All right, welcome everybody on this episode.
We have an interview with Brian Barnes.
Who is the CEO of em on finance as able to talk to him a little
bit. Here is the interview.
We had the last interview. I looked it up.
It was ten months ago. So met course sometimes yeah
feels like a lifetime ago. Is it a different environment as
well as wandering from then? Do you remember how many
employees are company? Had?
And when find a said, I don't know if I couldn't exactly get
Number in May, I could definitely look it up.
I know that we started 2020. So January 2020 with 38.
We now have about 155 and so we've been somewhere along that
that number, if May probably 50, 60, something like that see
where you went from 38 at the beginning of beginning of 2022.
Now, 150 ish, correct? Okay, what are your plans for
like, over the next year? So we're trying to double from
where we are now by the The end of the year, so we'll be sort of
high 200, sort of, you know, ambitiously trying to get to 300
people by the end of the year. And so the organization will be
in a little pretty fundamentally different place by the end of
this year when compared to a year or two ago.
Well, it seems like it. I've seen the trend overall and
I know you guys, you just announced what is it go to an
investment. They're like a hedge fund,
right? I think a pretty public one.
That does a lot of tech investing.
They led the last round of investment for you guys.
Yeah, absolutely. So CO2 is one of the Premier
hedge funds out there and so they have been more famous in
their public portfolio. And so it's the, you know,
almost like the who's, who of the tech names out there, but
the interesting thing about CO2 is they invested in them, you
know, 10, 15 years ago before they were before they were the
who they have since moved into the private market and have
invested in a lot of the private companies that have become sort
of your household brand name for Consumer Tech products and the
like and so we're super fortunate to have them as an
investor. And, you know, really, really
think that they're going to be To support a good amount of
growth that the M1 organization. Yeah.
I remember when I first started a portfolio with him and finance
his way back in general. I don't even think the retail
investor was this popular at that time.
Like I was when kind of M1 Finance, Robin Hood, these type
of things were kicking off and there was like a lot of, you
know, should I put my money in these guys?
Or should I just stay with Schwab or, you know, Fidelity or
Vanguard like the the more Legacy ones?
But how does it feel knowing like my question is?
How does it feel? Knowing you're getting backing
from these type of hedge funds. Now like as a source of
validation. Are you looking at this like
man, we have CO2 and like these these serious investors and if
you look at their portfolio, they have a wonderful portfolio
of technology companies. How does that validate the
company? It's incredibly exciting.
And, you know, it's definitely a result of a massive team effort.
And so the entire him, one organization is incredibly proud
of what they've built over time and, you know, having smart
sophisticated peoples, and you're doing a good job, as
always a positive and you feel good about it and the like it
does put the pressure on, you know, they're definitely looking
for M1 to be a large organization into the future.
And so we have those demands to fill and just you know one piece
of comment you were talking about your Vanguard.
Swab the Legacy players, which, which is interesting is at some
point. Those were not the Legacy
players, right? Vanguard started in the
seventies trough at the same time.
And you know, the Vanguard was fighting all the mutual funds.
And you know, it was sort of this.
Hey, you'd be silly to invest in an index fund.
It was just better product, better pricing and over long
periods of time. They become the Behemoth and
same thing with trough. They were fighting, you know,
Morgan Stanley Merrill Lynch and it was you know know the
individual investor shouldn't be doing this themselves.
They should work with the high-priced advisor or a broker
and have Also proved that model wrong.
And so, you know, really when we talk about M1.
We look to those companies as we're trying to be the next
Generation Vanguard Next Generation Schwab, really
empower the individual and data investor with a better product
better price and we know that it will take a long time to become
companies about their size and scale.
Yeah, maybe become their size, but I think the trust factor is
moving along a lot faster. Like when I started I remember
people. Put they put on a hundred dollar
like test deposit to see if it's like real and they can get their
money back type of thing. There's accounts.
I see publicly on YouTube that have a million dollars on a
month. Finance, you know, sigh?
See the trust Factor moving along a lot faster with with
this. The smaller, you know, you have
smaller assets under management and something like Fidelity
Fidelity or Schwab, but I see the trust Factor moving very
quickly. I have some questions on the
whole growth of fintech in general.
But before I jump into that, I want to ask what are you so you
receiving all this money 75 was it?
75 million? This is the last Round.
Yeah, that was the most recent round.
We've been fortunate enough, you know, up through sort of start
of 2020. We had raised 25 million dollars
in our lifetime and then over the last 10 months.
We've raised another 150 million.
