“I feel like, why spend your time on something that's not noble in pursuit if you have the opportunity to do that?”
Noah Kerner is CEO of Acorns, financial technology and financial services company specializing in micro-investing and robo-investing. Born in New York City, Kerner got involved with Acorns two months after launch as an adviser, investor, board director and then CEO. He is a 4X entrepreneur, Co-author of Chasing Cool with the former CEO of Barneys, and former DJ for Jennifer Lopez.
Acting on a lifelong mission to level the playing field in a world of haves and have-nots, Acorns was founded to bring tools of wealth creation to everyone. The goal is to make it easy to save and invest even small amounts of money, where typically investment tools are reserved for the financial elites. Acorns has an initiative focused on opening children’s investment accounts, highlighting the importance and value of early, compounding growth. It also seeks to offer investment education to prevent less experienced investors from overreacting to short-term market swings. “The market swings every day. It's in the red, the blue, black. It's impossible to stay calm and make rational decisions… great investors stay the course.”
Acorns Job Finder is the latest product launched by the company. Income is the most important aspect in people’s financial lives and serves as the basis of investment, so Acorns is now helping customers find a wide-range of job opportunities, made especially important during the pandemic.
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SPEAKER
Noah Kerner
Chief Executive Officer
Acorns
MODERATOR
Anthony Scaramucci
Founder & Managing Partner
SkyBridge
EPISODE TRANSCRIPT
John Darsie: (00:07)
Hello everyone, and welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum and networking platform at the intersection of finance, technology and public policy. SALT Talks, if you haven't tuned into any of our series yet, is a digital interview series that we launched during the pandemic with leading investors, creators and thinkers. Our guest today is another one that merges those three topics, and we're very excited to have a wide-ranging conversation with him.
John Darsie: (00:37)
SALT Talks, what we're really trying to do with this series is replicate the experience that we provide at our global conference series, the SALT Conference. That's to provide a window into the mind of subject-matter experts, as well as provide a platform for what we think are big ideas that are shaping the future. We're very excited today to welcome Noah Kerner to SALT Talks. Noah is the CEO of the micro-investing app, Acorns, and he's the co-founder of the shareholder rights startup, Say. His background is very colorful and diverse.
John Darsie: (01:08)
He's a four times entrepreneur. He's the co-author of Chasing Cool, and the former CEO of Barneys and also a former DJ. Noah built the leading creative agency for the young adult market, which was called Noise. Before being acquired by Engine, Noise developed hundreds of products and marketing campaigns for this generation. Including Facebook's first application, the first credit card to reward responsibility rather than spending for Chase, Vice's music website called Noisey, and the top-branded game in the app store.
John Darsie: (01:39)
Noah's been recognized as one of Billboard Magazine's Top 30 under 30, one of Adweek's Top 20 under 40, and Fast Company's one of their innovation agents and impact council members. Also, as a judge for the Webby Awards. He has also advised and invested in a variety of fast-growing startups, including WeWork, where he served as the chief strategy and marketing officer from 2013 to 2014. He's passionate about educating today's youth as well. He's lectured on entrepreneurism, FinTech and media at NYU, at UCLA, at Stanford and Columbia.
John Darsie: (02:16)
He currently serves on the board of VH1's Save The Music Foundation. Noah is a graduate of Cornell University, where he studied psychology and economics. I believe today he's coming to us from the beautiful Berkshires. Hosting today's talk is Anthony Scaramucci, who is the founder and managing partner of SkyBridge Capital, which is a global alternative investment firm. Anthony is also the chairman of SALT. With that, I'll turn it over to Anthony for the interview.
Anthony Scaramucci: (02:42)
John, thank you. Noah, it's great to have you on. Thanks so much for joining us and congratulations on everything thus far. The cool thing about you, Noah, is you're just getting started, so I have no doubt that the next decade and the next two or three decades, you're even going to be more sensational than the last few. Congratulations. Let's go back to what motivates Noah Kerner. Go ahead. Where did you get all of this great energy, passion, innovation?
