Sep 8, 2020 · 34m · 20vc
20VC: a16z's Angela Strange on Why Every Company Will Be A Fintech Company, How Founders Should Think About Niches and Optimal Insertion Points, How To Transition To Become The System of Record & Are We Entering A Period of Bundling Or Unbundling for Fint
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In this episode of The 20 Minute VC, venture capitalist Angela Strange of Andreessen Horowitz unpacks her seminal thesis that every company will become a fintech company, explaining how API infrastructure, strategic market wedges, and embedded financial services are transforming business software and consumer experience.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 34.9% of the talking time here. How this is scored →
Harry as informed peer 4.1 Guest teaching 3.3 Guest disagreement 1.1 Harry pushing back 2.6
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 10:14 Nuancing the 'every company will be fintech' line
Angela directly reframes the host's interpretation of her iconic essay title, noting that while provocative, not literally every company will become fintech, grounding the premise in realistic distribution dynamics.
Hardest push from Harry ▶ 20:34 Challenging standalone consumer fintech appsHarry explicitly voices skepticism about standalone consumer fintech features like savings pots or wealth management, arguing that established neobanks with massive distribution will easily eat their lunch.
Biggest teaching moment ▶ 26:12 Bi-directional M&A and fintechs buying banksAngela points out a counterintuitive market trend that goes against standard consolidation assumptions, demonstrating how tech startups like Hippo and LendingClub are actively acquiring legacy banking incumbents.
Harry holds his own ▶ 18:04 Interrogating 'system of record' claimsHarry demonstrates strong market awareness of startup pitch tropes by pressing Angela on how VCs filter out founders using 'system of record' merely as a buzzword in pitch decks.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Angela Strange's Career Path and Journey to Venture Capital | 1 | 1 | 0 | 0 | Harry warmly introduces Angela and asks standard background questions about her career path to venture capital. Angela provides an engaging narrative of her journey from engineering to Google PM and Andreessen Horowitz without any friction. | |
| Why Every Company Will Be a Fintech Company | 2 | 3 | 0 | 0 | Harry sets up the core thesis of Angela's viral article regarding why every company will become a fintech company. Angela uses the Amazon Web Services analogy to explain how modern fintech infrastructure lowers cost and complexity. | |
| Market Dynamics, Product Quality, and Consumer Preferences | 5 | 4 | 2 | 4 | Harry challenges the thesis by asking if lower barriers to entry create a race to the bottom on pricing and reduced defensibility. Angela nuances his point by highlighting consumer choice, subscription models, and how gaming environments serve as new financial distribution channels. | |
| Financial Automation and Regulatory Infrastructure | 4 | 3 | 1 | 3 | Harry brings up discussions with other founders and questions how heavy regulation like KYC and AML affects rapid innovation. Angela explains how modern infrastructure startups translate thousands of pages of compliance code into usable APIs. | |
| Strategic Entry Points and Transitioning to Systems of Record | 6 | 4 | 1 | 4 | Harry uses Carta as an example of a sticky insertion point and asks how VCs separate genuine system of record potential from fundraising pitch fluff. Angela outlines a two-stage strategy using examples like Centrelink to illustrate data network effects. | |
| Unbundling vs. Rebundling in Consumer and Business Fintech | 6 | 4 | 2 | 5 | Harry expresses skepticism toward point consumer fintech apps, arguing that distribution giants like Chime and Revolut will simply absorb those features. Angela validates his distribution argument but explains how solving specific underserved pain points like food stamp management enables unique rebundling opportunities. | |
| Modernizing Financial Software for the CFO Suite | 4 | 4 | 2 | 3 | Harry asks whether B2B finance tools will see unbundling or rebundling relative to legacy suites like NetSuite. Angela reframes the dynamic around real-time functionality and dynamic layers on top of traditional general ledgers rather than pure unbundling. | |
| M&A Trends and Industry Consolidation | 5 | 3 | 1 | 2 | Harry asks about consolidation trends and guides a brisk quickfire round covering books, board member qualities, and contrarian thesis points. Angela offers counterintuitive M&A insights and briefly defends her view on serving lower-income demographics profitably. |
Statements from this episode (20)
Strange: Every consumer and business company will embed financial services
“Similarly, we are going to see, and we are already seeing, an explosion of financial services. Which is new neobanks, new, directly new fintech companies, but then more to the point, all of these consumer companies, all of these business companies are adding f…”
Strange: Lower fintech barriers will increase CAC for new market entrants
“What that will do, though, is it will make customer acquisition more difficult for new entrants, and we can talk more about that later.”
