Shaper: Nick Hungerford


Transcript of the show
Elliot Moss

That was Up and At It, How Apposite, for a Jazz Shapers beginning on a Saturday morning.  Good morning, this is me, Elliott Moss and of course that was Cannonball Adderley I should add here on Jazz FM, Jazz Shapers and it is the place where you can hear the very best of the people who are shaping the world of jazz, soul and blues alongside their equivalents in the world of business, a business shaper.  My business shaper today is Nick Hungerford.  He is the co-founder and CEO of Nutmeg the world’s first on-line investment management business.  He will be talking all about that fantastic and revolutionary world which he now inhabits.   Lots coming up from Nick very shortly.  In addition to hearing from Nick, you will be hearing from our programme partners at Mishcon de Reya some words of advice for your business and on top of all of that some fantastic music from the shapers of jazz, soul and blues, including Takuya Kuroda, Billie Holliday and this from the wonderful Aretha Franklin.

That was Make Someone Happy from Aretha Franklin.  I hope you are feeling happy and ready for my business shaper today, Nick Hungerford.  As I said he is the co-founder of Nutmeg and they are officially the world’s first on-line investment management business.  I have learned my words very, very well.  Nick thank you for very much for joining me this morning.  What does an on-line investment management business do when it is at home, because some people listening will go well that sounds interesting but not really clear what that is about?

 

Nick Hungerford

Luckily for us we are part of an industry that is very, very old and quite established.  The investment management industry effectively we look after people’s money for them.  We hopefully make it grow and we certainly protect it when markets are choppy and moving up and down.  The difference between Nutmeg and everyone else is that we add an on-line component to our business.  So if you are looking to invest and you want someone to manage it for you rather than doing it yourself, you can come to Nutmeg and sign up in less than 10 minutes, rather than having to go to through the traditional 8 to 10 week process of meeting someone, you know having the hand holding, deciding on how to fill in all the forms etc etc which can take a very long time.

Elliot Moss

Now you have come to this kind of a few years after your first degree, a few years after working for a big well known bank, Barclays I believe, and Brewin Dolphin as well, a few interesting investment management businesses.  Many entrepreneurs that I meet well they all do all sorts of different things.  Some have lots of education and some have none.  You have a lot of education; you have done an MBA at Stanford as well.  Tell me a little bit about when you realised you wanted to run your own show?  How long ago was that?

 

Nick Hungerford

It is a pivotal moment and I don’t think it is very easy for people to describe because it kind of comes over you and the definition that I give to people is that I knew that I wanted and had to be an entrepreneur when my definition of risk changed from doing something as a risk to not doing something as a risk.  In other words if I didn’t do it I live with regret; I would look back and always question my decision not to do it and that you know so of regret of not doing and regret of being in the grind of the everyday worker and under someone else’s thumb just built up too much for me and I was feeling that when I was working in the City and gaining the experience which you know I can’t be thankful enough for that experience because it has given me the foundation for this business, but I was feeling it and I knew that I had to go and learn some of the skills that it would take to be an entrepreneur and that is when I made the decision to go to California, to surround myself with the Googles and the Facebooks and the Twitters, to study at Stanford where so many of these wonderful companies have been created and it is life changing.  You know the atmosphere there and the vibe there is so transformational that it gave me the confidence to start on this big journey.

 

Elliot Moss

Amazing I mean that you made that choice.  I imagine you put some pennies in the piggy bank as well though because when people say I’m going to start in a new place, I’m going to invest in myself, I’m going to a beautiful and really interesting way of articulating, I can no longer not risk to do this thing that I want to do.  How did you fund it at that point before you, you know had you saved some money is it as simple as that?

Nick Hungerford

Yes I saved some money but when we started the business you know you have to look to get funding and there is many traditional ways of getting funding such as bank loans and borrowing off friends and family.  I knew that I wanted to create a big business so I looked towards the venture capital world to the professional investors who had invested in start up companies before and tried to communicate my vision to them and it wasn’t easy when we started off.  I remember after graduation from Stanford I had this great plan, you know we put it together in a business class and you know everything seemed rosy but four months in you are still walking up and down Sandhill Road, that famous road where all the venture capitalists live, and still trying to convince people to give you money and you do doubt yourself and it came to the time when with our first few staff I was having to get new credit cards and take on loans and start thinking to myself well hang on a minute I have really got to get this finding or else I am going to be in trouble and fortunately for me you know one of the great investors, Tim Draper, you know the first investor in Hotmail, into Skype in Tessler Motors, I mean the guy is a legend in this community; he saw me and he said do you know what I don’t know if you are the guy for this but it’s a big opportunity and someone has got to do it and you have the commitment to take this forward and he placed his faith in us alongside the British French capital company Pentech Ventures and the two of them together gave us that money to really start us off and I tell you that day was a very, very fine day for me.