Noah Kerner: (03:12)
Someone told me, not that long ago, to write down your purpose, which I thought was a ridiculous ask, but I did it anyway. I sat down and just wrote what came out of me. What came out was, level the playing field. Then it is like look back in your life through the lens of that. Because for me, it was this organic process of like, "Okay. Level the playing field." I went all the way back to my childhood. I grew up in the East Village in New York, much like you. I was a public school kid.
Noah Kerner: (03:41)
I grew up around kids that didn't have a lot, but I had this weird dichotomy in my life where in the day I was with all these kids who didn't have a lot and at night, I was playing tennis with the wealthiest kids in Manhattan. That was every day going back and forth, back and forth. Then for high school, switched. Private high school by the day. I got turntables at 14, slightly terrified my parents and became immersed in hip hop and started doing hip hop nightclubs at 16. It was like by the day wealthiest kids in Manhattan, at night, grittiest nightclubs in the city.
Noah Kerner: (04:12)
That was the beginning of my life going in between these worlds and understanding the haves, the have-nots. I got to travel the whole country as a young person touring as a DJ actually, so I saw what was happening and how people were living. I felt like, "Huh, maybe it's time to dedicate myself to helping to bridge that divide. If I have the opportunity to do that, that would be a good use of my time."
Anthony Scaramucci: (04:38)
Okay. That was sensational. You got a great book. You have a great memoir in you, but I want to go on this a little further before we get into Acorn. When you say level the playing field, the way I understand it is you want people who are in the have-not category to have an equal opportunity, or at least to get closer to the starting line that other people have. What private high school did you go to?
Noah Kerner: (05:01)
Fieldston.
Anthony Scaramucci: (05:02)
Okay. There are wealthy people at Fieldston. There were probably some less wealthy people, but mostly wealthy people, so there was a divide. We know there is a great divide in the country, but what is that impulse, Noah. Go a little deeper. I'm not your shrink, but trust me, I'm a lot cheaper than a shrink. Go a little deeper for me. Tell me why that impulse and why that purpose?
Noah Kerner: (05:28)
Well, I think it's painful to watch. I think as a person, if you have any sense of empathy to see the way that this divide exists, it's just painful to watch. I don't know if I can combine my professional life and that sense of purpose, that's really good. To give a little more context. My father worked in banking for many years, but he was actually in the philanthropic side of banking. He was technically the first corporate social responsibility officer. He used to give the bank's money away to community development projects, but at the time, it was not a core part of the DNA of the bank.
Noah Kerner: (06:05)
It was because of the Community Reinvestment Act that they had to give the money back. I also saw this, working for these big banks, doing philanthropic stuff, but that wasn't really part of the DNA so I just always saw these gaps. That's the best way I can say it. I feel like, why spend your time on something that's not noble in pursuit if you have the opportunity to do that?
Anthony Scaramucci: (06:33)
I've got to ask you a question because this is just curious. You've been on both sides of it. You've been with the haves and you've been with the have-nots, but the have-nots are just as smart as the haves. Am I right or wrong? I mean, in my neighborhood, I mean, I was sitting up at Harvard Law School. I'm like, "Okay. I know you guys think you're all great with the blue and Brooks Brothers outfit on, but there were kids in my neighborhood that are as smart as you guys, if not smarter. They just didn't have the advantages." Do you feel that way?
Noah Kerner: (07:02)
And happier actually. I felt that way a lot. Yeah. I-
Anthony Scaramucci: (07:06)
Yeah. Possibly happier. Yeah. Why happier, do you think?
Noah Kerner: (07:12)
That's a good question. Maybe more freedom somehow. I don't know. I always felt more comfortable on that side. You know?
Anthony Scaramucci: (07:24)
Yeah. Well, listen, I've been on both sides, so I'll give you my view of it. It's not necessarily more freedom, but it's less expectation. If your dad is a crane operator, like my dad was, my parents thought I was going to Hartford Law School. When they took the map out, they were like, "Okay. We're going to Connecticut?" I'm like, "No, we're going back up to Boston. It down the block from Tufts." My parents didn't know any better, so if you don't have the expectation then there's a little bit of a relaxation to that.
