Sam Stubbs is the founder of non profit KiwiSaver fund Simplicity. A reformed investment banker and stockbroker his career also spans politics, philosophy and technology. His mission is to make the finance industry a force for good as a source of profit which he thinks can be achieved by companies embracing long term thinking, sustainability and full diversity.
Sam Stubbs joined Purposely Podcast to share his founder story:
What is Simplicity and what is its mission and vision?
‘We're a nonprofit fund manager. If you're overseas you might have heard of Vanguard… the vanguard of New Zealand… wouldn't be too far wrong. Our main aim is to give people dignity in retirement and how we do that is we give them choices. People who have choices in life have dignity.
We run as a nonprofit fund manager, which charges the lowest fees and making people richer. Simplicity is a charity, a social enterprise, a nonprofit, a whole lot of things! We give 15% of the fees we do earn to charity.
We've been running for almost five years now and we manage about $3 billion on behalf of over 60,000 members, in total we're giving away about $100,000 a month to charity, and making extremely good returns.’
Was the Kiwisaver scheme the result of New Zealand waking up to the fact that its people owed more in debt than they had in savings?
‘So it's about 14 years old now and when it started out and they didn't think it was going to be that popular. However it turned out to be wildly popular because the government gave everyone who joined $1,000 straight into their account. The vast majority of the population have now signed up to kiwisaver (voluntary pension scheme). In the first 14 years it's accumulated almost $80 billion, which for New Zealand is a lot of money. It will carry on growing and growing.’
Simplicity appears to run incredibly leanly, tell us about your set-up?
‘Yeah that’s correct, we have what we call a starvation mentality. So we never get used to having very much money because as soon as we are in danger of making money we lower our fees and we keep it really tight. Now that doesn't mean that we go stupid with it but it does mean that we have a really heavy emphasis on technology. So we spend a lot of money on that so we can automate as much as we can. We have 63 volunteers as well, people like lawyers, PR accountants, whole bunch of people who help us out because we're disrupting the financial services industry here. And also, you know, we're giving so much to charity, and we've given away over $2 million in their first five years’
I just keep thinking Sam Stubbs as poacher turned gamekeeper but that's not quite right. Tell us about your path and your insights?
‘I was really a gamekeeper turned poacher.’
‘So I'm a West Auckland boy, for those overseas I have come from the sort of the wrong side of the tracks and from a fairly poor suburb. That said I had a really lucky life, but mainly because I chose my parents well. You know that famous line by Winston Churchill, ‘if you make one decision in life, choose your parents well’. Mine were both school teachers who taught me all sort of wonderful things including great values.’
‘I had a very lucky career and went overseas and work for a few investment banks. However, by the time I got to about 46 I was looking in the mirror and not really liking the person that I saw, I was making myself richer but not doing anything to enrich the lives of other people. So I basically decided to work for charity. I had a good old fashioned midlife crisis and decided that the rest of my life was going to be looking after other people and not myself. During the first year I planted trees on an island and did some other charity work. I then thought about how we could make a big scalable difference and that got me thinking like a business person.’
‘Me and my other co founders got together in a pub one night with a blank sheet of paper. We started with that premise that we wanted to make the biggest difference we could to people’s lives and boom Simplicity was conceived. What we drew on that piece of paper is exactly what we have delivered today.’
What is like being ostracized from the sort of industry?
‘I'm never invited to any of these (finance) things and I would consider it a marked failure if I was invited to them. It's like Groucho Marx said ‘I wouldn't want to be a member of a club that would have me’. We very deliberately sit outside. But it's interesting because a lot of the advocacy work we do as shareholders. In fact we're getting to be sizable shareholders in New Zealand companies now. We go into the boardroom and start agitating for change which would benefit long term investors in the company. For example we are not about short term profit announcements. We are into things like diversity and governance, or diversity of hiring, it's about executive pay, it's also about long term environmental and financial sustainability which tends to be beyond the bonus terms of the current CEO, but is very, very important for long term shareholders like ourselves.’
Taking you back to your childhood, is it true that you were quite entrepreneurial early on?
‘The first serious money I made was installing extensions to old styled rotary phones so we would install you know, multiple phones in your house made out of spare parts that we found in the jumbo rubbish bins. We would charge $10 if we liked you and $20 if we didn't. You know, basic entrepreneurial stuff and we had a lot of fun’
Later in life you head overseas and ended up as an investment banker and stockbroker in London?
‘Yeah, exactly. I sort of found my way into Goldman Sachs which was a pretty big firm in those days! I hit the highlife and had some crazy experiences there, especially for this little working class kid. I thought I'd found gold and had a wonderful time really. Following four years in Hong Kong I really wanted to come home with my kids and I started to feel less than satisfied. I was just getting richer and richer, playing the same old games, maximizing margins, making more profits, selling things which were really unnecessary and unneeded. So that started gnawing at me and it took me a few years of that and to the point when I just got sick of it. Eventually I said no I don't want to do this anymore. I gave it up and came home and I've never looked back, in fact I should have done it 10 years earlier.’