¶ The Philosophy of Technology and Consumer Empowerment
Welcome to Retalistic, the official podcast of Corsight Research for April twenty eighth, twenty twenty six. This week, CEO Deborah Weinswig welcomes Will Reeves, founder and CEO of Fold, to talk about the economic forces challenging U.S. households. and the role that alternative finance tools can play in securing the promise of the American dream. But before we hear from Will, Dana is here to share about our exciting feature report for this week.
Thanks Philip. This week at Corset Research, we're spotlighting powerful reports every executive shop on their radar. This includes what's really driving today's grocery shopper and how should retailers respond? Our feature report this week answers these critical questions. Why are customers visiting stores more often but buying less? How is price perception reshaping brand choices? And what role will e commerce and private label play going forward?
If you're making decisions on pricing, promotions, or channel strategy, this analysis helps you understand where consumer behavior is heading and how to stay ahead.
Thanks, Dana, and now here's Deborah and Will.
Well, thanks so much for joining to us today at Retell I Circle. Very excited to have you. Maybe just start with a little bit about your philosophy around technology and how that relates to the consumer.
Well it's good to be here. Deborah, thanks for inviting me. Um you know, I've been building technology specifically for consumers for uh a decade plus in Silicon Valley, now here out in Arizona. And I've built it in many cities. context. I built it at you know large Fang stock companies. I built it at s very small two, three person startups. I currently run a company called Fold. All of them provide a different lens or answer to that because the reality is
Technology is an amoral tool. It is something that can be used for really many applications and for many ends. And a s one piece of technology can be used for two completely opposite outcomes. And so for for myself, what I've always
¶ Inefficiencies in the Financial System
been inspired by are the builders that choose to leverage technology to empower people to live better, longer, healthier. more meaningful lives. And I think that is really the opportunity that technology provides. Although it's plainly clear that technology can also do the exact opposite of that. And so I love really in terms of a philosophical standpoint, it is much less out of the ether and very much on the ground as who's building it and for what end.
And what's the outcome? And personally I've always been attracted to those that have a direct effect on on introducing new ways to prosper for humanity.
That's the big mission. I mean, my background is also financial services. And so if you I mean, I saw many inefficiencies during my time, but at its core, you know, what inefficiency in let's call it the traditional financial system did Fold set out to solve? And what has you know, why has that inefficiency persisted for so long? Or going back to our prior question, was it on the financial system side or was it on the consumer side?
Yeah, so I think generally when industries lack competition or have very little competition, so m it more resembles a a cartel where there's very limited participants There and they're also coordinating. I think that has really led to a financial system that's primarily based on extraction. How can we harvest value from our end customers the best?
And if you look at financial services, it's really pretty much all geared to that in really two important ways. Number one, tr the traditional financial world has slowly, slowly turned into a system where at every level, whether that is from your hard earned paycheck coming into your deposit account and the interest that that earns or lack thereof to the rewards you're earning on your purchase.
To the interest rates and fine print on buying a home or getting a loan to start a business. All of these have led to very extractive and predatory products for people. Now they're still used. How we can s we can say that, but we can still say, hey, but they're ubiquitous. They're everywhere. And that's because two things. People can handle a lot and tolerate a lot.
But also at the same time, these are important tools. There's no doubt that financial services are required, even if they are extractive in many ways. And so what Fold has endeavored to do is look at the entire banking stack and look at how can the company, instead of extracting from our customers, How can we grow with them? The more that they prosper, we prosper. And the more they prosper means that we have to do a very good job.
at pushing as much of the economic value of th their activities back to them instead of extracting it to us. And the proof here is, you know, Fold has built a financial services company that allows people to earn and hold dollars and Bitcoin in the same place. Every activity, whether you're paying a bill, a credit card, a debit card, earns rewards. You can split your paycheck between Bitcoin and dollars seamlessly. You can participate at our our merchants.