Elliot Moss

Find out what happened next in the story of Nick Hungerford’s business called Nutmeg.  Time for some music, this is Takuya Kuroda and Rising Sun.

That was Takuya Kuroda and Rising Sun.  Nick Hungerford, the co-founder of Nutmeg the world’s first global investment management business.  I am just going to keep saying it Nick, it’s like a free bit of advertising – I’m joking.  Nick you know you talked about funding then right at the beginning and these famous people, these luminaries as it were in the world of funding and the world of putting their money where their mouth was.  Was it debilitating at first thinking I am never going to get this funding, and if it was what made you drive through because a lot of people have great ideas and a lot of people write a plan and a lot of people go and try and get funding and a lot of people don’t; so what was the differentiator that made you Nick Hungerford able to do that?

Nick Hungerford

Yeah that’s a really good question and I guess some of the people in my life would probably say stubbornness is a bit of a differentiator which can be taken as a strength as well as a frustration.  You know I pitched to 46 investors before landing on one that shared my vision and now we have proven that that vision can become a reality and the company is growing very fast and other people are keen to get involved and we have attracted some wonderful team mates, it all seems like a very easy decision in hindsight.  But there were lots of people; lots of very, very smart people who said you can’t challenge the big banks; you know you are not going to change an established industry and I thought well if you are all telling me this is a problem but the only reason that you can’t back this is because you don’t believe we can take on the competition then you are simply not giving me an answer that requires me to stop.  Because Facebook would have said the same thing, Google would have said the same thing about libraries, Amazon would have said the same thing about book shops and everywhere you go around the world you can see improvements that have been made on behalf of customers and on behalf of users and I think Nutmeg does that for anyone that wants to invest and now it seems plainly obvious but at the time it was so hard and I just have to be thankful for all those friends that let me stay you know on their spare beds.  I was literally working in a garage in Silicon Valley putting this plan together.

Elliot Moss

Well and on that vision we will leave it and we will come back to Nick and what happened when he got out of the bed and moved on to building what has become Nutmeg and this fantastic business that is happening around us.  Latest travel coming up in a couple of minutes but before that some words of advice for your business as promised from our programme partners at Mishcon de Reya.

You are listening to Jazz Shapers with me, Elliott Moss.   Every Saturday morning I hope you know by now 9.00am to 10.00am you can join me to talk and moreover to hear a brilliant business shaper talking about their experience, their business, their insights.  If you have missed any then just go into Itunes, look over there and you will find them or at Cityam.com there are also a fair few over there.  Nick Hungerford is my business shaper and he is the co-founder and CEO of Nutmeg which is a financial services business and in fact has won some awards, lots of awards including one with Cityam.  Nick tell me just a couple of the awards that you have won and why you think awards matter and why you are proud of them?

Nick Hungerford

I think they matter most of all for our customers and for our team.  The people in our team work so phenomenally hard.  You know they are often found asleep at their desks at 2 or 3 in the morning programming …

Elliot Moss

I was going to say not in the middle of the afternoon?

Nick Hungerford

No.

Elliot Moss

Now that would be bad.

 

Nick Hungerford

Some of them deserve to have a siesta but they tend not to.  You know just wanting to improve the product, you know the customer service team are working all hours of the day and night and there is so much passion and I think that you know for external visibility and for external recognition that’s really important.  We have won some global awards, like the Financial Services Technology Awards, beating off some of the you know big banks in America and over in the Middle East.  We have won some local awards and most recently Innovation in Financial Services Marketing and we have won some technology awards; British French Capital awards and some industry-specific awards as well.  So for example, Wealth Management awards and the Best Provider of Wealth Management Services awards and I am not going to embarrass myself by trying to say all of the providers and all of the awards but it is hugely important for the team that they get the recognition and for our customers that they are also reassured that we are providing a great service.

Elliot Moss

And on that point about the great service essentially the idea is if you have even only got £1,000, I say only but only got £1,000 rather than having to have lots more you can go to Nutmeg on line and you can create an investment management strategy, create a little portfolio for yourself, find out in a pretty transparent way how much that is going to cost you and you can do that all on-line.  That is essentially the foundation of the idea and that hadn’t been done.  You were saying earlier that no one had ever kind of taken on the big guys, there was very little transparency.  If you had that small amount of money you were derided and you probably weren’t given a proper service and you said no we can do it properly?

Nick Hungerford

We can do it properly and after this I would like to talk to you about becoming our new sales head as you explained that so beautifully so thank you very much.

Elliot Moss

It’s a pleasure.

