Episode 142 - Fintech Will Be Massive - Brian Barnes, M1 Finance CEO Interview

All right, welcome everybody on this episode. We have an interview with Brian Barnes. Who is the CEO of em on finance as able to talk to him a little bit. Here is the interview. We had the last interview. I looked it up. It was ten months ago. So met course sometimes yeah feels like a lifetime ago. Is it a different environment as well as wandering from then? Do you remember how many employees are company? Had?

And when find a said, I don't know if I couldn't exactly get Number in May, I could definitely look it up. I know that we started 2020. So January 2020 with 38. We now have about 155 and so we've been somewhere along that that number, if May probably 50, 60, something like that see where you went from 38 at the beginning of beginning of 2022. Now, 150 ish, correct? Okay, what are your plans for

like, over the next year? So we're trying to double from where we are now by the The end of the year, so we'll be sort of high 200, sort of, you know, ambitiously trying to get to 300 people by the end of the year. And so the organization will be in a little pretty fundamentally different place by the end of this year when compared to a year or two ago. Well, it seems like it. I've seen the trend overall and I know you guys, you just announced what is it go to an

investment. They're like a hedge fund, right? I think a pretty public one. That does a lot of tech investing. They led the last round of investment for you guys. Yeah, absolutely. So CO2 is one of the Premier hedge funds out there and so they have been more famous in

their public portfolio. And so it's the, you know, almost like the who's, who of the tech names out there, but the interesting thing about CO2 is they invested in them, you know, 10, 15 years ago before they were before they were the who they have since moved into the private market and have invested in a lot of the private companies that have become sort of your household brand name for Consumer Tech products and the like and so we're super fortunate to have them as an

investor. And, you know, really, really think that they're going to be To support a good amount of growth that the M1 organization. Yeah. I remember when I first started a portfolio with him and finance his way back in general. I don't even think the retail investor was this popular at that time. Like I was when kind of M1 Finance, Robin Hood, these type of things were kicking off and there was like a lot of, you know, should I put my money in these guys?

Or should I just stay with Schwab or, you know, Fidelity or Vanguard like the the more Legacy ones? But how does it feel knowing like my question is? How does it feel? Knowing you're getting backing from these type of hedge funds. Now like as a source of validation. Are you looking at this like man, we have CO2 and like these these serious investors and if you look at their portfolio, they have a wonderful portfolio of technology companies. How does that validate the

company? It's incredibly exciting. And, you know, it's definitely a result of a massive team effort. And so the entire him, one organization is incredibly proud of what they've built over time and, you know, having smart sophisticated peoples, and you're doing a good job, as always a positive and you feel good about it and the like it does put the pressure on, you know, they're definitely looking for M1 to be a large organization into the future.

And so we have those demands to fill and just you know one piece of comment you were talking about your Vanguard. Swab the Legacy players, which, which is interesting is at some point. Those were not the Legacy players, right? Vanguard started in the seventies trough at the same time. And you know, the Vanguard was fighting all the mutual funds. And you know, it was sort of this. Hey, you'd be silly to invest in an index fund. It was just better product, better pricing and over long

periods of time. They become the Behemoth and same thing with trough. They were fighting, you know, Morgan Stanley Merrill Lynch and it was you know know the individual investor shouldn't be doing this themselves. They should work with the high-priced advisor or a broker and have Also proved that model wrong. And so, you know, really when we talk about M1.

We look to those companies as we're trying to be the next Generation Vanguard Next Generation Schwab, really empower the individual and data investor with a better product better price and we know that it will take a long time to become companies about their size and scale. Yeah, maybe become their size, but I think the trust factor is moving along a lot faster. Like when I started I remember

people. Put they put on a hundred dollar like test deposit to see if it's like real and they can get their money back type of thing. There's accounts. I see publicly on YouTube that have a million dollars on a month. Finance, you know, sigh? See the trust Factor moving along a lot faster with with this. The smaller, you know, you have smaller assets under management and something like Fidelity Fidelity or Schwab, but I see the trust Factor moving very

quickly. I have some questions on the whole growth of fintech in general.