Merchant partners, Uber, Amazon, Starbucks, and get increased rewards and build savings passively at every step of the way. And our customers, you know, live in a world where all the headlines are about homeownership is impossible, are about
¶ Financial Literacy and Consumer Behavior
People are l are putting off starting a family because it's too expensive. They're putting off, hey, starting a business because it's too risky. They're putting off sticking staying in a job that they don't love but they they feel tied to. But our customers at Fold, those customers have earned over seventy million dollars in rewards since starting. They are starting families at a higher rate. They are generally more optimistic about their future. They're accessing home ownership.
They are starting businesses or growing their businesses. And what we see is a stark contrast between what the world's headlines are today and the world that our customers are living in today. They're two different worlds. And the the f the basis of that is not because our customers are working harder or smarter. It's because their money is working harder for them. When you remove the extraction of the f banking and financial system off of consumers,
They tend to flourish because they are retaining the profits. And that is the vision that we believe in is to continue to scale that to have more people reach a point where starting a family is the obvious move or accessing home ownership. We're starting a business are not seen as things that delay their life or w are are unsustainable, but are things that fuel their life.
What is the financial literacy of your customers? And uh is there an so that's part one. And then is there an education that you're also helping them with kind of like over time, do you see them change either behavior based on knowledge or is it behavior changing based on outcome?
Or both. Uh both. So that's that's a question of where we are in the timeline on an individual user's journey. It starts with education, then it moves to skin in the game, and then it moves to a period of um low time preference and letting time in the market do its work and uh then realizing wow I made the right choice. That that that journey can take years. And Fold has been in business since you know, twenty before twenty nineteen. Um and
So we've seen our customers go through this journey. And generally our customers are higher income, are you know, some call them maybe Henries. They not not quite rich yet, but definitely have a higher income or at least a mindset to save. They are financially literate. They are very smart about their finances in in almost all respects. They have a low time preference and save a significant amount of money.
¶ Regulatory Frameworks: Traditional vs. Crypto
And so really it's the Fold platform helps both sides of this. Those that already have their resolve and have seen that their actions and their their usage of our Fold's tools help them ahead get ahead of life. And there's also those starting their journey that are still in the educational stage or still just getting a bit of skin in the game or maybe scared of the volatility'cause they just started on their journey.
But they those that it really is just a recognition of of where they are in in their financial journey. But generally those who have are saving in Bitcoin. Remember, our customers are getting paid. They're paying their bills. They're managing their family finances. They are not
trading meme coins or altcoins or cryptos. They are not trading NFTs. And in fact they don't care about that. What they care about is a serious financial platform that accommodates Bitcoin because they're making their rational d decision. The Bitcoin p should play an important role in building the long term savings of themselves. And that's what Fold aims to help do, not just for them, but for the ninety nine percent of the world who's not doing that today.
It's a really interesting point. I mean, as I think about it going back to my banking days, right, you've got two different regulatory frameworks, right, between traditional financial services and call it crypto. How How does that not to get too in the weeds although I'm I'm a weeds person, but can you can you help us untangle that a bit? Well
The financial system is just about the most regulated of all the industries out there. You know, oh m maybe uh you know, health and medicine is a is another. But needless to say, there are rules for absolutely everything. And when a new technology like Bitcoin that does things that the existing banking system cannot do, there is no way for you to exit the banking system with fiat money. With Bitcoin you can exit into self-custody that only
It only relies on you to own uh your your your own self. That is that is an impossibility in the fiat banking system. That's the first. Number two, there's an auditability and transparency. that is orders of magnitude higher than the traditional banking system. And that is because the traditional banking system is really
uh a place to deposit money, but more than anything on that, it's a place to trust where you deposit your money. You need to trust these people and though that did companies that hold trust are the ones that get more deposits. And that's why we see these old, larger institutional names from a long time ago. really dominating the banking sector. And um that is because they've been around and that has built trust. It's called we call that their Lindy.
At the same time, Bitcoin comes and says one way to build trust is to generally be a good guy for decades on end and generally have an okay track record. That's one way to build trust. It's subjective and it's not necessarily represents that there you should trust them in the future, but in the past maybe. Bitcoin brings cryptographic proof and auditability that you don't need to see that the
institution has been around for a long time. It is cryptographically can be proven not just by you, but by anybody and not just by the bank. So that's another benefit that Bitcoin brings that the traditional financial system just cannot a trust
Not based on personalities and relationships, but on cryptographic proof is a huge breakthrough. The third is I can send and use my money twenty four seven. There are no blocks, there are no holds, you have complete control. And so Between bringing a better level of exit to self custody, a higher level of trust and audibility, and a higher uptime and accessibility makes Bitcoin as a feature set superior in many ways to fiat banking.
