Today's discussion is on payment for order flow. Ever wonder why stock trading on Robinhood and other brokerage platforms is free? They're selling your orders to third parties like Citadel and Virtu. It's free because we're the product. The SEC is proposing new rules that would effectively end the business model as we know it, but the changes introduce their own challenges that may be even worse for investors. ----- Join the Fat Tailed Thoughts discussion on LinkedIn and the @FatTailThoughts discussion on Twitter with your co-hosts @KleeBeard and @StevenDickens3. For more episodes of Fat Tailed Thoughts, visit fattailedthoughts.com. Past topics include WTF is CPI, Debt Collectors Who Help Rather Than Abuse, Slow Revolutions in Financial Services, and more. Stay up to date on all of our content by joining the Fat Tail Thoughts letter at fattailedthoughts.substack.com.

The US faces a crisis level shortage in baby formula. It's a story of good legislative intentions gone wrong. In our haste to subsidize families in need, we distorted the market and created a fragile industry. In retrospect, the only surprise is that it took this long to fail. We explore why the baby formula market is in crisis, what is being done to bring baby formula to market now, and how we might avoid such a crisis in the future. ----- Join the @FatTailThoughts discussion on Twitter with your co-hosts @KleeBeard and @StevenDickens3. For more episodes of Fat Tailed Thoughts, visit fattailedthoughts.com. Past topics include WTF is CPI, Debt Collectors Who Help Rather Than Abuse, Slow Revolutions in Financial Services, and more. Stay up to date on all of our content by joining the Fat Tail Thoughts letter at fattailedthoughts.substack.com.

Terra blew up. Runs followed on other algorithmic stablecoins and many followed suit. Little about their failure was novel. They all implemented models we've seen fail before with fiat. We explore why they failed, how this could have been avoided, and consider the path forward for regulation. ----- Check out this week's letter for the full story. Join the @FatTailThoughts discussion on Twitter with your co-hosts @KleeBeard and @StevenDickens3. For more episodes of Fat Tailed Thoughts, visit fattailedthoughts.com. Past topics include WTF is CPI, Debt Collectors Who Help Rather Than Abuse, Slow Revolutions in Financial Services, and more. Stay up to date on all of our content by joining the Fat Tail Thoughts letter at fattailedthoughts.substack.com.

Jared rants about fraud in crypto. Steven tries to reign him in. It mostly goes off the rails. ----- Check out this week's letter for the full story. Join the Fat Tailed Thoughts discussion on LinkedIn and the @FatTailThoughts discussion on Twitter with your co-hosts @KleeBeard and @StevenDickens3. For more episodes of Fat Tailed Thoughts, visit fattailedthoughts.com. Past topics include WTF is CPI, Debt Collectors Who Help Rather Than Abuse, Slow Revolutions in Financial Services, and more. Stay up to date on all of our content by joining the Fat Tail Thoughts letter at fattailedthoughts.substack.com.

Welcome to the Fat Tailed Thoughts After Show! This is a more free flowing, less serious discussion of the episode. We discuss Buy Now, Pay Later... mostly. ----- Check out this week's letter for the full story. Join the Fat Tailed Thoughts discussion on LinkedIn and the @FatTailThoughts discussion on Twitter with your co-hosts @KleeBeard and @StevenDickens3. For more episodes of Fat Tailed Thoughts, visit fattailedthoughts.com. Past topics include WTF is CPI, Debt Collectors Who Help Rather Than Abuse, Slow Revolutions in Financial Services, and more. Stay up to date on all of our content by joining the Fat Tail Thoughts letter at fattailedthoughts.substack.com.

