The use of digital payments is expanding across the globe, but the transition to a digital financial system is still in its early stages. Fintech companies are receiving heavy investment, as agile companies find new ways to innovate in the payment space.
In this week’s pod, we’re delighted to be joined by Jonathan Rowland, founder and executive chairman of Mode, to give us an inside view on the rise of digital wallets, and the convergence of Open Banking and cryptocurrency in retail. Jonathan shares his expert insight on recent developments such as buy-now-pay-later (BNPL) following Square’s high-profile acquisition of Afterpay. We also get side-tracked onto the future of remote work!
Mode is a fintech and digital payments company, combining the best of payments, investment, loyalty, and digital assets. Mode is headquartered in the UK and listed on the LSE and US OTCQB market.
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Transcript
Albert: Hi, this is Albert.
Luke: And this is Luke.
Albert: Today is Monday the 9th of August.
Luke: Welcome to the Telescope Investing podcast.
Intro
Albert: Digital payments is a megatrend that we’ve been following for a few years now, and it was the topic of one of our earliest episodes. We believe that digital wallets and e-payments will continue to grow in use and in scope, and we have several investments in the space, both in our personal portfolios and in the model portfolio. We have Square in a model portfolio for 2021, which we deep dive into about two months ago.
Luke: So with that focus on Square, we’re really delighted today to welcome a guest onto the podcast, Jonathan Rowland. Jonathan’s the founder and executive chairman of Mode, a fintech company based in the UK, listed on the London stock exchange, and actually, I gather, also recently listing on the OTC market in the US. And Jonathan’s going to give us a bit of a deeper insight view of this fast-moving space.
Jonathan: Good morning, Luke. Morning, Albert. Nice to meet you both.
Luke: Great to have you on the show, and actually, I will say, Jonathan, you’re the first founder-chairman we’ve spoken to so far, so definitely illustrious visit for us. Thanks for joining us.
Jonathan: No problem. Happy to be here.
About Jonathan and Mode
Luke: So in the intro we said listed on the LSE and recently listed on the OTC market in the US under the ticker MODGF. Before we get into the company, could you tell us a little bit about yourself and the journey that led you to founding Mode?
Jonathan: Sure. So, I’m Jonathan Rowland. I set up a bank back in 2015 called Redwood Bank, and it was a challenger bank given a license by the Bank of England, and within that portfolio of companies that were created by me back in 2014, 2015, was what now became Mode.
So we span Mode out of the Redwood group of companies. Redwood Bank is existing, it’s still controlled by me and my family, to challenger bank’s focus on business, but the Mode side was really the research and development arm. And we were looking at all sorts of things like online credit, credit-scoring done different, but it evolved into what is now Mode. And Mode really took its first shape in 2017, 18 when we created a business in partnership with Tencent and Alipay, the two big Chinese conglomerates, and we became a merchant acquirer for those two businesses in the UK. And that evolved into looking at things like crypto, looking at things like digital wallets, payments.
And without getting into too much detail about the company in this short summary, we created a business that we floated in London in October last year on the LSE. We chose the LSE rather than AIM because it’s more flexible, more access to sort of larger capital pools. And as you said, this morning we announced that we’ve gone live on the OTCQB market in the US because the US is an important market for us as a business but as an investor base as well to tap into in due course. Mode today is two very, very focused things. One, digital wallet and secondly, payment system, which I’m sure we’ll get into.
Albert: Jonathan, you mentioned that Mode IPO’d on the LSE last year in October, but I also see that Mode was founded in 2019. That is an extremely short time to become a public company. What was your thinking in driving that journey so quickly?
Jonathan: Yeah, it’s a question we get a lot. Mode was founded before 2019. It became a well-shaped company in 2019, and we picked that date as our sort of founding date, but really the elements of the business go back to 2015, 17, roughly. The reason to take it public was during last year, as we all know, we were in the middle of a pandemic and a number of key issues arose around capital raising, around credibility, because we were involved in cryptocurrency, digital wallets, payments.