So, you know, it's six times the amount of money that we had
raised prior to a year ago. And so we're in a very good
position to to bolster every aspect of the company.
And I'm sure that's where the heck.
Well, we're gonna do with all that money is, is might be the
common questions question. You have this money.
What? Are you doing with it?
What's going on? What are the growth plans from
here? Yeah, you know, if you look at
the companies that we just talked about band Garden Schwab,
you know and you were talking about the trust factor of where
do people with a quarter million dollars Place their money.
The default option is still a Legacy Bank Legacy broker in the
Lichen and they offer okay. Products it have big scale, but
they do have a very trusted brand name and one has a long
way to go to like significantly. Prove every single product that
they offer. So if you look across the three
main products that we do, how you invest, how you borrow and
how you spend. I think there's incredible
improvements. That could be made across all
three of those buckets. And so, you know, we built a lot
of core product experience, core infrastructure to support it.
But we have a long way to go to make it definitively the best
personal finance account that's on the market.
You know, we're really focused on sort of a best-in-class
investing product best-in-class, borrow product best-in-class,
spend products, and having all of them work together so that
Whole is greater than the sum of the parts?
And we just, you know, that sort of a and state of perfection and
you know you we have a lot of work to do to there.
We'll never get there. But you know how you're going to
manage your money in five and ten years.
I think will continue at an accelerated Pace to the
improvements that have been made over the past couple years.
There's also just growing the the brand I mean, you know, we
now service over half a million customers.
We have coming up on four billion dollars on the platform.
We that's meaningful trapped track action from a Small fin
tech company that's growing. But, you know, the, the
companies that we mentioned, like, we're not a financial
institution until we manage millions or tens of millions of
customer accounts and tens of billions.
If not hundreds of billions and potentially even moving into the
trillions as you get to the the penis and the financial space.
So, you know, it's really just building better product better
pricing and growing me the overall organization to support
that. Okay?
Yes. Yeah.
It's true. Your it seems like it's growing
pretty quickly moving from like what?
Remember your now Strat 1 billion assets under management.
Now, you're under at four and that must have been like, what a
year in the time to do that. But it still is another two
months. Yeah.
So yeah, so that's growing fast, but you got a ways to go before,
you're one of the big players. All right.
So between between the different products that you have the
investing product, the spend product like the banking product
are, is there any direction? You're taking with it, where
you're going more into one than the other or you just kind of
splitting the effort between the three?
No, but you know, you you were asking about sort of what are we
going to do with the money m1's history?
Was we always had to do things more or less sequentially.
So, we started with invest, you know, then we put that on the
table and let that bake and then we moved on to borrow built
that. And then, you know, we moved on
to spend and every single feature and functionality.
We sort of had to, you know, not focus on anything else.
Build the new thing and then move on to the next right.
Now we have yo, the product team is 67 x.
The amount of people that that worked on a product at any given
time. And so we can focus A lot of
things. Concurrently and so the nice
thing is we can like the focus is best-in-class automated
investing platform and you know, like have a team dedicated to
that a best-in-class borrowing experience and will enhance an
offer more capabilities around that on the spend side.
Same thing best-in-class checking account as well as any
mechanism to spend and receive money and the like and we have
the ability to with the the new round of funding pursue these
things simultaneously. And so, you know our product
throughput and You should be increasing in a meaningful clip.
But you know, the unfortunate thing is you get the money
first. Then you have to recruit the
team, then you build the product.
And so there is a little bit of a lab to seeing the improvements
as a result of the money coming in.
But, you know, everything will improve in a pretty material
capacity in the the user should start to see that in a short
amount of time. Okay, though the other between
those three project products that they spend, and, you know,
the big, I see a big concern with people that have they want
to go to M1, or they want to go to At least a fintech, right?
Because most of the fintechs are honestly the Technology's there.
It's better than it's going to be better prettier faster than
something like Fidelity or whatever.
But it seems like the bigger the bigger brokerage is the
advantages that they have are that people feel more secure.
They have a phone number that can call, anytime.
They have 1,000, customer service people waiting on the
other the other line. And I see that as a biggest from
what I've received, like the just kind of what I've viewed
online. Is, oh, I would put my money on
him on finance, but I'm afraid I won't be able to get through the
line because they're so busy or that type of thing.
The same thing, even worse with Robin Hood.
It's like they don't even have a phone number to call, you know,
you have to message them and hope that you get back in time.
And with that they're doing a lot more short-term stuff.
So, sometimes it's even more pressing.
