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StashInvest’s Brandon Krieg: ‘Bigger companies crave innovation but it’s much harder for them to move fast’

StashInvest is a quickly growing popular consumer app helping individuals get serious about saving and investing again. But working directly with consumers — impacting their lives through investing — is a new transition for the firm’s co-founder and CEO, Brandon Krieg. Krieg began his financial career in algorithmic trading, aiming to disrupt the way institutions traded equities and when you hear him talk about Stash’s customers, the excitement is palpable.

On StashInvest’s path to a million accounts, Krieg has had to scale everything, especially customer service. On this week’s podcast, Brieg discussed that, his approach to product development and how his team determines what products and functionality to launch.

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What has your experience been leaving the large financial world to build something?
“What I realized with larger financial companies is that they do crave and value innovation, but it’s much harder for them to move fast. Especially at the bigger bank I worked at next in my career, it was a great place to work at but there were 15,000 people there.

I love the transition to consumers. It’s my favorite thing I’ve done yet in my career. We’re able to directly impact the lives of our customers. Our customers have a problem that we’re able to solve. By doing it in the form of a nimble startup, we can move much faster.”

Did you have any challenges transitioning to customer service requirements of retail investors?
“My co-founder Eddie [Robinson] and I both left Macquarie in the beginning of 2015. We launched Stash in the beginning of October that same year. We felt really good about the product we were shipping to the market because we spent a lot of time listening to customers. We didn’t build this in a vacuum and create a product that nobody wanted. However, when we launched, we weren’t able to form the view of how many customers we’d actually sign up.

It’s been less than two years now and we’re coming up on 1 million accounts. So, we’ve had to scale a lot faster than we originally thought. Our goal here is to keep our customers happy. Our customers are our heroes. We see ourselves just as a guide. So, we really had to scale customer service (brokerage, engineering, and compliance, too).”

Why don’t people invest today?
“Around 86 percent of our customers are first time investors. Our customers look like America — everyone you interact with everyday. They’re teachers, in the military, and Uber drivers. Financial education is a big problem. People aren’t learning this stuff at school or at home. The financial services industry only caters to the rich.

Our customers really face the issue of financial opportunity. It’s not scary and you can understand investing if you have companies building products that relate to you. We’ve dropped the barrier to entry to $5 and we’ve made it relatable because we’ve curated the investments, so you’re not overwhelmed by choices. Lastly, we help our customers on a long term journey of investing for life with our educational tools.”

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American Family Ventures’ Dan Reed: ‘Investing in financial technology answers questions that haven’t been asked yet’

On the Tearsheet podcast, we’ve tried to interview some of the smartest corporate investors at some of the largest firms in the financial industry, trying to understand their process, their investment strategies, and how their firms use investing as part of their innovation programs.

This week’s guest on the podcast is Dan Reed, managing director of American Family Ventures. As a corporate investor at insurer American Family, he’s looking for early stage technology firms that can help the firm modernize its distribution while remaining true to the legacy of the agents who helped build his business. We also discuss how his career path, through strategy and business development roles, informs his investing practice at a 90 year old insurance company.

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Below are highlights, edited for clarity, from the episode.

Gravitating to the insurance industry
“After about five years at the Boston Consulting Group, I moved back to Wisconsin. I signed up with American Family Insurance. The same things kept coming up: the notion of how do we modernize our distribution while remaining true to the legacy of our agents who built this business, how do we derive new insights from large data sets, and how do we work with our policyholders to engineer the risks we cover in a more proactive way.”

Working with tech firms
“I like the optimism of these companies. They’re just cool and excited and enthusiastic to work with a large company like ours to help create the future. When I think of the strategic imperatives we have as an enterprise, as a 90 year old insurance company, marrying up the energy and technological progress that some of these companies we were making with our scale was something I hadn’t encountered during consulting. It feels like a answer to question that may not really have been asked yet.

Our mandate is to get us involved in some of the emerging concepts and business models that can be meaningful to the insurance industry over the next decade and get us involved earlier than we otherwise would from an operational perspective. Our job is to get out over the hill, see what’s out there, and bring it back earlier. In putting this corporate venture function together, we would get the question whether we had a strategic or financial mandate. We have both.”