Nick Hungerford

I mean I look at the world of investment management and obviously you start from the point of view of the people who are existing customers.  So many of the Nutmeg customers who have had access to investment management before and that probably means from half a million pounds upwards, they have been explaining to us how it is a hugely opaque world.  It is very hard to compare the performance with benchmarks; it is very hard to calculate the fees that you are paying; it is very hard to get hold of people in the way that you want to.  I mean Nutmeg allows you to come in and have a face-to-face relationship that’s no problem but it also allows you to communicate over the phone, over secure email and through instant chat and if you are a busy person hard at work sometimes you don’t want to pick up the phone to the person managing your investments you actually just want to type them a note and get an instant response.

So you go from that world of trying to improve the service and then you think well hang on a minute all we are talking about here is investing, all we are talking about is a theory and if you know I want 5% of my portfolio in Japan and you want 5% of your portfolio in Japan then we should be able to do that it is not a physical good.  So what we did was build a system which enabled people as you said from £1,000 upwards to invest and for the first time get access to a truly well managed, you know no eggs in all one basket portfolio and that was just something that became rather revolutionary because people were saying hang on a minute if I haven’t got very much money the only option I have is to do it myself.  Pick a fund that I have probably seen advertised, you know they have named after a planet and was advertised on the tube or something like that and actually what I want is proper management and so you can have it you know no matter whether you have £5,000,000 or £5,000 and you should be entitled to it.

 

Elliot Moss

Stay with me for more from my business shaper Nick Hungerford.  Time for some music, this is Billie Holliday and Do Your Duty.

That was Billie Holliday and Do Your Duty.  Nick, underpinning all of this fantastic stuff and it sounds like a product and a service that make sense, it sounds like there was a hole and there is a hole in the market and there are indeed many, many people that would need this service.  As you step back from that and you have been applauded I think three times for being a fantastic entrepreneur, in the top 40 under 40 or something entrepreneurs in the financial services sector, or something another impressive sort of award that you have been given – my God he has got so many of them – what drives you as an entrepreneur now?  Away from the financial peace and the actual delivery what it is that you go that’s why I wanted to be an entrepreneur?

Nick Hungerford

It’s the creation; it’s the ability to see your vision come to reality and it is genuinely getting out of bed every day with enthusiasm to try and build more, to try and make it bigger, to try and access more people, to try and provide a service you know that I feel is genuinely valuable and you know I think there are two types of entrepreneur: there is the entrepreneur that wants to do it purely to make money and then there is the entrepreneur that wants to build something that is going to change the world and I know that sounds cheesy but I know that if we continue to build Nutmeg in the way that we are and we continue to you know cut prices and improve transparency and give access, we will be helping people retire earlier than they would have otherwise been.  We will be helping people to send their children to university where else they wouldn’t have been able to afford it.  We will provide the extra spaces at someone’s wedding because they will have saved up through Nutmeg and that is meaningful and I can see it with my friends and family and I can see it with our customers and that is so important for me.

Elliot Moss

And it sounds like also you are the type of entrepreneur that likes to share what you have learnt.  Is that a fair statement?

Nick Hungerford

Yes I think being open and encouraging entrepreneurship through other people is vital.  I am so proud of what is happening in the UK at the moment with the entrepreneurships scene.  I was terrified when I came back from Silicon Valley that it was going to be tight and closeted and you know frowned upon to be an entrepreneur or to be working in a start up and I found just the opposite and I found as we have gone forward over the last couple of years you know the Government polices and the enthusiasm for working start ups has just grown and grown and that I think is brilliant.

Elliot Moss

We will have our final chat with Nick plus play a track from Shaper of Jazz and one of my personal favourites Donald Bird.  That is after the latest traffic and travel here on Jazz FM.

That was You and Music from Donald Bird.  For just for a few more minutes Nick Hungerford is my business shaper and if you weren’t listening earlier he is the man revolutionising the investment management world on-line through his business that he co-founded called Nutmeg.  As you look forward now Nick for yourself personally and also for the business, there is a bunch of stuff on your to-do-list I am sure, hundreds of things and of those hundreds of things you will prioritise five or six things, at the end of the day though what is it that you want to leave behind in say 10 years when you have sold this business successfully and you have started your next one?  What will you go that’s what I achieved and what would you say yeah that was really what it was all about?

Nick Hungerford

It’s an interesting comment you made there about selling your business because …

Elliot Moss

Yes and if indeed you want to which maybe you don’t.

Nick Hungerford

Yes I mean the stars, my heroes in this world and in the wealth management and asset management world, have been the people who have decided that actually they are not going to skim from the top and make a quick buck, they are going to make their customers very rich and in the process they get wealthy.  So there is a phrase in our industry called where are the customers’ yachts because you look around and you see lots of stockbrokers with fast cars and fancy possessions and the customer is thinking well hang on a minute, you know where is my money, what is happening for me?  So I look up to people like John Bogle who founded Vanguard and he created that company you know 40 odd years ago and is still involved and he has just been a transformational figure in our industry so I have really got no desire to leave or to sell this company, what I want to do is keep the ethos of the client you know first all the way through and continue to grow it, maybe do some things on the side that involve financial technology but really keep going with this and have that vision of creating something brilliant.

