Buy Stock Where You Shop With Grifin | Aaron Froug | #574

Welcome to the MetFavor Show, where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here. MetFavor is the co-founder and chief investment officer at Cambrian Investment Management. Due to industry regulations, he will not discuss any of Cambrian funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambrian Investment Management or its affiliates. For more information, visit Cambriainvestments.com. If you've been hearing more about 351 exchanges and still have questions, you're not alone. Eligibility rules, asset requirements, timelines and tax loss treatment all matter, and understanding them up front is critical. Alpha Architect has operated over 50 351 exchange launches, and they've seen firsthand where advisors need clarity most. That experience informs the education first approach, including their 351 education center, with short videos, visuals and on-demand resources. On February 3, they're hosting a live educational webinar to walk through common FAQs, real-world use cases and lessons learned from prior 351 exchanges, plus a look at upcoming fun launches designed to address complex portfolios, register using the link in the show notes. Welcome back, everybody. We've got another awesome show today. Our guest today is Aaron Fruig, founder of Griffin, the company that helps you buy stock where you shop. We talk a lot about financial literacy and helping more Americans invest, and I'm excited about what Griffin's doing, the potential to help get more particularly young people to invest. Aaron, welcome to the show. Appreciate it. So this is going to be fun because long-time listeners of the podcast and on the blog have kind of listened to me talk about investing and all my crazy ideas over the years, and also my angel start up investing journey. For many years, I've been looking for a offering somewhat similar to what you guys are doing. And so listeners, full disclosure, I'm now an investor in Griffin, twice, I think, but also a client, so I have an account, so we'll talk all about this. But the reason being is because I like what you guys are doing. So the listeners out there don't have never heard of you guys. What's Griffin? No review. Yeah. So we're Griffin. Griffin stands for the greatest revolution in finances now. And we built an app that automatically invests people where they spend their money. So if you go and buy a cup of coffee at Starbucks, invests you in a Starbucks stock, you shop a whole foods and invests you directly in Amazon. Basically, our whole intent and purpose is to normalize investing and connecting people's lives. We actually focus on the reasons why people don't get started. It's actually a lot more psychological. So it's how do you get people to feel good enough, confident enough, exciting enough to just get started. It's sort of the writing the bike concept. You can tell somebody as much as you can about how to ride a bike, but what's the best way to actually just get them started and that's going. So listeners, you can find the app on Apple. And again, I'm a client, so we'll walk through this. But basically you explain, so you onboard, you set up a brokerage account, then what? So it's kind of just like getting started opening up any brokerage account or even, you know, for people who haven't invested before, it's like opening up a bank account. So you go on, you give your information, you kind of create an investor profile. But it's sort of an easier set and forget it type of thing. So you just connect your bank and your favorite cards that you use. We built a technology that like tracks the transactions, determines whether or not they're public. And then it automatically invests you across where you spend. The cool thing about fractional shares is that you're able to invest with very, very little amounts of money. So most of our customers start off with $1 per transaction. Let's say you buy something at Starbucks, at that time you are investing $1 into the company and that's sort of added up over the week. And then you can own all the brands that you're spending with. So just to make this relatable listeners, so I have an account, it's got almost two grand in it. We're moving up, but each week you get this update because it sinks to your credit cards, it sinks to your debit card and where you make purchases. So if you look at my companies, for example, not surprisingly, Amazon's on the top of my list. Been buying a bunch of my wife's new books on there probably, Papa John's. We got Walgreens, Starbucks, Uber, and then we always have some random ones. I'm like, cheesecake factory. I'm like, I'm not responsible for that. It's got to be my wife and child, Albertsons, and it's funny because you'll see ones like Intuit, which is one of my nemesis, but we use them for quick books at Cambria, so. And then you'll see ones that are like, oh, it's interesting. How does that even tie in waste management, lows, consolation brands, Chevron, on and on? And so it's a really fun, tangible connection to what you're doing, you know, what's going on in the real world. How do you set up the amounts? You know, so if you're an investor that comes on, yeah, is it something where you say look, I want a dollar to go in or do I set up per company because I have a lot more Amazon than I have everything else in my account. How's that work? Yeah. So we, when we first started this, we went around and we interviewed like 500 people around our university and then everybody who was outside of it. And we asked them a lot of questions