How Stash is creating the Netflix of financial services

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Stash is a mobile first investment platform that helps people simplify their investing and banking through education and user experience. I don’t think even that description does it justice.

Users are really happy that they invested $200 or $300. Most finance companies don’t get excited about their users who have $200 or $300. Stash seems to be drawing them in. I want to know if you can actually build a business that way.

We’re going to find out how he is changing investing and changing banking in this interview.

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Brandon Krieg

Brandon Krieg

Stash

Brandon Krieg is the co-founder of Stash, a mobile-first investment platform that helps people simplify investing and banking through education and user experience.

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Full Interview Transcript

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy. I’ve been really eager to do this interview for a long time. Joining me is Brandon Krieg. He is the founder of Stash. Stash is . . . I was going say the software but it’s much more than that. So I’ll call it a company for now until I explain it. It’s something I’ve been reading a lot about in blog posts and seeing people on YouTube talk about. People who’ve never saved money before and never invested before are now not just doing it, both saving money and then investing it, but they actually feel a sense of confidence in it and such pride that they are blogging about it, they’re talking about it all because of what Brandon has done.

So Stash is a mobile first investment platform that helps people simplify their investing and banking through education and user experience. I don’t think even that description does it justice. What they do is make it so simple that people who’ve never done a before we jump in and do it. The thing that I wonder, though, is, Brandon, I’m going to ask you about this later in the interview is a lot of these bloggers, they’re like really happy that they invested $200, $300. Most finance companies don’t get excited about their users who have $200 or $300. They almost want to like push them away. You seem to be drawing them in. I want to know if you can actually build a business that way.

We’re going to find out how he is changing investing, changing banking, for a large number of people, thanks to two phenomenal sponsors who are making this interview happen. The first, if you’re looking to hire developers, you’ve got to check out Toptal. I’ll tell you about them later. And the second if you’re doing email marketing, you need to know about ActiveCampaign. Again, I’ll talk about those later. But first, Brandon, good to have you here.

Brandon: Awesome. Thanks for having me. I’m looking forward to this.

Andrew: Brandon, I know you’re not going to talk about revenue. I imagine you’re not going to. But I was wondering if you could give me some number that gives us a sense of how many people are using it? Is it like 500 people? More?

Brandon: So we actually we just crossed over three and a half million customers on the Stash platform.

Andrew: Who are putting in money?

Brandon: Yeah, they have open brokerage accounts. And they’re either putting in money, they’re banking with us, or they’re actively engaging in our financial education. And it’s been so cool to see this. You know, when we started the company, you know, three and a half years ago, we launched. It was like I quite frankly have no idea how many people are going to use this thing, right? This is pre-finding product market fit. But we knew that. We knew we had a really good idea that solved a really big problem. What I think we understated as a company is how big this problem is and how many people are affected by the problem, which is they don’t effectively have access to financial services or financial education. And that’s the problem that we’re trying to solve for.

Andrew: You knew this was a problem because your friends, your family were coming to you and asking you what?

Brandon: So even more backstory is I started my career in the late ’90s in financial services but in technology disrupting the way trading happened. And even I didn’t know a lot about investing when I first started, but I kind of figured it out. And all of my friends, none of my friends work in finance, but they would all ask me questions about, “Where should I invest? What should I put it in? Should I buy? Should I sell? What do you think of the market?” All these questions, they constantly hit me.

And then as my career continued, progressed, I met my co-founder, Ed. And we both worked together in a big global bank. And even people that worked at the big global bank would ask us the same questions. And so, “Where should I invest? What should I invest in?” And it doesn’t matter who you talk to, someone who has an MBA from Harvard, or someone who didn’t finish high school, they all ask the same questions.

Andrew: So even people who are really in the business aren’t sure about what to do with their money. I’m trying to understand the business. So I went back and I started to try to understand how EdgeTrade worked. I started understand what it did, but I don’t fully understand it. It’s software-managed trading. Am I right?

Brandon: This is fun. I haven’t talked about this for a long time. So the last startup I was part of is called EdgeTrade. It was algorithmic trading business. So basically, if you think back to all those movies we see, the floor of the New York Stock Exchange and all these really big loud people screaming and yelling with tickets or pieces of paper in their hands, the idea of EdgeTrade was to use computers to officially trade in the stock market because computers can trade efficiently. And also they don’t use inside information, they try not to leak information.

So if you’re a big, big mutual fund company like Vanguard or Fidelity and you need to buy millions of shares of a stock, you could do it through an algorithm that’s pre-determined on how it executes the order. And we built a really great business, that ultimately, we sold to Knight Capital Group. And from there, went on to the . . . Knight was trading about a quarter the U.S. stock market volume every day. So it’s really cool to see a journey from a little baby company to a company that’s still exists . . .

Andrew: You were the first employee of the company?

Brandon: Yeah, I was employee number two.

Andrew: Employee number 2 back in 1998. And so what you’re saying is someone would come to you and get to buy or sell stock through other people. Was like your own market? Is that what it was?

Brandon: No. So we basically as the market started becoming more than one exchange, so it was for the last 150 years of NASDAQ and the NYSE. And then in the late ’90s, ECNs was the word started coming around like Island and Archipelago and Brut, and they were like 9 or 10 ECNs, which basically meant that liquidity where you could buy or sell got fragmented. So it wasn’t . . .

Andrew: Because of all these different exchanges, you could either go to one or the other, but there’d be different prices you’re saying at each one?

Brandon: Yeah. And they’d be different prices. And in a lot of cases, in the early days, each one had its own interface. So you’d have to be a trader looking at 10 screens looking around going, “Which one do I do? Where should I route my order?”

Andrew: Got it.

Brandon: We [inaudible 00:06:09] said, “Let’s build a router that basically takes all of these venues and intelligently routes to wherever we want to route to and combines the liquidity into one source.”

Andrew: And that was FAN if I understand it right. Is what you guys call it.

Brandon: Yeah. That’s right. Yeah.

