Hi Phil, great to meet you. Can you start us off with an introduction to you and your career so far?
I’m Phil Hollingdale. My whole working life has been in technology, I started out at age 17 selling typewriters! I’m sure you’ve never had to use a typewriter!
What’s a typewriter?
It’s what people used before word processers! I’m going back 40+ years. After typewriters I sold the very first generation of word processors. Since then I’ve followed technology trends, the idea being to get in early and become a disruptor. I’ve started 5 previous tech companies and Cushon (formerly known as Smarterly) is my 6th start-up business.
What inspired you to co-found Cushon?
Technically, I didn’t start it, I joined when it was just getting going, so it felt like I was creating another start-up. Ben Pollard is the CEO & Founder and when I joined him, the business was called ‘Smarter Investments’.
Ben asked me to get involved and help with managing, building and leading the business while he focused on the product. At the same time, I invested and also invited several business friends to invest alongside me.
On joining, one of the first things I did was change the name!
A lot of people still find investing a bit of a mystery and the perception tends to be that it’s complicated and that you need to have a lot of money to invest in the first place. I said to Ben that calling a business ‘Smarter Investments’ was likely to turn a lot of people off. We needed something more consumer friendly, so we called ourselves Smarterly.
There’s a theory that if you look at the Top 100 start-ups, for example, you see that most of them are one-word companies as it’s more memorable for consumers.
That’s true, and most of them are one or two syllables . We have just changed our name from Smarterly to Cushon. We launched Smarterly back in 2017. Three years on, we’re now one of the leading workplace savings platforms in the UK, about to launch our new pension product and other exciting tech developments. Reflecting on our achievements and looking forward to our future plans, we feel it’s a good time for a change. We have evolved and we want our name to reflect this. Our brand needs to mirror our purpose and what we mean to our customers.
We make saving and investing second nature, with automatic investment updates and daily monitoring to ensure our customers’ investments are on the right track. We make it as simple as we can, by doing away with jargon and complexity. Our ready-made portfolios offer a way into investing for those without investment experience, while giving customers full control of how much, where and when they want to save. In short, we support our customers by making saving and investing easy, to help them feel comfortable with their money. Hence we decided to re-brand as Cushon with a strap line of “get comfortable”.
Can you tell us about Cushon’s core platform and the journey that the company has been on in the last two and a half years?
Cushon is a savings and investment platform. Often, people refer to these platforms as ‘digital wealth platforms’.
The difference with us is that we’re workplace focused; we go out to corporate employers, and speak to them about financial wellbeing and how they can encourage their workforce to save and potentially get better financial outcomes.
For us, it’s all about financial wellbeing, engaging the workforce and encouraging good saving habits by making it easy for them!
We give employees the convenience of saving directly from pay. Often, the employer will match contributions as an alternative to all of the money going into the pension scheme.
Companies like our proposition because they recognise it’s a lot more engaging for their workers, especially younger people who are more interested in saving for short- to mid-term life events, like first homes, weddings, holidays, and all those types of things. It’s also an attractive option for higher earners who can’t put any more into their pensions due to tax penalties if they exceed annual or lifetime pension allowances.
When Ben set about creating the platform, the objective was to make investing as engaging and simple (and affordable) as buying a product on Amazon and that’s what we’ve done.
How have the last two and a half years been?
It’s been great and an exciting journey!
We’ve secured over 100 corporate clients who are now promoting our platform to their workforce. What’s been really satisfying is that we’ve attracted some really big global household name clients.
They’ve put their faith in a young fintech business because they really like our proposition.
We’ve spent the last two and a half years disrupting the market and taking business from the ‘old guard’, from big traditional pensions and investment companies like Aviva, Fidelity or Hargreaves Lansdown, who are generally the companies we are competing with.
We’re starting to get significant market traction and we’re getting a lot of customers who are using our platform to save and invest, many of those people are putting money into investments for the very first time because we have made it easy, engaging and affordable. People can invest from as little as £10 a month straight from their pay.
Why did Ben set up the business and, like many founders, does he have his own story?
Ben’s an actuary by trade and a super bright individual. He’s spent the majority of his career advising big financial services companies on their investment and risk strategy, so naturally, he’s a very informed investor. When he went to get himself an ISA he went to one of the well-known, financial services organisations who has a strong online presence and in Ben’s own words he was “appalled by the experience”. He was bombarded with fund data, fact sheets, investment opinions and commentary and he thought “this is complicated and I’m an actuary, how is the average consumer going to cope?”
It’s no wonder so few people invest or why most people just put their money into cash saving products because they find investing confusing and not at all engaging.
I think that’s the one thing that really puts me off! How does someone in their early 20’s know where to start?
