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One of the many challenges for low and middle income (LMI) consumers is building wealth. If you are living paycheck to paycheck with no savings you are more focused on financial survival and likely don’t feel you have the capacity to build wealth. This is where Stash comes in.

My next guest on the Fintech One-on-One Podcast is Liza Landsman, the CEO of Stash, a position she has held for around a year now. They are laser-focused on the LMI consumer and have built a suite of tools to help these people save and build wealth. Their Stock-Back Card is truly innovative and is often the first time their customers have ever owned public equities.

In this podcast you will learn:

• What drew her to the CEO role at Stash.
• How Liza describes Stash and its mission.
• Who the typical Stash customer is and how they are using the app.
• Some of the changes she has made at Stash since becoming CEO.
• How their Stock-Back technology works and why it has been groundbreaking.
• The Stash 100 and their approach to financial education.
• What their customer base is focused on when it comes to learning.
• Why they created Stash Core, their back-end infrastructure platform.
• The thinking behind launching a B2B platform.
• What they learned in their Hardworking Americans Survey.
• The scale they are at today.
• How sticky their customers are and what they are doing to reduce churn.
• Liza’s vision for the future of Stash.

Read a transcription of our conversation below.

Peter Renton  00:01

Welcome to the fintech, one on one podcast. This is Peter Renton chairman and co-founder of Fintech Nexus. I’ve been doing this show since 2013, which makes this the longest running one on one interview show in all of fintech. Thank you so much for joining me on this journey.

Peter Renton  00:27

Before we get started, I want to highlight another podcast that I always listen to. Fintech Takes by Alex Johnson should definitely be on your fintech playlist. Alex is personable, a great interviewer, and one of the smartest people in all of fintech. I love his regular features like the Not Investment Advice shows he does with Simon Taylor, his monthly recaps with Jason Mikula, his deep dive shows with Kiah Haslett, and the top notch guests he has on the show from time to time. Check out Fintech Takes on your favorite podcast platform.

Peter Renton  01:04

Today on the show, I’m delighted to welcome Liza Landsman. She is the CEO of Stash, a position she has held for a bit over a year now. Now, Stash is a really interesting company, they are in the consumer finance space. They’re really providing savings and investing tools for middle America. And a lot of this is all about automation, which we’ll obviously talk about all of that in some depth. What I really appreciate about Stash is that they are a true fintech company. And what I mean by that is they are equally focused on finance, and equally focused on tech. They’ve built a lot of their own tech, which we talk about, but they’re very much focused on the financial well being of their customers and delivering on that promise. It was a fascinating discussion. Hope you enjoy the show.

Peter Renton  01:57

Welcome to the podcast, Liza.

Liza Landsman  01:58

Great to be here. Thank you.

Peter Renton  02:00

Okay, so let’s kick it off by giving the listeners a little bit of background about yourself. If you could kind of take us through your career journey to date before Stash?

Liza Landsman  02:11

Well, I’ve been working since the dawn of man, mostly in consumer finance, fintech and deep tech, and really a combination of I’d say sort of more heritage, consumer finance companies. So the Citi Group, E*TRADE, BlackRocks of the world, and IBMs, but also startups in the payments space. Was part of the founding executive team at Jet.com, the e-commerce startup, and then spent a great chunk of years actually away from operating as an investor, as a general partner at a tier one venture capital fund, and then just really, really missed the operating world. And the mission here at Stash was so compelling to me, I was excited to join the team as the CEO about a year ago.

Peter Renton  03:00

I think what I read that you actually joined the board right, before that? So you’re on the board at Stash, what was sort of the, you know, what was the impetus to become CEO?

Liza Landsman  03:11

Really two things. Getting to know Brandon and Ed, our two co-founders, and the rest of the board, saw the enormous kind of mission alignment with sort of my own interests, I thought the team was great. And Brandon and Ed, I give them just an enormous amount of credit. As founders said, we really believe in the mission of this company. We believe in it so much, we actually think there’s someone better to lead the next chapter of this business from sort of growth and journey perspective. And I was incredibly flattered and thrilled to be the person they chose to do that.

