The intersection of social networks and finance has given rise to an ambitious new wave of financial products — And it’s fascinating -. Venmo’s feed and WallStreetBets on Reddit are just the tip of the iceberg of the phenomenon. More recently, we’ve seen tons of experiments, from Public.com, Dojo, Commonstock to personal tokens. I don’t know exactly what will work, but I’m convinced that something will eventually work.

If you build or want to build something in the social + finance, please hit me up on my Twitter or by mail :)

Over the past decade, the desire to share and collaborate has fueled the rise of multiplayer software across many markets and industries: files, documents, design projects, software development, photo boards, and more.

Yet, with a few exceptions, finance and fintech have stubbornly remained stubbornly single-player. We still call it personal finance. Though information sharing is pervasive, truly collaborative, multiplayer experiences have not yet emerged. Instead, we are left with the same stale products that the financial industry has been offering forever: joint accounts. The problem with joint accounts of all types: lending, saving, everyday spending, and investing, is that they can be quite difficult to set up, painful to maintain, and don’t accommodate short-term, non-partner, or non-family use-cases particularly well.

Traditional banks and financial products are still trying to enforce traditional, normative modes of living

Want more than two people on your joint account?

If the primary tool of one’s financial life is the checking account, what’s missing right now is a layer of collaborative tools that live on top of our primary accounts. These tools could allow us to spend, lend, borrow, save and trade together. This is an area of enormous opportunity.

Banks as both pervasive and invisible

We need more collaborative financial tools. These tools aren’t new banks necessarily, but rather, they exist on top of our primary accounts and allow us to transact around money together.

You shouldn’t need to have the same bank as another person to transact with them. Banks haven’t adapted to a world where two people with different primary banks might want to share money for a short project, and investing group, or a summer sublet. It’s not in the interest of a bank to offer such a product, so why would they?

Banks decided decades ago which sort of shared experiences around money were permitted, and which ones were not. In that time, technical and regulatory hurdles, along with issues around fraud prevention and AML have served as strong barriers to new entrants.

Finance has lagged behind other industries in facilitating multiplayer experiences because the banks don’t seem to want these interactions to happen. Most big banks offer a bundled experience and aim to have an offering for every financial need. Offering a best-in-market product isn’t necessarily when your customers are locked in. It’s so difficult to move away from a primary bank that most people just…don’t. Only 4% of consumers switched to their primary bank in 2018.

The emergence of P2P apps like Venmo, Lydia, and even Paypal, despite many headwinds, shows the massive need for more bank-agnostic, multiplayer, financial tools. And none of these apps allow users to create truly shared accounts.

Groups as financial entities

The group is the basic user class for the tools we need today as a society, yet few pieces of software allow the squad as a whole to produce cooperatively and generate wealth together.

This especially makes sense in 2021. COVID has resulted in the swift destruction of many small businesses, education systems, and social activities.

As millennials are approaching midlife, they are now left to deal with the reality that our dreams of homeownership, social security or any government safety net, and growing old with dignity are mostly illusions. Our coming-of-age story is one of two massive financial crises, overwhelming student debt, housing in many urban areas, and a global health crisis. Many still live with their parents or at their parents’ house. As the poster child for “Generation Me,” we have truly found the limits of individuality. Taking a more collective-first approach could provide greater financial opportunities and stability, but the toolset is thin.

Our financial products must adapt, whether the banks want them to or not. The problem is too big, and too important. The emergence of groups as more than a social entity, but a cultural and financial one, will hopefully push demand for these products.

To be fair, this issue stretches beyond banks, as there is still a pervasive social stigma around sharing money. At some point, talking about money and collaborating around it became scary and gauche. The role of “the money person” in any group is a fraught one. Trust is precarious. Collecting is often a nightmare. Tracking receipts is a time sink.

This is holding all of us back. We live in the world of my money and your money. Our money isn’t quite here yet, except within the confines of romantic partnerships, families, and businesses.

When will we get to a place where our money is a concept that is widespread and accepted?

What collaborative tools enable

Siloed, individual financial tools make dealing with money inaccessible and opaque, and the greatest promise of collaborative financial tools is transparency. There is a reason why we are so starved for financial savvy and basic personal finance education. Social activity and sharing around money happens on the periphery, but not enough inside the products themselves. We talk about stock trading together, sure, but mostly make those trades alone. Trading clubs are still fairly niched, and I don’t know of any new, great software products that offer group trading accounts, other than joint accounts with a partner or family member.

Even simple, regularly shared transactions such as a group of adults supporting their elderly parents are more complicated than they need to be. They usually involve one person collecting and tracking the payments and then sending money to the parent.

Or a creative project like a new podcast. There’s no need for a business bank account necessarily, though having one person track the expenses through their personal account is arduous. Pooling together an initial investment and then spending directly out of the pool allows for effortless tracking and transparency around exactly how much money is left in the budget.

