Please enjoy this transcript of my conversation with Jannick Malling, Co-Founder & Co-CEO of Public. Transcripts for other episodes can be found here.
Transcript – #148 Public: How They’re Building the Future of Investing from Fractional Shares to Alternative Assets and Social Investing | Jannick Malling, Co-Founder & Co-CEO
Daniel Scrivner (00:00):
Jannick, thank you so much for joining me. I'm so excited today to kind of jump in and explore how you've built Public, so thank you so much for the time.
Jannick Malling (00:07):
Absolutely. Great to be here.
Daniel Scrivner (00:09):
Where I want to start, because we have a ton of ground to cover today, there's a lot of topics that I want to get into, but where I wanted to start is if you could share a quick sketch of the origin story of Public and Public.com.
Jannick Malling (00:21):
Yeah, absolutely. We started Public, I think in... We launched it in 2019, started a little while before that, and really, the problem that we were solving in the early days was actually quite interesting. It was sort of twofold. I guess what most pitch decks, they try to have this like one problem, one solution, but I think we were maybe approaching it with a little bit more nuance than that, and we saw this problem around investing, where on the one hand, a lot of people were seeing these barriers getting into the markets, specifically with regards to how much money is actually required to sort of dip your toe into those kinds of waters.
The way that it used to work is you had... If you want to participate in the stock market, you've got to buy a share of a company, and the price per share of that company ultimately ends up representing the minimum amount of investment that you have to make, right? So before the recent stock splits, you know, Amazon, 2 or $3,000, Google around the same, famously Berkshire Hathaway worth hundreds of thousands of dollars. So that was one sort of barrier to entry that we saw, that we solved by inventing this fractional investing concept, where you could buy a fraction of a share.
A lot of people found that way more intuitive, because the stock price is a little bit arbitrary, actually. You multiply it by the number of outstanding shares, and then you get to the market value, but we even saw a lot of stuff of like people not thinking through those loops, and just thinking, "Oh, if this..." Like, if you talk to people who are not familiar with the stock market, right? Naturally, they'll think, "Oh, whoever has the highest stock price is the most valuable company," right? And even those concepts like... At the time, I'd already been in finance for way over a decade, so I knew that that was not the case, but it was sort of like some very first principles thinking and revisiting of very fundamental assumptions about what's actually common knowledge for the majority of America, mainly also people outside of finance.
So that was kind of one element, and then the other, way over here if you will, was just a lot of people having this psychological barrier that the stock market was not for them. And as somebody who had worked in and around the online trading industry since 2005, I sort of could totally see that, right? Because it's always been historically associated with sort of this like white trader bro if you will, right? Like, you've got all these incredible movies, by the way, like Wall Street in '87 and The Wolf of Wall Street, and then the follow-up with the Shia LaBeouf thing, and a bunch in-between those, even, and very, very entertaining, and therefore reaching a very wide audience, but therefore also having people think, "But that's basically what the stock market is all about, and that's who it's for."
Whereas the truth is, it's called the public markets because it's supposed to be for everybody, right? And we sort of realized, "Okay, all those movies are actually about what happened in the '80s and '90s, and here we are, 20, 30 years later, and the future doesn't need to look like that." In fact, we think it should look like something where everyone can participate, no matter how much money they might have or whatever their preconceived notions might have been about the stock market. And so you sort of had this psychological barrier, of a lot of people thinking that it's not for them, and then you had the structural barrier, economic barrier of a lot of folks not being able to potentially afford a share in their favorite companies, and also just not potentially being able to build up a nicely diversified portfolio, because if you have to buy one share of the top 10, 15 companies in the S&P 500 at that time, I think you would have to carve out like 10, $20,000, which is sort of way above the mean average savings account in this country, so...
Daniel Scrivner (04:26):
Yeah. It seems like what fractional shares really solves for is... You know, most people are thinking, "I want to invest $50," or, "I want to invest $100." They're not thinking, "I want a share, and what the hell's the price of the share today, and what is that?" And so it just makes it so that you can actually invest what's comfortable with you, the amount that you want, in what you want to invest. It's somewhat amazing that it took so long for it to be invented, but it feels inevitable anyways.
Jannick Malling (04:48):
Yeah, I mean, I guess it functioned for 2 or 300 years the other way, and then it very quickly changed all of a sudden. I think what's been super interesting to observe is I think a lot of the early even media that Public got, and a lot of other folks built fractional kind of shortly there after as kind of features. I still think we're actually the only brokers that spawned fractional, which is kind of interesting in many different prospects. But I think in a lot of the early media and awareness around it, it was seen as like, "Oh, there's a democratization element, because it allows for people who couldn't afford to buy a share of Amazon to now buy a share of Amazon."
That was obviously true, but what we then also found, especially during 2020 and the events of COVID and whatnot, is that it gave people much greater control over their portfolios. So even if you have $10,000 at a time where Amazon is trading at $3,000, you really have to decide, "If I want Amazon in my portfolio, does it represent 30, 60, or 90% of my portfolio at the time that I'm making that portfolio?" Right? Whereas the fractional capability just gave you the ability to fine-tune that and mix and model your portfolios exactly as you wanted to.
And then secondly, it allowed people to dollar-cost average in a much more meaningful way, right? And dollar-cost averaging meaning that you recurringly buy essentially into an asset, essentially to sort of de-risk for time, I suppose, because you might catch a stock at a high or a low, and so if you just buy it every week, every month, then you sort of end up building up an average price, that is... And that's, especially in these very volatile markets that we've been in frankly for the last couple of decades. Volatility has been trending upwards. That's become a very popular strategy, and that's really what fractional allowed for the long tail of investors that are not institutional or necessarily high net worth.
