Nik Milanovic Discusses The Power of Curation, Embedded Finance, and Growing his This Week in Fintech Newsletter

The goal for [This Week in Fintech] is still the same over the years: provide a way for people to easily digest everything happening in fintech. I don't have any explicit goals. I'd rather focus on making it as good as it can be now and focus on outcomes later.

- Nik Milanovic, This Week in Fintech

Nik Milanovic has worked in fintech for 10+ years. 

He started This Week in Fintech in response to a problem he observed amongst his team.

At the time, there was no one concise way to find all the fintech news in one place. So Nik sent out an internal update email, forwarded it along to a few friends, and it took off from there.

Here are some of the highlights Nik shared with us about his experience running This week in Fintech.

• On the power of curation: The[fintech] space is moving so quickly and has fragmented into so many interesting subgenres that it's all I can do to keep up with current events. That's why my main job is curation-- putting news together in a format and narrative that helps people make sense of it-- rather than opining on each event. 

• On the biggest mistake early investors make: I think the biggest mistakes that early investors make are (1) focusing on TAM, (2) focusing on revenue drivers over user product affinity, (3) overfitting for who else is in the deal, (4) only investing in solutions for problems that they personally have witnessed.

• On the future of embedded finance: In a world where everyone has a supercomputer in their pocket and our data exhaust tells you everything about our lives, the most successful financial products will be those that move up the funnel to meet customers where they are(in texts, in whatsapp, etc.)

Question/Answers

What gave you the confidence to feel like you were enough of an authority on fintech to start a newsletter covering it?

Well like any good millennial guy, overconfidence about my authority comes naturally 

To be honest I still don't feel like an authority on fintech at all. 

The space is moving so quickly and has fragmented into so many interesting subgenres that it's all I can do to keep up with current events. That's why my main job is curation -- putting news together in a format and narrative that helps people make sense of it -- rather than opining on each event. 

When I have a strong enough opinion, I'll write it out in Forbes or Techcrunch.

What strategies have/have not worked for you in growing your readership?

I am the worst newsletter writer, possibly on all of Substack, when it comes to tracking where my readers come from. 

I don't hype it up, I don't like self-promotion, I don't try to 'growth hack.' 

Mostly it's because I just don't have time, but my philosophy has always been - if you are building something that really creates value for people, the readers will come. 

All the other gimmicks don't seem like they translate into long-term readership.

What does the full process look like for creating an edition of your newsletter from research > sharing?

It looks like this. In all honesty, it's a labor of love. 

There's no algorithm or scraping, I find and curate everything by hand, but I've got it down to a science now.

What sources do you rely on most to find content?

Twitter, slack, newsletters, direct inbounds, it's all over the place.

What are the most exciting early stage fintech startups you've seen recently?

This is where I'm supposed to talk up my angel investments, right?

There are so many cool concepts being built by talented and ambitious founders right now. It's really exciting.

Here are a few of the best founding teams I've talked to:

Tribal, Sila, Power, Kasheesh, Stir, Creative Juice, Mono, Pngme, Ziina, Goldfinch, Fragment, Domain, Embed, Puzzl, Glean, Ponto, Eco, Sydecar, PartyRound, Orum, Trueaccord, Unit.... and I'm sure I'm forgetting a lot.

In terms of private fintech co's, Stripe and Plaid seem to be unstoppable juggernauts. How would you make a bear case against the companies?

Haha this is a dangerous bear case to make; I don't think these companies are going away anytime soon.

Stripe has built a fantastic multi-service business around helping people transact online ("increase the gdp of the internet").

There are some newer competitors (Finix and Tilled) focusing on competing with them on price and segmentation, but I think the real threat to Stripe will come eventually in the form of protocols.

As decentralized payment systems grow in acceptance, it will become less tenable to collect rent on transactions, and features like fraud, KYC / AML, lending, incorporation, etc. will be modular and built into these protocols.

Plaid is a big beneficiary of open banking, but it's a double-edged sword. As more financial institutions come around to PSD2 / open banking / DF 1033, they will invest in data-sharing alternatives to Plaid.

These may be other aggregators (Akoya), point-to-point solutions, or public options. Each of these will have their own challenges in overcoming Plaid, who have built a great UI and developed an entrenched network, but paradigm shifts find small niches to win and grow from there.

Which fintech sub-sectors and/ or geographies do you think have the highest potential for growth?

The best companies that anyone in fintech can start today are those that take a proven, working business model and cross-apply it to a new market with (1) 100 million people, (2) a common language, (3) one regulatory regime.

Nubank did this par excellence. 

And if you look at the explosion of venture investing in Pakistan, Egypt, Mexico, etc. you'll see that others are looking for these opportunities too.

Aside from your own newsletter, are there any specific resources that you’d recommend to someone trying get ‘more involved’?

One of my favorite questions! I've collated a bunch of resources here and here to help people get deeper into fintech.