There’s a lot of scepticism around all these things and we decided because of my experience of public markets, and something I wasn’t really afraid of, that we would look at the opportunity to take the company public at an early stage, really to hedge the risk of a pandemic that was going to go potentially very, very wrong in terms of financial markets. And if I had a public listing, I knew I had committed capital, so it was really a hedging risk strategy for me. And also, the credibility and trust issue around crypto assets has been growing and growing and growing. We’ve seen lots of people questioning various things. We’ve seen the Binance issues that we all know about.
The ability to become a public company where you’ve been through a regulated scrutiny from the FCA, who runs the UK listing authority, enabled us to say to some of our partners, some of our social media platforms that we’re advertising on, we’re a public company, we’ve been scrutinized by the FCA and the London Stock Exchange, and it made a big difference. One example would be Facebook. So Facebook would not talk to us whilst we were a private company. When we became a public company, they spoke to us and they started advertising for us. It’s the thing that not many people know, but those made big, big differences to our customer acquisition and onboarding of new customers.
So it was all around risk towards capital, pandemic, credibility that it brought to us, the trust element it brought to us. It brought us a great profile being a public company. We’re only one of one, so we are a unique offering as a digital-asset company with a consumer core Bitcoin offering, 5MLD, crypto registration element, the e-money license, and so on and so on. So we’re very uniquely placed in the environment. So by luck also, it became quite an interesting opportunity to say to people, look, if you want to invest in a company like this, we are the only one in the UK.
Luke: It makes total sense, as you say, sort of locking in the finance is really important because you never really knew where the world was going to take you at that point in time. But also, I guess, riding the coattails of crypto becoming really part of the public consciousness. You know, everybody was talking about it back in 2019, so really taking advantage of that. And there are a ton of neo-banks out there and other digital wallets. Apart from your public status, what other aspects make Mode unique do you think?
Jonathan: We’re sat in the middle of payments, open banking and crypto. We don’t think there’s many companies that have that ambition to sit right in the middle of those three sort of key pillars to what we’re doing. We have a very slick, easy-to-use digital wallet where you can buy and sell and transfer in, hold Bitcoin. And we decided to focus exclusively on Bitcoin, so we don’t do any other coins. We may do at some point, but today when we spoke to customers and we spoke to the market, a very simple offering of Bitcoin only was what people wanted, and it’s also sort of a large educational tool for us to keep it easy for people who’ve never bought and sold Bitcoin. You can also manage your sterling and euros within the wallet too.
So we’ve got a very, very simple, slick way to KYC yourself, to onboard, become a customer using the faster payments rails. Then we have created an open banking payment system, which is pretty unique in terms of seamlessly being able to come into the wallet and transfer across to buy things at merchants using QR codes in a very, very short space of time. We aren’t the only people doing these things, but as a mixture of payments, open banking, crypto, we’re pretty unique there and we’re regulated too.
Luke: I took a look at your investor presentation a couple of weeks ago. As someone who’s not a Mode customer, you’ve got this kind of virality of point of sale [where] the customer scans the QR code. With the open banking integration, they can make a payment and then they’ve got some crypto cashback sitting there and their Mode wallet if they choose to sign up.
Jonathan: If we’re only going to focus on our customers, we’re not going to acquire new customers. So be able to give them the ability for non-Mode wallet holders to use the Mode system, it was important to us and the hook to get them back in is to give them cash back or Bitcoin back. And all that goes live this month with you probably saw an announcement we made with The Hut Group, which is a FTSE 100 company. We’re deploying across all their brands over the next four or five months. The ability to offer our clients that option, but also offer non-clients the option to come in there, pay for it using Mode and receive crypto back. We’re obviously gaining customers that way, so it’s a very interesting sort of model we put together.
Fintech
Albert: So, Jonathan, you’ve mentioned that you started a few financial companies. What do you think are the key challenges as a new entrant in the fintech space?
