Big Banks' Secret Weapon Against Silicon Valley

This is The Startup Breakdown, the newsletter where we learn, laugh, and love startups. By joining this growing community of hundreds of future startup aficionados (think i spelled that right?), you're getting a beachside view of the ocean that is the startup and VC scene. This ain’t your grandpa’s newsletter, so prepare yourself for an inbox full of 4/20 jokes and Succession references.

Happy Saturday, folks.

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Sama Gets the Hamma

Admittedly, that headline was a bit of a stretch.

There was simply no way to top JPMorgan’s Control Altman Delete. 11/10. Bravo.

OpenAI announced the firing of CEO Sam Altman yesterday, and the news was shocking to say the least.

For those of you with actual lives, the news is akin to the Chiefs cutting Mahomes or Pirates of the Caribbean getting rid of Johnny Depp. Wait…

Given it’s so early, not going into too much depth on this one, but will have more to say next week when more details emerge. For a completely raw, unprepared take, we actually hosted an emergency Spaces to break down what had happened and give our early predictions on who might be the next person in charge (spoiler, prediction markets seem to already agree with our pick… 👀)

All the Finance Homies Hate Big Tech

There was a time when the biggest threat to the dominance of Big Banks was the rise in innovative fintech startups providing actual financial service (the nerve) to consumers.

Now, you can get 4.15% APY with an Apple Savings Account, so in the biggest “put our (dirtied with each other’s blood) hands in” moment since Rey and Kylo Ren, Big Banks and fintechs are putting aside their past differences in an effort to combat the threat of Big Tech financial service encroachment, and they’re stealing some tricks from Emperor Palpatine in the process.

JPMorgan Chase recently announced a generative AI project. Beyond merely summarizing tedious financial reports, the company is looking to integrate the tech into their helpdesks, exponentially increasing the quality of customer service.

CEO Jamie Dimon, channeling his inner Sama, is gunning for AI integration in "every single process" within JPMorgan's empire. Not sure who VPs are going to yell at for commas being off-centered now, but I’m sure there’s an emotional support bot somewhere.

As mentioned, though, JPM's AI leap isn't a solo flight but rather part of the effort to keep Big Tech's paws off the digital finance pie. Plus, rather than build these systems in-house (wait… a financial institution actually creating something of value? 🤯), most banks are looking to either partner with or acquire startups that can enhance their existing infrastructure to better compete with digital-native competitors.

Another wrench in Tim Cook’s plans to take over the world (respect honestly), the Consumer Financial Protection Bureau (CFPB) is also throwing down the spikes on the road, announcing plans to further regulate digital wallet providers and payment apps. This increased level of scrutiny is likely to slow down the pace of innovation that tech companies have been running with as they race the incumbents.

The end result for founders operating in the space is a bit of a mixed bag; a regulatory crackdown might cool off Big Tech's financial sprint, but answering “you up?” texts from the banking titans might come with its own pace-crushing challenges.

There’s only so much early stage news that one newsletter can cover…

So if you’re looking for even more content, check out Startup Rabbithole, taking you on a wild trip through the magical land of startup news and trends.

Cheers to another day,

Trey