How I Launched This Company

Good morning, everybody. Welcome to another episode of Cloudflare TV. And in particular, the series on how I launched this company with co-founder and co-CEO Leighton Roberts of Sharesies.

So Leighton, before we get started, good morning.

And can you tell us a bit about what Sharesies is? Because not everybody on this call will be from Australia or New Zealand and people might watch it at a different time.

So they may not have heard of you. I know you're gonna be on the world stage soon, but just a bit of background would be great.

Kia ora, Aliza, thank you for having me.

So Sharesies is an online investment platform started with the purpose of creating the most financially empowered generation.

And the vision of the company is to allow people with $5 the same investment opportunities as people with $500,000.

So we are a New Zealand participant broker. We also offer shares on US exchanges.

We're currently building the Australian Stock Exchange at the moment.

And you can invest in anything on our platform with one cent. We now have 260,000 investors on the platform, just over 70% of whom are under 40.

And we also have about 15,000 kids.

So that's people under 16. And yeah, we're about three and a half years old and just about to hit a billion dollars under management of the platform.

So it's pretty exciting times and it's been a big year. Actually, what are the laws around having kids on a trading platform?

Yeah, I mean, not that different from your sort of classic retail type thing.

So, or any product consumer type product.

So you still have to do good by them and you have to use good education.

In our case, you need a parent or a well-meaning adult to actually own the account.

So really, the kid's account actually sits under a parent account and whilst a lot of people use it for their kids for education and stuff, the actual control of the account still is maintained by the adult.

And does the platform have education on it?

I understand the idea of investing itself as a bit of an education, but do you guys actually help teach?

Yeah, yeah, we do. We're definitely about learn by doing.

So, we think the best thing that people can do is get on there and give it a go, particularly because the buy-in is so low.

And that is, in my opinion, the best way of learning how to invest.

But we write so many blogs. So we probably release a couple of blogs a week talking about different investing things.

Within the platform, we sort of use lots of layering techniques to help people learn what they're doing along the way.

We sort of focus on three things really as our strategy.

So one is giving people access. One is making people feel confident. One is helping people feel motivated.

And then across all of that is like education. So making sure that people are learning as they go.

And I wanna hear more about how you got the idea for this, but just before, I just realized, I never asked you why your symbol is, I think it's a pineapple, right?

Yeah, the pineapple is, yeah, we actually started with just fruit.

So that was the sort of fruit basket analogy for investing.

So one of the things, we're big preachers of diversification.

But the pineapple came probably a little bit later. So we re -looked at our brand.

And when I say a little bit later, it was only probably six months into our life.

And the pineapple, one of our brand strategists came up with it.

But for centuries, it was like a sign of wealth. So people used to have these pineapples, like they wouldn't actually eat them, but they put them on their table at these big banquets and stuff.

And that was showing that you were very wealthy. And now you can buy slices of pineapple in every corner dairy, basically, in every supermarket.

So we thought it was just a great representation of the democratization of something that was once for the elite and now for everyone.

So as you talk about something that was once for the elite and now for everybody, I guess that must be part of your idea.

How did you and the founders team come up with this idea of launching Sharesies?

What drove you to it? Yeah, so one of the other founders, Sonia, she actually had the initial idea.

So it sort of came to her when she was, there was lots of things I think that contributed to it, but her story is often that she was sitting there deciding if she wanted to go out for dinner.

And she was like, well, it's only $50, I might as well, because I can't do anything else with $50.

And she'd always really liked to have been involved in stocks, but I mean, the fee per trade was probably $50 at the time.

So it was part of that, and at the same time, I'm not sure if this is a global thing, but it's certainly New Zealand and Australia.

There was a lot happening about millennials and avocado and toast.

So there's headlines in Sydney basically saying, millennials can't buy houses, not because they don't have any money or not because of anyone else's problem, except for the fact they spend all their money on avocado and toast.