But if you get to the very last point that is the difference is that there is no central point of failure with Bitcoin. It is a global operating system at this distribute amongst the world. And so now your distributed risk Amongst that's counterbalanced across global acts versus regional. Regional is far more volatile. You go to the Strait of Hormuz.
Uh, you know, four years ago, you could sail on through very easily, you now go through it now and you might get shot at. Regional instability destabilizes things when you are globally mapped in a mesh. you are counterbalanced by the global activity overall versus a single point of failure. And Bitcoin across all of those creates a very incredible, incredible system to start growing a new financial system.
¶ The Impact of Bitcoin on Banking
But that doesn't necessarily have the same fit into the same categories of our compliance and legal structures that we have today. And so we've seen over the past Especially two years, how does the existing system want to bring in Bitcoin? And how does Bitcoin want to bring in the existing system?
And we are seeing that play out in real time. What's represented by that is you have traditional giants like BlackRock, Fidelity, Morgan Stanley offering Bitcoin products that are the most successful products ever launched by those companies. They're Bitcoin wrapped products. And then you have in Bitcoin a creating in a protocol way the services that a bank might offer. But they're not necessarily regulated or seen in the same way. And so you're seeing
a Bitcoin version of banking grow and you are seeing traditional version of banking that uses Bitcoin grow. And we're gonna see this accelerate over the next few years. very rapidly because ultimately they both serve different audiences, but the compliance and legal framework is gonna have to continue to evolve, although it's made a ton of progress recently.
So you said something important, right? This idea around kind of the the globality of financial services. And so, you know, some of the challenges end up paying, right, FX or, you know, foreign exchange fees. One of the areas that Bitcoin, let's just say, removes is that friction. How are you seeing that play out and how important th is that to either the banking system or to your customers?
Well, to the banking system as is, Bitcoin threatens really the fundamental a lot of the fundamental points of banking because it it it tends to evaporate margin because Bitcoin removes middlemen and middlemen create margin. So when you're talking about a transaction with Bitcoin over cross borders, there's no middleman. It can go from point A to point B without settling in any regional bank. In a fiat FX transaction, it's hitting sometimes three to four banks.
in a s single one and all those banks are going to get their cut. That case study is true almost about every bank service a bank offers. A good example of this is Fold offers. Bitcoin uh rewards on when you spend on your credit card, not in airline miles, not on cashback, but in Bitcoin. Bitcoin has increased roughly thirty percent uh compounded annual growth over its two hundred moving daily moving average uh forever. And what customers get is a reward that when they earn it cannot be devalued.
and has tended hand has historically appreciated. But when you look at the balance sheets of every major airline in the US and every major bank in the US, you see a huge line item related to rewards. And that's because banks buy rewards from airlines at a deep discount, sometimes fifty to two hundred percent. Low what they're actually sold to customers for, then they market huge top line rates, 5% back, 6% back.
But really in the actual redemption of it, you are losing value along the way. So your real return is about one percent. But the whole system is very profitable because of that smoke and mirrors that they can not only give you a reward that they bought under for fifty percent under value But then even when you have that reward, they can devalue that reward further. And on average, airline mile programs
¶ The Future of Rewards Programs
have been devalued about ten to twenty percent per year. Significant, so much so that the uh federal government has uh put them under investigation for malpractice when it comes to devaluing rewards programs. So Bitcoin comes in and says, number one, once we give this to you, we can't devalue it. So it protects against that. And two, we can't sell it to you below spot and play these smoke and mirrors games.
