Some months back I was approached by my friend and occasional fellow brain-stormer, James Hurman, enquiring if I was interested in joining the board of a KiwiSaver scheme about to launch. You can imagine my response. I laughed.
I mean, really, what could they possibly want from someone like me? And for that matter, what could be even remotely interesting about working on KiwiSaver? Word association on the topic brought to mind…boring, male (no idea why), dry, slow, steady, conservative, boring (did I say that already?) – not exactly the kind of stuff that gets you up in the morning and amped to contribute. But James was smart. He dangled a word in front of me to pique my interest. Disruptive.
It may well be an over-used term that is often under-delivered on in the start-up community, but in the financial sector to date (at least in New Zealand) it’s been rather underutilised thus far. There have been many of us saying for quite a while now that it’s simply just a matter of time before disruption occurs in the financial sector – not so much an “if”, but more of a “when” it will happen. Of course the scale in this industry is such that when it does hit, it will be epic.
We know that digital disruption, technological advances and massive economies of scale should mean a collision of forces with a super-demanding consumer, who’s eager to embrace competitive change. By now it should mean that we have a sector that’s rapidly making changes and delivering exceptional new products and exciting services that make transacting smarter, faster, easier and cheaper. God knows they can afford to. But they’re not. Sure there are some excellent outliers and start-ups getting a bit of traction, but that’s not who we’re finger pointing at. When it comes to the traditional mass market financial institutions, they’re sitting nice and still and enjoying taking what they can for as long as they can. They’re getting their demanded pound of flesh for their shareholder return. Bumper profits will be delivered! It really wouldn’t take us that long to join the dots and draw the lines between the accumulation of wealth for the 1%, the world’s political shambles and the part the banks have played. But I digress.
So, yes, well done James, my interest was suitably piqued.
I walked into my first meeting with Simplicity’s founder and CEO, Sam Stubbs, wondering why on earth he’d want me involved (I’m sure from looking at my CV this feeling was mutual) and subsequently ran out two hours later chomping at the bit to get started and feeling fully briefed as to the part he needed me to play. He had me hook, line and sinker.
What was it that got me? For starters Sam’s a great talker, a big thinker and he really knows his stuff. And despite coming from completely different backgrounds, we were able to connect very quickly on what the opportunity was. I got it. His ability to bring his concept (which is under-pinned by significant complexity) down to the lowest common denominator and explain it in a way that even the most disinterested can grasp, and then devour, is impressive. And that’s one of the major secret sauces required in a disruptive play; you have to be able to sell it and explain it simply.
The upshot was this. The banks (mostly) have been taking New Zealanders for a fee ride. Last year alone over $300 million was paid in fees out of Kiwisaver accounts. But most kiwis wouldn’t know this, because there’s no transparency in the market. Conveniently the banks are able to just hide the fee line into the profit line and you’re pretty much none the wiser. Add to this that most people are about as interested in this as I was, then it’s easy to somewhat “get away with it”. I think naively we think that if we’re being ripped off, the government will step in. But, well, sometimes that’s just not what happens. Let’s leave the politics out of this for now, though.
The idea was simple. Create a non-profit KiwiSaver fund. Managed by some of the best fund managers in the world, set up by very experienced people who know how to get outcomes, but charge next to nothing in fees. Strip out all the profits and give back what you can. The money is as safe as it would be anywhere else, but there will be more of it to give back to the people. Give them a massive boost in their savings. Because…well, with compound interest, you can expect to see your nest egg become more giant-golden-goose-egg-sized. It all made complete and utter sense to me.
The last lingering question I really had was…why? What’s in it for you, Sam? Surely that’s what everyone wants to know, right? If there’s an opportunity to take a large amount of money for yourself, then why wouldn’t you? Isn’t that the way of the world now? Isn’t that why we have the massive divide between the highest socio groups and the lowest? Where our middle is being left behind? Greed has driven us for a long time.
Truth be told, I think that’s the reality. I think Sam had done his time in being an ambitious over-achiever who has everything he’s ever wanted. He’s worked really hard for his success and he’s played the game well. But like many of us, I suspect he reached a point where he had worked out that life is a little short and a little bit empty if you don’t make the world a better place. What a wonderful reason to believe.
For me personally, the fight was a major motivating factor. The idea of being part of something that forces a massive positive market correction is right up my alley. It’s the perfect start-up recipe; slow and fat incumbents, entrenched and outdated thinking, a frustrated consumer set with personal financial reward as a motivational driver, and a whole bunch of margin able to be played with to give back to said people.
The next question I had to answer was what would I bring to the table? Quite simply, experience in starting. For 17 years I have led market-disrupting teams, and whilst small, they’ve embodied the kind of “start from scratch, one member at a time” mentality we have to adopt at Simplicity in order to succeed in this quest. I’m unafraid of the massive mountains in front of them, they look like fun to me. I love change.
My start-up experience is an asset for our team, though I’m fairly sure there have been (and will continue to be) many a moment when they realise that it pays to be careful what you wish for. Entrepreneurs aren’t exactly known for their quiet opinions. However, I truly believe we have a world-class team of people around the board table, the trustees, the operational team, the sales team and the many hundreds of supporters who have from day one said, “Yeehaa, I want on your bandwagon!”. It’s both exciting and scary in equal parts, as it should be.
To honour our vision, it will require thinking very differently from the institutions we’re looking to shake up. There hasn’t been a day go by when I haven’t said, “let’s do exactly the opposite of whatever they’d do”. It’s like “think like Google” but in reverse. We not only talk to the idea of bravery and being open to being vulnerable in order to dare to be different, but the real honour and privilege is to see it in action and people walking it too. It’s rare. I challenge the cynics (because, hey, there’s no show without punch) to spend even just 15 minutes in Sam’s company and walk away anything other than inspired by what is possible.
I’ve been asked by a few people what will happen if the banks just “match us” and my answer is simple: “here’s hoping”. If we can make a positive change that ignites a movement and everybody is better off, then we’ve achieved our goals (and New Zealanders would be better off by billions of dollars eventually). There is no ego driven desire here to be the only ones to make this a reality. If only we could encourage more organisations to consider the possibility of “living off less” and “giving back more” and we may well find ourselves in a better world. I’m often accused of being an idealist who dreams of Utopia. But I say, what’s bad about that? May we all fight the urge to let the cynicism and fear guide us and instead embrace the possibility of better outcomes.
Get on board.