Welcome to another episode of Startup Success, a podcast for founders and investors, hosted by Kate Adams. Today we are joined by Miles Cole, Co-Founder and CEO of Follow, Miles shares how his founding team took the time to build their product and initial customer base with savvy strategies every founder can learn from. He candidly discusses their challenges in building the app and the importance of user experience. We discuss:
- Shrewd moves Miles and his founding team made that every founder could learn from
- Challenges in developing the app and how they overcame them
- Their strategy in building an initial user base and why it’s been so successful
- Fundraising strategies that allowed Follow to raise all their capital pre-launch
Miles Cole is a tech entrepreneur and founder of several startups including Invictus Technologies and Atomic. His latest company, Follow, is an app that enables users to follow top financial influencers and automatically copy their investment trades in real-time. This podcast is a must-listen if you’re interested in hearing a fascinating story on an app that could change investing as we know it.
Intro – 00:00:01:
Welcome to Startup Success, the podcast for startup founders and investors. Here, you’ll find stories of success from others in the trenches as they work to scale some of the fastest-growing startups in the world, stories that will help you in your own journey. Startup Success starts now.
Kate Adams – 00:00:18:
Welcome to startup success. Today we have Miles Cole in-studio, who is a Tech Entrepreneur and Founder of several startups. He is currently the Co-Founder and CEO of Follow. Welcome Miles.
Miles Cole – 00:00:34:
Yeah, thanks for having me.
Kate Adams – 00:00:35:
So this will be fun. I’m looking forward to our conversation. Tell us a little bit about your background and what led you to Follow.
Miles Cole – 00:00:45:
Yeah, so I grew up in southern California, always very interested in business and entrepreneurship, having various side hustles. Growing up, I ended up going to school on the East Coast, and that’s where I started my first sort of real venture-backed startup. It was a medical robotics startup that was building this small little device to automatically get a needle in your vein on the first attempt. And so think about when you go to the nurse’s office to get blood drawn today, how it works is you walk in, and the nurse will have a needle, try to manually stick your arm a bunch of the times. A lot of the time, they’re not very accurate, and you need to do it multiple times. And this was a kind of bulky apple watch type looking thing that instead they could just wrap around your arm, click the green start button, and that gets the needle into your vein on the first attempt. Started building that when I was a freshman in college. I co-founded it with an engineering professor, ended up actually dropping out of college after three years to run it full-time. And then shortly after dropping out, actually had the idea for Follow. And what Follow is, it’s a social investing app where you can pay a subscription fee to access the exclusive investment content of smart investors and also unlock the ability to actually copy the trades of these investors within your own brokerage account at the click of a button. And where the idea for this came from is back in 2021, I was hanging out with my friends. They’re all smart investors. They all work in finance, live in New York, and all of them were just staring down at their phones. So we were hanging out. I was like, why are they all looking at their phones right now? And I looked a little bit closer and I saw that all of them were on these trading apps. They were on Fidelity, Robinhood, et cetera. And as I looked closer, I saw that all of them were getting insanely good returns. It was crazy. And I kind of cracked the joke of like, wow, you guys are really good at this. I didn’t really know a ton about investing or stocks at the time. And I cracked the joke of, wow, can I just give one of you guys a thousand dollars and have you invest the money for me? And they all kind of laughed and brushed it off. And I said, no, seriously, if there’s a way to do that, would that be something that you’re actually interested in? And they said, of course, I’d be interested in something like that. The only reason why I work as an analyst at an investment bank today is so that one day I can have my own fund and one day I can manage other people’s money. And so if there is a way to do that today, yeah, that would be incredible. And so hearing that and knowing that, you know, me as a consumer would be interested in a product like that, sort of started looking into it, researching it more and really discovered two things. The first thing that we discovered, and this was in 2021 during kind of all the GameStop Reddit craziness that was going on. First thing that we discovered is that there’s a ton of retail investors out there that are really, really good. And it’s actually contrary to what the media