about why they invested, why they didn't invest. And one of the things that like made people most comfortable was having a consistent same amount. So when we start off, and we tested this out too, like everybody starts off with investing one dollar at a time. So no matter how much you spend, it's completely based off of frequency, you're investing one dollar in a company where every that you make a purchase, but you can change it within the app. So we have some people who are investing $50 every transaction. It doesn't matter. You can choose that. You can set limits. You can even turn off companies you don't like. So if somebody, let's say, doesn't believe in a brand, they can actually turn it off and not invest in it when they spend there. Yeah. I had to put Amazon on pause today. I didn't want my account being 100% Amazon. Here's why I think you guys have found a really interesting wedge in product market fit. So listeners heard me, you know, complain a lot over the years, but particularly during the financial crisis when kind of meme stock mania was going on about, you know, we don't teach financial literacy in school. And so a lot of people learn through various channels. And in particular, one of them just being the product providers and one of the problem with that is a lot of them are casinos and not to pick on Robinhood, but you know, a lot of what many of these offerings teach is not the lessons they should be being taught. You know, it's hey, we're encouraging you to trade a lot. We're going to encourage you to do all these other things, trade options, zero day options, like all these crazy things. They have no business trading, but what's beautiful about what you guys do is look, I'm an engineering ETF company for financial advisors, for sophisticated investors, like great. We have 16 ETFs, but a little bit lost in that is the tangible real world connection for a new investor. This is like the Peter Lynch one up on Wall Street, you know, and so what you guys have is you now have that connection to where people can say, oh, I get it. I'd spend a ton of time and money at Starbucks, like I should probably buy that business. I'm now owner and that's a very cool lesson to explain to people, younger people, new people investing, but also, you know, as people build their portfolio, I think it's a really thoughtful approach. When did that light bulb come on for you guys? When did you guys figure that out? I'd like to take credit for this. When we first started this, we were just trying to figure out like how, because when we asked a bunch of people like, do you invest or do you not invest, it was always the same three things. I don't have enough money. It's not made for me and I don't understand it, but like every person we spoke to said that I know that I should and so I think that like the average person develops a relationship with money. It sort of starts around 16 years old and sort of what we were sharing earlier, like people, most people don't get started until early 30s. So it's like a very long time to build a relationship with money and then not get invested and not take care of yourself. And so we just kept trying to think like, how do you make this more and more fun? That's really the only way to kind of explain it and where people felt like they actually knew what they were doing without this barrier of like, I have to learn, I have to trust somebody else to do it. And one day my sister and I were at a Starbucks and the breeze had said that I'll be $12 for two cups of coffee. She looked back and laughed and said, I should really own stock for how much I shop here. And then the light bulb went off, like, why can't you own the things that you're using every single day? Like, I don't know how many times you've said this, but like, now I was like, I wish I would have bought Apple stock when I first bought the iPhone. It's something that can now tag alongside and be a part of you. And I think it's almost like the simplest, most human way to just get started. And so I think that's our goal, like even, even our designs, when you're like, I'll never speak poorly about another company. I think that there's been a lot of technological advancements, like ETFs are a great way to like own a bunch of companies and to get people invested. And obviously like we were talking about for like a, you know, more sophisticated investor. But I also think that like if you look across the board, every finance app looks the same. Everyone has a graph. Everything has stock ticker symbols. It's very overwhelming for most people. And to actually like manually take the time and like more people do research buying cars, then they do stocks, like it's either through emotions or friend or for the average investor. And so the effort that the emotional effort to buy something in the fear of being wrong is so high for most people. That's why I think there's 178 million Americans like still uninvested. This is the problem that I'd had with so much of finance and investing is there's so much jargon and it's so abstract. So even if the Warren Buffett advice, hey, go buy 90% go buy S S and P 500 S P Y, but then you're like, well, what's that like if you ask the average investor what's in there, like, you know, they're going to have a struggle. And then when it's down 10, 20, 50% or whatever it is, you know, they're like, well, I have no emotional endowment effect connection to this. But I think this is such a massive potential benefit and we'll talk about this in a minute about investors having a connection to the