What is Social Platform Commerce or Social Commerce?; Analyzing a16z’s fintech investment strategy; Why the big banks created Zelle?;

Sam Boboev
12 min readFeb 8, 2023

In this edition:

1️⃣ ​​PayPal is the latest tech company to announce mass layoffs

2️⃣ Embedded Finance Fuels Growth in Choppy Economy

3️⃣ Mastercard: payment plumbers make a very decent living

4️⃣ Why The Big Banks Created Zelle

5️⃣ Why OpenAI’s ChatGPT Is Such A Big Deal

6️⃣ Analyzing a16z’s fintech investment strategy

7️⃣ What is Social Platform Commerce or Social Commerce?

And many more….


PayPal is the latest tech company to announce mass layoffs and it says it’s cutting 2,000 jobs

The cuts account for around 7% of the company’s workforce and will take place over the next few weeks, CEO Dan Schulman said in a statement.

Schulman emphasized that the company was operating in a “challenging macroeconomic environment,” and said that while the company had made progress getting its cost structure under control, it had “more work to do.”

The CEO wrote that laid-off workers would be given severance and support after they departed the company.

“We will treat our departing colleagues with the utmost respect and empathy, provide them with generous packages, engage in consultation where required, and support them with their transitions,” he wrote. “I want to express my personal appreciation for the meaningful contributions they have made to PayPal.”

PayPal is just the latest tech company to announce major layoffs, following a slew of others including Meta, Alphabet, IBM, Microsoft, Twitter, Spotify, Stripe, Amazon, and Salesforce. Many companies went on hiring sprees during the height of the COVID pandemic. But when advertising revenue fell this year, spurred by fears of a global slowdown caused by inflation and subsequent interest rate hikes by the Federal Reserve, these tech companies found themselves in a very different business landscape.

Workers have often been left reeling from the impersonal nature of the cuts, waking up to zero email access, or denied entry into their office building. For employees who are working in the U.S. on a visa, the layoffs have meant a desperate scramble to find a new job within a short period of time before they are forced to leave the country.

In one instance, a Google employee on maternity leave found out she had been cut while she was feeding her daughter. Tech employees have left messages on LinkedIn and other social media platforms venting their frustrations about being axed.

“I’m devastated. I’m sad, angry,” one former Google employee wrote.

Source Fortune


Digital technology continues to transform the way producers, suppliers and consumers around the world connect and transact with one another. J.P. Morgan’s Global E-commerce Trends Report share data-driven insights that can help you understand local and cross-border e-commerce trends in 37 of the world’s most vibrant markets.

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Embedded Finance Fuels Growth in Choppy Economy

In this strange economy where inflation vies with recession, banks will assess their unique circumstances and decide whether to play defense or offense. Those favoring defense will tighten lending policies, adjust their outreach to customers and prospects, and possibly even exit some markets. Their more growth-minded counterparts will look to expand existing specialties or push in new directions.

One tactic those on offense are starting to pursue in greater numbers is embedded finance — a segment that hit $20 billion in revenue in the United States alone in 2021, according to McKinsey research. This figure could double somewhere between 2025 and 2027, the consulting firm estimates.

Embedded finance is, broadly speaking, offering banking services through the platforms of nonbanking companies. This could involve offering loans, payments, cards or deposits, or a combination, in the name of the other companies to the customers of those companies, with the financial institutions providing the service essentially remaining “invisible” in the background. Some also might refer to this as a banking-as-a-service strategy.

Asset size is not a factor in whether a given financial institution can — or should — get into embedded finance, according to Jonathan Zell, a partner at McKinsey. “Very large banks have been very successful in embedded finance,” says Zell. “There are also small banks that have been very successful in embedded finance.”

Opportunities may not necessarily involve big names nor big companies; they can come from any type of nonfinancial company or, in some cases, fintechs, that lack banking powers of their own and want to add them to their processes and platforms. Zell suggests that banks may find candidates for embedded finance partnerships as close as their commercial lending portfolio. Accounting software packages and business management software devoted to specific industries, such as operating restaurants, is another place where banks may find embedded finance tie-ins.

One example of embedded finance is T-Mobile Money, offered by the namesake mobile carrier, which depends on Customers Bank and BMTX, a fintech, to operate.

Source The Financial Brand


3 Pricing and Packaging Pitfalls to Avoid

Your free tier is eating into your growth

How to identify

A freemium model is a great strategy for expanding your user base early in your company’s lifecycle, but your growth will stall if you don’t effectively monetize those customers.

