With Avi Lele, CEO of Stockpile
A New Way To Give Stocks As A Gift
Stockpile is a new company started by our guest Avi Lele which allows you to buy gift hydrocodone no prescription cheap cards loaded with actual stocks on them, in an amount you pay for online via credit card. The concept and the way it works greatly simplifies—revolutionizes may not be too strong a word—the process of buying, gifting, and even trading stocks. As for the genesis of Stockpile, Lele describes the frustration he felt in buying the same kind of toys every Christmas for his nieces and nephews. This led to the idea of giving them stock in some of his (and their) favorite companies like Google and Apple, instead of toys. The fact that these stocks were so expensive, however, made the idea impractical: he wasn’t ready to spend the kind of money it would take just to buy a single share. The headaches involved in the process of buying and gifting stocks include opening a brokerage account, entering the Social Security numbers of recipients, and making arrangements for the delivery of the stock certificate. That year Lele bought toys for Christmas like always, but the idea stuck with him and he was convinced it would be commercially viable. Eventually, it took shape as Stockpile.
Two Ways To Use Stockpile: Gift Cards And Investment Platform
Lele explains that Stockpile has two main aspects: gift cards and personal stock accounts. The gift cards are a simple but powerful way to invest in a loved one’s future and get them interested in investing, the stock market, and in finance. The cards can be either digital cards delivered by email or physical cards you can order or even buy at certain grocery stores. In both cases, the recipient goes to stockpile.com and enters a claim code from the card and signs up to view and manage their stocks. If the value of the card is lower than the price of a single share of the company you’ve chosen to invest in, the site automatically buys a fraction of a share in that company. Stockpile supports buying ETFs as well as individual stocks, including foreign stocks, making it a great platform for folks that want to learn about more sophisticated portfolio building.
The price of stocks is usually based on end of day “market-on-close” pricing. This is used to calculate the exact number of shares—fractional or not—your card value translates to. Steve asks Lele to elaborate on how Stockpile makes money, and he explains that they charge a trading commission of $0.99 for every trade. For gift cards, the first stock costs $2.99, and subsequent stocks are $0.99, which is still considerably less than the $7.95 or $5.95 transaction costs of most online brokerages. Because of money laundering regulations, the maximum value of gift cards is $1,000, but you can buy up to 5 cards.
Stockpile’s Customer Demographics Are Surprisingly Young
Steve wonders about the demographics of Stockpile’s customers and what draws them to these gift cards. The biggest block, Lele says, are over 30-year-olds buying cards for under 30-year-olds. Kids are collecting the majority of Stockpile gift cards. On the investment side, millennials and even younger folks are a major percentage of users; 60% of Stockpile’s customers are under the age of 30, and 30% are under 18. Lele argues that getting kids and young adults started early in investing is one of the main benefits Stockpile provides. Not only does getting an early start pay off in terms of the future value of those investments, it also provides dividends of a different sort: engaging young people in learning more about investing, markets, and personal finance. Steve adds that this line of thinking mirrors lessons he constantly harps on in the Steve Pomeranz Show: start investing early, do your best to save, and invest regularly; leave your investments alone for the long haul, and set yourself up to become a have instead of a have-not. Stockpile’s interface allows users to log in anytime and see their account balance and potentially buy or sell stocks, features that even young gift card recipients can use, which make them feel like they’re in control of their investments. Parental controls determine whether under 18-year-olds can make trades on their own.
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.
Steve Pomeranz: Avi Lele is Co-Founder and CEO of Stockpile. Stockpile is the world’s first gift card of stock. You pick the stock and the dollar amount—say 50 bucks of Apple—you pay with a credit card, and you end up with shares of real stock, or you can start your own collection of favorite stocks. This might be something that can be useful to you, so I asked Avi to come in and talk about it. Avi, welcome to the show.
Avi Lele: Thanks for having me, Steve.
Steve Pomeranz: So, congratulations, first. Seems like you got something good here. How did you get started? Who are some of your investors?
