Jamie on Software

Why I’m long on Visa

Last month, Visa announced their intention to buy Plaid for $5.3 billion dollars.

Plaid provide an abstraction around bank accounts. They offer a developer-friendly API to query one or more of a user’s accounts. This allows startups and consumer products to offer financial analysis and services in a bank-agnostic way.

On the back of this purchase, and alongside my general growing interest in fintech, I’ve been becoming more and more bullish about Visa.

But why did Visa pay so much for Plaid?

$5.3b is a lot of money. It’s somewhere between a 25x and 50x multiple of Plaid’s revenue.

The Plaid team are impressive, but at $5.3b, it’s got to be something strategic. As my friend Rich put it, when you’re counting in billions, it’s not an acquihire.

So if it’s not revenue, and it’s not (just) the team, what’s the strategic value in Visa’s owning Plaid?

I can think of three big reasons:

1. It solidifies Visa’s core business.

Visa is a three-sided network. It provides the infrastructure to move money between consumers, merchants, and banks.

When Visa works well, everyone benefits:

Consumers get instant access to credit, and can buy products from anywhere the card is supported.

Merchants can accept payments from anyone, and no longer need to run back-office operations responsible for credit and payments, nor handle cash.

Banks can offer credit to consumers more easily, at higher interest rates, and collect fees from merchants to provide the aforementioned credit management services – and, in doing so, reduce merchants’ exposure to credit risk.

For arranging this service, Visa charge merchants and banks a percentage of each transaction. The underlying economics of the business are excellent: they have over a 50% profit margin, steady revenues, a long pedigree, and revenue still grows 10% year-on-year.

Plaid can contribute to this core business, since an increase in fintech innovation is likely to increase transactions simpliciter:

Banks can offer more, and better tailored, financial products to consumers. Visa can better integrate identity and security services with payments, reducing rates of fraud. More broadly, and more importantly, fintech can, and will, bring finance to the under- and unbanked.

Thus, Visa can leverage Plaid to shore up the existing network, make being a Visa customer more attractive, and create whole new demographics of customers in developing markets.

All of this means more transactions, and more transactions means more transaction fees.

2. Plaid is a good business in its own right.

A 25x to 30x multiple on revenue is large, but Plaid are still a relatively young company.

Plaid offers Visa the opportunity to take fees from the “other side” of the consumer’s relationship with the bank: in GraphQL terms, the queries against the bank account rather than the mutations on it. This is somewhere Visa currently aren’t able to capture value.

Plaid’s target customers are software engineers, but the institutions at the bottleneck to Plaid’s growth are banks. Now Plaid has the weight – and half-century of personal relationships – of Visa behind it, the product itself can grow substantially more.

Plaid are also, so far, focussed heavily on the U.S. Fintech opportunities are global, so now Plaid can lean on Visa’s global reach to expand internationally.

All this said, Plaid could represent a significant income stream for Visa in its own right.

3. Plaid is part of a broader Cambrian explosion in fintech.

Finally, this purchase reflects a wider trend.

As Stripe, Twilio, Algolia, and now Plaid have shown, making developers happy is big business.

But making developers happy and productive also has serious downstream effects. It reduces the amount of time and money it takes to create new products. It encourages the development of new tools which themselves make developers happy and productive, effecting a Cambrian explosion of new products and tools.

Just like the set of norms and tools developed around open source, and composability in smart-contract technologies, making it easy, cheap, and secure for developers to access financial data will only accelerate the potential of technology –– and, crucially, along dimensions we can’t easily predict.

In short: it increases the amount of innovation possible in the world.

If I am at all correct about this, then Visa have shorn up their excellent business model, giving themselves access to an attractive new revenue stream, and now control a resource which has already, and will continue to be, central to sustaining and growing the fintech space, and, eventually, the global economy.

Thanks to Jessica Cooper, Richard Burton, Peter King, JS Denain, and Jonny Corrie for their notes and comments.

9:49pm. February 8, 2020.