And at the same time, there's this macro problem in New Zealand and Australia actually with the housing market becoming so, so expensive.

And that's continuing to this day.

So you needed other ways to build your wealth. So that's sort of the things that were happening at the time, interest rates at the same time, obviously going down.

So a few things factored into it, but really it was just a classical, I'd really like to do this, so I wonder if it's a problem for other people as well.

And what were you doing before this?

So I was actually working at KiwiBank. So that's a New Zealand bank and I ran the lending business there.

So I looked after the home loan product, which was a massive part of that business.

It's primarily, was primarily a retail bank and also the business lending.

So the business lending tended to be more sort of working capital facilities and that type of thing, or term loans or asset finance.

So that was what I did. I had a great career there. I actually started in the call center about five years prior and was lucky enough to be given some great opportunities in another fast growing company, actually KiwiBank's reasonably new and certainly in banking terms.

And yeah, it was sort of part of that, this accelerator, KiwiBank started like an innovation accelerator or sponsored one.

And that's actually where we all got together and started working on this full time.

Oh, so all five of the other co-founders were at KiwiBank as well?

No, no, it was a- Yeah, so Brooke, Sonia and I were all had or did work at KiwiBank.

So Sonia and I were still there at the time, which is how we met. So, well, to start talking about business anyway, we knew each other from a work context.

And we, I started an investment club when I was 17, putting $50, we put $50 a week into an account.

There's 14 of us and we've bought all these random things.

And it's actually quite material amounts of money now, and we still do it to this day.

And that was sort of like a good proof point. So when Sonia told this idea to John, another friend of ours, who actually works at Sharesies now and runs our product, but he was like, oh, you have to chat with Leighton.

He's got this thing, investment club thing, and you guys should connect on this.

And that's sort of how I ended up talking in it.

And Sonia and I started talking and then we sort of introduced the other founders as we went.

It was a very organic process. It's worked out very well.

How long has the company been going? About three and a half years. We launched our first product, sort of like a beta to a few hundred people at the end of May, 2017.

So yeah, three and a half years. And you have one of the most unusual founder groups I've ever heard of.

I think you have six co-founders, two of you are couples and you have, what do you call the CEO?

Three EO model for the CEO. So can you tell us about this model?

Quite a few of these, we've had no more than three co-founders before.

Yeah, it was very topical, particularly when we were raising capital earlier and the Accelerator didn't particularly like it.

It didn't really fit the mold, but it certainly fit our mold.

Like we just don't believe really that there's such thing as rules.

You can always pick something, but you just got to do what works for you.

And this is what works for us. So yeah, we operate, we call it the three EO model.

So we have a reasonably, it enables us to have quite a large leadership team.

So we've sort of got people at the senior leadership team from all areas of the business.

And so that's made up, the three of us basically have four direct reports each.

And the idea is that we shouldn't be able to form a team just with our four.

So there has to be lots of like matrix type and collaboration going on.

And then we operate as a big senior leadership team. And the founding group, like I just don't know how you do it in any other way.

It takes such dedication and commitment.

You don't get paid anything and it's FinTech. So we always thought, you need to be an expert in finance, which some of us had experience and you need to be an expert in tech.

So we needed to have that as a founding team because it's so important to us to be able to deliver this.

I mean, we're dealing with people's money.

And then, I always think it's missing something in FinTech, like the creative side.

You need to be able to deliver an experience, particularly to consumers that people want.

So the design. So we had tech, design, finance, marketing, product.

We were sort of covered amongst that six people.

And I really do think it's been like our greatest strength. And I know that sometimes feels a bit fluky that we're all still really good friends and still all in the executive.

Still married? Yeah, still married. So Brooke and I are still married and Ben and Sonia are still together.

And we're all just pretty happy, to be honest.

But I think one of the things that six founders did right from the start, Shizzie's extremely values -driven business.

But we had to have those conversations right from the start.

You don't have to do that if there's only two of you.

