Thread by @GavinSBaker

1) $FB’s stablecoin will likely be the first serious threat to $V and $MA since Dodd/Frank. Especially as $FB doesn’t need to monetize via a processing fee. $FB can – and perhaps should – treat the stablecoin solely as a moat/driver for their existing ad business,

2) To @eugenewei point on utility being the ultimate moat for social networks, a widely used stablecoin would be powerful for $FB in terms of making it closer to WeChat level difficult to deactivate $FB. I believe that is what $FB is fundamentally after - Wechat envy is real!

3) i.e. A $FB stablecoin would protect and grow $FB’s advertising business – and thereby need no standalone monetization – in the same way that Android and Chrome protect and grow search for $GOOGL. More engagement for $FB explicitly equals more monetization.

4) “Come for the tool, stay for the network, never leave because of the utility” to once more paraphrase @cdixon. This makes the $FB stablecoin even more of a potential threat to $V and $MA. It is tough if/when your business becomes a loss leader for a company with 1.5b DAUs.

5) $FB is dead serious about this. David Marcus was the President of $PYPL. Kevin Weil is a fantastic product executive. Some of $FB’s best executives are leading this effort. Every article so far talks about remittances. $FB may start there, but that isn’t the end state.

6) There is no way they would have this much firepower on a $25b TAM (5% take rate on the $500b remittances market). That is a drop in the bucket relative to the $1 trillion plus (more on this later) ad market and all of their other opportunities (VR/AR, etc.).

7) Perhaps they start with remittances, then move on to their existing Facebook marketplace and upcoming Instagram marketplace in-line with Zuckerberg’s fairly explicit commentary from the Q1 conference call and CFO Wehner’s commentary at Morgan Stanley in February.

8) Zuckerberg on the Q1 call: “increasing commerce on Instagram, Facebook and WhatsApp, I think, is one of the most exciting product opportunities that we have… there’s also a very big opportunity in basically enabling the transactions.”

9) Wehner at Morgan Stanley: “We're going to invest in things like payments to make it easier for you to convert on site...be able to make those ads more valuable cause we'll will have a higher conversion rates.” I think payments = stablecoin.

10) Wehner at MS: “I don't think we'll be necessarily looking at something like a payments revenue mechanism as a big driver of growth…but more as an opportunity...for connecting businesses and consumers on Instagram and Facebook and be able to do that effectively.”

11) Wehner at MS: “That value will probably flow through more advertising opportunities for us.” This seems fairly explicit – payments are a mechanism to make the ads more valuable. And I suspect a mechanism to drive engagement. A loss leader.

12) I haven’t seen $FB mention remittances recently (curious for the fact check). They are clearly making off the record comments to reporters about remittances, but I think this may be misdirection aimed at lulling competitors into a false sense of complacency.

13) If/when the stablecoin was being used broadly – either for remittances and/or on their marketplaces – $FB would begin to roll it out more broadly. Merchant acceptance wouldn’t be a problem with 7m advertisers on their platform. Just make it 1-click.

14) Consumer acceptance is another matter. The existing payments system works well and a smart friend told me last night that he conceptualized it as businesses paying 2% to consumers – through loyalty programs that are valued highly – to shop with a credit card instead of cash.

15) So $FB will have the same problems faced by everyone else – how to get their stablecoin to the front of the consumer wallet. A 2% discount might not be enough – especially given the consumer love for loyalty programs. Applepay is superb, but I always forget to use it.

16) However, this is what $FB is awesome at – this is their core DNA. Rapidly scaling a new product. Legendary former CFO David Ebersman once told me that Facebook’s growth teams were $FB’s biggest competitive advantage and the most underestimated part of the company.

17) A 1-2% discount that makes their stablecoin front and center in every checkout flow? Or perhaps – the loyalty program to end all loyalty programs via the $FB stablecoin. Who knows? I certainly don’t. But this is why Kevin Weil is on the Stablecoin team.

18) If $FB succeeds, $AMZN, $AAPL and $GOOGL will quickly follow with their own stablecoins. After ApplePay ran on the existing rails and $PYPL agreed to a détente, everyone assumed secular risk was much lower for $V and $MA. This perception could change quickly - iceberg risk.

19) The best innovation generally happens in “winters.” i.e. $GOOGL, $CRM came out of the post 2000 bubble tech winter (altho founded pre 2000, they really scaled after the bubble burst). Crypto is in its own “winter" and the most foundational innovation is likely happening now

20) Obviously this will be all wrong in terms of being a risk for $V and $MA if the $FB stablecoin in any way runs on the existing rails, but that seems unlikely. Happy to be educated if wrong!

21) And either way, I think $FB is focused on a stablecoin/payments as a way to create more utility for its products, which is the ultimate moat for any social network.

22) All of this will only ramp up regulatory risks for $FB, but they – like every other large company – are really good at co-opting regulation to their own benefit. See GDPR.

23) Curious for the thoughts of payments experts and crypto believers/skeptics/experts given my relative ignorance. Could $FB gradually decouple their stablecoin from the underlying real world currencies per commentary abt the forthcoming JPMCoin? As always, good to end on MJ's #