in June.
Notably, Redfin also said it is closing RedfinNow, its iBuying division. To that end, CEO Glenn Kelman wrote in an all-hands email: “One issue is that the equity gains we could attribute to iBuying have become less certain as we’ve launched it more broadly, especially now that our offerings are so low… And the other 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 don’t want to own right now.”
Kelman went on to say that the company’s layoffs in June were in response to Redfin’s expectation that it would sell fewer homes in 2022. The latest layoffs “assume that the decline will continue at least through 2023.”
Redfin’s, Zillow’s and Opendoor’s layoffs are not the only ones in the industry. Digital mortgage lender Better.com carried out another layoff or two in the last couple of weeks. A source told me 240 employees were let go on November 4. And San Francisco Business Times reporter Alex Barreira tweeted November that dozens of workers were let go, and shared colorful details about the company’s WARN notice, in which Better.com said it was unable to provide notice earlier as the separations were the result of a “dramatic deterioration” in the company’s operations. When I contacted the company about the layoffs, a spokesperson wrote via email: “Bedre is focused on making sound decisions that take into account current market dynamics.”
Okay, back to Redfin. One thing that stood out to me most about the company’s latest round of layoffs was Kelman’s candor in addressing employees. In his email, he said: “Thank you to all departing employees who put their faith in Redfin. I’m sorry we don’t have enough sales to continue paying you.”
Interestingly, Kelman appears to be placing his own personal bets on real estate markets outside of the United States. 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 have been particularly remorseful of late as their companies either deteriorate or lay off employees. 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 was wrong, and I take responsibility for it.”
Also last week, FTX CEO and founder Sam Bankman-Fried admitted he “stuffed up” and “should have done better” just before FTX filed for bankruptcy and he stepped down from the 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 letting go of 23% of employees, saying, “This is on me.”
Even Better.com CEO Vishal Garg admitted at one point that he had not been disciplined in the past 18 months, telling employees: “We made $250 million last year and you know what, we probably pissed off $200 million. “
What does this tell us? CEOs are people, yes. Fallible people just like the rest of us. In some cases, decisions such as over-hiring were made based on genuine (or foolish) belief that the employees would be needed in the years to come. In other cases, decisions were less honorable and more about advancing the executive’s own agenda.
Unfortunately, regardless, thousands of employees are paying the price.
Image credit: Kuzma/Getty Images
Weekly news
Months after purchasing the gamified finance mobile app Long Game, Truist Financial Corporation has introduced Truist Foundry, an innovation division that it says “will act as a startup within the bank.” The aim will be to deliver “game-changing projects” and serve the bank’s business areas. A spokesperson told me via email that Truist Foundry will specifically work to “build software solutions that drive value and market leadership for the bank.” In other words, it appears that one of America’s largest banks is becoming even more serious about its digital efforts.
Instacart has tapped the Dutch payment giant Adyen to serve as “an additional payment processing partner.” As part of the new partnership, the companies said in a press release that Instacart will leverage Adyen functionality, including PIN-free debit activation 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 working together with Solvent, a fintech company building “affordable financial services” to support the formerly incarcerated. One aspect of the tie-up is Synctera’s recently announced Smart Charge Card, which doesn’t require a credit score or a company to fund customers’ balances. Overall, Synctera says it helps provide Solvent with “a suite of personal finance and banking tools, products and services aimed at empowering and building wealth among former cons-cons, a group of Americans who are often underserved and overlooked .”
BNPL plays Confirm last week reported mixed financial results. While first-quarter pretax income of $361.62 million beat analysts’ estimates, the net loss of 86 cents per share was larger than expected. The stock fell to a new 52-week low of $11.94 last week, before rebounding to $15.88 on Friday morning at the time of writing. Trying to put a positive spin on the results, the company shared via email that active consumers grew 69% year-over-year and total transactions increased to 13.3 million, representing 97% year-over-year growth. It also claimed that default and net repayment rates remained at or below pre-pandemic levels during the quarter.
From Sarah Perez: “Elon Musk last week outlined 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, withdraw their money to authenticated bank accounts and later perhaps be offered a high-yield money market account to encourage them to move their money to Twitter.”
Also from Sarah Perez: “Google announced that it is expanding its user-choice billing pilot, which allows Android app developers to use payment systems other than Google’s own. The program will now be rolled out to new markets, including the US, Brazil and South Africa, and Bumble will now join Spotify as one of the pilot testers. Google also announced that Spotify will now start rolling out the implementation of the program from this week. The company first announced its intention to launch a third-party billing option back in March of this year, with Spotify being the first tester.” More here.
From Tage Kene-Okafor: Kuda, the London-based and Nigerian-operated startup that takes on incumbents in the country with a mobile-first and personalized set of banking services, is expanding into the UK 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 three times the number it had in August during its $55 million Series B round, money it raised to enter other African countries such as Ghana and Uganda this year. The expansion to these countries has not yet materialized; instead, Kuda has chosen to launch in the UK, a move the company says is part of a major global expansion campaign.
Image credit: Bryce Durbin / TechCrunch
Financing and M&A
Thomson Reuters buys tax automation company SurePrep for $500 million
Pet insurance startups are chasing the market as pet ownership grows among Gen Z and Millennials
Yassir pulls in $150 million for his super app, led by Bond
Quona Capital invests $332 million in startups with a focus on financial inclusion
Former Tink employee launches Atlar, a payment automation startup
Travel app Hopper raises $96 million from Capital One to double down on social commerce
Blnk, a fintech providing instant consumer credit in Egypt, raises $32 million in debt and equity
A16z-backed Tellus wants to offer consumers a much better savings rate. This is how.
And elsewhere:
Savvy Wealth completes $11 million capital raising:
Ritik Malhotra (CEO) and Muller Zhang (CTO) founded Savvy after Malhotra came into 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 trying 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 wrap up, just a reminder that we here at TechCrunch love scoops. So if you have got a news tip or inside information on a topic we’ve covered (or haven’t yet, but should). I would love to hear from you. You can reach me via Signal or DM at 408.204.3036. Or you can send us a message at [email protected]. If you prefer to remain anonymous, click here to contact uswhich 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
