When Nigel Morris and Richard Fairbank were pitching their idea for a data-driven credit card to banks in the late 1980s, they were scoffed at.
“They said, one, it can’t be done. And two, if it can be done, it can’t be done by you two guys,” Morris recalled Monday during the keynote at Fintech Meetup in Las Vegas.
The banks were wrong: The duo created Capital One, with Fairbank at the helm and Morris as operations chief, and it went public in 1994. Now, $490 billion-asset Capital One is on the verge of becoming the largest credit card company in the world, if it can secure regulatory approval to acquire Discover.
Morris, who left Capital One in 2004 and has run fintech investment firm QED since 2007, said the Capital One story shows “that from small acorns, giant oak trees grow.”
“To me, it says that entrepreneurs can create huge things. Everybody will shout at you about why it can't be done. There'll be naysayers – what about this and what about that? – but the passion and energy to build something on the ground is a wonderful thing, and it can lead to great outcomes.”
Up until this week, he saw the deal as “a slam dunk,” he said. But the Trump Organization, owned by President Donald Trump’s sons Eric and Donald Jr., sued Capital One on Friday. The lawsuit alleged that Capital One debanked hundreds of Trump Org accounts in March 2021 because “the political tide at the moment favored doing so.”
“We’ll see how that all plays out,” Morris said of the lawsuit’s effects on approvals for the Capital One-Discover merger.
Today, Morris places his bets on fintech firms.
“Fintech levels the playing field. Fintech empowers consumers of small businesses. Fintech takes away the power hegemony between incumbent and individual,” Morris said, touting their transparency and customer satisfaction in comparison to traditional banks.
QED’s portfolio includes Credit Karma, Remitly and Brazilian neobank Nubank, the last of which claims to bank more than 100 million people.
Klarna, another QED investment, is set to file a $1 billion-plus initial public offering as early as this week, Bloomberg reported.
Morris suggested he doesn’t think Klarna will be the sole fintech IPO in the near term.
“In 2021, there were 61 fintech IPOs,” he said. “Since 2021, there’s been a total of 13.”
“Now we have a cohort of companies that are at scale, they’re profitable, they’re growing fast, that have business models that make sense,” he said, naming Klarna, Circle and eToro.
“There's no doubt that these companies are IPO-ready and will be [in] the right window, either at the end of this quarter or next quarter, that will see a whole generation of them,” he said. “And with that, there'll be a wave of valuations that are market-tested … these are really powerful and capable companies.
