Aaaaaaannnnnnd we’re back. Hey Everyone! Dez here from This Week in Fintech. It’s officially 2024. We’re all getting back in the swing of things, and I could not be more excited (and slightly nervous) about what’s to come in 2024. We’ve got the 2024 election here in the US (nervous). We’ve got a hardware renaissance in the tech world (excited). But most importantly, we’ve got another year for the fintech community to continue to build, to iterate, and to pull forward the future of financial services. So to kick off the new year, I am so happy I get to share my conversation with Emily Luk, the CEO & Co-Founder of Plenty. Let’s dive right in.
Emily, so excited to be doing this interview. I think the best place to start is: Could you introduce yourself, Tell us a little bit about your background, as well as what Plenty does?
Sounds great, thank you so much for having me! A little bit about me: I am a friendly Canadian, I was born in the province– ”state” equivalent– where we are known for oil and cattle, so I’m always up for a great steak. But a lot of what brought me to start Plenty started in my family roots. My grandparents started a business. My parents started a business and ran that for 18 years together, and so it was very natural to always talk about starting and running companies, and that was what we talked about at the dinner table.
Plenty is a wealth platform for couples to invest and plan for their future together. We're built for the reality that most millennial couples nowadays are in long-term partnerships or married and most are dual-career. As a result of that, they think about managing money in a unique way that’s different from prior generations. We’ve launched our private beta in 2023 and are gearing up to fully launch Plenty in early 2024.
What was the business that your parents started? What were those dinner table conversations like?
They didn’t work in tech. And so sometimes when I talk about the world of venture and am we talk about profit margin, my parents are a little worried. My parents started a textiles manufacturing company, where they would design, manufacturing, then ship what teams or employees would wear, whether that is, you know– clothing for the Edmonton oilers or winter jackets for the government, or uniforms for people working the provincial fair.
Yeah. So what was your, kind of, path into tech? How did you go from the world of growing up in an out of world of atoms to, you know, making a career in a world of bits?
Yeah, great question– I love that framing of it, too. My parents always thought that I would start a company one day. My parents surrounded themselves with other people who started companies, so it always felt like that was the most natural path. The concept of an office job wasn't very normal in our household. So I went to university, graduated in 3 years, studied business, and history, and econ and biology–, kind of just studied all the things I enjoyed. From there I knew I wanted to get as close to starting companies as possible so I could start getting the experience that I would need to one day start my own company.
So I started my career in venture when I was in 20, had someone take a bet on me. I worked at the BDC IT Venture Fund, where we looked at a lot of different Canadian companies either expanding across the country or expanding into the US market.
I had found my way into that and it was truly a stroke of luck, you know– right time, right place. It was actually running into someone when I was walking around campus that ended up ultimately leading to that job offer.
Awesome. And this is actually a theme throughout all the interviews: The importance of luck and serendipity. So maybe not in terms of getting your first job right into school, but do you have any anecdotes of luck or serendipity while you were at Stripe? I think people will be very curious about the roles you had there– what that experience is like, knowing that it's one of, you know, the largest private companies in the world today.
Yeah, a great question. I think so much of my experience at Stripe– and even getting to Stripe, and then everything within Stripe– was luck too, and I always frame it as you know, “I've worked hard to give myself chances to get lucky.”
And that's a lot of, I think, what is characterized as luck? Because when I got to Stripe so much of what shaped my time there was starting off on what then was called the Growth Team. It was very much the early sales team. We did everything. There were no solutions architects, so if you were on the sales team, you're reading the API docs. We were also right at the point of putting together the first set of slide decks, putting together the set of questions to understand, “What do we ask in the first call? What do we do in a demo? What happens in the call after that?” And so it was putting together that early sales playbook.
From there, because I was one of the team members that had experience on the financial modeling side of things and had a finance background, I ended up just helping out team members when they were trying to price a deal as work that was on the side. That ended up catching the eye of our CFO who joined after me, who was like, “Why aren't you on the Finance and Strategy team? You should come join my team.” He was just starting to build out that team.So it was very much serendipity there.
Gotta love that! So bringing things back to Plenty, you know, as investors, we speak to hundreds of companies each year and I think one of the things that gets easily lost is that– at least on the consumer side– it's always like, “Hey, can I build something that's cool and interesting?” versus like, “What's the overlap between what's cool and interesting, and also tangentially, like, directly useful for people?” So let's talk a little bit about: What are the core products of Plenty? How does someone use it today?
