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Comment by brunoTbear | Hacker News Reader

Will be interesting to see the terms for the acquisition and see if Mary Meeker's last investment for KP was a winner or not!

I'm cautiously optimistic for a good outcome for the Plaid folks here: last round was two years ago for $250M. Could they have been suffering $10M/month losses and are running out of money? Could be.

No offense to Visa, but I don't think of them as the most innovative organization or one that is a sign of a "good outcome" for a company getting acquired. I can't think of a good exit to Visa, but I am open to being wrong on that one.

Disclosures: worked at Stripe; dealt altogether more than I would have liked with Visa. Have no knowledge of Plaid's particulars.

Edit: Visa and Mastercard were strategic investors in the C round. Curious what the competitive dynamics were that led to Visa grabbing the acquisition instead of MC. https://techcrunch.com/2019/09/16/plaid-announces-strategic-...

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Looks like the acquisition price is $5.3 billion[0], so it looks like it's a real winner for its investors.

[0] https://www.streetinsider.com/Corporate+News/Visa+%28V%29+to...

Nice to have the number to sate my curiosity! Thanks for the link!

> No offense to Visa, but I don't think of them as the most innovative organization

Visa is a $434B company. I guess "innovative" is subjective but their valuation trajectory has looked like a high growth tech co over the past 5 years.

That's fair. 3x valuation growth in the last 5 years is tech company level. More or less the same trajectory as GOOG and FB.

It's not Stripe or Airbnb level growth, however.

no one suggested that it was.

my point is that it's clearly not a dying dinosaur of a company. if anything, Visa has too much power in our financial system as more transactions are non-cash and non-ACH based.

Harder to have the same growth rate coming from a much higher base (already being worth about $100 billion five years ago)

% or $'s? You can't eat a percentage.

Well the attractiveness of Visa (V), GOOG and FB is that they are all profitable companies that don't need "hypergrowth" because they own and control their target market.

FB and GOOG own a part of the internet traffic. Almost all of the worlds internet payments goes through VisaNet and is the fundamental processor of these internet payments and have been profitable for years.

That's just a function of their size. I guarantee you that Stripe and Airbnb's growth rates will drop to these types of growth rates if they hit the 100B valuation. The truth is when you are so large, the opportunities for growth become smaller and smaller. It's much easier to grow at high percentages when you are small. Buffet talks about this a lot with Berkshire; he has said he could grow Berkshire at a much higher rate if the company was smaller. Now he has to pass on amazing investment opportunities that are too small for him.

That's kind of a weird thing, like my mental picture of Visa is indeed that they're a bit stodgy and behind the times.

But then the other part of me says that I clearly have no clue what I'm talking about, there's basically no chance they could stay relevant this long without being on top of it at some meaningful level. And potential quasi monopoly status doesn't quite capture it. So much of finance has been disrupted by technology, you figure if there's finance companies who wasn't disrupted, it must be because they are the technology.

It could just be that to be a payment processor, it helps to have a conservative, reliable image.

All the POS tech is behind the times, because retailers don't want to spend the money to upgrade. But behind the scenes I'm sure their fraud detection etc. is quite reasonable.

It seems their main software division is in India and in the US it's mostly sales, servers, mobile, and POS support, suggesting that the company is focused on the bottom line and probably could be disrupted. For example Bitcoin is getting more and more prevalent. But it's going to take a while before supporting a new payment network is as easy as an over-the-air software update. And the recent trend in "disruption" is acquihires as seen here.

Visa is extremely unlikely to be disrupted. Their Network links almost every bank in the world. It would take decades for a competitor to sign up all the random banks out there. Furthermore the intermediate steps are not really that lucrative. It'd take tremendous up front cost and patience.

Apple couldn't even do it with their in-house credit card.

I'd argue that their weakness is governments more than companies.

Governments are eventually going to see "a foreign company owning our major payment networks" as a national security and sovereignity risk, especially if we end up in a multi-major-power world. They'll also eventually covet the data and the ability to disable "inconvenient" business. You might see it take the form of a government-mandated account (would Visa/Mastercard have taken off at the same angle if universal, instant direct debits were available in the US?), or just providing a glidepath for local commercial alternatives. Look at what Russia is doing with the Mir card.

Visa measures its downtime in seconds per decade. Whatever they’re doing seems to be sustainable and scalable. They work so well, people just take them for granted. ‘It just works’ is a pretty good business model.

Speaking from experience, of all 3 major US card networks, I consider Visa the most advanced in terms of their tech.

their unfair advantage is being a front from selling data pipelines to hedge funds.

>competitive dynamics were that led to Visa grabbing the acquisition instead of MC

Quite possibly got overbid in that case, which would be a good exit. MC is no slouch in this space.

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