Andrew: Aggregates liquidity from off exchange trading venues. Isn’t it interesting you guys sold to Knight Capital Group for $59.5 million, which is not low. But do you ever look at tech companies after that who do nothing but like photo sharing, sell for hundreds of millions of dollars and go, “What is this? We did something way bigger, more complicated.”

Brandon: Yeah, no regrets at all.

Andrew: No regrets at all?

Brandon: No regrets at all. Yeah. All these opportunities, EdgeTrade story ended with an exit. There was a lot of hard work went into that business, a lot of hard times and a lot of good times. But ultimately, the team that was there and Joe and Kyle the two original founders, and they were amazing. I learned so much from the both of them. I don’t think that I’d be sitting in the situation I am today if I didn’t go through that with them back then. And so for me, everything is just learning and growing and just getting better over time. And I’m so happy about it.

It is funny what you said though like, yeah, you can create some app now and they get sold for stupid amount of money. That was a real business that made money. But it was a great story. And I ended up going to Knight, and I spent over five years at Knight post the acquisition. And I loved it. I loved every minute of it. It was great.

Andrew: I’m going to get to what your wife said after that. But let me get back a little bit and understand your history. You told Forbes in an article they published on January of this year that you grew up in New Rochelle and in your family people were in the restaurant business. What did your parents do? And what did you learn from watching them do it?

Brandon: Yeah, my mom was a stay-at-home mom and my dad was in restaurant and food public relations. And my dad, we grew up doing great. And everything was great until the big recession in the late ’80s and everything went real bad for my dad.

Andrew: Wow, what did real bad mean for you?

Brandon: We didn’t have any more money. The business went away, his PR firm didn’t work. Unfortunately, when times get tough for business, the first company . . . the group of people that get terminated from a company is PR. It’s a big expense you cut right away. And so everyone started cutting my father’s company and he never saved, my father. So we had no savings. So ultimately, my father ended up moving us down to Florida. And from there, he built a life. But I got to see the struggle of like growing up doing really well and then not doing really well. But I think my family did really well through all those circumstances but it left a mark on me.

Andrew: It did for me too. My parents also they did really well and then they had a huge financial hit. And I actually think that I’m made as a person now because of the financial hit more so or at least as much as by the success. The success gave me confidence to know it was possible. The financial hit made me realize I am vulnerable. I shouldn’t be spending money on wasteful things. I should be watching what I do. I should be working hard. It seems like it did something for you. What was that?

Brandon: It made me think about the way I spend my money and the need to have some savings. I’m a practical thinker, right? Now I’m a parent, I have three kids. I do not want to . . . I mean, if things happen out of my control, then I can’t control it, right? And I’ll do the best I can. But for me when I have an opportunity to save, I do it.

And when I moved to New York, I came to New York with $300 in 1998 when I met Joe and Kyle and started there. And I started saving in ING Direct account right when it launched. And I took a little bit of my paycheck and started putting it away all the time. And I started building up a little nest egg. And I don’t think money solves your problems but it can definitely help you think clearly through problems. And I think it’s good to have a nest egg and it’s important. And I don’t want to raise my family the same way. I learned a lot from my dad. He’s my best friend and I talk to my dad every day, but my dad knows that I need to have some type of emergency fund there if things go bad so I can provide for them and make a hard situation a little bit easier.

Andrew: By the way, speaking of kids and teaching them, my kid has been wanting to sell something. He’s five years old. He’s wanting to sell something like lemonade or something. We finally went this weekend we sold sunscreen on the Embarcadero here. I was thinking one of the things I learned as I read about Stash is I could create a custodial account for him. Can I actually for a five-year-old create an account and allow him to sell I think it’s like as little as $5 worth of Apple or something else? Am I right?

Brandon: You’re right. And we have a lot of people who set up custodial accounts. For me, the coolest thing about custodial accounts is the stories we hear from Stash customers about the way they’re using the tool. So even for a five-year-old, as you’re out and about going to different stores and shopping, it’s kind of cool to point out that your child could be a shareholder where they’re spending and teaching these fundamental things is really, really powerful.

Because one of the reasons we started Stash and why Stash I think is doing as well as it’s doing is because financial education is part of the DNA of the company. We’re actually . . . I believe in STEM. So you can learn as you do. It’s important. This is how they teach kids now. Investing works the same way in my opinion. It’s one thing to read a boring ass investing book and not do it. It’s another thing to actually be an investor while you’re learning at the same time.

Andrew: So do you think five-year-old is too early to teach them to get them to buy fear of Apple after they go to the Apple store and get to play around with the iPads?

Brandon: I guess it depends on the child. I have three. One of my daughter, at five it wasn’t too young. She like tries to sell lemonade and get 20 a glass when she sells it. My son wants to play with toys so he doesn’t care. So each kid is different. But remember, at the end of the day, every time you put $5 away, it’s their money. So, yes, there’s an education element to it, it’s also you’re saving for the future because it’s their money when they hit legal majority age.

Andrew: So at what point did your wife say to you you’re not good at sitting around?

Brandon: Every day.

Andrew: Is this after EdgeTrade where it was acquired, you were there for six years, at some point the company changed and you said, “You know what? I’m taking off.”

Brandon: Yeah, it was time to go. And I left as friends and I still speak to all my old employees over there and all my old friends that are still there. So EdgeTrade is still going strong, which is cool. I was home, we had our first kid and my wife looked at me, she’s like, “All right, you’re just here all the time. You got to figure it out.” And I started feeling the urge to do something. But the problem is, I didn’t know what to do. But I still loved my old business, which was electronic trading. And a big global bank named McQuarrie reached out to me to come . . . they offered me the opportunity to come build a new brand new type of electronic trading business inside of the bank globally. And I didn’t want to pass up on that. So I had like a bit more than six months off and then I went back and took another shot at it.

Andrew: They are an Australian company, am I right?

Brandon: Yeah, they’re based in Sydney, Australia. And they’re a much bigger company than I thought. Now they’re in pretty much every country in the world, and they have quite an amazing business. They own from a great trading business to . . . they used to own the airport in Sydney. I think they’re one of the top farmland owners around the world that . . . it’s a pretty incredible place when you get to know it.