It's just a conversation. You don't have to talk about how you're gonna work together.

So some people used to say we were sort of maturing a little bit too fast, but really it was just what we needed to do to work together with six of us and make good decisions.

So I think it served us pretty well. And like I say, I think, I always sort of think maybe one day, if we were, say, the next Amazon or something, I don't know, like absolutely gigantic company, then I wouldn't be surprised if Gallerators started saying you need to have at least six people and three of them have to be CEOs or something.

I don't know. But that seems to be how some of that stuff works sometimes.

It's like, here's a recipe that's worked. Let's see if it works for everyone else.

So you talked about being values-driven and I know you're very proud and it's great that you're a B Corp.

Do you wanna tell us a bit about B Corps in New Zealand, what it means, why you chose to be one?

Yeah, B Corp, it's not actually a huge movement in New Zealand yet, but it is something we're very passionate about and it is growing here as well.

So recently there's been some quite high profile B Corps, even on the exchange.

But B Corp is, in a nutshell, it's a company that is for purpose and profit, not purpose or profit.

So it's made up of lots of different things and around how you build up to that.

It's a really robust process you have to go through. Actually, it's not without challenge, but it is something to hold you to account to what you say you're going to do.

And you know you're gonna get looked at for it. If you still want to be a B Corp, which we very much do, then it means you have to meet some of these requirements.

So yeah, that's basically what it means. It's like, we're here to drive what we think is a very important purpose, which is creating financially empowered generation.

And I think that purpose is just more relevant today in this K-shaped recovery where that's like a visual representation of this wealth gap widening.

So people having opportunities to grow, invest into growth assets is so important.

And B Corp is one of the ways we've decided to sort of hold ourselves account to that.

And it's a great network. It's massive in Australia. It's massive in the US.

I'm wearing a Patagonia hat right now, probably the most high profile B Corp.

But we do try to sort of, yeah, I'm wearing Allbirds shoes. And I can see Mikey, who's managing the camera here, wearing Allbirds shoes as well.

So yeah, it's just like a thing that it's cool to be part of.

It's really interesting.

You also told me in terms of things that you do differently, that you raised funds really aggressively in the beginning, more aggressively than others.

Oh, and by the way, I'm glad that Mikey has Allbirds on it.

Just for anybody watching, it says Mikey on Leighton's screen because Mikey is doing the video behind the scenes.

So don't be confused. We are speaking with Leighton, but Mikey is the power behind the throne.

Anyway, so Leighton, tell us a bit about how you decided that you would then go and raise funds aggressively in the beginning and why you did that.

Yeah, aggressively is like a funny word for it, but it's like probably more in line with what companies do in the US, but it's not to that level.

I mean, it's so mature and well done in the US, the sort of Silicon Valley model and stuff of raising capital and getting growth out the door.

But New Zealand, it has traditionally been quite a hard place to raise capital at times.

And bootstrapping is a very common model.

And what that results in, often it limits the opportunity for growth for some companies.

And I'm speaking generically here, obviously it's not for all.

I mean, it's a great strategy for some companies. But for us, it was like, come back to the fact that we're dealing with people's money again, and to that end, we needed to have a very robust company ourselves and a well -funded balance sheet and all that.

So yeah, we have raised quite a lot of money. We always aim to have a couple of years' runway up our sleeve, and most of that simply comes back to the fact that we're a financial services company.

And I always tell people when we're inducting people into Sharesies, we have this session with them.

But we talk a lot about risk, and Sharesies, as a startup company, has a lot of appetite for risk.

That's what you do, right? You take risks, and you go for the ones that you think are gonna trade off and ultimately end up good for you.

And that's absolutely what we're like.

And then we have another part of our company, which is the custodian side, which manages customer money.

And my absolute worst nightmare ever is ending up in something where we've put that at risk.

So I always remind people, we're operating two worlds, and we have to have those lenses at all times.

