Victor Trokoudes is the co-founder and CEO of Plum. They are focused on making the boring act of saving money an automated, seamless ,background process.
Highlights of this episode:
[00:54] What is the personal story behind Plum?
[02:33] Are millennial saving less?
[03:31] From saving from subscriptions to helping get reduce bills
[06:52] Do you face trust issues?
[08:02] Automated finance vs challenger banks
[09:30] Connected to savings so no need to decide amount of investments
[10:42] How to uncover the problem
[12:08] BBC article and getting 5000 users
[13:20] Impact on people's lives
[15:05] Is Plum for people with very little income
[17:02] What are the big issues that still need to be solved in personal finance
[18:52] Finance philosophy
[20:09] What is the future of Plum
Plum - https://withplum.com/
Victor Trokoudes Linkedin - https://www.linkedin.com/in/victortrokoudes/
Listen to this episode now:
Read the transcription:
[0:31] Maiko: In today's episode, I'm joined by Victor Trokoudes, founder and CEO of Plum. A chatbot that helps you save money, with you barely noticing it. With many millennials struggling to save money and keep it in a savings account, Plum solves the problem by automatically saving small amounts, and even giving its users the option to invest in stocks or funds. Plum now has about 150,000 users and is growing rapidly. The company estimates that it can make the average user about four 50 to 200K wealthier over their lifetime. It's great to have you on Impact Hustlers, Victor.
[01:05] Victor: Good, thanks for having me.
[01:07] Maiko: Thanks very much. You left TransferWise to set up Plum. What is your personal story behind Plum and what was the need you saw in the world to start Plum back then?
[1:17] Victor: When I was at TransferWise, it's a great company, great experience, but I realized I was too busy to focus on my own finances and kind of like, put money aside or think about my savings and my future. And I realized that there were a lot more people around me that had that similar problem. So, when I met Alex, my co-founder, he was downloading his bank statement on his PC because he was a freelancer and wanted to like better budget and manage his money. And we both realized that we could use that data to figure out how much we could save for ourselves and start automating it. So, while we were living our busy lives, we could be accumulating savings. And I felt that was something very powerful, because it always frustrated me that I wasn't on top of my money, like kind of like dad was always nagging, like what are you doing about like savings? Are you buying insurance? Are you investing continuously? And I felt like I should create my dad, as, a chatbot, almost that does all these things that I know are good or not even painful to do and they deliver like, you know, greater financial well-being for you in the long run.
[2:16] Maiko: So, you started building a solution to a problem you face yourself?
[2:20] Victor: Yeah, it was very much something that was like annoying me and I wasn't doing anything about it and felt it was like a very big missed opportunity for my own, you know, financial life.
[2:30] Maiko: Alright. This is cliché, that millennials are just bad and saving, they just don't know how to do this, they're not really interested in kind of finding out about it or just might not know, or half the time to do it. How true is that? How much do you see, is that actually an issue? And how much are you solving that issue?
[2:46] Victor: I actually think that like, I don't, I can't say, I don't think millennials are worse than other generations with regards to like, their intentions to save. I just think we live in a world that has changed dramatically and the tools that we have today, basically saving and managing money have not, right. So, right now, like, you still have a bank account that has a savings account there that like you have to choose how much to put, when, etc., right? Before people would not change, would like, stay in a job forever, they'd have like a pension with that job, etc. Right now, people move around jobs every like two, three years, there's not that like kind of stability, where the company in a way like takes more care of you, right and kind of thinks about that for you. So, I just think what we're trying to bring to the market is the tool that makes millennials that I think have the right intention to put money aside, but then it fits the way they're used to living, right.
[3:37] Maiko: So Plum, if you look at the product, and maybe we can talk a bit about how the product actually works, you're not just focusing on savings, but you're also trying to give financial advice and being really the dad and the pocket and Facebook Messenger. But how does it work when I use it? When I'm using Plum, let's say I just connected to my bank account, now what happens next?