Andrew: I had never heard of them but I’m looking them up right now on Wikipedia. And so you were there and then you realized, “You know what? I’m actually burned out on this. Yeah, I have the skill for electronic trading, I could help them but I’m a little burned out.” And so were you looking for another business? Or did this problem just keep coming back to you?

Brandon: No. This was one of those things that just was under my skin every single day. And the problem was is that, like any startup, right? You think about it, I knew there was a big problem. And as I started looking at this problem more and more, I realized this is a pervasive problem across every single element to people’s financial lives. But I didn’t know a solution yet. And so my co-founder, Eddie and I were thinking about a lot. This isn’t something that we could have did inside of a bank. We also didn’t know what we were doing. It wasn’t like I built Stash inside of a bank. I didn’t know what Stash would be. But what I did know is in order to do with this to solve this problem, I needed to be free to do it. And that’s the reason we both resigned to literally spend our time in the street nailing into what the problem is.

Andrew: Without knowing what it was going to be, you just knew, “There’s a problem here. People are going to Eddie. People coming to me. They’re asking me what to buy and sell. They don’t even know the basics of this. I think there’s something here. I’m going to quit my job. Eddie is going to quit his job. We’re going to just go figure it out.” That was what you were thinking.

Brandon: Yeah. “We’re going to do this. We’ll take risk and build a new type of startup.” And it wasn’t that crazy, though. I mean, I did get permission from my wife to do it. Little did she know I’d be home even less than I was before because I . . . if you think about all the problems that people have, right, what we knew, there is an access issue, there’s an education issue, accessibility issue. And people just have this general confusion over financial services. And when you ask people about investing, and I did this a lot in the early days, I just walk up to people in the street and say, “Hey, can I ask you a question? Do you invest? Do you save?”

Andrew: And literally, did you walk up to strangers and do this?

Brandon: Yeah, I like that. It’s fun.

Andrew: You’re fine doing that?

Brandon: Yeah. And in New York City, it’s the best place because people are cool and people will talk to you.

Andrew: They won’t just say, “Shut off. I’m on my way to work. I’m on my way home. Leave me alone?”

Brandon: No, because I think people find this interesting. And it’s a big question mark to people. So when you start talking about this, people will say, “No, I don’t invest and I don’t save. But boy, I really, really want to. Why are you asking?” And we’d start talking about it and ask more questions about the why. We’d hear, “I don’t understand the jargon,” or, “It’s really scary.” The big thing we’d always hear is, “I know I need to invest. I’ll do it later when I’m rich.”

Andrew: Yeah, that stuck out for me in my notes from your conversation with the producer. I get that. I totally get that.

Brandon: But what’s rich mean? We always say that and people go, “I don’t really know but I’ll do it later.”

Andrew: Right. There’s a sense that at some point I’ll have so much money that at that point, I’ll dedicate some portion of my life to thinking about it.

Brandon: Yeah, because the system, if you look at, and we looked at the industry really closely, the system is made of high minimums, at least it was before we came around. You couldn’t invest in . . .

Andrew: What is it by minimum? I never thought about that.

Brandon: It was for a long time. I don’t know what it is anymore. It was like . . .

Andrew: $1,000? Actually, I remember growing up, I couldn’t buy shares until I got to 100 shares that I could afford of some company. Is that what you mean?

Brandon: Well, yeah. I mean, it’s not as much shares anymore. It’s more dollar minimums. But a lot of cases big firms are like $1,000, $2,000. Okay, that’s great. Eighty percent of Americans live paycheck to paycheck, right?

Andrew: Right.

Brandon: How does that work? It doesn’t work. It doesn’t line up. And so the other problem is, is that if you have a minimum of $1,000 but there’s a lot of data that says over 50% of people in America can’t come up with $500 in a medical emergency, how the F are they going to afford one share of Amazon that’s like 1,700 bucks? They really, really want to be an Amazon shareholder because they spend all their money there. It doesn’t line up. And these are the problems that we started uncovering as we talked to people.

Andrew: All right, let me talk about like one of the problems that you didn’t end up with to get a sense of what the research was bringing up and then how you decided to go with this and then what that first version looked like. But first, I’ve got to tell you and everyone else listening to me that my sponsor is a company called ActiveCampaign. Brandon, I don’t know how into email marketing you are, but I love it when it’s done right. The problem is, most people don’t do it right. They fire off the same message to every single person on their list. And it’s because they don’t know how to customize it, how to break it up. And so what they might do is say, “Well, what if I ask people when they sign up, ‘Are you big in investing? Are you experienced? Or are you brand new?'” And then they start funneling email.

But do you know what? Most people don’t want to fill out those forms. They don’t want to tell you, but they do do things that indicate to you. So imagine Brandon on your site, if some people kept gravitating to the experience stuff, or the retirement articles, or some aspect of your site, and you said, “You know what? We’ve got a pixel on our site from ActiveCampaign. As soon as they join our email list, we’ll see what they’re doing on our site and then we can fire off messages based on that.” So if someone keeps looking at articles about how to get started, you just start sending the messages about how to get started. It’s really easy. If someone says, “How did you grow money? How do you get more experience?” And you start sending the messages based on that.

I’ll tell you and everyone listening to me that in the past that used to be really hard and really expensive. ActiveCampaign decided they were going to make it super simple. If you’re out there listening to me and you’ve never tried this, you’ve got to get into email marketing automation, all done beautifully simply in a way that you can actually use it, even the CEO, even the founder who’s busy will be able to use this and then pass it on even to a virtual assistant. All you have to do is go to activecampaign.com/mixergy. I’m talking so fast, Brandon, because I want to get back to your story. Activecampaign.com/mixergy will let you try it for free, will let you have your second month free if you decide to sign up.

They’ll also give you two free one-on-one sessions to strategize and plan and actually use all their features because their consultants will make sure that you understand it all. And if you’re with a different email marketing company, they will migrate you for free. They do way more than email. I know I’m only focusing on that because I want to get you guys started easily. But you can expand to text and everything else beyond activecampaign.com/mixergy. Longtime supporters and I really appreciate it.