So yeah, it was kind of one of these things where a lot of people thought that it was designed for this one purpose, this one use case, but it just ended up completely changing, I think, how people invest, because it was so much more useful for that. That was just the beginning, and I think today, it's just starting to be much more the default of how people are thinking about modeling, controlling, diversifying their portfolios.
Daniel Scrivner (07:08):
Yeah, totally. It feels like today, if you were going to say, "I want to build a Public.com," or, "I want to build a competitor or something like that," you would of course default to, "It's always going to be dollar-cost average." It just is a better primitive at the end of the day, a better kind of root way to get access and to make those purchases. Makes a lot of sense.
Jannick Malling (07:25):
Yeah, absolutely. I mean, one thing that I always thought was interesting is, for all its sort of like pros and cons, crypto was designed like that, right? Crypto was sort of designed on the internet, so you never had to buy one whole Bitcoin to participate in the Bitcoin movement, if you will, of the be an investor in that. And that's because it was designed in, and I guess the paper was written in 2008 or something, right? And so the stock market was not. It goes back a few hundred years, and so I think if you had to invent it today, yeah, you would definitely invent it with something like this at the core, no doubt.
Daniel Scrivner (08:03):
I want to go back and talk a little bit about the beginning of Public.com, and I'm just going to provide a little bit of context. You know, I think I met you late 2018, and so I've been super fortunate to have a chance to kind of see you and Public evolve over those years, and one of the things at the beginning, that really struck me, I learned about what you were building, and it made sense to me. And we're going to get into... I mean, one of the reasons I was so excited about this is Public's been very values-focused from day one, and I think this is a fascinating case study of just a company competing on values and proving that you can actually win, and win in a market, win a lot of customers with that.
But, one of the things I wanted to ask about is Robinhood. You know, I remember in 2018, 2019, talking about it, and I would talk about Public with other people I knew, and literally, the default response was, "Well, there's Robinhood. Like, how do you beat Robinhood?" And Robinhood wasn't as big as it is today, but it was a big competitor. And so one of the questions I wanted to ask is how did you think about that, and what gave you the confidence that you could enter the market and you could beat what I'm sure to many people felt like this 800-pound gorilla? And every market has incumbents, but this was a startup, along with a bunch of other incumbents.
Jannick Malling (09:13):
No, absolutely. I'm a designer, and in those early days, it's not like I looked at that product like, "Oh, this is ugly," right? Like, they won a bunch of incredible design awards, so I guess it's a good question. And there are a number of elements to it. Number one, I actually came over from London back in 2015, I think, '16, something like that, so not too long after Robinhood launched, and I think I came over to the US always having looked from sort of Europe, over there across the pond, and just seeing the greatest financial market in the world, right? The S&P 500 returning 10 or 7% adjusted for inflation over the last 100 years, you know? I think on a risk-adjusted basis, that's a pretty great asset, and something that you'd struggle to find in Europe. And so I sort of came over here assuming that, of course, everyone would be taking advantage of that.
And what I found was that was far from the case, and like I said, that there was a lot of these misconceptions around it. And so, there was really these two things, right? One piece was the fractional thing, which is something that nobody offered at the time, I guess, I think Robinhood or anybody else. And then, the other half was thinking that like this is not for me, right? That second part is really where we got the idea for community, and using community as a way to kind of showcase to people that you can do this sort of, no matter what your background, or your gender, or your age, if you're above 18 and old enough to open an account at least. So, those two things really, then, came together in a big, big way to create just an experience that was like, I think, orders of magnitude different. So that was actually the early days.
Now, that's interesting, that might not, to your opening point, be as much as what we're known for now, but when I think back to 2019, 2020, the product set was like heavily differentiated. We were the only one really offering fractional access to the US market at the time, and obviously, as other people started to kind of add that feature, I think the community aspect still made a big difference. You know, 40% of the customers, of the users on Public are women, right? That alone has been a stat that has been wildly different than that of other startup investing apps, and certainly legacy kind of companies.
But then I think over time, what we started to think about is really that like, "Okay, what this business, more than a lot of other businesses really comes down to is trust." And that might sound like an obvious statement, but when you think about it, financial services, consumer financial services companies, they just have to over-index on trust so much. And the way that trust was filled, I think, in the legacy, sort of in the older cohort of legacy brokerages if you will, was through investing in these personal relationships, actually setting up brick-and-mortar stores, where you could come in and build and cultivate that kind of relationship. A lot of those relationships are then inherited down through the family, right? So like, if your parents had a stock broker, you would sort of inherit that, and there would be that kind of relationship.
But then, in the age of the internet, you realize that certainly a lot of our generation were not going to be going through brick-and-mortar stores, and to cultivate those kinds of relationships, and there's actually a question of what relationship do I want with my brokerage relative, and how is that trust actually built, right? So we ended up in this model where, look, we will build trust in predominantly, I think two ways, that kind of reinforce each other. One is just being a very values-driven kind of player, standing for things like transparency, and trying to create the most aligned business model in the industry, as far as incentives goes, because we always say incentive dictates outcomes, so that's sort of something that we believe in a lot. And then secondly, through community, right? So that you could find on the app, have conversation, form communities there, which really led you to trust other people in the community, and then sort of like indirectly, Public as a result of that.
And as you can imagine in that kind of equation, one kind of fed off the other, and they ended up forming more of a growth loop than anything else, in that the more that you're sort of focusing on values, and you're talking to people as human beings, the more, the higher your word of mouth rate, your NPS score, et cetera, but also the more communities will actually form that are truly valuable on Public. That was kind of like probably not something that you would learn in your average MBA, I suppose, but nevertheless, that ended up becoming kind of the formula for us to really crack into the space.
