Phil Siarri speaks to Hoda Mehr, CEO and co-founder of San Francisco startup Invest Groove, a stock market research and idea validation platform that aims to empower regular people to make informed decisions based on easy-to-understand structure and well-researched insights.
Hi Hoda, nice to meet you. Can you tell us about your background?
Nice to meet you too, Phil! I’m the co-founder and CEO of Invest Groove. This is my latest career and life adventure based on my stock market investing hobby, which I picked up from my dad when I was a teenager. Before Invest Groove, for 13 years I pursued my career in strategic planning and insights within large technology organisations. I’m also very fortunate to have a technical co-founder – Aidin Eslami – who is the company’s CTO. He’s a full stack developer and an independent movie producer. Not only is he building our core platform, he also brings an artistic flare to our UX design.
Hoda Mehr from Invest Groove
What’s the concept behind Invest Groove?
When I was investing in the stock market on my own, the process of doing research and testing my ideas was really cumbersome. It would start from a piece of news, or a friend recommending a stock. Sometimes I would buy something in the store and I’d wonder whether the stock was a good investment. When I had an idea, then the first moment I’d get a chance I would start the research from Google. I would read articles, corporate annual reports and financial analysis, then dig into Quora and Reddit to see what others would say. I would summarise everything I learned in a Google Sheet, take a good look at the financial data and finally make a decision. This was painful and used to take me a couple of hours. More importantly, I had to do multiple research runs for at least 5-10 stocks before I gave one stock a thumbs-up.
The ratio of research-to-buy decision is really high if you’d want to make a logical investing decision. I then realised that many other people go through the same pain, so decided to build a platform to facilitate the process for people like me.
What is your unfair advantage vs other communities, such as Seeking Alpha or Motley Fool?
Both of these communities are great. I’m actually a member of both, and have learned a lot from them, especially the Motley Fool crew. The difference between us and them is in the consistency of our research process and framework. Our analysts and APIs read all the articles, financial data, and so on, and summarise such for our users into a consistent framework. We call them a ‘stock card’. When you come to our platform, you get the answers in 30 seconds on one page; no need to read through the articles, compare one analyst’s research to another.
We also tell you how many other investors agree or disagree with that research, and you have the choice to filter who you would want to trust and listen to. So while our investing philosophy is similar to the likes of Motley Fool and many great investors on the Seeking Alpha community, we go the extra mile of doing the work for our users, giving them the power to decide who they’d want to listen to with minimum effort on their part.
Down the line, do you consider turning Invest Groove into a fully fledged trading platform?
It depends on our users and what they would need down the road. Our focus is to relentlessly reduce the pain of investing in the stock market for regular investors like us. The closest example I have is how Amazon is removing the online shopping pain one step at a time. We believe the starting place for us is to reduce the pain of stock market investing research. Once that’s solved for our users, we will work with our community to tackle the next big pain they have. The power is in our users’ hands to shape the next steps.
What is your current funding strategy?
Right now, we’re funding the project through our personal savings, and friends and family. After all, we are great stock market investors, and some of our earlier good investing decisions are now helping us fund the project.
Our goal is to find angel investors or VCs who share our vision. We’d like to put together a group of investors who are stock market investors themselves. They understand the pain and are passionate about solving it. I also like the idea of letting our users join the fun! Our users are thoughtful and logical investors in the public market, and they will know a good opportunity when they see one. When the time is right, we will definitely share the opportunity with our users.
Are there any fintech firms you admire?
There are two firms that I’m a fan of. Both are questioning the legacy processes of the financial industry. First one is Affirm. This is a company founded by Max Levchin, one of the original PayPal founders. It looks at credit score differently. Credit score calculation process is designed based on how people used to live: stay in one country, never move, buy a house in your mid-20s, get a stable job and stick to it for years. This is not how many successful people live anymore, and creditworthiness shouldn’t be calculated that way anymore. Affirm is tackling this issue.
The second one is actually a publicly traded company called Ellie Mae (Ticker ELLI). Full disclosure, I personally own some shares and I really appreciate what it does, because it’s automating the agonising process of mortgage underwriting for smaller banks. I think it will be a big part of the financial industry in future.
Do you think fintech is an opportunity for women to shake things down when it comes to gender bias in finance?
I’d like to go one level broader: I think women need to see themselves as wealth generators and investors to be a part of the fintech sector. The number of women I personally know that actively invest in the stock market isn’t so many. I think women shy away from financial decision-making. I’d like the next Warren Buffet to be a woman. I want to see the next Carl Icahn be a woman. I don’t personally know one single investing icon that’s a women. I’d like to change that.
I also think women have what it takes to be successful capital allocators. We ran a survey in the fall of 2016. We asked people, when they hear ‘investing’, what comes to mind? Interestingly enough, women were 1.5 times more likely to associate investing with the longer-term horizon (sample size of 80). The way women think long-term is very well aligned with making better investment decisions, and that makes them great candidates to drive fintech progress.
Recently, your team joined the Founder Institute incubator. How did this partnership come about, and what has been your experience so far?
My appreciation for the Founder Institute comes from my belief in the power of process. If you think about it, successful investing in the stock market requires you to adopt a consistent research and decision-making process, and repeat it several times. The Founder Institute approach to building a company is similar. By sticking to a logical company development process, you increase the chances of your success. Five weeks into the programme, I believe the process has proven to be effective. We’re very happy that we’re still in the programme. Many of the participating founders drop out or are asked to do so based on their progress. We are still going strong.
What’s next for Invest Groove? Do you have an approximate release date?
We have version one of our website up and live, and are using it to collect feedback and talk to our users. People can try our research framework, ask for our research result for any publicly traded company, and we will send the results to them and ask for five questions to help us enhance the platform and product. We will continue this process in the next couple of weeks.
Our goal is to have our beta platform live at the time we graduate from the Founder Institute in mid-April 2017. So far, we’ve been fortunate to receive requests and multiple beta users sign-ups, and we would continue to invite more people to do so.