Revoco Talks…Investment made easy with Invstr’s Kerim Derhalli
We’re over the moon to be joined by Kerim Derhalli for this Revoco Talks Q&A.
Kerim is CEO and Founder of ‘Invstr’, the app with the mission to empower people the world over to take charge of their financial future by providing them with the education, resources, and opportunity to become confident investors.
Kerim has lived and worked in London, New York, Singapore, and Tokyo, working in the banking industry. Over his career he noticed the financial industry was being left behind by social technology. This prompted him to leave his banking job behind in 2012, where he set out to democratize finance through technology with Invstr. Wanting to give aspiring investors the platform they need to hone their skills and grow their confidence.
In this Q&A he tells us more about his career, how Invstr came about and the lessons he has learned along the way, including some pearls of wisdom for other aspiring founders. Have a read below…
Thanks so much for joining us Kerim! Can you give us an intro to yourself, Invstr and your career please?
I went to boarding school when I was 7 years old because my parents were working abroad. At school I studied Latin, Greek and Medieval history. That gave me a perfect understanding of where we have come from and how we evolved. I finished school when I was just sixteen. I then took a year off to travel in the United States. At Oxford I studied ‘modern greats’ – Philosophy, Politics and Economics. Economics in particular was a great benefit in understanding the financial world and the relationships of different asset classes. I recommend it to everyone who wants to be an investor. Though one of the first things I learned when I started work was to rip up economic notions of demand and supply and efficient markets. People aren’t rational agents. They buy when the price is going higher, not when it is low. They sell when it is low, not when the price is high. And markets are not efficient. That is where the opportunity lies. Once you realise all of that, economics can then be very useful!
I graduated from Oxford when I was 20 and celebrated my 21st birthday on the training program at JP Morgan. In all I spent almost thirty years on Wall St and in the City. During that time I built many businesses, several from the ground up. I also had the fortune to live and work in the United States, Europe, Tokyo, Singapore and the Middle East. And my travels took me to over 60 countries around the world. Those were exciting times in finance. The industry went through a remarkable transformation. Deregulation and a rise in leverage drove a huge increase in turnover, geographical expansion and product innovation. That all came to a head in 2008 when those trends not only stopped but went into reverse. I realised back then that the industry had lost its way and would likely never recover. Financial intermediation is a vital role in a capitalist economy. But that social purpose was overwhelmed by excessive leverage and risk-taking which corrupted the industry.
After all your years in the banking industry, what made you start Invstr?
Starting in 2010-2011 I realised that the emergence of three technologies created a perfect opportunity to transform the financial industry and make it more inclusive. Those technologies were cloud, mobile and social networks. Financial markets operate these days 24/7, so mobile phones give us the ability to be permanently connected. Financial markets are about people and the interaction of human emotions and psychology. Social networks are a perfect medium to enable people to connect to each other. And cloud computing has enabled small businesses to take on huge incumbents without the need for massive capital outlays. So, that is how the idea of Invstr was born.
How has the journey with Invstr been so far?
I believe that the move towards self-directed investing is the most powerful trend in the world today. Invstr is all about empowerment not exploitation. There are tens of millions of millennials and zoomers in the US and globally who want to take charge of their financial future.
Invstr is designed with their needs in mind. We help them build the confidence, knowledge and wealth to become great investors, from a young age all the way through to our more experienced members.
How do we do this? Fantasy Finance is a portfolio management game that lets them experience the fun and excitement of the markets risk-free and start to learn essential portfolio management skills. Invstr Academy is a carefully constructed step by step text and audio syllabus that takes everyone from zero knowledge to everything they need to know in an easy logical progression. Our social features – Profile, Feed, Private Leagues and Direct Messaging – allow our members to leverage the power of our global community by sharing their experiences, learning from each other and building supportive networks.
Contrast this with other platforms which treat their users’ order flow as the product that they harvest and sell to high frequency trading firms. Or encourage them to trade options and use margin because there are fatter profits in that for them. These other platforms shamelessly exploit their users. Invstr empowers its members to become the best investors they can be.
