Sorry folks, this episode was delayed due to my travel schedules. I apologies to my readers, but here’s another episode of “Behind the ‘Apply’ Button”.
Before we begin, please check out my other write up on Latin America FinTech published by CrowdFundInsider.com. – FinnoSummit Miami: LatAm Fintech Revolution Part 1 – Death of Point of Sale Terminals and the Rise of Mobile. In this piece, I tried to chronicle my experience at the first Latin American FinTech show took place this month in Miami. More installments are coming, stay tuned.
Why am I writing this Blog?
My name is Timothy Li, founder of Alchemy and a fan of all things FinTech. I grew up in banking, lending, and financial services. I’ve been in technology, analytics, and product management most of my life. I worked at large banks such as JPMorgan Chase as well scale ups like RealtyMogul.
Four years ago, I began a venture to create a FinTech infrastructure company to let FinTech startups, banks and financial services to launch their product efficiently and completely remove the barrier to entry for anyone that wants to try their hands in lending and payments.
I believe in delivering best in class FinTech infrastructure to all corners of the world and to lower the cost of financing for everyone.
Episode 6 – “Secret Sausage”
Fine, not “Secret Sausage”… let’s go with “Secret Sauce”…
According to Urban Dictionary, Secret Sauce is defined as: noun The sauce that Jack-in-the-box put on their burgers starting in the 1980s. It’s the color of thousand island dressing. This “secret” was encouraged by Jack as a way to differentiate itself from the other fast food chains.
However according to wikipedia, secret sauce (redirect) is defined as: A secret ingredient is a component of a product that is closely guarded from public disclosure for competitive advantage.
So what’s really your competitive advantage?
Many people argue that technology is their secret sauce and that their tech stack is superior in any and every way. That might be the case if you are Google, Microsoft or Intel, or in other words, if you are a technology company by definition.
However in any other lines of business, technology might not be your core competency or your value proposition. It is an enabler of your business at best. FinTech, InsurTech, EdTech, whatever-tech sometimes get the “tech” portion of their vernacular twisted.
These companies aren’t tech companies, they offer financial services, insurance, education and technology is an enabler to that end.
If you are a novelist, a writer, would you feel the need to build a word processor before laying down your first paragraph? I think not. Writers won’t even think about technology as their core competency or their competitive advantage.
A.I. & Machine Learning Algorithms
Guys, most of us are enamored with artificial intelligence and machine learning these days. And some even claim that their special sauce in their algorithms.
Don’t get me wrong, there are some excellent companies out there that makes a ton of money leveraging statistics. Just as in Technology, true algorithm based companies such as FICO or Fair Issac considers these techniques as their competitive advantage. Everyone else is just using it for a means to an end.
And by the way, if you don’t have millions of transaction history behind you, your A.I. and Machine Learning algorithm is no more powerful than experiential business rules (e.g. guessing…)
In other words, Data is your competitive advantage, not these fancy algorithms that may or may not provide you with you with a lift against your competition.
Your secret sauce is your customer base and how they are leveraging your product and services. The data collected through that interaction is your valuation-multiple. Find a good partner in technology and analytic that will make sense of your data is worth every penny.
Happy Holidays and have a wonderful rest of 2019!