Incumbents can provide value to startups
“We were pretty active in the home automation market in 2014 and 2015. As a significant home insurance carrier, we have relationships with millions of policyholders across the country. If we could find standouts in the home automation startups out there that were displaying some meaningful customer traction, we could partner with them and offer a secondary or tertiary channel to get to market in a way that benefits everyone.

Ring makes a wifi-enabled video doorbell you can answer from your phone. It’s a fairly effective burglary deterrent device. We put a program together where Ring offered a $30 discount to our policyholders in exchange for some marketing weight we put behind it. We offered a 5 percent homeowners premium discount which can be meaningful over a few years. Ring offered to cover the deductible if there was a theft claim for policyholders that had a Ring device. We’ve have a variety of programs like this to understand what our customers really care about and what types of partnerships seem to work.”

 

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Inside Mastercard’s investing approach

Jeff Allen Mastercard venture capital

For Mastercard, investing is less about commercial partnerships and more about relationships.

“A lot of our investments were driven historically because we wanted a preferred commercial arrangement with a partner, like exclusivity for example. We realized that although the commercial relationship is a key part to why we make investments, we can’t let that dictate too much as to why we make an investment,” said Jeff Allen, who runs the company’s strategic investing function, on this week’s Tearsheet podcast.

Edited highlights are below.

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Below are highlights, edited for clarity, from the episode.

Adjusting the investment approach to align incentives
“We need to invest in quality companies first and foremost because if these companies and partners aren’t performing on their own, that commercial relationship is worthless.

We’ve definitely been a lot more disciplined over the last few years in terms of the types of companies we’re looking at and getting our business units involved in understanding why we make investments.”

Mastercard’s investment philosophy and approach
“There are three pillars as to how we go about investing. Our first approach is as a limited partner in several venture capital funds, both within the U.S. and internationally. The idea there is to leverage the expertise, access, and insights that venture capitalists have and to get access to their portfolio companies for potential co-investment and acquisition opportunities.

Our second approach is through Start Path, which we’ve had for three or four years. Our team kind of bristles when they’re described as an accelerator program. They like to view themselves more accurately as our startup engagement program. The idea for startups that go through the program is not necessarily just that they’ll be co-located in a working space and get access to a bunch a mentors. It’s about the access they get to Mastercard business units and our customers and partners. Because we’re a payment network, we sit in the middle of banks, merchants, corporates and governments. It’s compelling for startups to get access to all this. We invested in Kasisto, a conversational AI platform, through Start Path.

The third pillar is our strategic investment team. This is more later stage, larger check sized investment. Within this space, we’re being more disciplined. We investing in Masabi, a platform for transit agencies to issue mobile tickets. The MTA in New York City is one of their customers, enabling customers LIRR and Metro North riders to buy tickets from a mobile app.”

How investments are managed after writing a check
“I stay deeply personally involved. We didn’t really have that oversight on the overall investment point of view and that was part of the reason I came onboard. Every investment we make requires a business unit sponsor, who raises her hand to be accountable. If that investment doesn’t perform and there needs to be an impairment, that’s going to run through her P&L which will impact performance and compensation. We’ve formalized this process over the past few years and because business unit executives change jobs more frequently that corporate venture capitalists, we want to make sure executives stay committed to their investments.”

 

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Experian’s Laura DeSoto: ‘This is an area ripe for disruption’

Offline lending still consists of a lot of paper work and duplication of basic form filling. one of the keys to shortening the cycle times here is to be able to verify that what a potential borrower says he owns, he actually owns. Credit bureau Experian, along with financial technology firm, Finicity, just launched a service that can significantly improve how quickly borrowers can get a loan.

This week’s guest is Laura DeSoto, svp of transactional products at Experian Consumer Information Services, who discussed how the credit scoring business has evolved and how AI is making previously invisible “unscoreables” feel more included.

Edited highlights below.

 

Subscribe: iTunes I SoundCloud
Below are highlights, edited for clarity, from the episode.

How has your business changed over your tenure at Experian?
Technology has really been a game changer in the information services business and certainly, here, at Experian. I remember 20 years ago that we were using mainframes and our time to market was often six to 12 months. We were hampered compared to today, where we have big data architectures, artificial intelligence and cloud technologies. We’re able to speed up innovation and most importantly, improve the accuracy and experience users have when interacting with Experian.