And so yeah, it was kind of interesting. It started being more features driven, but at the end of the day, a lot of people can copy each other's features, and it ended up being something that I think has frankly also more of a moat around it, which is sort of like brand recognition, values, community. These kinds of things are not as easy to replicate as something that you can sit down, write code for six to 12 months, and then come out with a similar kind of product.
Daniel Scrivner (15:07):
Yeah. It was fascinating to hear you talk about legacy companies, and really building trust. I think it's an excellent analysis, building trust in part by having these physical locations. And I don't know about your experience, but I feel like generationally, I hate going to those physical... When I have to go to my bank and actually go into the branch, it's the... I've basically exhausted all other options. This is the option of last resort. So it's just funny generationally, that now, that's not needed, and in fact, I think it's not desired at all. But it's also just fascinating, thinking about that building trust through community, because it makes a lot of sense. You're finding people that you trust and respect, people that you want to follow. They happen to be using Public, so of course, you're going to trust it as well too.
Jannick Malling (15:47):
Yeah, exactly. Like, when you form those relationships, I mean... And by the way, trust is not binary. That's the other thing, right? Like, trust is... Consider that trust is a ratio between zero and 100, right? So what might get you through the door as a customer, at that point, you might still be at 10% trust, and you might just have a little bit of money, and you're still testing stuff out. But the more that you find and cultivate other relationships, the more feedback you also have that other people have built up that trust as well. Maybe they got to the store, if you will, before you did, but they're still hanging out there, right? So that reinforces that kind of loop, and that's really how we thought about it, and fortunately, how it ended up all playing out, so...
Daniel Scrivner (16:31):
Yeah. I want to go one level deeper on community, because I think it's clearly been a very strategic part of Public, but you've also... I think there was some really interesting insights. You know, one of the things that you and I were talking about as we were kind of preparing for this is just that you guys took the approach, from day one, clearly you have to KYC people, because they're going to be investing, and so that means that profiles tended to be actual people, with names and photos, and not what we sometimes find, you know, just anonymous photos and kind of made-up names. And there has been this debate of is it good to have these kind of pseudonymous names? Is this a net positive? I think you have some really interesting examples, but I'd love it if you could talk about how you guys cultivated community and some of those things that really enabled it, that you feel like are undeniable kind of principles.
Jannick Malling (17:18):
Yeah, absolutely. I think historically, when you think about internet communities, you think about these like, in your early days, the forum boards, right? And the places like Reddit, that's still the primary kind of format, but you also think about, obviously, places like Twitter and many other places. But what they all have in common is anonymity. You know, it is a little bit of like a deep-rooted principle in even the formation of the internet, that anonymity, like consumer, company, community, when you think about that. There's a lot of anonymity [inaudible 00:17:56] and I think we saw that if we wanted to use community to build trust, anonymity was actually running counter to that, right? Like, that was something that would... Because who do you trust the most, somebody who is clearly anonymous, you have no idea who they are, or somebody whose identity have been fully verified? I think the vast majority of people would say the latter, right?
And I think it's been interesting to see, like now, with the last acquisition of Twitter, some of those kind of ideas floating around, because what we ended up doing then was saying, "Okay, we're running a stock broker, so we have to verify people's identities in order for them to have an investing account," but we linked that to the community in a way where if you wanted to participate in the community, post anything, react to stuff, et cetera, you needed to actually have an approved brokerage account, which meant that we had verified your identity.
And I think that allowed us to grow the community still at a very sort of fast rate, but without all the sort of spam, trash, and all that stuff in the first place. So that was one objective that it kind of solved. We're seeing a lot less of that than many other communities would, that sort of have reached some scale. But secondly, the quality of the conversations were just like much higher, right? And it was really a place where people are debating rational ideas, but there was also a lot of emotion at display, but in a very humane way, and there's a lot of support for each other in the community. Like, that's probably the word that jumps into my mind the most when I think about the Public community, is how they have just, at every turn, supported each other, right? Through the COVID drop of March 2020, and then supporting each other through, generally, a pretty great ride through 2020, and then for the mean stock movement, and then even through 2022, which was a very different year.
One of the reasons that I think as a business, we've continued to do pretty well, certainly relative to a lot of our peers, is the community have reinforced, and so whereas maybe you would open many other apps and be like, "I don't want to open that, because honestly, I don't like red numbers. I don't want to see how much I'm down," people continue to open Public and engage in the community because they know that they can find support there as well, and that's been incredibly... You know? And it's actually like obviously, these markets have been challenging for a lot of our customers, but for us as a business, it's been nice to see that that didn't just turn Public into a great place, and we felt like we were sort of doing the right thing with that, but now that there's good business impact there too, because you've created something that people actually want to use, not just in a roaring bull market, but something that they also find value, and sometimes frankly more value in, in a market that's sort of heading in the other direction.
Daniel Scrivner (20:51):
Yeah. No, I think it's just fascinating, because obviously, you hear community thrown around a lot these days, and I think generally, it feels meaningless, or it's hard to grasp exactly what that means. And you know, I've spent time in crypto. I don't consider joining a Discord a community, because I have no idea who's in there. It's like grifters along with people who are supporting the project, and so it's just kind of been fascinating, I think, to look at Public as just a great example of a business that prioritized it. And it's been a core part of how you've been able to be so successful.
