A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

Miki and I want to congratulate Jerry Nemorin, founder and CEO of Lendstreet, a fintech startup. As a board member I’ve been with Jerry from the start and know how hard he’s worked, as well as how much he cares.

He cares about his team, his company, and his investors, but most of all he cares about Lendstreet’s ability to help its customers to a better life.

Lendstreet restructures debt for consumers in financial distress. A badly kept secret is that healthcare expenses is the number one reason that people go bankrupt and families lose their homes. In fact, most middle and low income families live on a shoestring — the average family only has  a few hundred dollars in the bank to deal with emergencies.

As a consequence, a seemingly small thing like the car breaking down can put an entire family spiraling downward to homelessness. Lendstreet interrupts this cycle by using technology to restructure the debt and ensure that the family has the necessary liquidity to get through hard times. In addition, they educate people on financial best practices, including how to improve their credit score.

In essence, Lendstreet provides technology-based solutions and resources that reduce consumer debt, increase credit scores, and improve savings. Since its inception, Lendstreet has helped customers successfully reduce their debt by nearly 40 percent and improve their credit score by an average of 100 points.

Lendstreet was founded in 2013, and Jerry has spent the intervening years building its business to support some of the most vulnerable people in this country. Sure, he’s raised money, a difficult proposition for a business focused on helping the bottom 80% of the population, instead of the top 20%.

He has been relentlessly tenacious in his drive to bring the company and its products to market and in raising the necessary capital to be able to help an increasing number of people.

This week he reached an important milestone in his quest — he managed to get top institutional investors to participate in funding a solution to the tune of $120 million.

“Lower and middle-income Americans are struggling and relying on high interest credit cards for their day-to-day survival. These investments will enable us to scale our platform and reach more consumers who are struggling with too much debt. Prudential, CIM, Radicle Impact, and our other investors share our vision of finally giving mainstream Americans access to an equitable and transparent alternative for their mounting credit card debt.”–Jerry Nemorin

My hope is that by helping people get back on a solid financial footing, by reducing their debt and coaching them on spending wisely, they will be able to stabilize economically and generate upward mobility, as opposed to treading water or, much worse, drowning.

CONGRATULATIONS,  and !

(In 2013 Jerry covered The Innovation Summit for MAPping Company Success.)

Image credit: HikingArtist

Ajo sent me an email about another conference he attended yesterday and I thought I would share it with you.

Hi Miki,

I attended the Future of Money and Technology Conference hosted by Brian Zisk .
I was invited to the conference thanks to an introduction by Dave Park who runs recombinantinc.com. Recombinant is interesting by itself because they can synthesize new music from a sample of old melodies from an artist using an AI algorithms.

The conference has a great attendance with many high powered people such as Jon Jeswald from the Federal Reserve, Sheel Mohnot from 500 startups and Arvind Purushotham from Citi Ventures.

One interesting line of development has been the use of Bitcoin technologies for DRM.

One of the issues that the music industry faces is that it’s hard to track the owner of the rights to a piece of music – through divorces, inheritance, etc. This is a big mess because even though people want to pay for the music they play, the owners of the rights often don’t get the money.

So, many startups are working on different aspects of the bitcoin type blockchain technology to keep track of who owns these rights.

There are several companies that have similar but slightly different applications of the same general idea of keeping track of rights to digital assets using the blockchain algorithms for other types of assets. Blockstack.io headed by Peter Shiau was recently acquired by Digital Asset based on its success in using this technology in enterprise software.

Interesting world we live in.

Cheers,

Ajo.

Fascinating stuff, Fintech; one of the few areas that no matter how much I read I don’t understand — starting with bitcoin.

FinTech, the wedding between finance and technology, is a hotbed of startups and innovation, especially in London. Now it’s lighting the fires of the investment community in Silicon Valley, so I prevailed on Ajo Fod, who knows the FinTech world well, first as a quant and now as an entrepreneur, to attend the Trading Show and share his observations with you.

I had the pleasure of attending Trading Show West Coast 2015: West Coast’s leading quant, automated trading and big data event last week. This is one of the most legitimate trading shows I’ve seen and truly geared to professionals.

The first thing that caught my eye, was the surprisingly large majority wearing business attire; I was expecting some confusion. Google tried to hold down the fort of casual-at-work and a few people were dressed in jeans, with long-sleeved shirts for good measure.

But finance won over West Coast causal even in San Francisco. My decision to dress in a brown suit and a tie was just the right measure down from full business dress.