But the effort to ensure like, if you're, if you're a consumer
or a client of m1's, you know, I guess if the concern is, We're
not gonna be able to get a hold of people or and time or be able
to get these Issue is resolved. What are the efforts to be able
to resolve that? So people can have confidence,
they're going to be able to get through.
Yeah, you know our our we have not like M1 has not done the job
that we should on customer support and a lot of it is due
to the fast scaling nature of the organization and the growth
that our user base experience or of outpaced our ability to grow
the organization. And we unfortunately had a pie
like a little bit of ketchup and so that, you know, I've liked
that is 100% my fault, not the fault of my team.
We have been incredibly devoted bought in team.
That is Super PAC. What about helping the End,
customer and servicing, all their needs?
They frankly just get more requests than any person can
handle and we are massively higher, you know, adding tens of
people a week. You were asking about the
organization at the beginning of 2020.
I think we had five customer support reps.
We're now over 50, we're adding, you know, 10 every week.
And so that team is getting increase in a material capacity.
I do think there is a sort of pace of change or Evolution that
you're going to see and M1 has only been public facing for
about. Four and a half years where you
look at a Schwab a Fidelity of better and you have 50 60 or
legacies and, and, you know, tens of thousands of people
building stuff over time. That being said, like the pace
of innovation for a 50,000 person, and Charles Schwab.
Organization is quite slow. And um, one and four and a half
years has built, you know more products better product is
increasing at a faster clip. And so, you know, we do have
work to do to catch up to them on a service perspective.
I do think you look a little bit out and sort of say in one year
two years. Three years.
I'm very confident that M1 will have significantly better
service than Schwab at that point.
Whether it's through self-serve, automated tools or, you know,
technology driven Solutions or connecting with a an individual
person, you know, the, I'm not trying to make excuses but the
unfortunate scenarios, you know, some of the, the like, we're,
you know, sort of building building things as they go.
And, you know, there we have to support the current operation
and support the future operations and have, you know,
stumbled a time or two. With that.
But you have all the attention and time and energy to really
improve it in a fundamental capacity.
All right. Well, yeah, it makes sense
because I didn't I don't think anybody predicted at least they
would be rich if they predicted that Virginia Tech would explode
like it has over the past couple years, but which leads me to
another subject so we know that M on finance is growing like
crazy and you guys have you're getting you're getting a
investments from Big management firms.
When you going to let us in on the action.
This investment in one when is it going to be something?
Where where you either have a SPAC, you know that you can join
in because I feel like investors would very much like M1.
Finance. I look at some other, look at
some other IPOs and different things.
You have, you know, different ones that I think are inferior
products that get tons of public money right now as it ever been
a thought or you just keeping it keeping it to private
investment. I mean, it's a have two minds of
it. I mean, you know have built the
entire business for personal. Sighs automated choice in the
Investments that you know, want understand and really long-term,
systemic investing in those Securities that you want to
invest in. I would love nothing more than
our user base to be able to invest in and one company.
And, you know, the promise that we're making is, we're building
M1 to be a durable, large financial institution that grows
for for incredibly long periods of time.
And that's what we're building towards.
I think the soap like that side of my brain is absolutely, would
love to be able to offer that. The other side is just the
complexity associated with being Bloke in the rules and
regulations associated with it and sort of the distraction to
the company. As we're trying to really build
a lot of the foundational stuff. And so unfortunately like every
time we've entertained it, the cost of going public have been
too high where it's we're better served being private for now and
being able to be 100% focus and heads down on improving the
customer experience and building out product and infrastructure
and you know, everything that will support the organization
for many years to come. So, you know, it's it's those
two things. That tension of wanting to have
the ability to offer him one as a product, but then just sort of
the cost and complexity associated with it.
Okay, but I mean, spec Mania is definitely real.
We get hit up from a lot of these facts answers.
And if, if you're looking for a time to sell to sell em, one
out, this is the time to do it because there's a lot of
companies that I think, I just, I look at the different fintechs
coming up and obviously there's a huge demand in the market
right now, for any good Equity. People are looking for Quality I
can Someone find out to be a much higher quality better than
than some of them in the market right now that are getting
crazy, crazy valuations and stuff.
So interesting, but it does make sense, because if you're going
public, there is a lot of, a lot of red tape at it to a lot of
things you have to do in the first place.
Yeah, for sure. I appreciate that.
And, you know, I hope that's a be the case that we're building,
you know, very strong durable company that that exists for the
long term. I think our perspective, like,
the nice thing is we now have the cash where we don't really I
have to worry about the next couple years from 0, what
happens, from a price perspective.
We have all the money we need to to build thing.