I want to talk a little bit about financial literacy, because I know, even just going back to one of the first pitch decks for Public, financial literacy was this really big focus. Just like, "Yes, there is this cost barrier, but more than that, what's really the barrier is people don't feel like they get it, or they don't understand it." And I remember just thinking back. One of the things I thought was really impressive, that I really liked in the earliest versions of Public was you guys leaned heavily into discovery. And it wasn't like overly clever discovery, but you were just grouping things, and helping people be able to say, "Oh, you're interested in this. Okay, go into this category."
I'd love to talk a little bit about like how do you feel like you guys have tangibly solved some of the financial literacy piece? I imagine community is a piece, maybe discovery as a product feature is. What else is there?
Jannick Malling (22:02):
Yeah. I mean, certainly if support is the first thing that comes into my mind when thinking about the Public community, financial literacy is the second one, so let's break it down, because there's a couple of different facets to it. Number one, we've seen this whole movement of people helping educate each other, right? And I've seen, through my history in this industry, that if you try to be, as a platform, the main catalyst driving education, you might be doing it for all the right reasons, but it can be very costly. And, at the end of the day, as one company, you represent one viewpoint, and what's incredibly important in the stock market especially, in investing more than anything, is to have diversity of thought, right? So that's something that any one entity, just by being one entity, will actually struggle to deliver on. So that, more than anything, led us down this path of having a more community, user-generated content approach to education. And that's been incredibly important.
The other thing is, you know, I talked earlier about how for a lot of folks, there was this psychological barrier of entering the market. The solution to that, I think as I said in that pitch deck, was financial literacy, right? Because the reason that... Part of it was like feeling that it's not for you, but then with Public, we were able to create a place where you could open the app, and you could see people that looked like you, which makes you think... And then again, if you think about that trust barometer going from zero to 100, that would give you the first 10, 20 percentage points up. I'd be like, "Okay, other people that actually look like me, maybe have a similar background, are actually kind of doing this," and then the financial literacy piece is the other thing to really help you grow your financial prowess as you grow your portfolio.
And that's also where the interplay, frankly, with the fractional stuff worked out incredibly well, because it wasn't this notion of you having to save up 10, 20, $50,000 and then get to work. You could actually learn in a community, with others, learning from your own experiences as well as from other people's experiences, which is sort of like learning by doing on steroids, because you're dramatically pulling forward and accelerating your learning curve in that moment when you're doing it together as a group. But then being able to build up your portfolio step by step at a time, and not having to deposit these huge chunks of money and spend $3,000 every time you wanted to buy a share of Amazon, et cetera, because you felt like that you'd done the work and the analysis, and you were now ready to do that.
And so that's a little bit where I previously talked about these two problems maybe in a more disjointed fashion. The financial literacy aspect, how you learn it, and how you execute on it, that really came together through the holistic sense of the model that those two components kind of represents, and so, I guess in short, the ability to build your financial literacy, be a better investor, right? Which maybe initially was mostly true for people that were new to the stock market. Today, those people have become incredibly sophisticated, actually, and that's very rewarding to see, when you kind of follow around the community, see how people have really grown.
But at the end of the day, learning is something that you can't get enough of, right? Everybody can still learn, you know? Warren Buffett's still reading many books at 93 or whatever he is, right? And as the best investor in the world ever, he'd be the first to admit that there's still a lot that he can learn. So, if it's the case for him, it's the case for everybody, and that's kind of when we realized how powerful this is, right? The ability to just continue to learn, which is more efficiently done in a group setting, and then execute those learnings all sort of in one experience. That was sort of the sum is greater than the parts aspect of our model.
Daniel Scrivner (26:09):
Yeah. I mean, it's a super interesting thought experience, to just say, "Okay, if you're focused on financial literacy, helping people learn, if you have Public, but you take out all the social features," I think everyone would agree there's not going to be a whole lot of learning there that's maybe super deep and super rich. So it really is this community, but to your point, I think it all kind of feeds into one another, because I think for everybody, what is gaining financial literacy? It's one gaining confidence, but also trying, and realizing what works for you, having painful experiences, having good experiences, so it is just that flywheel, and having a product that can go through that.
Jannick Malling (26:42):
Daniel Scrivner (26:44):
I want to talk for a second about product market fit. I guess the question that I wanted to ask is did you guys have a framework or metrics in place for product market fit? And I'm guessing this is maybe going back to 2019, 2020. How did you think about that? How do you think about product market fit generally?
Jannick Malling (27:02):
That's something that me and Leif, my co-CEO, co-founder, have geeked out on a lot, right? And really, again, when thinking about like which frameworks you use. That's a really tough one, right? There's a number of things floating around out there. The Superhuman folks have some blog posts about some stuff, et cetera, et cetera, and I think while [inaudible 00:27:21] we didn't end up going down that route at all. I'll take you a little bit chronologically through the journey, as it were.
I think we definitely initially looked at just like retention of new people that signed up and then how engaged they were, time spent on the app, things like frequency, right? So basically how many days of the week are people kind of checking in, and what's the rate of that engagement? And those are solid, quantitative metrics, but the problem, especially with the retention one, is that it's more of a lagging indicator, so it creates a long feedback loop.
So for that reason, we then also started to look a little bit more on the qualitative side, and I think one constraint that a lot of companies have when doing the qualitative analysis of product market fit is that you end up with user interviews or user surveys. They're very time consuming, and so while they're not a lagging indicator in the same way that retention is, it'll take you a few months to do all that work and get everything together, and then you may as well look at the three-month retention curve at the end of it, right? And that's actually not a bad framework. It just means that it takes like 90 days to really figure it out.