[3:56] Victor: So, what will be happening next, very soon as soon as you connect it to your bank account, we'll let you know if we--. We will run some calculations, we'll figure out what bills you're using and we'll do what we call a spring clean. The spring clean for us is like, a lot of us forget a gym membership two Spotify subscriptions and we're paying double for things we're using. So, we want to like make sure that we're not forgetting that because there's been a study that 40, the average person in the UK forgets 40 pounds of subscriptions a month, right? And when you count, that's like 500 pounds a year, and then over 40 years, that's 20-grands, right? So, it's a lot of money, right, that goes down the drain. So, that's number one, then out of those bills, we want to discover the ones that we think you're overpaying, right? So, we're like, hey, you're paying on the utility bill, switch to this provider and actually, we're plugging into mostly green energy providers. Right now we are plugged into Octopus, we plan to do a partnership with Bulb as well, in order to let people, switch their utility bills, and then we'll go down the whole spectrum, right? Hey, you have too much debt, why don't you consolidate your debt into something cheaper? Hey, you're overusing your overdraft. Why don't you like either like reduce the use of your overdraft or use another bank that makes it cheaper, or we might even try to make it cheaper for us Plum.
[05:08] Victor: Once we figure out like your current status, I think of it almost like a fitness coach for your money, right? Where like these things you can change and they're actually not even painful to change, right? Change them, right and we'll give you the tools to do it. And then, we'll calculate how much we can put aside for you. And that's like a habit that I think should be happening all the time in the background, where we're putting, you know, we want to target to put 5% of people's money aside as a minimum right, automatically, right? That's happening, right. So, now we've started putting money aside for you, we can give you tools to save more. So, we're building payday boost, so when you get paid, do you want to save a percentage or an amount or the beginning of the month? Or are we going to build other more fun rules like if you overspend on Starbucks, save more from you? So we're building all these like tools that you can continuously be saving. But the fundamental thing is that the Plum, what we call it, the Plum brain is saving money for you consistently without any necessary input from you.
[05:59] Victor: Once you save money, once you start saving money, then we want you to like graduate or if you already have enough savings and are not using your overdraft, start investing, right. And we think investing should be something that is not like foreign and like, I will take care of your investments for you, you don't worry about it. And that's why we've created themes, so we allow people to invest in themes, we have three themes right now, you can do the ethical theme, if you're interested in companies that have an ethical standard, you can do emerging markets, you can do tech fund, or you can do the diversified risk-based approach where you have three risk levels, low, medium, and high. And we want to keep evolving these themes that you know, we were just discussing for the podcast, could you follow Warren Buffett, that's an interesting theme, or maybe people want to get exposure to AI, maybe they want exposure to crypto. So, finding all these things that millennials read about, hear about and want to get some exposure to, or want to take this ethical angle to, are things that we want people to be able to start putting their money towards.
[7:00] Maiko: You talked earlier about, yeah, Plum really being the dad in your pocket, gives you good advice, do you face ever any trust issues? Because sometimes, maybe I don't want my dad to see everything and maybe I'm skeptical about, okay, now Plum knows basically everything about me, is that everything, any issue that you face or is that actually a non-issue?
[7:21] Victor: I think it's a non-issue because Plum is like, quite targeted at what it does for you, right? So, it's not, it's not like, I'm a website, I'm not like Amazon, and I'm asking you to connect your bank account so I can sell you more books, right? Or like, I don't know, gadgets, right? It's more like, we know that we can continuously save and invest money for you and get rid of bills that are just like 100% worse off that you're paying that bill provider versus someone else and we're just enabling you to do that. So, I think there are people that have like, blanket trust issues like, you know, they don't want anyone to see anything about them, we'll never convince them. But I think the people that understand that we're trying to get to this, it's obvious that we need this data to get you at a better place, there's no trust issue.
[8:04] Maiko: And if you look at the landscape, right now, there are a few startups that might have a similar approach, that have messenger bots to save money. There is, of course, the Challenger banks that are trying to develop their own versions of a savings product or some sort of automated saving. How do you see yourself differentiated from that? And why should people choose Plum?
[8:24] Victor: Look, we've set ourselves like a very clear, like mission and goal. And that mission and goal are that we want to automate things in people's finances. And the way we think about the companies that, we have these three areas that we think we can clearly improve people's life. And it's, one is, save a percent, 5% of people's income, two, is get as many people investing as early on in their career. And then three is, find out how many bills people are overpaying for and eliminate that. And that's the only thing we drive to do and I think as a consequence, with the way we've built the product has been very much focused on allowing you to take these actions. So, like, we have launched, you know, like, if you look at the speed and the features that we've developed, we have launched utility bills switching before anyone, we have saved, we started with savings, not like which isn't, we started with savings and we've integrated that with investments. So, I think we're agnostic of what bank you're with and we want you to bring all your bank information into Plum so plum can be more intelligent in how it develops your financial status, we think of Plum as the brain for your money, basically.
