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Buy Now, Pay Later


  • The rise of “BNPL” or Buy-Now-Pay-Later is an interesting development at the intersection of banking, consumer spending, and technology.
  • BNPL seems to benefit everyone
    • The merchant gets to book a sale. The merchant does give up some margin but is willing to do this to book a sale. For example, a customer buys a $100 item for $100 but the merchant only keeps $90 of the revenue with the remaining $10 going to the BNPL provider.
    • BNPL provider gets the $10 margin
    • Customer gets the item today at low or no incremental cost and the customer gets additional flexibility in paying off the item.
    • BNPL offers a low-cost way to acquire new customers. Merchants and BNPL providers can then engage customers and cross-sell additional products and services.
  • New market entrants are capturing market share and taking $8-$10 bil in revenue from traditional lenders. What’s more is that these are typically younger customers with little to no credit.
    • “In markets like Australia, POS financing is significantly more mature and widespread and Pay in 4 products have been around longer than in the United States; in Australia, roughly 30 percent of the adult population had an account with a Pay in 4 provider as of June 2019,5 and the value of BNPL transactions grew by around 55 percent in 2020,6 in contrast to the continued decrease in credit cards in circulation.”
  • How can established banks get in on this game? The potential profitability of this business is certainly attractive for banks as Exhibit 5 suggests.
    • For the past 5 years, the average ROA of JP Morgan was 1.09% so entering the BNPL business would definitely improve profitability for most banks.

  • BNPL providers love to claim that they are ‘fintech’ or ‘data analytics’ companies. The reason? Technology companies trade at 26x forward warnings and banks trade at 12x. They can dress it up however they want but at the end of the day the BNPL providers are in the business of extending credit to consumers.

Learning & Work


  • Isaac Asimov is one of the most impressive minds ever. He is also one of my favorite writers. In a world that is increasingly dominate by specialists, Asimov wrote a book listed in every section of the Dewey Decimal Classification except for philosophy.
  • His ability to think ahead and conceptualize how things like robotics and the internet would impact humanity is astounding. In this clip he walks through how education, work, and our own sense of purpose and fulfillment fit together.
    • “As computers take over more and more of the work that human beings shouldn’t be doing in the first place…. There’s going to be nothing left for human beings to do but the more creative types of endeavor. The only way we can indulge in the more creative types of endeavor is to have brains that aim at that from the start.”
    • On computers dehumanizing work “everyone can have a teacher through in the form of access to the gathered from of knowledge of the human species”
    • “make it possible for them to enjoy learning and they will keep it up”
  • Perhaps COVID-19 is a catalyst in breaking down some of these rigid structures in education and work.
    • Remote learning, which is technology forward, is forcing institutionalized education to examine its organization and barriers.
    • Work-from-anywhere and the rise of networking technology is having a profound impact not only where people work but how work fits into a person’s lifestyle.
    • The pandemic exacerbated some structural labor market constraints. Companies are responding to this tight labor market by leaning into automation.

The New KGB

Excerpted from Orders to Kill by Amy Knight.

“The Federal’naia sluzhba bezopasnosti (Federal Security Service or FSB), the most powerful of Russia’s security agencies, was established in 1995, after various reorganizations of the old KGB. Although the foreign intelligence service and the government guard agency are not under the FSB, as was the case with the KGB, the FSB is by law authorized to conduct its own intelligence operations both at home and abroad, which has opened up a whole range of opportunities. It is a formi¬dable organization, numbering an estimated 350,000 employees. Its functions include counterintelligence, counterterrorism, combating economic crimes, guarding the borders, protecting government com-munications, and ensuring the security of nuclear materials and in¬stallations. In the words of Russian security experts Andrei Soldatov and Irina Borogan: ‘Rather than a revival of the Soviet KGB, the FSB had evolved into something more powerful and more frightening, an agency whose scope, under the aegis of a veteran KGB officer, ex¬tended well beyond the bounds of its predecessor.’ In Soviet days, the KGB was controlled by the Politburo and did not take important initiatives without the concurrence of this Communist Party leader¬ship body. Now there are no formal mechanisms of control over the FSB, except Putin and his closest allies.

“The FSB has extensive powers of surveillance, including that of the Internet, that far surpass those of similar agencies in the West. According to Soldatov and Borogan, the FSB, through a special system called SORM, monitors ’emails, Internet usage, Skype, cell phone calls, text messages and social networks. It [SORM] is one of the world’s most intrusive listening devices.’ In 2014, the Russian parliament passed a law requiring social media websites to keep their servers in Russia and hold data on users for six months. Security au¬thorities also use a broad interpretation of the ‘anti-extremism’ laws to block websites at their will. This became especially noticeable after democratic opposition protests erupted in Russia in 2011-12.

“More recently, in November 2016, Russian authorities blocked the professional networking site Linkedin, because it did not trans¬fer user data to servers in Russia. And in April 2017, apparently partly in response to the widespread street protests at this time, the Kremlin shut down Zello, an app with 400,000 followers that has been instrumental in organizing Russia’s truckers. The FSB is also proposing changes to the Russian Criminal Code that would intro¬duce harsh sentences for ‘causing damage to or threatening the crit¬ical information infrastructure of the Russian Federation,’ i.e. the internet. This new law would be another weapon in the FSB’s arse¬nal as it tries to rein in the internet.”

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