And that's a little bit where we had an advantage by way of operating an open community, because people were putting their emotion on display every day. So there's a lot of sentiment analysis that we could actually do. We could see, are people talking about stuff? Yes. What are they talking about? Why are they talking about it? And then, it allows you to sort of just like observe behavior. I mean, I guess it's a little bit like the digital version of one of these kind of creepy movies where they're standing behind the mirror, and they're looking at a bunch of subjects in the room. I'm not portraying it in the... That's actually a creepy thought, but like looking at the data-
Daniel Scrivner (29:23):
That is how it works, though. No.
Jannick Malling (29:25):
But that is how it works.
Daniel Scrivner (29:26):
Jannick Malling (29:26):
Like, that's how focus groups were ran in the '80s and the '90s, right? And even, I guess some companies still do that kind of stuff today. But that gave us a little bit of advantage, in like trying to just pull forward the qualitative measures of product market fit, and sure enough, we very quickly got to a point where we looked at a cohort that would come in of new signups, and we were able to observe behavior pretty quickly, and also see like how long does it take them to go to the first few posts before they sort of activate, they make their first investments, et cetera, et cetera? Like, looking at all these things, seeing that funnel kind of compress, and then we're actually able to have a better and better idea of predicting what that three-month retention rate would be, which ended up being incredibly, incredibly high, quite fortunately for us. But we had the benefit of being able to call that a little bit earlier, relative to if we hadn't had the community alive and kicking.
Daniel Scrivner (30:27):
Hey, I want to go one level deeper and ask about like philosophically, how you think about product market fit. And the reason I want to ask that question is clearly, if you just... It feels like embedded in the words "product market fit" is this sense that you go from not having it to having it, and it's like a line in the sand that you cross one day and then you're good to go. And then that stands in contrast with what a bunch of other very smart people have to say. I know Scott Belsky, one of the things he said on the podcast was that it's a liquid, it's not a solid, and it's always changing. And it makes me think back to your trust score, of your zero to 100, and people are always there. How, from a framework perspective, do you think about it and do you encourage other founders to think about product market fit?
Jannick Malling (31:05):
I think the reality is, now I was talking about the early days, and maybe like the first time that we found it. The truth is, we've had to found it multiple times, and that's the situation for any company. And it'll manifest itself in a few different ways. Sometimes, things change in your market, and you have to rediscover kind of product market fit, because they're not constant, to Scott's point, right? So it's like you might analyze the market first, build the product to serve the market, but then the market moves, and then you got to use the big taboo word of pivot the product a little bit, right? And that's sometimes the market moves, sometimes the market just expands, and then you're realizing, "Oh, now I've got to serve it, so I've got to find..." So regardless of which scenario you're in, you'll have to find product market fit multiple times.
And actually, in most cases, you've got to find what are called product market channel fit, because you've got to consider how those customers come through the door in the first place, and the behavior can be very channel specific, depending on where you're finding your customers. So we would, in the early days, go out and partner with a lot of communities, right? We partnered with Girlboss, Sophia Amoruso's community, at the time for instance, and that brought a lot of really smart women into the app, that would certainly see things very differently than other channels that might be predominantly male for instance, right?
So it's like you've got to think about all that, and that might be like two things where, talking about Scott, the first mile there is really important, and one of the things that we've gotten increasingly more sophisticated around and increasingly better at is not having the same first mile for everybody. So earlier, one of the... As a product manager, one of the kind of shitty things about running financial services companies, like the funnel is so long, and there's just no way around it. Like, I would meet investors who had not invested in fintech before, and they're like... They'd be like, "Dude, your funnel is terrible. Like, the onboarding is 20 questions," and I was like, "I kind of have to ask those. There's no other way around it."
But if you take the glass half full approach instead of the sort of more pessimistic view on that, what that means is that you're able to actually get a lot of data, and learn a lot about your customers very, very quickly, and normally, it would take maybe like 10 app sessions, over four days, over the next two weeks or something like that, to sort of get a good picture of why are your customers here? What are they trying to do? What are they trying to learn? How are they trying to accomplish the objectives that they're sort of having coming through the door? So you can get a better idea of that a lot more quickly by even these know your customer kind of questions that we have to ask and so forth.
So I think what it comes down to is you've got to find product market fit multiple times. I think we found it with the fractional sort of technology that we built, we found it with community, but also later, we found it with more values-based things, like the decision to abandon the payment for order flow mechanism, right? Which is sort of like a change to the product that we made as the market also was very kind of rapidly evolving, right? That's another great example of it. Yesterday, we announced that we're going to be launching treasuries, which is another sort of way for us to bring product market fit, because again, the market has changed, right? The market specifically, like quite literally, macro. The market has completely changed, right?
Rates go up, tech stocks and growth stocks for the most part have come down, the overall market's also down, but it also creates this amazing opportunity, that anyone who didn't invest 15 years ago might not be familiar with, which is in the fixed-income space. So now, we're sort of redeploying that entire playbook of like, okay, here's actually this generation of millions and millions of investors. The vast majority really have never been interested in fixed income. Frankly, why would they when the rate's been zero? It's been an irrelevant asset class. It's gone through the last decade if you will, right? But now it's come back in a huge way, and we announced it yesterday, starting with the six-month maturity. We're offering 4.8% yield, and that's almost like a... People is like, "Hey, it's a little bit too good to be true." It's like, "No, that's the US Treasury people. Like, what can I tell you," right?
And so we're realizing right now, that we need to redo our thing with like, okay, there's a lot of education that needs to happen here as the community is getting their hands into it and asking all the right questions, so it's a super exciting time right now. I'm looking forward to seeing how that plays out, but I think we'll end up, again, finding product market fit one more time with that asset class. Same goes for the alternatives business that we sort of launched last year, and so it's just this journey of finding it multiple times. You don't have to be right 100% of the time, but you've got to be more right than wrong for the most part, and so that's why it's really helpful to just develop this kind of process for it and this framework of thinking forward.
