CJ: Okay, here to talk to you about Noyack. I’m CJ Follini, founder and CEO, and I have Sam Suching. Sam, want to introduce yourself?
Sam: Hi, Sam Suching here. I’m the co-founder, and I lead up BD and strategy for us here at Noyack. We are the hub to learn, interact, and invest in private markets, providing a community with education and expertise.
CJ: This is why we’re doing this. $4.4 trillion—with a T—is going to be inherited by Millennials and Gen Z in the next 2.5 years. $38 trillion in the next 20 years. Those numbers are undeniable and they are massive. But there’s a behavioral problem as well. One, they already are primed to adopt private—excuse me, primed to adopt private investments as a significant portfolio allocation. They believe it’s the only way to truly create generational wealth versus just getting rich quickly.
Sam: Well, and I think the reason that is, CJ, is just that, you know, the Great Recession of 2008-09 really left a bad taste in their mouth, and they don’t trust the same media outlets that their parents do either. So there’s a number of reasons why that is. But you can see in the numbers here, they’re already averaging a three times higher allocation to private markets than their parents did, even if it might be a lower dollar amount, at least to start. And the acceleration—the year-over-year growth—is accelerating far faster than my generation, Gen X. And you’re right, I think there is a mistrust. Every FTX, every SVB, every great housing crisis, and on and on, undermines their belief in the system. And frankly, I don’t see a future for independent financial advisers when there are the tools for all of these investors to educate themselves and empower themselves.
CJ: And we want to be at the forefront of that. Obviously, the problem, Sam, too complex by design in order to perpetuate their own need. The advisors create complexity. They’re trying to validate why they exist. But in a self-directed world where Millennials and Gen Z are moving towards, that’s going to be harder to maintain. Plain spoken, direct, straightforward information—fees will always be more valuable. The fragmentation, moving from platform to platform, you have to be holistic. When have you ever, Sam, wanted to go to five places to do one thing?
Sam: Right, I won’t, is the honest answer.
CJ: You are. And you are—wait, Sam, are you a Millennial or no?
Sam: Actually, Gen Z. Of course, you’re Gen Z. You’re 26, 27?
Sam: It varies. I was born in ’96, so some people put me as the youngest Millennial or the oldest Gen Z.
CJ: Actually, you’re a Zillennial. You might be a cusp Gen Z. You are the true Zillennial.
Sam: I didn’t realize we had a Zillennial here. Sam is also Zillennial. Wow, we’re chock-full of Zillennials. Love it!
CJ: Inaccessibility that’s existed forever, because that’s really because the CAC is too high. So they have to take high minimum checks. And yet they’re reinforcing or they’re accelerating their own demise by the inaccessibility, giant minimums. Needless complexity is making what should be a much greater adoption impossible. Let’s change that for aspirational investors.
Sam: Good agreement. Learn, interact, community, and access to investment. Learn, interact, and invest. The holistic one-place hub. This is, for me, whether it’s Noyack or someone else who does this, this is the win. And frankly, the market is ready and primed to accept this. That’s why our tagline is “Access Granted.” Education, research grants access, community peers, and also grants and accelerates access. And obviously, the direct enablement is the access granted.
CJ: And I think it’s worth noting, CJ, that we don’t want to disrupt the whole IR and traditional financial community. We want to bring them into this new investor perspective and new tech stack and be their front end. So this is not a zero-sum game; it is positive-sum. It’s a question of how do we not all duplicate spend on tapping into these huge dollars you can see on this slide that are going to flow to Millennials and Zillennials over the next five to ten years.
Sam: Couldn’t agree more. Obviously, we want to bet on a year-over-year growth. We want to bet on a demographic and an obtainable market that’s growing. And while the absolute amount of assets and the addressable market is larger and considerably larger in Gen X, the adoption is less and it’s declining. So the future is clear and the future is in younger aspirational investors, greater adoption, growing assets.
CJ: Tell me what we’re thinking here as in terms of value-based pricing.
Sam: So essentially, we’re sort of turning the model on its head. Whereas most traditional financial institutions and asset managers have always focused on the transaction, you know, their regs or whatever product they’re selling, we’re doing the opposite. I mean, that’s sort of the carrot at the end of the funnel for us. We want to monetize throughout the funnel. You know, whether you come on as a free audience member and then you might convert by buying a single all-out report, a due diligence report on an investment offering that we’ve reviewed, and then ultimately becoming a subscriber and an investor as well. The idea is that we’re deploying SaaS metrics that have been around for 10-plus years now into the financial industry, which is still stuck on the 2 and 20 model that is certainly older than I am.
CJ: So I think—sorry, Sam, but I don’t think anyone believes that the 2 and 20 is a value-oriented approach and yet they’ve never ever changed it.
Sam: Yeah, I mean, this is essentially talking about investment in terms of lifetime value and not in terms of, you know, a single paycheck when you exit your fund in seven years.
CJ: Yeah, I mean, it’s such a myopic point of view of your customer to extract exorbitant fees for every action rather than paying it forward. It doesn’t really concern itself with having that customer for life, and they should. I love the education as a service. I actually think that education and education as a service could be the greatest impact possible, especially for these demographics in the wealth-generating business.
Sam: Well, and this gets back to our point about inaccessibility. There are scarily few people who have $500,000 or a million dollars to invest in a private placement, but there are a lot of people who have eight bucks a month to dip their toe in the water and then ultimately get access to a private offering at a significantly lower subscription price.
CJ: More importantly, once they do, with the education and the community they’ve experienced, they might make fewer mistakes when they do invest that amount which is precious to them. It will have a greater opportunity for success.