Anthony Scaramucci: (07:54)
I felt a lot of people that I went to law school with were so fearful of failing because of what they needed to 'live up to' that they were pressurized. There's dilemmas on all sides. I appreciate that. I appreciate where you're coming from. You built an amazing business. Let's talk about Acorns now because it fits into your life plan and it fits into who you are as a guy. It's a brilliant idea. For those of us that don't know a lot about Acorns ... I do, but there's lots of listeners that may not. Tell us about Acorns. Tell us why you initialized it. Tell us how's it going so far?
Noah Kerner: (08:30)
Yeah. To get back to the leveling the playing field, at the highest level it's really about putting the tools of wealth making in everyone else's hands. That's like you asked the question, why shouldn't everybody have access to these things that have been reserved for the rarefied? That doesn't make sense. At the most basic level, Acorns makes it really, really easy to save and invest small amounts of money for the future. Then we also layer on top financial literacy as an integrated function inside the product. We've opened up over 8 million accounts in the U.S..
Noah Kerner: (09:01)
The customer base is really that it's the everyday American almost exclusively, and the product is designed that way. Functionally, we have a bunch of products inside. Like we help you round up your spare change, automatically invest the spare change into a diversified portfolio. You can set up a retirement account. It's the easiest way to set up a retirement account. Automatically contribute by the day, the week, the month. We have a kid's investment account, so if you just started a family, you can easily set up a kid's investment account.
Noah Kerner: (09:32)
Then we built out a banking product that helps you. Well, our goal is to get people to spend less, save and invest more. It all comes back to us for how do we help people maximize their saving and investing potential?
Anthony Scaramucci: (09:49)
You've attracted a very interesting investor list. You've got Dwayne Johnson, The Rock, Dany Garcia, you've got Jennifer Lopez, you have Ashton Kutcher. How did you get these people?
Noah Kerner: (10:04)
Probably mostly from former lives. You know what I mean? Getting back to the beginning of the story, just navigating these different worlds, music, entertainment, hip hop, whatever. I think the common thread for all of them is that they connect to the storyline. Like Dwayne Johnson is perfect. His company, Seven Bucks Productions, he started because he had seven bucks in his pocket. His story is the acorns to oak story. Our brand is all about, how do we help people move from being tiny acorns to mighty oaks? All those people share that. Jenny from the block, that whole storyline is the same.
Anthony Scaramucci: (10:43)
Well, I mean, I want to emphasize this because we got a lot of young people that listen to these SALT Talks. You kept your relationships, you didn't transact with your relationships. You made them holistic and you made them symmetrical so these people wanted to come with you in your life. It's not like you were just operating as a DJ, that was over, hasta la vista. You kept in close touch with everybody. The point is, no matter what's going on in your life, you could, as an example, work in the White House for 11 days, get your ass fired after 11 days.
Anthony Scaramucci: (11:16)
That could be a bad thing, but it could also be elements of good where now you've bonded with General Kelly who fired you, become personal friends.
Noah Kerner: (11:22)
Right.
Anthony Scaramucci: (11:23)
You see what I'm saying? There's a big lesson to people that you got to keep your relationships because these people have clearly helped you, but you've also helped them because you've built this amazing company. Now, let's talk about the transaction. I go to the store. I'm a member of Acorn. I go to the store, I buy something, it's $4.15. What does your app enable me to do?
Noah Kerner: (11:47)
We round it up to $5. The 85 cents automatically gets invested into a diversified portfolio of ETFs, so like thousands of stocks and bonds.
Anthony Scaramucci: (11:55)
That hits my Credit Corp or how does it round up?
Noah Kerner: (11:59)
It pulls it from your bank account.
Anthony Scaramucci: (12:01)
I got it.
Noah Kerner: (12:02)
As part of registration, you link your bank account. That becomes your funding source. We see your spending, and then we pull the spare change and invest it for you from your bank account automatically.
Anthony Scaramucci: (12:12)
Okay. All right. It's a brilliant idea. You've got companies out there that are known as robo-advisors, companies like Betterment or Stash or Robinhood, so how do you differentiate from them?
Noah Kerner: (12:25)
Yeah. To be honest, we don't really think about competition. I like the idea of blazing a path and leaving a trail. We pioneered micro-investing. We pioneered bringing financial literacy and education together in the product. We pioneered getting brands to invest in you for shopping with them. We move in our own way and we move forward in our own way and don't really look right and left necessarily. I'd say from the customer vantage point, the key thing to understand about Acorns is the customer we serve, the simplicity of it, the way it helps you grow and grow wealth and the number of tools we provide to help you unlock your potential.
