Looking for something broken, let’s see now…

Media? Well yes but…

Manufacturing? Depends really…

Oh, yes there it is…Banking! No wait, bigger…financial services!!! Yep. Busted. Definitely broke.

My quote of the day today from Paul Graham reminded me of why Amy and I created Nauiokas Park:

Don’t look for solutions, look for problems. Look for stuff that seems broken.

For several years Amy and I have been pointing out the fact that many aspects of the traditional banking business models were clearly broken or at least no longer fit for purpose, and as such subject to (catastrophic?) failure. Almost six (!) years ago, in May 2003 when I wrote this article – Minority Report: Capital Markets in the 21st Century – it (mostly) seemed to fall on deaf ears. My 2003 recipe I imagine has a few more supporters today:

I wrote:

Firms in our industry are constantly reshaping themselves: merging this business and that, creating new teams and silos, breaking down walls on one hand and building up new ones on the other.

For the most part this combinatorial ballet has avoided real innovation and has yet to break free from the chains of past experience. It is a classic example of turkeys not voting for Christmas. But clinging to the status quo only avoids the inevitable. The death of the salesman. And the trader. And the syndicate manager. Etcetera.

Not only did banks cling to the status quo, in the subsequent years as we all now know, they rode it past the point of exhaustion, past the point of diminishing returns to almost no returns and magnified these with enormous doses of leverage. But the main thing is, coming back to Paul Graham’s insight: great opportunities arise when things are broken. And it is this opportunity – the opportunity to re-invent a new financial services paradigm for the 21st century – that we are so excited about. And since it is a whole industry that is broken, rather than start one company, addressing one problem, we think the best way for us to be successful and help to drive this change is to participate in creating many new businesses, support many entrepreneurs, help build a new financial ecosystem. Change the world. World peace. (That last one is admittedly a ‘stretch’ goal…)

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