I want to get an understanding of your process of how you thought about what business to get into. Was their business that you consider, Brandon, but did not go into? Was there a part of the space that you didn’t go into?

Brandon: Yeah. So the first idea for what this was going to be was completely different. It was on blog scraping. And so we were going to start doing like consensus analysis for what people are investing in and try to scrape as much data as we could from any available source and then display it back to customers in a way where they can understand what to buy or sell. But then we were like this is a bad idea because that’s not the audience we wanted to cater to.

And so what we discovered is, yeah, that probably for what our like outcome was or what we wanted, it wouldn’t have worked. It’s probably a good idea for someone else. I think a few people now do it. But we wanted to go after the biggest ham or the biggest audience size, which is the core American, excluding the wealthy. So America excluding the wealthy. And this is the 150 million people in the U.S. that are not investing, not saving, and just not living the financial life that they deserve to live.

Andrew: How did you know that there’d be money in servicing them? How do you analyze that?

Brandon: Well, number one, we’re looking at different businesses that like in Robinhood, that was out there offering free trading, they had launched before we started. We weren’t looking to be in a business like Robinhood. Like they’re in the trading business, we’re not in the trading business. So we just started talking to people about different pricing models and decided that wealth management should look like Netflix. You should pay a monthly subscription fee and get access to all the services that are included in it for a monthly fee.

And we started doing some modeling on a business like this and discovered that, “Yeah, you know what? It can work. We can build a good business that’s viable and generational that can raise venture capital and be subscription.” And we’re really happy we made that decision. We have subscriptions that are out there that people pay us monthly to get different services. And now fast forward till today, we’re also we offer banking to our customers and we generate . . .

Andrew: So the first product was subscription. You guys charge . . . people need $5 to start investing and it’s $1 a month for maintenance if the balance is under $5,000 and point 2.5% annual fee if it’s over $5,000. Am I right about that?

Brandon: Yeah. So that’s the pricing for old users. We just changed it for new users where we’re packaging up all the different services because we offer a lot more than just investing now. We offer tax efficient retirement accounts now, custodial accounts now and banking. So the plans now are $1, $3, and $9 a month based on the services that you want. And we got rid of the monthly the 25 basis point fees.

Andrew: So the most I would pay is $9 a month?

Brandon: Yes.

Andrew: Sweet. If I’m buying and selling $10,000 worth of stock with you guys, if I if I have $10,000 with you, I’m only paying $9?

Brandon: Yeah. You’d pay whatever plan you’re in. You could pay $1, $3, $9. We don’t charge trading commissions now.

Andrew: I didn’t realize that. All right, but the first product you said, “We’re going to go for subscription,” when you didn’t think you were going to make money from trading?

Brandon: No, that’s not our business. It’s just not what we wanted. If that was what we wanted, we would have been in a much different path.

Andrew: So then what was in that very first product? What were you offering people to be able to do?

Brandon: Still there now. So you can come in, open up the investment account with us under two minutes. That was a lot of work. And you can invest in things you believe in, things you like, or things you care about. And so we kind of looked at investing and looked at the universe of different investments. We said, “Let’s create investments that we want. And we want and we think are right for our customers in the different categories.” It wasn’t to build an active trading platform. It’s to build a long-term trading platform. So if you believe in . . . if you’re in the military and you want to invest in defense companies that you deal with every day, you can invest in defending America.

Andrew: By the way, that’s something that’s interesting. That has existed before but it had complicated names that didn’t make sense to people, right?

Brandon: Yes. Very much so.

Andrew: And what you said was, “We’re going to let you sell the stuff that exists but we’re going to give it a name that’s a little bit easier for people to understand.”

Brandon: Yeah, that’s right.

Andrew: Like here, look at this. One of the articles that I saw highlighted that you guys have, for example, SPDR S&P Biotech ETF. You guys called it Modern Meds. The Vanguard Small Cap ETF is called Small but Mighty. That’s what you decided we’re going to do. You’re going to take these groups of stocks that are already existing and let people buy a smaller amount that they might otherwise, am I right about this?

Brandon: That’s exactly right.

Andrew: And give it a clearer name.

Brandon: And it’s fueled by education and the desire to allow people to understand it. Because now take what you just said, Andrew, let’s play a role play. We’re at a bar and we’re two friends. And I’m like, “Dude, I just started investing. I bought the name this phone company, fun company, core tactical allocation class B shares. You should check it out.” You’re going to look at me and go, “What are you talking about?”

Andrew: That happens with my wife. She tells me that she needs to put some money away because of her work. And I give her the thing that I’ve got, like it might be some Vanguard BOO tool. “What’s Vanguard BOO. It’s not available for me.” It’s pain to even describe it.

Brandon: Because people don’t really, unfortunately, especially for younger generations, they’re not getting financial education at home anymore. They’re not getting it in school anymore. So the expectation that the bulk of people are going to understand tickers, that’s insane to me and it doesn’t work. But if you get someone to invest in this core principle, everything else gets even more fun because then you could help them with diversification.

Andrew: Collection of stocks, better name, lower buy in price, but it was also individual stocks too at the beginning. I think you guys have about 150 stocks that are available, like Amazon, Apple, Facebook that people can buy?

Brandon: Yeah, not in the beginning. That’s a newer thing. We put that in last year. Yeah.

Andrew: Got it. So in the beginning, it was just these collections of stocks, clearer names, lower price, and you told our producer, “Look, we didn’t start off with an app,” you started off with something that felt like an app. What was that?

Brandon: So when we were testing, like any startup, when you have an idea, at least everyone follows their own principle. My principle and Eddie’s principle was we’re not writing a line of code, until we at least go through the philosophies of lean startup. Let’s make sure that we show prototype to users, get feedback on it and iterate before we go to code. So we did that a lot. We built a prototype of the what we thought it was going to look like. I can tell you that what we actually went to market with and in V1 of the prototype looked completely different from each other. And I think if we launched the initial prototype it would’ve failed.

Andrew: What was the difference between the initial prototype and the finished product based on the feedback that you got?