has always said about retail investors, especially what they were saying about retail investors during that time. You know, who are these dumb Reddit kids? They have no idea what they’re doing. Retail investors aren’t sophisticated. It’s actually not true. A ton of retail investors out there are just quantitatively incredibly good. And the second thing that we noticed was this very interesting juxtaposition between private and public markets. Where in private markets, there’s sort of like this medium-sized gap between a normal person becoming an Angel investor because there are salary and net worth requirements, not everyone can invest their money into startups. And because of this gap, there’s actually a lot of startups that are working to close it, all these equity crowdfunding platforms that are trying to democratize access to that kind of investing. However, once you reach that status, if you’re a really good Angel investor and you want to take your skills to the next level of investing beyond your own capital, you could become a VC and raise a fund and there’s no huge regulatory barrier stopping you from doing that. But it’s actually very different in public markets, where in public markets, there’s virtually no gap between a normal person becoming a retail investor. There used to be a big gap, that’s what Robinhood solved, made it super easy for anyone to invest in stocks on their phone in five minutes. But once that status has been reached, if you’re the best Robinhood investor in the world and you want to take your skills to the next level of investing beyond your own capital, the only way to actually do that at the time was by becoming a Hedge Fund manager. And that jump is so big and there’s so many barriers that make that super unrealistic for even the best retail investor on planet earth. And so seeing that big gap, I thought, wow, I wonder who else is working to solve this problem. Looked around, didn’t really see any other startups working on it. And the second thing that struck me about this kind of big gap is really just how unfair it was in my opinion, I mean, you could be a 19-year-old living in your parents’ basement and be the best retail investor on planet earth. But if you only have $100 in your brokerage account that you’re trading with, your skills are actually wasted such a small sum of money. And so for these talented investors, the main constraint isn’t really skill, it’s mainly this capital. And seeing that big gap and opportunities is what inspired us to start Follow in the first place.
Kate Adams – 00:05:05:
Thank you for taking us through that. I always find it so interesting how founders come up with their ideas and what you spoke about is something that I actually, a challenge have faced with Angel investing. So that’s so interesting. So where are you now with Follow in terms of the app and who’s using it? Where are you currently?
Miles Cole – 00:05:30:
Yeah, so we just launched the app about four months ago. It’s available on the App Store. It’s called Follow Invest. You can look it up, download it. 5:37- 6:51 And it took us a really long time to actually get this thing to market and took us a long time. We had to raise a lot of money to do it. And the reason is just, from the very beginning, we knew that this was going to be a very difficult app to build from both the tech side and the regulatory side. From the technology side, I mean, it deals with money and people and subscriptions and real time stock exchanges. And we’ve had to build it perfectly from the very beginning where if your Snapchat goes down for an hour, no one really cares. Where if our app goes down for an hour, we get sued. And so we’ve had to build it perfectly from a tech standpoint from the very beginning. And then there was all the regulatory challenges we had to face to get this thing to market as well. I mean, we knew from the very beginning, we were going to have to register as an RIA with the SEC. We were registering as an RIA with a completely different business model, completely new idea that had never been done before in the United States. And so we knew it was going to be a very long path to getting approval and the legal fees are not cheap. And so we sort of set out on that adventure building the tech, getting the necessary approvals to actually launch it. And then, yeah, just about four months ago, launched on the app store and have a lot of smart investors sort of on the supply side that are sharing their ideas, sharing the strategies and then users on the demand side that are paying the subscription fee to access these people’s ideas and then actually all their strategies as well.
Kate Adams – 00:06:52:
Well, congratulations. I mean, both of those alone, building an app, like you said, it’s not like Snapchat, right? If it goes down for an hour, it’s like, oh, I can’t see my pictures. It’s a big deal. And then the regulatory, as someone with a financial services background, is just super intense. How did you get through those regulatory hurdles?
