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Colossus (Invest Like the Best / Business Breakdowns)Podcast10 Dec 2024Source: joincolossus.comHost: Patrick O'Shaughnessy

Micky Malka - Building Ribbit - [Invest Like the Best, EP.401]

In plain words

This piece covers Micky Malka, founder of Ribbit Capital. He says the first phase of fintech (using tech for finance) is over (2012-2023), and now you must actively change the game by focusing on AI, crypto, and the 'grid' (the merging of knowledge, wealth, and energy systems). He likes Robinhood (stock-trading app; Ribbit injected $500M during its 2021 crisis), Coinbase (crypto exchange; early Ribbit investment), and NuBank (Brazilian digital bank; founder recruited from Stanford, stayed quiet for 7 years). He warns 'diversification is lack of conviction' and urges concentrated bets.

AI SummaryAI-generated · may contain errors · verify against the original

At a Glance Ribbit Capital founder Micky Malka presented a disruptive view on the podcast, arguing that "fintech is dead" and that financial technology has entered a new phase, with the core drivers shifting toward AI, cryptocurrency, and the restructuring of knowledge, wealth, and power by network

~10 min full read · 9 sections
Deep Analysis

At a Glance

Ribbit Capital founder Micky Malka is a serial entrepreneur who grew up in Venezuela and founded Ribbit Capital in 2012. The core thesis of this issue: "Fintech is dead" — Malka argues that the first phase of fintech from 2012 to 2023 has ended, and now the game must be actively changed by focusing on the convergence of three elements—AI, cryptocurrency, and the "grid"—to enter the next phase.


Theme 1: Ribbit’s "Rebel" DNA and Label-Free Philosophy

Malka believes that the most fatal trap for investment institutions is being constrained by their own defined strategies, and Ribbit has deliberately avoided this from day one.

Ribbit’s founding began in 2011 after Malka’s reflection following his fourth startup exit. He spent a year traveling the world, speaking with entrepreneurs he knew, and ultimately decided, "I don’t want to be a VC, I don’t want to be called an investor." Core principles include:

  • No Labels: The firm is named Ribbit Capital rather than Ribbit Ventures, because "I didn’t know whether we would do early-stage, late-stage, or public market investments."
  • Full Transparency: Any Ribbit member can view anyone else’s email, and everyone shares the same data.
  • Retroactive Equity: Regardless of when someone joins the team, they are entitled to retroactive equity in past performance — "You have only one team."
  • No Branding: There is almost no website, and no active marketing.

Key Data: When founded in 2012, Ribbit was the only institution that explicitly allowed cryptocurrency purchases in its fund documents — "Others couldn’t do it because they didn’t have permission."


Theme 2: "Fintech is Dead" — Proactively Changing the Game

At the 2023 Ribbit Annual Meeting, Malka displayed a slide showing a gravestone inscribed with "Fintech 2012-2023," declaring the end of an era.

Malka explained: "To play the infinite game, you must constantly reinvent yourself. Once you take the lead, change the rules to put yourself behind again — because the chase is more interesting than being ahead."

He proposed a pyramid framework to predict the industry landscape:

  • 3,000 fintech companies that received funding over the past decade
  • 50 will become "compounders," growing steadily over the next 15 years
  • 200 with assets/licenses/software/customer bases will be acquired by compounders
  • 500 will achieve profitability, trading at profit multiples or being acquired by private equity
  • 1,500 "should never have existed" and will disappear in the coming years

Malka emphasized: "Diversification is a lack of conviction, not an investment philosophy."


Theme 3: The "Grid" Theory — The Triple Convergence of Knowledge, Wealth, and Power

Malka introduces the concept of the "grid": the data/knowledge grid, the financial/wealth grid, and the power grid are converging for the first time in 500 years, creating unprecedented investment opportunities.

Historical analogy: "The printing press itself was not the event — it mattered because it could print all the knowledge accumulated over the previous centuries. AI is today's printing press, but it is possible only because we digitized everything over the past 30 years."

The convergence of three grids:

1. Knowledge Grid (Internet/Data): AI is tokenizing digitized content

2. Wealth Grid (Financial System): Cryptocurrencies and smart contracts are tokenizing money

3. Power Grid (Energy): Increasingly decentralized electricity powers the first two

Malka believes art is a leading indicator for observing this trend: "Artists are always ahead of society. They use AI differently from Silicon Valley engineers, use NFTs as a means of ownership distribution, and use dynamic art to express changes in the world."


Theme 4: Digital Identity and Stablecoins — The Critical Infrastructure of the Grid

Malka argues that without tokenized digital identity, individuals cannot connect to the knowledge grid and the wealth grid, and thus cannot achieve self-enhancement.

He uses India as an example: first, the Aadhaar biometric identity system was established (covering 1.2 billion people), then the UPI payment grid was launched, followed by the e-commerce grid — "If you don't solve identity as the first piece of the puzzle, nothing else happens."

On stablecoins: Malka likens them to "traveler's checks in the digital age" — when he was a child in Venezuela, his mother would queue at the bank every week to buy American Express traveler's checks to preserve value. "Stablecoins are instant dollars anywhere in the world today, at zero cost, backed by U.S. Treasuries."

