The Financial Industry's Theranos?

A charismatic founder, a star-studded board and investor list, a $5.6 billion valuation—Mozido had everything a unicorn could want except a cohesive product. Now with a cash flow crisis, federal subpoenas and employee layoffs, it’s hard to see how this ends well.

- Nathan Vardi

As party tricks go, it’s tough to top what went down at Michael Liberty’s 2014 charity bash, which he sponsored together with his financial technology startup, Mozido. As the sun set over the Pacific, a plane soared above the 1,000 guests at an elegant Santa Monica beach club and disgorged 13 former Navy SEALs and 2 of Liberty’s executives. The former group was accompanied by a giant American flag; the latter two held a giant check, signed by Liberty, for $1 million, designated to support military families.

The USC marching band serenaded guests with a medley of patriotic songs. Speeches came from the likes of retired general James Mattis, former head of U.S. Central Command, and the former Mexican president Vicente Fox. As donations piled in, the aptly named Liberty took his place at the podium in a crisp blue suit, white shirt and red tie. “We as Americans have a moral obligation to step up and do our part,” he said in his Kennedy-like New England accent.

For Liberty, his part could easily handle $1 million. That year Mozido, his little-known Austin-based company, entered unicorn status, having finished raising $300 million, much of it at a valuation of $2.4 billion, from a diverse roster of glittery investors, including hedge fund legend Julian Robertson, Google billionaire Eric Schmidt’s venture fund, MasterCard, an Abu Dhabi sheikh and well-regarded Wellington Management, which oversees billions for Vanguard and led the fundraising. What were they buying into? On paper, the silver-tongued Liberty sold a vision of using mobile payments to “unlock financial freedom” for the roughly 2 billion people around the world with a cellphone but no bank account. Rath-er than offer a branded product, Mozido would focus on so-called white-label services to other companies.