Jonathan: The key challenges are moving at speed. What you find is you have to succeed or fail quickly. If you fail, fail quickly and move on. The market is moving so quickly at the moment. The different disruptive technologies coming out are coming from every angle. The key to all of this is moving at speed. If something doesn’t work, move on. People are so difficult to find right now and the cost of those people, the good people, is very high.
I closed a transaction last week in New York, I listed a SPAC. We raised 230 million from very interesting investors, and it just shows you that if you’ve got good ideas and good people, and you’re moving at speed and you’ve demonstrated that you’ve got a track record that is working there, you can move forward very aggressively in this market. So we’re hoping that at some point we may be able to possibly, and this is very possibly, utilize that SPAC in some way with Mode. Nothing’s imminent but we do have ideas. There might be an opportunity to roll things up very quickly.
It does enable you to have committed capital for ideas, and it means that if the market is down or the market’s not very good, you have a pool of money there ready, and good companies can still access it. So I think there’s an opportunity to bring together a number of companies. And this is always what I’ve talked about for the last five or six years since I got involved in Redwood and Mode. Since this grouping of companies has been discussed, I always saw the opportunity to have a roll-up of various different platforms and ideas and have them listed in the US because the US is still the dominant market for capital; it’s still the dominant market for customers and users. And I do believe that the UK is very, very key to a sort of more global approach and Mode is in a great position in the UK; we have a great opportunity in Europe. But in terms of the US, this could be the answer to an interesting sort of fintech conglomerate which could come together in the next couple of years.
Albert: Well, speaking of international growth, you mentioned earlier that you have partnerships with Alipay and WeChat Pay, and it seems like your QR code payments works in a very similar way to theirs, and I’m sure you know that Alipay and WeChat Pay comprise about 90% of the e-payment market in China or even more actually. Well, how does this partnership work between Mode and Alipay and WeChat Pay?
Jonathan: So we’re a merchant acquirer for them in the UK. What that means is that we have a license from both Alipay and WeChat Pay to enable us to deploy software into online stores or physical stores. And if you’re an overseas Chinese traveller coming to UK, of which we’ve not had that many in the last year or so, although actually, our revenues are up, which is down to probably online adoption. An overseas Chinese traveller will come to the UK, they might go into a shop, buy some goods and they’ll be able to pay with their app that they use in China. And it would be using our software. The store would be using our hardware and software, and we would manage the money, and then we would distribute what needs to be distributed to the merchant, keep our piece of the fee equation, and the customer would pay using Alipay.
The renminbi change to sterling will be done automatically at a set rate. They would have to have credit in their credit wallet in their Alipay or WeChat Pay wallets and transaction’s done. So we’re basically acquiring merchants for the customers using the system they use in China every day. So it’s easy for them, they don’t have to have a credit card, they don’t have to carry cash, they can just use their Alipay and WeChat Pay [on] vacations in the UK to buy goods.
Albert: Oh, that’s really interesting. I’m sure the tourist business will pick up sooner or later.
Jonathan: I mean, it has already. Our revenues from that side of the business, which is not our core business anymore, it was our original business, but revenues from that business have actually started to grow much more than we thought they would. And we think that’s down to mainly online adoptions. We call ourselves an emerging super-app and that’s just another product which is useful for our evolution, but it’s not our core business.
Luke: And you guys are using QR codes to do some of that integration. I think there’s a real misunderstanding of what QR codes can do in the UK, particularly in the retail sector at the moment. Think of an example, you know, you go into a restaurant, you scan a QR code and you get like the menu, but why can’t you order directly to your table? I think there’s a lot of capability in there that companies haven’t quite figured out.
Jonathan: Such an easy way to make a payment peer-to-peer or government-to-merchant. It’s cost-effective, it’s safe and secure, it’s fast. You don’t have many issues with it, so it has to be the future of payments, it’s so easy.
Digital wallets
Albert: Yeah, we see the use of digital wallets expanding to the point where physical money might even disappear in some markets. It’s this a reasonable thing to assume?