Most financial advisers don’t want to talk to the average consumer because they don’t have enough money to invest. They’re left on their own, in the so-called ‘advice gap’, and they find investing daunting and often the perception is that investing is risky and it’s what clever and rich people do, so they just put their money into cash, which isn’t necessarily the best thing to do because they’re potentially missing out on much better returns, especially with interest rates the way they are at the moment!
So Ben built an investment platform that makes investing as easy as shopping online, allowing you to compare products and manage your investments easily.
You can do it via the website and a mobile app?
Yes, you can monitor your investments via both platforms.
Our route to market is through the workplace so the employer is promoting Cushon to their workforce and educating people about the importance of saving, helping them make more informed decisions and making it convenient for the employee by enabling them to save directly from their pay. As I mentioned, there’s often a contribution match from the employer which is a great incentive for employees to get involved and start saving. People usually sign up via our website and then monitor and manage their investments through our App.
How does it work in the background? Do you have advisers?
We don’t have financial advisers or investment managers, it’s all completely tech-enabled, using data analytics and clever algorithms to design and monitor portfolios for every single customer. We’ve got something called ‘CushonMe’ which is our daily investment monitoring service.
When you open a Cushon account (90% of our customers choose one of our 4 ready-made risk-rated portfolios) it projects the most likely outcome of your investment in 5, 10, or 20 years, or however long you choose to invest. It also shows the potential ‘good case’, ‘bad case’ and ‘most likely’ outcomes so people can easily compare the difference between risk and return.
If between now and then, our algorithms predict you’re not going to hit the original ‘most likely’ target it will alert you and suggest what you can do. That might be increasing contributions, switching one of the fund managers (either because there are better performing funds available or their charges have gone up) or any other reason like that.
It’s a daily monitoring service and you don’t get many alerts in all honesty, but you get a monthly ‘traffic light’ type of statement to show you how your portfolio is performing.
Think of it as having your own personal investment manager looking at your portfolio every day and giving you a monthly report in a very simple and engaging way on your mobile app.
What’s the ultimate goal for Cushon in the long term?
We want to be the market leader in workplace savings. We’re UK focused, we’re not looking overseas and it’s not part of our current plan as the opportunity in the UK is enormous. Increasingly, people are looking towards their employers for some help and guidance around their financial wellbeing. The workplace is a great way to engage with consumers and encourage them to save and invest sensibly.
In 3 – 5 years, we expect to have hundreds of thousands of customers on our platform, if not millions, and to be the dominant provider in workplace savings.
Ultimately my personal goal is to deliver a good return for our investors as well! We have a lot of people who have invested in us, including around 100 of my personal contacts who have put their faith in me. I am focused on getting very good outcomes for all of our investors as well as our customers.
Of your time at Cushon so far, what are you most proud?
We’ve got a great team of about 25 people today, and many are people who I’ve worked with before. We’re really proud of what we’ve achieved in the business in terms of the market share we’ve secured, the brand recognition and reputation we’ve built and the fact that we’re helping thousands of people now save through our platform and many of those are possibly saving for the first time.
What’s been your biggest personal success?
I would say I’m proud of the fact that I’ve started and run 5 previous businesses, not always without challenges, all different and all with good outcomes. They all disrupted their own markets in one way or another by doing something new with tech. I’m proud and excited to be on that journey again at Cushon.
With each of those businesses, the exit got bigger every time and I’m hoping Cushon will be the biggest so far!
I made many shareholders in those businesses a lot of money. It’s very satisfying to reward those who’ve taken a risk in backing your venture.
I think I’ve stimulated a lot of people to start their own businesses. Many of the people I’ve hired and managed in the past have gone on and set up their own companies, so together we have created a lot of employment in the UK market. It’s pleasing to see people who you recruit, especially from a young age like graduates, develop and progress their careers.
What has been the biggest challenge for Cushon?
I would say it’s been fundraising. I spend a lot of my time on investor relations. I say it’s been challenging because there are so many start-ups who are chasing investment, especially in the institutional world where they see a high volume of investment decks across their desk, so you really need to have something special to stand out.
However, as challenging as that’s been, we’ve done a really good job at fundraising.
We’ve just closed a funding round, raising £7m, so in total we’ve now raised c£12 million.
The initial investment came from Unum, a Fortune 500 Company and one of the UK’s biggest workplace insurers. I then secured investment from 8 of my personal contacts, 3 of whom were investors in my previous business. Then in the next round we reached out to a wider part of my network and about 80 of my contacts invested. We topped it up with crowdfunding through Seedrs and we just repeated that process again in the round we have just closed.
Initially, I wanted a platform to manage a large number of investors through my personal network. It wasn’t about attracting the crowd, but more about how I can invite my network to invest in the business and manage that efficiently.
I decided to use the Seedrs crowdfunding platform as I was familiar with it having made an investment via it personally. We got the initial investment that we were seeking through my personal network but then went live to the public and were extremely successful. Via crowdfunding we’ve attracted over 1,500 investors and many of them are now customers of our platform as well, so that’s testament to how people feel about the business.
