Acorns’ Post

Transcript

Now a recent survey from the fintech startup Acorn finds that more than 25% of all Americans have never had an emergency fund. Acorn is trying to address that gap using the concept of micro investing. And joining us now is of course, the company CEO, Noah Kerner. And it's interesting to talk to you about investing in savings. At this point in time, we are still looking at higher for longer interest rates. We're also looking at a market that hit a new all time high just earlier today, wavering though at the edges. You also, on top of all that, have a meme stock resurgence in some fashion. When you think about your clients, how do you think about their way that they're really trying to put money to work out of those three options? Well, our customers are saving and investing for the long term. So very small amounts of money. It's everyday Americans and families. So they're doing $5 a day, $25 a week, that kind of thing. And we're helping them focus on the future and compounding over the long term so that they can see the benefits over time for themselves and their family. Does the meme stock. Thing where you at all given that, you know, maybe part of this is coming from this worry that you can't save for the future, this kind of get rich quick kind of feeling. It totally does. And the way we've approached that problem is we have this program called bits of Bitcoin. So you can actually add tiny bits of Bitcoin to your already diversified portfolio. And we think that helps people manage their money intelligently and sort of, you know, cast away all of this noise in the market about trading and crypto and all these kinds of things, all these kinds of get rich quick schemes. Well, what does that really about at the end of the day? Is this an acknowledgement also that there's another generation here that does believe in crypto as a future financial means? Yeah, I mean, certainly. And I think we have to educate them about how to think about that and diversified constructs. And so that's why our portfolios are automatically diversified. And you can do 1 to 5% of Bitcoin, but not more than that. And that's really important for people if they're going to save an investor the long term and not focus on these kind of quick ways to get rich, which are not obviously fundamental ways to get rich. Now, if you take a big step back, how big has ACORN? And who are your clients these days? For the most part, everyday consumers. So the middle class were 6,000,000 subscribers around the world, but we're primarily focused on on the US market. So it's those kind of customers who have not really saved and invested before and who are getting into it. And it's really exciting to see them contributing regularly and building their portfolio over the long term so that they can change their future and and the way that their family has existed unlike prior generations in their family. Well, to that end also when you have a marginal dollar to store away. What is the option here? Is it putting it back into the stock market or is it putting it back into, into cash, into bonds, into places where they're safe yield again? Yeah. I mean, the, the way Acorn started was with spare change and that's the way our customers get going. And so that's we, we like to encourage people to do tiny amounts of money even when they feel like they can't. And the way spare change works is you link a debit card, you link a credit card, we automatically round up the spare change for you. And it's over $30.00 a month that you're not really feeling in the background of life. So that's a really powerful way to invest small amounts of money, even if you have debt to pay down. So what are people using that money for at the end of the day? Are they using it to mostly stay invested in the market, you know, clip those gains from NVIDIA at the end of the day and large cap tech stocks? Or are they just saving to buy a plane ticket at the end of the year? Well, a lot of our customers are saving for retirement. So we have a product called Acorns later that lets you automatically save small amounts for retirement. And then our customers are saving for all kinds of future needs. So it could be a short term trip, but most of the time it's longer term. And obviously, as you know, our our product really encourages people to stick with it for the long term. We have this screen called the potential screen that shows how your money compounds automatically over 40 years. And it's a very powerful way to keep people engaged. So how do you differ from some of the other platforms that are out there, for example, Robin Hood where of course there has been a lot more trading, they do show their trading volumes on a regular basis. They have gotten into other forms of of trading for for example, I mean, why is it that you have? Chosen a different model here yeah we don't offer trading so Acorns is all about long term saving and investing and that's really the fundamental difference you can add different asset classes into a diversified portfolio portfolio but it is not trading you know there's a lot of talk about when Acorns itself will consider going public is this something that's on your radar yeah I mean figuring out how to have a liquidity event for us of course is always on my radar we don't have a date yet but you know it would be a very exciting I think opportunity for the whole team and all of our. Their holders to take the company public. So that is something that we will likely do in the future. How long will it take you to get there? Do you think that this is something that could be in the next year or so? I think it's conceivable. I think, I think within the next couple of years it's conceivable. And you know, again, it's really an exciting opportunity for our whole our whole team and shareholders. As you try to March towards that moment, what do you want to be? What is Acorns become? I mean, we want to continue being the place for everyday consumers to save and invest for the long term. That's what everything in our product comes back to, whether it's for your kids, whether it's for yourself. For the near term, for the midterm, for the long term, for retirement, that's really always what we'll focus on maximizing for people. And all of the products come back to driving that outcome for, for for our customers. Well, it's interesting you mentioned kids too. Whether you're an adult or a child and you've been investing in younger people, parents and their children into investing in the future. How much traction are you getting? A lot. We have a product called Acorns early that makes it really easy for parents to save and invest for their kids starting at birth. I love this statistic that if you start investing $5 a day for your newborn. By retirement, they'll have over $4 million at an 8% compound rate. And we just acquired a product called Go Henry out of the UK that is a kids product that kids can start getting involved with it six years old, learning about money, getting rewarded by their parents for learning about money, getting paid for chores with an allowance card and all that kind of stuff. So we're very focused on the kids market and the Acorns family experience will be something we prioritize forever, actually. How global can you get? You mentioned the UK expansion here too. I mean, how large do you think you can get in the next year or so? Oh boy. I mean, saving and investing for everyday people is a global need. So we're going to focus on bringing this everywhere. So you were mentioning IPO to what does it take to get there? Have you met profitability yet or do you think you will be by the time you go public in the next year or so? Yeah, we're, we're, we're at break even. So we have a lot of cash in the bank. We're in a really good place and you know, next year is going to be a nice profitable year for us. Would you have any reasons to raise money before that? Noah, well, I'm looking forward to seeing where this company goes next. That is Noah Kerner, Chief Executive Officer at Acorns. Of course, as the company expands, looks towards public markets in the future and as more people look towards the possibility of investing.