Brandon: Well, there’s a bunch of things that were different, but one is more of the aspirational effect that we use in the product. And we took our cues, actually, to nail V1, believe it or not from Weight Watchers, or the concepts of weight loss or the industry of weight loss. So what we said is, “Okay, I can get someone to put $5,” but if you do $5 once and that’s it, that’s not a business, that’s not Stash’s in business, it’s a hobby. And so how do you actually really bring change to someone’s life, help them get ahead of everyone else? You create a positive habit.

And so, weight loss, you know, if I come to you and say, “I need to lose 30 pounds,” you’re going to help me lose one pound at a time. Maybe you’ll say, “Lose two pounds and come back, and we’re going to celebrate you and you’re going to feel great about yourself.” Great. It works the same way with investing, “We’re going to help you save $5 and then we’re going to celebrate you. And then we’re going to help you save to $50 and to $100 and reach those core milestones.”

And so the version that we ultimately went out to the market with had a lot of focus on milestones and helping people reach those goals in little bite-sized pieces. So each goal is achievable. By the way, I’m on a rant, but this is one of the things I absolutely hate. There’s all these calculators out there. And you go and you’re like, “All right, I need to save $100,000. Here’s my income. Here’s how much I have saved,” and it spits out like, “Great. You can save $100,000 in 5 years if you put away $18,000 a month.” I’m making up the numbers.

Andrew: Yeah.

Brandon: So for most people are like, “Oh, my God, I can’t do that.” And these tools that are supposed to help you are so defeatist because all of a sudden, you’re like, “I’m never going to hit this dream of mine. I can’t do it.” And I hate that because I think that everyone, with a little bit of discipline, a little bit of fun, and a good habit could ultimately reach dreams they have as long as the dreams are realistic.

Andrew: Is this Auto-Stash, is that what we’re talking about?

Brandon: Auto-Stash.

Andrew: Auto-Stash is automatically taking money and putting it and investing it for people?

Brandon: That along with the milestones, yeah. It’s very powerful.

Andrew: And so the Auto-Stash, where were you getting the money from? Their bank account?

Brandon: From their bank account, yeah.

Andrew: So they’d connect their bank account and then you start taking a little bit of money on a regular basis.

Brandon: That’s right. That’s right.

Andrew: Oh, I didn’t realize that’s how it came about. Okay, I got it. And then they would even see this chart. I’m looking at early versions of your site and early versions of the app, and they could see their chart and their balance grow. By the way, I love that one of the screenshot shows what this person is holding. They’re holding Internet Titans, which is I guess it’s a mutual fund that you renamed Internet Titans. Another one, Do The Right Thing, which is a collection of companies that are good for the environment in the world. And then there’s Slow & Steady. I love the names on these things. How did you even get the design of this right? I don’t see anything in your background that says, “This is a designer who really has empathy for end user.” How did you get to develop that?

Brandon: The one thing that we’ve done I think really well since day one is we’ve surrounded ourselves with incredible people, incredibly talented people. And it just makes a world of difference. I mean, I’m not a consumer. I love to talk about that. I do not come from the world the consumer . . . my co-founder, Ed, was at Macquarie for 11 years. He also doesn’t come from consumer. But the thing that we share is a constant drive to help the consumer, to help our customer. And when we scream that from the rooftops, we have attracted over 200 employees at Stash now who are incredibly talented who agree with us and want to be on this journey with us. So, yeah, the people that work here incredible, especially on the design and product side, really just constantly honing in these designs and the look and feel of the app to be super consumer friendly.

Andrew: So then you ended up going to social media. And is that where you got your first signups?

Brandon: No. So back before launched, we did a waiting list site. So we put it out that people jumped the waiting list and they could get online. And we had a lot of people sign up on the waiting list. It was like just tens of thousands of people and we’re like, “Wow, this is awesome. This is going to be super successful.” We are going crazy over it. And then October 14th of 2015, we put it out on the App Store. I remember being so nervous that I ran into the other room and threw up because I couldn’t . . .

Andrew: Wow, literally?

Brandon: Yeah, because you put your heart and soul into these products. So you get them out in the market, you never really know and launched it. We had like a few 1,000 signups over the first couple of days, which was great. So people really . . . it’s the super early majority early adopters that will sign up for anything and try out new tech. And then it very quickly went from a few 1,000 people a day to like literally less than 100. So like, all right, that’s cool, though, because no one knew who Stash was and we weren’t doing any advertising. And then we started the process of doing some really smart advertising to start honing in our own message.

Andrew: By the way, the message was good from the beginning. The very first item that I can see here in front of me is it says, “Launching next month sign up for early access.” And, by the way, from what I understood, if I entered my email address back then, this is August 2015 I think that I’m looking at, after I signed up, you’d say, “Andrew, do you want to get to the front of the line? Share this with your friends.” And if I did, then I got to the front of the line. Look what it says on top, “Got five bucks, now you can invest. Introducing Stash an easy way to invest, start with as little as $5 and we will guide you.” Even that freaking thing is great. How did you get to that?

Brandon: Because that’s what it is. It’s just simple, right? I mean, that’s what we were doing. The whole point was drop to $5, let everybody invest. And it goes back to that point I made before that I learned in the street. People would say to us, “I need to be rich to start.” Once we kept hearing that over and over again, Eddie and I were like, “All right, well, there’s something that is a no-brainer. We have to get rid of this minimum.” So we worked really hard to build a fractional investing platform so that we could buy fractional shares of stock so that we could actually go back to people and say, “Well, you don’t need to be rich. Do you have five bucks?” And everyone say, “Yeah, I have five bucks.” “Great, then you can start investing. You can try it out . . . ”

Andrew: Oh, this was you testing it on people saying, “If you have five bucks, you can start investing?”

Brandon: Yeah. And we heard over-resounding, “Well, I would do that. Sure.” But if you get a little bit of a, “Well, how do you do that? Can you really do that? Is this a scam?” Things like that.

Andrew: By the way, I wasn’t sure how open you would be today. So one of the things that I grabbed a screenshot to talk to you was the first thing that I saw when I went to Google and search for Stash invest is a question, “Is Stash legitimate?” And that comes up a lot.