Peter Renton  03:54

Okay, so then what, what is Stash’s mission? How do you describe it?

Liza Landsman  03:58

So Stash is an investing app. And it’s a personal finance platform, really dedicated to helping lower middle income consumers achieve economic security. That is a pretty lofty goal and mission, but I think the simplest way to think about it is that the greatest source of wealth creation in this country is access to the equity markets. And typically, costs, pricing, and somewhat jargon-filled industry have historically boxed out most low and middle income consumers. And so actually, creating that access and leveling that playing field is at the core of Stash’s mission, eight years ago, eight plus years ago at its founding, and still true today.

Peter Renton  04:46

Right. Right. And so maybe you could dive into a little bit about the typical Stash customer and how they use the app. Is it just for do they use sort of the rounding feature? I mean, how, what are they? What are they doing? How are they building their wealth?

Liza Landsman  05:01

Sure. So typical Stash customer looks almost exactly like what the sort of median US household looks like, low and middle income household consumers $60-$65,000 in household income. Three of the most common employers of our customers are Walmart, Amazon, US armed forces, but lots of teachers, police officers in our mix as well. So just everyday hardworking American consumers. And how they’re interacting with the platform is also pretty straightforward. We are a subscription model. So starting at $3 a month. And that’s a great model for low and middle income consumers because it’s simple, transparent, predictable. And it’s sort of like one subscription fee, all you can eat. Our customers are typically starting their journey with us bringing in $30 to $50 onto the platform. And then they’re investing regularly and consistently small amounts. Five or $10, every few weeks, often through a feature we call Auto Stash, which means they really get to take the full benefit of what we in the investing world think of as dollar cost averaging. So creating time diversity, but really I think about it as like I’m putting a small amount away for my future, all the time. Typically, the things that people are really taking advantage of in addition to auto Stash is our smart portfolio. So that’s our robo advised portfolio, we actually were named Best Robo Advised Platform in the country last year by Condor. And it’s just a way that you can set it and forget. And really fulfill kind of, I would say the two or three critical aspects for successful wealth creation and investing, which is small amount, consistently over time. So you get dollar cost averaging, and then invested into a diverse portfolio with a buy and hold strategy. That’s what our customers are doing. And then the other thing they take advantage of on the platform is really a terrific feature functionality we have for those folks who are holding cash on the platform, we issue them a debit card. And that debit card comes with our patented Stock-Back® rewards functionality, which allows them to earn fractional shares in any public company where they happen to shop.

Peter Renton  07:32

I want to dive into that in a little bit. But before we do, maybe we could just sort of take a step back and you’ve been CEO for about a year now, what are some of the changes you’ve made at Stash since you became CEO?

Liza Landsman  07:46

The great thing is our mission, sort of serving those underserved consumers stays really consistent. But we’ve made some really exciting changes. One, we’ve had the opportunity to bring in some great new talent. So added, you know, really experienced terrific executives in a range of functions. So Chief Marketing Officer, CTO, Head of Product, Chief Information Security Officer, really folks who are very fintech savvy, but also have seen the movie on scaling sustainable businesses before. Two, we’re opening up our new B2B channel through our offering called StashWorks that’s launching in second quarter. And all of that work, both the signing up of our pilot partners and the sort of building out of the extension of our platform happened in 2023. And then last, but certainly not least, I’d say the relentless and inexorable, you know, sort of pursuit of our path to profitability. So we’ll sort of exit first half of this year, essentially, cash flow neutral, other than debt service. But having added, you know, more than 25 full percentage points to our gross margin over the last 12 months, and really putting us into a great position for sustained healthy growth.

Peter Renton  09:17

Right, right. Okay, so I do want to go and talk about Stock-Back® because I know you, I think it was before the pandemic that you released this. So before your time at Stash, but it’s such a great product. I think it was a groundbreaking product when it, when it first came out. Maybe you can just explain the mechanics of how it works, like someone who goes shopping, you know they’re at Chipotle, or they’re at Best Buy. How does it work?