Yeah, great question. So really, at the heart of Plenty today is that you are getting into the stage of your relationship where whether you're newly engaged, you're married, or you’re starting a family. You’re at a point where you're really starting to plan towards your future together. And you're starting to now say things like, “We want to buy a house. We need to pay for a wedding. We’just had our first kid.” and you're trying to figure out all the adulting pieces now. What do we have together? What do I have? Where is our money going? How do we reach our goals - small or big. We’re here to make managing money with your partner simple. Tracking. Budgeting. Goals-based saving and investing.
For our goals product, say you want to buy a house. , “Great! Where do you want to buy a house? New York? Okay. How many bedrooms? 2 bedrooms? Great. This is how much we think you're going to need.”
You tell us when you'd like to buy that house, then we will guide you into the right investment portfolio for that, and then from there we tell you, between you and your partner, that you each need to be putting in roughly this much money per month in order to reach that goal.
And does Plenty construct the investment portfolio for me? Is that outsourced? How does that work?
Great question. So we partner with a broker-dealer to create the investment portfolios, then your investment account is custodied at BNY Mellon Pershing– they're the largest custodian in the world.
So it really is as effortless as saying, “This is what we recommend.” You give us a thumbs up, and then we do all the work behind the scenes.
A core philosophy, too, is that we do values-based investing for all of our portfolios, so it's very easy for your values to be reflected in what you invest in. You’d be surprised how many people are shocked by what their money is currently invested in, when you start to look into the basic ETFs that are popular.
So if I want to say, “Hey, I want to be saving up for a house but I also want to be climate-conscious,” that's something that I can easily invest in.
And it's basically one click for the climate-conscious, and one more click for you to say, “Yes, that's a portfolio.”
The second part of the functionality we have is making it really easy for you and your partners to see everything in one place with this mental model. For the majority of dual-career couples the default way of managing money is a Ours and Mine mentality. So within our product, we allow you to connect all of your accounts, label them to maybe say, “This is private, my partner can't see this;, “This is ours,” and whether it is legally joint or not, you can just put it in the “ours” bucket, so that you always can have a place where each of you can get a complete view of your finances independently and together.
You were also recently interviewed by the Wall Street Journal. I believe you talked about some of the challenges that couples are facing financially today. You kind of probably have a 360 view of what's going on across the country, so what are some of the trends that you're seeing in the market?
So one of the most eye-opening statistics that we saw was that of financial infidelity, which is defined as when you make purchases, you hide debt, or you hide money from your partner– that is a bigger cause for divorce than actually cheating.
Wait, that’s crazy!
You know, I thought it was crazy instinctively and then I thought about this and was like, if you're at a point in your relationship where you are hiding money from someone, or you are hiding that you owe money, there's this lack of transparency and deep trust and shame that's mixed into it. It starts to actually suggest that there's a lot more issues in your relationship there, and I think oftentimes when we're meeting couples who’re at the beginning of the journey to merge their finances together, what the platform nudges you towards is one making it really easy to focus on what you're working towards together.
It’s also important to start from a strong foundation; financial infidelity doesn’t just happen. But it can be the result of a lot of built up guck from years of not having the money talks that keep things healthy.
What we found is that for a lot of couples who used to use budgeting products and no longer do now, they stopped using them often because it caused fights. A lot of that is because it's very easy to look at transactions and be like,
“Why did you spend money on that thing?”
“Why did YOU spend money on that thing?”
We focus on a goals-first approach because– and there are a lot of behavioral finance and psychology papers written about this– if you point people towards goals they're working together on, the conversation completely changes. Instead of it being like, “Hey, why do you spend on this?” it's more like, “If we put more money towards our goal here to make our house down payment, we could actually get that house 3 months earlier.
The other part that we thought a lot about is making it really easy to be more transparent and for both partners to understand where things are. Because the reality is that the majority of couples right now manage finances out of multiple spreadsheets, and usually only one person manages that spreadsheet, which already creates some tension because one person doesn't fully understand how the spreadsheet even works. It's also a lot of work to update it, so that person feels annoyed that the other person isn't doing more to keep things up-to-date. And ultimately they're just trying to have a picture of where they are, both independently, as well as together. And so we that really easy with all of our automatic tracking functionalities.
Are spreadsheets are your primary competition?
