Investing is pretty daunting.
There’s a bit of a feeling that it should be left to professionals and therefore it’s hard for the average Kiwi to put their money to work without needing to pay someone else to do it for them.
The tide is changing though. There’s been a strong move in recent times to engage more people in the world of investing. Hatch is one company making it easier for Kiwis to invest. I sat down with Hatch’s co-founder and general manager Kristen Lunman, to find out more about the business.
“Hatch is an investing platform with over 3000 US-listed shares from the world’s most recognisable companies and funds,” says Kristen.
“For the first time, you can easily invest in the brands you know and love. Hatch enables thematic investing (for example, sustainability, technology) because how you spend your time and money shows what you care about. We allow you to easily build an investment portfolio that reflects your values and who you are.
“Investing can be daunting. But you have to start somewhere, and the easiest way is to invest in what you know.
“Investing is also an investment in your education. If I put a $1,000 into a brand I love, I'm going to be watching the share price move and learn by doing, I'll probably be listening out for news reports or information about that company. I will understand more about the world we live in, for example, if I’m investing in Apple, I’ll recognise that decisions Trump makes about China and trade could hurt Apple iPhone production and potentially my share price.”
I asked Kristen how they got started.
“We wanted to make investing more attractive to the modern investor and started working with Kiwi Wealth to develop an engaging way to build wealth.
“We talked to a lot of people to get a sense of how they built their wealth with investing. The overwhelming feedback was that people felt it was hard - it was risky, it was boring.
“The next step was working on some prototypes to solve these problems - we looked at ‘share club investing’ (where a group of friends could put money in together), and building your own Kiwi Saver. Some things were a straight no - with ‘share club investing’ for example, the feedback was ‘I don’t want to be responsible for my friends’ money’,” laughs Kristen.
“Then, we started on an investing prototype with familiar brands - Apple, Tesla, Netflix etcetera. People would literally grab the phone with the demo out of our hands and ask how they could get started. It was tough to invest in those brands from the bottom of the world!
“We then found an international partner to help us get safe and reliable access to the US share markets.
“It was a logical process to develop a better way to invest. We kind of went ‘What are some interesting and different ways to solve this problem? Can we make it exciting and engaging? Now let's go and find out who's going to help us build it, and then let's build it.’ It was very process-orientated getting to market, we took it step by step.
“We targeted higher deposits to start with, and it's worked well as a result, but we want to still be accessible for those that want to put a couple of hundred bucks in to start because Hatch is also great for those starting out on their investment journeys.”
I asked what the motivation is behind Hatch.
“Our motivation is to inspire Kiwis to be as wealthy as they should be. If you know and understand technology, and now you can invest easily in Google or Nvidia, it inspires you to learn more about investing and to learn by doing. We’re trying to inspire people to be better with their money,” Kristen says.
“Say there's a 35-year old female who's got a bunch of money sitting in a savings account. Is that the best place for her money right now? She might as well put it under the mattress - it’s not doing anything for her future. Now, what if she could easily shop for shares? And what if she could put her money to work by investing in Lululemon, Ulta Beauty, Amazon or Starbucks? Or a Retail exchange-traded fund (ETF) that invests automatically in a bundle of retail companies? Isn't that a more inspiring place to put her money to work?
“We know everyone's not going to put all of their money into Hatch - and nor should they. But if we can get people to say ‘Oh this is interesting, this is investing and it’s bloody exciting’, then we’ve done our job well.”
I asked Kristen what the response has been like since the launch of Hatch.
“The response has been cool. We have 15,000 people signed up, and they’ve invested over NZD $75 million. So, things are ticking along nicely!
“We launched with a team of 5 people, and we’re now at 13 - we’ve got a very sustainable approach to growing our business, and it’s working for us.”
I asked what some of the unexpected challenges have been on the Hatch journey.
“Quite honestly, the hardest challenge for us has been building a great team,” Kristen says.
“We have an exceptional team now, but we made some mistakes early on, and that was pretty unexpected. I guess the founding team was surprised that not everyone was as passionate about building a business as we were. So, finding the right people with the right cultural fit has led to us learning some tough lessons along the way. We're cautious now about who we bring on board! We all have a real desire to grow a tribe of Hatchlings (our investors) and deliver a mind-blowing investing experience. We have a long way to go there, admittedly, but that’s what gets us up in the morning.
“Another challenge is that we're operating in a regulatory environment that's always changing.
“We’ve seen a lot of issues of fraud in Australia and further abroad, and the NZ Government naturally wants to keep investors safe and companies safe. But it's pretty tough to operate in an agile manner in an ever-changing environment.
“It's a technical challenge for our business. I mean most start-ups, you just set up a name and address, and you're good to go. But because we’re dealing with people's money, we have to learn about them and verify their identities. Thankfully, it keeps everyone safe, but it is a challenge when you feel like it's not as pragmatic as it could or should be.”
There’s a strong innovative culture around Hatch, given what they do and their approach to it.
I asked Kristen how they keep innovation embedded in the company and their staff.
Says Kristen, “We have a culture of growth mindsets. And we foster an environment where people can learn and grow.
“We have three philosophies we look to champion at Hatch.
“The first is an entrepreneurial culture. We look to hire the people with growth mindsets that take initiative. When you hire people that are continually challenging the status quo, you create an environment where people make your business better. Getting the right people on board that have an entrepreneurial mindset is important — and then protecting that culture so that they can operate in that manner is critical.
“The second is running lean. We have adopted a lean approach, and it’s all about figuring out what’s the smallest thing we can do. We tend to run small experiments before we fully automate and scale something. If the experiment fails, we can quickly discard it and try something else.
“And the third thing is talking to our customers. We love our investors and want to build this platform with them. The big companies that have failed just haven’t kept up with their customers.”
I asked Kristen what advice she would give to those wanting to get a start-up off the ground.
“Get the right people. I can’t express enough how much you need the right team,” Kristen says.
“You need team members that are as dedicated as you and want to live your agreed core values. People people people, culture culture culture. It’s so important; I can't express that enough.
“In those early days, everyone needs to be passionate about growth. If you're not growing, you're dying, or you're treading water and eventually going to die. Everyone, from developers to designers to marketers, needs to be passionate about growth.
“And finally, I’d say start small. Throw up a landing page and sell to your neighbours or colleagues.
“So, build a great team and culture, be passionate about growth, and start small.”
I asked Kristen where to next for Hatch.
“We've got to make it easier for those that don't know where to start investing. I’m talking about those Kiwis that still think that their money is best sitting in savings accounts, I'm talking about people that are considering buying that rental property.
“There are more engaging and potentially better ways to put your money to work, and we want to solve the 'exciting investing is inaccessible' problem. We've started by launching a free Getting Started Course as our first small step, but stay tuned for more.”