December 10, 2024 • 1hr 32min

Micky Malka - Building Ribbit - [Invest Like the Best, EP.400]

Invest Like the Best with Patrick O'Shaughnessy

Micky Malka is the founder of Ribbit Capital, one of the most influential fintech investing firms. Through Ribbit, Micky has backed transformative companies like Coinbase, Robinhood, and NuBank from their earliest days. The conversation explores his perspective on fintech's evolution, including his provocative declaration that "fintech is dead," and his theory of the grid - how knowledge, wealth and power are being transformed by technology.

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Key Takeaways

Ribbit Capital's Founding Philosophy: Built as a "rebel" firm focused on changing financial services through innovation rather than financial engineering
The Grid Concept: A framework for understanding how knowledge, wealth, and power are being transformed through the convergence of financial, data, and electrical networks
Investment Approach: Highly concentrated positions based on deep conviction and relationships with founders
Team Structure: No titles or traditional hierarchy; emphasis on knowledge sharing and collective growth
Future Vision: Focus on the intersection of AI, crypto, and digital identity as key drivers of change

Introduction

Micky Malka is the founder of Ribbit Capital, one of the most influential fintech investing firms. Through Ribbit, Micky has backed transformative companies like Coinbase, Robinhood, and NuBank from their earliest days. The conversation explores his perspective on fintech's evolution, including his provocative declaration that "fintech is dead," and his theory of the grid - how knowledge, wealth and power are being transformed by technology.

Topics Discussed

The Rebel Spirit of Ribbit (5:48)

Malka describes Ribbit's identity as a group of rebels who seek to drive change where innovation is lacking. The firm was structured intentionally to maintain this rebel mindset.

Initial Structure: Spent a year determining the right structure to maintain rebel identity
Founding Principles: No labels, complete transparency, aligned incentives
Culture: Focus on finding and backing other rebels who want to change the status quo
"Wherever the status quo grows bloated, wherever there's not enough innovation, wherever there's nothing new that benefits the customer, you're going to find us there as rebels" - Micky Malka

Early Investment Thesis (13:17)

Ribbit's early thesis centered on the opportunity created by the 2008-2009 financial crisis and the rise of mobile technology.

Post-Crisis Opportunity: Banks became over-regulated and stopped innovating
Mobile Revolution: App store created new channel to acquire customers
Infrastructure Gap: Banks had modernized backends but not last-mile delivery
Crypto Vision: Early recognition of Bitcoin's potential based on personal experience with currency crises

The Death of Fintech (16:10)

Malka explains Ribbit's controversial declaration that "fintech is dead" and the strategic thinking behind it.

Market Evolution: Fintech has accomplished its initial mission of modernizing financial services
Strategic Pivot: Need to change the rules to stay ahead rather than defend position
Future Focus: Moving beyond traditional fintech into new areas of innovation
"To play an infinite game, to play a game that you get to reinvent yourself...once you're ahead, you have to change the rules of the game so you fall behind" - Micky Malka

The Global Digital Grid (28:28)

Malka introduces his concept of the "grid" - the convergence of knowledge, wealth, and power networks.

Three Components: Internet (knowledge), Financial Networks (wealth), Electrical Grid (power)
Historic Convergence: First time in 500 years these systems are merging
AI Parallel: Compares current moment to printing press revolution
Future Impact: Creates unprecedented opportunities for new use cases and innovations

Digital Identity and Tokenization (34:34)

Discussion of the critical role of digital identity in enabling the future grid vision.

Current Limitations: Existing digital IDs are siloed and don't enable full connectivity
Tokenization Impact: Essential for connecting knowledge, wealth, and power networks
India Example: Aadhaar system as model for national digital identity infrastructure
Future Vision: Identity as key enabler for AI agents and automated transactions

The Robinhood Story (21:45)

Malka shares the dramatic story of helping Robinhood through its January 2021 crisis.

Crisis Preparation: Had emergency funding terms ready nine months in advance
Quick Response: Mobilized $500 million in funding within hours
Relationship Value: Demonstrates importance of deep founder relationships
Long-term Impact: Brand consequences lasted 2.5 years despite quick resolution

Investment Philosophy (1:06:01)

Malka explains Ribbit's unique approach to investing and returns.

Focus on Inputs: Emphasizes process over outcome metrics
Concentration: Believes in even more concentrated positions than current approach
Relationship-Driven: Deep engagement with founders as key to success
Time Management: Prioritizes spending time getting to know founders

Art and Innovation (1:11:47)

Discussion of Malka's deep interest in digital art and its role in predicting future trends.

Artists as Leaders: Views artists as early indicators of societal change
Digital Revolution: NFTs and generative art as transformative technologies
Museum Evolution: Traditional museums becoming outdated like bank branches
Future Vision: Immersive, interactive art experiences as model for future experiences

Building Better Money (1:16:35)

Malka shares his core mission of improving money to better serve people globally.

Access Impact: Equal access to financial products improves lives
Global Equality: Technology enabling same opportunities worldwide
Risk Management: Better financial systems reduce predatory lending
Economic Mobility: Access to capital enables personal growth and business creation

Crisis Management (1:27:19)

Malka's approach to handling crises and difficult situations.

First Steps: Focus on immediate decisions needed
Clarity: Help people see through complexity to core issues
Support: Provide guidance while enabling autonomy
Movement: Emphasis on forward progress rather than perfection

Conclusion

The conversation reveals Ribbit Capital as a uniquely principled and adaptable investment firm, guided by Malka's vision of improving financial services globally. His concept of the "grid" provides a framework for understanding current technological convergence, while his emphasis on relationships, conviction, and continuous reinvention offers lessons for investors and entrepreneurs alike. The discussion highlights the importance of maintaining a rebel spirit while building lasting institutions, and the critical role of identity and tokenization in enabling future innovations.