And then, as it happens, your intuition hones in, and it gets better and better every time, and so I don't know that I'll say that it becomes easier, because a lot of other things change too, but as you go through those cycles, you sort of grow as a decision-maker, or as a designer, or product manager, or whatever your role might be.
Daniel Scrivner (36:39):
You develop that capability. It's like a muscle, you know?
Jannick Malling (36:40):
Daniel Scrivner (36:40):
So it's not going to be easier-
Jannick Malling (36:40):
It's a muscle, exactly. Yeah.
Daniel Scrivner (36:43):
... but you at least have it, and you've worked it. I was just going to say really quickly, you know, I was really excited to see the treasury yield product, in part because the UI's fantastic, and I no longer will have to use treasurydirect.com, which is just the world's most atrocious, looks like it's literally built by the Treasury Department, maybe was. Anyways, so it's cool to also see that get packaged.
Jannick Malling (37:03):
Yeah, it's kind of like weird. I never like to say bad things about competitors, but certainly not when it's the US government. Like, it's a little bit strange to be actually technically competing a little bit with those folks, but honestly, I think... I don't want to speak on their behalf in any way, shape, or form, but the first signals that we've seen is like there's a lot that we can... Obviously the ability to actually invest in these T bills, but what we can really also bring to the table is just putting them at the forefront, having people get educated around them, right? It's sort of this chapter of financial literacy that, like I said, has been irrelevant for the past decade, and now it's come back in a huge way, and a lot of people are really engaging in that, so...
Daniel Scrivner (37:51):
Yeah. Okay, I have a few more questions I have to ask. The next one I want to go to just really quickly is kind of... You know, similar to the dive we did on product market fit, I want to talk about growth, because I imagine there are a lot of parallels. You know, growth is a liquid, not a solid. I'm guessing your strategies clearly were different at different periods in time, even talking about early on, partnering with communities, and having an angle be pulling people into your community, but then you're also trying to sell people on a product sometimes. Maybe the community's secondary. Just talk a little bit, in whatever you think is most interesting, whether it's philosophically or tactical examples, about how you've thought about growth and what you've learned, growing so quickly, I think, with Public.
Jannick Malling (38:28):
Yeah, absolutely. It's been interesting. The way, by the way, that we've always divided sort of the work between me and Leif, my co-Founder and co-CEO is I'm responsible for product engineering and he's responsible for growth, and where we come together to form one person as much as we can is in the product growth work, and like in the product market channel fit exercise, right? So yeah, early on, I mean, we've... First of all, our philosophy here has always been, from day one, build a really diverse set of channels, right?
Specifically, you never want to be addicted to an algorithm that the Facebooks of the world might wake up and just change one day, and then just see all the numbers going down and to the right suddenly, so there's a lot of work for us that went into finding other channels, and it's, I think, much harder than just going to the Facebook Ad Manager and upload some assets and start clicking those buttons, but I really think it pays dividends over time, because everybody saw what happened with IDFA, and you know, that was something that we actually thought a lot about, even before it happened, in the early days of like, "Hey, you've had this era of programmatic advertising," I think, with the rise of Facebook and whatnot, right? And all these ad marketplaces.
It's all been data, data, data, data, so when you upload those ads, if you're just optimizing for click-through rate, you'll end up uploading things that just blinks here and there, and looks like a casino, right? And I think and the brand manager would be like, "Oh, god. What's happening there," right? But if you're really just purely optimizing your business, that's what you'll end up doing, or that's what you did in the era of programmatic advertising.
And I think what you're seeing now, in the sort of post-IDFA world, is it's going back to your brand and your values become much more central, and really paramount to your marketing mix, in a very different way, right? I think we've lived in this programmatic advertising world, where brand and acquisition were fighting over like how much the advertisement should blink versus how nice it should look. Now I think you're moving into a world where it's coming together in a much different way, and here's why. Obviously, post-IDFA, everybody is like [inaudible 00:41:03] click-through rates are much shittier now, et cetera, et cetera, so you've got to find customers different ways.
At the same time, what's happening, on those same networks, is sort of the rise of the influencer, right? And a lot of that engagement is now centralized on sort of a few channels, if you will. And so your ability to partner with those creators is very rooted in your brand, right? Because that's a totally different exchange than the one you're making with the Facebook Ad Manager. The Facebook Ad Manager is exchanges, "Here's some money, here's a blinky ad, and you'll send me users. I'll get impressions, they'll click, and," you know?
This is one where any creator is like, "Okay, if I have to put my brand behind your brand," it's an exchange of sort of social currency more than anything, which is a totally different sort of thing, right? So that's really where I think, with Public, we've benefited a fair amount from always being a very transparent... You know, we're trying to build the most trusted investing platform for our generation and beyond, and as part of that, we've really honed in on be very values driven, be very transparent, and a benefit of that has been that a lot of these creators have really been able to get behind us in a big way. And I think that's been huge for us, and obviously like the community angle there means that there's a nice integration into that, et cetera, because you know, if you're somebody who might want to put up a YouTube video every week, to tell people about markets, or analysis of this, that, or the other, you could be things like, "If you kind of miss me between now and next week, you can follow me on Public and you'll see a little bit more daily, what I'm up to." You know, people put on display what they have on their portfolios, et cetera.