[9:34] Maiko: Let's talk a bit about an investment product that has been launched recently to the public, so anybody can use it right now. How's that different from the savings project? Besides, of course, I'm investing my money but how's that different from existing solutions right now? And how can you help people invest money more wisely?
[9:52] Victor: Yeah, sure. So, first of all, it's, I think the fact that it is connected to savings is very critical, right? So, that like, first of all, you have this automated action, that money's being saved up and from there, you can choose a percentage that you can then allocate to your investments. So, you don't have to decide how much you want to invest. So, that's very critical. The other thing is that you can set up new rules of how you want to invest. So, you can say like at the beginning of the month, when I get my salary, then start putting 50 pounds in this fund. And then finally, the big difference, all the robos, basically allow you to choose a risk, but they don't allow you to choose a position review, right. And we're very much of the belief that people should be able to express their views with their investments. And that's been a core thing of how he developed investment product.
[10:38] Maiko: From there, I'd like to talk a bit about your personal journey. So, you mentioned in the beginning, you tried to solve your own problem in the beginning, how did you go about figuring out whether anybody else is facing that problem, that you follow a very traditional Lean Startup approach and did you interview people in a structured way? Or did you just put something out for yourself and then try to come people to use it?
[11:01] Victor: Well, after I left TransferWise, the journey was that I started talking to people, I had this problem in the back of my mind, but I started talking to people that had like, either a bit of savings, sitting there, but not earning any interest, or other people that were just not saving. And it just felt that like everyone felt that it was a bit of a painful process that they kind of forgot to do, didn't enjoy doing, and had no like, structure around how they did it, right. So, it was just very evident in my circle, that it wasn't something that anyone felt there was a solution built for. So, it was a series of like interviews that we did, like formally and informally before we like, kind of figured out that this is actually a problem and we're going to launch solution for it.
[11:44] Maiko: And then looking at the first 1000 or 10,000 users, how do you go about acquiring those people? Was it quite manual?
[11:52] Victor: No, we got quite lucky, BBC wrote an article that 16 million people in the UK have less than 100 pounds in savings, right, which is another like massive indication that savings is not like something that is being achieved in this country. And on the back of that article, I reached out to the journalist, and then he wrote a follow up a month later about how Plum could be a solution to that. And we never, I never understood how it would have meant that the BBC is kind of one of the biggest news sites in the UK but that article ran over the weekend. I think it got like a million views, which was quite a bit for an article. And basically, we got around 5 to 6000 signups to our waitlist. So, that ran in November, and then we launched it in January, and all those people became users. So, I don't know, we got lucky in some ways, but at the same time, I think if you're solving something that's actually a problem, you know, people notice and you know, you can get lucky like that.
[12:52] Maiko: So, you were able to actually acquire those people quite organically without having to pay for acquisition?
[12:59] Victor: Yeah.
[13:00] Maiko: Very good. If you're looking at the experience of your users, what are sort of the stories that you can share of some of your users in terms of what they've been able to do with using Plum? What's been the impact on people's lives?
[13:15] Victor: Well, I mean, one of the biggest quotes we've gotten was that like, you know, someone, you know, publicly said that they've saved more in a month than in the whole year before using Plum, right. And that's when you hear things like that, that you realize that this small background behavioral change has really impacted users, right. And then we have so many stories of people that have used Plum, and then have managed to go on this holiday, they wanted to go for a long time, or use Plum and something unexpected came their way and like, you know, a boiler broke, etc., they managed to use it for that. But it's fundamentally that the biggest pleasures when we feel that Plum has managed to do people, allow people to have savings where they didn't have that before, right. And that's very satisfying. But we have people of both, people that have had savings and people that don't have savings, right? It's kind of like a product that everyone needs to be saving continuously. And so, we get both types of people.
[14:10] Maiko: So, what's the split there? I don't know exactly, but do you attract more people that are already into investing and saving or do you get a lot of people are like, I've never saved a penny of my life?
[14:21] Victor: It's actually 50-50. So, I think it's just like, it's just a representation of the whole population. It's just that the appeal to half of it is that I haven't really managed to save before, the appeal to the other half is, this is a better way for me to push my current savings and I wanted, it's almost like you know, if you're an athlete, and you find something that can boost you and make you better, that's Plum for some people. And then for other people, Plum is like the subscription to the gym in a way that they weren't going to the gym, right? But both people are trying, they're on the same journey, there are just different stages.
