In America, when you swipe your credit card, your bank has given you a loan which if you do not pay off at the end of the month, will attract an interest. Yes, that process of issuing a rolling loan via a credit card simplified what typically would have required going to a bank, filling a form, getting approval, etc.

The banks made tons of money through this business model. Until a generation of young people came. Yes, the millennials hate paying for interests: they are value seekers. And because of that, a new generation of innovators invented a new product which is called Buy Now, Pay Later. 

What this does is magical: you can buy most things and spread the payment over months and pay absolutely zero interest! Of course, the merchants do pay those interests, by playing on volume, through discounting with the startups. The Buy Now, Pay Later competes with credit cards.

Goldman Sachs understands this disintermediation as you can have those cards and no one will care to get them or if they do get them, use them, since someone is offering them zero-interests over 4 months. Without adoption and usage of the cards, interest revenue nosedives.

That is why GS is paying GreenSky to buy $2.2 billion. I will be explaining this more on Saturday during Tekedia Business Growth Playbook session.

This could work in Nigeria and Africa with a little flavouring.

The Goldman Sachs Group, Inc. (“Goldman Sachs”) and GreenSky, Inc. (“GreenSky”; NASDAQ: GSKY) today announced that they have entered into a definitive agreement pursuant to which Goldman Sachs will acquire GreenSky, the largest fintech platform for home improvement consumer loan originations, in an all-stock transaction valued at approximately $2.24 billion. GreenSky’s differentiated lending capabilities and market-leading merchant and consumer ecosystem will help accelerate the efforts of Goldman Sachs to create the consumer banking platform of the future, help tens of millions of customers take control of their financial lives and drive higher, more durable returns.

• Goldman Sachs is acquiring fintech lender GreenSky for $2.24 billion as the investment bank pushes further into consumer finance.
• The all-stock deal for GreenSky, called the biggest fintech platform for home improvement loans in a release announcing the deal, is expected to close by the first quarter of 2022, the companies said on Wednesday.
• GreenSky shares jumped 44% in premarket trading before they were halted.

This is the future of the digital economy: aggregation at different levels of operational stacks. The top five leading companies in the United States (on market caps) deploy one element of aggregation in the business. Today, you could be hard working but if your business model has expired for the digital era, you will struggle to capture value. 

Aggregation is the reason SmartNews, a news aggregator, is now worth $2 billion! (New York Times, the world’s finest journalism, is worth about $8.3 billion)

SmartNews, a Tokyo-headquartered news aggregation website and app that’s grown in popularity despite hefty competition from built-in aggregators like Apple News, today announced it has closed on $230 million in Series F funding. The round brings SmartNews’ total raise to date to over $400 million and values the business at $2 billion — or as the company touts in its press release, a “double unicorn.” (Ha!).

[…]

The aggregator’s business model is largely focused on advertising, as the company has said before that 85-90% of Americans aren’t paying to subscribe to news. But SmartNews’ belief is that these news consumers still have a right to access quality information.

Last week, during the Tekedia Business Growth Playbook, I explained the power of Aggregation Construct in the new economy. Your business model is the most important thing you must spend time to understand and update where necessary. Your newspaper must be a technology company which offers news instead of a news organization that uses tech.

Our world is changing: an aggregator of news is now bigger than most banks.

From Press Release

SmartNews Inc., the global leader in redefining information and news discovery, announced today it has raised $230 million in its Series F round of funding. This brings the company’s total capital raised to date to more than $400 million and secures its status as a “double unicorn” with a valuation of $2 billion, the highest for a standalone news app. The oversubscribed round includes existing investors as well as significant new ones who are aligned with SmartNews’s vision and growth strategy.

“Since the company’s inception in 2012, our vision has been to redefine the way we discover and engage with information by supporting diverse, quality journalistic sources, and serving our users a wide variety of timely and relevant content that helps improve their daily lives,” said Ken Suzuki, CEO and co-founder of SmartNews. “This latest round of funding further affirms the strength of our mission, and fuels our drive to expand our presence and launch features that specifically appeal to users and publishers in the United States. Our investors both in the U.S. and globally acknowledge the tremendous growth potential and value of SmartNews’s efforts to democratize access to information and create an ecosystem that benefits consumers, publishers, and advertisers.”

The Series F funding round represents another significant milestone for SmartNews, which has been the number one news app in Japan for multiple years running. In the U.S. market, SmartNews achieved the highest monthly user time spent among all news apps and saw its monthly active users (MAU) double in 2020. Since its last funding round in 2019, SmartNews has more than doubled its headcount to approximately 500 globally.

Why is China doing this to its companies? As we write, there is no single Chinese company anymore in the global 10. You may ask why is this Nigerian villager worried about China when his country has none in the top 100! Yet, understanding what is happening in China is extremely vital for us to understand the future of commerce in Africa because if China pauses their firms at home, I expect most of them to make Africa a growth destination. As I write, the largest financial institution in Nigeria, on market cap, at a valuation of $2 billion, is OPay which is controlled from Asia.

Tencent Holdings Ltd. has lost its place among the world’s 10 largest companies by market value, leaving no Chinese company in the list as Bejing’s regulatory crackdown continues to wreak havoc on the stock market.

Hong Kong-listed shares of the gaming and social media company fell 0.5% Thursday, valuing it at $556 billion. That’s just below U.S. chipmaker Nvidia Corp., data compiled by Bloomberg shows.

This is the first time that a Chinese company isn’t among the world’s ten largest since 2017, the data show. Tencent’s unseating follows that of Alibaba Group Holding Ltd. earlier this year, as China’s tech behemoths face tougher rules on everything from monopolistic practices to data security and kids’ gaming hours. 

The academic festival begins. And on Saturday at 7pm WAT, I will begin the live session with “Innovation and Growth of Firms”. Zoom link in the Board. Next week Tuesday, from Redmond Seattle United States, a Microsoft strategist will lead another session on Business Strategy. On the Thursday which follows, a scrum master from Canada will explain agile methodology. Welcome to Tekedia Mini-MBA.

Registration continues here.

Tekedia Institute offers Tekedia Mini-MBA, an innovation management 12-week program, optimized for business execution and growth, with digital operational overlay. It runs 100% online. The theme is Innovation, Growth & Digital Execution – Techniques for Building Category-King Companies. All contents are self-paced, recorded and archived which means participants do not have to be at any scheduled time to consume contents. Besides, programs are designed for ALL sectors, from fintech to construction, healthcare to manufacturing, agriculture to real estate, etc.