Digitizing the credit bureau speeds lending up
We know that consumers expect that purchasing decisions can happen with the speed of a click of the mouse. We’re able to harness technology and innovation now to create an end-to-end digital experience for consumers in the lending product. Our announcement this week was that we’re the first credit bureau to introduce technology that allows consumers to direct much of the lending transaction from their laptop or mobile device. The crux of the technology is that it allows for real time asset and income verification from 80 percent of all financial accounts. This will allow lenders to speed up and digitize the lending process, impacting millions of borrowers.

The role asset and income verification play in the loan process has changed
My boss recently moved from Northern California to Southern California and was looking to get a mortgage. He went into a household name bank. He had three loan officers sitting across from him. They asked him a series of questions over 45 minutes, taking notes to understand where he held his financial assets. When they finished, they asked him to then prove that everything he said was true. Another 45 minutes. So, he pulls out pay slips and documents and then was asked to fax or send to them via pdf. The loan officer then needed to scan or re-key that information into his system — another 45 minutes. At that point, the institution was ready to start the loan process. This is technology that’s not from this century. This is an area ripe for disruption.

Experian partnered with Finicity on this product
Finicity has been a fintech leader in account aggregation for the past 15 years. So this is a core technology and competency gained over many years. Finicity has integrations into over 16,000 financial institutions. That core technology, capability, and proven expertise in being able to safely and securely integrate into financial institutions was paramount and why our partnership with Finicity is so critical to this program.

Is your new product the beginning or end of the digitization process?
We’re beginning to use technology to digitize the credit bureau — technologies like AI to remove inaccuracies in data. We’re plugging into the API economy and to speed up decisioning and product identification. We’re also using new technologies to enhance access to more affordable credit. We recently integrated the Cloudera enterprise platform with our analytical sandbox environment to help facilitate common issues to make it quicker for clients to access our information. Our new verification of income and asset reports are really the latest products to enable more fast, accurate decisioning. It’s part of a larger strategy to modernize the credit bureau.

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U.S. Bank’s Dominic Venturo on creating a model for innovation

US Bank's Dominic Venturo on fintech innovation

This week on the Tearsheet Podcast, you’ll hear from U.S. Bank’s chief innovation officer, Dominic Venturo. Dominic describes what’s prompting banks to innovate and how U.S. Bank approaches innovation and judges its own success, including his team’s KPIs. You’ll also hear his take on whether the senior innovation role is just a flash in the pan or will be a key part of banking leadership out into the future.

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Below are highlights, edited for clarity, from the episode.

Why are banks focusing on innovation?
U.S. Bank has a large payments business, which makes us kind of unique. Because the size of our payments business and the innovations happening in payments, we started the innovation group about 10 years ago focused solely on the retail payments side. We began to build out a practice by looking what was happening in fintech and emerging technology. Our original objective was to change the paradigm around how we did product development and to test and learn, fail fast, and hopefully less expensively for new things that weren’t quite well known. We then expanded that to the rest of our payments business lines and a couple of years ago, we expanded the innovation group to the rest of the bank.

U.S. Bank’s brand of innovation
Every institution innovates differently. Our approach is to work with the businesses to understand their objectives and strategies. We want to keep a long-term eye on emerging technology and how consumers and businesses interact with technology. We’ll blend that into the product development roadmaps for the businesses. In some cases, emerging technology will look like it has a lot of potential but then you really have to see how it applies to a business, whether it solves a customer problem or pain point, and whether it can scale to a company our size. I don’t know if this is different than others, but it’s definitely our approach.

Things like design thinking and empathy building have been built into our practice. We’ve also evolved the way we’ve handled research. We’ve done ethnographic studies on our customers and use that to identify pain points and future problems to solve. This model isn’t unique to innovation but it may be in financial services in general and banking in particular.

How do you judge success in innovation?
The first thing we do is ask what problem we’re solving. If you’re not actually solving a business problem, it could just be a shiny new object that’s interesting only to us. The next thing is to think about the technical feasibility and product performance. Early on, we could do this as a proof of concept to just prove whether the technology does what it promises to do. We then check to see if it’s scalable and can be run at the enterprise level. Lastly, we check to see if the behavioral changes occur that we expect to happen.