One is our company, Sharesies, and that does have appetite for risk, and that's how we'll achieve what we're trying to do.

And then we've got this other one, which is there purely for the protection of investors' money and keeping that safe, and that takes no risk.

So what series are you on? Are you in A or B? What have you raised?

Yeah, so we've just closed the $25 million round, which is probably like a series B, or a late A, maybe.

And yeah, we literally closed it about a week or two ago, so it's quite recent.

Oh, congratulations. And are you willing to share what kind of backers you have who's in your cap table, or is that confidential?

Yeah, I mean, a lot of it's sort of publicly available. One of our largest shareholders is actually a company called Trade Me, and Trade Me came in one of our early rounds.

They're a very well -known success story in New Zealand. For those who don't know, it's basically eBay, but it won a New Zealand Trade Me, and it's managed to sort of always fight off eBay, and it's a massive company here now.

So we have a great relationship with them, and they own 15%.

Outside of that, we have some high net worths.

We have some people out of Singapore and Australia that we've bought in in this latest round, and the US, actually, a fund called Amplo, and that's because we're starting to look at international growth.

So we've just hired our first roles in Australia, and starting to create these connections, and that's going really well.

So yeah, we've got a great investor base. The other thing that we sort of do slightly, well, odd, but we're quite staunch on always raising on clean terms.

So everyone has the same class of share, and that's sometimes a challenging conversation to have with investors, but we always just frame that up front.

That's how we want to raise capital, and we understand that that doesn't work for everyone, but it is how we do it.

So we sort of get that out of the way, and then we either continue the conversation or we don't.

Can you talk to us a bit about COVID and how that's impacted your fundraising and your business?

I guess we've all seen that most of the share markets are doing well, so one would think that that would be attractive or useful for our shares.

These, on the other hand, as you said, there's the K-shaped gap emerging.

So some of the people that it seems like you want to appeal to, under 40, maybe less money stored up so far, may be struggling a bit.

So how has this impacted shares and your approach to the business, even?

Yeah, well, it's such an odd one, isn't it? Because we always, the top on our risk register, I talked about risks earlier, but it was always a market event.

It's like, how would people react if a big market dip came?

And then one did come, the biggest ever possibly, actually, right?

So the way the markets tumbled in those first week or two of COVID was basically unprecedented.

And I know that term was used so much all around the world, but I think someone was explaining to me, it wasn't a black swan event, it was a black ostrich.

It's like all these, just things that we'd never seen before. But- Shouldn't it be a black swan event?

Yeah. The absolute opposite happened of what we expected in the end.

People really identified this market dip as a great time to buy, and this was not just shares.

I'm sure many people have heard about similar investment platforms around the world where this has happened.

So we went from, we had about 90,000 customers at the start of March, and we now have 260,000.

So we just saw huge amounts of growth.

We were onboarding 2,500 people a day, which in a country the size of New Zealand, New Zealand's only 5 million people, right?

So it was just a massive sort of kick in the butt to our company really as far as accelerating some of that growth.

Speaking to capital specifically, so because when it all started going, like many companies around the world, we did choose to raise a small amount of money then to sort of shore up our balance sheet.

So as it turns out, we just kept on, we didn't need that capital, but we felt very safe with it there.

And the growth has been crazy, and sometimes it feels a bit surreal. And then from a customer perspective, we just always just reminded people this is ultimately a medical thing first.

Like it's very easy in our industry to fall into thinking that it's a financial thing, you know, like we're looking at markets the whole time, but really it's health and very people-driven.

And we just kept that front of mind.

We kept that communication open and had really good conversations with our investors and like you say, markets doing well and the people who came in hot in March are probably feeling very good about themselves.

That's great. So, you know, you've had to deal with COVID, you've done this aggressive fundraising, you have six of you, maybe you don't need this, but do you, there's like been these big lumpy things going on.

Do you go anywhere for advice, you guys, or do you have enough advice with just the six of you?

