Shaper: Paolo Galvani

Show aired on 22nd July 2017

Transcript

Elliot Moss
That was Dr John with Right Place Wrong Time. Good morning I am Elliot Moss, this is Jazz Shapers here on Jazz FM. Thanks very much for joining us. Jazz Shapers is the place that I hope you know where you can hear the very best of the people shaping the world of jazz, blues and soul and right alongside them we bring someone who is shaping the world of business, we call them Business Shapers. I am really pleased to say all the way from Italy via London, my Business Shaper today is Paolo Galvani and Paolo is the co-founder and chairman of Moneyfarm and they are a digital wealth management business, a really smart one too. You will be hearing lots from him very shortly. In addition to hearing from Paolo, you will be hearing from our programme partners at Mishcon de Reya some words of advice for your business and then of course we’ve got the music and it’s a sumptuous mix today; Taj Mahal with Keb’ Mo’, Zara McFarlane and this from Jill Scott.

That was Jill Scott with Getting In The Way. Paola Galvani is my Business Shaper as I have billed earlier and Paolo is the co-founder and chairman of a business called Moneyfarm which is in the last eighteen months or so, or I believe come to the UK, but has actually been around since 2011. Paola thank you so much for joining.

Paolo Galvani
Thank you for having me.

Elliot Moss
Now give me the low down. What is Moneyfarm for those people that don’t know?

Paolo Galvani
Yeah so Moneyfarm is officially a digital wealth management. What does it mean in a nut shell? We are helping people to invest and protect their wealth in a more effective, independent and low cost way as possible. So in other words we are using technology, to help people preserve their money and to invest it more safely. And as you have said, we started in Italy in 2011 and since then the company has grown up to the point of you know moving to the UK as well so we launched the same product in the UK almost a year ago, a bit more than a year ago and now we are working in both countries.

Elliot Moss
Now it strikes me just looking back at you and what you have done before you got into the crazy world of the start-up which is now a few years ago, so you are probably feeling like a mini grown-up, not quite a start-up. You were in the world of banking obviously, it was Morgan Stanley was in there, Deutsche Bank is in there and many other things as well and I believe actually, you set up an on-line peer-to-peer lending service before this. At what point, and that start-up is really for me the interesting moment in 2008, why did you move away from the comfortable world of a nice big company and the salary and all that to the world of the wild west, you know of start-up land. What happened in your head?

Paolo Galvani
So basically it, it’s a, you know, the story is that I spent you know the first part of my career in banking and it was clear as time was going by that there were some mechanism, especially within the product distributed to retain a client that wasn’t properly fit in a sense that you know the amounts of commissions and the way in which this product has been sold in the past were way too much compared to the market and the way which could have been a fair of doing this stuff. So in other words I have learned a lot, it was interesting and it was a very important experience to my life and my career, but I really feel the need of entering to something directly managed by myself in order to change things and the way that has been done. And this was part of the overall, you know, I got, part of this initial wave of what is called Fintech which the concept is simple in a sense. So technology has a way to disrupt and to change the tradition of the financial industry. So I started relatively early in 2007 with a peer-to-peer and then I moved into the investment space in 2011.

Elliot Moss
And we are going to find out a bit more after Gregory Porter who is coming up next, a little bit about why you were that man that decided to go on this journey because not everybody does. As I have said, Gregory Porter is up now with Be Good and the Lion Song.

That was the brilliant Gregory Porter with Be Good and the Lion Song and its fabulous isn’t it. Paolo Galvani is my fabulous Business Shaper today. Co-founder and chairman of Moneyfarm and Paolo you were talking about the world that you came from and you just very calmly said ‘I wanted to do it myself and I could see that technology could disrupt’. I’d buy that. I think that’s true, but what was going on? I mean people spot that there is an opportunity to change and of course since the last ten years or so people have been more alive to the power that technology has to change, but why you? Why did you remove yourself from that world and put yourself in the new world?

Paolo Galvani
Yeah, well as always there, there is a mix of elements right and there is a personal component, there is a professional component, there is a lot of stuff and you know on, on the professional one there was a period and we are talking about you know late 2000s in which the financial crisis starts to weigh-in and you start to realise that the mechanism is no longer effective and functioning as it was. So that was a strong signal to me. And this came alongside a personal situation in which you know living in London and in Milan at the same time, family there, travelling back and forth, reaching a certain age in which you know either you change it or you stay for life in the safe space. So, it was the sum of all these elements that made me think structurally this is the right time to take a big change in my professional and personal life. So, you know, I spent a weekend with my wife and we decided is it the time to go or not and you know when we both decided that it was the time then we started this new life.