Anthony Scaramucci: (13:13)
Tell us about Acorns Early. What does that mean? What's Acorns Early?
Noah Kerner: (13:17)
It's a kid's investment account, so parents can automatically set up investment accounts for their kids, as many kids as you have. You set up a recurring contribution and it just automatically invests into the kids' future for you. If you're an Acorns customer, it's pretty much 30 to 60 seconds to set it up. It just works like magic. You can see that we have a graph called the potential graph so you can see what that money can become through compounding over time, which I'm sure everybody here knows, but that's when your money grows on top of itself.
Noah Kerner: (13:46)
We have financial literacy for families. Then we have brand partners that are family-oriented and invest in you when you participate with them.
Anthony Scaramucci: (13:57)
It's amazing and it's also a reminder to people the earlier that you start investing, the more value there is in the compounding. You can give small amounts of money at an early age, end up with way more money than if you start out with large amounts of money at a later age. I think you're taking advantage of that for people and you're also explaining that to them, so there's a lot of wisdom in what you're doing. The COVID-19 has complicated investing. What is Acorns Grow and how is Acorns helping its users understand the opportunities of long-term investing in the COVID-19 landscape, Noah?
Noah Kerner: (14:35)
Yeah. Grow is our education product, and it started out of this idea that when you're an investor and you read the news, you're going to make bad decisions. The difference in this space between news and education, I think is really critically important, right? News is the world's coming to an end. The market's crashing every day. The market swings every day. It's in the red, the blue, black. It's impossible to stay calm and make rational decisions when you watch this. Education for us is providing information to our customers that helps them.
Noah Kerner: (15:13)
When the market goes down, you know this, that's the worst time to pull your money out. If you're not super sophisticated about this, and you're paying attention to the news, you're going to pull your money out because you're going to panic. My parents did that two or three times and probably lost 200/300% on their money. Our messages to the customers are, great investors stick with it, great investors stay the course. If you look back in time throughout history, every downturn has ended in an upturn. That kind of information is much more useful than the market went down a thousand points today. The world's coming to a fucking end. You know?
Anthony Scaramucci: (15:47)
Yeah. Well, I mean, I agree with you. I mean, we had Morgan Housel, who wrote the book Psychology of Money. What ends up happening is people get so emotionally charged about their money they do the exact opposite thing that they should do. It's based on the fight or flight response and most people have a flight response when it's their money because it's their life savings. They get very, very worked up about it. Also, they lose some confidence in the system so they think, "Okay. That number that I'm looking at on CNBC for that stock is just a number. It's not reflective of an underlying business."
Anthony Scaramucci: (16:23)
It's super important for people to be aware of that. You have become a very well-known enterprise. I mean, everybody knows about Acorns. Millennials, generation X and Z up into the old fogies like me. How did you do that? How did you get the proliferation of your brand?
Noah Kerner: (16:45)
Starting with, and I think this gets lost a lot, but a real focus on product and product quality and making sure the product is good so people talk about it and refer it. I mean, the majority of our growth comes from organic and referral growth. We focus a lot on things like NPS, which is net promoter score. How likely are your customers to refer your product to a friend? Making the experience great. From a marketing perspective, we have partnerships with everybody from The Rock to brands. We do a lot of press. We do search engine optimization.
Noah Kerner: (17:14)
We have our content publication, Grow, that gets a couple million uniques a month. It's a pretty holistic approach, but at the most basic level is thinking about how to make a great product experience so people love it and talk about it.
Anthony Scaramucci: (17:28)
All right. You're doing something pretty gigantic today, right? You're launching Acorns Jobs Finder, is that correct?
Noah Kerner: (17:35)
Yeah.
Anthony Scaramucci: (17:35)
All right. That's pretty huge. Okay. Mazel tov. Congratulations. Okay. Now, what are we doing with Acorns Jobs Finder? Tell our delegates about it.
