10 lessons from a wealth management platform that went from Zero to $200m

I had the good fortune tonight of being able to pick the brain of Paolo Galvani, founder of Moneyfarm, the digital wealth management platform. Paolo set up the business in 2011 and has since raised $30m in equity and grown the operation to 100 staff across offices in Italy and the UK. Doing my very best in taking accurate notes in between eating dinner, drinking wine and asking questions, here are the 10 things Paolo described as his experiences in taking a company from Zero to where it is today:

1. 90% of all decisions made by consumers and other businesses are emotional, not rational. Put another way, having better pricing or higher quality doesn’t necessarily get you anywhere.
2. The strength of the team is everything. Potential investors did listen to the general story of Moneyfarm, but what they really wanted to see was a unified, strong team. Everyone assumes that the business model will change several times before the team pivots towards something that actually works.
3. When his team was 5-7 people, everyone’s role changed every 6-9 months. This went on for several years.
4. Growing quickly from 30 to 80 and then 100 people was hyper-complex and involved a lot of mistakes. Hiring lots of new people inevitably meant hiring some bad people. It’s key to have the mechanisms in place to get rid of the bad ones quickly. If that’s the case, then hiring some bad people isn’t a major problem because they aren’t there long enough to cause serious damage.
5. He spent time on educating his investors that they need to spend – i.e. “waste” – some money on marketing. You never know in advance what marketing works. But once you have found it, you can scale it up.
6. Never underestimate how little your customers actually know. They could be totally gut-driven and not base their decisions on much actual information.
7. You might learn more about your customers by asking them what Netflix movies they watch than by giving them sophisticated questionnaires.
8. To really make use of the big opportunities that exist in many markets you need a lot of money to get to a place where you can compete and earn a profit.
9. Even at the now much more mature level of development, the company’s decision-making process still changes every 6-9 months.
10. Everything you offer the market has to be an easy and fast, but also solid, solution.

The strength of the team is everything

Very kind of Paolo to shares his insights with me, so I wanted to share it on. Moneyfarm is one of the few robo-advisors that has gained some traction and now manages about €200m in client funds.

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