Book Hour

A while ago, J and I noticed we’d lie in bed, fiddling with our phones for 30, 40, 45 minutes, an hour, many, most mornings, every morning. Sometimes our fiddling was productive, clearing emails, writing lists, researching some topic or other – but most of the time, it wasn’t.

And it’s easy to justify it to yourself if it’s AngelList, or LinkedIn: you’re keeping up with career options. Hacker News is obviously of great professional concern to a software engineer. Twitter keeps you wired into the zeitgeist. And, as for Facebook, what could be more important than friends and family?

The point, of course, is that I’m fickle and distractible and the only thing that can salvage my mornings, whittle and form them out of the chaos, is to leave the matter out of my hands entirely. Leave motivation and bandwidth in the hands of a /system/, and make delivery an inevitability – or at least a reliable expectation – rather than something subject to whimsy and caprice.

So we built a system, and we call it “book hour”. Every morning, we read, at least, a few pages of a dead-trees paper book. Before touching our phone.

A glimpse of analog before our days become digital.

You can turn off your alarm. If somebody calls you, you’re allowed to answer. And it’s flexible: if you both agree on an exemption – early start, late start, got to catch a flight, etc. – then it’s allowed.

But it turns out that we rarely need an exemption, because beginning your day with a few pages of a book is actually a really nice thing to do.

So, incentives:

Carrot: you end up reading more, and, in a relaxed and controlled manner, gradually phase into your day.

Stick: If you touch your phone before reading a few pages, £10 goes in a savings pot in our joint bank account. When the pot reaches some amount, we take ourselves out for dinner.

This is good because it serves the psychological function of an incentive without any great real-terms material loss (we’d probably spend the money on eating out anyway.) It hurts without hurting.

It’s effective, and I urge you to try it out if you too are looking for an easy and fun way to cut down on screen-time.

It’s also, I think, illustrative of a more general approach to productivity, good work, and human happiness:

Build systems that minimise friction, and, where appropriate, align your incentives with your interests.

Research is chaotic, but it’s okay, because we can build routines which encourage regular, structured work and limit the possibility of procrastination.

Memory is chaotic, but it’s okay, because we can use spaced-repetition to minimise friction and make long-term memory a choice. (As for incentives: how about an Anki hour?)

The shape and structure of data is chaotic, but it’s okay, because we can work with statically typed languages and write unit tests, both of which have all kinds of good upstream effects.

The world is chaotic, but it’s okay, because systems help tame it.

5:31pm. February 1, 2020. London

The Government of No One: The Theory and Practice of Anarchism

Ruth Kinna, Pelican, 2019.

Most political ideologies have clear theoretical commitments. Liberalism: the individual as the primitive unit of society; his wellbeing subordinate to, or exhausted by, his freedom; doctrines of rights which circumscribe and define that freedom sitting at the base of any institutional arrangements. Socialism: the collective as the primitive; the individual’s wants subordinate to the group’s needs; a commitment to equality expressed in the common ownership of property.

But anarchism doesn’t really seem to fit. Anarchism, it seems to me, isn’t a political ideology at all: it’s more like a family resemblance, each anarchism approximating the others to a greater or lesser degree, but none admitting of a common core or shared basis. A fluid set of concepts aimed at achieving a form of radical egalitarianism rather than a concrete theory. Or perhaps, like conservatism, it’s more of a temperament, an inclination to gesture toward an outcome, rather than an explicit set of instructions to achieve it.

‘Anti-capitalist egalitarianism’ holds the clue to unlocking it, says Kinna. But ‘anti-capitalist egalitarianism’ is hardly a clearer term than ‘anarchism’.

In one direction, it veers into a Kantian metaphysical liberalism of totally self-regulating agents. In another, it seems to collapse into communism. So the exponent of anarchism as a distinctive tradition must not only explain anarchism on its own terms, but also situate it relative to the primitives of both the liberal and communist traditions, without relying on the primitives of either.

It turns out that such a tradition can be cleaved out from between the two extremes. But it’s awfully difficult to do cleanly.