Jonathan: I’m 46. I still carry a bit of cash around in my pocket, but it’s becoming less and less useful, right? So I went to try and pay for something yesterday at a market store and they wouldn’t accept cash and, you know, that’s market stall stuff so. And all of them had the little Square devices or SumUp devices or chip-and-pin card things. I think the younger generation, let’s call it 35 and below, don’t really know what cash is. They are using cards. They’re tapping their phones. What need do we have for cash at the moment? And the quicker we move on from credit cards and plastic to tapping phones or using your digital wallets. Digital wallets are the future, right? Everyone’s going to have either one or multiple digital wallets in the future and it’s coming pretty quickly.
Albert: It’s funny you mentioned credit cards. Could they disappear also with the rise of buy-now-pay-later?
Jonathan: The thing about credit cards is we’re still in an era where people like a card. People like to carry a card. In some cases, they like to have it as a symbol. Any person under the age of 25, 30 maybe, has a Monzo card and they want the Monzo card because it’s a badge of honour for them as a young person to have a Monzo bank account in the UK.
And people talk about it, and I don’t know how you guys are, but in the old days, we didn’t talk about our credit card and what colour it was and what it was. These people would talk about they have a Monzo card, it’s coral red, and it’s a badge of honour for them. So there’s still a demand for a card but it’s not what it used to be. The quicker I can get away from cards, the happier I am, and I think that we’re probably 10 years away from being cardless and cashless, maybe less.
Luke: We agree. We think that’s the direction of travel. Things like the pandemic remind you how grubby money is, right? There are so many reasons why money is going to become a bit of a legacy.
And I’m a bit of a poker player, so actually, poker has resisted the transition to electronic money so far. And if you go and play a game, you usually walk in with a lot of money and hopefully walk out with a bit more.
Jonathan: The problem is when you walk out with a lot of money, and I hope you do, your options are limited now. Starting to be limited to where you can use it, right? Other than to go back and poker again and lose it.
Albert: That’s usually what happens, right. Luke?
Luke: Actually, I did a ski season in 2020 in Lake Tahoe and I had to leave in such a hurry when the mountain closed due to coronavirus, I’ve left a couple of thousand dollars on credit with the local casino, so that’s in the bank now in the US.
Jonathan: I do think we’re seeing the end of cash and I do think we’re going to see the end of cards. There’ll still be a demand for cards because people like them for the reasons I said, but, as you said, everything has escalated and moved forward very quickly due to the pandemic. So even the adoption of what we’re doing, people coming online to buy and sell Bitcoin and transfer money around and do stuff, it’s all accelerated by the pandemic and the adoption of people going online to do all these things that we’re doing.
Albert: Yeah, same here. I’ve hardly used cash myself in the last year. It’s all been on cards or using my phone.
Jonathan: And the banking apps that we have today, all the neo-banking apps we have today, again, are not like they were 10 years ago. If we spend money, we have an immediate notification that we spent £4 at McDonald’s or whatever it is, so we can track it and follow it. In the old days, we had to wait till the end of the month to receive our statements and then we went to our statements. The innovation and the move forward on all this stuff has made it very easy to not use cash.
Like Luke said, I mean, I occasionally pop into the casino with some cash. I occasionally pay for things with cash where I think I might get a better deal, but those are limited now. And I think that we’re all moving towards a digital world.
Competition
Albert: I think the same thing is happening everywhere in the world. Most markets have a number of e-wallets. I think in Hong Kong, there’s four options we could’ve chosen for the consumption voucher that the Hong Kong government recently launched. So I can see that fintech is becoming a very crowded space and do you see the number of e-wallets competing for market share? Do you see consolidation happening anytime soon?
Jonathan: Yeah, I think either consolidation or extinction. You probably have a number of large players that won’t be pushed off their perches, so I mean Alipay and WeChat Pay are the dominant forces in China. Will they get taken apart by the government? Who knows? But certainly, I don’t see anybody else coming up and suddenly becoming the leading digital wallet or application.