Liza Landsman  09:45

Sure. Stock-Back® is a functionality you have on your debit card with us. So let’s just say you swipe your debit card, let’s use Chipotle. So that’s a publicly traded company, and you spend, this would be an expensive meal at Chipotle, but let’s say you’ve spent $100 at Chipotle. You get up to one, one and a half percent back in fractional shares of that company. And so effectively what we’re doing is recycling a significant portion of the interchange we received. And then we’ve got this sort of patent pended technology we use to allocate fractional shares based on all of your swipes. So if you’re swiping at publicly traded companies, you get shares in those companies. If you are shopping, if you’re at your local mom and pop owned dry cleaners, we have designated with you typically an ETF, or a basket of ETFs that you’re earning in. But it’s a great way for people to learn about the market and experiencing it in the world around them, because we also will send you content that sort of explains oh, maybe you didn’t know Chipotle was a publicly traded company. Or maybe you didn’t realize when you were eating a meal at Outback that it was part of a larger restaurant group. And so you get to actually, like, bring the market to life and the world around you through these shares. The other thing that is terrific about it, because often for us, people who are investing on our platform, we’re the first place they’ve ever invested. And so sometimes when they start their journey with us, they’re on a path to building confidence as investors. And so one of the things we see people doing is starting with a debit product, using that card as a primary card, earning stock rewards and building their portfolio first that way, that enables them to build their confidence. And then they go on to make independent investments, either choosing equities and ETFs on their own, or through choosing to invest money through our smart portfolio. But that Stock-Back® platform actually serves as kind of a warm introduction to the equities market, in a way, you know, as Warren Buffett always says, invest in what you know. So these are places that you are choosing to give your business to in the first place. And now you get to participate in some of that value creation through owning equity in the places that you’ve chosen to give your patronage to.

Peter Renton  12:20

Right, and it’s and it’s automatic dollar cost averaging, because every time you swipe…

Liza Landsman  12:23

It’s automatic dollar cost averaging, this is the thing we love. It’s actually one of the real tenants of the platform. Like we have great content and education. But I will tell you, lots of people also have that. We are big believers that for many consumers, the best way to learn is by doing, and so we try and bring that to life through great features like Stock-Back®, but also things like the way we structure our trading windows are really designed to help you become an investor, not a trader.

Peter Renton  12:54

Gotcha. I know for those people who are watching on video, I saw you have that poster behind you says don’t be don’t be a day trader, be a decade trader. It’s a great motto for most people, even a multi decade trader, you could even…

Peter Renton  13:11

Yes, yes, likewise. So let’s talk about investor education, as you say, I mean, it’s an important part. But I mean, I often find that I mean, people want to learn about money, but they don’t want to actually sit down and be educated. They you know, it’s hard to just learn about it on your phone or at a computer. Well, what’s your approach? I know, you’ve got the Stash 100, which I think is a really is a really cool thing. Maybe tell us a little about that, and your approach to education in general.

Liza Landsman  13:16

Certainly for me, yeah.

Liza Landsman  13:40

I mean, you’re right, I think people crave education and information. But very few of us have infinite free time in which to sit down and make a study of these things. And so we’ve taken kind of a two pronged approach. One, which we’ve talked about a little bit already, which is we really believe one of the ways people learn best is by doing, and so whether that’s through our Stock-Back® platform, as we talked about, or just even things like we renamed a lot of the ETFs on our portfolio to sort of eliminate the sort of lengthier, maybe less obvious aim, and sort of make them less jargon filled, right. So like, we have an ETF in our portfolio that we refer to as delicious dividends, right. It’s the dividend generating thing as opposed to like the long and less obvious name, and it’s just a way for people to like, rip out the layer of confusing and sometimes overly complex language that has sort of been the, I would say plague, of the consumer finance industry for decades. But the other thing we do because recognizing that people are often not feeling like they have enough money, also feel like they don’t have enough time, and so we try and make our approach to content and education very snackable. The Stash 100 was a way for us to both help organize like, what are the kinds of areas that you need to be thinking about as you think about your money and your relationship with money and long term economic security, right? There’s budgeting, there’s investing, there is kind of like basic knowledge on different categories. And what we tried to do is just really distill that down into like, what are the 10 or 15, like, most essential facts to know, or behaviors to engage in? I actually happen to have my Stash 100 like reminder card, sitting here with me. And like, one of the like, Stash 100 Number Two is basically just a reminder to like, have a buy and hold strategy, right? That is very few retail investors ever got a good return, trying to time the market. And so we just tried to make these things like super snackable and straightforward, and not like a history lesson.