So far, that is consistent with what we've heard. We've probably talked to, now, close to 300 or 400 couples and consistently the most reliable tool is still, fortunately or unfortunately, a spreadsheet. We initially built that first version of our product to be desktop-first because that is ultimately what we're looking to replace.
Yeah. And so I'll be honest, I'm a cheap person. I try and save as much money as possible, and I'm also one of your spreadsheet users. I literally have the spreadsheet up right now– it's just my finances, but it tracks like investments across equities, crypto, retirement, angel… all this stuff is super bespoke, and I do exactly what you describe. Once every 2 months, I go in there and and update stuff.
I'm considering using Plenty, but I'm also probably one of the more price-sensitive personas. How are you working with some of the trends that you're seeing across the buying characteristics or usage characteristics on a persona basis within Plenty?
Right now we're working with millennials, because that just tends to be the age group in which you're really starting to merge finances and partner up. And so that's really like, 25- to 40- or so years old. Most of the couples we work with are earning over $100,000, and they’re at this point where they’re reaching these life milestones and an increasingly common question is… “should I hire a financial planner?”. And our response is…. We’re a fraction of the price… try this first, then see if you still feel you need a financial planner.
What we’ve also heard from many people on Plenty who used to work with financial planners… is that they hoped the planner would give them a shared view of their finances, or help them save / invest better. And they paid all this money and still didn’t get any of that.
And a core facet of our business model - we bring you direct access to saving and investing products. Our savings product currently yields 5.1% APY after our fees… our goal is to make you more money than our small, $100 per person, annual membership fee.
Thanks, Jerome.
Yes, exactly. And our investing product, too, is a much more advanced way in which we are actively reducing your taxes for you through advanced tax loss harvesting. And so we think of these as saying, “How do we continue to bring access to products that are hard to get access to on your own, so you can earn more?” and give you a deal where, if you work with a financial pointer, you'd be paying anywhere from $2,500 to $7,000. We're cost $100 per person per year at the annual membership where, you get access to the entirety of the product, as well as all of these perks in terms of better, saving products, better investing products.
So less than a thirtieth of the cost, in some cases, relative to the nearest competition or like, using an advisor.
Yep!
Taking a step back and kind of putting the investor hat on. Consumer fintech is a hard category. When we think about even consumer opportunities relative to enterprise opportunities, consumer opportunities do drive a lot of venture dollars and returns. But I don't think we've necessarily seen the same consistency within consumer fintech as in consumer social. So how are you kind of navigating that tension as you're building a piece of that company?
I think the difficulty of the last decade and building consumer fintech was really tied to 2 things. Lack of infrastructure, and lack of true product differentiation. First, I think there wasn't great financial infrastructure that you could build upon, so it already was extraordinarily difficult to build a neobank, to offer a checking account. I think what really changed was that starting about 4 or 5 years ago with that last fintech boom, a lot of that boom was really funding infrastructure companies that at this point are more mature and now able to dramatically drive down the cost andnd, you know, speed at which you're able to launch a new product. Now, if you look at a lot of these legacy companies, you just look at how much trouble Chime has had moving to open up all these accounts themselves, completely changing some of their own internal architecture. I think some of the legacy companies are having difficulty expanding what their product is able to do, because I think there's so much of a legacy of building on old infrastructure because they were the first in-market. It's almost like they were disadvantaged because they were the first roboadvisors that had to build on very poor infrastructure. They were the first set of neobanks who again, like building a neobank in and of itself, was extraordinary at the time, but that really hamstrung their ability to see the full scope of what people are looking for. And I think if you look at a lot of these consumer fintech companies, they haven't been able to innovate and build new products and new product lines faster, their customers are graduating out of them.
A lot of people who have used these products for the last 10 years, on average, have anywhere from 4 to 10 companies whose apps they may have tried, and it's heavily fragmented because they keep growing out of it. So I think that's been a very big constant.
I think the other thing is because it’s been so difficult– you end up seeing it– you have so many companies really focused on the checking account, and now you kind of see the aftermath, “Wait. Checking is a really hard business model in terms of unit economics.” The bet was on being able to become the primary depository institution, that was the holy grail, but it never panned out. And there was so much venture funding plowing into acquisition to see if that bet could pan out.
Then, thinking about differentiation. How different is a debit card or checking account, really? I think that's where there's been a bit of a blind spot, a race to try to monetize instead of really going consumer-first to say, “What do people actually need and want?” I think a lot of debit-card companies (not all though) looked to debit cards as the easiest way to monetize quickly, instead of look at the population demographics to see that the generation adopting fintech products most rapidly were beginning to earn more… and higher earners scale out of debit cards.
