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May 26, 2017 · 23m · top-founders

671: Predicting The Future of FInTech with Steve McLaughlin, CEO at FT Partners

Steve McLaughlin · 11m spoken Nathan Latka · 9m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this episode of 'The Top', host Nathan Latka interviews FT Partners CEO Steve McLaughlin to discuss fintech investment banking, valuation models for high-growth startups, M&A deal mechanics, and the long-term performance benefits of automated robo-advisors over passive index funds.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 44.8% of the talking time here. How this is scored →

Nathan as informed peer 5.0 Guest teaching 3.2 Guest disagreement 1.4 Nathan pushing back 2.8
05100:0010:0020:001:40–4:43 · Nathan as informed peer 5/10 Introducing FinTech Investment Banker Steve McLaughlin Nathan frames the FinTech discussion by referencing previous interviews with Wealthfront and Betterment founders. McLaughlin details FT Partners' advisory remit and sector categorization across payments, wealthtech, and insurance tech.4:43–7:53 · Nathan as informed peer 6/10 Advising BlackRock on FutureAdvisor and Investment Banking Fees Nathan cites researched deal numbers for BlackRock's acquisition of FutureAdvisor and inquires into fee economics. McLaughlin explains buy-side mandates and tiered success fee structures ranging from 1% to 7%.7:53–14:54 · Nathan as informed peer 5/10 Valuation Methodologies, Capital Strategy, and WealthTech Adoption McLaughlin reframes Nathan's attempt to value Betterment on immediate AUM revenue multiples, detailing why long-term scenario modeling and DCF projections over 7 to 10 years are necessary for unprofitable high-growth firms. Nathan pauses to ask for clarification on the RIA acronym.14:54–17:19 · Nathan as informed peer 7/10 Passive Indexing vs. Robo-Advisors: The Warren Buffett Debate Nathan pushes hard against the value proposition of robo-advisors by contrasting their added fee layer against Warren Buffett's passive low-cost S&P 500 indexing philosophy. McLaughlin defends WealthTech by highlighting future forensic performance data and tax-loss harvesting benefits.17:20–20:31 · Nathan as informed peer 2/10 Sponsor Segment: Acuity Scheduling Productivity Workflow Nathan transitions through an Acuity Scheduling sponsor read and runs through the standard Famous Five rapid-fire questions to close out the interview.1:40–4:43 · Guest teaching 2/10 Introducing FinTech Investment Banker Steve McLaughlin Nathan frames the FinTech discussion by referencing previous interviews with Wealthfront and Betterment founders. McLaughlin details FT Partners' advisory remit and sector categorization across payments, wealthtech, and insurance tech.4:43–7:53 · Guest teaching 3/10 Advising BlackRock on FutureAdvisor and Investment Banking Fees Nathan cites researched deal numbers for BlackRock's acquisition of FutureAdvisor and inquires into fee economics. McLaughlin explains buy-side mandates and tiered success fee structures ranging from 1% to 7%.7:53–14:54 · Guest teaching 6/10 Valuation Methodologies, Capital Strategy, and WealthTech Adoption McLaughlin reframes Nathan's attempt to value Betterment on immediate AUM revenue multiples, detailing why long-term scenario modeling and DCF projections over 7 to 10 years are necessary for unprofitable high-growth firms. Nathan pauses to ask for clarification on the RIA acronym.14:54–17:19 · Guest teaching 4/10 Passive Indexing vs. Robo-Advisors: The Warren Buffett Debate Nathan pushes hard against the value proposition of robo-advisors by contrasting their added fee layer against Warren Buffett's passive low-cost S&P 500 indexing philosophy. McLaughlin defends WealthTech by highlighting future forensic performance data and tax-loss harvesting benefits.17:20–20:31 · Guest teaching 1/10 Sponsor Segment: Acuity Scheduling Productivity Workflow Nathan transitions through an Acuity Scheduling sponsor read and runs through the standard Famous Five rapid-fire questions to close out the interview.1:40–4:43 · Guest disagreement 1/10 