Hello everyone, it’s been a wild week in the world of fintech, as I wrote two distinct pieces in the span of a few hours on startup layoffs and a nine-figure fundraising round. FinTwit, or “Financial Twitter,” as it’s more technically known, was also buzzing this week, owing to more than just a little back-and-forth between Stripe and Plaid. So grab a bag of popcorn and settle down for a few minutes as I try to break everything down for you. Would you like this sent to your email every Sunday morning? Here is where you can sign up!
I joked earlier this week that I anticipated fintech to be a rather dry and low-key beat when I first started covering it. My naiveté now makes me giggle. The debut of Stripe’s new Financial Connections product, which TC’s Ingrid Lunden reported here, was perhaps the biggest news in the fintech sector this week. Yes, the product debut was newsworthy in and of itself. But it was the fact that it caused some debate, which is precisely what Plaid, a former Stripe partner, does that elevated it in the world of newsworthiness. And it does so by allowing Stripe clients to connect directly to their customers’ bank accounts, as well as access financial data in order to speed up or complete specific types of transactions.
Plaid does the same thing again. Plaid CEO and co-founder Zach Perret responded to a post from Stripe PM Jay Shah in a since-deleted tweet, effectively criticizing Stripe’s “methods” for gathering information on constructing the product. Shah retaliated with a tweet of his own, defending his and his company’s conduct. Perret admitted on Twitter a few hours later that he had removed his message, writing: “Deleted tweet. Perhaps there was a misunderstanding or there were distinct styles. “Assuming good intentions.”
Meanwhile, Stripe’s leadership issued an internal memo in response to the uproar. Patrick Collison, in particular, claimed Perret’s “accusations” cooled his “enthusiasm” for Stripe’s new offering. He was apparently hurt by the possibility that Plaid would be irritated that Stripe had announced this competitor solution, despite the fact that the two businesses have previously collaborated on integrations.
He concludes his internal memo by admitting that Stripe should “definitely be open to the notion” of handling things better. It’s great that he confessed it, but it’s hard to imagine that these executives had no idea the decision would cause so much controversy. Patrick even suggests that Stripe should have alerted Plaid “so that they may privately communicate any issues that they had.” He went on to say that, while Stripe was not compelled to do so, it might have prevented the public outcry if it had merely notified Plaid sooner.
Meanwhile, John, Patrick’s brother and co-founder, remarked that Perret’s deletion of his initial post was “gracious.” “We appreciate that his opinion on the situation may still differ,” he continued. Plaid is still a big part of our lives in any case. They’re a fantastic firm, and we’re excited to collaborate with them in the future.” Both firms declined to be interviewed when I contacted them for their perspectives. True, we may never know the truth about what happened in this case.
But what I do know is that the scandal sparked a whole new debate, with assertions that this wasn’t the first time Stripe has been accused of unethical activity. These included (unproven) claims that the corporation has previously pretended to be interested in buying or employing other companies in order to get information from them. It also brought up memories of Stripe allegedly pressuring Sequoia Capital to pull out of a potentially competitive venture. I’m not here to pass judgment since this narrative may still be developing, and we don’t know what’s true yet.
That said, in my humble view, acting unethically is not worth it, regardless of how large or rich you are, or how tiny or poor you are. I’d rather be poor and know I did the right thing by the individuals I dealt with than wealthy and have my integrity called into question. But that’s just my opinion. Listen to the Equity team’s thoughts on the matter by clicking here.