Elliot Moss
Just looking at you telling me that, that looks like that’s a pretty emotionally moment. I mean that’s not, that’s not the decision about do we go left or right tomorrow, that’s a big life changing one?

Paolo Galvani
Well absolutely because this affects your life as a whole right. As you’ve said, you are giving up a certain status, a certain recognition, a certain salary and so forth, to take very seriously a view and try to implement something that you think is going to happen but which will take a long time before proving to be right and not necessarily all the time being successful. So, yes it’s an emotional moment, you need to share it with the right people but then you are all in and I am really, I am really happy with the choice.

Elliot Moss
And I was going to ask you about that. At what point did you know you definitely made the right choice. Was it then or was it two years later, four years later or is it every day that you know that’s right?

Paolo Galvani
No it’s a kind of every day right. When you are waking up in the morning and there is you know, you have this twelve hours/thirteen hours of work, but you are not worried for that, you know that you are doing something that you like to do and you are really you know passionate about delivering what you are doing. That make big changes in your everyday life so you know you have done the right things.

Elliot Moss
Stay with me for more from my Business Shaper, that’s Paolo Galvani and we are going to get into how he made sure the technology has been right for his platform and why he decided to relocate the business to London which I find particularly interesting especially in light of where we are right now. The latest travel in a couple of minutes and before that some words of wisdom I hope from our programme partners at Mishcon de Reya for your business.

You are listening to Jazz Shapers with me Elliot Moss. Every Saturday I am very lucky that I get to meet someone who is shaping the world of business and I have been doing it for a few years now and those two hundred and fifty or so people are safely tucked away in iTunes. Put in the words ‘Jazz’ and ‘Shapers’ and you can find them there. British Airways is another destination for you or even CityAM.com if you are in the mood. Paolo Galvani is my Business Shaper today. He is the co-founder and chair of Moneyfarm, a clever business of a few clever businesses which helps you invest your money on-line, essentially manage your wealth, your growing wealth we all hope, on-line. Now Paolo you were saying, we talked about this decision and many good things flow from the right decision and it looks like you’re a happy guy even though obviously you work very hard. The business starts in Italy and how quickly were you funded? How quickly did you have to raise money to do the things you wanted to do and then how did you go and get that money?

Paolo Galvani
Yeah so we started of course investing, you know the initial part was split between some of our savings, mine and my co-founders and some other money that came in as a really seedy investment at the beginning right, from a fund, from a venture capital fund, Italian venture capital fund. That basically backed us since day one and then since then we slowly growth, we started really look for more money from a financial investor in Italy and eventually then we did a second most relevant fund raising with a private equity here based in the UK called Capital Square Capital that became our shareholder. So we raised more money that allow us to move from Italy to the UK and then eventually another small investment happened last year with Allianz that bought minority stake of the company as well.

Elliot Moss
And that’s quite a lot of fundraising and regardless of the amount I just mean the number of different investors. How did you go about it because people often ask, so do I raise the money? How did you go about convincing those different parties that you were the right business to back? What percentage is about Paolo and his partner versus the business plan?

Paolo Galvani
So in terms of commitment and time you have to spend is quite massive right and as you have said it’s not just the amount, it’s also the numbers you have to do that. What is, what makes the story even more complicated is that when you are starting from an idea, at the beginning you are just having the idea in the team so people need to believe in you and what you are thinking without so many data points to demonstrate what you doing is correct. And then as time goes by then you are producing numbers and you are showing that the model is working then a different type of investor or face then comes looking for you and try to invest in what you are doing and as you grow, a different player come into the field and try to invest. So it’s a mix of you looking for the right guys, but also there is plenty of investors that are interested in putting money in an interesting business so it’s a kind of a mix.

Elliot Moss
And in terms of them saying, you know what we are going to back that, what percentage of that is the pure numbers versus the personality?

Paolo Galvani
Yeah so at the beginning, as you can imagine, a hundred percent people.

Elliot Moss
It’s lucky you are charming.

Paolo Galvani
Yes.

Elliot Moss
It could have been a problem.

Paolo Galvani
Thank you. Well but you have to show the team right? And then the story about the team and who is basically backing up the idea in terms of it, it’s critical. And then as time goes by the balance is changing right and you reach a point in which yes you can be as mad as you want, but if numbers doesn’t add up, it doesn’t work and so you really need to demonstrate that there is a good balance between professionals and peoples but on the other side a business plan that is reliable and demonstrates that you are doing something that is valuable.