Brandon: Yeah.

Andrew: But to me, it doesn’t seem like that hard of a thing. Maybe I’m oversimplifying it in my head when I think fractional shares, what you’re probably doing is you’re buying a lot of shares, you’re selling people a piece of this collection of shares, right? Or is it like a . . . I don’t know what it’s called where you’re shadowing this . . . How do you do it?

Brandon: No, no, we don’t shadow. No. So it’s actually done in a way where we have a custodian, it’s Apex Clearing. Each customer when they open an account here gets an account open in his or her name. And the stock that they buy, the fractions, actually goes into your brokerage account.

Andrew: A literal share . . . you can actually buy shares of stock?

Brandon: You can own fractions of stock. Just like if you get a dividend payment and it comes in fractions like you’ll get point 0.001 shares of stock, that stock is yours, Andrew.

Andrew: I didn’t realize that was possible.

Brandon: It’s your stock. It’s in your name. Yu get proxy statements delivered to you.

Andrew: This is Green Dot bank that you guys work with?

Brandon: No, that’s on the banking side. This is Apex Clearing firm. And we did a huge amount of work to make all this work. But Apex is a good partner and they’ve helped us a lot. And we’ve been with them since the start now. It’s been on four years now. But for our customers, they ultimately own the stock. And it’s great. I mean, you can [Acap 00:35:33] the stock out and go to a different brokerage firm if you wanted to. Very few people do that but you could. And it’s your stock, yeah. But the point of it all was to get to fractions so that we can drop the minimum. That was the most important thing. And, you know, over time, our brand just gotten stronger and better. I think that a proof to that is that the majority of our customers come through word of mouth now, friends telling friends.

Andrew: That made me a little nervous when I read that that’s where you get your customers because you can’t really pump that up. You can’t buy more of that. Let me talk about my second sponsor and then we’ll get into how you did marketing and how you figured out what else to add. Second sponsor actually, Brandon, is a company you might want to get to know. I did see right on the beginning on your website was two things. First, enter to get on the waiting list. And second, a really big join our team Stash is hiring. Clearly, hiring is really important for companies like yours.

I want you to know about Toptal because what they do is they assembled a team of developers and UX designers and they said any company that needs to hire just talked to one of their matchers. You Brandon will call him up and say, “Here’s how we operate, here’s how we work, here’s what we’re looking for.” And they’ll go to their network.

They’ll find the right people for you. They will introduce you to them so you can get on a screen share or video conference software like Zoom, like what I’m using right now. Talk to them. And if you’re ready to hire, you can often get started with them within days. They’re so good. Andreessen Horowitz invested in them. And many of the top companies, including Airbnb have hired from.

If you or anyone else wants to hire from them, you should . . . it’s kind of weird I’m doing an ad with you here. But you’re the money guy, you should know. This is how business works. If you or anyone out there wants to hire, you should go to toptal.com/mixergy. When you do, you’re going to get 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no risk trial period. Here it is. It’s top as top of the mountain. tal as in talent toptal.com/mixergy.

When things started go quiet, what did you that worked or didn’t work to try to drum up more users?

Brandon: Well, the first thing we did is fall back on old trusty UX research. So, you know, when you start a company like this, you have to take your time. It’s important. So really starting to understand how our customers felt about the product. Did they like it? Did they not like it? What didn’t they like? How can we do better? And then it starts this vicious process, which we’re still doing, you know, years in, which is starting to really partner with our clients to understand how they’re using the product. And that took time to work through that. And we had to start iterating the product. And we did a bunch of iterations early on.

Andrew: What are some of the changes? Because I’m looking at your site and I’m not spotting the big differences in it. And there’s some things that stand out for me and I could bring them up in a moment. But what should I be noticing year to year from 2015 to 2016? Which is what I have on my screen. What are the big changes?

Brandon: It’s more nuanced. I wouldn’t be on the site. It’s is in the actual product, right? It’s . . .

Andrew: Yeah, I’m looking through the screenshots to try to read what the difference is but I can understand that wouldn’t really do it.

Brandon: Little nuances like the way we show data, the path of the experience as you’re using it. The way we present different topics in the app. The way that learn content or education content is displayed. Lots of nuance things that we do. And too many. I’d bore you and everyone on here if I went through them all but it’s basically learning. Learning about our clients and iterating. And that’s really important because the one thing that I got an early lesson on and consumer is, you have to check your ego at the door. And even if you love your product, don’t fall in love with your own product. You have to listen. And that’s something that I took very seriously and so did Eddie and we started rapid iterations of it.

And when we started seeing that the reaction we get to some of the updates were really positive, then we started spending on marketing. And so we spent some money on Facebook ads. At the same time, we raised our series seed round from a firm called Goodwater Capital. I think we raised like 3 million bucks to start. And we then started working really hard on marketing. We got very lucky though because we had a CMO named Dale who was with us before we launched. So she’s amazing and she’s like a co-founder to Eddie and I. And she’s always been laser focused on the customer and on the acquisition side and the brand side of how do we build brands in the market that people can understand and love? And also, how do we go out and acquire customers at a super low cost so we can be a business and make this revenue model work?

Andrew: I feel like with such little start and such a little monthly fee, it’s hard to earn back your money from customers? Was the money just the subscription money? Was that your profit?

Brandon: Well, I mean, a business like this also, you have to think about what you’re trying to do when you start. Our goal wasn’t to get 1,000 customers and charge them a lot of money, it was to build a scaling business that had millions and millions of clients. So our goal from the start is to get to 25 million customers. That’s been our goal since day one. It’s still a goal of ours. And so we are taking a view of building a real business here. So you can’t come out the gate and go, “All right, how am I going to get as much money out of my clients today as I can?”

Because the problem is, is that most people don’t have any money. Which is exactly why a business like Stash needs to look like Netflix and be subscription, not AUM-based, which is why we got rid of AUM charge. Because that’s how you build. And so scaling up a business is about like this is about taking a long view. And we went into this with the long view. We did very strong financials. We had a good idea of where we think we could get to with the plan that we had. And I have to tell you, I’m really happy it’s working and it’s working really well.