brand's and ownership. And they're not just a customer. They're now an owner and that changes everything in all of the way that people think about investing in my mind. Tell us a little bit about who you mentioned this to me before and I know some of these answers, but the traditional demographic is not, you know, an 80 year old person that's got 100 million. Who is your traditional client? How do you guys think about this and has it changed over time? Yeah. So we were pretty fortunate that a few years ago we had a video go viral on TikTok. I think it's at 47 million views now. Basically, it was just sitting in front of a camera saying this is who we are. This is what we do. I'm pretty sure the top liked comment was this is so exciting. I'm going to own all of McDonald's. And it's like it was is a very interesting, you know, response from a lot of people. And so when that happened and like through a lot of organic content, we're seeing a lot of like across the board, we see first time investors, but definitely was like next gen younger people getting started investing recently, we've switched to a subscription model, which has been phenomenal for us and we're like, it actually makes us able to achieve a lot more things. And by doing that, our actual main customer now is a, we've always been majority female user base. But right now it's a, it's a female in her 40s and sort of the head of the household parent, like basically who we call like the chief family officer. And it's been very exciting to see that there's a lot of like comments that's like, Hey, you know, this is my first time I've been invested. This is amazing and like fun. And I want to be able to use this for my family. So our goal is to build out family accounts and sort of expand upon what's being asked of us. And so we're going to dive into a couple topics here, you know, one of which is, again, going back to this education component, money is such a taboo topic investing is such a taboo topic. But pretend like you're the head of household, your family, your the mom, your the dad. And saying, Hey, you know, open you account on it, e-trainer, Schwab and we're going to buy some ETFs. Or, you know, even worse, in my opinion is like, Hey, we're going to stockpick and you pick a couple of stocks and, you know, the problem is it creates this very weird dynamic within the family that if say someone picks a great performing stock, you know, they're proud. Hey, I impressed my father, look how much money we're making. Let's say you pick a bad stock, you know, and it goes down. They're shame and embarrassment. I don't want to talk about it. We're at the dinner table. Hey, you idiot. You bought Nvidia and it went down 80% on and on, right? But this is different. Like because it has this tangible, Hey, you guys, you realize we went out to cheesecake factory tonight or we have this Wall Street Journal subscription on and on. We're actually investing in these companies and it gives people, it creates that connection between business and investing, which I think is the key connection. There's a couple of experiments you guys could run when you get much bigger and you have these free time and put some, you know, PhDs on staff, one of which would be this also helps you hedge your human consumption. And so listeners, if you think about this, you know, and you think about inflation and you think about, you know, what you spend money on, everyone has a different inflation right? You know, we report 3% inflation and are like, well, you know, X are 12 bucks now or whatever they are, but TVs are way down. And so where do you spend your money? It's an interesting hedge and discussion. So it's also funny because you can talk about your spouse. You'd be like, look, man, my spouse and spend so much money on Amazon. But for every, you know, dollar we put in Amazon, we're putting into this account. So we're rising tide in some some ways. But again, it makes it makes it, it's almost like a mortgage, you know, you're putting that money away and putting it to work. I think I heard you mention at one point that, you know, stakeholders, shareholders that own some of these companies actually spend more at the underlying company. Do you guys do a study talking about, I think Walmart might have been one? Yeah. So we looked at kind of where people, like how people are spending before they own stocks and then after they own stocks, there's no incentive at all. It's just literally the concept of ownership. And we've seen like, for example, Walmart after six months of people owning stock, they spend 234% more at the brand. It's just a, it creates loyalty and a new and unique way. I think that there's a huge opportunity for that in the market. Let me expand on this idea for you and hopefully it's something you guys run with. The credit cards have done a really good job of this where they have you log into your AMX, log into your chase, whatever and you see rewards and it's somewhat annoying because you have to go in and opt in, you know, I record her, hey, here's all the deals you have. There's like a hundred of them, right? But again, you don't own those companies. It's just benefits and rewards, however, we have some old Twitter threads and I'll send them to you later where I said, hey, what's the most interesting shareholder stock perk? The most famous, of course, you own one share of Berkshire, you get to go to the meeting. But over the years, there's so many that are kind of hilarious and funny. Starbucks used to put a Starbucks card in the annual reports, right? You