We just need to execute on it. And so being able to, you know,
focus on making the Investments hiring the right team and not
having, you know, the whims of the markets are distract people
from a day-to-day basis, but I do think there is a big macro
trend of fintechs, I think going to be huge or that, you know,
technology can better serve people's finances than how it's
been sort of historically whether that's, you know,
face-to-face, interactions or be a big thing.
It's in the like and so I think the category is going to be
massive. I do think there are some okay,
there will be winners and losers within that that pocket, right
for sure, and that that is one. One question.
I had was fintech will be massive.
I think most people have bought into that Vision because I use
the tools and, you know that, you know, you know, using stuff
like venmo to pay for things as much quicker than what we did
before, you know, using m 1 bar 0, it's such a cheap rate
compared to anything. Yeah, so everybody's used a tool
to understand that. Value of it.
And there's this huge surge of fintech over the past couple
years as you have millions of millions of new retail investors
into the market and just on the subject of fintech in general.
There's people like Kathy would that says, these are going to
replace Banks and she says it very like matter fact, like the
big Banks Bank of America, JP Morgan, City bank Wells, Fargo,
Etc. She thinks Square PayPal.
These type of companies are just going to overtake the amount of
customers and Really eat away at these Banks.
And there's other people to, to mothball yappity has said in
other terms that the banks are pretty much done over time.
What is your like, just kind of looking out in the future.
Do you see, do you share that kind of vision that fintech will
either, just keep eating away at Banks profits, and their
customers and their client base, or will they kind of work with
them? Or how do you see that playing
out? I sort of follow in the
combination of both sort of that wishy-washy, both anti-type
perspective. If you look like, you know, we
mentioned Charles Schwab and Vanguard as you know, sort of
disrupting the the old players Vanguard came about and it's not
like mutual funds are gone, you know, if they still exist in a
very fundamental capacity, is just a lot of the world has
moved to pass it, you know, it was a better idea, better
product better pricing. And so, you know, there's a
seismic shift over time. And if I were, you know, I bet
on passive ETS more than I bet on mutual funds, long-term and
same thing with, you know, Charles Schwab, it's Morgan.
Stanley and Merrill Lynch were the outdated incumbents.
At that point Charles Schwab is, you know, a hundred billion
dollar company now is just Morgan.
Stanley Merrill Lynch were also a hundred billion dollar
companies. And so when you look at this in
like a sort of financial service, I think is more
generational where you know a person who is 60 and has a
Schwab account and two million bucks on their truthfully is
likely going to have a shop account for the next. 20 years
of their life, 25 years of their life and it's partly going to
grow with the the market and so it's really sort of more of a
generational thing of as the people who are 20s 30s and 40s.
They're going to sign up for the newer players, the better
players the the more forward-thinking players.
They're going to put their money in there and then all of those
are going to sort of build up as the the asset growth happens.
The income growth happens, the purchasing power.
So it you know, it is more of a generational play than a you
know, hey, JP Morgan. Chase is going to Zero and five
years. I think that's that's a hard
thing to imagine. If they like said another way of
JP Morgan doesn't sign up another customer.
They're going to be a big company for the next 20 years,
you know, it would take a long time for even just their user
base to to. Well.
Yeah, they have so much. It seems like all the fintechs
have a lot of, they do a lot of transactions.
They have a lot of transactional volume, but it seems like the
big banks have a lot of assets, they control, at least I have a
lot of assets under management. The other thing that I would say
is fintech in like all these fintech players are not going to
be even competitive with the bank.
Until they convinced the person with a hundred thousand two
hundred fifty thousand five hundred thousand dollars to
trust them with their money. And if in the mental mind of the
consumer, it's still you know, hey, I'll use this as the fun
tool in the financial entertainment.
But then once I get telling you for sums of money, yeah, you
know, I move over that, that needs to be broken down for
fintech to win out and I think that's what M1.
Really. This is substantively on.
How are we? Like truly managing money better
than any Solution on the marketplace today?
And why is it the better option for anybody with any amount of
assets? Whether you're starting out with
a hundred dollars or you have half a million, we need to be
able to compete and say, our product is, you know better for
a variety of reasons, and less expensive for a variety of
reasons, against all the incumbent players.
And that that's the only way that you can actually take
market share from the these big incumbents.
Do you see on your platform? User behavior that mimics that
where people get to a certain like they get to like a hundred
thousand dollars or fifty thousand dollars and then they
move it over to like a big guy cuz they're like, okay now I
have this isn't just play money anymore.
Now, I need to put it on something more secure, right?