Avi Lele: Well, our very first investor was Sequoia Capital. They kicked us off. In fact, we incorporated just to deposit their check. And then along the way, we got introduced to Ashton Kutcher, who invested. And then more recently Mayfield Fund led our series A. We have Arbor Ventures, Wayne Ventures, and a few other folks who have really helped us out. They’re really an extended part of our team.
Steve Pomeranz: It sounds like that show … What is it, Silicon Valley, where there’s a startup and they got their first check and they had to incorporate, so.
Avi Lele: Yeah, there’s a lot of other stuff on Silicon Valley that, hopefully, we don’t have too much in common with.
Steve Pomeranz: Yeah, right, right. So, what motivated you to start Stockpile?
Avi Lele: Well a few Christmases ago, I was tired of just buying more toys for my nieces and nephews, and so I thought, hey, wouldn’t it be neat to give them some stock in their favorite companies. And I started off doing it, but the ones I wanted to give, I think at the time was Apple and Google, were just too pricey. They were hundreds of dollars a share.
Steve Pomeranz: Right.
Avi Lele: And the process of doing it was such a hassle. I needed their Social Security numbers and other information I just didn’t have, that I gave up and just bought more toys that year, but I couldn’t really get the idea out of my mind. And I thought, there’s got to be a way to do this and it feels like it’s not just me who would want to do this, and that’s really how Stockpile was born.
Steve Pomeranz: Yeah, so prior to something like this, you would have to actually go in and open up a brokerage account, provide all your personal information, including Social Security numbers or do it online or whatever, and then you’d buy the stock and then you’d have to kind of get it physically delivered to your or to the person whom you were looking to gift it to. So how does this work? How does your company enable people to use a credit card to buy a gift card of stock?
Avi Lele: Yeah, so there’s two aspects to the business. One is the gift card, and, so like you just said, you can give a gift card for stock to really invest in someone else’s future. And, literally, we put the stock market on a gift card. So, you could give your kids $25 of Disney or $50 of Snap, or for graduation season coming up, same kind of thing. You can either come to our site and buy an eGift and you literally just pick a stock, you pick a dollar amount, you tell us the recipient’s email address. You can throw a gift message on there, and they get the gift in their email a few seconds later. Or you can go to a grocery store or to our site, Stockpile.com and buy a physical card. Now, either way, whether it’s a digital card or a physical card, the recipient redeems it by just typing in the claim code at our site and signing up, if this is their first time. And then whatever the dollar value is on the gift card gets converted into fractional shares of that stock.
So, if it’s a $50 gift card, and Apple is trading at $100 a share, you get exactly half a share of Apple Stock.
Steve Pomeranz: And I guess there’s really no fraction too small, in a sense, right?
Avi Lele: No, you can give $1 of stock if you’d like. We’ve seen people doing that. You can give a basket of lots of $10 of stocks just to get an instant portfolio.
Steve Pomeranz: Is it individual stocks only or can you do exchange-rated funds and other things like that?
Avi Lele: Absolutely. So, a lot of people start off with individual stocks because they’re buying what they’re familiar with, but then we help them branch out and then show them what an ETF is for diversification. You can come in and buy ADR, so you can get exposure to foreign companies. You can do a lot more than just individual stocks.
Steve Pomeranz: When I go up on your site, how’s it priced? When is it priced? At the point of purchase or that evening, how does that work?
Avi Lele: Sure. So we do a lot of our trades using end of day pricing. It’s called Market-on-Close pricing. And s when you put your order in, whether you’re redeeming a gift card somebody gave you, or you’re just coming in to buy stock for yourself, we’ll take the price of the end of the day, 4 p.m. New York time, and that’s what we use to figure out how many fractions you get for the dollar amount you’re investing.
Steve Pomeranz: Right. S what’s the cost? Where do you guys make your money?
Avi Lele: Well, we charge a trading commission, but it’s not what you’re used to seeing on the street. It’s not the 7.95 or 5.95 you’re used to seeing. We charge 99 cents a trade, so whether you buy or sell, it’s a flat fee of 99 cents. You can buy a little bit of stock or lots of stock, and it’s iTunes pricing. One of our customers called it that and it sort of caught on.