No, we definitely go places for advice.

Yeah, we're chatting with people all the time. We have, I mean, we have our boards, we have two external directors on that one.

Ali, she's our chair, and Ali is a very well-known director in New Zealand of sort of the big listed companies, the banks, ANZ at the moment, and a few other high-profile New Zealand companies.

And then we have John McDonald, who was the former CEO of Trade Me, which I've mentioned before is one of the companies on our cap table.

So, and then we've got sort of like our virtual CFOs.

We have an internal CFO function as well, but who's been with us since day one.

We started having coffees with him all about almost the first week.

And he was just, he's always been the black cat. So he's like, this is why this can't happen.

It's just a great voice, but he's also an amazing advisor to us and gives us lots of you.

And he came out of a company called Xero. So he was there very early.

And shared a lot of experience with that. He's also one of the sort of, one of the investors on our cap table.

And then we chat with anyone who'll listen, really.

We're not a shy bunch, I think, and we get talking. But certainly we all had, the six of us were reasonably senior in our careers.

So, and we did have a good grounding there, I suppose, to get things started and cover our own areas.

But yeah, always learning, always talking, that's for sure. Particularly this year.

It's been, none of us have ever been at the executive level of companies before, not the senior team.

And then we've grown this year from, started the year with about 30 people and now we've got 110, I think.

So, and that's still growing and we're learning a lot out of that.

But we've got a really amazing team.

And you're also looking at other countries, right? You said you've opened in Australia.

I don't know, how is that going? Do you have your sights on- That's right, yeah.

That you're allowed to disclose? No, it's just Australia at the moment.

So we are looking at other countries now to see where we might go after that.

We've got, we've hired someone to run our international strategy here, Toni, and she's really focused on that.

But I mean, in the last three months, she's really just been getting us into Australia.

So FinTech, it comes with, you know, all the nice regulatory things and challenges that it's not just like going over there and launching a product and getting customers on board.

It's just not that simple.

And for good reason, you know, we always remind ourselves, regulation ultimately means protection of customers and their money.

And that's something we're very passionate about too.

So, yeah, Australia, we've got, we've hired our first people over there.

We're just about to bring on, start onboarding some people, and we're really excited to see what we can do as far as empowering some Australians as well.

Okay, so is the app up and running for Australians yet or not?

It's, we've got a landing page up over there where people can enter their emails, and we're just sort of letting, you know, we're sending out invites.

We're managing a rollout very slowly at the moment, and we're learning and building the product as we go, and just sort of making sure all our T's are crossed and I's are dotted before we go out with a full marketing launch.

Okay, but so for the Australians watching, they can start to look for Sharesies.

Yeah, that's right. Yeah, so we've got sharesies.com.au, which is a landing page at the moment, which tells a little bit about us, what we're doing in Australia, and it's got a place to enter an email.

And if people are interested in more information, or chance for some early access.

What about mistakes? It sounds like you're on a great ride and doing really well, but we do have entrepreneurs, either other entrepreneurs or would-be entrepreneurs, wanna-be entrepreneurs watching, and I'm sure they'd love to hear.

And is there anything that you'd do differently if you had to do it over?

So many things, yeah. Let's pick a couple. Yeah, yeah. Well, I mean, it's such a funny thing, isn't it?

Because on one hand, it's like, well, no, there's nothing, because everything we did got us to where we are right now, and it's going pretty good, and you learn things, and hindsight's a wonderful thing, but you never have that benefit.

So I think, maybe we would've just gotten to the Australian stuff a little bit earlier, but there was a risk call at the time, it was like, we didn't know COVID was coming, we didn't know we were gonna get this boost, we thought we still had a lot to do in New Zealand, we knew we did.

So maybe we would've looked at some of those international things a bit sooner, and if we started to invest in that, potentially been a little bit more bullish, I think, on our chances of success, but it's so much easier with hindsight.

