Nick Huber spends a lot of his time trying to figure out what financial services might look like 10 years from now.
That thinking is what drives his investment choices as a partner at Ribbit Capital, a venture capital firm that has invested in some of the biggest names among fintechs, including Robinhood, Credit Karma and Affirm.
In an interview, Huber discusses how he surveys what’s happening in areas like mobile apps and social media to assess the trends that may influence the future of financial services. He also talks about how his background helped prepare him for what he’s doing now, what Ribbit likes about its partnership with Walmart and why cryptocurrency is still a major focus for him despite all the turmoil in that market.
(This is the second of two articles on Ribbit. The first article is “Where Ribbit Capital Sees Fintech Opportunities.”)
Still on the Hunt for Good Fintech Prospects That Can Scale
Huber came to his Ribbit Capital job with experience at a traditional bank and a fintech.
He started out with JPMorgan Chase, working in its investment bank with financial institutions as his clients. He moved to LendingClub in 2014, taking a role in corporate development that involved making minority investments in other fintechs. The focus was on finding good prospects that could someday scale.
But in 2016, LendingClub went through a major management transition, amid trouble with the Securities and Exchange Commission. Negative publicity inundated a company that had been, in Huber’s words, a “fintech darling.”
LendingClub, which has since acquired a bank, relied heavily on marketplace lending back then. This had come to mean cultivating investors — often banks — to buy the loans it generated. And suddenly there were no buyers.
“We had almost every one of our investors on the platform stop providing financing in any way,” Huber says.
So he had to do “a 180,” with his role going from allocating corporate development capital to hunting for money, he says. Though tough at the time, this experience proved valuable, because when he came to Ribbit Capital in 2017, he’d been on both sides of investment deals.
“It gave me an appreciation for what it feels like to walk around, cap in hand, asking folks for funding, knowing that they know that the power dynamic is in their favor,” says Huber. “I hope that I learned some empathy, and that having gone through that experience carries over in how I interact with entrepreneurs now at Ribbit.”
Saying ‘No’ When You Know What ‘No’ Feels Like
Working at Ribbit Capital has meant getting used to not only doling out money but also doling out disappointment.
Huber says the hardest aspect of his job “has been saying ‘no’ to great founders — especially when you’re not really sure that ‘no’ is the right answer.”
“Somebody can handle it with class, can handle it with a growth mindset, and really take it as positively as you hope for,” he says. “But you’re still kind of calling their baby ugly, and that’s never a fun thing.”
Though Ribbit monitors all things fintech, “we’re a very thesis-driven firm and we always have a handful of themes that we try to prioritize,” he says. So a “no” sometimes arises because the idea for the fintech does not align with a theme Ribbit has been focusing on. The fit and the timing may not be right.
“It has become easier to say ‘no’ in this market because ‘no’ is more of an expectation than it was 18 months ago, when it seemed like everybody was clambering over every deal.”
— Nick Huber, Ribbit Capital
Saying “no” with a direct and honest reason counts for a lot, according to Huber. Ideally a turndown comes with some insight that still makes the founder’s pitch worth their time.
Where Will Future Fintech Innovation Come From?
Asking a venture capitalist where they get their ideas from — especially where the “next big one” might come from — is akin to asking a reporter where they get their stories.
“It’s impossible to know and we certainly don’t think about things through the lens of focusing only on this stage of company or that, this kind of company or that,” says Huber. “We go where the opportunities are.”
In other words, it’s eclectic. At any given time, the Ribbit Capital team might be talking about a seed stage investment with one fintech or getting an update from a fintech they’ve seen before but haven’t invested in.
But generally, “we try to think of what will be the biggest things 10 years from now and then work backwards from that,” Huber says.
Some things that are going to be big in a decade can be seen in their infancy now. Others are just a germ of an idea.
Huber believes that developments in mobile apps across other industries have been impacting what happens in the fintech and banking sectors for some time. So he tracks what nonbanks are doing on phones and tablets. (Dive Deeper: Offer ‘Test Drives’ of Mobile Banking Apps for a Marketing Advantage)
He’s seen insiders from traditional financial services and newcomers from outside the industry succeed in fintech.
“But the ones who have been successful have invariably looked for inspiration from outside of financial services,” says Huber.
Right now, something that he has his eye on is social commerce — this is the buying and selling of goods and services directly within a social media platform. Consumers not only find shopping recommendations on the platform but can make a purchase without going elsewhere to locate the brand or product.
“All of that is happening outside of the financial services business,” says Huber.
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The Strategy Behind Ribbit’s Walmart Partnership
Walmart has been making moves to get into financial services for decades, especially banking and payments. Its attempt to get a bank charter years ago caused an industry uproar.
In January 2021, its frequently changing strategy went in yet another new direction. Walmart launched a fintech startup, with Ribbit Capital as its minority partner.
The partnership acquired two fintechs: ONE Finance, a neobank offering savings accounts, and Even Responsible Finance, which Walmart already had been working with to offer its employees early wage access. In early 2022, they were merged into a single company to offer financial services products under the name “ONE.”
The strategy behind ONE comes down to need and distribution, according to Huber. The thinking is, a lot of people who don’t use traditional financial services could potentially be served if a provider reached out to them.
“These people want easier financial services, and they want value,” says Huber, who declined to discuss ONE in more detail. “That is totally what the Walmart brand stands for: value for their users.”
ONE’s selection of services includes a high-yield savings account, checking and a debit card that can pay 3% cash back on Walmart purchases, subject to conditions. Free overdraft protection up to $200 is also available.
Many competitive neobanks offer similar packages, but no others have the Walmart connection.
“The opportunity to partner with them on something that’s aligned to easier financial services, better value to customers coming into their stores day in and day out, and to their associates who are working their butts off, that really resonated with us and is what got us excited,” Huber says.
Crypto’s Future: Looking Beyond the Meltdown
Ribbit Capital is also very interested in cryptocurrency, despite the volatility in that market. The venture capital firm has operated globally from the start, and its broad perspective has made crypto “a very important focus,” Huber says.
The appeal has a lot to do with the basic original idea behind it: censorship-resistant currencies that governments couldn’t easily manipulate. He says use of Bitcoin in Argentina and some other countries where currencies are less stable is an example of positive uses of crypto.
“But that’s just a narrow definition of what crypto can be,” Huber says. “We’re still in the early innings of crypto as an application or a product.”
It’s the technology itself that Ribbit finds most exciting. Using tokens via the blockchain introduces game-changing possibilities for transparency, collaboration and more, in Huber’s view.
“If you are focused on financial services and you think about the various rails that are used — payment rails, etc. — tokenization is an incredibly powerful technology,” says Huber.