[al3x]

Hi, cofounder of Simple here.

Most banks do use "glorified IT systems". Very few of them develop their technology in-house.

Think about it this way: you can have a bank that buys their technology from another company, or you can have a technology, design, and customer service company that partners with banks. Both are viable options, but I think our approach is going to better for retail banking customers in the long run.

[sector]

As a customer, I'd feel a lot more comfortable if you worked solely as a technology vendor to my bank.

This isn't a knock on the team you're putting together, or your ability to build a great company. It's caused by the realities associated with venture capital.

Now that you took VC money, there's countdown to an exit, and I have to think about likely buyers. If you're successful, one of the top possibilities is a strategic acquisition from a major bank. This basically means that if I buy into the vision and support it, I'm likely to end up right where I started.

I want to like this idea, because I want to see more great, customer-service oriented banks. But I just can't quite bring myself to like it, because of the guaranteed change in ownership that is pending and the lineup of probable buyers.

[ganeumann]

I was the first investor in Simple. I can't speak for all the investors, but for me this was an investment in making the world a better place.

When Josh proposed the idea to me I asked a few people about their experiences with their banks. One of my friends told me how she had accidentally double-booked an airline ticket. This overdrew her account and--since she uses her debit card for everything--she started incurring overdraft fees on everything she purchased. She ran up several hundred dollars of overdraft fees before she even realized she was overdrafted. When she called Bank of America to explain, she was given the runaround. They eventually refunded half the fees (their standard offer) but refused to refund the rest without her jumping through hoops.

My friend is a single mom with two kids and a full-time job. She did not have time to constantly monitor her bank, nor the time to jump through the bank's hoops. Paying the fees caused her significant hardship.

The big banks in this country make their living by preying on those least able to protect themselves. They are evil. Again, I can't speak for the other investors, but I am not interested in selling out to a big bank. Success for me is either beating the other banks or forcing them to compete on Simple's terms: by treating their customers like people.

[sector]

I agree that many retail banks wouldn't be missed by anybody if they disappeared tomorrow; and I applaud and support efforts to improve competition in the sector. I think that we share a vision of what should be in the retail banking sector.

That said, I can't help but think about the capital required to scale the business due to the high customer acquisition costs in the sector. This large capital requirement seems likely to reduce the ability of Simple to have meaningful control over their exit, as it won't all come from impact investors.

I hope the Simple team makes a mark on the market, but I still fear that success means that a large bank purchases them, increases the cross-sells, adds incremental fees, and "streamlines" customer service. I hope my concern is misplaced.

Either way, I'm excited to see what develops, and I think you made a great investment.

[al3x]

Hi, cofounder of Simple here.

There's a ton about when and how and if we exit that's out of our control, and I wouldn't presume to predict exactly what's going to happen. But, please know that our goal is not to sell out to a big bank. We're building this because we want to use it, and part of what we want to use is a banking service that's provided by people who are acting in the best interests of their customers.

Unfortunately, I'm not sure that going with a smaller or local bank provides a more solid guarantee that you won't be banking with a giant down the road. The economic crisis of the past few years has seen a ton of consolidation in retail banking, and I think there's even more to come.