Fintech startups that will be as big as Lending Club in 7 years time are probably using Blockchain today

The Lending Club “overnight sensation” (which puts Fintech on the front page)  took 7 years. They were founded in 2007

This is about par for the course for a high velocity startup (check out the founding dates for Uber and AirBnB for example, founded just slightly later and now in line for their IPO).

Those 7 years means that the Lending Club team had to work their way through the financial crisis of 2008 and the deep recession/bear market of 2009. These hard times were what gave Lending Club their opportunity to get traction.

This is not the first time that a great company got its chance in tough times.  Google was started in 1999 and had to work its way through the “technology nuclear winter” that followed the popping of the Dot Com bubble.

The formula seems to be:

  • Raise money when it is loose (1999, 2007, 2014).

  • Get traction when money is tight (2002, 2009, 20xx).

  • Exit when money is loose again (202x).


You don’t have to get the macro-economic timing exactly right; nobody can do that. You do need a proposition that resonates when money is tight, such as:

  • Google – lower cost advertising in 2002.

  • Lending Club – lower cost credit in 2009.


Fintech startups hacking away in obscurity in 2014 might hit the front page about 7 years later in 2021.

Almost certainly there will be another recession and bear market between now and 2021. How big and when, nobody knows; if anybody claims to know, they probably have a bridge to sell you. However the odds of another recession and stock market crash/bear market within the next 7 years is statistically highly likely; so any entrepreneur needs to factor that into their thinking.

In simple terms, you have to ask:

“Does my value proposition work in a deep recession/bear market?”

That is what brings me to distributed Blockchain platforms.  I see entrepreneurs building two types of systems on top of Blockchain platforms that are both about deep cost cutting:

1. Lower cost sharing economy services.

The type of proposition that gets traction in a recession/bear market is dramatically lower cost (like 10x lower or 90% less than incumbents). Uber, AirBnB and other sharing services can get away with a big % take today. What if somebody charged 1.5% rather than 15%? What if that 1.5% included payment processing by cutting out credit cards? The customer demand is already proven and the Blockchain can deliver the lower costs, so this is feasible. In a deep recession/bear market, that sort of proposition will resonate. We will then stop referring to “sharing economy” which sounds all lovely and social and refer to what it really is which is squeezing cash out of unused assets.

2. Radical core enterprise systems that take an axe to the IT budget.

Big companies love to cut deep during recession/bear markets. That means taking a disruptive approach to the big “keep the lights on processes” that account for 80% or more of the costs. These are the kind of Blockchain use cases that Richard Gendal Brown of IBM analyses so brilliantly.

That is why so many developers and entrepreneurs are spending time on these decentralized Blockchain platforms and why there is a lot of controversy about which is the best platform. These debates seem arcane to most people, but if these decentralized Blockchain platforms are the basic building blocks for a Lending Club level of success in the future, they are important.

That is why new decentralized Blockchain platforms are still being launched, including the one from Eris that Preston Byrne tells me should be launching tomorrow (see comments to that post).


  1. Brilliant article. I’m a FinTech entrepreneur running We have a disruptive online marketplace but still our suppliers use SWIFT network for settlement. As I’m sure you’ll know, cross-border payments is a huge space, with VC backed startups cutting excessive cost x10 times, making it 90% cheaper to trade internationally. Recently in Tel Aviv we hosted a meetup on Bitcoin. One such speaker deemed the SWIFT network a ”monopoly” and outdated with it’s corresponding banking network. I’m growing ever more convinced that elements of the blockchain will come into our mainstream world of international payments, with banks brokers and currency suppliers (e.g. P2P) engaging with Bitcoin upstarts not to disrupt their own business, but to look at ways the technology behind cyrpto can help with speed of transfer, instant transfers. Thus making it x10 better for the end customer who is paying his overseas supplier.

    Daniel Abrahams,

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