Or do you see them like sticking with it?
I guess TCH earn when they hit a certain a certain amount
truthfully know. If anything it's quite the
opposite that over a third, you know two-thirds of our assets
have been just cash deposits in the black.
Form. So people, you know, like
depositing via ACH. The other one third is bringing
over assets from other brokerage accounts.
And so, you know, the person with the quarter million dollar
account that the typical use cases.
They try am one with 1000 or 5000 or 10,000.
Try it out for three, four months and then they bring over
their Fidelity account. And so that, you know, is where
the bulk of their assets, the bulk of their money is and
that's what buoys up are a, um, and a very meaningful capacity.
And so, if anything, we are seeing the opposite of people
are almost like nervous. To try them on and so they try
it out with smaller sums of money, but then once they get
comfortable and they are saying, wow, this is a better more
intuitive, more straightforward, lower cost more automated way to
manage my money. It makes sense to move from a
legacy solution. That makes sense.
I think, I don't personally think that younger people
Millennials younger anybody in that range.
I don't think they're gonna have much of a problem, trusting
fintech companies. Ultimately, but I don't see a
lot of people already in Kermit taking the retirement out and
putting in something like I'm on finance.
So it does seem like a generation thing.
So you think it'll be more of like a kind of slow bleed away
from older Banks and then the growth of fintech slowly over
time. Kind of like what we're seeing
with like cable and streaming. Just a shift from a new
technology to an old like an old technology to a newer one.
Yeah. For sure.
I think, you know people the good and bad thing about
financial services is people are pretty complacent and you know,
whatever they use is sort of what they're comfortable.
And so I think a lot of the, like more damning statistics are
the bank that you use is the one that was closest to your house
when you signed up for a bank account.
And, and I think that's migrating more as we move to,
you know, digital Nationwide distribution and people will
look and seek out the best and whatever they, you know, will be
the best is what they select. And if it continues to be the
best, that's where they'll manage their money.
But if you look at the, you know, it's hard for a 30 year
old to compete with a 60 year old in terms.
Of you know, how much money do they have to their name?
Because I've had, you know, 8 10 years of earning power whereas
the six-year-old has had 40 Years of earning power.
And so, you know, it is just a sort of Natural Evolution of how
assets are buildup in the United States of you graduate high
school or college with little to no assets.
May be in debt, you build up to retirement and then you draw
down and so it's I do think the where money is held as more of
a, like cyclical nature, but people are going to seek out the
best tools available and I don't like you were saying, you know,
Under people are more trusting of Technology solution.
I think they're distrusting of banks.
You know, I think they're more willing to, you know, trust any
of the fintech players or in Facebook, Amazon, Netflix,
Google with things than using a old Legacy solution.
I think the tech forward forward thinking mentality just resonate
a lot more with them. All right?
Well, the the next subject on this on the same subject with
fintech and the growth of it overall.
I'm we've seen what's happened over the past.
Ten months with a surge of interest, in retail investors
entering the market. We have, we have the whole
GameStop drama and I was wondering some thoughts on that.
Like, what are you? What did you think watching that
back? Do you think it played out
fairly for Robin Hood? Kind of being the bad guy in
that situation. They took a lot of flak with
selling order flows. They took flak with stopping
trades. They take a lot of flack for not
not I guess protecting the investor and I wanted to know
your thoughts on that overall, like You think when when
Congress are, you know, that Capitol Hill, they're going and
they're taking it to Vlad from Robin Hood saying, you're
allowing them to do all these crazy things.
You know, some of them are on the side of saying, you need to
clamp down on these type of things.
What were your thoughts when you're watching that?
Um, It's a combination of a lot of things.
I mean, you know, there's like healthy competition and
camaraderie between the fintech companies.
And so, you know, there's like mixed mixed opinions anytime
something happens to and a competitor.
I think Robin Hood's donut a ton of fantastic things.
I think they brought cost down across the entire industry.
They've increased the entire user experience threshold.
They proved out people will trust spintax with no
substantive money and they have a massive user base and the like
Associate with it. I think some of the things that
they were critiqued for. We're not fair.
I think, you know, payment for order flow is sort of a in the
weeds type subject, but I actually do think it helps the
overall environment more than it hurts or two tracks from it.
Some of the like, you know, like weirder things that they're
getting brought in front of Congress for it, you know, we
can talk about specifics and can give perspective on that.
