16 Sep, 18:45

Bullish on Nubank as foundational layer beneficiary

Bullish-2.82%

AI Summary

Author argues that software fragmentation favors foundational layers like Nubank and Shopify while threatening application-layer incumbents like Intuit.

We're entering a great fragmentation of software. As the cost of building software collapses, the trusted foundational layer - your bank, payroll, commerce OS, whatever most-primitive SOR system you already log into first - expands horizontally. It doesn't need to win a new relationship. It already has one. I used to think switching costs would protect incumbents for a while, but I underestimated the speed and ruthlessness of some players. The game is changing. If you're already on Mercury using a QBO connection, the cost of stopping QBO is much lower than the cost of leaving Mercury. The data & trust is already there. Startups aren't really the threat. Adjacent formerly-friendly incumbents are what will kill you. The company one layer down starts competing with the application sitting on top of it. Good for Stripe, $NU, $SHOP, etc. Not good for $INTU and other application-layer incumbents higher up the stack.

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