Peter Renton  16:04

What are your customer base sort of, what are they interested in when it comes to learning? Like, what are they? Are there certain categories? Or different parts of the Stash 100 that really engage them? What are they focused on?

Liza Landsman  16:18

Yeah, I mean, you know, it’s super interesting. I think if you zoom out a little bit, worry about money and anxiety about money constantly tops the list of things that consumers think about, right. We did a survey of our customers and just think about, like what was going on in this country in October when we did this. And like money concerns still top the list versus like, more social issues, even at times of like great disruption in the world, like money tops the list for most people. Interesting our customers also, one of the things that they get really interested in is how do people who have already achieved economic success, how did they do it? Because in part, people are trying to say like, Okay, well, what’s the unlock for me? And so we think they’re great lessons for us to help abstract there. As you look at sort of different generations, one of the interesting things, and this is something, part of the reason we’ve got goals on our platform, about 25%, so a full quarter of like Gen Zs and Millennials rank as number one, and a lot of the other things are more fragmented, building an emergency fund, as an area that they’re most interested in. And when you think about sort of the dynamic in the US market, with a majority of Americans living paycheck to paycheck, the fact that that’s an area of like constant interest makes a ton of sense. And it’s a reason why the ability to like save small amounts continually to like, build up that nest egg is so critical, but it also makes sense why it figures prominently on the list of issues young Americans are wrestling with.

Peter Renton  16:45

Sure. Okay, so I want to talk about tech now. And you’ve really, you’ve developed a lot of your own tech, you developed a tech for the Stock-Back® piece that we just we talked about earlier. And you’ve also developed your own infrastructure, the Stash Core, which I was reading about recently. Tell us a little bit about what is that and why have you gone and sort of created your own.

Liza Landsman  18:28

So Stash Core is our proprietary back end infrastructure platform. It allows us to really own all aspects of our banking experience, which is a critical component of our platform. But also because it is an API driven architecture, allows us over time to have an enormous amount of flexibility about incremental products, we may want to add into tiers, whether those are things like 529s, or incremental retirement plans. It gives us an enormous amount of flexibility. I think, for us, and I am a big believer in investing and innovating where you need to, but partnering with the best of breed where that gives you the best outcomes are great examples. We have terrific partners, like Alloy, and Mambu, who work with us on our sort of fraud KYC ledger management. And we love that we get to partner with people like that. And frankly, you know, their R&D dollars hard at work embedding AI and fraud data, that’s a great outcome for us because we don’t feel like that’s a place where we’re uniquely qualified. On the flip side, because the connectivity to our customers and that core experience is so critical for how we engage with our customers, we really wanted to assume the reins. Both to ensure we had the highest quality customer experience, but also to make sure we had the lowest possible cost. And that’s really both from ability to continue to deliver a high quality product at a reasonable cost to our consumer, but also, frankly, as we’re running a business, so we could ensure it could continue to deliver higher margins, better return for our shareholders. And Stash Core is one of those things where like the investment pays long-term enormous dividends, no pun intended, because it both gives us better short term outcomes around consumer experience and ability to be flexible there, but is just a much better cost profile for the long term sustainability of the business.

Peter Renton  20:50

Right, right. So you’ve been a B2C company your entire existence, but I’ve read that you’re working on some B2B initiatives, I think they’re supposed to be launching this year I believe, so what can you tell us about what you’re doing in the B2B side of things?