Elliot Moss

Do you think, you used the word transformation which I think is an interesting word especially where technology is involved, do you think this is a business that needs to continue at the centre of its ethos to have the belief that it needs to transform?

Nick Hungerford

Oh 100%.  When I look at the problems that some of the larger financial services companies have now they are stifling innovation by having to deal with legacy issues they have created and the most successful companies in the world are often ones that cannibalise themselves.  Look at Coca Cola going out to buy new brands that are a threat to the core product but they add so much to the company.  Look at Johnson & Johnson and the way that it creates all these different brands that again compete with each other.  So you have to compete and you have to be open and honest with yourself to drive improvement.  Don’t ever let anyone get too content.

Elliot Moss

And on that point, just before I ask you about your song choice about getting too content, what have been the biggest challenges so far that you have had to face up to in running your business, because it is still only a few years old and have any of them been deal breakers where you gave gone enough.  Even though its young and I know I want to be there for 30 years just like my friend in the States and Vanguard, have there been some really poignant moments where you have gone wow this is really really hard?  Because beyond the raising the money, beyond the getting the first website up, people testing it, then you get your first money and so on there must just continue to be little mountains that you have to keep climbing.

Nick Hungerford

Oh there are and you know I am not a person that can survive on one hour’s sleep every night, so you do get tired and if you miss out on your physical activity you know that brings you down as well so you get very grumpy and you know I am sad to say but I am sure my team have seen that occasionally but they lift you up and I try and do the same when they are in a rough patch.  I don’t think there has been a moment when I have said I have had enough here, but there have certainly been some tough times and ones that I wouldn’t want to repeat but I am also realistic enough to know that I will repeat them and it’s about learning and I always say this to young entrepreneurs, never get asked the same question twice.  You know if you are being asked the same question twice then you are not doing a good enough job in the first place to answer that question.  As long as you can keep that as a philosophy then you will progress and you will face new challenges and you will overcome them.

Elliot Moss

Very good, well I am only going to ask you this question once, otherwise you will look at me with evil eyes; what is your song choice Nick and why have you chosen it?

Nick Hungerford

Its Breakestra, Dust till Dawn and the track is Come on Over.  A Californian musician, incredibly talented, plays about eight different instruments and I just love the way this one makes me feel.  If I am getting up in the morning it gives me a smile, makes me put a swagger in my walk and sets me up for a great day.

Elliot Moss

Nick Hungerford, thank you very much for being my business shaper.  This is Breakestra and Come on Over.

 

That was Come on Over from Breakestra, the song choice of my business shaper today, Nick Hungerford, a measured man, a man who really likes being an entrepreneur and a man who has fought very hard for an idea that he believed would revolutionise the financial services industry.  Do join me again, same time, same place, that’s 9.00am next Saturday here on Jazz FM for another edition of Jazz Shapers.  In the meantime stay with us though, coming up next it’s Nigel Williams.
I knew I wanted to be an entrepreneur when I realised if I didn’t do it I would live with regret – regret of being in the daily grind and under someone else’s thumb.

The atmosphere and the vibe when I was studying at Stanford were so transformational that it gave me the confidence to start my journey.

I was literally working in a garage in Silicon Valley putting this plan together.

In the investment management industry we look after people’s money for them. We hopefully make it grow and we certainly protect it when the markets are choppy.

Some people in my life would say my stubbornness is a bit of a differentiator, which can be taken as a strength as well as a frustration.

I pitched to 46 investors before landing on one that shared my vision, and now we’ve proved that vision can become a reality.

The people in our team work phenomenally hard. They are often found asleep at their desks at 2 or 3am programming…

There are two types of entrepreneur: there is the one that wants to do it purely to make money, and there is the one that wants to build something that is going to change the world.

I think being open and encouraging entrepreneurship through other people is vital.

You have to compete and you have to be open and honest with yourself to drive improvement. Don’t ever get too content. 

Nick Hungerford

Nick is the founding CEO of Nutmeg. Following a business degree at Exeter University, Nick worked at Barclays in the areas of product, banking and wealth management. Nick was a Divisional Director at Brewin Dolphin and has an MBA from Stanford University in the United States. Nick’s industry and investment views are respected globally and he frequently appears on Bloomberg, CNBC and BBC and has been quoted in the Financial Times, Wall Street Journal and many international publications. Nick has been a guest lecturer at academic institutions including Harvard, Stanford and London Business School and has represented UKTI around the world, promoting the benefits of doing business in Britain.