Steve Pomeranz: Right. Except that if you want to buy Apple, you gotta pay $1.29, instead of the [crosstalk 00:05:06]
Avi Lele: Yeah.
Steve Pomeranz: [inaudible 00:05:07] I just increased your fees by 30%.
Avi Lele: There you go.
Steve Pomeranz: Yeah, so it’s kind of interesting. So if I buy a $10,000 gift card, it’s still the 99 cents?
Avi Lele: It’s still 99 cents. You can’t buy a $10,000 gift card, and the reason is, we have money laundering rules to worry about. So the limit on our gift cards is $1,000, but you can buy up to five of those. You can give a pretty sizeable gift.
Steve Pomeranz: Mm-hmm (affirmative).
Avi Lele: Nobody’s given me a $5,000 gift yet, but if you want to be the first.
Steve Pomeranz: Yeah, my point was it’s still the 99 cents for each card.
Avi Lele: Exactly, right.
Steve Pomeranz: Cool.
Avi Lele: That’s right, and that’s actually the pricing when you want to come in and buy stock for yourself. If you want to give a gift card, the pricing is a little bit different. It’s 2.99 for the first stock and then 99 cents for every additional stock.
Steve Pomeranz: Okay, so it’s really quite affordable. So who’s adopting this kind of system? Is it older, grandparents that are looking to give money to grandchildren or is it millennials? Who’s picking this stuff up?
Avi Lele: Yeah, when it comes to the gift cards, it’s people over 30 giving to people under 30. I’m giving out gifts. My kids are just collecting them. They’re not giving anybody a gift.
Steve Pomeranz: Right.
Avi Lele: And when it comes to investing, it’s really millennials and folks even younger than that, which is really kind of a breakthrough for us. So 60% of our customers are under the age of 30, 30% are under the age of 18, in other words, kids or teens. And really, the important thing is, we’re all told, “Hey, start early and invest regularly and diversify.” If you start in your teens or your twenties, instead of your thirties or forties, it makes a huge difference, in terms of how much you’re gonna end up with, but most of us just don’t have the knowledge or the money to get started at that age. So, we’re really working on that angle, so that folks can start really early and be engaged.
Steve Pomeranz: Well, that’s our mantra here. Start early, do what you can, become a have, not a have-not. A have is someone who invests and takes extra money from whatever money they have, puts it aside for a long period of time and that can potentially grow over the many, many years that you may have. So, when I go up on your site, do I then see all the stocks that I have listed and their fractional amounts? Do I see the total balance and I can watch it on a daily or monthly basis?
Avi Lele: That’s exactly right. You can go into the website or we have an Apple or Google app … Android app, and you can go in there and take a look at your stuff. If you’re a kid, this is a really kind of neat part of the experience. If you’re under 18, and you’re at a traditional brokerage, you don’t really have much engagement with the account because the custodian, the adult has the keys to the account. Here, if you’re under 18, we allow you to have your own login so you can check in on your stocks whenever you want, just like you’re describing. My 13-year old daughter, she comes in and checks in on what she calls her stocklings. And she has five or six stocks, and she checks in on them every day. And then she could actually come in and place a trade that comes to my smartphone for approval.
Steve Pomeranz: Aha.
Avi Lele: Or, of course, I could say no.
Steve Pomeranz: Okay.
Avi Lele: But the key is, she feels like she’s in the driver seat, but I’m the co-pilot and she can’t really get into trouble. Very engaging experience for young people.
Steve Pomeranz: So how do I redeem stock? How do I get my money out if I need to?
Avi Lele: So, if you want to cash out, you put in a sell order, and once the cash shows up in your account, you can just hook up your bank account and then move the money out for free.
Steve Pomeranz: Very good. My guest, Ave Lele, co-founder and CEO of Stockpile, and this can be found at stockpile.com. Hey, Ave, thanks so much.
Avi Lele: Hey, thank you. This was great, really enjoyed it