Liza Landsman  21:07

So we are really excited about this. In the second quarter of this year, we’re launching our B2B platform with five or six pilot launch partners across a range of like, sizes and industries. And the insight really came from one of our founders, who for years had been fielding phone calls from large enterprise saying, like, so many of my employees already have your product, I wish there was a version of this that I could offer to them as a benefit. Because economic insecurity and instability is one of the primary drivers of employee attrition. We also often as employers, particularly of hourly employees aren’t able to offer equity to those employees. And we know that’s something that actually drives a lot of loyalty, but also better outcomes for our employees. Like, is there a version of this that Stash could provide? And so as we started thinking about kind of the next chapter for Stash, you know, we always talk about meeting our customers where they are, and we mean that kind of like in their journey as investors, but when we really thought about that writ large we’re like, actually where they are most of the time, most of their waking hours is work, is there actually a great way for us to deliver a lot of the terrific value and services and platform capabilities we’re delivering, sort of by the ones, out to consumers, but deliver it through integration with employers, that would allow typically, more of the sort of hourly workforce, or at least less executive workforce, to benefit from financial advice, the ability to save on the platform, the ability to earn equity through Stock-Back®, and to start their own journeys toward economic security, and associate that as a benefit provided from their employer. And so we’re super excited about the launch. We took largely, what we refer to internally as an Apollo 13 approach, which is we looked for things that were already inside the ship. And because we had great capabilities, one of the benefits of having launched Stash Core, it also was super helpful, as we were going out to our launch partners that they knew they had a time tested, secure, stable platform. Because as you’re, if you’re offering something to your employees, you want to know that it works and is going to deliver real value. And so we had the opportunity to say like we’re, there’s some feature functionality that’s slightly tailored for that market, but it’s operating on like, super stable, time tested, Stash Core platform.

Peter Renton  24:02

Interesting. Okay, so then switching gears a little bit, like maybe it was in December I think I read about the survey you did, I think it was called the Hardworking Americans Survey. What is, can you tell us a little bit about that survey? Why you do it? What you learned?

Liza Landsman  24:18

Sure. I mean, look, we love to talk to our customers in general, and we like to take a pulse on where consumers are, both our customers and prospects. I always think they’re just people who haven’t met us yet. And so a couple of key themes coming out of that. One, no surprise, and I think I mentioned this earlier, you know, worry and anxiety about money still tops the list of most Americans’ worries. Personal wealth, and the creation of personal wealth is a top priority. Paying bills and how to sort of, you know, manage their own, let’s call it cashflow, also high on the like list of things that people are thinking about. Tremendous amount of interest in how wealthy people have made their money, and wanting to understand what are the learnings in there, for maybe a less affluent consumer? Some other really interesting points, financial literacy is improving, although some of these hardworking Americans we talked to are still we’re still a little distrustful of the market. 1/5, so about 20% of the consumers we surveyed still think the bulk of their savings should be in cash, which was a really interesting learning for us. I think that comes out of some concerns around instability in the market. Some concerns about just broadly global instability. And so there’s this a little bit reversion to what people consider to be safety. When we see data like that, we’re like, wow, that’s a great opportunity for us to help people understand the beauty and magic of compounding interest, and that putting the cash under your mattress actually doesn’t make it safer. In fact, you’re losing money. And so those are some of the highlights of what we found coming out of that, I would say nothing that was really surprising other than the keenness of the interest in how other people have achieved economic security.

Peter Renton  26:26

Okay, so then can you give us a sense of the scale you guys are at today, are there any numbers you can share publicly?

Liza Landsman  26:33

So I mentioned before, we’re very close to profitability. And we have a base of north of a million active subscribers, a little bit over $3.4 billion in assets under management of that. North of $100 million, at least just as of this moment, invested in our smart portfolio, and sort of sustaining investment from our latest round of financing this past fall.

Peter Renton  27:07

And is the is the Stash product a sticky product? I mean do you, it sounds like it probably is, but what are you doing to try and reduce the churn that does happen?