Let's form that thread a little bit because you touch on it where right now, what Plenty’s introducing into your business models is different from the past wave of consumer fintech, which was largely transactional. We know that transactional revenue is less highly valued in public markets, and we're seeing that probably from like, 2022 Q3/Q4 highs with Coinbase, Robinhood, have probably drawn down 40% of what it was to what it is today. You're introducing a subscription-based model, which is also clearer than a lot of other consumer businesses. I'm thinking of a Spotify or a Netflix, etc.
Are you drawing any inspiration from best-in-class consumer subscription businesses? And how are you thinking about applying that business model to the realm of personal finance?
I think a lot about the potential of what Plenty could be. I think a lot of the timeframes we're thinking about are actually of more enduring companies. Many of the companies you named are great companies that have been around today, but where we've actually drawn a lot of inspiration from is the Costco’s of the world that have built decades of loyalty. You talk to early Costco members and they proudly show you their card where they say, you know, “Member since,” Like my parents’ to this day says “Members since 1983,” and there's this pride that they feel. They pay the membership because they feel like they get so much value out of it, because it brings them so much access to so many other products that are curated at greater affordability than what they might have been able to access and find on their own. And it's very efficient. There's this deep loyalty and trust there.
I would say Costco is actually one of the consumer companies that we've drawn a lot of inspiration from. Another one is looking at how Schwab has built. Really thinking about how Schwab was built at this really unique timeframe– the company was starting to take off right around the time when baby boomers were starting to partner up and starting to make these big life decisions around, “We're starting to actually have enough money to think about investing. We're buying our house, we're right at the beginning of this rapid ramp-up in our careers. We're going to be earning more than ever.” You know millennials right now are on track to 4x the amount of wealth they have in the next decade. I think we're really at the beginning of that for the millennial equivalent. And so those 2 companies are actually the ones that I've looked at most closely and have been most excited about. Probably because I'm a massive history nerd I also find it helpful to reach back and see what the similar patterns are. And probably also because I think those are two examples of enduring companies, which is what we’re seeking to build Plenty into.
Yeah I think about how millennials, as a customer base, are in a position to compound very well over the next few decades. I'm on the younger end of millennials, but you know there's this cohort of 25- to 40-year-olds that are going to be powering the economy for the next, you know, 30 to 40 years. And right now millennials account for the largest percentage of the workforce in any generation.
They also look very different from other generations, and I think there's an opportunity for a brand to speak to that. I was just reading earlier this week from Pew Research Center that 44% of working millennials right now come from minority backgrounds, which is so fascinating because if you think about the big banks in the world and all of their marketing spend, they don't speak to that. And if you start to think of the millennials, the largest generation in the the workforece – They’re on average 32 years old. We're right at the beginning of really starting to ramp up our careers, as well as starting to think about kids, and houses, and all these other life milestones. There’s a lot of change in the decade ahead.
Using history as a guide, where do you think the next decade of Consumer Fintech specifically is headed?
I think there is a set of legacy companies that will struggle because they built in graduation points, and they've not been able to build fast enough to address the next set of needs that their customers have. In the last decade you have people who on average had more time, they had less money, and it made a lot of sense to look around for the best deal and trial a lot of new things. But actually, there's this great book called Boom, Bust and Echo written by the former Chief Population Demographic Economist in Canada, where they talk about actually, how generations are fairly predictable. If you think about the average 32 year old, over the course of next 10 years they’re really busy through 40 years old. This is arguably what a lot of people say are some of the busiest years of your life, because your career is starting to really solidify. You're also generally building a family. Alongside that you have more resources, but you're trying to figure out where it goes. From a consumer fintech perspective, people will naturally start to want to consolidate what they have, and they're not going to care as much or want to look as much for, you know, 5% off here or a cheaper deal there. They're looking for convenience. They’re also looking to put their money to work to earn more, not just save the $10 subscription fee. And I think that's actually where there's going to be companies that will be able to serve that within more of like a true platform, or serve the younger cohorts and compete against the companies that are now serving specifically the younger generations, too, because the first gen of consumer fintech companies haven't been able to grow with their customer base.