Noah Kerner: (17:44)
Yeah. It comes back to the leveling the playing field thing and also, I think trying to be timely. I can't sleep at night when I think about what's happening right now and how much unemployment there is and all the statistics around how much people are struggling. There are pre-COVID and COVID reasons for why we did it and why we did it now. If you think about the banking industry at large, and we do that, just what are the gaps, right? Ask questions. Why doesn't the banking industry help people with income when income is the most important part of your financial life? This just seems like a weird gap in financial services.
Noah Kerner: (18:24)
We said, "Look, we help people save and invest money. To do that, we have to help people earn more money. If you can earn more money, you have the potential to save and invest more money." That was pre-COVID logic. COVID logic for why we did it now is obviously you know the statistics around labor and unemployment. This is a really tough time so we wanted to deliver millions of job opportunities, remote jobs, side gigs, part-time, full-time to our customers and say, "Look, there's a lot of opportunities."
Noah Kerner: (18:54)
There's a lot of interesting statistics around side gigs for example when you see the huge uptake in side gig activity during COVID. It turns out a lot of people don't know what type of side gigs there are, how to find them and what to choose. We said, "Let's bring this to bear inside of our product and bring these opportunities in a really important time."
Anthony Scaramucci: (19:17)
Let's talk about the pandemic. You said that you're having some sleepless nights. Are you having some sleepless nights related to the pandemic?
Noah Kerner: (19:24)
I have sleepless nights because it's hard for me given what we do to digest what's happening to people in the country. I mean, I obviously have some sleepless nights because of some of the activity happening in the world and in the country. Mostly it's if you're as immersed in this problem as I am, and we are as a company, it's very hard to sleep when you see these statistics. 70% of Americans not having a thousand dollar emergency fund. Our statistics show that the average American wants 75,000 to feel financially comfortable.
Noah Kerner: (20:00)
That's a pretty big, enormous gap that is not going to magically get filled. Unless we're helping people earn more, unless we're helping people save and invest for the future, unless we're helping people spend less so they can save and invest more, it's going to be very, very difficult to move into the future.
Anthony Scaramucci: (20:19)
Well, listen, I join you in having the sleepless nights. The reason I'm asking you is there are a lot of nights in the last six months where I've lost sleep because of all the stuff going on. The political ramifications of what's going on, the healthcare ramifications, the fact that we have this dystopian information, disinformation out there, worries me, but you're talking about the income divide. Let's address that for a second. Why do you think that that has happened to the extent that it has happened? It seems you could really trace it back to the last 40 years, Noah. Why do you think that that's happened?
Noah Kerner: (20:56)
Well, pretty much flat middle-class wages, rising debts. It's really I think-
Anthony Scaramucci: (21:04)
Okay. Let's address that. Why are the middle-class wages flat?
Noah Kerner: (21:07)
Well, there's a lot of reasons for why middle-class wages are flat, but I think when you ... By the way, one of them is when you look at payroll inside companies, a lot of the wages are going to healthcare costs and things like this. There's a lot of reasons. Combine that with the rising debts, and looks like this, and the rise of personal loans and credit card, credit card debt, and the increase in that, you get into a really difficult cycle that we're in. Unless it starts to go like this, I think we're going to be in a very difficult-
Anthony Scaramucci: (21:38)
Okay. CEO wages are going like this though, right? No?
Noah Kerner: (21:42)
Absolutely.
Anthony Scaramucci: (21:43)
Okay. You get CEO wages going like this, everyone else's wages going like that, that's going to cause some tension and anxiety and possible anger in a society, right?
Noah Kerner: (21:52)
A hundred percent.
Anthony Scaramucci: (21:54)
What do you think has happened then? Have we lost our noblesse oblige in the society? Are we catch as catch can where just everybody's out for themselves in an Ayn Rand kind of a way? Or we don't have the fabric knitting and stitching or social contract tighter together? What do you think is happening?
Noah Kerner: (22:16)
That's a really deep subject and obviously there's a lot to say on this. When I think about what I do and back to what I view as purpose and the idea of trying to level the playing field, if you think about banking, as an example, just look at credit cards and how the credit card industry works. You and I get credit card points and rewards paid for by the debt of other people who don't have a lot of money. I don't like using hackneyed phrases, but the system in many ways is rigged to enable people who have money to make more money and people who don't have money to go deeper into debt.