Typically, when your free tier is eating into your growth, the proportion of your free-to-paid customers is too high. While there’s no hard-and-fast benchmark to tell you when this is the case, some signs that might indicate your free plan needs an adjustment include:

- If cohorted annual free-to-paid conversion rate is less than 5%

- If company adds 5 free customers for every 1 paid

- Within 2 years of introducing a free plan, the number of new paid customers acquired per month should be equivalent to before the free plan was launched

Your plans aren’t optimized for buyer personas

As your company grows, you’ll likely serve different types of customers with different needs. When any of these customers review your packages, they should be able to quickly identify the plan that best addresses their needs and agree with the price of that plan. If they can’t, your customers might favor a competitor with clearer pricing structures, or you might have customers with a high willingness to pay stuck on cheaper plans.

Here are some signs that might indicate your plans aren’t addressing your buyer personas’ needs:

- You have 2 plans or fewer or 5 plans or more, including a free plan

- Your lowest-cost plans have most of the features and higher tier plans have few distinguishing features

- There are big price jumps (more than 100% in most cases) between plans

You’re attracting a small number of high-paying customers

You’ve addressed an important problem for a small subset of buyers who are willing to pay a premium price for your product — but now you’re reliant on these buyers for a significant part of your revenue. If a competitor comes in and offers what you’re offering at a cheaper price, or if your customers churn for whatever reason (like a bankruptcy), you’re left scrambling for new revenue streams.

Some indicators that this is a problem include:

- Your net customer acquisition slowing down and CAC increasing YoY

- Your sales cycles elongating

Serving a small segment of customers means that you only grow when your customers do. As your customers expand, they’ll likely shop around and encounter competitors who are offering the same products as you, but cheaper. That’s why you’ll see your sales cycles elongating: it’s harder to close deals because you’re stuck in a back-and-forth with your existing customers.

Pricing and packaging is an ongoing experiment for most companies. The pricing strategies that get you to product-market fit aren’t likely to be the ones that help you scale.

Source a16z


Why OpenAI’s ChatGPT Is Such A Big Deal

OpenAI, which Elon Musk helped to co-found back in 2015, is the San Francisco-based startup that created ChatGPT. The company opened ChatGPT up for public testing in November 2022. In under a week, the artificial intelligence model amassed over a million users, according to OpenAI’s CEO, Sam Altman. By the end of January, ChatGPT was averaging about 13 million visitors per day.

Users have had ChatGPT write everything from essays, to lyrics and even correct computer code. ChatGPT is part of a growing field of AI known as generative AI, which allows users to create brand new content including videos, music and text. But generative AI still faces a number of challenges, such as developing content that is inaccurate, biased or inappropriate. Now enterprises and the public are wondering what wide access to AI will mean for businesses and society.


Analyzing a16z’s fintech investment strategy: Where did the VC place its biggest bets in 2022?

Fintech is central to a16z’s investment strategy. In recent years, the firm has not only shored up its presence in more familiar sectors like banking, but also reached deeper into newer territory like blockchain.

Of the 206 deals a16z participated in last year, almost a quarter went to fintech companies — more than any other industry. Sixty percent of these fintech investments closed in H1’22, and the remaining 40% closed in H2’22.

CB Insights mapped how a16z spread these fintech investments across categories like payments, blockchain, digital lending, and more.


More than a quarter (28%) of a16z’s fintech investments in 2022 went to the payments category. Notable investments include:

- SpotOn ($300M Series F): SpotOn offers a cloud-based platform that provides payment solutions for restaurants and small retailers.

- Jeeves ($180M Series C): Jeeves offers corporate cards and other expense management tools for businesses, with a focus on credit and payments rails across countries and currencies.

- Tally Technologies ($80M Series C): Tally’s app helps consumers pay off credit card debt more quickly by automating payments.


a16z has actively invested in companies developing blockchain platforms for years. In 2022, 22% of its fintech deal volume went to blockchain companies — although most of these deals closed between January and June, before the year-end turmoil that rocked the cryptocurrency markets. Notable investments include:

- Matter Labs ($200M Series C): Matter Labs is an Ethereum development company building a rollup layer 2 network designed to lower fees and speed up transactions.

- Lightspark ($175M Series A): Lightspark, launched in May 2022, is building a Bitcoin payments tool.

- NEAR Protocol ($150M Series B): NEAR Protocol is developing a platform for blockchain-based decentralized applications, with a heavy focus on Web3.

Digital lending

a16z’s third-most popular fintech category in 2022 was digital lending, accounting for 12% of the firm’s fintech deal flow. Notable investments include:

- Point Digital Finance ($115M Series C): Point provides a lending marketplace that allows homeowners to borrow against a percentage of the future value of their property.

- Valon ($60M Series B): Valon offers residential mortgage loan servicing technology through a cloud-native platform.

- Vesta ($30M Series A): Vesta provides a platform for mortgage origination and underwriting that is designed to streamline processes, reduce risk, and help lenders improve their book of business.

Source CB Insights


What is Social Platform Commerce or Social Commerce?

E-commerce where critical parts of the purchase journey such as product selection, payment, and order confirmation, happen inside a social platform.