Elliot Moss
Stay with me to find out the valuable things that Paolo Galvani and his business have been doing and the kinds of challenges that they have faced as well. Time for some more music. This is Taj Mahal and Keb’ Mo’ with Ain’t Nobody Talkin’.

That was Ain’t Nobody Talkin’ from Taj Mahal and Keb’ Mo’. Paolo Galvani is my Business Shaper, we’ve been talking about the art of raising money and how it changes and I think that makes sense. Common sense would say the person first if you’ve got no numbers and data and then the data starts to kick in and it’s more of a balance. In terms of building this business, I mentioned briefly that you moved the head office to London. Looking back with great fondness on a time when London was really without question perceived as a bit of a capital, a place to be especially for start-ups and for Fintech. What made you make that decision then and if we were talking now about moving, would it be a different story?

Paolo Galvani
Umm a difficult one. So London has been and I would say it’s still the capital in start-ups from financial services. You can find, you really find the perfect home almost, you find the resource, the talent first of all right, talent is what drives the most and this is an amazing place for pulling talent from all different places with different features and then capital and then the regulatory body. FCA is probably one of the most advanced in approaching and working together within relation. All of these elements are all part of a perfect mix for launching something in the relation of space. Now Brexit has changed the way in which people are seeing this even though it’s not clear in which way right, so we are not in a position to have a clear sense of how things will develop further. Of course it generates some frustration or at least some doubts in how these things will evolve and I more, so you know there is two elements, there is a major element that could effect this. The first one again talent, will people be, will London stay in the place where you will find the best guys in Europe to work on the project which are the key and second of course this concept that will be passporting any be in a single market or in other words being authorised by FCA’s and then can work across Europe in different things. These are the two elements that has to be, that has to stay in order to maintain London as a centre.

Elliot Moss
Now I imagine you have had many challenges along the way, but the particularly challenges you just mapped out both talent and whether there will be a regulatory environment or an agreement with the European Union that indeed we can passport, we can use passporting to ensure that money can flow. Are those the big issues faced since you have set up your business or if not, what has been? What has been the moment where you’ve said this is going to be hard. I am now not questioning setting up the business, but this hard?

Paolo Galvani
So probably in terms of challenge you are building effectively a new financial brand right and when you are talking about money, investment and so forth, the challenger tends to be large guys with big budgets to position themselves. So the challenge for us is always you know how you can manage to find your space in a crowded environment in which the players tend to have a lot of money to spend in marketing and then positioning themselves and also a story. So that’s where the challenge comes from in most of the cases because unless the product and the solution we are a hundred percent convinced we have something very powerful and very effective for a client perspective. The challenge is how we can communicate and how these people can know what we are doing and so that has been our challenge since day one in order to, and this is more or less the challenge of all the Fintech space right. A smarter and more efficient product that has to reach the market in some way and has to become more public and more available and so that’s where we are working hard.

Elliot Moss
It doesn’t look like you are worried by that challenge though, it looks like you like fighting that challenge?

Paolo Galvani
Well we have to right? This is why, this is what you need when you are thinking about building something from the beginning, yeah.

Elliot Moss
Stay with me for my final chat with Paolo, plus we will be playing a track from Zara McFarlane. That’s after the latest traffic and travel.

That was Zara McFarlane with Night And Day. Paolo Galvani is with me just for a little longer so I hope I choose my questions carefully. You have grown this business, obviously you are at a pretty decent state now, what’s the ambition over the next few years? How… is big and is size important? Is it your platform, is it a distribution thing that’s really going to unlock you or is it something else?

Paolo Galvani
No well distribution is really critical right. At the end of the day the business is based and the business is based on asset and the amount of fees that can repay the cost of building all these things. So on the other side given that we want to do something new and we don’t want to overcharge for our pricing, we need to grow in size in order to make this working. So launched it in Italy and now it’s four year in Italy and launched in the UK and now we’re a year and a half, happy with the development actually this year, 2017 has been a very important year in terms of growth and the speed at which we have grown clients and assets. We will keep on going this way, we already having an initial product, the first product that helps to invest a chunk of money into you know a plan and then eventually a portfolio. We will launch within you know in the next few months a pension product as well that will be our second pillar in terms of helping to you know preserve and increase the wealth of our investor and this is the way I mean this is where we have to move.

Elliot Moss
And for you, Paolo, is it a, it sounds like you love challenging and that you love the fight of the challenge. Have you got a date in mind when you say, ‘basta’, which I am sure is the wrong word for enough, but anyway it might be the right word

Paolo Galvani
No it’s actually the right word.

Elliot Moss
Phew that was lucky. Have you got a moment when you say, you know what Elliot in five years I am going to be having my feet up, I’m going to be spending more time in Italy or is it not like that, do you not think like that?