Collaborative financial tools are far more pervasive in other cultures. Tandas in Latin America and Chama groups in Africa are two examples of collective financial habits and practices that exist and are widespread. But for a whole list of reasons, these practices have not become widespread in Europe yet.

The power of collective action should extend to borrowing, investing, trading, saving, and everyday spending in ways that we have not yet explored. Better tools can solve some of the stress and pain around tracking and collecting, and if done well, can unlock opportunities that are currently unattainable given the current system. We need more of those.

Finance is inherently social, but

Fintech will underdeliver on its promise if we continue to believe that all we need to build is modern infrastructure. We need to build a social layer to the mainstream financial system within the bounds of what people are already using. The blockchain industry is exploring similar ideas, but is it too soon?

Luckily there is a blueprint here. Fintech has a lot to learn from products like Figma and Dropbox. Social financial products will have as much in common with Pinterest as they do with JP Morgan.

You see it across all of the platforms, but you see certain categories that people are now talking about that they didn’t talk about before.

I think it’s driven by a few factors. One is generational, so every generation’s relationship with sharing and every generation’s relationship with money is different. So what Boomers did versus what Gen X did versus what millennials do versus what Gen Z does is different, and I think you see this macro trend around increased sharing.

And that’s driven by historical changes and the financial crisis. They have to take nontraditional paths to achieve financial progress and realize their dreams. For a long, long time, buying a home was not only the dream but something you achieved through the traditional financial system. So, everyone had a mortgage. Today, mortgages are less accessible than they’ve ever been. Will you talk to your peer set about, “How am I ever going to buy a home?” That’s really the catalyst behind many of these things.

Definitely, there is a long-term trend line towards sharing more rather than sharing less. But you see it happening at the category level and, to a certain extent, at the subculture level. Let’s take student debt as an example: When people start talking about it, then everybody feels empowered to talk about it, right?

I think you need catalysts for walls to come down around certain categories, like the student debt crisis, the financial crisis, there are a lot of external events that have led to some of these things coming down. But it’s happening, and it’s happening step by step

The question is: what pieces are going mainstream?

I think the hacker mindset has pushed outside of software and into finance. There was always a small number of people who were excited about “hacking their money,” but now that’s becoming a more mainstream concept. So the idea of being someone who distributes rewards across credit cards used to be a pretty niche, edge thing, and now more and more people are doing it. Money is not a destiny, it’s a game or it’s at least closer to a game than destiny and more people are talking about the ways to play it. When I say it’s a game, I say that in a hopeful way, not in a dismissive way, in terms of its importance.

There are also more offline examples than we’re all typically aware of. So once I learned about in the last few years is called Tontine, which is these offline communities, mostly immigrant communities, that are managed by an individual. Everyone contributes, let’s say, $1,000 a month. And then each month if there are 10 members, one member receives $10,000. And typically these are folks in your community, you might meet them at church. It’s really hard to save $10,000, it’s a lot easier to contribute $1,000 a month. And then when you receive the lump sum, there’s always some big thing you want to do with the $10,000. There are tons of examples of these micro-communities that have not yet successfully been brought online. So, you know, not everything starts from the ground up when it comes to digital products.

What are the things people like to do on socials?

Three of the core functions are bragging, complaining, and rubbernecking. And I think you’ve seen much of those in the place where social and finance meet. They’re coalescing around those three use cases as well. At the end of the day, social and finance, a lot of it is just content. It’s content that’s anchored around some financial transaction, but it’s still just content, so the usual rules of social apply.

Another way to think about it is: when you’re building something in social plus finance, you have an interaction layer and a transaction layer. And the interaction layer is built around the emotional and cognitive pieces: that is content creation, that is messaging, that is all these social things that we see pop up that appeal to these cognitive and emotional levers. And then you have a transactional layer, which is whatever your actual financial transaction is. That’s generally much more of a functional use case.

The magic in social plus finance happens when the transactional piece and the interactive piece are mutually reinforcing. That’s where the flywheel on social plus finance really starts to spin aggressively.

What’s so hard about social plus fintech?

It won’t be easy, though. Social software is messy and complicated because people are messy and complicated. AI won’t fix the awkward kitchen interactions you have with your roommate, who is late paying his rent. That said, there’s room for more tools, and ones that allow for more than bill splitting, joint accounts, and shared personal financial management. We need change at the account level, too.

Because money is so private, people are less likely to send invites to each other and bootstrap a social product in the way that you would bootstrap other social products

Build the best group account.

There is real power in pooling, spending, and managing group money together. Group spending already happens in individual silos, reconciled through spreadsheets, P2P, and bill splitting apps. It is believed that the transparency that comes with spending together is crucial.

I am not looking to re-invent an entire stack of personal finance products. Instead, I want to build the absolute best group account. You should be able to sign up with any bank and get money in and out easily. The accounts should be trivial to set up and easy to customize. We should support groups of all shapes and sizes. The accounts should feel lightweight enough to use one for a weekend but trustworthy enough to use one for a decade.

If you build or want to build something in the social + finance area, please hit me up on my twitter or by mail .