Bitcoin tends to really be transparent about, you know, who's winning and who's who's taking a a cut at every side. And so when we think about it, whether it's FX, whether it's rewards, whether it's deposits, whether it's lending, Bitcoin threatens a very fundamental aspect of fiat banking and what we're seeing right now is fiat banking's
looking at how can we make money on Bitcoin and offer new services and that's gonna disrupt themselves in some ways and create new value for consumers, which is good. But at the same time you're having Bitcoin native versions of traditional finance pop up that don't rely on any of the traditional financial system. And so it's just a whole change, a changing of the guard because the incentives and the tools have fundamentally changed.
So when you think about rewards, right, there you know if you think about the move from cash to credit, et cetera, right, a lot of that was driven by these rewards schemes, if you will. Do you think that in a world where customers understand the value of Bitcoin and Bitcoin rewards that this changes more fundamentally.
I firmly believe that Bitcoin will become the dominant reward for US consumers over the next five to six years. Already today s it is making it is uh gaining incredible market share. our own uh Bitcoin rewards product. We created this category about in back in twenty nineteen and we have seen it absolutely skyrocket. And consumers are going to realize it. Not only that, not only because of Bitcoin, I believe Bitcoin will continue to
uh is very still very early in its growth trajectory. But the existing options are self-imploding. Airlines and banks are devaluing not only the value of the reward given, but the experience of the reward given. You go into any new MX lounge and you're gonna be waiting outside for forty minutes. Just to get inside for some, you know, unheated f you know, food that's sitting under a light for for six hours.
The the bottom is falling out of that that system. And the way to encapsulate this is that Fold has given away seventy million dollars in Bitcoin rewards to our customers. Had we given cash back instead, had we given them just dollars.
¶ Consumer Behavior in a K-Shaped Economy
We would have only given away 20 million. The value of what we gave away would only have been twenty million. Had we given away airline miles, the value we would have given away under 10 million. And so you're seeing that ninety-nine percent of the world is operating in that.
only getting twenty to five million dollars of value versus a full customer earning seventy million. And this led to a very strange thing that as our customers were earning over time, They had more value in their rewards accounts than they had in their savings accounts. that they've been building for years. And that's the power of Bitcoin, just in the context of of rewards. Now we can apply that across the stack to converting your paycheck into Bitcoin, a piece of it.
We just launched a Bitcoin bonus program with a one of the oldest fast food chains in the country where they're their employees. are earning Bitcoin r bonuses for every hour they work as a retention tool. Bitcoin's gonna totally take the rewards mark. And uh we're seeing the momentum today and it's gonna continue to accelerate.
So if we think about the kind of where where we are right now and you kind of looked out five years, can we just look out twelve months? And How do you see right for those of us in retail? Right. We've got holiday around the corner. How do you see maybe your more average consumer rethinking how they pay for things, what they expect from or because many retailers have rewards programs.
And
there's consumers will change where they shop and how they shop based on those. So if you can just kind of help us understand, because I think that may help, you know, some of the retailers and brands who are listening to this think differently about what they should do in let's say the near, medium and long term.
Yeah, I think a a few ways. Number one, rewards undoubtedly has become one of the most powerful tools to change behavior when it comes to financial activities ever invented. So much so that rewards are created to differentiate credit card programs. But ultimately the rewards became the product, not the credit card necessarily. The credit card is a commodity. Anyone can out get a credit card. Now it's all about the rewards. What's the structure?
What's the bonus? What's the categories? All of that. That is the product that's being sold now. And Fold believes that that is true and it can change behavior towards one that rewards. true rewards that also gives it a a great credit experience. And so I would say that the understanding for retailers coming up is that to acknowledge the world that we're in right now, we are in a
as what's been termed a K shaped economy where we are at the barbells at the two extremes. Most of the spending, the consumer spending that is happening right now is happening from well to do higher end those on the right side who have who are keeping up and ahead and still spending a lot. Everything below is spending a lot less and if they are spending, it's only going to the most discounted, most ruthlessly cutthroat discount opportunities out there. But if you look at it,
Luxury and all these things are still going up on the everything on that side. So understand where your business is in the K-shaped economy. Who are your customers? The middle is gone. Now you have two sides of the spectrum that's really powering the economy today. And rewards are one way to signal to either end. Bitcoin is a is a reward that appeals to both sides of the spectrum.