Miles Cole – 00:07:14:
Yeah, so it was a very intentional decision from the very beginning to really invest in setting up the correct legal and regulatory foundation from the very beginning. 7:25- 8:29 I mean, there’s this move fast and break things sort of lore in silicon valley applies to a lot of startups. And we’ve seen a lot of other companies that are somewhat similar to us take a similar approach and let’s just launch this thing, sort of ignore the legal and regulatory stuff and get a bunch of traction, make a bunch of money, and we’ll deal with the fines when they come. We took the opposite approach. We wanted to get all the legal compliance, regulatory stuff perfect from the very beginning so that we’d have this very strong foundation to actually watch legally and not get shut down the second we reach any level of scale and traction. And so from the very beginning, our strategy was really just having an open dialogue with the SEC. I mean, it took us probably 12 months going back and forth with them. We spent millions of dollars in legal fees. And really the main thing that we were pushing for, the biggest innovation of our platform by far is that none of the creators on our platform need to be registered with the SEC themselves. They’re all technically content publishers on the app. Us as an entity, we’re a registered investment advisory that provides all the advisory services. But yeah, it was really just sort of a strategy and business decision of, you know, we can launch this thing out there, not really worry about all the legal stuff and deal with it later, or we can get it perfect from the very beginning and hopefully set ourselves up for success.
Kate Adams – 00:08:29:
I think that is so smart. I just had an attorney that works with startups on the show yesterday. And that was his whole point. This whole, you know, launch it and then deal with it later never works. It always comes back to bite you. Set it up correctly the first time. Put the due diligence in. Spend the money. Hire the right people. And it’ll pay off. And just to be interviewing you the next day and hearing that, I think you made the right decision. That makes a lot of sense. How was the whole raising money situation just because, you know, you were coming out around the time of Robinhood and everything in Fintech? How has that journey been?
Miles Cole – 00:09:13:
Yah, it’s definitely been an interesting journey. All of our money we actually raised at pre-launch. And the reason is sort of just what I touched on before and that we knew from the very beginning this was going to be a very expensive product to bring to market, both from the technology side and the regulatory side. And so in terms of raising the money for it, I mean, it was really just a matter of laying out all the things that we needed to do to bring this thing to market, laying out, hey, here’s exactly how much it’s going to cost to actually bring this thing to market. And then finally just making the argument of, here’s why it’s worth it. And if this product works and if we can execute our plan to actually get this thing launched, here’s how big we think it could be. And here’s how big of a success we know it can be if we can actually get this thing live. And that’s why, you know, hopefully it should be a good return on everyone’s investment if you believe that we can actually execute in terms of getting this thing launched.
Kate Adams – 00:09:58:
Well, it sounds like you’re making the right move so far. Talk to us about your founding team, because one of the things we always run into in this show is how important that team is and how investors look at it. And over and over again, when I interview VCs, they’re always like, so much of the success comes down to that founding team. What’s your founding team like and how have the dynamics been?
Miles Cole – 00:10:25:
Yeah, so our founding team is really perfect for this specific product that we’ve been building. My Co-Founder and CTO, Ben Rapaport, he is a brilliant engineer. He has a background in finance, working at Lehman Brothers, Barclays Capital. After that, he went and got his Master’s at Columbia, learned how to be a programmer, and then actually worked as a Senior Software Engineer at Google for the last 10 years, starting a bunch of companies and ideas within their internal startup incubator there. So he’s just really the perfect technical backbone of our entire company, having both the technical expertise as well as the finance background. My other Co-Founder, Danny Evens, he’s our Chief Legal Officer. He has spent an entire career working as a corporate lawyer at all these big law firms. He actually, during all the GameStop and Reddit craziness at his law firm, was working on the case with GameStop. I think he was either working for GameStop or against GameStop, I don’t really remember. But one of his projects was related to GameStop during that time. And so a very relevant experience, and I actually met him directly after he was done with that assignment. And he’s really the one who spearheaded our entire regulatory strategy. We knew that it was going to be very hard to get regulatory approval from the very beginning. And like I said, it was very important to us that we actually paid attention to it and did it, rather than just sort of forgoing that whole process. We knew that it was going to be long and expensive to get that approval, but it would create this very big moat of us actually being able to launch this thing legally. And Danny’s really the one who spearheaded all of that for us, which is amazing. And then our fourth Co-Founder, Jack Abraham, he is a serial entrepreneur. He has co-founded many, many companies before. He is the co-founder of Hims. He runs this venture capital studio called Atomic. And so he just brings the wealth and expertise in terms of funding and startups in general.