The investment we just raised was mainly to fund the acquisition of a workplace pension company, which completed in April. It’s possible other acquisition opportunities will present themselves, which will trigger further fundraising.
Our other challenge has been finding the best talent. We’re a fast-growing business and we need good people. There’s a competitive landscape so finding, attracting, and retaining good talent is a challenge for every business.
We’ve been lucky or clever, whichever way you want to look at it, as we’ve put together a great team. Many of them I’ve worked with in my previous businesses. They’ve all got share options in Cushon, which I’m sure will reward them handsomely when we come to have some form of exit event in the years ahead.
You partnered with Unum, one of the world’s biggest insurance companies and a Fortune 500 company, how did that come about?
Ben (the founder) was doing an actuarial project for Unum at the time, helping them with an acquisition they were making. It was during that time that he had the idea and started building the platform in his spare time. He shared the idea with the executives at Unum and they decided to invest in it as one of their ‘test and learn’ projects.
Unum is workplace focused, their core offering is protection products like life insurance, income protection, critical illness and so on, and they saw what ben was building as a nice extension to their wellbeing product offering. They encouraged Ben to focus on the workplace as his route to market rather than direct to consumer which is a relatively competitive landscape and you need significantly more money to establish a consumer brand.
Our business model is smart in terms of customer acquisition as employers are promoting Cushon on our behalf. Also, Unum is already serving around 11,000 corporate organisations in the UK and have relations with most of the financial advisors and benefit consultants, so we’ve been able to tap into that channel as a route to market.
It’s a great endorsement having a Fortune 500 company as a shareholder, especially when we’re pitching to large corporates, it gives them comfort to work with a young Fintech which is well funded.
Cushon had a successful 2019 and you recently joined Tech Nation’s Fintech Cohort alongside some great companies. What does 2020 look like?
We’ve spent the last two years proving our model and fine-tuning it in terms of our sales and marketing strategy. This year is about further scaling the business, land-grabbing and making the most of our early mover advantage in the workplace.
Our goal is to have the most engaging, complete workplace savings offering in the market. To-date it’s been about offering a range of ISA’s including the Lifetime ISA, Investment ISA, Junior ISA, as well as Cash ISAs.
During 2020 it’ll be about rounding off that proposition, using our tech to make all savings more engaging and getting people comfortable with investing.
60% of our customers are millennials and most millennials aren’t engaged with a pension as it’s a benefit that they’re not going to see for 40 years.
Most people have no idea what’s in their pension pot but they know exactly how much is in their ISA or savings account. We want people to have a pension that they engage with, just as they do with their ISAs.
In a way, we think of ourselves as a ‘Challenger Savings Provider’. We’re taking business away from the big traditional savings and pensions companies like Aviva, Legal & General, etc. and introducing a much more engaging way for people to save, whether it’s short-term or long-term savings. The pensions industry is ripe for disruption and we intend to disrupt it in the workplace.
You can consolidate all of your previous pensions, see them in one place, and engage with them by understanding how much you’ve got in there and how it’s performing.
It’s about having flexibility in where you put your money -how much of it goes into short-term savings, how much goes into an emergency savings pot and how much goes into long-term savings – so providing much more flexibility in choosing where you direct your monthly savings and how you can access them. Our daily monitoring, which I mentioned earlier, will also ensure people get the best potential outcomes.
Finally, you’ve founded and exited 5 technology companies. What advice would you give to somebody who wants to set up a tech or fintech company in London?
If they’re thinking of doing it, then do it! There’s no better time to start a business.
I often look back on the first time I set up a business in 1986, it’s so different from today. You didn’t have serviced offices and the ability to rent an individual desk and pay as you go, you had to lease a whole office floor! You didn’t have access to capital like there is today and you never had the internet as a means to get your message out to the market. We didn’t ‘reach out’ in those days, we went out and we knocked on doors to drum up business. It was very, very different.
Today is a great time to start businesses and if you have a good idea and you’re thinking about doing it, I’d encourage people to go for it. I think the UK has much more of an entrepreneurial mindset these days. But you need to go in with your eyes wide open and be aware of the risks.
Surround yourself with good people, good advisers, and get investors who can help you. Don’t just take money because you need the cash, you’ll be much better off taking smart money from people who can really help you, preferably from people who have been on the journey before.
I have an investment portfolio of 8 early-stage tech companies, mainly fintech, many of whom I’ve mentored and advised. I’ve really enjoyed helping them.
And, recruit the best people that you can afford to recruit! Getting the best talent is so important and if you can’t afford to pay the market rate, incentivise them with share options because that’s a great way to attract and retain really good talent, which as I mentioned we’ve done that at Cushon. Our early starters and senior managers all have significant share options in the business and we’ve just widened the pool so everyone in the business has shares and an interest in our success.