get mail them to you and you got a gift certificate to go spend at the company. But there's a lot of the companies and so we were joking, I got too much on my plate, but I was joking. I said, someone needs to build a website that just lists, like, hey, here's the top 50, a hundred shareholder perks that no one knows about. Some of which you should just buy one share that way you could get the perk, like it's that beneficial. Like, hey, if you're cheesecake factory, you know, owner, 10% off, whatever, maybe you get free dessert, right? But you know who does a really good job of this is the Japanese. And so it is a massive culture of stakeholder rewards for public companies in Japan. And so you can go do a laundry list search and we'll add these to the show notes listeners. If you have any particularly interesting ones, leave it in the comments on YouTube or on Twitter. But it's really fun to see some of these. And so now you have a really interesting wedge where you're in between the consumer, say, hey, I know they're shopping here, but also that they're an owner and hey, let's offer. And so there's a, you know, you guys do a five box a month subscription, 36 bucks a year. So not bad, but you can say, hey, look, eventually we want to get you to wear the rewards dwarf, this payment, right? So you're getting extra benefits by just being an investor here. And we're kind of going to the companies at some point say, hey, you should offer to these people because also now that they know they're an incentivized stakeholder, they'll spend more. I think that's our goal because I genuinely believe it's a win win. I'm already spending money at these brands. Why not own them and have them be a part of my life? And then like if those companies grow, I get to be a part of the growth of where like, I'm already patronizing to if I then have the benefit of like actual real benefits that come with stock ownership, like the intent of the stock market and what it used to be is like, you were an owner, like, how do you feel like an owner and be actually a part of these brands where it's not yes, yes, growth is incredible. People invest for the benefit of the long term, like, that's our goal and our hope to. And if we can get people to start a lot earlier, amazing, or people who have never invested before. Like, that's the intent. Almost like an entirely new class of consumer owner that's like supercharged, superhero, customer, right? It's like, cool, you got your consumer, cool, you have your owner, and then this is both. And to my knowledge, kind of hard for them to find that information and you guys are collecting it. What also is interesting about Y'all's app, and by the way, listeners, you want to go try it out, use the code and best, you get 25 bucks to get going, is that the design intentionally is not focused on buying and selling, right? Particularly selling. And one of the things that we kind of bemoan, you know, most of the apps and the transaction based brokerages is they want you to have activity because they make money on that. And, you know, not always the buying and selling costly, bid-ass spreads, etc., but also it's taxable. And so this long-term view, like, you look at your app and it's almost like you're just stacking shares and companies, right? You know, it's like you're consistently just adding. And the people that do want to sell or that, you know, want to get out, make any generalizations, are they selling the companies one off, or is it traditionally, they're like, you know, this is not for me. I'm going to close the account. I'm going to move the account, or I just, I ran out of money, so I got to, I got to withdraw all this. I assume it's all or nothing at some point, or how is it traditionally viewed? Probably more all or nothing. There are definitely people who feel like, hey, I don't have the money or the finances right now. And at any point in time, they can't sell. They can withdraw their money, but we do see a lot of people like even pause sometimes and then start up again later on. So I think that we want people to feel like that they have full control and safety over what they're doing. You guys are clearly finding, you're having a moment, right? You're finding kind of this product market fit now, which is exciting. You know, when it happens, you know, when you see it, and it's fun, it's a really cool feeling. Talk to us a little bit about building this. How difficult was it in the early days to make this connection between the payments and the companies? And then talk to a little bit about the universe. Like do you guys go all the way down to some of these microcaps? You cut it off at 10 billion, a billion market cap with some of these stocks, or how do you think about it? Yeah. So we'll try not to give too long of a story because you guys got started what year? What was the origin year? So we started this actually at the end of 2017. And so this was our last semester of college. It was one of those things where we graduated. We both had jobs that was supposed to go work with JP Morgan, co-founder is going to go work in the wealth management industry. And we had like three months until we had to accept our jobs. So we there's a it was called the nursing school accounting building. And like we weren't both of us weren't in accounting, but they had these huge whiteboards. So we became for this friends with the security guards, we used to go in there and work basically every single day, we used to call law firms, you know, get like just try to ask for like different advice, even though