So it's just been a way that we can first attract these communities, by actually investing in brand, and not just acquisition, which is kind of interesting relative to the other programmatic advertising. That's a little bit of a 180 in a way. And then the ability to activate folks, and like open the funnel up as widely as possible, and again, there, it obviously helps to be sort of community, social platform ourselves frankly, that can then more directly map onto kind of other communities and other social platforms.
Daniel Scrivner (43:24):
Yeah, that was a fantastic breakdown. I mean, you made so many points there I'm not even going to try to add anything to that. That was fantastic. I want to ask, I want to take a hard left turn, and ask one more super tactical question, and then I want to shift and talk about products. I think there's a bunch of stuff to explore there. What I want to ask, tactically, is when you and I were talking about what we might cover, one of the things that came up was how you guys have embraced the DRI model. And this ties, a little bit, into how you think about brand, which I think is another really interesting thought, in the really gets to this, I think, this philosophical idea that accountability versus responsibility, and how you think about those things. I know I just teed up a bunch of stuff there. Talk a little bit about why you guys embrace DRIs, how you approach that, and how that trickles through into things like "brand" and "brand ownership," quote-unquote.
Jannick Malling (44:09):
Yeah, absolutely. The DRI concept, I think was actually invented by Apple. It stands for directly responsible individual, and I guess it seeks to eliminate any question marks around who does what in an organization. Now, we've sort of taken that concept, and I think we've taken it a step or two further, and I'll... Let me go off of the brand example, to illustrate how we've actually used that to build brands.
As I mentioned before, brand's been incredibly important to us, and Zack, who's our DRI and who's our head of brand, he's the DRI for brand obviously, but on the other hand, we have this saying that your brand is everything you do, right? Your brand is made up by everything that you do, and so every interaction that you have with customer service, every little pixel, frankly, in the platform will add or contract, because at the end of the day, you could define it as the perception that people have of you, and like everything matters, right? So you can't...
So when it's such a broad thing, right? And a lot of these things, brand, and growth, and so forth, they are these huge things, and so you can't just have one person do all that. But that is not what the DRI means, right? So we differentiate between the responsibility of the DRI and then accountability, and I think it is actually important to have accountability be something that everything, like everyone can have some ownership in, which might be a little bit of an unconventional kind of thought, because I think most MBA thinking is like, "Hey, we need one person accountable for everything," and if it doesn't work, it's a complete binary, and then that person gets kind of promoted or fired, right?
But I think the reality is there's so much more nuances, and if you are willing to embrace those nuances, I think there's a lot of power in having everyone feel a level of accountability in building their brand, because it means that how people even talk about your company to potential people that you want to hire, or to their friends, or they go to a bar, whatever, but everybody, there's a shared sense of accountability which is really, really important, but you've then got to differentiate that from the DRI, where the responsibility to drive is, right? And sort of coincidentally, it's also the three first letters in the word "drive," which is like really, what that ends up meaning in a way. I've thought of endless acronyms, by the way, to try and make like D-R-I-V-E, but it ends up being too messy. There's a reason Apple stopped at three characters, so I'm just going to leave that there.
But yeah, that's something that we talk a lot about internally, and I think it's incredibly important, sort of in our operating model, to have these kind of DRIs, so there's clarity about who has to drive this process. But frankly, for most of the company-wide objectives, everybody's got to feel some accountability in that, and everybody's got to be able to see how their work directly roles up into that. And so that's why you can't just have it only be on like the middle management layer or whatever. It needs to be truly a shared group effort, because you know, really, the definition of a company is a bunch of people kind of coming together, and everybody, yeah, like I said, they really need to be able to feel, and also to an extent, sort of measure what the value of their contribution is.
Daniel Scrivner (47:35):
Yeah. And maybe a litmus test that I would throw out, which might seem really silly, but I think Public performs incredibly well on this, is something I like to do is just like find the least sexy surface area that a company has, which I tend to think of as like the help center, and go and read an article, and is that something were you're like, "Oh, I don't even..." You know, it's just terribly done. There's such a low bar for it. It's not helpful. It doesn't integrate with anything else, doesn't... It calls features by different names. Your guys's are incredible. And they're simple. They're not anything... They're not like over the top, but I think it's that sort of uniformity of ownership, and the sense that, "No, we all have a chance. We all have a role to play," is really important.
Jannick Malling (48:13):
Yeah, 100%. And there's a lot of truth to the statement that your brand is made up by everybody, because every touchpoint matters, right? And I think we're talking about brand as one example here, but growth is another one, right? Where you know, yes there's a DRI for sort of growth and acquisition, but there's so many things that go into that. Like I said, the funnel is incredibly long, et cetera, and so like the person who's responsible for onboarding as a PM also needs to feel some accountability for growth. Otherwise, even if he's not the DRI for growth, because otherwise, if you feel the top of funnel but onboarding isn't doing its job, then nothing kind of matters in the end. So that's been sort of important for us.
Daniel Scrivner (48:55):
I want to close... You know, we only have a few minutes left. I want to close by talking about product, and because I think it's something that Public is really good at. I'll just kind of, I guess, share some thoughts, and then I'd love to kind of open it up to you to kind of talk about how you think about it and how you approach it. But even just preparing for this, you know, there's not only... In the product, you guys started with obviously stocks. You've expanded into alternative assets and crypto. You've got ETFs. You also now have treasuries inside the product, so even within the product, there's this kind of rich world and this rich focus, of just making the experience, I think, incredible.