I do think like we're the two things that if you know where to
start say how M1 differs. I do think Robin Hood has a A
Trader mentality, and they sort of they encourage frequent
trading turning over the portfolio levered bent with
options. Whereas M1 is much more
investing mindset of, you're buying ownership stakes in
companies or asset classes. And you're trying to benefit
from the value accretion over long periods of time.
And those are just ver they all start with the same thing of
buying a security but they're very different Madden sets of
why you're doing it in your time Horizon.
And so I think there's, you know, we just view the world a
little differently than Robin Hood.
And I think Robin Hood, you know, and I think Vlad would
admit to it. Didn't communicate the best that
you know, all the interviews leading up to it.
Yeah, exactly. I think they should have been
more transparent from the beginning of the real root cause
of the issue. Why?
And I think you know and even if they did that I think there are
real critiques to have there, but I think they sort of dug a
hole from themselves by being wishy-washy.
Not getting to the heart of the issue and it led the The
narratives are run astray, that it felt like, you know, the
suits versus the little guy and they just however, they message
it sort of played into that. I do think like, Even with how
things truly played out. It's not fully understood and
you know, I think like if but, you know have mixed opinions on
whether it even should because it is sort of the depths of the
clearing industry and capital requirements and part due to
regulation part due to company capitalization part due to the
behaviors that they're encouraging and the like.
And so I do think it's a pretty complicated topic but you know,
in the in the media, it's sort of bad guys versus good guys.
Sort of pick a side. So it's a Nuance is not loved in
the narrative media narratives. All right, so there, I think the
big criticism for them is that they're like, like you said,
like encouraging short term gamification, this type of
thing. I know, obviously, I'm on
finance is a more long-term like, like ownership oriented
platform. How do you plan on?
When you see, I can't remember the exact statistic off the top
of my head, but after the Game Stop drama was as kind of
unfolding. There is some days where Robin
Hood was getting millions of downloads per day on the App
Store. It was a top one on iOS, and
most of those people and this is my experience as well.
We're being asked like, hey, what do you think of GameStop
people that have never talked to me about an investing or stocks
ever before, and they're asking me about that, like, personal
friends, I have and stuff. So you see the same attitude of
people now downloading their First Financial app?
After this explosive drama because it's caught mainstream
attention. I'm how do you with everybody
interested in it? But they're doing short term.
Most likely they're going to lose money doing this type of
thing. How do you bring them over to a
long-term mindset? Like how do you look at all
these new people in the market? Is there any type of strategy to
say there's obviously a lot of new, you know, a lot of new
potential long-term investors. How do we get them into a
mindset that fits better with long-term wealth creation.
It's tough. You know, it like a VC that I
followed. I don't remember exactly who it
was. But once said that, it's easier
to sell candy than it is vitamins.
And I think it's sort of that mentality that, you know, like
Robin Hood. If you equate it to different,
big is selling a sugary snack versus a substitute meal and you
know, that's fine. You know, it's there's a market
for that. There's a demand for that.
I do think there's where I have issues.
Is when you claim you're doing otherwise, if you're trying to
sell frequent trading, you're encouraging it and you're saying
that this is benefiting people for the long-term wealth,
building wealth creation. I think there's a little bit of
a mismatch there and you know, so it's if people like people
are more interested in the ability to make a quick Buck,
you know, make money fast. It's why casinos make a ton of
money. It's why the lottery make a ton
of money. Those are not Avenues or
strategies, that I would ever recommend to a family or
friends. So say, hey, this is how you
should think. Think about money and build
wealth over long periods of time.
I think it's, you know, you know, if someone came to me and
said, you know, hey, I'm like starting to build up assets.
I need to think about it. The first thing I said you
should do is create an IRA. So tax-advantaged account.
You can grow, you know, long term for retirement.
And I think it's telling that some of these trading platforms
will have levered options, but they don't have Ira accounts.
And so, you know, you can turn talking to one side of their
mouth of it helping the individual investor, but you
know, but Since pay more is maybe one way to look at it.
And so, you know, have fun. Do you ever plan on having
something like options on I'm on finance or any type of
time-sensitive tools? Yeah.
I think we would absolutely be open to it for more investor
flexibility that, you know, we're trying to really give the
people tools to manage their own finances.
How they won. I do you think we would never
gear it towards, like, you know, selling Weekly's or short-term
option trading? Because I just It's not our DNA.
It's not how we think, the, you know, like what we want to spend
time and energy to help people benefit their finances.
I do think we there are real electron uses of options,
whether it's hedging a portfolio or adding additional income with
covered calls and the like, and so, I think we, if we were to
move into it. It's a perfectly good tool and
it's really just the application of it.
I think we would always have the application.