Noah Kerner: (22:56)
I think if you think about investing, even right now there's this whole range of savings products that have been pushed over the last couple of years, with a 1.5% interest rate, saving, saving, saving, saving. Well, you can't save your way to wealth. You can't even save your way past inflation. I think it's information. I think it's education. I think there's not enough people working to level the playing field and actually giving a shit about that. I think when people start making money and they get here, you don't want to come down from that position. People seem to ... It's actually always been a surprising thing to me.
Noah Kerner: (23:33)
Any modicum of success for me is incredibly humbling, but I meet a lot of people who get more successful and seem to lose sight of ... So it's a strange phenomenon. I think there's a lot. I think there's psychology. There's socio-economic forces, macroeconomic forces. There's a whole series of range of forces.
Anthony Scaramucci: (23:57)
Yeah. Look, I tell my conservative friends, "I got it. I understand that the rich want to get richer and I'm all for unlimited outcomes, but you got to be very, very careful because if you break the society and we disassociate the super wealthy from regular people, you will have an upheaval." It's just, unfortunately, that happens. You got to study five or 6,000 years of history. You are way better off figuring out a way to help your neighbor. Otherwise, you're going to be ending up living in a bob-wired security compound, sitting in your McMansion with your family while your neighbors are suffering.
Anthony Scaramucci: (24:34)
I'm not exactly sure if there's a social good to that. I don't understand why having 10% less and your neighbor doing better, isn't better for you overall, holistically. That's a whole longer-term philosophical discussion. Where is it ... Before I turn it over to John Darsie who's dying to ask you questions, and we got tons of questions in the queue, where is Acorns five years from now, Noah?
Noah Kerner: (24:59)
Our vision is to build a financial wellness system that helps everyday Americans save and invest every day. That's our stated vision. I'm sorry. What that means is there are many things you do in your financial life that impact your ability to save and invest, spending, earning, borrowing, literacy, all those things. We want to help you maximize all of that around saving and investing so you have as much saving and investing potential as you possibly can. In the next five years, Acorns will be much more of a system of products that work together. That's one.
Noah Kerner: (25:31)
We're already the largest subscription service in U.S. consumer finance. By the way, the subscription pricing model is also really important to the concepts we've been talking about, which is when you think about the way people are charged fees in banking, most of it is surprise and most of it is variable. Overdraft fees, minimum balance fees, all these things that pop up out of nowhere. Our thought is let's bring a very predictable, simple, transparent pricing model to this category and say, "It's $1 a month, $3 a month, $5 a month, whatever, here's what you pay. Here's what you get."
Noah Kerner: (26:04)
We have an ambition of a hundred million everyday Americans saving and investing every day. It's a pretty lofty ambition and ideal, but I think if we could achieve that, that would help to make a dent in the fabric of society. Also, literacy levels. Really, really getting people more financially literate and focusing on getting our customers, learning about all the things they need to learn about with their money. I think it's a travesty that financial literacy is not part of the core education, because how do you get dropped off into the world not knowing how to do your taxes? That doesn't make any sense to me?
Anthony Scaramucci: (26:39)
Look, you preach to the converted. Have you read The Richest Man in Babylon by George Clason?
Noah Kerner: (26:44)
I haven't. Tell me about it.
Anthony Scaramucci: (26:46)
Yeah. I want to recommend it to you because your whole business model is basically based on that. I read the book when I was 14. It had a big impact on me, but the central thesis of the book is if you want to get to independent wealth, you have to pay yourself first. If you have a cable bill and you have an electric bill, that's all fine and dandy, but whether it's $5, $10, a hundred dollars every month, you have a bill to yourself which goes into a savings account, or goes into a stock market account.
Anthony Scaramucci: (27:16)
I've been doing this since I was 14 years old, and it did have a dramatic impact in terms of developing the good habits of savings, which you are trying to do for so many Americans as people around the world. I'm going to turn it over to John Darsie, but Noah, I've enjoyed the conversation. I was your therapist there for about 10 minutes so I will send you a side bill and we can round that up into my Acorn account, okay?
Noah Kerner: (27:40)
You got it.
Anthony Scaramucci: (27:41)
All right. Thank you. Go ahead, John.