What do you think the next embeddable fintech solution will be? What's your view on how all these new banking as a service businesses will change the financial system and how people bank going forward?

To me, these are part and parcel of the same question, so I'll answer them together.

Lex Sokolin put it well recently: The idea that we go to "the finance store" will seem anachronistic in 10 years. 

In a world where everyone has a supercomputer in their pocket and our data exhaust tells you everything about our lives, the most successful financial products will be those that move up the funnel to meet customers where they are (in texts, in whatsapp, etc.)

Embedded finance (incl. Baas) will eventually blend with crypto to put people in control of what data they share, what services they access, etc.

I wrote about this a couple years ago here and here (shameless plug).

How do you divide your time between newsletter, events, spv, twitter and google too? Do you have plans to start a fund of your own someday, given enough headsup to earn lp level money and lastly what are your thoughts on big banks and which if one is your favorite large bank!

It will look totally different day to day and week to week. But I ask myself all the time: what is the most important task for me to focus on to enable things to keep moving? Sleep normally loses out.

Investing is interesting but I like building products more. If you play basketball well enough, you can always become a coach later.

I actually think many big banks are really underrated! I've talked to bankers in all three of my last jobs and they are intensely curious and thoughtful about how to keep transforming and avoid complacency. I don't play favorites though.

How do you actively try to grow your subscriber base?

Mentioned this a little bit higher up but: it's all inbound right now.

My philosophy is that if I'm making something that really creates value for people's lives, they will keep coming. I think the hype and promotion and gimmicks don't really lead to sticky readership. 

One day I will start evaluating what channels people come through and how to grow proactively, but not today.

Do you envision a point where you would move off of Substack?

Maybe. I really like the ease and simplicity of the UI, but two growing pains I've encountered are(1) robust reader analytics and(2) adding two new international editions(Asia and Europe) that we had to start as separate Substacks.

How do you manage side projects while working full time at Google?

Sleep gets the axe.

What was your original goal/hopes for TWIF when first starting out? How has this changed over time?

The goal is still the same over the years: "Provide a way for people to easily digest everything happening in fintech." 

w/r/t like, selling it off or growing it or trying to make it a full-time occupation I don't have any explicit goals. I'd rather focus on making it as good as it can be now and focus on outcomes later.

Any thoughts on Coinbase's recent move to buy $500m worth of crypto?

Coinbase seems to know what they're doing around crypto, so I trust the plan.

When do you think [blockchain/defi] innovations will start to become mainstream? And how do you think it will happen?

Yeah, blockchain / crypto / decentralized finance protocols are a powerful back-end innovation waiting for great UIs to catch up.

The change will happen slowly, then quickly. My guess is that this will be the order:

1. Native defi companies get large but niche constituencies (we're seeing this today)
2. Banks experiment with blockchain in specific use cases like settlement or trade finance (happening today)
3. Enterprising nimble tech companies start incorporating these features (starting to see this with PayPal + Paxos, Current + Compound, etc.)
4. A regulatory regime is established that dictates guardrails for crypto.
5. Banks and FIs all rush to incorporate defi into their UIs.

I actually don't think defi + crypto will necessarily usurp big banks.

I think the more enterprising ones will be able to incorporate these products into their service offering, but it will take a lot of compliance and regulatory direction first.

What % of the founding teams that you've invested in have had deep financial industry experience?

Don't we all want to just figure out what Sequoia is investing in and then put our money there?

Ehhh tough to say. I throw my limited angel dollars into a variety of sectors, so financial industry experience doesn't normally top the list in terms of qualifiers.

Here's what I look for, roughly rank-ordered:

• Team background and strength
• Qualitative assessment of resiliency and hardiness
• Diverse background (w/r/t traditional tech + finance)
• Nuanced understanding of the product potential and roadmap, especially deciding which problems not to tackle and differentiating between core value products and ancillary ones
• Story + vision
• Sales ability (to hires, to customers, to investors)
• Is this somebody I want to talk to on the phone at least once a month, if they need it?

This is all super, super early-stage.

Metrics change as companies mature. I think the biggest mistakes that early investors make are (1) focusing on TAM, (2) focusing on revenue drivers over user product affinity, (3) overfitting for who else is in the deal, (4) only investing in solutions for problems that they personally have witnessed.

What is a non-tech related physical product that you use regularly (ex. not your laptop or phone!)

Love this!

Definitely:

• Nalgene
• Eyemask
• Kettle (for watering my plants....)

One tech-related thing I started doing last year is bringing my Google Home with me on trips. You can set it up in 5 mins and you have music, emails, weather report, etc. all in your room.

What does your workspace consist of?

Uh... I am pretty minimalist. I use:

• a laptop
• google docs
• substack

Yeah that's really it. I use a lamp when it starts getting dark?

What part of getting your newsletter off the ground has been most rewarding to you?

Always always always getting feedback from people. That's the only reason I do it. Even if it's criticism, it makes a difference just knowing people read.