Andrew: So the thing that stood out for me as I moved from the first year to the next was a lot of logos from new sources that covered you. Yahoo Finance, CNN Money, Fox, AP, BuzzFeed. I feel like was that intentional part of your strategy to let people know, “We are trusted. These people have written about us”?

Brandon: Of course, I want people to know that we’re not a fly by night company and that we’re really proud of all that coverage. I can’t go out and pay for coverage and use it because I’m a registered investment advisor. I’m not allowed to do that. So earned media is awesome. And we are proud of it to share with our customers. And I think a lot of our customers early on were like, “Boy, I really want to do this but are you legit? Are you FDIC insured? Is there [SIPC 00:42:18] protection from the custodian?” All these questions would come up. But that took time. And so if you follow the path of our journey, now we’re becoming . . . and we’re not even there yet. We’re like probably 20% there. We’re becoming a household name in America. We’re on our way but we have a long way to go. Takes time.

Andrew: How did you know what else to add? So we talked about the first set of features. How did you know, “All right, it’s time for us to let people buy individual shares. It’s time for us to add . . . ” I forget what that service is called where when someone buys . . . don’t you have a service where if I buy from Apple, you can then let me either round up or even buy some Apple share? Am I misunderstanding this or miss-remembering?

Brandon: Yeah, there’s a path, right, that’s called Stock-Back on the banking side.

Andrew: There it is, Stock-Back. It’s a diversified ETF for when customers buy a coffee at Dunkin or pay for their T-Mobile bills or shop at amazon or Walmart, they earn a piece of each company’s publicly-traded stock. How did you come up with this stuff? I love that.

Brandon: That one came up from a bunch of red wine.

Andrew: Really?

Brandon: From all of us hanging out one night and we’re like, “How do we connect banking and investing together?” And we did it through Stock-Back, right? Because we’re jumping ahead a little bit to banking, but we rolled out a few months back banking services where you can get your paycheck two days early, stop paying overdraft fees, and bank with Stash. We’re not a bank. We have a banking partner. But you can also become a shareholder every time you spend.

That really connects the two together because people come to Stash to live a better financial life. But investing in a portfolio that reflects who you are is really powerful. Not everyone invests the same way. There’s so many unique portfolios on the platform right now. So the sheer fact of like going to Chipotle and getting your lunch and getting stock when you pull your card out of the reader is really cool. I mean, it’s wild. You can go on the stashbanking.com. It’s actually a counter of how many rewards we’ve paid out. I think it’s like 1.8 million now. I’m going to look myself. I haven’t looked for . . .

Andrew: I’m onto it right now. How did you know how to get into banking?

Brandon: That was a natural one for us. So everything that we’ve done so far has all been about what our customers need.

Andrew: Why not stay focused on it? Like think about Charles Schwab, they didn’t get into . . . are they even in banking right now? I guess they are.

Brandon: They are. Yeah, they’re in banking.

Andrew: But that was a long time coming. How did you know we . . . why didn’t you say, “We’re going to solve this investing thing. Let banking be done by other banks. We’re going to focus on getting people to invest more.” Why add that?

Brandon: Well, there’s a bunch of reasons. One, it was in our original plan to be a platform. But I think what really, really drove us to do it is listening to all the problems that our clients are having and looking at how much money they’re wasting in fees. And when I say wasting, just an overdraft fees in the U.S. to the top income in banks. It’s like $18 billion a year charged for overdraft fees. But if you started looking at our customers a little closer and said, “I wonder if our customers are paying the same?” It turns out the average Stash customer pays $360 a year in banking fees. But what’s worse than that is 30% of our customers pay $70 a month in fees.

Andrew: Really?

Brandon: Yes.

Andrew: What type of fees could there be? I guess it’s overdraft.

Brandon: Overdraft, monthly maintenance fees. It just it’s fee on fee, on fee, on fee. But what happens if you take those fees they’re paying and move it to their retirement account? What happens? Right? And you compound it for 40 years. It’s a big deal. And so Stash needed to become more of the financial home for our customers. And banking is a natural progression for the company. And I have to say, we’ve opened over 200,000 bank accounts in just a few months. So our customers, we didn’t do it because, again, ego is the thing that kills startups. We listen to our customers and ask them and a lot of them were like, “Build a bank or build banking services that help me live my life for a better life.”

And all this stuff comes down to aspirations, right? How people want to live. Everyone wants the same things. Ask billionaires and people who are working at Walmart the same question, they’re going to give you same answer. “What worries you about money? What do you want for your future money related?” Everyone says the same stuff. “I want to retire well. I want to go on vacation with my family. I want to make sure I can pay my bills.” It doesn’t matter if you’re rich or poor. But the problem is, is that rich people have tons of options and tools to help them. What about the 80% of America? They don’t.

Andrew: What about this though? I’m looking at a CNBC article from two years ago and I think it’s more true today than it was back then. They’re saying that for some large regional banks, fees are close to 40% of their income. Aren’t they charging fees because you can’t make money on people who don’t have much money? And so they need those fees.

Brandon: It depends what kind of business you’re running, right? If you’re using a business that’s led by technology that’s innovative, that’s built with a blueprint that’s from 2018, you can make a great business because the average consumer pays thousands of dollars a year in different fees to services. And you can not only lower the cost of those services, but you can build a great business at the same time. So you don’t have to sell the customer out to build a great business. If you use technology and a new way of looking at the business.

Andrew: Where are you saving money? We’re all thinking about like the teller. But the teller is not that huge of a cost. I mean, it’s big but that’s not where you’re saving money. Where else are you saving money because you’ve gone to tech?

Brandon: Well, you don’t need to have a massive back office with 10,000 people in it, whatever. You can do things through tech. You can not even have overdraft fees as part of your revenue model. So you don’t get addicted to the drug, right, the drug of all those fees. You can leverage technology to do customer service better so you don’t have to build a massive call center. You can even give some of the revenue you make back to the customer, which is what we did. We actually share some of the interest revenue we make back with our clients. We share a stock loan revenue back with our clients.