Introducing FinTech Investment Banker Steve McLaughlin Nathan frames the FinTech discussion by referencing previous interviews with Wealthfront and Betterment founders. McLaughlin details FT Partners' advisory remit and sector categorization across payments, wealthtech, and insurance tech.4:43–7:53 · Guest disagreement 1/10 Advising BlackRock on FutureAdvisor and Investment Banking Fees Nathan cites researched deal numbers for BlackRock's acquisition of FutureAdvisor and inquires into fee economics. McLaughlin explains buy-side mandates and tiered success fee structures ranging from 1% to 7%.7:53–14:54 · Guest disagreement 2/10 Valuation Methodologies, Capital Strategy, and WealthTech Adoption McLaughlin reframes Nathan's attempt to value Betterment on immediate AUM revenue multiples, detailing why long-term scenario modeling and DCF projections over 7 to 10 years are necessary for unprofitable high-growth firms. Nathan pauses to ask for clarification on the RIA acronym.14:54–17:19 · Guest disagreement 3/10 Passive Indexing vs. Robo-Advisors: The Warren Buffett Debate Nathan pushes hard against the value proposition of robo-advisors by contrasting their added fee layer against Warren Buffett's passive low-cost S&P 500 indexing philosophy. McLaughlin defends WealthTech by highlighting future forensic performance data and tax-loss harvesting benefits.17:20–20:31 · Guest disagreement 0/10 Sponsor Segment: Acuity Scheduling Productivity Workflow Nathan transitions through an Acuity Scheduling sponsor read and runs through the standard Famous Five rapid-fire questions to close out the interview.1:40–4:43 · Nathan pushing back 2/10 Introducing FinTech Investment Banker Steve McLaughlin Nathan frames the FinTech discussion by referencing previous interviews with Wealthfront and Betterment founders. McLaughlin details FT Partners' advisory remit and sector categorization across payments, wealthtech, and insurance tech.4:43–7:53 · Nathan pushing back 2/10 Advising BlackRock on FutureAdvisor and Investment Banking Fees Nathan cites researched deal numbers for BlackRock's acquisition of FutureAdvisor and inquires into fee economics. McLaughlin explains buy-side mandates and tiered success fee structures ranging from 1% to 7%.7:53–14:54 · Nathan pushing back 3/10 Valuation Methodologies, Capital Strategy, and WealthTech Adoption McLaughlin reframes Nathan's attempt to value Betterment on immediate AUM revenue multiples, detailing why long-term scenario modeling and DCF projections over 7 to 10 years are necessary for unprofitable high-growth firms. Nathan pauses to ask for clarification on the RIA acronym.14:54–17:19 · Nathan pushing back 6/10 Passive Indexing vs. Robo-Advisors: The Warren Buffett Debate Nathan pushes hard against the value proposition of robo-advisors by contrasting their added fee layer against Warren Buffett's passive low-cost S&P 500 indexing philosophy. McLaughlin defends WealthTech by highlighting future forensic performance data and tax-loss harvesting benefits.17:20–20:31 · Nathan pushing back 1/10 Sponsor Segment: Acuity Scheduling Productivity Workflow Nathan transitions through an Acuity Scheduling sponsor read and runs through the standard Famous Five rapid-fire questions to close out the interview.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 83.5% · guest 16.5%0:00 · Nathan 83.5% · guest 16.5%3:00 · Nathan 32% · guest 68%3:00 · Nathan 32% · guest 68%6:00 · Nathan 26.3% · guest 73.7%6:00 · Nathan 26.3% · guest 73.7%9:00 · Nathan 20.2% · guest 79.8%9:00 · Nathan 20.2% · guest 79.8%12:00 · Nathan 4.1% · guest 95.9%12:00 · Nathan 4.1% · guest 95.9%15:00 · Nathan 48% · guest 52%15:00 · Nathan 48% · guest 52%18:00 · Nathan 63.4% · guest 36.6%18:00 · Nathan 63.4% · guest 36.6%21:00 · Nathan 100% · guest 0%21:00 · Nathan 100% · guest 0%
Sharpest disagreement ▶ 15:47 McLaughlin dismisses Buffett index purism with empirical data thesis

McLaughlin directly counters Nathan's Buffett-inspired skepticism by asserting that empirical case studies will prove robo-advisors and tax-loss harvesting outperform standard passive indexing.