Strange: Consumers favor predictable monthly subscriptions over hidden fees in fintech
“And what consumers are showing increasingly is that for a high-quality product, a personalized product, They're more than happy to pay a predictable average fee per month, and we're seeing that business model move into financial services, which speaks to your …”
Strange: Fintech competition is incumbent innovation versus startup distribution
“The battle between the incumbent and the startup is whether the incumbent can get innovation before the startup gets distribution. And that applies to any industry, but it applies especially to financial services because getting customers is so damn difficult.”
Strange: US holds $1 trillion in total credit card debt
“The U.S. Infamously has a trillion dollars of credit card debt.”
Strange: Personal financial lives will become increasingly automated
“And as we get better at this, and as consumers start to trust new software companies more, I think our financial lives will become more and more automated and just optimize in a much better way.”
Strange: Software startups gain high retention by becoming systems of record
“The most exciting insertion points are insertion points where you can become the system of record. And that is very hard because usually even if it's a shitty system of record, one exists. It's been building up over the years. It's got tons of data. It's very …”
Strange: Carta is uniquely positioned to build private securities exchange CartaX
“The vision for Carta X is right now you can be public and very liquid and private and very illiquid. What would be the platform or the stock exchange, so to speak, of private and liquid? And who best execute on that than the company that has the system of reco…”
Strange: Startups can become systems of record through two main strategies
“Becoming a system of record can be stage one of your business, which Carta very cleverly figured out, but it could also be a Stage two of your business, which is solve a very valuable problem for a customer that they're willing to pay for, and over time, you e…”
Strange: US has around 100 banks with over $10B in assets
“At least in the U.S., there's probably around a hundred banks that have more than ten billion in assets.”
Strange: Fintech unbundling requires a high-pain-point wedge for CAC efficiency
“You can't just unbundle, pick a product and go. You've got to find a high consumer pain point wedge that is going to enable to get you customers cost effectively.”
Strange: Propel's initial app helps 40 million SNAP recipients manage spending
“Propel's first product is they help the forty million Americans who are on food stamps to better manage their spend.”
Strange: Banking rebundling will take entirely new forms than legacy models
“The unbundling and rebundling in banking still has a long road to go, but we won't see things rebundled in exactly the same way.”
Strange: Corporate finance software evolution is driven by real-time functionality
“I think of software for the finance suite as less of a unbundling, re-bundling story and more of a new functionality or real-time story.”
Strange: Fintech startups are acquiring incumbent financial institutions
“Hippo acquiring Spinnaker, Lending Club acquiring Radius Bank.”
Strange: Amazon issued $1 billion in small business loans in 2019
“Like Amazon has done a billion dollars in S&D loans last year”
Strange: Financial services is consolidating internally while dispersing broadly
“So it's this consolidation within traditional and new fintech and then dispersion across much, much broader industries.”
Strange: Top board members ask unique questions and work unprompted
“The best ones have these two things in common. One, they ask really good questions from a unique point of view. So that's either their world-class sales, the best at building brands, or they prescribe to the Charlie Munger worldly wisdom and just look at the w…”
Strange: Large, profitable businesses will serve the bottom 25% of the economy
“I believe that there are large for-profit businesses that consumers will love that are still to be built that are going to serve the bottom 25% of the economy.”
Strange: LatAm banking will be delivered via mobile, not bank branches
“So I've got a few investments down there. I hope to make more. If you wanted one chart, you would look at credit card penetration per country. So let's take Columbia where I have a great team there. It's about 14%. It's been stagnant for years. Smartphone pene…”