All along that journey, there are different dates we use to measure and check to see if we’re reaching our desired objectives. If we’re not, we want to know that early so we don’t continue to invest time and resources. That’s back to the fail-fast principle. When we look longer term, at the portfolio level, we’re measuring our throughput — how many new ideas are coming into the idea funnel and are being evaluated. Of those ideas, we see how many are turned into POCs or pilots. And once you get into the pilot phase, we measure how many of those are ultimately converted or commercialized into a product or a feature of a product. If we’re generating enough good ideas, we should see a fair level of conversion at the portfolio level.

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The blockchain: Man, myth, or legend?

This week on the podcast we zero in on blockchain with Tradestreaming’s payments reporter, Josh Liggett. Josh drills down on his monthly Blockchain Hype Meter, which looks at how the mainstream media covers the space in an effort to distill signal from the noise. To be sure, distributed ledger technology portends to be super transformative — but there’s a vast distance between there and here.

We also talk about newly-launched cryptocurrency Zcash and why there was so much excitement around its launch. We’ll also chat about the growing influence of just a handful of people on the future of the blockchain.

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Below are highlights, edited for clarity, from the episode.

Blockchain Hype Meter

We decided to start the hype meter as our creative way to cover what’s happening in the world now. We cover the FT, WSJ, CNBC, Bloomberg and NYT. Inside all the sass and fun we have covering the hype around blockchain, it’s important to realize not much is really happening right now. But it is the appropriate time to begin discussing it and have the important conversations about what the impact of the blockchain will have on the financial services industry.

Harvard report on the tightly-controlled blockchain

A hacker and associate professor at Harvard got together and argue that it’s actually a very small group of people who make decisions about the direction of Bitcoin. There’s a programmer in the Netherlands who has a lot of decision power, including over block size. Tradestreaming’s Gidon Belmaker also explains that only 15 mining pools control global mining operations. It’s not just mining — they also control the verification and approval of all transactions.

Blockchain around the world

Tradestreaming’s Hadas Tayeb joins the podcast to talk about what’s going on in Japanese blockchain news. On November 2, a consortium was launched with support from the Japanese government. The government is trying to spur innovation by encouraging large investment companies to invest in fintech startups, including those focused on distributed ledger technology.

 

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[podcast] Umpqua’s Lani Hayward on the community bank’s acclaimed podcast

Umpqua Bank is the West Coast’s largest independent community bank, headquartered in Portland, Oregon. The bank calls its branches stores and designed them as inviting spaces for people to come in, read the paper, surf the Internet, and enjoy a cup of coffee. That approach of using the bank branch as a community hub has been incredibly successful. Umpqua Bank has grown from 5 locations and $140 million in assets in 1994, when it moved to this community design, to more than 330 stores and $24 billion in assets today.

Umpqua’s approach to banking is in many ways an answer to a simple question: what does it take to have a conversation about money? The bank is doing just that with a highly-acclaimed podcast called Open Account. Hosted by Sunchin Pak, the podcast tackles tough issues like how divorced couples handle finances or, my personal favorite, an interview with Neil Gabler about the secret shame of the middle class.

On this episode of the Tradestreaming podcast, I talk to Umpqua’s Lani Hayward, EVP of creative strategies about the community bank’s acclaimed podcast and how it fits into the firm’s conversation with its customers. We talk about the genesis of the project, all the way through measuring its impact.

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Below are highlights, edited for clarity, from the episode.

Why Umpqua launched a podcast

The bank sees marketing as part of everything it does. It’s about brand and culture of a company being the same. Banking can, and should, be very different. About 20 years ago, we started changing the status quo of how banking was presented. Banks have been austere, uninviting, and frankly, boring businesses. Umpqua set out to change this intimidating experience into something more welcoming. We changed our branches into what we call stores. We see it as our responsibility to perpetuate the health and well-being of the community we serve. With that as a background, this podcast experience lends itself to a conversation that was really important — one about money.

A valuable conversation, not advertising

Podcasts are a great format to convey, in a story-like way, some very meaningful and emotional pieces of information. The beauty of the podcast is that you’re not advertising or pushing things at people. People self-select to listen to this and you have to honor that experience. The takeaways must be valuable. We started to look deeper at our behavior around money. It’s the number one stress point for Americans. It affects 92 percent of us, yet 77 percent don’t do anything about it. Banks are best positioned to do something about these insights. We started Open Account over a year ago. We wanted to do make sure we had a topic that was really authentic to us, that we could own, that we’re passionate about.

