143. The new Holy Grail

Hi Gerard,

It seems that everyone is involved in connecting things with things, without a human hand intervening. In the financial world, work is also being done on new technological developments. The collective term here is FinTech and there are currently many conferences and magazine articles on this subject. There seems to be a kind of mania in the air that we are all looking for the new Holy Grail. Listed companies who say they are engaged in the IOT (Internet of Things) have high valuations. Just as at the beginning of the internet bubble, integration in our daily life is the main topic. Then too there were very high valuations for internet companies.

I notice now in FinTech initiatives, for which I have seen presentations, that some applications are very good as regards presentation of the layout and ease of operation. But for all the FinTech startups I have spoken with, this was the only thing that was present. And this is why they visited our company. As for the entire front of the business (customers, market) and the back (operations), they did not have a clue. But nonetheless they had very high valuations. I’ve seen company valuations higher than the companies that do have the front and backend. And valuations higher than for my business. This then forms a blockage to cooperate with such a company. This is unfortunate, as it is ideal if there is an application that you can plug into your business. We give the startup the front and backend and they give us the application. However, if I were to apply an exchange of shares while their valuation is higher than ours when we make profits and have customers, then you have to really believe in this application. And this is also true because today creating in general applications is becoming cheaper. There are several low-wage countries with graduate mathematicians and programmers, who can develop an application. I am also curious about FinTech integration in other existing businesses and that’s what I’m going to write about next time.

Regards,

Erik