Today's discussion is on Buy Now, Pay Later (BNPL). BNPL is a novel alternative to credit card debt that's grown dramatically in recent years. We discuss how BNPL makes money, the impending regulatory crackdown, and why the enthusiastic reception by consumers and businesses alike begs a lot more attention. Please enjoy this breakdown of buy now, payer later. ----- Check out this week's letter for the full story. Join the Fat Tailed Thoughts discussion on LinkedIn and the @FatTailThoughts discussion on Twitter with your co-hosts @KleeBeard and @StevenDickens3. For more episodes of Fat Tailed Thoughts, visit fattailedthoughts.com. Past topics include WTF is CPI, Debt Collectors Who Help Rather Than Abuse, Slow Revolutions in Financial Services, and more. Stay up to date on all of our content by joining the Fat Tail Thoughts letter at fattailedthoughts.substack.com.

Today's discussion is on embedded finance. It embeds the financial product purchasing decision right alongside consumption purchase. We discuss why an embedded and frictionless user experience is a major leap forward for finance, how banks and startups can partner to create experiences better than either one can alone, and the powerful data feedback loop from combining finance and consumption. Please enjoy this breakdown of embedded finance. ----- Check out this week's letter for the full story. Join the Fat Tailed Thoughts discussion on LinkedIn and the @FatTailThoughts discussion on Twitter with your co-hosts @KleeBeard and @StevenDickens3. For more episodes of Fat Tailed Thoughts, visit fattailedthoughts.com. Past topics include WTF is CPI, Debt Collectors Who Help Rather Than Abuse, Slow Revolutions in Financial Services, and more. Stay up to date on all of our content by joining the Fat Tail Thoughts letter at fattailedthoughts.substack.com.

Today's discussion is on Netflix Ads. Netflix lost subscribers for the first time in over a decade. CEO and co-founder Reed Hastings opened the door to an advertising based model alongside the company's subscriptions. It's a bad idea. We discuss why combining advertising and subscriptions creates terrible incentives for Netflix, other business models for successful entertain businesses, and the many non-advertising options for how Netflix can grow revenues and subscribers. Please enjoy this breakdown of Netflix ads. ----- Check out this week's letter for the full story. Join the Fat Tailed Thoughts discussion on LinkedIn and the @FatTailThoughts discussion on Twitter with your co-hosts @KleeBeard and @StevenDickens3. For more episodes of Fat Tailed Thoughts, visit fattailedthoughts.com. Past topics include WTF is CPI, Debt Collectors Who Help Rather Than Abuse, Slow Revolutions in Financial Services, and more. Stay up to date on all of our content by joining the Fat Tail Thoughts letter at fattailedthoughts.substack.com.

Today's discussion is on a revolution in payments. Visa has dominated card payments for 50 years, but cryptocurrency networks pose a real challenge. Services like Strike help businesses transact over the Bitcoin Lightning Network practically for free. We discuss why Visa has been so successful, how crypto can win the coming payments war, and what this means for processors and other payments companies. Please enjoy this breakdown of the payments revolution. Shoutout to Strike for what the payments solution they've built on the Bitcoin Lightning Networks. ----- Check out this week's letter for the full story. Join the Fat Tailed Thoughts discussion on LinkedIn and the @FatTailThoughts discussion on Twitter with your co-hosts @KleeBeard and @StevenDickens3. For more episodes of Fat Tailed Thoughts, visit fattailedthoughts.com. Past topics include WTF is CPI, Debt Collectors Who Help Rather Than Abuse, Slow Revolutions in Financial Services, and more. Stay up to date on all of our content by joining the Fat Tail Thoughts letter at fattailedthoughts.substack.com.

Today's discussion is on bad money, the difference between Starbucks and a bank. Good money is backed by government guarantee or robust regulations. Bad money, like the 100's of billions now held at money services businesses, lacks those protections. It has all the makings of a crisis. We discuss the history of privately issued good money, the rapid growth of bad money, and regulatory updates that can turn the bad money good. Please enjoy this breakdown of bad money. Special thanks to Dan Awrey for his awesome paper Bad Money. ----- Check out this week's letter for the full story. Join the Fat Tailed Thoughts discussion on LinkedIn and the @FatTailThoughts discussion on Twitter with your co-hosts @KleeBeard and @StevenDickens3. For more episodes of Fat Tailed Thoughts, visit fattailedthoughts.com. Past topics include WTF is CPI, Debt Collectors Who Help Rather Than Abuse, Slow Revolutions in Financial Services, and more. Stay up to date on all of our content by joining the Fat Tail Thoughts letter at fattailedthoughts.substack.com.