Really interesting. And rounding up the last questions– and I'm kind of pressure testing here– would you argue that a central thesis for Plenty is that: 1. The demographics of the country have changed? So if we run the clock back to 50 years ago, it's no longer single-income households, it's dual-income households, 2. Using history as a guide, people have always valued convenience the more senior they get in their career, so they're less prone to low switching costs that occur within financial services? And 3. There's obviously the underlying tail wind of being in a digitally based economy, so there should be digitally-based tools that deliver that convenience for any individual? Is that kind of the central thesis, or how would you describe it?
Yeah, I would say spot on there. And that's a great summary, thank you actually for saying that you said that better than I could say that myself! That first one, for sure. There's this stat that was incredible to see, that 80% of millennials nowadays are dual-career couples. Now think back to even one generation ago or 2 generations to go when the default actually was single-income, and when you only have one income, you have joint everything. That completely shifts the paradigm. I think we're already seeing this in the number of average accounts an individual has, and the number of accounts a couple has together. That's a really big change where you need to actually build for that reality, because how they manage money, how money flows, how complicated that web is has never really been cleaned up. It's a unique set of functionalities that's required in order to make it easier to manage or to reduce the complexity there, because that complexity already exists. You don't even need to go too far back– if you look at some of the old reports from Schwab on one generation above, you know, at a lot of the people to which the Facets of the world are trying to really say, “Hey, you're 50. You're now starting to retire, or you're getting close to your retirement,”– that's where a lot of financial planners are focused because that’s where you get the most AUM. And a lot of financial planners really target that like 45 to 55 age group, because you're also most likely to start working with them at that time. And if you talk to people who are now looking for planners, you will see that they've already consolidated a lot of the things they've had. There's a lot of loyalty already built up with some of the institutions that they've worked with.
That's just a very natural pattern. I think when you're busy you do look for convenience, especially if you can afford it, and it's almost like the switching cost is so high, and the time and effort it would take to potentially find a slightly better deal is just not worth it to the point where you'd see that people naturally consolidate on the financial side. And so I think there's basically an opportunity there for a digital platform– to your final point– to say, “We're right there alongside you.” And in order for us to deliver on that promise, we need to continue saying, “You can trust that we will always bring you higher quality products that are heavily curated, so that we maintain that very precious trust. We build loyalty with customers who know they are getting products that would be hard to access on their own, or that would be hard to find, or even that customers might not even know to ask for. And we continue serving that to them as they think about their banking, investing, as they think about their retirement, or whatever other financial products they will inevitably need down the road.
Awesome. Love it. Last 2 questions will be pretty relatively rapid fire, but the first one is: In 3 words or less, how would you describe the culture that you're building at Plenty?
That's a great question. 3 is a hard limit. First one: Service. We are here to serve; I think a lot of it started from the core of the team actually coming from Even and knowing that it's hard to build wealth and we want to make that easier, especially for the households that are going to struggle with it the most. Many investors have asked us, why don't we work with people who have over a million dollars, or have 10 million dollars? There's a lot more money to be made quickly there. And that's just not what we want to do, because we want to serve the people who probably wouldn't be served unless we built this.
Second one is quality. There's a pride in our work, in quality of product that's really important to everyone on the team, and also because we think so much of that is at the core of what has been missing– this quality curation of product and experience that makes finance easy to understand and accessible.
Then the last one…probably “quirky”. But we're definitely a pretty goofy, fun-loving team and of course, also deeply nerdy in our own ways. I think those would be the ones I'd pick to capture our culture!
Cool! So quirky, quality, and service– 3 Q’s and an S. So then, the last question– and this is one I deeply care about, because I think in the modern era of, you know, media, finance, venture, entrepreneurship, there's so much information and so much content and the ability to learn from others farther along you on the journey is at the highest point it's ever been but sometimes, sifting through that noise can be hard– but what advice would you give to other founders who are looking to build in fintech? Knowing that when people see you, they’re seeing themselves and thinking, “Hey, Emily can do it so can I.” So what advice would you have for future founders building in fintech?
Hmm, I feel like I'm early in my own journey, but definitely one of the things I would share specifically about fintech is, you know, fintech is difficult because there is a complexity in regulations and relationships and industry that is inherent. It’s also very rewarding, so I would say is if you're going to be in fintech, learn to love the complexity, because if you can harness and truly master the complexity, you have an edge above everyone else building in this realm, or people who don't have that background in fintech.
Got it, I love it. Mastering complexity is much easier said than done. But look, Emily, really appreciate you taking the time, I loved this conversation.
Of course, Dez! Thank you for having me!