I was impressed by the balance between different groups of professionals. Quants / traders / investors / hardware / risk management and students were all well represented.

Different scales of enterprise from startups to micro hedge funds to medium sized funds, such as AXA Rosenberg, to industry titans like BNY Mellon Financial and Blackrock were there, too.

The mix of speakers, from hardware tech providing fast access to markets to macro thoughts from Lex Huberts, was good, especially considering the audience.

Systematic trading and HFT is no longer about the fastest execution. The marginal advantage from trading faster needs to be weighed carefully against the cost of the infrastructure, while the ability to forecast farther into the future is significant.

Apparently, the fastest access to markets is provided by Algo Logic. They sell machines that race the path from tick data reception to placing trades in 1.2micro seconds!

They achieve this by storing the logic in hardware in FPGA (field-programmable gate array). They include trading logic and risk checks on the chip to achieve this kind of reaction time.

The speed is used to grab favorably priced orders before anyone else can. The winners at any speed tend to be the ones with higher algorithmic sophistication. The direction of development in this field tends to be about adding computing power to the FPGA.

The discussion on Co-location vs Cloud Servers focused on the tradeoff between speed and algorithmic sophistication.

Pravil Gupta of Quadeye Trading and Bert Shen from SuperMicro are both suppliers of HFT technology. The difference is that one is about more sophisticated but still very fast trading while the other is at the higher speed end of the spectrum.

Speed is not everything in the HFT world. The incremental speed edge costs significantly. While there will always be fast traders that grab obviously mispriced orders over a short time horizon, others will play the game of taking the not so short-term bet.

The roundtables covered a list of varied topics. As expected the round table audiences in the Bay Area were largely focused on state-of-the-art in Big Data and deep learning.

These technologies could be the future, but I don’t see as much profitable application of these technologies as there is hype.

FinTech startups seem to be numerous in data services for the finance industry. iSentium: works on estimating the sentiment of tweets. Another works on interpreting SEC filings. Strategies are being fed information faster to produce more efficient markets.

The past was a speed race. The future is going to be about more information used in smarter ways.

For example, Alpha Sangha, my startup, combines information from a variety of data-sources using complex models/algorithms that maximize profitability while filtering out noise.

Acronyms come and go, so here are three relatively new ones stay aware of.

BRIC : Brazil Russia India China
MINT : Mexico Indonesia Nigeria Turkey
ESG: refers to the three main areas of concern that have developed as central factors in measuring the sustainability and ethical impact of an investment in a company or business

Ajo Fod is the founder of Alpha Sangha, which helps companies optimize complex forecasting models or algorithms based on large quantities of past data while avoiding the common pitfall of noise. They can further increase profitability by mining for model/algorithm variants that are better fits based on historical data.

Ajo previously worked as a quant at BGI/Blackrock and Mellon. He has masters degrees in both Computer Science (AI) and Operations Research (optimization). He earned a BTech degree from the prestigious IIT-Madras.

For centuries the most important information upon meeting someone new was where were they from and who was their family.

Once that was known the involved parties would be able to figure out how they were connected; crucial information in order to do business or move forward with any kind of relationship.

Then World War II and the post war automobile culture changed our social structure forever.

Strangers met, formed businesses, fell in love and married — all without the introductions and recommendations of family, friends or other associates.

Fifty-plus years later we have reverted to our previous attitudes regarding introductions — now based on professional/personal networks, social media and the crowd-sourced opinions of strangers.

After attending a fintech conference (see his upcoming post Thursday) Ajo Fod, founder of Alpha Sangha, left a comment on KG Charles-Harris’s post regarding the help that entrepreneurs really need.

The most effective resource at this point in my start-up is introductions to the right people. Meeting them directly doesn’t seem to have the same effect as an introduction.

Entrepreneur of not, what can you do to offset a lack of introductions?

Here is what I told Ajo.

You are right in your analysis that the best connections are the result of introductions and this seems especially true when it comes to investors.

Partly it is a function of trust, i.e., I trust you because I trust the person who introduced us, which is ridiculous as I wrote in Who Do You Trust? in 2008 and KG touched on a couple of years ago in If the Shoe Fits: Facing Reality.

Beyond repeating what you already know, such as working your network, finding connections, etc., I suggest that you put part of your focus on developing your peer-and-below network, not just those who can directly help, by reaching out and helping them. One way to accomplish this is by responding on forums like Quora.

Use your expertise to build your visibility, so that even with no intro you will be a more known quantity when they google you.

Not great, but you have to start somewhere.

Image credit: George Tims