But before I jump into that, I want to ask what are you so you receiving all this money 75 was it? 75 million? This is the last Round. Yeah, that was the most recent round. We've been fortunate enough, you know, up through sort of start of 2020. We had raised 25 million dollars in our lifetime and then over the last 10 months. We've raised another 150 million. So, you know, it's six times the amount of money that we had

raised prior to a year ago. And so we're in a very good position to to bolster every aspect of the company. And I'm sure that's where the heck. Well, we're gonna do with all that money is, is might be the common questions question. You have this money. What? Are you doing with it? What's going on? What are the growth plans from

here? Yeah, you know, if you look at the companies that we just talked about band Garden Schwab, you know and you were talking about the trust factor of where do people with a quarter million dollars Place their money. The default option is still a Legacy Bank Legacy broker in the Lichen and they offer okay. Products it have big scale, but they do have a very trusted brand name and one has a long way to go to like significantly. Prove every single product that

they offer. So if you look across the three main products that we do, how you invest, how you borrow and how you spend. I think there's incredible improvements. That could be made across all three of those buckets. And so, you know, we built a lot of core product experience, core infrastructure to support it. But we have a long way to go to make it definitively the best personal finance account that's on the market.

You know, we're really focused on sort of a best-in-class investing product best-in-class, borrow product best-in-class, spend products, and having all of them work together so that Whole is greater than the sum of the parts? And we just, you know, that sort of a and state of perfection and you know you we have a lot of work to do to there. We'll never get there. But you know how you're going to manage your money in five and ten years.

I think will continue at an accelerated Pace to the improvements that have been made over the past couple years. There's also just growing the the brand I mean, you know, we now service over half a million customers. We have coming up on four billion dollars on the platform. We that's meaningful trapped track action from a Small fin

tech company that's growing. But, you know, the, the companies that we mentioned, like, we're not a financial institution until we manage millions or tens of millions of customer accounts and tens of billions. If not hundreds of billions and potentially even moving into the trillions as you get to the the penis and the financial space. So, you know, it's really just building better product better pricing and growing me the overall organization to support that. Okay? Yes. Yeah.

It's true. Your it seems like it's growing pretty quickly moving from like what? Remember your now Strat 1 billion assets under management. Now, you're under at four and that must have been like, what a year in the time to do that. But it still is another two months. Yeah. So yeah, so that's growing fast, but you got a ways to go before, you're one of the big players. All right.

So between between the different products that you have the investing product, the spend product like the banking product are, is there any direction? You're taking with it, where you're going more into one than the other or you just kind of splitting the effort between the three? No, but you know, you you were asking about sort of what are we going to do with the money m1's history? Was we always had to do things more or less sequentially.

So, we started with invest, you know, then we put that on the table and let that bake and then we moved on to borrow built that. And then, you know, we moved on to spend and every single feature and functionality. We sort of had to, you know, not focus on anything else. Build the new thing and then move on to the next right. Now we have yo, the product team is 67 x. The amount of people that that worked on a product at any given time. And so we can focus A lot of

things. Concurrently and so the nice thing is we can like the focus is best-in-class automated investing platform and you know, like have a team dedicated to that a best-in-class borrowing experience and will enhance an offer more capabilities around that on the spend side. Same thing best-in-class checking account as well as any mechanism to spend and receive money and the like and we have the ability to with the the new round of funding pursue these

things simultaneously. And so, you know our product throughput and You should be increasing in a meaningful clip. But you know, the unfortunate thing is you get the money first. Then you have to recruit the team, then you build the product. And so there is a little bit of a lab to seeing the improvements as a result of the money coming in. But, you know, everything will improve in a pretty material capacity in the the user should start to see that in a short

amount of time. Okay, though the other between those three project products that they spend, and, you know,

the big, I see a big concern with people that have they want to go to M1, or they want to go to At least a fintech, right? Because most of the fintechs are honestly the Technology's there. It's better than it's going to be better prettier faster than something like Fidelity or whatever. But it seems like the bigger the bigger brokerage is the advantages that they have are that people feel more secure. They have a phone number that can call, anytime.

They have 1,000, customer service people waiting on the other the other line. And I see that as a biggest from what I've received, like the just kind of what I've viewed online. Is, oh, I would put my money on him on finance, but I'm afraid I won't be able to get through the line because they're so busy or that type of thing. The same thing, even worse with Robin Hood.