Key data:

  • The stablecoin market size is approximately $200 billion
  • Users are willing to forgo 4%-4.5% in yield to hold stablecoins (i.e., holding dollars without earning interest)
  • Monthly stablecoin transaction volumes are already comparable to Visa network payment volumes

Malka's take on Visa: "This is a problem for them. But Visa's CEO Ryan McInerney understands this and is working to integrate crypto rails. Meanwhile, Jamie Dimon says 'it's all evil' — while running JPM Coin at the same time — he's defending the castle, that's his job."


Theme 5: Robinhood Crisis — The Value of Trust and Preparation

Malka recounts how, during the GameStop incident in January 2021, Ribbit had prepared emergency financing terms nine months in advance and injected $500 million into Robinhood at a critical moment.

Key timeline:

  • April–May 2020: Robinhood experienced system outages due to pandemic-driven growth. Malka discussed capital adequacy with CEO Vlad Tenev.
  • May 2020: Ribbit and the Robinhood team jointly drafted a term sheet with bracketed clauses and "put it in a drawer."
  • January 2021: The GameStop incident erupted. Regulators demanded that Robinhood provide $3 billion in collateral by 5:00 AM.
  • 9:30 AM the same day: Ribbit wired $500 million to Robinhood via Silicon Valley Bank.

Malka's reflections:

1. "The CEO is very lonely — without the relationships built over the past 7–8 years, that call would never have come."

2. "We made a mistake: we didn't spend enough time understanding the brand consequences — Robinhood became the 'child star' of the GameStop incident and took two and a half years to emerge from the PTSD."


Theme 6: Investment Philosophy — The Five Elements of "Eye of the Tiger"

In Malka's office, there is a napkin listing five criteria for evaluating people: the energy of a scientist, the conviction of a missionary, the heart of a partner, the dream of an athlete, and the obsession of an owner.

On Conviction: "Conviction is one of the most important traits. Without conviction, you diversify—diversification is a lack of conviction."

On Heart: "We have had founders caught up in controversy—we proactively reached out to them, met them, and even continued to support them in the next round. Why? Because we have conviction, and we truly know them as people."

On Continuous Evolution: "I want to peak on the day I die. Burn the bridges that brought you here—what got you here won't take you to the next place."

On Concentration: When asked what Ribbit 2.0 would do differently, Malka replied: "I would be more concentrated. You don't need to do 50 things to express a point of view."


Mentioned Positions

Position Guest Stance Key Data
Robinhood Bullish (Compounder Case) Founders Vlad Tenev and Baiju Bhatt started the business at age 26; needed $3 billion in collateral during the January 2021 crisis; took 2.5 years to recover from PTSD
Coinbase Bullish (Early Investment) Ribbit helped secure the first bank account (Silicon Valley Bank) in 2013; Brian Armstrong and Fred Ehrsam team
NuBank Bullish (Compounder Case) Founder David Velez; recruited talent from Stanford Business School classmates; stayed low-profile for the first 7 years; the message conveyed in earnings calls today remains consistent with 14 years ago
Walmart (OneApp Joint Venture) Bullish (Active Build) Collaboration with CEO Doug McMillon; Ribbit discovered two bugs in Walmart's financial products and received a $20 "bug bounty"; OneApp is the only in-store mobile payment method for Walmart
Visa Neutral (Facing Challenges) CEO Ryan McInerney understands the crypto trend; currently collaborating with Solana on tokenization
JPMorgan Neutral (Defensive Posture) CEO Jamie Dimon publicly criticizes cryptocurrencies but operates JPM Coin

Judgments Worth Remembering

1. "Fintech is Dead" — Malka: The first phase of fintech from 2012 to 2023 is over. Of the 3,000 companies, only 50 will become compounders over the next 15 years. Actively changing the rules of the game matters more than staying ahead.

2. "Grid Convergence Is a Once-in-500-Years Opportunity" — Malka: The three grids of knowledge, wealth, and electricity are converging simultaneously. The last comparable event was the printing press in the 15th century. AI is today's printing press, but it is only possible because we digitized everything over the past 30 years.

3. "Stablecoins Are the Traveler's Checks of the Digital Age" — Malka: A $200 billion market, where users are willing to forgo 4%–4.5% yield to hold them. Monthly transaction volumes are already comparable to the Visa network.

4. "Without Tokenized Identity, You Cannot Connect to the Grid" — Malka: India's Aadhaar system (fingerprint identification for 1.2 billion people) → UPI payment grid → e-commerce grid proves that identity is the first piece of infrastructure.

5. "Diversification Is a Lack of Conviction" — Malka: Do not use "spreading risk" to mask a lack of deep research. The higher the concentration, the greater the impact you can generate.

6. "Burn the Bridge That Brought You Here" — Malka: What made you successful will not take you to the next place. He cites high school reunions: "Some people peaked in high school — I don't want that."

7. "In a Crisis, Help Them Make the First Decision" — Malka: When founders call for help, they often already know the answer but are stuck on the first step. Unlock that first decision from the outside, and the rest will unfold naturally.

8. "Art Is a Leading Indicator of the Future" — Malka: How artists use AI, NFTs, and dynamic expression foreshadows how the business world will be reshaped. The CryptoPunks community is tighter than the Ferrari owner community — this is the prototype of a "network state."