Paolo Galvani
It is really not like that. So when you are starting something like this one or actually the way in which I am thinking is that I haven’t put an end, a specific end to this story right. It would be nice to imagine these things you know growing to the point that you know my son and daughter could run it as well as it could be nice to have someone interested in joining and building different stuff and so forth. So there is nothing that has really been said in my mind that will define when it’s going to be the end.

Elliot Moss
And the money. You’re in the money world, you’ve been in it for many years. Does the money motivate you in terms of what might happen if it goes super well or again is that to you just a by-product. You have to be honest on this one Paulo. I always know when people aren’t honest by the way. He’s looking, he’s looking like he’s going to give me an honest answer, it’s okay.

Paolo Galvani
Well as you’ve said, it’s always important right, but you know reaching this point and reaching a certain age in which you have built and have worked in the industry for so long, it’s a relevant element but it’s relevant as well as other elements within the overall contest. So in other words will it be just a pure money plane or yes that being the case we haven’t thought that in this way. Could it be an element, an important element when we will value the future of the company, yes it will. Will it be the only one, no, it will not. So as you say, you know, it’s an important element but it’s not the only one. If it’s just for money, my sense or at least for me it would be difficult to build something right. There has to be something else that motivates you. That has always been the case for me.

Elliot Moss
It’s been a real pleasure talking to you and I believe your answer by the way. I think, I think you’re being honest. Of course money is an element, but it’s alright for you there’s other things as well. Good luck with it all, I hope it goes well, I am sure it will. Good luck with the sip, I think it’s the sip launch that you mentioned and you are nearer to the pension. Just before I let you go, what’s your song choice and why have you chosen it?

Paolo Galvani
So I like jazz even though I am not a super expert. I choose a Christian Scott song, it’s The Erasure, it’s actually coming from Thom Yorke, so Radiohead songs I really love the mix of jazz and new electronic music and I think it’s perfect.

Elliot Moss
It is perfect and I believe he won the 2016 Innovation Award which was sponsored by Mishcon de Reya so it’s a great choice. Here it is just for you.

That was Christian Scott with The Erasure, the song choice of my Business Shaper today Paolo Galvani. He talked about the emotion involved in making the decision to go from the corporate world to running your own business. He focused on the key challenges. He has been utterly focused on differentiation of his business from the pack since he created the business. And finally someone who is not obsessed with the exit, but has been obsessed with being passionate about delivering the right product for his business. Really good stuff. Do join me again, same time, same place, that’s next Saturday at 9.00am here on Jazz FM. Meanwhile stay with us, coming up next it’s Nigel Williams.

Paolo Galvani
Paolo Galvani is the co-founder of Moneyfarm, a digital wealth management company.

Born in Vicenza, in north-eastern Italy, Paolo went to the University of Padova where he studied Statistics and Economics. Following this, he worked in sales and trading at IMI Bank, then became Vice-President at Morgan Stanley; CEO of Sella Capital Management; and Managing Director of Deutsche Bank; before co-founding Prestiamoci, an Italian online peer-to-peer lending service.

In 2011, Paolo and Moneyfarm co-founder, Giovani Daprà, looked at the wealth management industry and saw a “huge opportunity”. They felt that the wealth management business model hadn’t changed for decades, and that nobody had thought to apply technology and simple UX (user experience design) to deliver a strong financial solution for the customer. They set about trying to build a business that incorporated both of these ideas. Moneyfarm was born. The company manages and advises on a range of investments, including Exchange Traded Funds, ISAs, and pensions, both online and via its investment app for iOS and Android.

Follow Paolo on Twitter @galvi.

Listen live at 9am Saturday.

What does it mean in a nutshell? We are helping people to invest and protect their wealth in a more effective, independent and low cost way.

I really feel the need to enter something directly managed by myself in order to change things…

You are giving up a certain status, a certain recognition, a certain salary to try to implement something that you think is going to happen, but which will take a long time before proving to be right…

Technology has a way to disrupt and to change the tradition of the financial industry.

When you are waking up in the morning and you have twelve hours/thirteen hours of work, but you are not worried for that, you know that you are doing something that you like to do and you are really passionate about.

At the beginning you are just having the idea so people need to believe in you and what you are thinking without so many data points to demonstrate that what you are doing is correct.

London has been, and I would say it is still, the capital in start-ups from financial services. You can find the perfect home almost, you find the resource, the talent…

If it’s just for money, at least for me, it would be difficult to build something. There has to be something else that motivates you. That has always been the case for me.