I think there’s room for lots of players, but there will become a point where trying to accumulate users will become difficult and you have to have some sort of niche that is interesting to customers. I don’t know about you guys, but I do appreciate having less apps rather than more apps. And the quicker I can create my own super-app through Mode and be able to do, even if it’s 50% or 70% of all of my financial services needs including insurance and booking holidays and whatever else, the better because jumping around applications, passwords, different credit cards that are linked to different applications. It just becomes quite difficult to manage and I think the easier, the more simple, the more innovative companies will succeed. And that’s what we’re trying to create.
Luke: That’s interesting. I hadn’t realized you had that vision for the super-app that you were taking it into insurance and other products as well.
Jonathan: The roadmap for Mode goes on forever, and we have to continually updating it and reiterating what we want to do. These things don’t happen overnight and we chose Bitcoin and we chose open banking as our pillars to start with. Whereas other people might have chose current accounts and insurance or whatever, we chose Bitcoin and open banking. From there, we will create more products, more things you can do within the app, and it will automatically become a super-app as long as we succeed in executing our business plan. So yeah, we have ambitions to become a global super-app and that’s not going to happen this month or this year, but it is our ambition.
We are on the way. We do have a great team of people installed. You probably saw that we have Rita Liu, who was Head of Alipay UK and Europe. She’s been involved in every business set up by Alipay outside of China for the last 12 years. She joined us, that’s a huge stamp of credibility for us to have a great team and we do believe we can deliver this. And we go back to a question I think Albert asked, what are the challenges? The challenges of speed and people. You know, the quicker we can do things and the more good people we have, the quicker we’ll deliver our global ambitions.
Remote work
Luke: It does look like your team’s growing very rapidly. I think on the investor call a few weeks ago, you cited having 50 employees in Mode and maybe that’s already grown to 60.
Jonathan: I think it has, yeah. New people are joining every day. Due to the pandemic, I’ve only met about half of them physically, but it’s worked, you know, it does work. We have been able to operate a company through the pandemic completely from home. It’s amazing what we’re able to do when we’re put under pressure as a race. So yeah, I think we’re about 60 now. It doesn’t show any signs of slowing down other than good people are hard to find because the sector is on fire.
Albert: Do you think remote working is going to happen in the future?
Jonathan: We’re moving to a hybrid model where you sort of half in, half out, and then we have various other ideas that we’re… we’re testing it. We’re testing with the employees. The younger employees all wanted to come back to work immediately to be together, to get that sort of buzz. The older employees were like, well, we’re happy to work at home.
The productivity, in my opinion, from my employees when they’re at home was higher than it was when they were in the office, but it did mean that people burn out quicker. We had this situation where we had to physically tell people to take time off, tell them they couldn’t work that day or for a couple of days because they were sitting at home, nothing else to do, working from eight to eight, and the burnout was quicker. The productivity was higher, but it’s not the answer.
So we just took a new office last week and we haven’t had an office for a year. We just ventured back into the office market last week with WeWork in Paddington, and everyone was keen to get back and see each other and meet each other and start to get that sort of camaraderie going that you get in an office.
Albert: Yeah, you do go a bit stir-crazy when you’re stuck at home.
Luke: And you got to keep the corporate culture, right, as well? Just having those conversations and that kind of water cooler stuff. I think forward-looking organizations will move to a model where people can dictate where they work, but you still want to bring your team together once in a while for like an offsite or some sort of vision session.
Jonathan: Yeah, it’s very important. Also. It’s very important when you’ve got an issue, it’s much easier to deal with it face-to-face around a table rather than round a Zoom call. So very important, we listened to the employees, we carried out a survey, we’re implementing a plan to have some sort of hybrid model. So I don’t think we’ll have a work from home only situation for anybody. I don’t think we have a work from office exclusively situation. I think it will be a hybrid.
Luke: We’ve taken our fintech discussion into a different megatrend that we track, work from home and remote working, but interesting to get your view.