It tends to be a premium product. Bitcoin investors tend to be higher income, lots of savings, higher net worth. Historically, they have completely outpaced their peers in terms of savings rates, purchasing power, nearly everything. They are Active consumers. And so exploring how you can offer Bitcoin as a way that maybe you don't care as a business, but you want to attract their
¶ Elevating the Bottom of the Hourglass
business of people with Bitcoin who have a lot of discretionary money. That is a great strategy and you should do that whether you care about Bitcoin or not. You should do that because you want to build a good business. So I would really look at understand we're in a K shaped economy. What product are you offering and on what side is it offering it to, and how can we market to those
the extremes and rewards is one one great way to do it. But it's a mistake to believe that we are in the world we were during COVID. Or even during before that, where there was a much more there was a stronger center. That center is bottomed out very significantly. Even today, I believe, consumer sentiment came out as absolute record lows based on continued issues with inflation and what's going on in the world.
No, I I think you bring up some very interesting points. We've always had this idea around kind of an hourglass and right this continuous thinning of the middle. And uh, you know, after a while, right, there there just kind of is is very little middle. And I I I feel that you're if we take a step back and almost look at this holistically, how do you think about this, you know, let's just say the the bottom part of the hourglass? And from a Bitcoin perspective.
How can we elevate them to participate in the economy more and then ultimately I mean, we can all say what we want and think what we want about kind of the measuring consumer confidence. But ultimately I don't I don't think that having kind of a barbell really works. And so I think everyone needs to participate and feel like they can participate. Maybe maybe just kind of walk me through your thought process there because I think this conversation has made me at least Yeah.
Yeah. So unfortunately, asking why the center has bottomed out and where has the center gone is is gonna be grappling with the hard Realities of our world today. Number one, inflation has been persistent and higher than even reported.
Ten years.
All of those changes have the effect of lowering the perceived inflation, even though inflation, real inflation is higher. They'll remove entire categories. from the calculation to at least say inflation is down or under control. So the reality is is that people's savings are being rapidly inflated away, and that was accelerated under COVID.
where more money, more US dollars were printed during COVID than in the history of the United States in a single fell swoop. And so what's happened is that the the middle class who relies on a fair and balanced economic policy. They do not tend to have a ton of money in the assets. They also tend to not they are also not getting government subsidized help.
So they're really at this very hard point where inflation hits them really hard. Inflation's not only hitting them, you're also getting mass layoffs. tied to either AI anxiety or fears or replacement. That will accelerate. You're also having instability uh around the world, not only that is very volatile in terms of the markets, but also everyday goods and services. Well today oil is now much more expensive than it ever was. Tomorrow, yesterday it was your timber. If you can remember there was a
A whole sh would you know, commodity shortage going on. All of these things mean the middle class gets the hardest. And what that means when they get hit, they either move on to one side or the other of that hourglass. And so resolving that is not a matter of motivating middle class to spend. Unfortunately, it's about giving that group new tools or the world new tools in which to use or a new perspective on how to see things.
A lot of the the tried and true kind of maxims of financial literacy are really don't really work as well anymore. You have the idea of the sixty forty portfolio or the pension that you can rely on, or that a house is own the down payment is only going to represent twenty percent of your annual paycheck instead of forty percent or sixty percent, which it is today. All of these metrics are wrong, which means our tools need to be different and our perspective needs to be different. And I believe
We're just at an uncomfortable portion, uncomfortable moment where we are going through that learning period and these new tools will proliferate. And I I found it fold because I believe that Bitcoin provided one of the most unique opportunities for anyone in the world to participate in a
¶ Reflections on the Evolution of Fold
growing global economy that will preserve their savings over the long haul and increase their purchasing power so that they make sure that they are not being pushed to the left side of the the hourgh. And Bitcoin, unlike any of these global revolutions that happen, no single person is benefiting off of the growth of AI. Those stocks are held very privately, only in secondaries. You can't get
can't get the benefit of the current acceleration in AI. Can't there's no there's no way for an average person to get access to that. But Bitcoin from its very day won, that anyone in the world who understands its value proposition can can get along for the ride in investing in it, which is an incredibly democratic proposition. And we believe that ne needed to be wrapped in a financial service that makes that feel understandable, legible, and safe.