It's like they don't even have a phone number to call, you know, you have to message them and hope that you get back in time. And with that they're doing a lot more short-term stuff. So, sometimes it's even more pressing. But the effort to ensure like, if you're, if you're a consumer or a client of m1's, you know, I guess if the concern is, We're not gonna be able to get a hold of people or and time or be able to get these Issue is resolved. What are the efforts to be able

to resolve that? So people can have confidence, they're going to be able to get through. Yeah, you know our our we have not like M1 has not done the job that we should on customer support and a lot of it is due to the fast scaling nature of the organization and the growth that our user base experience or of outpaced our ability to grow

the organization. And we unfortunately had a pie like a little bit of ketchup and so that, you know, I've liked that is 100% my fault, not the fault of my team. We have been incredibly devoted bought in team. That is Super PAC. What about helping the End, customer and servicing, all their needs? They frankly just get more requests than any person can handle and we are massively higher, you know, adding tens of

people a week. You were asking about the organization at the beginning of 2020. I think we had five customer support reps. We're now over 50, we're adding, you know, 10 every week. And so that team is getting increase in a material capacity. I do think there is a sort of pace of change or Evolution that you're going to see and M1 has only been public facing for

about. Four and a half years where you look at a Schwab a Fidelity of better and you have 50 60 or legacies and, and, you know, tens of thousands of people building stuff over time. That being said, like the pace of innovation for a 50,000 person, and Charles Schwab. Organization is quite slow. And um, one and four and a half years has built, you know more products better product is

increasing at a faster clip. And so, you know, we do have work to do to catch up to them on a service perspective. I do think you look a little bit out and sort of say in one year two years. Three years. I'm very confident that M1 will have significantly better service than Schwab at that point.

Whether it's through self-serve, automated tools or, you know, technology driven Solutions or connecting with a an individual person, you know, the, I'm not trying to make excuses but the unfortunate scenarios, you know, some of the, the like, we're, you know, sort of building building things as they go. And, you know, there we have to support the current operation and support the future operations and have, you know, stumbled a time or two. With that.

But you have all the attention and time and energy to really improve it in a fundamental capacity. All right. Well, yeah, it makes sense

because I didn't I don't think anybody predicted at least they would be rich if they predicted that Virginia Tech would explode like it has over the past couple years, but which leads me to another subject so we know that M on finance is growing like crazy and you guys have you're getting you're getting a investments from Big management firms. When you going to let us in on the action. This investment in one when is it going to be something?

Where where you either have a SPAC, you know that you can join in because I feel like investors would very much like M1. Finance. I look at some other, look at some other IPOs and different things. You have, you know, different ones that I think are inferior products that get tons of public money right now as it ever been a thought or you just keeping it keeping it to private investment. I mean, it's a have two minds of it. I mean, you know have built the

entire business for personal. Sighs automated choice in the Investments that you know, want understand and really long-term, systemic investing in those Securities that you want to invest in. I would love nothing more than our user base to be able to invest in and one company. And, you know, the promise that we're making is, we're building M1 to be a durable, large financial institution that grows for for incredibly long periods of time. And that's what we're building towards.

I think the soap like that side of my brain is absolutely, would love to be able to offer that. The other side is just the complexity associated with being Bloke in the rules and regulations associated with it and sort of the distraction to the company. As we're trying to really build

a lot of the foundational stuff. And so unfortunately like every time we've entertained it, the cost of going public have been too high where it's we're better served being private for now and being able to be 100% focus and heads down on improving the customer experience and building out product and infrastructure and you know, everything that will support the organization for many years to come. So, you know, it's it's those

two things. That tension of wanting to have the ability to offer him one as a product, but then just sort of the cost and complexity associated with it. Okay, but I mean, spec Mania is definitely real. We get hit up from a lot of these facts answers.

And if, if you're looking for a time to sell to sell em, one out, this is the time to do it because there's a lot of companies that I think, I just, I look at the different fintechs coming up and obviously there's a huge demand in the market right now, for any good Equity. People are looking for Quality I can Someone find out to be a much higher quality better than than some of them in the market right now that are getting crazy, crazy valuations and stuff.