Jonathan: I read something in the paper yesterday that because a lot of the companies in central London are forcing their employees to come back to work, all the hotel rooms are booked up because a lot of employees who have found a different life over the pandemic where they’ve moved out of London, they’ve moved down to the south coast, they’ve moved to the countryside, have now been told, come back or else, and all the hotel rooms in London are booked up apparently. So you get these strange things that happen in adverse times.
Albert: I should check the Marriott share price, maybe invest.
Luke: Yeah, Albert’s challenging me because I’m about to buy some Airbnb stock this week. There’s another push for me to make that decision.
Jonathan: And what do you like about Airbnb?
Luke: I think as we’re coming out with the pandemic, they’ve got some pretty serious results they haven’t yet shared. We’ve got Fiverr in our own portfolios and our model portfolio too. They took a bit of a hit in recent results because I think they’ve been a bit optimistic with their forecasts in the most recent quarter and they had to adjust those. Well, I think that same end of the pandemic effect is going to be a positive boost for Airbnb.
Jonathan: I think you need a bit of help with your thought process. The comments around central London hotel rooms, I think that probably applies to all cities and I think that means Airbnb will be doing well too. So seems like not a bad idea.
Buy-now-pay-later
Luke: Let’s bring it back to the fintech just for the wrap-up on Mode and this sector. We’re fascinated by your perspective on the industry and we talked just now about the consolidation and, as you say, the elimination of other companies. So the recent news about Square acquiring Afterpay, and I wonder what your view was on buy-now-pay-later vendors and where that fits in the trajectory for this place.
Jonathan: Yeah, buy-now-pay-later, I like it. I like the idea but it does have its issues. And we’ve seen its issues with the likes of Klarna, maybe mis-selling, mis-advertising. But when I started this journey in 2015, my original interest to get involved in was giving position-of-sale credit in-store or online for very small amounts of money, very short term, and the ability to use a dynamic credit score to give you a different rate of interest. And that’s something that people have been doing now for some time. The credit scoring issue is slightly different because it’s slightly more difficult to implement. In China, they do it very well on the point-scoring.
But I do think buy-now-pay-later, it’s very easy to use and it’s not misrepresented. It’s a very good tool for all of the things that a lot of these fintech companies are doing, including us. So we do have ambitions as soon as possible to get into the credit market. That will take some sort of adjustment to some of the things we’re doing, but it’s very key to my thought process because if we’re working with all these merchants, like The Hut Group, for instance, to be able to offer credit at point of sale, buy-now-pay-later, using perhaps Bitcoin as well, it opens up so many different avenues for us to play in, earn money, gain revenue, gain customers.
So I think Square’s acquisition of Afterpay is a fantastic one. At first sight, I think a lot of people thought why they’re buying an Australian company, but I do think they have access to a huge merchant base in Australia. They basically dominate Australia in terms of buy-now-pay-later. And they’ll use that as a model to take to the US, I’m sure.
I know some of the guys at Square. I’ve met Jack Dorsey a few times. Biz Stone, who was a founder of Twitter, was on the board of Mode before we floated. He left the board because he didn’t want to be on a public company board in the UK, but he was very, very helpful to us in the first couple of years before we listed. And he set up Twitter with Jack Dorsey and he took me to see Jack a couple of times, and just to get his sort of vision, his thought process, a very, very deep thinker. And I do believe that they’ve thought through this acquisition and it will give them the ability to put a lens into Australia to see what they can do in the US and also they’re collecting a great business.
Luke: I was a bit sceptical about buy-now-pay-later for a while. I kind of felt, intuitively, it was encouraging reckless spending, but I’ve come around to the idea that actually, this is probably the future of credit cards, right? And we all accept those.