Today's discussion is on futures and the London Metal Exchange. The nickel futures market experienced a massive short squeeze in early March, driving the price up 250% in two days. The exchange responded by reversing trades and halting trading. We discuss futures and forwards markets, why the exchange's explanation for reversing trades is mighty fishy, and what opportunities this presents to challenge a 145-year-old institution. Please enjoy this breakdown of futures and the London Metal Exchange. Shoutout to @CliffordAsness for his unfiltered coverage as these events unfolded! ----- Check out this week's letter for the full story. Join the Fat Tailed Thoughts discussion on LinkedIn and the @FatTailThoughts discussion on Twitter with your co-hosts @KleeBeard and @StevenDickens3. For more episodes of Fat Tailed Thoughts, visit fattailedthoughts.com. Past topics include WTF is CPI, Debt Collectors Who Help Rather Than Abuse, Slow Revolutions in Financial Services, and more. Stay up to date on all of our content by joining the Fat Tail Thoughts letter at fattailedthoughts.substack.com.

Today's discussion is on voluntary carbon credits. The market for voluntary carbon credits has been on a tear for the past year, but it hasn't always been that way. New demand to achieve net zero emissions is driving growth, but there remains a huge amount of work to do. We discuss why the market took over a decade to emerge, what still needs to be improved, and who is doing the great work of building. Please enjoy this breakdown of voluntary carbon credits. Shoutouts to Carbon Streaming, InfiniteEarth, Moss.Earth, Pachama, and Watershed and the work they're doing in voluntary carbon credits! ----- Check out this week's letter for the full story. Join the Fat Tailed Thoughts discussion on LinkedIn with host Jared Klee. Join the @FatTailThoughts discussion on Twitter with your co-hosts @KleeBeard and @StevenDickens3. For more episodes of Fat Tailed Thoughts, visit fattailedthoughts.com. Past topics include WTF is CPI, Debt Collectors Who Help Rather Than Abuse, Slow Revolutions in Financial Services, and more. Stay up to date on all of our content by joining the Fat Tail Thoughts letter at fattailedthoughts.substack.com.

Today's discussion is on startup equity. We explore how founders and employees alike should value and structure equity. We discuss the many varied structures including RSAs, ISOs, NSOs, and RSUs, how taxes work, and what happens when you leave a startup. Please enjoy this breakdown of startup equity. ----- Check out the letter for the full story. Join the Fat Tailed Thoughts discussion on LinkedIn and the @FatTailThoughts discussion on Twitter with your co-hosts @KleeBeard and @StevenDickens3. For more episodes of Fat Tailed Thoughts, visit fattailedthoughts.com. Past topics include WTF is CPI, Debt Collectors Who Help Rather Than Abuse, Slow Revolutions in Financial Services, and more. Stay up to date on all of our content by joining the Fat Tail Thoughts letter at fattailedthoughts.substack.com.

When price increases, demand for most goods falls. But not all. There's a class of goods where demand rises with price. These "Veblen Goods" lead to businesses unlike any other. We use Veblen Goods to signal - we're rich, we're successful, we have something you can't. Companies like Chanel, Montblanc, Rolex, Rolls-Royce, and Supreme have co-opted our need to signal to drive sales of their carefully curated brands. In this episode, we explore the world of Veblen Goods and take a deep dive into watches. Co-host Steven Dickens shares insights from his 20+ years of watch collecting and opines on watches as an investment. Check out this week's letter for the full story. Follow @FatTailThoughts on Twitter and your co-hosts @KleeBeard and @StevenDickens3 for more content.

