‘Ever since I dreamed up Greenlight, investing was always part of it’: Tim Sheehan on the launch of Greenlight Max

New entrants continue to launch into teen banking. Greenlight is an early entrant into the space, focusing on the financial interactions parents have with their kids. Greenlight has now extended its offering into investing.

Greenlight Max is a fractional brokerage integrated into the app that allows kids, along with their parents, to make investments in stocks and ETFs. CEO Tim Sheehan joins me on the podcast to discuss the new product and the type of feedback Greenlight is getting from its 2 million users.

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The following excerpts were edited for clarity.

The evolution of family banking

There are a lot of point solutions out there, like an allowance app or chores app. You can get a debit card or savings account or an investing account. What I think is special about Greenlight is it has all of the things integrated into a simple, easy to use app that allows for interactivity between the parent and the kids. I think that’s what makes it compelling — it simplifies a lot of complexity. It’s very easy to use and convenient.

Parents learn, as well

I learn some things when our product managers or our team comes up with something and presents it out. I find myself learning things. So I imagine, there are definitely cases where parents will pick up a nugget of information here or there. And, yeah, I like that that happens. I think it’s good, because being smart about finance is not magic — it’s just information and experience. The more that we can spread that knowledge, the better.

KPIs

We’re focused on making sure our customers love the product, that we’re taking great care of them, that they’re using it a lot. We’ll focus on lots of different usage metrics. We’ll focus on growth: we grew about 300 percent in revenue and customers year over year. Another key metric, obviously, would be gross margins.

We have 2.7 million parents and kids using the product now and fast approaching 3 million. One of the best things is that parents are telling other parents about Greenlight, and the kids are, too. That’s a really good sign that you’re doing something right. Parents can be the toughest judges because they’re constantly getting requests from their kids. They’re constantly being peppered with questions like, can I have this? Can I have that? Kind of constantly being asked for things. So, when a parent recommends something to another parent, it tends to be quite meaningful.

Partnerships

We collaborated with Chase. Chase launched Chase First Banking, where they incorporated a lot of Greenlight’s functionality into the Chase Mobile Banking App. I think they did a fantastic job. It’s a great product. It really enhanced and added a lot to the Chase mobile banking experience. So we’re pretty excited about that.

You might see more partnerships from us. We’re talking to various potential partners to see what might be possible. I think you’ll see Greenlight partnering with a few other companies where it makes sense, in addition to our direct to consumer business,

New investment product

We launched a first: an educational investing service for kids. What’s special about it is it’s a real brokerage account, and the kids can do the research into stocks or ETFs. And then they can propose the investment to their parent, and the parents can approve or decline it, and if they approve it, then the investment will go through. It can be a fractional share purchase, so if they want to buy $20 of Apple, for example, the parent approves it and it will go through.

It has lots of trusted, respected sources in there, like Morningstar premium content, but it also has some fun, easy to understand videos in there that help the kids understand the basics of investing. We were super proud with the reception it’s receiving — the kind of adoption from consumers has been really way higher than we expected.

The Wall Street Journal just published an article discussing our investing product over the weekend. There’s a lot of stuff happening in the markets today with GameStop and such. We love that we stand in contrast to gambling. We’re all about teaching people real investing, how to actually do it the right way, where you understand risks and you understand how to analyze a company or an ETF to determine if this company is going to do really well in the future. And if I were to buy a share today of this stock or ETF, is it a fair price right now? Or is it massively overvalued? Things like that.

I’m so happy that this product is in the market because ever since I was dreaming up Greenlight, investing was always part of that picture.

Interest in investing

We did some some research that 89% of parents feel that it’s important that their kids grow up with good financial habits, including investing. There is some some other stuff out there about kids: 87% of teens are interested in investing. So, there’s strong interest from parents and kids.

I don’t think families were investing. The majority of kids were interested in it, but not yet doing it. Now there’s a good choice. I’m not sure there really was a good choice for a parent to bring their child on to an investing service and have them learn in a safe way, where the guardrails are in place for them not to learn the wrong habits.

Workflows

Parents want their kids to be independent, right? And be able to go do the research, figure out what they think they should invest in, but then have them circle back to the parent and say, hey, here are the investments I think we should make. And then have them tell you why. That’s really the critical piece: to have them tell you why they think that they should buy Nike or Apple or the VTV ETF or whatever it may be.

Kids will always surprise you and they are really taking to the service and using the research aspects of it. I’d love to see that they’re not just hearing about something and then proposing to invest in that. They’re actually doing the research and making smart proposals to their parents. There’s that workflow built in where the kids do the research, they propose the investment to the parent, and the parent gets a push alert on their phone. They tap on it, see what the kid is proposing, and then they can approve it or decline it. And if they approve it, it goes through.

Integrating banking and investment services

Greenlight Max is all integrated into the consumer app — it’s just one app. And it has chores, tracking allowances, and spend controls with debit card functionality built into the savings account. And now the investing account. It’s all integrated. It sounds like a lot, but it is a lot. The way that we’ve designed it and done usability testing, we’ve optimized it for simplicity, so that it’s very easy to be a first time user and to start using it. But then there’s lots of power and functionality that you discover over time.

Marketing Greenlight

Referrals are a big help. And then, of course, digital marketing is a big focus, as well, reaching out to parents across all the digital channels. You might even see some TV and some video ads and streaming services and things like that.

All our marketing is toward parents. That’s because we believe the parent is the decision maker. You want to build the product in a way where, first, the parent loves it. And then hopefully, second, the child loves it, as well. So it is a difficult balance to get right. But we we think it’s important to speak to the parent first and explain what your service is and how it can help their kids. That’s the approach we’ve chosen.