Jonathan: Yeah, I mean it’s the same as a credit card, right? And by the way, it’s generally cheaper than a credit card. I mean, I use PayPal credit just for fun, so easy, right? Interest-free generally. I can pay whenever I want. It works very well. You have to have huge volumes to make it work but I think if you give younger people, or anybody frankly, the ability to pay for something that cost £700, for instance, or dollars, given the opportunity to pay it off over three to six months, whenever they like, with very defined repayments costs. I like that. What’s wrong with that?
I just think some people are probably mis-advertised or misrepresented, and some people have not understood what they’ve taken on, but as long as it can be very clearly run and regulated, it’ll fine, I’m sure.
Luke: And as you say, yourselves getting your FCA accreditation, I’m sure they’re going to be pretty hot on that aspect.
Jonathan: From the beginning of this journey with Mode, I said to the core team, if we get regulated in a best-in-class jurisdiction, such as the FCA in the UK, it will take us longer, it will cost us more, but it will be worth it. And those words I said three, four years ago, rung true now in the sense that our regulation is a unique selling point. We are regulated by the FCA. Took us two years. We are regulated to deal in crypto assets. We are scrutinized by the FCA on a monthly basis. There’s not many of us doing what we do who are in this bracket, so it is a unique selling point for us. It gives us huge credibility. We’re gaining customers from the likes of Binance, etc. So it’s a key point for us.
Cryptocurrency
Albert: Yeah, speaking of which, another common theme of fintech seems to be crypto and to be honest, I don’t own any cryptocurrency myself because I don’t really understand it. I had a quick look before and there’s about 4,000 cryptocurrencies. Seems a bit ridiculous to me. What’s your view on the future of crypto?
Jonathan: I think I share your view. We made a very, very specific focus point to just look at Bitcoin. Bitcoin is by far the largest currency, way ahead of everything else combined. We do believe it has a relevance in the future. We do believe it can be a store of value. We do believe you’ll be able to pay for things with it. We do believe it will become the currency of the internet. We may look at Ethereum. Beyond that, for now, I don’t have a lot of interest. I don’t understand what a lot of these coins do or are doing. I don’t frankly care.
You know, we are very focused on what we call the number one cryptocurrency with the most distribution, the most adoption, with the most chance to succeed. And that’s where we’re going to leave it because I just don’t understand a lot of what’s going on. A lot of these things are scams. A lot of these things are not backed up by anything. They’re not regulated. We don’t know who’s managing them. We don’t know who’s behind them. So I think people have to tread very carefully.
We do a lot to educate people. We hold regular Q and A’s. We have blogs to educate people about cryptocurrency because you can get yourself in a mess. And again, going back to regulation, the reason we got regulated was so people could see that Mode is regulated and it gives them some sort of trust that we could deliver things within the environment which is regulated and gave them that comfort that they were going to have the opportunity to understand what they were doing rather than just being thrown something that they didn’t understand.
Luke: I don’t know if it’s tongue-in-cheek or if it’ll actually happen but I see a number of governments, are mooting floating government-backed cryptocurrencies. Things like Britcoin I saw contributed to Rishi Sunak recently.
Jonathan: He retracted it the next day or so he hadn’t said it so. I don’t think the government knows how to approach it yet. I wouldn’t even want to take a chance to try and guess what’s going to happen. I’ve seen some ideas that come into fruition in various countries, but nothing’s very far ahead.
Luke: But Bitcoin’s certainly, where it’s at now, it’s now a nationally-accepted currency in one of the South American countries?
Jonathan: Yeah, El Salvador, I think, and there was another country that said it’s going to do it recently. It’s going to happen. These things will start happening. What happened in some of the South American countries, I guess, some of the African countries, and gradually get adopted, I believe, by everyone.
Future plans
Luke: Yourself and Mode are in a really interesting point in the industry and maybe a point of inflexion as we change how we do commerce globally.
Jonathan: Yeah, I think what we’re doing is very innovative. I think, again, sitting between open banking, payments and crypto, we’ve chosen a different approach to some other people. It’s still early days so we’re going to see how people adopt to these sort of things over time, but we feel we’re on the right path. We have the pillars in place to do this now. We have a digital wallet that’s very easy to use. You can get on our app and on our wallet, KYC, ready to go within three or four minutes. It’s very easy. The payment system is being delivered. We have the WeChat and Alipay relationship. We’re at the forefront of open banking. It’s all very interesting. It’s all early days which makes it scary and exciting at the same time.