[14:52] Maiko: If I'm now at the start of my career, or I might be working a job where I get minimum wage or anything like that, I might be thinking, well, saving isn't really for me, because basically right now, I'm already struggling to pay my bills and everything, is Plum then for me or how do you think about that? And how is the split of people? Again, to attract a lot of people that kind of already have some money to save or do you really take the view, even if you have very little, we might be able to actually leverage that?
[15:21] Victor: So, we think even if you have very little, we can leverage that, right? Because the way I think about it, and so we allow people to save in overdraft, right? And the reason we do that is that we believe people that use, overdraft, create a new mental like zero, which is their overdraft, right? So it's like minus 500 is my zero, right? So, you're still, you're very likely to still go on holiday if you're going to minus 500. And what happens then, is that you either go to minus 1500, or you take a loan, or you put it on a credit card, right? So, we think that like, irrespective of your income level, right, you should be putting money aside that you will use for things that you want to do and that will prevent you from going into further debt or more debt. And so, basically, irrespective of income, we help you save. The way I think of Plum, as well is like when you're earning little, let's say minimum wage like if you lose 20 pounds, on the way to work, like, it falls out of your pocket, you probably won't necessarily immediately notice that right? You don't fully calculate exactly how many times you're going to eat out, how much you're going to spend on food, exactly, right. Some people do but the majority of us don't. So, I just think like, you can always skim some money off that you haven't fully calculated where it's going and that's your Plum savings.
[16:41] Maiko: I'd like to take the discussion a bit broader, so, we talked about savings, we talked about investment. And just before we started recording, we talked a bit about financial education, etc., what do you think are the big issues still to be solved in personal finance? Whether that might be buying a house or financing bigger things like a car or something like that, or financial education early on? What are the big problems that you see as still need to be solved? And how far do you think Plum is going to solve them? Do plan to expand much beyond investment and savings and be really the financial assistants of people's lives?
[17:20] Victor: Yeah, no, I mean, I think the problem that really needs to be solved with finance is to bring together all these like technologies that have managed to lower the cost of various financial products, and make sure that everyone is using, you know, the cheapest and best, kind of financial products, right? And that's the role of Plum, right? So, that's when I talk about how you connect your bank account, we see all of your bills, we calculate how much you're paying your bank, your loans, etc., and calculate whether or not you can do things better. So, I find that like an assistant is basically, like, when you think of what technology is, right, it's always making things more efficient. And our role is to make your money a lot more efficient for you. And I just think like, right now there are inefficiencies. And the reason why you bring in Plum and technology like Plum is that it can eliminate those inefficiencies. And when we're done with those inefficiencies, then at least that we know, it's completely up to some person how they choose to go and it's like a lot more of a conscious decision, rather than someone has sold me this like loan that now I can't get out of it, there's a big penalty to get out of it.
[18:25] Maiko: Do you have any philosophy that you follow in terms of how you approach investment or savings, after looking into personal finance quite a lot, and there are people you know, that advise you, to save 40% of your income, there's people that advise you to save 20, some say, you know, you should have like, as little expense as possible, do you follow certain philosophy and try to coach users to stick to that? Or are you, rather like, very low touch and not attaching yourself to any of these concepts?
[18:55] Victor: So, yeah, the philosophy we follow is that we want to automate your finances for you. We want to save 5% of your income for you, right, as a minimum, and we then want to give you the tools to save more, or maybe even less, right, you can tell us to save less. But we don't necessarily want to tell people, we were discussing earlier, like, I don't know how long someone wants to work, right. I mean, I enjoy working, I don't envision ever, like stopping completely. So, we don't want to tell people, how much to spend going out. We think it's, I like going out, it's an enjoyment, I know the cost of it, I'm happy to take it right. But I think we want to give people the ability to change it if they want to.
[19:45] Maiko: And lastly, if you look over the next 10 or 20 years, what's the sort of world you're trying to create with Plum that you're trying to contribute to? How does the word look like in 10, 20 years where Plum has succeeded?
[19:58] Victor: Plum succeeded when people like have started their job, have connected Plum. And by the time they're like, the early 30s have like, you know, accumulated a decent amount of savings, have been investing since the age of like 23 and they don't have any financial product that they're using that is is not beneficial to them. And they can talk to Plum and ask Plum like, you know, how am I doing? I want to go on holiday in a year, what can I do to get there? And plum can like, figure out the best way for them to get the money that they need to do something. So, it's a world where people worry a lot less about money.
[20:40] Maiko: All right. Thank you very much, I wish you all the best on that journey. And thanks for taking the time today.
[20:46] Victor: Cool, thank you.