Kinna does well to reveal anarchism’s parallel world of literature, art and debate. And she does a good job at casting the anarchist in a positive light, of repainting the out of the colours of a psychotic lover-of-chaos and into something a little more.

But it’s not a good book.

One problem is Kinna’s bias, and how it can hinder the book’s analytical power. This is advertised as a “sympathetic account”, and, to that extent, it delivers: she clearly has an affinity with the anarchist programme and is deeply immersed in its literature. But that’s also what makes it a tough book to follow: her familiarity means that she never really explains the basics, leaving the rest of us to reconstruct the edifice on which her explanations sit.1

This lack of an accessible introduction means that, to the outsider, it is a book of half-thoughts, non-sequiturs and passages groaning under the weight of technical terminology:

The rejection of domination unifies anarchists in shared struggles against the monopolization of resources and the centralization of power, representation, racism, imperialism and authority, while leaving the institutional and sociological mechanisms that explain it open to discussion.

Passages like the above are littered throughout the book, and yet the core concepts they turn on are never really explained. Is domination just shorthand for the ‘monopolization of resources and the centralization of power’? If not, what is it? And if so, why isn’t that compatible with federalism and some liberal anti-trust laws? Isn’t the point of representation to centralise power? And what does it mean to centralise racism and imperalism? Why is authority a bad thing, its centralisation to be struggled against; doesn’t its goodness follow analytically?

And why couldn’t it be that these institutional and sociological mechanisms justify, not just explain the phenomena? Why accept these normative claims in the first place? Answers are not forthcoming, and so the whole thing feels incoherent, and in-groupy.

It is at its most incoherent and in-groupy in the section on education. Education is an important piece of the anarchist puzzle, since most people are in fact decidedly not anarchists, and the political organisation it proposes requires individuals thinking and acting freely in anarchistic (i.e. egalitarian, ‘non-dominating’) ways. But anarchist thought on education, beyond just rehashing Marxist ideas about power sustaining power through ideology, are deeply unenlightening:

Knowledge is underpinned by linear, instrumental reasoning and this is manipulative and alienating … Education … comes, instead, through re-wilding: reconnecting to undomesticated, genuinely ecological and gentler systems of knowing.

And so it goes on, and on, and on.

Inaccessibility is this book’s original sin, but it also feels like it’s been rushed to print. Structurally, it’s organised thematically (Traditions, Cultures, Practices, Conditions, Prospects; followed by a set of anarchist biographies, which is mostly filler) and yet it focusses much on the historical development of the ideas, with the result that it keeps jolting, restarting; awkwardly lapsing into chronology, bumping against the ostensible thematic structure. Each insight and thinker tumbles into the next, presenting a cacophony of anarchisms, rather than a single unified theory. All of which means there’s little to no sustained argumentation.

The biggest sin, however, is the lack of a genuine multi-sided discussion of political violence. Government actions are described as “horrifying brutality and evident injustice”; anarchist assassinations and violent direct action are described in much cooler, theoretical terms. Her sympathy means we miss any real discussion of these very important questions: the extent to which political violence is legitimate, necessary or just. And while I understand her reluctance to encourage the typical framing of anarchism as chaos, violence and disorder, violence is anarchism’s shibboleth, and any book on the subject ought to address it.

Instead of a subtle, informed, nuanced debate of both why these given thinkers find it legitimate, and under what conditions we might today, we get quiet acquiescence, defensiveness, deflection:

One example of this is the debate about the ‘black bloc’ – the protest tactic associated with politic confrontation. Another is tactical diversity … resonant with the fluidity of historical anarchist activism, [which] encourages activists to ask whether a proposed action is ‘effective at generating power’ rather than ask whether it is ‘peaceful or violent’.

That’s as close as we get to a discussion of this central issue, and it’s a much poorer book because of it.

There’s a lot of content in here. Kinna knows the tradition well. And it may be a valuable reference for somebody already au fait with the anarchist tradition; someone already predisposed to buy what it’s selling. But that’s not me.