Social aspect of the experience = A familiar environment, e.g. a social media or messaging app, in which the primary activities that users engage in are social in nature, with a pre-existing trust that underlies these activities in this environment.

Social Platform Commerce is suitable for almost any consumer brand, but success needs good planning and execution.

1. Establish a strong and flexible direct-to-consumer fulfilment engine

Social Platform Commerce lends itself best to direct-to-consumer transactions. Building the necessary inventory management, order management, and fulfilment capabilities to accept orders from several new channels will help you get the most out of these channels.

2. Invest ahead of the curve on TikTok Shop, the most important new channel

TikTok Shop has begun to show its promise across Southeast Asia in 2022, and will likely continue to dominate the Social Platform Commerce landscape in the years to come. Invest early to learn and capture share ahead of your competition.

3. Wherever you launch, staff your new channels for 1–2 years of experimentation

The pace of innovation and new feature development across the Social Platform Commerce space is very high. Ensure your organization is resourced to test new features and tactics early and often.

4. Prepare your digital marketing strategy with less distance between traffic and sales

Single-platform e-commerce journeys unlock greater spend attribution and insights. To take full advantage, build a marketing organization that goes beyond traffic generation and be empowered to adapt pricing, promotion, and messaging in real-time.

5. Elevate your social shops by integrating other Social Commerce archetypes

Social Platform Commerce enables quick and seamless single-platform customer journeys, but is worth little without consistent activation. Invest in on-platform Live Shopping, Conversational Commerce, and content generation to maximise engagement and sales.

botcommerce.io helps retailers to take advantage of social commerce through its all-encompassing social commerce platform. Reach out for more information.

Source Cube Asia


Why The Big Banks Created Zelle

Competition among peer-to-peer payment apps like Venmo, PayPal, Cash App and Zelle have been heating up for the past 10 years. The big banks tried to compete in the space when PayPal first came on the scene 25 years ago, but their business models failed. Now, Zelle, a seven-bank platform, is outpacing its rivals in average transaction value. But a rise in reported fraud activity recently got the attention of Congress, with allegations that the banks aren’t supporting those affected customers.


Open Finance Index

Open Banking is a global phenomenon. It has the potential to fundamentally reshape the interplay between social and financial systems and to change the way we all relate to our money.

There have been many studies that have attempted to analyse the speed of adoption and from it, infer the pace and extent of the change that is coming, however none have succeeded. Directly comparable data points across countries and regions are non-existent and for inferred data to be valuable, the background work to establish context has to be second-to-none.

This index makes use of more than 150 data points per country, gathered through our own survey and from partner sources like the World Bank, the IMF, Dealroom. com and more. This is contextualised through more than 50 in-depth interviews with international experts to provide what we think is the most definitive source of insight into the progress of Open Banking across the world.

In this report, we look at more than 50 markets around the world where Open Banking has begun its journey to adoption and narrowed the scope to the 23 markets where these first steps are producing the beginnings of an ecosystem.

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Mastercard: payment plumbers make a very decent living

Payment network operators occupy one of the stodgiest corners of Wall Street. The biggest of these, Visa and Mastercard, make money by facilitating payments between consumers, banks and businesses. They provide the hidden plumbing allowing consumers to make mundane everyday transactions with a tap, swipe or click.

Their shares have been anything but invisible. Shares in Mastercard and Visa have both risen more than 9 per cent over the past 12 months, standing out smartly against the S&P 500’s 7 per cent drop. Fourth-quarter results underlined why.

Visa and Mastercard do not actually issue credit cards, just provide the settlement network. They have little exposure to the credit risks from borrowers when times get tough. Yet they win big when consumers feel flush, and as more of them opt to go cashless. Even inflation benefits, as they take a small percentage on the value of each transaction.

At Mastercard, the charges collected on these purchases helped boost total revenue by 18 per cent to $22.2bn last year. More impressively, operating margins rose by 180 basis points to 55.2 per cent, despite a 13 per cent increase in overheads last year.

Mastercard’s forecast for “low teens” growth in revenue and net income for 2023 may have disappointed optimists. Then again, consensus forecasts for S&P 500 earnings growth in 2023 is just 4 per cent.

To be fair, Mastercard trades at 33 times forward earnings, hardly cheap. But that multiple reflects high profitability and annual expected free cash flow of over $13bn through 2025. Pent up demand for travel powered card spending last year. This should continue as Asia reopens and travel to and from the region picks up.

Mastercard’s biggest risk is not macroeconomic, but regulatory. A federal bill that looks to drive down credit card transaction fees by increasing competition has been introduced. Bulls will hope that a currently dysfunctional Congress will fail to pass this legislation anytime soon.

Source Financial Times



Sam Boboev

I am a fintech enthusiast and product leader passionate about crafting simple solutions for complex problems. Subscribe https://www.fintechwrapup.com/