we didn't have money. And it took a lot of work to work with the SEC and to build this out to like actually be an investment advisory service. So right now we are investment advisors. The app looks and operates like it's a brokerage because you're you're buying into the stocks that you that you spend with. But every single company on our platform actually has an assigned risk tolerance that we update consistently. And so how people put their information into our app determines whether or not we actually allow them to invest in certain companies. And so it feels like something like it's a part of your life, but we in the background make sure that we're always adjusting. It took a very long time for that, but the actual technology itself. So I had to teach myself and this is before AI or anything else. So I had to teach myself regular expressions. So I bought these like red sunglasses and I sat in a computer and I would just like write regular expressions every single day for weeks upon end. It was a very interesting experience. But we because we wanted to set the intention to think of like what's every public brand that you've ever spent with, because I think you're you're mentioning it earlier. I've invested like a hundred and thirty seven companies, the amount of places that we actually spend with. That's not just consumer, like, you know, discretionary, it's like it's a lot of different things that we actually put our money into. And so we want every public company, every subsidiary underneath it. So if you do shop at Whole Foods, the app recognizes that it's owned by Amazon and will invest you in Amazon and then even down to the like, you know, bottom lower product level, which hopefully one day we can get to skew level data with brands. And so we just spent a really long time building this out. We at the technology there's a lot of negotiation both on the brokerage side. So we actually had a negotiate the first contract ever to actually do all in one encompassing trades for like low fractional share amounts. So that's been a very long time. And then we, you know, we used plaid. So basically all the best companies in the world use that supports millions and millions of users to link people's bank accounts securely and then take care of the transaction data. And then we launched this sort of at the end of 2020 early 2021. That's kind of when we went viral. We had a really amazing moment there. We able to bring around our first institutional see round of funding. And then we kind of put our heads down and like really focused on building sort of this the dream app that we wanted to and really launched the official version at the end of 2023. And then like immediately hit product market fit with our new designs and our new user experience growing rapidly took a hard pivot to a subscription model. Went from a few thousand revenue to millions. And now we were closing our series a and very excited about it. So. Yeah. Congrats. Well, what do you guys learned, you know, often the journey of the entrepreneur and the founder is one where as you build an iterate, you get feedback from investors and users and you're like, Oh, wow, they're using this this way or they have found some insights that we never totally expected or everyone hates this and banging on this and they think this part is stupid. Well, we're some of the insights the last couple of years that you guys kind of hit upon that you either, you know, incorporated, got rid of all the good stuff. I would say the biggest thing that we learned when it comes from a consumer side is don't oversolve actually like it's it. So we became very, very data obsessed and like actually we've always listened to our customer as an interviewed them like we used to do like Zoom calls like this. I just say like get as much advice as possible. So basically one of the things for example was that most people really just loved the fact of that like it just invests you where you spent that like actually keeping it very, very simple, only focusing on the brand. So sorts of things is like them absolute most important to people. So it's like we just focus on like how do we make that experience the absolute best. And like one of our things that we built with we call it our magic moment and it's called the time machine is that actually when you get started using Griffin and you go through the onboarding process we actually show you where you could have invested in. And like the last 30 days and then most people say like I actually want to buy these stocks and then we allow them to get jumps are on their account by investing in their past. So they feel like that they can like already get so when you open the app you already own 10 plus companies. It's like a very cool user experience. Talk to us a little bit about how you guys find your customers you know it's a modern world you're mentioning a video on TikTok going viral I imagine there's a lot of word of mouth too. And we mentioned the referral idea earlier and listeners I don't keep any of that. I'm donating all my my proceeds to you guys because I don't I don't want to want you guys to have it. But other than kind of word of mouth how do you guys think about getting new customers in this in this new 2025 world. I think there's multiple ways so right now like we built this to be a consumer business where like our end customer is the individual and so that they they feel that way. So one when we originally started with a lot of organic content we've been we've been fortunate that we've gone viral multiple times I think