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[podcast] Jan Bellens on fintech trends in Asia and emerging markets

ey on asian fintech, jan bellens

Jan Bellens is banking and capital markets leader for EY in emerging markets and Asia Pacific.

Jan Bellens, EY
Jan Bellens, EY

He’s tasked with a role at his firm that is part analyst, business consultant, and trend watcher. He speaks to his partners, teams, and financial services clients in emerging markets, with his ear to the ground to best understand how EY can help and serve its clients. It’s this high-level and global perspective that I was most interested in chatting with Jan.

Jan sees an Asian phenomenon — born out in his firm’s Global Consumer Bank Survey. In some of the asia markets like Indonesia and China, he and his team see strong eagerness from consumers and businesses to engage with new financial firms, models, and technologies.Much more so than in developed markets.

He’s tracking his firm’s Fintech Adoption Index — fintech adoption in quite strong in bigger cities like Singapore and Hong Kong. In mainland China, Jan believes fintech providers do pose a serious challenge to some of the smaller banks. It’s a reality — at different paces and speeds across different markets and all of EY’s clients are looking at how to address this.

Jan has a unique geographic view and not one we’ve given enough attention to on this podcast — Asia is such a diverse market and one that’s embracing of fintech. It’s interesting to hear what large incumbent financial institutions are planning for their futures. One thing that’s top of mind in the Asian market, according to Jan, is the role of the ecosystem. How will regulators approach this going forward. Are rules going to be loosened so that banks can start to improvise a bit more or will regulators turn their sites to startups and force them to comply with similar rules facing traditional financial services firms?

Listen to the FULL episode


More resources

  • EY (Jan’s company)
  • EY Fintech Adoption Index (EY surveyed more than 10,000 digitally active people in Australia, Canada, Hong Kong, Singapore, the United Kingdom and the United States to better understand the overall rate of FinTech adoption, which users are adopting which products and the outlook for future usage.)

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Running successful crowdfunding campaigns with Roy Morejon

retirement investing

It may look easy to launch a crowdfunding campaign, raise hundreds of thousands of dollars, and hit your targets…but it ain’t.

The secret behind many of Kickstarter and Indiegogo’s largest and most successful crowdfunding campaigns is that they have professional help behind them.

They hire guys like Command Partners‘ Roy Morejon to run integrated Internet marketing campaigns, outreach with guerilla PR, and produce awesome crowdfunding videos. David and Zack bring Roy on to TWiC to discuss what’s tips and techniques are working for project backers.

In our news roundup, we talk about the growing internatlization of crowdfunding and the Kickstarter Film Festival 2014 in Brooklyn and the rising importance of platform branding in crowdfunding.

Lastly, co-host Zack “Attack” Miller digs deep into his experience producing over 20 crowdfunding videos and takes us through the 5 steps to make a captivating and successful crowdfunding video.

Listen to the FULL Episode

About Roy Morejon

Roy Morejon picRoy is the President of Command Partners, a full service marketing agency focused on crowdfunding.

Resources mentioned in the podcast

Roy Morejon’s Resources

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Investing in distressed mortgages — with Jorge Newbery

The Internet is opening up all kinds of new investment opportunities that many of us didn’t have access to before.

One way real estate investors have made lots of money over time was by investing in distressed mortgages. But for an individual to buy a single mortgage is pretty complicated, let alone risky.

Jorge Newbery founded American Homeowner Preservation (AHP), a crowdfunding site for accredited investors to invest in pools of distressed mortgages earning between 9-12% per year — all with a focus on helping people stay in their houses longer.

Jorge joins me on the Tradestreaming Podcast to discuss how investors should think about investing in distressed mortgages, the types of returns they should expect, and the growing popularity of this investment.

About Jorge Newbery

Jorge Newbery of American Homeowner PreservationJorge is the CEO and Founder of American Homeowner Preservation. He has been a principal in mortgage, property management and real estate brokerage firms

Listen to the FULL episode

More resources

Even More Resources

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