Liza Landsman  27:17

So I would say broadly, it is super sticky. I mean, it was one of the things that I found really compelling about the business, because it’s a hallmark of great product fit to the market that like, people vote with their feet and their pocketbooks every month, to stick with us. And because the business has been around eight years, we can look at that longitudinal data and see like, yeah, they they really hang out. I think the things that we do, because there’s no consumer business that has no churn, to really think about it. One is, we get better and better at guiding people to their next best action, thinking about kind of where they are in their journeys. And the good news, as we’ve talked about, is that the sort of simple, unsexy things are the things that actually create the best outcome for consumers. And so often the case is just like, let us help you if you do recurring deposits into your investment account, but you do them manually every month, like let’s help you get into Auto Stash. If you are already doing Auto Stash into a Smart, but into your personal portfolio, can we get you into Smart, because we know if you’re in Smart, which is our robo advised portfolio, you’re gonna get even better, you’re gonna get two dimensions of diversity, not just dollar cost averaging, but a diversity in the portfolio. We know like every sort of step up in that it’s actually great for us, all the things that drive stickiness are actually the things that are best for you as an investor. So, continued investment, greater diversity, reminder to buy and hold, using the debit card. So you earn Stock-Backs® to amplify your portfolio. Those are the critical things. I would also say one of the things that we have just launched in a beta is an AI coach. And we’ve just launched it on one of our platforms. And it’s just a way as we think about how do we really help provide real guidance? And guidance, you know, in the literal sense can mean like, what should you buy? But it’s often the case when people are starting their journey as investors. Yeah, they know, they want to know what they should have in their portfolio, but to a certain extent, they kind of just want to know, like, how do I get started? What’s the right amount to put in? Like, what does diversity really mean? And so, one of the innovative ways we’re using technology is through the use of AI, not to do portfolio construction, but rather to actually just help consumers at those kind of little moments of truth in their journey, with a conversational interface, as opposed to oh, let me go into an FAQ and try and find the answer to my question. Because what we’ve often found is that consumers just want to engage in a little bit of a discussion. And one of the great things, like the promise of fintech is that you can open up access by driving down costs through the use of technology. We wouldn’t be able to provide our service at such a good value if every time a consumer had a question, a financial adviser was picking up the phone and calling millions of consumers a day. Actually, the use of AI to help people through some of those small moments of should I go this way, or this way? We think is super promising and exciting.

Peter Renton  30:50

Interesting, interesting. Okay. So I want to end with like a forward looking question. And you have sort of detailed some of the things that are coming down the pipe, but I’d like to sort of take you, take us out like three to five years. Where do you want Stash to be in the medium term?

Liza Landsman  31:07

Look at maybe I’ll go out to the end state and come back.

Peter Renton  31:10

And that’s fine, too.

Liza Landsman  31:11

Which is, I think Stash should be in the pocket of every low and middle income consumer in the United States. Why do I think that? Because I truly believe that the approach we are taking can help be a relief for economic anxiety and provide long term financial security for most Americans. It’s right approach, easy to use, great value for money. In the medium term, how do we get there? One, we have to continue to open up these new means of meeting customers where they are. And that’s not just in their journey as investors as I said, it’s meeting them at work, meeting them through other partners and really opening up our aperture beyond meeting them by the ones. And second is continuing to build out the offering on the platform so that it provides both more value, but helps consumers through a longer piece of their economic journey. Whether that is thinking about finances for their kids or thinking about emergency savings, I think that sort of share of wallet, share of mind around the broader financial journey most consumers go through, I think is really part of how Stash sort of fulfills that promise in the long-term.

Peter Renton  32:43

Well, it is, it is an honorable mission, and I wish you all the best. I’m really impressed with what you guys have done so far. And so thanks so much for coming on the show today, Liza.

Liza Landsman  32:53

Thank you, Peter. It was a pleasure to be here.

Peter Renton  32:56

Well, I hope you enjoyed the show. Thank you so much for listening. Please go ahead and give the show a review on the podcast platform of your choice and go tell your friends and colleagues about it. Anyway, on that note, I will sign off. I very much appreciate you listening, and I’ll catch you next time. Bye.