Credit: Spare change—we all have it. Yet for most of us it just collects dust in our bank account or under the couch. But what if all that change could actually be useful?
That’s what Acorns is trying to accomplish. By automatically investing your spare change from credit card purchases and bank transactions, Acorns wants to make it as easy as possible to put your money to work. Since its inception, the 5-year-old company has made a name for itself as one of the most innovative startups in fintech, and along the way has attracted investments from major firms, including a recent round from Point72 Ventures in November.
Benzinga recently caught up with Acorns CEO Noah Kerner to talk about this recent investment, and his plans for the future of the company.
Benzinga: What is the ultimate goal of Acorns?
Kerner: Our focus is largely on the group that we call the “up and coming,” so the mission at Acorns is to look after the financial best interests of the up and coming. We started with micro investing. We think that is a really optimistic, exciting, empowering place to start with a customer.
Our long-term stance is to introduce new products and features, and, like you’ve seen with Found Money, new ways to help our customers grow their accounts over time automatically in the background of life.
Benzinga: A lot of people don’t invest because they don’t know how. So how do you help educate your users along the way?
Kerner: We have this awesome opportunity to educate the next generation at a large scale, which is really a wonderful responsibility.
As a company that is getting again what we call “the up-and-coming generation” investing early in small amounts, if you are not educating them along the way, it is not really a total service.
It spans the gamut from investing, to saving, to building credit, borrowing, all these kinds of things. Now we are making a really concerted effort to integrate all that education content into the actual app so that while you are making decisions about how to invest and how much you invest, you are also learning as you go.
Benzinga: Where did the idea for [in-house content site] Grow come from? How did you execute on that, and how did get somebody to leave CNBC and work for a fintech company?
Kerner: We believe in the convergence of product and education. The way that we’ve attracted people from the world of journalism is by making it clear that the content we’re going to produce is going to have journalistic integrity. So if you look at Grow content, it’s taking a really unbiased perspective. It’s not about pushing customers to Acorns per se. It’s really just about educating the generation on personal finance and financial literacy. So that is how we’ve attracted real journalists.
Benzinga: Tell me a little bit about Found Money and how you got that idea of an affiliate program started.
Kerner: It started by answering the question of how to help our customers grow their account. We would love to be working with all of the retail brands that matter to our customers, frankly. We just came up with the idea that the most logical way to increase customer accounts is to roll out a loyalty rewards program with retailers with whom they already shop. That’s how Found Money started.
Today we’re working with brands like Airbnb, Blue Apron, Dollar Shave Club and Jet. We will continue adding more brands from there, but at the end of the day, the vision is potentially at the end of a year as a result of Found Money you could have grown your Acorns account by an additional $1,000 just by shopping the way you normally shop.
Benzinga: You’ve got all these kinds of new projects like Grow, Found Money — where are these all going to converge?
Kerner: So just getting back to the mission, looking after the financial interests of the “up and coming” for us means that Acorns ultimately will be the mobile place for Millennials and their money. That’s how we see our business and our product evolving over time. We started with micro investing. We’ve just made a huge effort with sound money and education, and then we’ll add products and services over time to help deliver on that mission.
Benzinga: How do you guys think millennials are changing finance? Are there any different ways that this generation is approaching wealth and money that you haven’t seen before and that you guys are responding to?
Kerner: I can speak from our perspective. The idea that you can automatically build a future for yourself in the background of your life is a very exciting composition. We’ve seen really strong behavior changes and action from our customers as a result of simply link a debit and credit card, and we’re going to round up everyday purchases to the nearest dollar and invest the spare change for you. And you know psychologically that every time you’re transacting, you’re also building your future. That’s a very powerful catalyst.
I think the way the generation responds, we’re essentially removing every barrier to entry that might exist for someone to take advantage of something like investing and automating it and making it something that happens in the background. Otherwise it’s too much work. “I have to read too much. I have to learn too much. I have to do too much.” It’s just too much of a distraction.
So I think that’s the expectation, and that’s what we’re doing and will continue to do.
Spencer: This one’s for the future entrepreneurs out there. What was your first job ever?
Kerner: I have two for you. I started selling baseball cards when I was about 12. That was the beginning of my life in work. But my first official job was actually as a bank teller. I think I was 16 years old and my father thoroughly enjoyed that I spent a summer doing that.
I mean, I have to tell you, the experience actually helped shape a lot of my thinking, because I was interacting with customers all day and dealing with their frustrations at how complicated things were and probably to a large extent also a lack of transparency that existed, because so many of the questions had to do with not understanding why things were the way they were, how to read their credit card statement, just all kinds of things that I think we’ve gotten to a point today where a lot of those challenges have been addressed. So it was character forming.
Benzinga: When’s that Amazon deal coming through? That’s the grail I bet.
Noah: Yeah. It is. For our brand partners, largely retail companies are either giving discounts or freebies or cashback, and they think the idea of cash forward — in other words, investing into the future of your customers as a reward for shopping — is a powerful idea, and we have already seen its effectiveness. It’s good for our customers. It’s good for our partners.
I think the reason, like I was saying before, that we decided to focus so intensely on education is because we’re getting a new generation of people into the market, and it’s critical that they understand why they’re getting into it, how they’re getting into it, what they need to know, what to focus on, these kinds of things. So without the education piece, we believe it’s not really a complete product.
The genesis of Found Money is as simple as we think a lot about how to help our customers grow their account. As you know with Acorns and our round up feature, our customers have linked their debit and/or credit card to the product.
We have invested a lot as a company into building out our contact capabilities. I think you have seen our digital publication grow. We brought in the personal finance editor from CNBC. So we put a lot of effort into financial education and financial literacy. Not just in investing.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