So no quick fix to that K shaped economy without, you know, number one, cultural and behavioral changes, but also fundamental economic changes and where we're unfortunately just at the time where we have to go through that pain. We are gonna go through that. We are in that pain right now. And now is about how fast we get new tools and new thinking.
So I have one more question before we hit our lightning round. When you founded Fold in twenty nineteen, obviously there's been a very dynamic environment. But if you were to kind of just sit back and think about it, what's been the most different? How has Fold evolved to maybe solve for that?
Well, I mean, if you asked me twenty nineteen is before COVID. Is before so it it's a truly a there's a that I believe is a seminal before and after moment in the world. So the entire world has changed. But at the same time, the function that that Bitcoin plays, the the value proposition that Bitcoin offers, I knew was strong in a pre COVID world.
After 2008 financial crisis and and other other things. Bitcoin's value prop was strong then. It's even stronger now. Now the world is really pulling back from a kind of globalist mindset more to kind of regional collaboration, Bitcoin remains a protocol that that still enables everyone to be connected globally.
¶ Lightning Round: Quick Insights
on a financial system, at least as an alternative to the regional one that they operate in, which that exit has never existed before until and I think the economy has changed, the way people get work has changed. I think people's
You know, we can even look at, you know, from a health perspective and uh has again almost everything has changed. And so I think the only thing that I come out with is that I have a stronger belief in the power of what Bitcoin can do for this world, even though I've started building it for a different world.
Yeah. had a call earlier today and you know, it's it was about it was people in the retail industry, but we end up spending about half of it talking about right GLP one and the impact that's had, right? So you you think about that's just like one sliver of healthcare. Yeah. And the impact that's had and will will continue to so I I
Can't even imagine like when you take a step back what that looks like. All right, so this is my favorite part of this is we have ten questions. You can pass on any of them, but just kind of say what comes first to your mind and we'll have fun with it. So I've really enjoyed I've really enjoyed the conversation. It's been uplifting in many ways and it it's kind of where I've always thought technology could play in our world and to see you doing that is
Fantastic. So thank you for joining us and let's jump into it. All right. Bitcoin in one word. Biggest risk to crypto adoption.
biggest risk to crypto adoption is I think continued bad actors that take advantage of the space.
Most overrated trend in fintech.
Of the um uh every everything on credit. Buy now, pay later on your your DoorDash all the way up to a new car. Too much.
Most underrated behavior among consumers
Old fashioned saving. Live below your means and save money.
Regulation necessary evil or competitive moat?
Both at once all the time.
Payment payments or savings, which matters more long term?
Savings ultimately matters longer.
One company outside of crypto you admire.
Costco, one dollar fifty hot dog despite continuous inflation for the last twenty five years still holding strong.
What would surprise people most about your user base?
think people into crypto are crypto bros trading, speculating, doing Poor financial decisions. We have the most financially savvy, longest term thinkers and savers, families building families, businesses, and great lives.
Bull case for Bitcoin in one sentence.
Bitcoin to a million. Because the world does not change.
And then what keeps you up at night? Last question.
It my having a I'm about to welcome my second kid into the world in a couple of weeks. So that that's right now that's what's on my mind.
I can only imagine. Well, first of all, congratulations on your second arriving soon. And uh thanks for joining us and really taking the time to explain some of the nuances which are often I think difficult and I think putting it into very simple and plain language, but with the backdrop of the financial services industry, we really appreciate. We hope to have you on again soon. Thanks so much and enjoy the rest of your day.
Thank you, Deborah.
Thanks, Deborah, and thank you for joining us this week. Corsite Research serves the retail community with time sensitive research. on consumer shopping behavior, retail technology innovation, financial outlooks for industry leaders, and trends across every retail vertical. We also facilitate leadership communities, conduct seminars and conferences, provide strategic consulting, conduct technology assessments, and develop proprietary data resources.
Visit us at Corsite dot com to learn about all the ways we can support your success. Have a wonderful week.