So interesting, but it does make sense, because if you're going public, there is a lot of, a lot of red tape at it to a lot of things you have to do in the first place. Yeah, for sure. I appreciate that. And, you know, I hope that's a be the case that we're building, you know, very strong durable company that that exists for the

long term. I think our perspective, like, the nice thing is we now have the cash where we don't really I have to worry about the next couple years from 0, what happens, from a price perspective. We have all the money we need to to build thing. We just need to execute on it. And so being able to, you know, focus on making the Investments hiring the right team and not having, you know, the whims of the markets are distract people from a day-to-day basis, but I do think there is a big macro

trend of fintechs, I think going to be huge or that, you know, technology can better serve people's finances than how it's been sort of historically whether that's, you know, face-to-face, interactions or be a big thing. It's in the like and so I think the category is going to be massive. I do think there are some okay, there will be winners and losers within that that pocket, right for sure, and that that is one. One question.

I had was fintech will be massive. I think most people have bought into that Vision because I use the tools and, you know that, you know, you know, using stuff like venmo to pay for things as much quicker than what we did before, you know, using m 1 bar 0, it's such a cheap rate compared to anything. Yeah, so everybody's used a tool to understand that. Value of it.

And there's this huge surge of fintech over the past couple years as you have millions of millions of new retail investors into the market and just on the subject of fintech in general. There's people like Kathy would that says, these are going to replace Banks and she says it very like matter fact, like the big Banks Bank of America, JP Morgan, City bank Wells, Fargo, Etc. She thinks Square PayPal.

These type of companies are just going to overtake the amount of customers and Really eat away at these Banks. And there's other people to, to mothball yappity has said in other terms that the banks are pretty much done over time. What is your like, just kind of looking out in the future. Do you see, do you share that kind of vision that fintech will either, just keep eating away at Banks profits, and their customers and their client base, or will they kind of work with

them? Or how do you see that playing out? I sort of follow in the combination of both sort of that wishy-washy, both anti-type perspective. If you look like, you know, we mentioned Charles Schwab and Vanguard as you know, sort of disrupting the the old players Vanguard came about and it's not like mutual funds are gone, you know, if they still exist in a very fundamental capacity, is just a lot of the world has moved to pass it, you know, it was a better idea, better

product better pricing. And so, you know, there's a seismic shift over time. And if I were, you know, I bet on passive ETS more than I bet on mutual funds, long-term and same thing with, you know, Charles Schwab, it's Morgan. Stanley and Merrill Lynch were the outdated incumbents. At that point Charles Schwab is, you know, a hundred billion dollar company now is just Morgan. Stanley Merrill Lynch were also a hundred billion dollar

companies. And so when you look at this in like a sort of financial service, I think is more generational where you know a person who is 60 and has a Schwab account and two million bucks on their truthfully is likely going to have a shop account for the next. 20 years of their life, 25 years of their life and it's partly going to grow with the the market and so it's really sort of more of a generational thing of as the people who are 20s 30s and 40s.

They're going to sign up for the newer players, the better players the the more forward-thinking players. They're going to put their money in there and then all of those are going to sort of build up as the the asset growth happens. The income growth happens, the purchasing power. So it you know, it is more of a generational play than a you know, hey, JP Morgan. Chase is going to Zero and five years. I think that's that's a hard

thing to imagine. If they like said another way of JP Morgan doesn't sign up another customer. They're going to be a big company for the next 20 years, you know, it would take a long time for even just their user base to to. Well. Yeah, they have so much. It seems like all the fintechs have a lot of, they do a lot of transactions. They have a lot of transactional volume, but it seems like the big banks have a lot of assets, they control, at least I have a

lot of assets under management. The other thing that I would say is fintech in like all these fintech players are not going to be even competitive with the bank. Until they convinced the person with a hundred thousand two hundred fifty thousand five hundred thousand dollars to trust them with their money. And if in the mental mind of the consumer, it's still you know, hey, I'll use this as the fun tool in the financial entertainment.

But then once I get telling you for sums of money, yeah, you know, I move over that, that needs to be broken down for fintech to win out and I think that's what M1. Really. This is substantively on. How are we? Like truly managing money better than any Solution on the marketplace today? And why is it the better option for anybody with any amount of

assets? Whether you're starting out with a hundred dollars or you have half a million, we need to be able to compete and say, our product is, you know better for a variety of reasons, and less expensive for a variety of reasons, against all the incumbent players. And that that's the only way that you can actually take market share from the these big incumbents.