We’re uniquely positioned. We’re one of only one, I think, public company. It’s 5MLD-registered with the FCA and has an e-money license and has a consumer Bitcoin offering at its core. There’s no other company in the UK who has that who’s listed. So if you want to get involved in Bitcoin-type opportunities and open banking, we are it. There’s no one else to go to, and I don’t think people will realize that yet and when they do, I think we’ll see some real interest in our company.
Luke: I’m not a Hut Group target consumer, but I would definitely be looking out for your branding at points of sale as I’m out in the shopping centres.
Jonathan: And that’s a very exciting partnership for us. It’s a flagship partnership and it’s coming to fruition right now, so it’s very exciting. The team is hard at work delivering that as we speak. The next for Mode is more of the same – delivering products, delivering a service that is liked, easy to use. We will be deploying a number of new functionalities over the coming months. We will be using our e-money license that we just received very shortly so we’ll start implementing the regulated side of what we’re doing and just growing the business.
It’s exciting times and, you know, there are some acquisition opportunities we’re looking at and maybe there’s something we’ll do in the future that transforms the business a lot quicker.
Luke: Very good. Well, very best of luck with the future. We’ll be watching very closely. Actually, I might be watching very closely if I take a small position in Mode myself, something I’m thinking about right now.
Jonathan: I don’t give investment advice, but that might not be a bad idea.
Luke: Jonathan, thanks so much for giving us some of your day today. Really fascinating conversation and great to hear from one of the leaders in the industry.
Jonathan: Thanks very much guys for having me. I enjoyed it.
Quote
Luke: So, Alb, I’ve got an investing quote to close out today’s episode. It’s from investing great, Peter Lynch. He said, “If I had to choose a great single fallacy of investing, it’s believing that when a stock’s price goes up, you’ve made a good investment.”
Albert: But isn’t the stock price going up all that matters, Luke?
Luke: That’s coming back to the poker comment, right? Results-oriented. Make good decisions. I think hubris is my undoing. It’s quite easy to think you’re a genius in a rising market.
So, Albert, this is episode 51. Looking forward to our party on the pod next episode, 52, our one-year anniversary show.
Albert: Yeah, looking forward to this, Luke, to celebrate our one year on the pod. And a few friends are joining us for this party. Ramesh was a guest on our podcast around episode 12. He’ll be coming on to ask us a few more listener questions, and Luke’s brother, Matt, will be joining us and he’ll be giving us a quiz between myself and Luke to see who knows more about the stock market and our model portfolio.
Luke: Yeah, join us next week to hopefully hear me kick Albert’s butt and win a fancy dinner from him.
Albert: You kind of decided that this quiz will be played over dinner without my consent, but I won’t say no to a fancy dinner when I win.
Luke: Right, if you insist on sending me a cheap ass Deliveroo, so be it.
Albert: Well, I’m not sure if Gordon Ramsey uses Deliveroo, Luke, but maybe you can get one of them.
Wrap
Luke: Well, that’s all for this week. Thanks for listening.
Albert: If there’s a future topic you’d like us to cover, you can message us on Twitter. I’m at @AlbertTelescope.
Luke: And I’m at @LukeTelescope, or you can email us at feedback@telescopeinvesting.com.
Albert: And if you enjoyed this episode, you can find more content at our website, telescopeinvesting.com, where you can leave us a comment or a review.
Luke: And if this is your first time tuning in, perhaps consider subscribing to the website so you’re the first to hear about it new articles and episodes as they drop.
Albert: Thanks, Luke.
Luke: Thanks, Albert, and thank you, Jonathan, for your excellent insights.
Albert: Thank you, Jonathan.
Jonathan: Thanks, guys.