  1. Some of the main concepts – domination, power, self-emancipation – echo Marx, but seem to be used in a different way; anarchism doesn’t share Marxism’s explanatory basis of historical materialism. Kinna never really explains what anarchists mean by these concepts, perhaps because they’re used so variously that there isn’t any common definition to give. 

9:36am. January 9, 2020. London

A few favourite LRB pieces

The London Review of Books has been a good companion to me, its prose crisp and clean and sometimes lyrical, its horizons broad. And while it’s often a little too political, too much on its sleeve – which hinders the analytical power of some of the more polemical pieces – I was a happy subscriber for years and recommend it to anybody.

For the next month, the website’s paywall will be down and everything will be free. I figured I’d use this opportunity to link to a few pieces that I’ve read, enjoyed, not forgotten, or otherwise found interesting.

You could start with Hitchens on Ignatieff on Berlin, Meany on Schlesinger Jr., or Williams on Parfitt. Two pieces by the philosopher Amia Srinivasan, one on octopodes and consciousness, the other on politics and sexual desire are insightful and elegant. Jeremy Waldron, as ever, writes extraordinarily well on the shape and character of a politics given by a country’s constitution, and the tradeoffs (tradesoff?) involved.

David Runciman is a regular contributor, and always interesting: on David Cameron and the 2016 referendum; on Theresa May; on Trump; on Obama; on Gordon Brown; and on artificial intelligence. Jonathan Rée wrote on James Harris’s Hume, and on Edwin Curley’s Spinoza. I’ve enjoyed articles on punishment and race in America, on Entick v. Carrington, and Geoffrey Hawthorn’s reflections on my favourite philosopher, Bernard Williams.

There are three interesting pieces on antisemitism, zionism, Israel, its government, and the relations between all of the above; though none, in my opinion, quite understand the relevant problems, or render with enough subtlty the range of opinions amongst diasporic Jews –– and the dangers of getting the answers wrong. (Relatedly, Ido Vock’s piece in Vice is the best article on this subject that I’ve ever read.)

The LRB occasionally jumps to and revives older texts, like this review of my favourite Iris Murdoch novel, Under The Net. And sometimes it doesn’t review texts at all, but instead tells contemporary people’s stories.

Finally, the blogs, which always remain free, are also worth exploring. There’s a piece on Finnis, homosexuality, and academic freedom by Sophie Smith, which helped me see into a blind spot of my liberalism. Or there’s this piece on Landmines in the Sahara by an old acquaintance of mine, Matthew Porges; his piece on Killing a Camel is also good. Srinivasan also wrote a short obituary on Parfitt, which is charming.

8:20pm. December 16, 2019.

Some thoughts on the election

Here are a few thoughts, mostly unstructured, and in no particular order, on the general election:

  • Why is everybody so surprised that so many working-class Northern seats went Tory? The moment Labour prevaricated over their Brexit position was the moment they lost these seats. Delivering Brexit matters.

  • This is an empirical point I’ve not tested, but it looks like May did the bulk of the work in 2017. Johnson’s – and Cummings’ – brilliance was to leverage it.

  • It would only work if they managed to convince the right voters in the right places that Parliament – this Parliament – was the block, and needed replacing. While the rest of us were moaning about prorogation, and mocking Johnson for losing all those votes, he was quietly winning the election – and he hadn’t even called it yet.

  • The Momentum brigade are just as bad after the election as they were before it. I saw more on my feed from Corbynites trashing the Liberal Democrats than I saw from them criticising the Conservatives. Or even making a positive argument for Labour.

  • Relatedly, ‘the media has a right-wing bias’ and ‘FPTP disadvantages us’ are terrible excuses for losing an election. Tough. Of course the media have a right-wing bias. Of course FPTP is a preposterous system that offers the Conservatives an entrenched advantage. We’ve known this for years. The Left needs to learn to work within these constraints rather than decry them. And, this election, Labour singularly failed to do so. This is on you.