Ukraine is under attack. The world is responding with financial warfare. It's a new domain in multi-domain operations. Air. Land. Maritime. Space. Cyber. Finance. We explore how financial warfare happens: how SWIFT works and why Russia's been kicked off, how the US can enforce sanctions all over the globe, and what freezing Russia's central bank reserves means for Russia's economy. We conclude with a look at what each of us can do to support Ukraine. They're small acts, but they make a very real difference. Check out this week's letter for the full story. Follow @FatTailThoughts on Twitter and your co-hosts @KleeBeard and @StevenDickens3 for more content.

The theme of this episode is MORE. More funding, more startups, more investors, more everything. Funding for startups has grown 10x in 10 years, an astonishing 26% annual growth rate. Money is flowing in not just from venture capitals, but from new types of investors as well. It's all been helped by an accommodative regulatory environment. Those trends will continue to propel the industry forward. Expect more liquidity, more complex financial products, and more bundling of capabilities as the market grows. We analyze the three big trends - more VC money, more new types of investors, and more investor-friendly regulations - before we predict the startups that will emerge to serve this market in the years and decades to come. Check out this week's letter for the full story. Follow @FatTailThoughts on Twitter and your co-hosts @KleeBeard and @StevenDickens3 for more content.

Selling your startup equity used to be the only option for startup employees to get cash prior to IPO. But as the number of unicorns has ballooned and startups stay private for longer, a new option has emerged. Startup employees can finance their options. An ecosystem of lenders stands ready to lend employees money to exercise their options, take ownership of their equity, and pay the associated taxes. No money is owed until the startup goes public or is acquired. We discuss the tax treatment of options, the tradeoffs of financing, selling, or waiting, and the growing number of lenders employees can engage. Shoutouts to EquityBee, ESO Fund, Liquid Stock, Quid, Secfi, and Section Capital for helping employees keep their equity! Check out this week's letter for the full story. Follow @FatTailThoughts on Twitter and your co-hosts @KleeBeard and @StevenDickens3 for more content.

The average time for a startup to go public has increased from 7 to 12 years in the past two decades. More and more early employees are left equity rich and cash poor. An ecosystem has emerged to help. Four different secondary markets work with employees and the startups themselves to help employees, investors, and founders sell their startup equity for cash. It's not all smooth sailing. The challenges of an illiquid startup equity market, complex regulations, and burdensome taxes are real. How to navigate is critical for any potential seller to understand. Shoutouts to CartaX, EquityZen, Forge, and NASDAQ Private Market helping startups, their employees, and their investors! Check out this week's letter for the full story. Follow @FatTailThoughts on Twitter and your co-hosts @KleeBeard and @StevenDickens3 for more content.

The US stock market had its worst January since The Great Financial Crisis. But investment returns don't make a lot of sense without more information around "normal" returns and the period over which performance is measured. In this episode, we look at 100 years of stock market performance - how changing the dates over which performance is measured makes huge differences in the measured outcomes, why average returns are misleading, and how poor short-term performance can create incentive misalignment between money managers and their clients. Check out this week's letter for the full story. Follow @FatTailThoughts on Twitter and your co-hosts @KleeBeard and @StevenDickens3 for more content.

Market makers and order books are core to how modern financial exchanges work. They're how we ensure there's a buyer for every seller and a seller for every buyer. It's a model that works well in big markets. Jane Street, a premier market maker, traded over $17 trillion in 2020 and generated $1.6 billion in revenue. But the model fails in small markets. Jane Street's margin was just 0.009%. It's not profitable to be a middleman when trading volumes are low. Automated Market Makers change the game. They can operate - profitably - in small markets. The model ensures there's always a price - buyers can always buy and sellers can always sell. It's a powerful new invention that's beginning to transform markets as we know them. We explore how exchanges and market makers work, where the model fails, and the innovation unlocked by automated market makers. Shoutouts to Jane Street and Uniswap. Check out this week's letter for the full story. Follow @FatTailThoughts on Twitter and your co-hosts @KleeBeard and @StevenDickens3 for more content.