 Hardest push from Nathan ▶ 14:54 Nathan confronts robo-advisor fees versus Vanguard indexing

Nathan refuses to accept the robo-advisor hype, citing Warren Buffett's passive low-expense ratio strategy and demanding to know why anyone should pay higher basis points for Betterment.

 Biggest teaching moment ▶ 8:28 McLaughlin explains multi-scenario DCF valuation for unprofitable tech

McLaughlin explains why looking at current revenue or AUM is the wrong way to value high-growth private tech, educating the host on 10-year forward scenario modeling.

 Nathan holds their own ▶ 5:22 Nathan provides verified transaction data on the FutureAdvisor buyout

Nathan demonstrates prepared industry research by stating the estimated $150 million acquisition price and exact timing of BlackRock's purchase of FutureAdvisor.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Introducing FinTech Investment Banker Steve McLaughlin 5212 Nathan frames the FinTech discussion by referencing previous interviews with Wealthfront and Betterment founders. McLaughlin details FT Partners' advisory remit and sector categorization across payments, wealthtech, and insurance tech.
Advising BlackRock on FutureAdvisor and Investment Banking Fees 6312 Nathan cites researched deal numbers for BlackRock's acquisition of FutureAdvisor and inquires into fee economics. McLaughlin explains buy-side mandates and tiered success fee structures ranging from 1% to 7%.
Valuation Methodologies, Capital Strategy, and WealthTech Adoption 5623 McLaughlin reframes Nathan's attempt to value Betterment on immediate AUM revenue multiples, detailing why long-term scenario modeling and DCF projections over 7 to 10 years are necessary for unprofitable high-growth firms. Nathan pauses to ask for clarification on the RIA acronym.
Passive Indexing vs. Robo-Advisors: The Warren Buffett Debate 7436 Nathan pushes hard against the value proposition of robo-advisors by contrasting their added fee layer against Warren Buffett's passive low-cost S&P 500 indexing philosophy. McLaughlin defends WealthTech by highlighting future forensic performance data and tax-loss harvesting benefits.
Sponsor Segment: Acuity Scheduling Productivity Workflow 2101 Nathan transitions through an Acuity Scheduling sponsor read and runs through the standard Famous Five rapid-fire questions to close out the interview.

Statements from this episode (6)

Assertion Partly supported
McLaughlin: FT Partners did $10B–$15B in 2016 transaction volume
“Probably 10, fifteen billion of total transaction volume. Largest deal is probably four and a half billion.”
Steve McLaughlin May 26, 2017 ▶ 2:58
Assertion Contradicted
McLaughlin: Marqeta is growing at hundreds of percent annually
“In the payment space like Marketa is growing at hundreds of percent a year.”
Steve McLaughlin May 26, 2017 ▶ 3:36
Prediction Not checkable as stated
McLaughlin: Wealth tech will have the most long-term staying power in fintech
“In the wealth tech space, that's the one of the ones I think is going to be a little bit slower to ramp, but has probably the most staying power long-term because you just keep piling assets on top of each other over the years and the stickiness level over som…”
Steve McLaughlin May 26, 2017 ▶ 3:48
Assertion Not checkable as stated
McLaughlin: Advisory fees scale from 1% on mega-deals to 7% on $100M
“It's different, you know, on a multi-billion dollar deal, you know, it can be a percent, and on, you know, a hundred million dollar deal, it can be seven percent. It kind of scales with the deal size, and then some of the fees can be pretty large if you end up…”
Steve McLaughlin May 26, 2017 ▶ 7:38
Opinion
McLaughlin: Silicon Valley fintechs are underfunded by drip rounds
“I think that's one of the problems I'm seeing in Silicon Valley is a lot of these companies, not necessarily these wealth management companies, but in general are not getting enough funding. Everybody wants to build fintech companies. Exactly. There's no one t…”
Steve McLaughlin May 26, 2017 ▶ 14:07
Prediction Not checkable as stated
McLaughlin: Empirical data will drive mass adoption of robo-advisors
“Once you get some empirical evidence that these robo-advisor platforms and the value of the lower fees and the tax harvesting and things like that are super, you know powerful over the long haul, you know, that empirical data is going to really propel people t…”
Steve McLaughlin May 26, 2017 ▶ 16:56
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