  • (By the way, Labour, you had a chance to get rid of FPTP.)

  • I’ll leave my thoughts on antisemitism in the Labour Party for another day. But they got everything they deserved, and their loss is something to celebrate.

  • The Liberal Democrats have been bruised, but they’ve been bruised before. And it wasn’t all bad. Increased majorities, a gain in vote share, moving into second place. As my friend E said, if they had held East Dunbartonshire but lost Jamie Stone, they would be saying it was a good night.

  • I think it’s likely that ‘presidentialising’ the campaign – “Jo Swinson’s Liberal Democrats” – killed it more than the revoke Article 50 overreach. As people got to know her more, people liked her less.

  • Obviously, the Conservatives ran a remarkably ugly campaign too, and their victory should be lamented. This was not a victory of ideas. It was the final nail in the coffin that Thatcher and Blair built. Democracy’s epistemic function is over.

  • That being said, I’m a little more optimistic about a Johnson government with a seventy-odd-seat majority rather than a minority, or a 5-seat majority, particularly one enabled by working-class Northern seats. These voters are still, quite rightly, naturally suspicious of the Conservatives. He has very little good will indeed. I think he understands this – his “you’ve lent me your vote” comment is telling.

  • Turkeys voting for Christmas? It’s this arrogance and superiority, this smug self-indulgent paternalism (which I’ve indulged in myself) that lost the election for people like me and the ideas I believe in. Of course the average voter doesn’t have the time, skills, knowledge, whatever to make comprehensive, informed decisions. Their vote still counts, and their voice should still be heard. It’s up to politicians to craft a narrative – which is to say, an abstraction of ideas and policy proposals – that resonates with people.

  • Also, it’s easy to forget that most people are instinctively conservative. A lot of people don’t like immigration, or are (reasonably) fearful of its effects. A lot of people don’t like taxes. An increasing number of people have a strongly negative aesthetic response to perceived political correctness, and the social justice movement more broadly. We can debate any of these individual positions until we’re blue in the face, but for a lot of people it’s just a gut thing.

  • It now seems clear to me that Remain is no longer an option, democratically or otherwise. We’re not getting a People’s Vote. We are going to leave the European Union, at least formally speaking, in January. In this sense, the debate is over.

  • In another sense, it’s just beginning. Remainers who care about preserving the tangible benefits of EU membership need to plan, regroup, and lean on interest groups, business, the trades unions, local government and the other relevant institutions of civil society to protect or otherwise emulate those benefits in a Brexit context. Democracy doesn’t end between elections (even though it might feel like it does sometimes.) Nor is it only implemented in Westminster.

  • A lot of people in my circles – including people who have taught me – are arguing that there’s no mandate for Brexit since the Tories were elected without a majority of the popular vote, or polling suggests slight support for remain, or whatever. This misses the point. We have procedures, whatever issues from those procedures are called democratic, and Brexit, loosely defined, has now issued from those procedures twice. If you don’t like it, change the procedures.

  • One might reply with illegal contributions, Russian hacking, lies on busses etc. It’s horrendous, I agree. But I’m starting to think that the fact that enough people believe they voted for Brexit for their own valid reasons, and voted subsequently for the Tories to reaffirm that Brexit position, is enough to make the implementing the outcome both legitimate and indeed required, at least morally speaking (though perhaps not epistemically). You can’t tell people they’re empowered and then not let them wield that power –– certainly not twice. The social contract is a fragile thing.

  • I’m aware of the slippery slope in the point above. I still haven’t figured out what all this means for my theoretical commitments. As with everything in the social sciences – and possibly value theory – it’s a moving target.

  • There was nothing unpatriotic about campaigning for a People’s Vote in the GE. The courts’ suspension of Johnson was not traitorous. People like Dominic Grieve will be looked upon kindly by history. The Remain movement was important, urgent, and its cause noble.

  • But we’re having a different conversation now. And I think Remainers need to realise this, lest we beat on, boats against the current. There’s nothing noble in that.

These opinions are, of course, liable to change.