John Darsie: (27:43)
All right. Now, for the normal part of the session where Anthony is not acting like your shrink. What's interesting to me, and Anthony talked about this earlier, is how you've differentiated yourself from other FinTech players in the space focusing on investing. To me, the power in Acorns, and comment on this, if you will, is reinforcing positive habits. He talked about, we did a SALT Talk several weeks ago with Morgan Housel who wrote The Psychology of Money and writes a lot about that exact topic on his blog regularly as well.
John Darsie: (28:15)
How much of the platform is about reinforcing the right habits in terms of when you spend money, you should also be saving money and investing money? How have you guys thought about the investor psychology piece of this business?
Noah Kerner: (28:27)
Yeah. It's a good question. I mean, a lot of our customers have not saved or invested before, so what we find there's this ... And we talk to a lot of our customers. We get this feedback. There's this sense of hope and confidence that happens with discovering the product, and more importantly, the fact that you can actually save and invest money. The way the product functions is that there are a lot of ways to contribute really regularly.
Noah Kerner: (28:49)
You come back to the product, you see it happening right in front of your eyes and that from a conditioning perspective is really important because as you know, the act of saving and investing is just complicated. It's out of reach. It's just hard to do, so if we can make it easy to do, but also show you that it's happening right in front of you, we like to say celebrating growth and milestones, that helps people begin and it helps people build the confidence to be able to continue doing it. It's very much a conditioning.
Noah Kerner: (29:21)
I like the idea of, and ask the question, can we make saving addictive? Because there's a lot of addictive shit out there. There's a lot of addictive platforms that aren't necessarily good for you. If you could take those mechanisms and apply them to something that's really good for you, that's wonderful.
John Darsie: (29:38)
Right. Yeah. There's a great book called Nudge about that exact thing. Is that the same way that big tech companies use all of their research and AI capabilities to nudge people into behaviors that benefit the company, what if we as a public good started creating nudges into the right behaviors that actually makes people healthier and wealthier and happier?
Noah Kerner: (29:59)
Yeah. Richard Thaler is an advisor to the company. Very familiar. I love that book, but that's exactly it. By the way, the other side of this, and the other side of money for most people, probably all of us in different moments and different times, not all of us, but a lot of us, there's a lot of shame and embarrassment tied up in it. It's hard to talk about if you're struggling, you don't want to talk about it. The fact that you can find this place where little by little, it adds up, it builds a sense of hope. I think that emotional component is important because there's a lack of hope. There's a desperation in struggling with money. A hundred percent.
John Darsie: (30:45)
Yeah. No. It's definitely something that people are very reticent to talk about even within their own families. Talk a little bit more about Acorns Grow. We have a couple of questions about what's your long-term vision and mission for educating today's youth and our population in general, about financial literacy? How can we use technology to further pepper people with just these small stories about how you pay your taxes, how you understand the different taxes that you eventually are going to have to pay?
John Darsie: (31:13)
You see people like athletes coming into college football programs and going to play professional sports that buy a $2 million house without understanding the basics around property taxes and income taxes and understanding personal budgets. How are you going to use technology the way you've done with Acorns, the core product, from a Grow perspective to educate people?
Noah Kerner: (31:34)
Yeah. The best thing to understand is that the core product involves education. We don't think of education as a side thing. There is a separate website we have called Grow, but the education is part of the product. The way we think about it ... And by the way, we have not delivered on this yet. We will. Educating at the moment of decision-making is the way to crack this. It's very hard to get people to read content. It's very hard to get people to remember. It's harder. Richard Thaler will tell you, you could get someone to read something, but forget about trying to get them to remember it.
Noah Kerner: (32:07)
You've got to educate at the moment of decision-making. What that means in our world is product and education come together in one experience. Education is not branded entertainment. It's not over here. It's here. There are things that we'll do for you. Like we automate investing, but there are things you need to know as an investor to make good decisions. We can't automate the act of you not taking your money out of the market when it goes down. You have to know that that's a bad decision.
Noah Kerner: (32:35)
We have to educate at the moment of decision-making so that you are constantly reminded of every downturn ends in an upturn, every downturn ends in an upturn, every downturn ... This kind of stuff. We don't make it hard to pull your money out because we don't believe in that. You should be able to withdraw. It's free. It should be easy, but it's not a good idea to withdraw unless you really, really need the money.
