“Pivot” by Ian Foley
This new cartoon illustrates how consumer fintech companies are now having to constantly pivot to find product market fit in a very different environment from when they initially received funding.
In 2021, fintech was the leading sector for venture investment, with at least $131 billion globally going into start-ups in the space.
Many fintechs went after the consumer market identifying underserved customers as a target audience to develop new products. However, many of these markets often do not have strong unit economics (e.g. consumer checking), are very cyclical (e.g. lending) or have scale or credibility issues for start-ups to overcome (e.g. wealthy management).
Pivoting a start-up’s business to find product market fit is very common. For example, PayPal initially pivoted from a payment encryption service to a PDA-to-PDA payments app and finally to a web-based payment processor. However, the fintech market is currently going through an industry-wide pivot caused by macro-events, including higher interest rates and the demise of crypto as a high-margin business (hello, all you neobanks).
According to Gokul Rajaram, a Silicon Valley investor and operator, “Each pivot does take a psychic toll on the company, and I don’t think a company can do more than, say, two pivots before employees start wondering if there is a method to the madness and start losing trust in the founders.”
You can find more of Ian’s cartoons here.