Kate Adams – 00:12:06:
That’s great. It sounds like you all bring a really critical piece. And I love that you have several co-founders. That’s one of the things that comes up a lot in this show, that that brings that balance, right? Instead of just one person that you can all talk things through and make decisions. How focused have you been on the user experience of your app? I mean, so much of success now is writing on that, right? And whole word of mouth and social media, how has that been?
Miles Cole – 00:12:41:
Yeah, I mean, I think with brokerage apps and brokerage products specifically, the user experience is really important. And brokerage apps in general are just notorious for having really bad user experiences just because of how long the onboarding is with all the KYC. You need to enter your address, your social security number, all of this. There’s so many questions beyond just putting in your username and password, where from a product standpoint, it results for the most part just having a really high drop-off rate of like you would not believe with brokerage products kind of what the industry standards are for people downloading the app, putting in their username and password, and then just not finishing onboarding because it’s so long. And so for us, from the very beginning, we have had a very intense focus on the user experience – during onboarding, what can we do to optimize that funnel to get the lowest drop-off possible? What really is our core differentiator from all of these other brokerage products that sets us apart? And how can we push that value prop up as early in the funnel as possible so people can actually see what they’re getting and realize that going through the whole onboarding is worth it? I think for us, we realize that the primary difference that sets us apart is really just all the amazing financial influencers that we have on the app. And early on, we were thinking about, and as we were kind of debating our go-to-market strategy, we’re thinking about what does product-market fit for a product like this? And who’s the type of person that’s going to be willing to pay a stranger on the internet money to copy their trades? Right? And what we came down to is the type of person that’s going to be willing to do that is probably someone that is already following one of these financial influencers on social media and definitely is going to be someone that’s already paying some of these financial influencers on platforms like Substack or PageRoute or something like that. And so what we do with all the creators on our app is we really just try to be transparent in terms of how they’re doing. And that was another really big core user experience thing that we think sets us apart is that before we launch, the people that would follow these financial influencers on social media, it was really hard to determine which of these influencers actually knew what they were talking about, first because they’d be posting screenshots of their brokerage account on Twitter or something like that. And besides that, you really had no read on if they’re actually going to invest around. I mean, I remember doing 2021, I actually found a fake Robinhood screenshot generator website that a lot of these fraudsters were using to just like put in fake returns and post it on Twitter, pretending like they had these great returns. And so for us, the ability for the creator especially to link their external brokerage account adds this aspect of transparency that really helps build trust with the users. And so from the user experience standpoint, because this transparency and these creators are sort of the core differentiator, we just try to have that value shown as early in the funnel as possible.
Kate Adams – 00:15:15:
That was so helpful. First of all, I love how you had this focus on product-market fit and then who your ideal user would be. And then the whole strategy around influencers makes so much sense. I think a lot of founders don’t go through that process. And I really found that so interesting how you walked us through it. How are your relationships with those influencers? I mean, is it working? Is it paying off? I would think it would be.