John Darsie: (32:57)
Have you guys done any studies around the behavior of Acorns' investors relative to the general public in terms about how they react to periods of market volatility?
Noah Kerner: (33:08)
We have actually. First of all, during the pandemic, and this is not the case, historically, we've seen really high retention rates. There's a bunch of factors, but we attribute that in part to the constant barrage of education and information, making sure these customers have this. We've also run test controls during market dips to see what happens when we don't educate people, versus when we do, and there's a much better behavior among people who get educated through those periods. I think we like to have our hand held during those moments.
Noah Kerner: (33:40)
I'm sure when you talk to your parents or anybody who's ... Even I go ... I mean, I have financial planners. I freak out too. When things are sideways, I'll get them on the phone and they'll be like, "Okay." It's kind of embarrassing because of what I do, but I'll get them on the phone and I'll be like, "I mean, this one, are you sure? This one's different." You have to hold people's hands. Everybody has anxiety. Even the people with the most experience doing this, you still have moments of anxiety.
John Darsie: (34:15)
Yeah. We've had plenty of financial advisors on SALT Talks talking about that exact thing, is that their job is part investment manager, but the larger part of it is psychologists for their clients and reassuring them during periods of volatility to stay the course.
Noah Kerner: (34:29)
Yeah. I wish I had my conversations with my guys recorded because it would be hysterical.
John Darsie: (34:33)
Book recommendations [inaudible 00:34:34].
Noah Kerner: (34:35)
What'd you say?
John Darsie: (34:35)
Sorry.
Noah Kerner: (34:36)
Yeah.
John Darsie: (34:36)
We have a question about book recommendations. Anthony mentioned The Richest Man in Babylon, which is a great book. Do you have any authors, whether it's books or bloggers or anyone that you read frequently that help shape your worldview or any book recommendations that you're reading right now?
Noah Kerner: (34:53)
Well, as it relates to this stuff and behavioral economics and money, I actually am a huge Thaler fan not, so Nudge and Misbehaving and those books, I think are great.
John Darsie: (35:01)
All right.
Noah Kerner: (35:01)
As it relates to life, I'm a Churchill fan. I like to read biographies and I think The Last Lion, that series is one of the great series from an inspiration perspective. Like you said, this is as much about courage to move through difficult times as it is about technical knowledge. Man, nobody had more cards to move through a difficult time than Churchill. His great lines run through my head all the time, never, ever, ever, ever, ever give up. We'll fight in the hills, we'll fight in the streets.
Noah Kerner: (35:33)
Just that mentality, the optimist sees the opportunity in every challenge, the pessimist sees the challenge in every opportunity. Just all those reminders of stay courageous.
John Darsie: (35:46)
Well, our director of sales at SkyBridge is a massive Churchill fan. He's also British so he fashions himself as a modern-day Churchill, so I get to hear a lot of Churchillian quotes and everything every morning. In the middle of the pandemic was no different as we confronted all the issues that everyone in the world and in our country and in our industry faced during that time period.
Noah Kerner: (36:06)
Here's a good pandemic joke.
John Darsie: (36:08)
All right. Leave us with a nice Churchill quote to get everybody inspired as they leave today.
Noah Kerner: (36:13)
When you're going through hell, keep going.
John Darsie: (36:15)
There you go. Keep investing in your Acorns account because the compounding won't stop. Noah, thanks so much for joining us. Anthony, you have a final word for Noah before we let him go?
Anthony Scaramucci: (36:26)
No. Noah, I loved it. I hope we can get you back on. I'm looking forward to the future with you because even though you've already built an oak, I think that oak is going to turn into a redwood or sequoia. I'd like to figure out a way to invest me some money in Noah actually.
Noah Kerner: (36:41)
Okay.
Anthony Scaramucci: (36:41)
God bless you. Okay. We wish you great success.
Noah Kerner: (36:44)
Thank you.
Anthony Scaramucci: (36:45)
Keep up the great work for everybody.
Noah Kerner: (36:46)
Thanks Anthony. Take care.