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HN Office Hours with Michael Seibel and Aaron Harris

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Re: HN Office Hours with Michael Seibel and Aaron Harris

#181

Post by samstave »

zbruhnke wrote: post #130
samstave wrote: post #125

Earlier quoted context omitted.

I was thinking about this recently - there is a need for a meta banking service - basically a p2p banking service much like Venmo -- but also allowing for vendors. The actual funds can still be housed in a traditional bank - but you can still have an account or CC number which you would give a vendor. Whenever the vendor attempts to charge your CC number the amount goes on escrow hold only in the meta-space until you…

Thats exactly the idea that got us to this point Sam. To be honest we had no intent of sharing this much publicly before there was more to play with out there but we couldn't pass up getting some advice from Aaron and Michael as we've been going through this process and trying to figure out more pain points for the end users.

Cn I contact you and give you all my personal pain points, I have actually been thinking about this for months -- but only internally. I'd like to vent and give you some context as to why.

Ill gladly sign an NDA - you actually dont need to tell me too much - but I'd like to just brain dump on you in the hopes that my issues will be addressed by someone.

I want to opt out of the traditional banking system 100%.

Re: HN Office Hours with Michael Seibel and Aaron Harris

#182

Post by karanbhangui »

zodiac wrote: post #166
zbruhnke wrote: post #140

Earlier quoted context omitted.

we are buying an actual bank, its not a credit union we're just buying a small one in good health and with a charter already in place. The idea is that we can expand from there, but this is not something we are trying to form and have a new charter issued, this is continuing on an existing bank that we hope to be able to use as a testing ground for our ideas with actual customers

I'm really curious because I've heard this idea of starting a startup by buying an existing bank a few times on HN - has anyone done this before?

We tried this at Daltic and I know Standard Treasury (YC) tried this as well.

Buying a small bank with a healthy federal charter is definitely the way to go over trying to start a new charter (FDIC hasn't given out a new charter in years and even if they do, de novo status is very cumbersome). The real challenge is getting around the Bank Holding Company Act with respect to raising capital. Basically, if any entity has a significant stake in a US bank (5-10% can trigger this) they are subject to BHCA which includes scrutiny from federal regulators (Plural!) over your books and a legal duty to bail the bank out. Our idea around this, consulting with a top financial attorney and consulting firm, was to get a consortium of wealthy individuals who would not exceed the limits individually and wouldn't be "acting in concert" with each other (which also triggers BHCA).

But even after this, any major shift in the bank's operations, including a re-architecture of technology is subject to regulatory oversight, similar to de novo status. Also, not to mention background checks from not only the FBI but also the CIA. Replacing management (which you probably want to do) is also a major change in bank operations. You also need a CEO who the regulators approve, and has previous CEO-level experience at another charter. We also had someone like this lined up.

We got pretty far in this process, but decided to put our efforts elsewhere. Seems ST did as well. Curious if you've found the same things, happy to chat further about what we learned (email in profile).

Edit: Of course, all the fun begins once you successfully acquire a charter. The real business in acquiring a bank is not to make money on loans. It turns out, despite the monopolistic access to cheap capital from depositors, non-bank lenders do a much better job at making high margin risk-adjusted loans (see https://foundationcapital.com/fcideasfintech). I believe the real opportunity for a tech-first bank is to be a whole sale and commercial bank, and tackle the $300B+ treasury services industry.

Re: HN Office Hours with Michael Seibel and Aaron Harris

#183

Post by tkmcc »

fananta wrote: post #163
mwseibel wrote: post #162

Earlier quoted context omitted.

I think giving your customers what they want is the central theme behind most of our advice

Absolutely, but would charging them for a (technically) trivial feature be self-limiting to our growth? Another question: Would be worthwhile to apply to YC with a product of this nature? This was super helpful. Thank you for taking the time Michael.

Addressing your first point, Heroku charges $20/mo for HTTPS support and plenty of people pay for it: https://elements.heroku.com/addons/ssl

Re: HN Office Hours with Michael Seibel and Aaron Harris

#184

Post by spike021 »

danieltillett wrote: post #178
jamesk_au wrote: post #15

I'm a co-founder of a website for Australian high school students. It's a forum-based community where students help each other, share resources, and make friends by bonding over the high school experience—especially for students in their final year as they study for our equivalent of the SAT. For the past couple of years, we’ve averaged more than 350k users, 500k sessions, and 1.5mil page views per month (Google Anal…

James I think you are focusing on the wrong market. Your potential paying customers are not students, but their parents who have the money. One idea might be to allow parents to track what their little darlings are doing on the site. Another is to provide regular feedback (email, newsletter) to the parents about how their children are progressing.

Not sure how things are where OP is located, but some parents may not be able to afford something like this depending on their income.

If this works well integrated with school activity maybe it could be payable through that?

Re: HN Office Hours with Michael Seibel and Aaron Harris

#185

Post by samstave »

zbruhnke wrote: post #140
sgoraya wrote: post #133

Earlier quoted context omitted.

Are you creating a 'traditional' bank or considering a Credit Union model? (Should have read further down :), looks like 'traditional' bank - please correct me if I'm wrong.)

we are buying an actual bank, its not a credit union we're just buying a small one in good health and with a charter already in place. The idea is that we can expand from there, but this is not something we are trying to form and have a new charter issued, this is continuing on an existing bank that we hope to be able to use as a testing ground for our ideas with actual customers

I assume you've read this and are familiar with what happened with Internet Archive CU:

https://blog.archive.org/2015/11/24/difficult-times-at-our-c...