Overwhelmingly, people want to learn. They want to feel and be in control of their destinies. They want to align with platforms that share their values, that have a social purpose, not just a profit motivation.
Invstr members are part of a revolution of empowered self-directed investors. Typically they start by playing Fantasy Finance, accessing the huge amount of content that is available to them for free, and start to make friends with other users on the app or friends that they bring to the app. We have had over 50,000 members go through our Academy. Their returns outperform massively people who don’t use the Academy. We have had 70,000 private leagues created – mini communities within the larger Invstr family.
Learning to invest is a big learning curve for most people. Invstr makes that learning process fun, social and easy. Our advice to new investors is to slow down and think long term. Life is not a race – the first to finish is the loser, the last person standing is the winner. So, also in investing. Investing is for the long term and the more that people can think and operate that way the more successful they will be. Invstr is the platform that will be their companion throughout their investing life journey.
What are some of the biggest lessons you’ve learnt since founding a start-up?
Entrepreneurs almost by definition want to change the world. They recognise problems that need to be solved and they experiment with different solutions in order to create different outcomes. That involves risk. Success comes from correctly identifying the problem and the solution and doing so at a time when the world or at least a group of early adopters is ready to embrace the change that the entrepreneur proposes. Along that journey there are times when things aren’t working as they should and it all comes down to you. So, being an entrepreneur is not easy and not for the faint hearted. At times like that it is essential to have a real purpose and to believe in what you are doing. That is where you get the strength to keep going.
What’s one piece of advice you would offer other Founders, or aspiring Founders?
There are two kinds of people you need most on your side when running a start-up: your team and your clients. I have had the fortune in my career to manage many large teams and work with some fabulous people. The thing that I have learned is that when you can get people to collaborate around common goals you can achieve amazing things. And if those people are diverse and bring different talents and experiences to the table the results can be spectacular. The reason that the human race, despite being not the strongest and maybe not even the cleverest species on earth, has come to dominate the planet has been our ability to communicate, learn from each other and collaborate. It is collaboration that has been the secret of our success.
The other people you want to enlist to the common purpose are clients. I think there is a generational shift taking place. Too many people are critical of millennials and zoomers. I’m sure they have faults. But their faults are nothing compared to my parents’ generation that fought two world wars and exploded nuclear weapons. They are nothing compared to my generation, which has polluted the planet and saddled society with massive debts that we face little prospect of ever repaying. Debts we have incurred because we have focused almost exclusively on current wellbeing at the expense of our future. We have overborrowed and over spent to support an unsustainable lifestyle rather than investing for the future. And we have left the millennials to pick up the bill.
So, we need to be extremely circumspect before we start criticising younger generations.
I actually believe that millennials and zoomers understand all of this intuitively. Zoomers even more than millennials. They have witnessed the aftermath of the financial crisis. They understand the predicament they face. Fortunately, they are smarter than us. I believe they have better values than us. That they have the capacity to collaborate to solve the problems we face. We have to believe it if we want to be optimistic!
These generations are also going to align themselves with enterprises that share their values. They know that the short-sighted profit maximising behaviour of my generation is morally and financially bankrupt. They expect companies to put the common interest first – to give before they take, as Invstr has been doing for several years. Organisations that fail to understand that will not gain social acceptance and will not survive.
— Invstr (@invstreams) October 21, 2020
What’s on the horizon for Invstr?
Our ambition is to empower everyone to become a great investor. We have learned that we can’t rely on governments or companies to invest for us. We need to do it ourselves. Empowerment involves three things – education, resources and opportunity. Think about enabling someone to eat spaghetti bolognaise. Before they can eat they need the recipe, the ingredients and a kitchen to cook it in. So far, at Invstr we have created the recipe and we offer all the ingredients that people need to cook a meal or manage a portfolio. Soon, we will be launching our financial kitchen where people can save, spend and invest more securely and more conveniently than anywhere else. Invstr will be the only fintech platform that offers true empowerment. Investing is going through a revolution and Invstr will be marching along at the very front of it!
Want to find out more about Invstr? Visit their website here.
Want to find out how we’re supporting start-up growth? Click here.