Fintech-enabled marketplaces will disrupt traditional offline industries
- Pete Flint founded Trulia and now invests in marketplaces.
- The investor shares his ideas about the evolution of financial services.

Pete Flint is a serial entrepreneur. He built one of today's largest marketplaces, Trulia. Trulia was bought by Zillow in 2014. Nowadays, Pete spends his time investing in next generation marketplaces as a general partner at early stage venture capital firm, NFX. His firm has invested in companies like Lyft, Patreon, Doordash, and AngelList.
Pete published a presentation last week on a topic that I thought was very interesting for our podcast: the rise of fintech-enabled marketplaces. I'll let Pete explain the trend but as some of today's hottest companies evolve, it's their new financial services offerings that can further create tremendous value.
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The following excerpts were edited for clarity.
Investing in fintech-enabled marketplaces
NFX is an early stage fund. The name is short for network effects. Our entire thesis is about investing in networks effects -- in platforms, marketplaces, and B2B services. The three partners have founded 10 companies with exits in excess of $10 billion, some of them marketplaces. We have a passion for this space and have been studying, building, and investing in marketplaces for 20 years.
When you look at 2019 and the raft of IPOs coming out -- Uber, Lyft, Airbnb -- they're B2C marketplaces. You've also got the B2B network effect platforms like Slack and Zoom. We want to find the next generation of these companies that have a core network effect that can create tremendous value. The core notion is that they're highly defensible.
Our research has tracked the evolution of marketplaces, from basic lead gen to what we think is the next set of billion dollar marketplaces, which we're calling fintech-enabled marketplaces.
As you think about marketplaces, it's been an incredibly dynamic category. In many industries, you've seen horizontal lead gen platforms like Craigslist and Ebay. Over the years, there's been a relentless path in two directions: increasing the user experience and capturing more of the transaction.
What's driving the move to fintech-enabled marketplaces
From the consumer side, they demand a high quality service with a frictionless experience. Consumers have learned to expect this from Uber and Airbnb and they're willing to pay a premium for it. There's a very large portion of consumers who are prepared to pay a pretty sizable fee for the convenience and confidence of a transaction. You see this in automotive, travel, and transportation. As the founder of Trulia, I watched OpenDoor grow from a startup to a bigger company. We also saw it with Zillow Offers.
On the business side, there are some enabling catalysts. First, it feels like a natural evolution. Money is flowing through these marketplaces. Once that happens, you can start to do more with that money flow -- whether it's banking or insurance or credit. The other is that the data is flowing in enormous volumes, too. The data exhaust from these transactions is hugely valuable in superior underwriting and experience.
There are lots of enabling technologies that can be plugged in easily. In banking integrations, you have Plaid. Stripe's done this from a payments and transaction perspective.
Lastly, capital is available. One of the scary and exciting things is companies raising tremendous amounts of money to compete in the marketplace. Wall Street and other institutions are looking at these opportunities.
Banking evolves through marketplaces
We see a general rise in verticalization and platform-specific services. It calls back to original banking infrastructure that targeted demographic groups like farmers and firefighters. Banks eventually bundled and went horizontal. Now, we're seeing an evolution back where customers are demanding a more tailored experience. One would expect to see some cannibalization of core retail banks from segment-specific banking providers and from companies like Uber that provide financial services.
Fintech-enabled marketplaces are hard but defensible
Marketplaces can provide a magical user experience that takes a multiparty transaction and creates a breakthrough product experience. It's also really complicated. To be a CEO of one of these companies, you need to have an incredible left brain, understanding how to structure and navigate a complex financial services world. And you need a strong right brain with an intuitive product sense to build magical experiences. It's extremely rare and anything really hard is really interesting.
Ribbon provides a sort of bridge financing, allowing you to buy a new property before you've sold your previous property. It's a platform, working with agents across the U.S. As venture investors, we look at some fintech sometimes and think that these new companies don't have the same level of defensibility as a fintech-enabled marketplace.