Be more long-term oriented. How are you, you know,
protecting against risk. Adding additional income streams
in the like versus, you know, how can you make hopefully a lot
of money on Thursday, you know, and so I think it's just a
little bit of a different mindset and, you know, both
should be available on the market and both people should
both like firms should get customers.
And customers can vote with their feet on what to use.
You were asking about your how do you do it?
I think it's just being honest to what we're trying to do.
We're we're not trying to do the financial entertainment.
It we're not trying to you know, like have Mannix wings of you
know, hey, this is worth nothing on Monday and a ton on Thursday
or vice versa and you know sort of encourage that behavior were
saying the truest way to build and accumulate wealth is to have
ownership stakes in valuable things that appreciate over
time. And so we're sort of that's our
ethos or mentality. We try to reduce cost for
borrowing money and try to give you a very flexible terms.
And so, you know, we I think we have Principles that we live by,
and that's the product that we're going to create.
We know that that's not going to be attractive to some people,
but the people that that is attracted to, I think we're
going to create the best tool on the market place.
Okay. Yeah, it does seem like a lot
like that side of it. The short-term side will always
exist. It seemed like it seemed like,
from the meetings, at least what what the Congress was saying to
them, at least, to me. It came across like, they're
like, hey, we need to protect these people and, you know, give
them. I don't know if it's restrict
their options and their availability to do different
things or to get like more stern warnings, right to have some
type of like, you know, on cigarettes.
You have the cancer morning. If you have a super short term
option, you can have some big warning saying, you can lose a
lot of money doing this. So you don't think that they're
either, think that both sides will always be exist, but you're
going to always lean on the side of long-term.
Yeah, you know it's an interesting like sort of
philosophical. Question of should someone be
able to you know, go take a ten dollar bill and light it on fire
their backyard, you know, and I wouldn't say that's like a good
strategy but should they be able to do it?
Probably, you know, probably above my pay grade is maybe they
are the better answer to that. I do.
You think options there. What's interesting in options is
there they are. Complicated products their
levered bats. You have the ability to make and
Is Meaningful amount of money in short periods of time.
I do think it's incumbent from a like product design perspective
to Showcase that as you're bringing customers in and and
you know, doing that. And so like whether there should
be laws or rules against it. I do think there's an ethical
question associated with it. But then, even on the the rule
standpoint, there are a lot of financial rules on the on the
books already that are around suitability.
So, you know a broker-dealer can't you know, has to ensure
that any Man is suitable for their investor and that takes
into account, their their income, their net worth.
They're investing experience their risk tolerance their time
Horizon than like and I think, you know, there does become a
question of are the rules on the books being enforced of when
someone signs up and they say, I have a low risk tolerance
long-term Horizon. I really can't afford to lose
money. But then I do trade a weekly
option in my account either goes to zero or negative in a short
amount of time. Is that sort of alignment with
what's on the books today? Day, probably not.
Yeah, but you know, yeah as long as I know the so you're saying
as long as they are aware of of the possible outcomes of what
they're doing that it's probably probably.
Okay. Well, I have another question as
future future feature set of em on finance.
Are you planning on doing anything with crypto anything
related to that with them on finance?
At some point, especially, you know, if the market continues
like, it's going to get, seemingly going to continue will
absolutely support something. I think I've said on many
interviews and I would have thought, there'd been a crypto
or Bitcoin ETF. Yeah.
Mateo now. Yeah, exactly.
And, you know, in some sense. I think we were sort of
defaulting into getting crypto for free and just having it work
in our sort of existing platform and not having to engineer
something that new for it. Right?
So, you know, that, that that's been the strategy is Let it come
to us and it hasn't necessarily work all that well, but you
know, if people have an interest in it a demand for it, you know,
they like with they want to put it in as a component of their
portfolio. We absolutely want to support
it. I think it's just more of a
prioritization and timing effort and a thoughtfulness of can we
improve on the solutions that are in the market and turned to
a unique M1? Take on it versus sort of a me
to solution that is available in a lot of different places.
Now, just another place to buy crypto.
Right. Yeah, exactly.
You know we want to, yeah, be additive to the the marketplace
and we think there's a lot of ways that we can do that and,
you know, working on current initiatives there.
I would say that we don't have a, here's how we improve crypto
mindset. Yeah.
Okay. Yeah, I, I was wondering because
I have so many you see. So many, you know, I don't know
what the comedy fintech companies that are just crypto
centered and lending crypto and all this type of stuff.
That it seems like it has a big boom right now.
Who knows, how long that will last.