Do you see on your platform? User behavior that mimics that where people get to a certain like they get to like a hundred thousand dollars or fifty thousand dollars and then they move it over to like a big guy cuz they're like, okay now I have this isn't just play money anymore. Now, I need to put it on something more secure, right? Or do you see them like sticking with it? I guess TCH earn when they hit a certain a certain amount

truthfully know. If anything it's quite the opposite that over a third, you know two-thirds of our assets have been just cash deposits in the black. Form. So people, you know, like depositing via ACH. The other one third is bringing over assets from other brokerage accounts. And so, you know, the person with the quarter million dollar account that the typical use cases. They try am one with 1000 or 5000 or 10,000. Try it out for three, four months and then they bring over

their Fidelity account. And so that, you know, is where the bulk of their assets, the bulk of their money is and that's what buoys up are a, um, and a very meaningful capacity. And so, if anything, we are seeing the opposite of people are almost like nervous. To try them on and so they try it out with smaller sums of money, but then once they get comfortable and they are saying, wow, this is a better more intuitive, more straightforward, lower cost more automated way to

manage my money. It makes sense to move from a legacy solution. That makes sense. I think, I don't personally think that younger people Millennials younger anybody in that range. I don't think they're gonna have much of a problem, trusting fintech companies. Ultimately, but I don't see a lot of people already in Kermit taking the retirement out and putting in something like I'm on finance. So it does seem like a generation thing.

So you think it'll be more of like a kind of slow bleed away from older Banks and then the growth of fintech slowly over time. Kind of like what we're seeing with like cable and streaming. Just a shift from a new technology to an old like an old technology to a newer one. Yeah. For sure. I think, you know people the good and bad thing about financial services is people are pretty complacent and you know, whatever they use is sort of what they're comfortable.

And so I think a lot of the, like more damning statistics are the bank that you use is the one that was closest to your house when you signed up for a bank account. And, and I think that's migrating more as we move to, you know, digital Nationwide distribution and people will look and seek out the best and whatever they, you know, will be the best is what they select. And if it continues to be the best, that's where they'll manage their money.

But if you look at the, you know, it's hard for a 30 year old to compete with a 60 year old in terms. Of you know, how much money do they have to their name? Because I've had, you know, 8 10 years of earning power whereas the six-year-old has had 40 Years of earning power. And so, you know, it is just a sort of Natural Evolution of how assets are buildup in the United States of you graduate high school or college with little to no assets.

May be in debt, you build up to retirement and then you draw down and so it's I do think the where money is held as more of a, like cyclical nature, but people are going to seek out the best tools available and I don't like you were saying, you know, Under people are more trusting of Technology solution. I think they're distrusting of banks.

You know, I think they're more willing to, you know, trust any of the fintech players or in Facebook, Amazon, Netflix, Google with things than using a old Legacy solution. I think the tech forward forward thinking mentality just resonate a lot more with them. All right? Well, the the next subject on this on the same subject with

fintech and the growth of it overall. I'm we've seen what's happened over the past. Ten months with a surge of interest, in retail investors entering the market. We have, we have the whole GameStop drama and I was wondering some thoughts on that. Like, what are you? What did you think watching that back? Do you think it played out fairly for Robin Hood? Kind of being the bad guy in that situation. They took a lot of flak with selling order flows. They took flak with stopping

trades. They take a lot of flack for not not I guess protecting the investor and I wanted to know your thoughts on that overall, like You think when when Congress are, you know, that Capitol Hill, they're going and they're taking it to Vlad from Robin Hood saying, you're allowing them to do all these crazy things. You know, some of them are on the side of saying, you need to clamp down on these type of things. What were your thoughts when you're watching that?

Um, It's a combination of a lot of things. I mean, you know, there's like healthy competition and camaraderie between the fintech companies. And so, you know, there's like mixed mixed opinions anytime something happens to and a competitor. I think Robin Hood's donut a ton of fantastic things. I think they brought cost down across the entire industry. They've increased the entire user experience threshold.

They proved out people will trust spintax with no substantive money and they have a massive user base and the like Associate with it. I think some of the things that they were critiqued for. We're not fair. I think, you know, payment for order flow is sort of a in the weeds type subject, but I actually do think it helps the overall environment more than it hurts or two tracks from it.