Andrew: What’s stock loan revenue? Oh, because you’re . . . sorry, go ahead.

Brandon: Some of that we lend the stock out to the street. That pays revenue to Stash. We give some of that back to our clients. Stock-Back is being funded by us by Stash because interchange revenue comes from the merchant. We take a little piece of that we give it back to the client. So you could actually make them even more extreme argument that you can actually have a customer benefit from using financial services cheaper than they would have before.

Andrew: Oh, you’re saying that, right, if I use your ATM . . . do you guys have a credit card yet?

Brandon: No credit card just using . . .

Andrew: Right. So if I use your ATM card, I go to the store, the store has to pay a fee for processing that card. Some of that comes back to you. You’re saying we use that to help buy the stock?

Brandon: That’s right, we do. And we still do great in banking and our customer does great with banking. And it’s the lines. And that’s the way we think financial services should be. The customer and the firm should be aligned, very aligned. And the firm should be giving the customer what they need when they need it, not beating them over the head all the time to do everything with that. Everyone has a different need and a different set of things they want. And I think it’s important to listen to them and give them what they need.

Andrew: Here are the different fees. Deposit fees, transaction fees, insufficient fund fees, annual fees, inactive fees, checking account fees, mortgage fees, credit card fees, fees for deposit slips. The list just keeps going on and on.

Brandon: Fees on fees on fees.

Andrew: Stash-Back is what it’s called, am I right? Or Stock-Back?

Brandon: Stock-Back.

Andrew: Stock-Back. And that is a two point . . . well, $2,038,792 have been . . . is that the number of stock purchased? Or is that the amount of dollars? No, it’s number of stocks purchased.

Brandon: That’s the number of rewards we’ve given out. It’s crazy. And if you watch, it just keeps going up faster. By the way, I didn’t even know it clicked over to 2 million. So I’m finding out with you.

Andrew: Yeah, it just must have done it recently.

Brandon: It’s really cool.

Andrew: So, wait, if I buy $1,000 on Amazon, how much are you getting . . . how many shares do I get or what percentage of a stock do I get?

Brandon: If you have direct deposit on with Stash banking, you get a quarter of a percent back in stock. You don’t. I think it’s a 12.5 basis points, 0.125%.

Andrew: Okay. I had no idea you could even do fractions of shares.

Brandon: Yeah.

Andrew: What are some of the limitations that you have because you’re in a regulated industry? I imagine you can’t like pay off influencers to do YouTube videos for you. Can you?

Brandon: I cannot pay off influencers to YouTube videos for us. No.

Andrew: The only way I find out about cameras like this one, it’s just influencers showing it to me on YouTube until I have to buy it. What else can’t you do?

Brandon: I can’t do testimonials. So I can’t have my customers speak on our behalf on our website like . . .

Andrew: Oh, wow, I didn’t know.

Brandon: Blah, blah, blah, I’m not allowed to do that. And I understand why. Because you basically could influence people to leave the good reviews but what about people that have a bad experience? So how are they telling their story? So it creates a need to be very balanced in everything. But for us, we’re very comfortable following the rules because we believe in a very simple philosophy, which is build a really good product and stay very focused on the customers’ pain and solving it. And you can grow and scale very quickly. And that’s what’s happening here. We open thousands and thousands of new accounts every day. A lot of them is because Stash has become dinner table discussion now.

Investing is something that friends are talking to friends about. I can promise you that that was not what was happening before. Because people are gaining that confidence and that sense of pride that they’re not only investing, but they’re investing while they’re banking. And they’re able to talk about it now and because they’re learning about it. That to me, as a co-founder feels really, really good and really empowering for not only the company, but for our customers.

Andrew: Let me close it out with this. I want to know like what’s the thing now as a leader in this company that you teach your people on an ongoing basis? What’s the one message you have to keep getting out and teaching them?

Brandon: Stay focused.

Andrew: Stay focused.

Brandon: Right now we’re hyper focused on a few things. And one of the things that I’ve learned over my career, especially now in consumer, it’s really, really easy to do a lot of things. It’s really, really hard to keep things simple for the customer. And that’s hard. You got to practice that. And so that’s something that we as a company are doing and as we get more focused, we do better and better. So it’s really cool.

Andrew: All right, I’ve learned I can get my son. I know the one that’s going to really want this. Get him set up with a custodial account. I’m guessing we’ll probably have to pay a buck a month for him. Let me see. A buck, personal investment account, tax benefits. He’s not going to need to care about that. Investing . . . oh, for a $1 I could get investing accounts for two kids. For just . . . oh, no, that’s a $9 plan.

Brandon: Yeah, that’s $9, yeah.

Andrew: That’s a $9 plan and then I get them set up with two different investing accounts. All right. For anyone who wants to go check it out, its stashinvest.com. That’s the best site to send them to or just the app stores?

Brandon: Stashinvest.com. You can sign up there and check it out. And if anyone has feedback for me, my co-founder and I have an email team@stashinvest.com. Go shoot me a note with your feedback. I would love to hear it.

Andrew: Do you still talk to customers on a regular basis? I know that was a big part of my notes from our producers’ conversation.

Brandon: I do I do. I haven’t had time today but tomorrow I’ll do some. But I think it’s really important to always talk to our customers. If we stop doing that, we’re going to lose touch. And that’s not a good thing. So we will always call customers. And it’s also the my favorite part of my day. I love it.

Andrew: Well, thanks for talking to me. Thanks for being on here. I’ve been watching this company. Like I said, I just keep reading articles about Stash. I’m glad to have you on here. For anyone who wants to go check it out, check out the website, let me know what you guys think of it. And I want to thank my two sponsors who made this interview happen. The first will host . . . well, the first will help you hire phenomenal developers. It’s called the Toptal. Check them out at toptal.com/mixergy. And the second if you’re doing email marketing, you got to check out activecampaign.com/mixergy. Brandon, thanks so much.

Brandon: Thanks a lot.

Andrew: Bye, everyone.

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