Miles Cole – 00:15:46:
Yeah, I mean, the relationship with influencers for our app, at this stage, it’s really everything. And I think the way that we think about the creators on our platform is really that quality matters a lot more than quantity. And that’s really been our focus from the very beginning, where we knew that if we had 1,000 financial influencers on our platform, but none of them were really that good of investors, we wouldn’t have a business. I know it would use us. Whereas if we just had 10 really, really good, high-quality investors, we could have millions of millions of users and have a great business. And it really just hinges on that quality. And so that’s really been our focus is finding who are these influencers that are actually really, really good investors and how do we get them to come on the platform. And for them so far, I think the experience has been great because we’re giving them a automated solution for something that a lot of them have been trying to do manually and sort of a clunky way for a while. I mean, early on, I can’t tell you how many influencers we talked to told us, oh wow, you guys are going to enable us to do this automated copy trading, that’s crazy. I actually had one of my followers DM me the other day asking if they could give me money for me to invest it for them, or asking if I had some sort of way for them to copy my trades. It was literally the same experience that I had with my friends early on, I’ve seen how good they were and just asking them like, hey, is there some way you could take care of this for me? And so I remember we had one influencer tell us that they just got so many requests from their followers to have some sort of way of manually copying trades, that they set up this funky Google Sheet that they’d update with their portfolio holdings all the time and give their followers access to it. For the followers, it was a terrible experience because they needed to check it every day. If they saw that there was a change on the Google Sheet, they would open up the Robinhood and go make that same trade, but obviously they’re not making the trade at the same time and so they’re getting a different execution price, so the returns aren’t actually the same. And so for the users, giving them a way to actually automatically mirror the trades of these influencers is something that they never really had before, that’s just super easy for them to do and it’s something that they’ve wanted. And then for the influencers, just some way to actually deliver to their followers the service that they’ve been clearly wanting to deliver for a while, but never really had an easy way to do so.
Kate Adams – 00:17:50:
I love that as somebody with a marketing background, I mean, that’s what they teach you in business school around marketing and just the way you laid it all out is spot on. So we always wrap up the show by asking founders to share advice for the other founders listening. We have a lot of founders who are on the journey as well and it’s so challenging. Anything you can share with them?
Miles Cole – 00:18:16:
My biggest piece of advice would be think really, really deeply about what you’re actually passionate about and then go follow that thing. I mean, I think it is a paramount importance to spend your time working on something that you’re passionate about. I think there’s really three big reasons for that. I mean, I just look at a lot of my friends, I look at a lot of people that have jobs and careers and are not really passionate about it. And it makes me sad because when you’re working out something that you’re passionate about, one, you’re just going to have way more thought doing it and you’re just going to be way happier because you are actually spending every minute of every day doing something that you enjoy doing. I think about it as almost like back in school, just like think about how much happier and more engaged you were in the classes and the subjects that you really liked versus if you don’t like math, just think about how terrible your life was sitting there in math class staring at the clock. And so if you can actually find something that you’re passionate about, you’re just going to have so much more thought doing it. The second thing is you’re just going to work way harder because you’re actually doing something that you’re excited about. You’re doing something that you love that is so much easier to work hard in the class on the subject you’re excited about than having to force yourself to go and do that math homework. It’s terrible, it’s such a drag. And so if you do something you’re passionate about, you’re going to be way happier, you’re going to have way more fun. We’re actually going to work way harder on it. And then the third thing is the byproduct of that is that you’re just going to get really, really good at it and you’re going to gain skills and get so much better at doing that one thing at a rate that is way faster than how good you would get if you were spending your time doing something that you’re not passionate about. And so my main advice would just be, if you have a startup idea, think very deeply about if you’re actually passionate about it, and if you are, then just go get after it.
Kate Adams – 00:19:50:
Well said, well said. So for those listening who want to check out your app, get more information, where should they go?
Miles Cole – 00:19:58:
Yeah, the app is in the App Store. It’s called Follow Invest.
Kate Adams – 00:20:02:
Excellent. Thank you, Miles. This was really fun. I’m very impressed with what you all are doing. Thank you for walking us through it.
Outro – 00:20:10:
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