And I think, really, we do a lot of reflection on what we've done and how things can, we always talk about it and try and improve, and then we choose things to just improve a little bit.

It's like, perfect being the enemy of better type thing. It's just like, we just need to get these little bits happening all the time.

And since we are a tech company cloud player, and since you are a customer of ours, about which we're delighted, that is not the criteria for being on this show, but it's a happy coincidence.

Can you tell us a little bit about the tech stacks and some of the people watching will be interested in that?

You don't have to go into too much detail or give away any secrets.

Yeah, well, so we're built on AWS, so sometimes you still have to tell people that we're a cloud company, which sort of makes me laugh these days, because I don't know that, there's not really another option when you're building, but we have built almost all of the tech ourselves, so it's all in-house.

We do use some third party services, so we use like Intercom, which is for our customer messaging and stuff, and we use Stripe for some of our payments and for merchant payments, but largely ourselves.

Yet we have Cloudflare, so we use that in a few places actually, but the first obviously being protection of the platform and the security side of it and all the good things that come with that.

I'm not sure if you sort of saw some of the stuff with the NZX in New Zealand, not so long, so there's been quite large DDoS attacks and brought the exchange down for a while.

So it is interesting, like these things are coming back and getting more focused, which shows how important companies like Cloudflare are too.

And we also use it to enable our working from home, which has been a super important part of our strategy for managing with COVID.

So we literally, once New Zealand went into its lockdown, there was no problem for us.

Everyone could just work from home the next day basically, and Cloudflare played a big part in that too.

And then we also use it for some performance things too, so getting that end point close to the customer.

Can't remember what that product's called off the top of my head, but that's sort of what we use that for at the moment.

Thank you.

You're sounding like a Cloudflare ad, which was not what I meant, but it's great to hear how you feel and that you're built in the cloud.

Cause it's an interesting thing for financial services.

People are still nervous about, you know, is the cloud safe?

And to be honest, it's probably safer, but there's still some education that needs to happen.

We're almost at the end of our time and I wanna make sure, cause I think I mentioned to you, I always have this problem that we run over.

So I would love to know, before I cut you off, you told us about some things you might've done differently, but just more as advice to other entrepreneurs.

Is there anything you would say to budding entrepreneurs? That's one takeaway.

Yeah, there are no rules, I think. Like every time you try to do anything as a startup company, you walk into somewhere and someone tells you what the rules are.

And the more you dig into anything, and I always like tell people, it's good to walk in and just, you know, think with the mindset of being, for want of a better term, well, the least informed in the room, the dumbest in the room, almost, you know?

It's like, you wanna walk in there and then it opens you up to ask questions and questions and questions.

And then you will almost always walk out the smartest, knowing the most about something around it.

So, and it's amazing how often you'll just ask about these rules that come up.

We find it all the time.

And just how often, once you dig into it enough, you realize that it's just not actually a rule at all.

It was someone came up with it once and then it stuck. And that just happens all the time.

So there's no rules would be the first one. And the second one would be have a super clear vision and get everyone on board with that.

So our vision is same investment opportunity, some with $5, some on 500,000.

When we first engaged with the NZX to launch, we told them that was our vision.

And every time something came up that would stop that allowing us to achieve that, we'd say, well, that's not for us then.

We'll just have to walk away and find something else.

So, and they were super on board with supporting us to get there and helping that.

And we were all working towards the same vision. Leighton, thank you so much.

I think that's really terrific. So entrepreneurs, if you take away from that, remember there are no rules, just dig, ask a lot of questions.

They might be tradition or something that was put in place a long time ago, but it may not really hold and stick, have a clear vision and stick to it.

So I just want to remind everybody that we are finishing up with Leighton Roberts, one of the co-founders and co-CEOs of Sharesies, which is currently available in New Zealand and about to be available in Australia, sharing his tips and insights and story on launching Sharesies.

Thanks again, Leighton.