But totally aside from that then, you guys have some incredible features, like Public Live. If you weren't values-driven, if you weren't focused on helping people feel that they have financial literacy, that they have control, they know what they're doing, you wouldn't do something like Public Live. It's incredibly well done. And you have stuff like Public Town Hall. Pulse is really interesting as a way... You know, as an example, I've had Robert Cantwell, who's the fund manager of Upholdings. He runs an ETF called Compound Kings I'm a big fan of. I know he's used it and has raved about it as just a way for him to connect with shareholders. So these are all... What I love about it is it's opinionated, it's well executed, and it ties to what you are doing. So it's not going to be a particularly graceful, tight question, but I guess what I want to ask is what drives... I guess what is different about Public, that you not only invest in these things, you do it really thoughtfully, but you execute on them really, really, really well?
Jannick Malling (50:19):
I think we over-index a lot on what we call invest with context, right? If you break down the Public value proposition, it maps a little bit to what you're saying, but the way I would say it is sort of like invest in everything. That's the mission. That's the future that we see. You know, we're expanding the definition of what can be an asset class. We literally even have things like alternative investments on the app, you know, which everything from like [inaudible 00:50:43] and this that and the other, now treasuries, et cetera.
So like all doing that, but then the sort of level right below that is invest with context, right? When you can invest in everything, it doesn't actually mean that you should. It's up to every individual to decide, based on their own risk factors, et cetera, how they should construct their portfolios. And so there's a huge responsibility that actually comes with that, when you're opening up such a vast investing universe to people, to just do the very best you can do to give people context. And you know, we have this saying that we always want to put investors first, right? We want to help people be better investors, be the best investors that they can be, and that's a little bit where all these kind of formats have come in.
And to the point on quality, I think it's mostly because we obviously have an incredible team, that I think sets a very high bar for this stuff, but it's also just like very important to us, right? It is a very important part of the experience. We want Public to be not just a place where you go to trade, but a place where you experience the markets, and I think that's been sort of part of that vision from day one, right? It might have started with community, and now we've leaned a little bit into the Public Live stuff, which for the audience's benefit is sort of a social audio show that runs now multiple times a day, with many times the open starts 9:15 every day. A quarter to, before the market opens, there's breaking news kind of coverage, et cetera, in this like social audio kind of format. It's really helpful for people. The Town Hall stuff is something where we bring leadership of public companies directly onto the app, to actually take questions from retail shareholders, who are not really invited to the earnings calls, and so we-
Daniel Scrivner (52:34):
Oh, yeah. If anyone has ever tried to join an earnings call, like, someone should just go and try that experience if you haven't. What you guys have built is so much better.
Jannick Malling (52:43):
Yeah, thanks. So I think it might... The invest with context might have started with community, right? And you can see the Venn diagram here, between financial literacy, invest with context, all these things, right? They're all a little bit different sides of the same kind of coin, like investor education. So, you know, it started there, where we expanded with that concept of like, oh, it's a richer kind of format that you can dial into every day, and now you can replay them, so we have a whole library, which is like it's basically like a podcast in the app at this point. And then you've got, yeah, things like Town Hall, which is where you can hear it directly from the horse's mouth, so to say, the leadership of these public companies, right?
And that's a little bit us seeing ourselves as like, hey, we don't just want to be a broker of securities. We'd like to be a broker of relationships as well, right? And a lot of the leadership in public companies really want to build and cultivate relationships with their retail investors as well, if nothing else, than just for the fact that there's a lot of data that actually shows it's the highest form of loyalty that you can have to a company, right? Like, people that own stock in ride sharing app A will not use ride sharing app B, right? And we see that all the time, and so there's sort of like a rational argument for why you would want to go and kind of cultivate that investor base.
And yeah, that's just generally how we've kind of thought about these things, right? Like, can we be not just a place to trade, not just a broker of securities, but a place to experience the markets, and also a broker of relationships to leadership in public companies, to other people, and so forth? That generally sort of helps inform our product roadmap.
Daniel Scrivner (54:18):
Yeah. I think what I just appreciate so much about it is it ties into what you're doing, and you can feel you guys are doing impactful things. What I mean by that is, you know, I think before fractional share ownership, or before Pulse, or Town Halls, or Public Live, if you were a retail investor, I mean, as I alluded to, I've tried... I've been on earning calls before. It's an atrocious, atrocious, atrocious experience, and so it feels like Public is an advocate for all retail investors, and is really trying to create the best world for them, and obviously tie that in with everything else, and it just feels very different than people that are focused just on trading, helping you trade, helping you invest, and I love that. It ties so closely into your values. Any closing message for people listening, any kind of final thought to share? We've talked about a lot.
Jannick Malling (55:03):
We have talked about a lot. It's been great. It's funny, because I enjoy the technical stuff as much as I enjoy the greater philosophical things, right? Like, I think really, the ability to go from one to the other, that's what I personally define as like doing the work and really... But at the same time, being able to like have deep and kind of big thoughts. That spectrum is really what, personally, I just find a lot of joy in too. So it's always fun to look back and reflect, and yeah, especially with someone like yourself, who was early kind of part of the journey, and can also know the hypotheses that we had at that time, and having seen some of those twists and turns, and been there to observe everything. So yeah.
Daniel Scrivner (55:52):
I mean, it's been such a treat to be able to kind of follow along, and see a bunch of ideas that I was really rooting for in the beginning play out has just been so cool. So thank you so much for the time, Jannick. I really appreciate you taking the time to come on. Thank you, thank you, thank you.
Jannick Malling (56:06):
Yeah, thank you, Dan. Thanks.
On Outlier Academy, Daniel Scrivner explores the tactics, routines, and habits of world-class performers working at the edge—in business, investing, entertainment, and more. In each episode, he decodes what they've mastered and what they've learned along the way. Start learning from the world’s best today.
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