Clearly buying a charter is the same model as starting a bar in SF these days; buy one as no new ones will be forthcoming!

This is why I want to opt out of the traditional banking system altogether.

Please provide a method for me to request my employer to pay me via bitcoin.

The whole system is corrupt.

Re: HN Office Hours with Michael Seibel and Aaron Harris

#186

Post by zbruhnke »

samstave wrote: post #181
zbruhnke wrote: post #130

Earlier quoted context omitted.

Thats exactly the idea that got us to this point Sam. To be honest we had no intent of sharing this much publicly before there was more to play with out there but we couldn't pass up getting some advice from Aaron and Michael as we've been going through this process and trying to figure out more pain points for the end users.

Cn I contact you and give you all my personal pain points, I have actually been thinking about this for months -- but only internally. I'd like to vent and give you some context as to why. Ill gladly sign an NDA - you actually dont need to tell me too much - but I'd like to just brain dump on you in the hopes that my issues will be addressed by someone. I want to opt out of the traditional banking system 100%.

please email me ... no NDA needed - z@zbruhnke.com - would love to chat

Re: HN Office Hours with Michael Seibel and Aaron Harris

#187

Post by zbruhnke »

karanbhangui wrote: post #182
zodiac wrote: post #166

Earlier quoted context omitted.

I'm really curious because I've heard this idea of starting a startup by buying an existing bank a few times on HN - has anyone done this before?

We tried this at Daltic and I know Standard Treasury (YC) tried this as well. Buying a small bank with a healthy federal charter is definitely the way to go over trying to start a new charter (FDIC hasn't given out a new charter in years and even if they do, de novo status is very cumbersome). The real challenge is getting around the Bank Holding Company Act with respect to raising capital. Basically, if any entity h…

Already emailed you ... looking forward to a chat

Re: HN Office Hours with Michael Seibel and Aaron Harris

#188

Post by samstave »

zbruhnke wrote: post #89
corybrown wrote: post #70

Earlier quoted context omitted.

This sounds great. What type of fees are you considering?

to be honest Cory the last thing we have thought about so far is fees. In all likelihood we'll slash current fees and get down to the nuts and bolts of what makes our customers tick, we'll re-think our lending practices and try to find risk-averse loans that make sense for us and our customers and allow us to continue to be a stable bank while becoming something the average customer is proud to work with

Lets hope you can innovate on the "overdraft business model" and offer people to buy into a credit card as opposed to egregious graft on over drafts.

Further - you should have full transparency in charge ordering.

The method by which banks order charges to algorithmically produce the most overdrafts should be a capital crime.

I used to bank at a CU and they posted their monthly overdraft profits on the wall: ~$250,000 per month they charged their customers in overages. When 2008 hit, this number balloned to ~$500,000 PER MONTH that people were paying in overdraft because everyone was getting fucked so hard by the banks.

On paper I make a lot. I would literally pay a sizeable amount to have a true banking partner that actually had my best interests at mind and wasnt trying to rob me.

A friend of mine recently complained that she had dropped to $22.00 in her BofA account, which had a $25 min balance req. They then charged her a $35 fee for being under $25 - this caused her to go negative, and then for being negative they charged her an additional $35 PER DAY.

Re: HN Office Hours with Michael Seibel and Aaron Harris

#189

Post by samstave »

karanbhangui wrote: post #182
zodiac wrote: post #166

Earlier quoted context omitted.

I'm really curious because I've heard this idea of starting a startup by buying an existing bank a few times on HN - has anyone done this before?

We tried this at Daltic and I know Standard Treasury (YC) tried this as well. Buying a small bank with a healthy federal charter is definitely the way to go over trying to start a new charter (FDIC hasn't given out a new charter in years and even if they do, de novo status is very cumbersome). The real challenge is getting around the Bank Holding Company Act with respect to raising capital. Basically, if any entity h…

What about the following scenario:

They buy this chartered bank.

They make a mechanism for certain types of users to create accounts -- lets say only those with a valid HN account with a karma and age of over X + Y

I create the account and get the account and routing number

I then use this to direct deposit some portion of my pay into this account.

I have no access to the account aside through their meta app.

I give full autonomy to their bank and app to the funds in that account -- and I only get reports on usage and spend through the app - and I gate keep all transactions with a yay/nay -- but I never have access to the account itself in the chartered bank.

Instead, I just must commit to depositing say $1K per month in the account.

In the app - I can then only sign up for transaction types or vendors that fit within that particular deposit level.

They don't raise money for the bank at all.

They raise money for the app only.

(needs tweaking -- but the seed of what I mean is there)

Re: HN Office Hours with Michael Seibel and Aaron Harris

#190

Post by samstave »

wjg wrote: post #5

Hi Michael and Aaron, I built Supertask ( http://supertask.co/ ) to make web automation easier and more accessible. Supertask allows users to write shareable, composable automations that make testing webapps and repeating complicated workflows a breeze. Automation scripts are written in a new intuitive language called Flytrap, and are interpreted by a library called Flytrap.js ( https://docs.flytrap.io/ ). Each autom…

Been looking for something like this!

Does it basically replace the need for Selenium.

Let me share this with my CI eng from my last co who was using a lot of selenium to test the webapp for QA.

Thanks!

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