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This website was archived on July 20, 2019. It is frozen in time on that date.
Exolymph creator Sonya Mann's active website is Sonya, Supposedly.

Crowdsourced Common Sense

My friend Beau Gunderson showed me KmikeyM, a project in which “shareholders” get to vote on what Mike Merrill does with his life. Merrill describes his endeavor like this:

By “buying shares” in Mike Merrill you are in effect giving me money. In exchange, I am valuing your input on my choices based on how many of those shares you buy. As this mini-economy grows, my stock price will become a benchmark for my success; the higher the stock price, the more optimistic my shareholders are.

When Shareholder Questions come up, stock owners will be able to vote on significant choices in my life. The more shares you have, the more weight your vote has. You could be the only person voting to send me to night school, but with enough shares behind you, I’m going to enroll. Ostensibly, if we make the right choices, we both win.

Here are some recent decisions that Merrill crowdsourced: Should he accept any and all Facebook friend requests? (No.) Should he subscribe to Spotify? (Yes.) Should he un-register as a Republican? (Yes.) There are many, many more proposals and results.

Is this performance art? Is it business? A sensible way to run your life? Markets are very good at aggregating and weighing preferences, but there’s no guarantee that Merrill’s shareholders will optimize for his values or goals. I suppose he protects himself by only offering up fairly trivial questions.

KmikeyM reminds me of Sarah Meyohas’ stock-trading paintings and, the precursor to Twitch. I deeply wish that I’d come up with the idea first! Of course, there’s no reason why I couldn’t copy him… Would you buy Sonya Shares?

Correction: Mike Merrill allowed the shareholders to dictate whether he would propose to his girlfriend. (They voted yes, but an inside source told me that he hasn’t done it yet.) That’s not a trivial question at all!

The Staid Side of Money

I interviewed my Twitter friend Marc Hochstein, who is the editor-in-chief at American Banker, about finance and technology. (He didn’t speak with me in a professional capacity, but I think his workplace is helpful context.)

Hochstein started his career as a wire service reporter at Dow Jones. He called it a “character-building experience” that involved a lot of cold-calling day traders. The upshot is that Hochstein has been reporting on banks and finance for decades, so his perspective on recent industry developments is interesting.

(Why you should care about this: Our world runs on money. The financial-services industry is hyper-entwined with government, and together they’re the base-level system that everything else is built on top of. That’s actually a simplification since “everything else” and “finance” developed concurrently, but you get the idea.)

I think this quote sums up a lot:

In the last two years — maybe three or four years — there’s been a lot more interest in technology as a potentially transformational force, than there has been in a very long time. You could argue that banking was always, in a way, a technological industry, or always a data industry. There’s a quote from Walter Wriston, who was the chairman of Citicorp back in the ’80s and ’90s. I forget the exact verbatim quote, but it’s something like, “A bank is nothing but a data warehouse, that’s always what it’s been.”

But the banks — financial institutions in general — have been slow to upgrade their core technology, and for some understandable reasons. Changing the core of the bank is a hard thing to do. […] When times are good, when they’re making a lot of money, there’s no real impetus to change anything. And then when times are bad, they don’t have the resources to do anything. Or resources are scarce, I should say.

Hochstein pointed out that the “Uber narrative” hasn’t played out in finance like it has in other industries. He told me, “The barriers to entry are higher. The stakes are higher, because you’re talking about people’s money.” Fintech startups can’t afford to beg forgiveness instead of asking permission. Regulators don’t take kindly to that, and users don’t either.

Technology hasn’t shaken up finance as much as people in Silicon Valley might have expected. Over the last few years, Hochstein explained, “The rhetoric changed from ‘fintech is going to eat the banks’ lunch’ to ‘fintech is going to make banking better at what they do’.” Still, “it’s a little early to say” whether fintech is actually improving banking, or what the degree of change will be. “I wouldn’t say it’s been a profound effect, but it’s there.”

On the bright side, “Transferring money is slowly getting faster.” The Automated Clearing House is finally moving to same-day settlement. “Part of the reason why they did that, why they finally had an impetus to go there,” Hochstein said, “is because of things like Ripple, and bitcoin, and cryptocurrency, as well as real-time payment systems that you see in a lot of other countries.” Hochstein noted that regulators and the Fed have also been pushing in this direction.

I find this slightly mind-boggling. It’s a big deal that ACH is moving to same-day settlement — not real-time, just same-day. In the year 2017.

I asked Hochstein which issues are going to dominate a lot of attention going forward, and he mentioned “open banking” and data portability. Basically, banks have a tremendous amount of lock-in because of all the information they’ve collected and stored about your identity and your account activity.

There’s some talk of forcing banks to provide this information to competitors — or whoever else might be authorized by individuals, e.g. money-management apps like Mint — via API. Guess whether the banks want to do that!

In conclusion, finance gonna finance. Big companies gonna rent-seek. They change when they’re forced to, either by regulation (Dodd-Frank Act, for example) or by the competitive environment. In general, these institutions move slowly. On balance that’s actually a good thing, considering how much havoc they could potentially wreak.

Thank you to Marc Hochstein for talking to me — follow him on Twitter or read his articles.

Photo of the Wall Street bull by Sam Valadi.

The Downsides of Femme Finance

Yesterday a friend showed me Ellevest, which bills itself as an investing service for women. Their tagline:

Ellevest tagline

Thank goodness! The scourge of mansplaining in automated investing will be vanquished!

I find this extremely disturbing, because it’s pure pandering. As far as I can tell, Ellevest is just a fee-charging software layer on top of a basket of Vanguard ETFs. The terms and conditions explain that Ellevest pulls their recommendations from Morningstar. I’m sure Ellevest itself does something, but I’m very skeptical of whether the something it does is valuable.

They claim on the homepage, “We’re not just ‘shrinking and pinking’ an old investment model. We’ve built a whole new approach.” No, you haven’t! You’re just Vanguard with better UX and cynical marketing!

Look, I’m a woman. I believe misogyny exists and I agree that it’s fucked up for finance to be overwhelmingly dominated by men. I consider myself a feminist. I could get behind an investing service that was ethically women-oriented, like a version of faith-based investing.

But that’s not what Ellevest is. Ellevest is normal investing with a ladylike veneer. (Notice all the curly fonts?) Sure, I bet they employ more women than the average fintech company. But they also exploit a historically disadvantaged group, one that’s low on financial literacy, in order to offer a return to their own VCs.

I’ve talked before about how I love the internet’s ability to serve every niche. This is not what I meant.

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