Discover Lithic, formerly Privacy.com, a card issuing company that has seen remarkable success with its API-driven infrastructure. Explore Lithic's pivot under the framework of 'The Amazon Tax' by Ben Thompson. Dive into their high fixed costs, primitive-building strategy, and increasing returns to scale. Learn about embedded finance and how Lithic's API enables direct payments and real-time card generation. Also, explore the card program services of Lithic, Stripe, Galileo, and Marquette.
Lithic, formerly known as Privacy.com, has experienced significant growth by offering a flexible and developer-friendly card-issuing and processing solution that serves startups and fintech companies.
Lithic's modularized components and infrastructure approach, inspired by Amazon's playbook with AWS, allow clients to mix and match components, integrate seamlessly, and leverage embedded finance to build innovative financial products.
Deep dives
Lithic: A Flexible and Innovative Card Issuing Company
Lithic is a highly innovative and flexible card issuing company that has seen remarkable growth and success. With $110 million in venture funding, Lithic has surpassed $1 billion in annual processing volume and quadrupled its growth on its API platform. The company is expected to 2-3x its growth by the end of the year. Lithic stands out not only for its impressive growth but also for its talented team and customer pull. The company offers a modern developer-first card-issuing and processing solution that serves startups, fin-tech companies, and brands. Its modularized components allow customers to mix and match, offering flexibility and customization. API-first companies like Lithic play a crucial role in the financial industry, enabling new use cases and expanding the market. While the card issuing space is competitive, Lithic's strategy of focusing on earlier-stage startups positions it well for future growth and opportunities.
The Anatomy of Payments and Lithic's Role
Understanding the complexities of payment processing is essential to grasp Lithic's role in the industry. Payments involve multiple layers, including issuing, acquiring, and card networks like Visa and Mastercard. Lithic operates on the issuing side, where it offers a comprehensive card-issuing solution that is flexible, fast, and developer-friendly. The company's infrastructure, built from the ground up, allows for quick and easy card issuance and transaction processing. Lithic's modularized components enable startups to launch card programs swiftly, and its focus on flexibility helps clients leverage best-of-breed products from the fintech ecosystem. By supporting innovative use cases and providing a seamless experience, Lithic stands out in the payment processing landscape.
Privacy.com: From Bitcoin to Building Infrastructure
Before rebranding to Lithic, the company was known as privacy.com and was founded by Bo Zhang, Lithic's CEO. Initially, privacy.com aimed to create a Bitcoin-backed debit card, but faced challenges due to banks' reluctance to cooperate. However, they recognized the value of security, privacy, and unanimity that Bitcoin presented and shifted their focus to delivering these values through virtual cards. Privacy.com enabled users to generate and use single-use virtual cards, ensuring privacy and security in online transactions. To improve its offering and overcome the limitations of legacy issuer processors, privacy.com built its own infrastructure from scratch, resulting in the creation of Lithic's advanced card-issuing platform.
The Amazon Playbook: Primitives, First and Best Customers, and Modularization
Lithic's infrastructure approach mirrors Amazon's playbook with AWS. Amazon's success came from breaking down its infrastructure into primitives, creating modularized components that developers could freely access. Lithic adopted a similar strategy, offering primitives in card issuing and processing. This modularization enables clients to mix and match components, integrating Lithic's offering seamlessly into their own products. Lithic aims to be the first and best customer for its own card-issuing API, fostering growth with developers and generating valuable insights. By playing well with other ecosystem players and focusing on specific areas, Lithic empowers startups and fintech companies to leverage the benefits of embedded finance and build innovative financial products.
You may not know Lithic. Until recently, it was called Privacy.com.
In May, it announced an Amazonian move: delivering the card issuing & processing infrastructure it built for itself via an API.
Now, it's worth $800M and growing like a card rocket.
This is a fun one. We'll learn about Lithic's pivot using the framework thatBen Thompson laid out in The Amazon Tax. Build primitives, incur high fixed costs, expose primitives via API, get increasing returns to scale.