Some of the like, you know, like weirder things that they're getting brought in front of Congress for it, you know, we can talk about specifics and can give perspective on that. I do think like we're the two things that if you know where to start say how M1 differs. I do think Robin Hood has a A Trader mentality, and they sort of they encourage frequent trading turning over the portfolio levered bent with

options. Whereas M1 is much more investing mindset of, you're buying ownership stakes in companies or asset classes. And you're trying to benefit from the value accretion over long periods of time. And those are just ver they all start with the same thing of buying a security but they're very different Madden sets of why you're doing it in your time Horizon. And so I think there's, you know, we just view the world a little differently than Robin Hood.

And I think Robin Hood, you know, and I think Vlad would admit to it. Didn't communicate the best that you know, all the interviews leading up to it. Yeah, exactly. I think they should have been more transparent from the beginning of the real root cause of the issue. Why? And I think you know and even if they did that I think there are real critiques to have there, but I think they sort of dug a hole from themselves by being wishy-washy.

Not getting to the heart of the issue and it led the The narratives are run astray, that it felt like, you know, the suits versus the little guy and they just however, they message it sort of played into that. I do think like, Even with how

things truly played out. It's not fully understood and you know, I think like if but, you know have mixed opinions on whether it even should because it is sort of the depths of the clearing industry and capital requirements and part due to regulation part due to company capitalization part due to the behaviors that they're encouraging and the like. And so I do think it's a pretty complicated topic but you know, in the in the media, it's sort of bad guys versus good guys.

Sort of pick a side. So it's a Nuance is not loved in the narrative media narratives. All right, so there, I think the

big criticism for them is that they're like, like you said, like encouraging short term gamification, this type of thing. I know, obviously, I'm on finance is a more long-term like, like ownership oriented platform. How do you plan on? When you see, I can't remember the exact statistic off the top of my head, but after the Game Stop drama was as kind of

unfolding. There is some days where Robin Hood was getting millions of downloads per day on the App Store. It was a top one on iOS, and most of those people and this is my experience as well. We're being asked like, hey, what do you think of GameStop people that have never talked to me about an investing or stocks ever before, and they're asking me about that, like, personal friends, I have and stuff. So you see the same attitude of people now downloading their First Financial app?

After this explosive drama because it's caught mainstream attention. I'm how do you with everybody interested in it? But they're doing short term. Most likely they're going to lose money doing this type of thing. How do you bring them over to a long-term mindset? Like how do you look at all these new people in the market? Is there any type of strategy to say there's obviously a lot of new, you know, a lot of new

potential long-term investors. How do we get them into a mindset that fits better with long-term wealth creation. It's tough. You know, it like a VC that I followed. I don't remember exactly who it was. But once said that, it's easier to sell candy than it is vitamins. And I think it's sort of that mentality that, you know, like Robin Hood. If you equate it to different, big is selling a sugary snack versus a substitute meal and you know, that's fine. You know, it's there's a market

for that. There's a demand for that. I do think there's where I have issues. Is when you claim you're doing otherwise, if you're trying to sell frequent trading, you're encouraging it and you're saying that this is benefiting people for the long-term wealth, building wealth creation. I think there's a little bit of a mismatch there and you know, so it's if people like people are more interested in the ability to make a quick Buck,

you know, make money fast. It's why casinos make a ton of money. It's why the lottery make a ton of money. Those are not Avenues or strategies, that I would ever recommend to a family or friends. So say, hey, this is how you should think. Think about money and build wealth over long periods of time. I think it's, you know, you know, if someone came to me and said, you know, hey, I'm like starting to build up assets. I need to think about it. The first thing I said you

should do is create an IRA. So tax-advantaged account. You can grow, you know, long term for retirement. And I think it's telling that some of these trading platforms will have levered options, but they don't have Ira accounts. And so, you know, you can turn talking to one side of their mouth of it helping the individual investor, but you know, but Since pay more is maybe one way to look at it.

And so, you know, have fun. Do you ever plan on having something like options on I'm on finance or any type of time-sensitive tools? Yeah. I think we would absolutely be open to it for more investor flexibility that, you know, we're trying to really give the people tools to manage their own finances. How they won. I do you think we would never gear it towards, like, you know, selling Weekly's or short-term option trading? Because I just It's not our DNA.