actually last month we went viral again. And so just always can creating content. But then we take that content we were purpose it into ads. And so we've gotten very, very good we are basically ahead of marketing. His background is it's one of those dropped out of Harvard scaled built a company scaled to 9 million users sold to draft kings and now like he runs our entire marketing department and in the focus is on like making sure we have strong repeatable content that people connect to that's more organic and then we can use page channels to scale so we've actually built something that's like very repeatable until that's kind of why we we went out to raise what we actually didn't go out to raise a series a we as it was preempted which is pretty awesome. And so we're like going to use that new capital to scale what we built. But it's it is very cool to see you know a lot of users refer to their friends a lot of our ads are naturally just organically shared. And then it's how do you focus building out product led growth things within the app that actually make it more meaningful for people to share with each other. And then on top of that just distribution so actually yesterday we just got a a letter of intent from a very large publicly traded company where we're going to use our technology because we serve a unique audience that's mostly not touched by the investment industry. You know the head of household then just to help provide investment opportunities for potentially like 10 million plus people that are part of their company and their platform. And so it's like distribution goes through business partnerships and I think we can again plan a unique space in loyalty so we don't have to just work with the wealth management industry which we are having conversations that now but also we can work with brands. And I think that's that's the hope. Well what you guys do your message. It's so easy it lends itself to such a great video messaging who came up with stock with these shops at you one of your one of your customers who came up with that phrase. That was us. Yeah. It's such a good one. But you can just picture like you know a couple sits down to cheesecake factory in the spouses like you shouldn't order the dessert. Come on we just got so much food and we're like well you know actually this is we're owners and we're buying more if you the more you spend on and on like it's it's a very video focus sort of messaging that I think will resonate and continue to resonate. Do you have a most memorable investment across your your timeline good bad in between. My most memorable investment and this is like as honest as I can be is Helios and Matheson who owned movie pass and I was younger and I like believed in a lot of what the founders were saying and that they were going to reach profitability. And so I put a lot of my personal money into it because I really like the concept and I didn't diversify into anything else and I lost a good bit of money on it and it was a really good big learning lesson and you know so I hope that there's like I think that's kind of where our goal is is is more to be the antithesis of that and to more like invest people in things that are validated and that are being used consistently and brands and more blue chips dot companies and to also like create honesty and transparency and an industry that we feel like needs it a little bit more. I saw movie pass on both the first go around investing and then it just did a recap and relaunched I haven't heard anything about it. I'm curious to see what the idea is interesting. Yeah, it's back up and running. So who knows. I'm listening. You may get it. You may get a second shot. AMC create a list off of it and they've done really, really well with that sense. So I mean good for them, but and I loved I loved the concept of movie pass. I thought it was so cool. This has been a lot of fun. Tell our listeners where do they go? They want to go sign up for the app. Make sure you use code and vest for free 25 bucks. What's the best place? Yeah, so you can just finance on the app store, Griffin, just GRI FIN. It says positive daily investing. We're actually in the top of the charts right now, which is pretty cool. It's been pretty consistent there. And then also we you could go to griffin.com to learn more. We actually own griffin.com. There's a company called in or out multi billion dollar company out in the UK. I believe that owned griffin.com for like 17 years. We reached out to their customer service. We told them our story who we are, the change we want to make in the investment industry. And they dropped the domain and we were able to pick it up. Oh, dude. Well, that's not that's not as good of a story as conglomerate in Europe that owns favor.com. I keep trying to get them to give it to me and they're like, talk to us when you got six figures. We'll we'll we'll drop it then. Yeah. Yeah, ours was a little different. So we didn't have the money at the time. So it was it was a it really worked out well. Yeah, just find us anywhere, it's a super simple sign up process. Obviously, you have to be able to age. We hope to expand to to families soon. Awesome. Aaron, thanks so much for joining us today. Thank you. This was fun. Podcast listeners will post show notes to today's conversation at mebfavor.com/podcast. If you love the show, if you hate it, shoot us feedback at the mebfavor.com. We love to read the reviews. Please review us on iTunes and subscribe to show. We're a good podcast or found. Thanks for listening friends and good investing.