Some people are very much bought into it for the long term and
think it's going to replace a lot of Finance to go with that.
So you don't have any plans to add it in some people that I
talked about I said, I'm going to buy a crypto ETF when they
come out with one. They're like, oh but that
defeats the point because then you can't act as your own bank,
right? You can't have the like where
you take it out and you have the wallet with it.
I don't really see it. I don't really want to be my own
bank as my issue. She was crypto not something
I've ever wanted to do. So but no it doesn't know plans
with crypto in the future. That's pretty much all the the
questions. I had.
Was there anything anything with em on finance anything that you
want to? Let people know that you're
working on England's me. Share.
Yeah. So the like platform is growing
in a very meaningful clip that, you know, if you want to invest
in a custom portfolio in automate, those Investments and
one is by far the best part products on the Lacey.
I really don't think we have a competitive peer, and how we're
doing and approaching, and thinking about money management,
or borrow product is also, similarly, one of the lowest
cost ways that you can borrow money.
And I think regardless of whether you use it or not.
It should be available to you. And so there's sort of that
synergistic benefit of. If you invest for free, you just
get this benefit of low-cost borrowing, whether you use it or
not and it's emergency funds. And then our son account is, you
know, one of the highest interest rate checking accounts
on the market with cash back on debit card, and we're going to
be moving more into So having that be a full checking account
replacement, and so I think m1r, our trajectory has been strong
and I think that customers should demand and expect more
from us over the years to come. What do you think that does
bring up on question? What do you think when like when
you see user behavior on your platform and building out the
different that different functionality of it?
What do you see as the most underutilized part of it?
Like what are people missing with it?
I think we are best known for our invest product.
It's a unique brokerage. On the marketplace that's really
built around portfolio management rather than trading.
And I think you know, you have 99 other options for trading and
one is really one of the true. That's designed the portfolio
and invest in the portfolio mentality out there.
And so I think borrow is a huge value add service and if it's a
tax advantage, line of credit, that is the lower cost than you
can get anywhere else. We're getting meaningful, uptake
of it. But I still think, you know,
people people should be paying down their mortgages and paying
off auto loans and the like with M1 varro, it's more flexible
lower cost and its margin interest income.
So it's tax deductible. And then the same thing with
spend. I mean we like we're currently
giving away Plus for free for a year and you get a 1% interest
checking account. There's nothing comparable to
that on the marketplace. And so I think the om one should
be the primary checking account for most people if you really
want to earn the most amount of money on your idle cash.
And so, you know, I think the newer products are under you.
Isn't I think there's a lot of growth to be had there now.
Okay, and you're still planning on building out these three.
These three parts of the platform.
You're not, there's no new part of the platform.
You're adding like it at least right now.
No. Yeah, Don those will be the
pillars for the foreseeable future and it's really about
going deeper in each. And so, you know, more investing
options, more intuitive ways to edit and customize your
portfolio and get reporting and Analysis on how it's doing
borrow. We will move into other forms of
borrowing and so right now it's only a portfolio line of credit.
So borrowing against your portfolio.
As collateral to will move into the unsecured and the like and
then spend on credit cards or what do you mean by insecure,
you know, if you just want a personal loan so, you know like
hey, I need 10,000. Like I may not have the Forty
thousand dollars of investment assets to borrow 10,000, but I
need to borrow 10,000 for whatever purpose so, you know
kitchen remodel or something like that and you know, we can
we can support that we're will be able to support that and then
on the spend side, we are moving into the credit card round.
So we have a debit card that provides High cash back, but you
know, we will be Now, from spoiling is a big Market
announcement with them one. I've cited elsewhere, but we
will be moving into that realm and giving people higher rewards
and doing a lot of creative things.
And the, with our product ground, with a new credit card.
Sorry, what's up with a new credit card?
Yeah. Yeah.
We know, there will be an M1 issued credit card and we'll do
interesting things with rewards based on your Investment
Portfolio and use the bar line of credit to provide you better
revolvers and the like. And so, you know, it'll be a
pretty unique credit card on the market.
Okay. Well that's exciting stuff.
I appreciate it. Coming on again round two
absolutely always a pleasure. Yeah.
Thanks again, Brian. Okay.
Hope you guys enjoyed that interview with Brian Barnes C. 0
of m. 1 Finance. If you guys like these type of
interviews where I sit down ask questions with with people over
different companies, make sure to subscribe to the channel,
like the video, share it with friends because I plan on doing
more of these in the future. We have some more lined up.
So appreciate you guys for watching.
I'll talk to you next time.