It's not how we think, the, you know, like what we want to spend time and energy to help people benefit their finances. I do think we there are real electron uses of options, whether it's hedging a portfolio or adding additional income with covered calls and the like, and so, I think we, if we were to move into it. It's a perfectly good tool and it's really just the application of it. I think we would always have the application. Be more long-term oriented. How are you, you know,

protecting against risk. Adding additional income streams in the like versus, you know, how can you make hopefully a lot of money on Thursday, you know, and so I think it's just a little bit of a different mindset and, you know, both should be available on the market and both people should both like firms should get customers. And customers can vote with their feet on what to use. You were asking about your how do you do it? I think it's just being honest to what we're trying to do.

We're we're not trying to do the financial entertainment. It we're not trying to you know, like have Mannix wings of you know, hey, this is worth nothing on Monday and a ton on Thursday or vice versa and you know sort of encourage that behavior were saying the truest way to build and accumulate wealth is to have ownership stakes in valuable things that appreciate over time. And so we're sort of that's our

ethos or mentality. We try to reduce cost for borrowing money and try to give you a very flexible terms. And so, you know, we I think we have Principles that we live by, and that's the product that we're going to create. We know that that's not going to be attractive to some people, but the people that that is attracted to, I think we're going to create the best tool on the market place. Okay. Yeah, it does seem like a lot like that side of it. The short-term side will always

exist. It seemed like it seemed like, from the meetings, at least what what the Congress was saying to them, at least, to me. It came across like, they're like, hey, we need to protect these people and, you know, give them. I don't know if it's restrict their options and their availability to do different things or to get like more stern warnings, right to have some type of like, you know, on cigarettes.

You have the cancer morning. If you have a super short term option, you can have some big warning saying, you can lose a lot of money doing this. So you don't think that they're either, think that both sides will always be exist, but you're going to always lean on the side of long-term. Yeah, you know it's an interesting like sort of

philosophical. Question of should someone be able to you know, go take a ten dollar bill and light it on fire their backyard, you know, and I wouldn't say that's like a good strategy but should they be able to do it? Probably, you know, probably above my pay grade is maybe they are the better answer to that. I do. You think options there. What's interesting in options is there they are. Complicated products their

levered bats. You have the ability to make and Is Meaningful amount of money in short periods of time. I do think it's incumbent from a like product design perspective to Showcase that as you're bringing customers in and and

you know, doing that. And so like whether there should be laws or rules against it. I do think there's an ethical question associated with it. But then, even on the the rule standpoint, there are a lot of financial rules on the on the books already that are around suitability. So, you know a broker-dealer can't you know, has to ensure that any Man is suitable for their investor and that takes into account, their their income, their net worth.

They're investing experience their risk tolerance their time Horizon than like and I think, you know, there does become a question of are the rules on the books being enforced of when someone signs up and they say, I have a low risk tolerance long-term Horizon. I really can't afford to lose money. But then I do trade a weekly option in my account either goes to zero or negative in a short amount of time. Is that sort of alignment with what's on the books today? Day, probably not.

Yeah, but you know, yeah as long as I know the so you're saying as long as they are aware of of the possible outcomes of what

they're doing that it's probably probably. Okay. Well, I have another question as future future feature set of em on finance. Are you planning on doing anything with crypto anything related to that with them on finance? At some point, especially, you know, if the market continues like, it's going to get, seemingly going to continue will absolutely support something. I think I've said on many interviews and I would have thought, there'd been a crypto or Bitcoin ETF. Yeah.

Mateo now. Yeah, exactly. And, you know, in some sense. I think we were sort of defaulting into getting crypto for free and just having it work in our sort of existing platform and not having to engineer something that new for it. Right? So, you know, that, that that's been the strategy is Let it come to us and it hasn't necessarily work all that well, but you know, if people have an interest in it a demand for it, you know, they like with they want to put it in as a component of their

portfolio. We absolutely want to support it. I think it's just more of a prioritization and timing effort and a thoughtfulness of can we improve on the solutions that are in the market and turned to a unique M1? Take on it versus sort of a me to solution that is available in a lot of different places. Now, just another place to buy crypto. Right. Yeah, exactly.

You know we want to, yeah, be additive to the the marketplace and we think there's a lot of ways that we can do that and, you know, working on current initiatives there. I would say that we don't have a, here's how we improve crypto mindset. Yeah. Okay. Yeah, I, I was wondering because I have so many you see. So many, you know, I don't know what the comedy fintech companies that are just crypto centered and lending crypto and all this type of stuff.

That it seems like it has a big boom right now. Who knows, how long that will last. Some people are very much bought into it for the long term and think it's going to replace a lot of Finance to go with that. So you don't have any plans to add it in some people that I talked about I said, I'm going to buy a crypto ETF when they come out with one. They're like, oh but that defeats the point because then you can't act as your own bank,

right? You can't have the like where you take it out and you have the wallet with it. I don't really see it. I don't really want to be my own bank as my issue. She was crypto not something I've ever wanted to do. So but no it doesn't know plans with crypto in the future. That's pretty much all the the questions. I had. Was there anything anything with em on finance anything that you want to? Let people know that you're working on England's me. Share.

Yeah. So the like platform is growing in a very meaningful clip that, you know, if you want to invest in a custom portfolio in automate, those Investments and one is by far the best part products on the Lacey. I really don't think we have a competitive peer, and how we're doing and approaching, and thinking about money management, or borrow product is also, similarly, one of the lowest cost ways that you can borrow money. And I think regardless of whether you use it or not.

It should be available to you. And so there's sort of that synergistic benefit of. If you invest for free, you just get this benefit of low-cost borrowing, whether you use it or

not and it's emergency funds. And then our son account is, you know, one of the highest interest rate checking accounts on the market with cash back on debit card, and we're going to be moving more into So having that be a full checking account replacement, and so I think m1r, our trajectory has been strong and I think that customers should demand and expect more from us over the years to come. What do you think that does

bring up on question? What do you think when like when you see user behavior on your platform and building out the different that different functionality of it? What do you see as the most underutilized part of it? Like what are people missing with it? I think we are best known for our invest product. It's a unique brokerage. On the marketplace that's really built around portfolio management rather than trading. And I think you know, you have 99 other options for trading and

one is really one of the true. That's designed the portfolio and invest in the portfolio mentality out there. And so I think borrow is a huge value add service and if it's a tax advantage, line of credit, that is the lower cost than you

can get anywhere else. We're getting meaningful, uptake of it. But I still think, you know, people people should be paying down their mortgages and paying off auto loans and the like with M1 varro, it's more flexible lower cost and its margin interest income. So it's tax deductible. And then the same thing with spend. I mean we like we're currently giving away Plus for free for a year and you get a 1% interest checking account. There's nothing comparable to

that on the marketplace. And so I think the om one should be the primary checking account for most people if you really want to earn the most amount of money on your idle cash. And so, you know, I think the newer products are under you. Isn't I think there's a lot of growth to be had there now. Okay, and you're still planning on building out these three. These three parts of the platform. You're not, there's no new part of the platform. You're adding like it at least right now.

No. Yeah, Don those will be the pillars for the foreseeable future and it's really about going deeper in each. And so, you know, more investing options, more intuitive ways to edit and customize your portfolio and get reporting and Analysis on how it's doing borrow. We will move into other forms of borrowing and so right now it's only a portfolio line of credit. So borrowing against your portfolio.

As collateral to will move into the unsecured and the like and then spend on credit cards or what do you mean by insecure, you know, if you just want a personal loan so, you know like

hey, I need 10,000. Like I may not have the Forty thousand dollars of investment assets to borrow 10,000, but I need to borrow 10,000 for whatever purpose so, you know kitchen remodel or something like that and you know, we can we can support that we're will be able to support that and then on the spend side, we are moving into the credit card round. So we have a debit card that provides High cash back, but you know, we will be Now, from spoiling is a big Market

announcement with them one. I've cited elsewhere, but we will be moving into that realm and giving people higher rewards and doing a lot of creative things. And the, with our product ground, with a new credit card. Sorry, what's up with a new credit card? Yeah. Yeah. We know, there will be an M1 issued credit card and we'll do interesting things with rewards based on your Investment Portfolio and use the bar line of credit to provide you better

revolvers and the like. And so, you know, it'll be a pretty unique credit card on the market. Okay. Well that's exciting stuff. I appreciate it. Coming on again round two absolutely always a pleasure. Yeah. Thanks again, Brian. Okay.

Hope you guys enjoyed that interview with Brian Barnes C. 0 of m. 1 Finance. If you guys like these type of interviews where I sit down ask questions with with people over different companies, make sure to subscribe to the channel, like the video, share it with friends because I plan on doing more of these in the future. We have some more lined up. So appreciate you guys for watching. I'll talk to you next time.