The fees—well, those are two ways. I mean, obviously, private investment fees, but for me, I think that the private investment fees are the product extension, and they are a culmination of all of the education and research that has been offered and consumed.
Sam: Agreed. I think there still is a place for traditional fees, but they need to be aligned, lower, and transparent. That’s one of the areas we see from the research reports.
CJ: Ah, I see. This is all about your scalable investor acquisition. Go ahead, Sam.
Sam: Look at that—$3,200 for the typical registered investment advisor’s acquisition cost. It’s a lot of money. That’s the upfront cost to acquire, you know, a Gen Z or Boomer investor in the traditional way. And that’s both real cash down and in terms of labor cost as well. It’s utterly unscalable. I don’t know how many average clients an RIA has, but it sort of plateaus at some point because you can only scale yourself so much.
CJ: So what Noyack is doing is taking a funnel-based approach where we’re acquiring audience, consumer, subscriber, and investor. The CAC is spread out throughout the funnel and lower, and ultimately that helps our CAC/LTV ratio over time. So the unit economics actually work. If you take the old way and try to put some sort of digital lipstick on it and attract these new Millennial investors, it just doesn’t work. The economics fundamentally don’t work. You see these new platforms with a $600 subscription price per year. When you start doing the math around how much an average investor has to have deployed in that platform for the subscription prices or the monetization they’re charging, it’s unattainable for most investors and doesn’t make sense.
CJ: So our funnel-based approach is about lowering the customer acquisition costs and then nurturing investors throughout their financial journeys. Like we’ve said, most of these Gen Z and Millennial investors don’t have a ton of money right now, but they will in, you know, five or ten years. Also, no one learns in a linear fashion anymore; it’s all asynchronous. So to not present a multi-format, omni-channel method of learning with different types of content makes no sense and it’s going to be unsuccessful. I love the fact that, you know, while someone may only listen to or learn from a research report, many others only want to listen to a podcast or watch a video or video cast. And yet there might be long-form articles for others. Meeting people wherever they are in the way they want to be reached and communicated to is the ultimate success and impact.
Sam: Well, and the point is that the incumbents aren’t doing any of those different strategies. I mean, they’re sending out a report once a quarter on linen card stock, and that’s about the extent of their marketing effort.
CJ: Okay, so defensibility. Well, we all know that education and content is hard to do, so there’s an initial moat right there. Lowering the CAC attracts the co-sponsors, so I see what you’re saying. There’s a flywheel, there’s a network effect that will create tremendous scalability to customers.
CJ: I love the fact that future co-sponsors bring their own audience, which we then consume and add to our audience. Well, it’s virtuous—it creates liquidity, it creates engagement. And that’s why we want to position ourselves as, you know, a friend to traditional financial firms and RIAs and not as a foe. This is additive, true. It’s always a vectored approach with other firms. It’s, um, what they get you—they attract you, they speak to you. There is no virtuous cycle. It’s one. It’s really, I say vectored, but maybe it’s different.
Sam: Okay, economic scale in the funnel over time. I believe that. I think the previous network effect showed that to be true. Agreed. What this is really about is that, you know, whether we have three different products—we’ve got consumer, subscriber, and investor—and there’s a different LTV to CAC associated with each of those. It’s pretty expensive to acquire someone as a consumer. You know, we’ve got to produce content, we’ve got to get them first to our website as an audience, and then ultimately to purchase a report or another offering that we have on our website. That’s expensive in terms of CAC, and LTV really isn’t that good. But if we can nurture them over time and they’re getting a report once a year, twice a year, and then ultimately becoming a subscriber and investing, that is the on-ramp to the much larger opportunity, which is the aligned investment fees and ultimately our subscription product as well. And that’s exactly what this is capturing over time. This is split up by cohort, not by actual fiscal years. So this is, you know, again substantiation of our SaaS metric approach to financial investing as opposed to a transaction-based approach. And, uh, I think, you know, it’s visually pretty powerful, as you can see.
CJ: Well, I think the conversion—we believe that the conversion of a warm relationship that the customer subscriber has received value over time, the ask to become an investor, the conversion will be exponentially higher than, say, dialing for dollars, which, you know, crazily, the entire industry is still doing.
Sam: Yeah, I mean, ineffective cold outbound. I mean, ineffective is barely scraping the surface of, you know, how dire it is. But, uh, half a percent on email automation—it should cease entirely. The whole email automation is not working. But you listen—lower CAC increases conversion, lower CAC increases conversion story.
CJ: Okay, well, I’m glad we did a reverse build. We followed what you presented to me as Jeff Bezos and Amazon’s approach of manifesting the end of the build. And, uh, I think these are all very impactful. $100 million in assets raised—actually $105 million in assets raised—part of our minimum viable product and as well as our proof of concept. And it was really, I think you’re getting at, is that, you know, we built discrete offerings—five discrete offerings—before we built the platform to unite them. And this, you know, overcomes a chicken and egg problem because there’s actually inventory and real products with, you know, $100 million plus in gross asset value on our platform from day one. These are ones we’ve built. We certainly want to invite co-sponsors to tap into what we’re building as well in the future. But we think this is a really good, uh, really good foundation to start from. Like we’ve always said, five is on the way to 50, Sam. So, uh, the rest will be co-sponsors that are vetted and approved, and that is when that flywheel—that, excuse me, I keep saying flywheel—that network effect really takes hold.
Sam: Differentiation, clearly. Um, it’s amazing to me that, I guess, the difficulty of creating meaningful education and, um, in a multiformat has been so hard that everyone always takes the path of least resistance, even if it’s not the most successful. That surprises me. But I mean, we all believe, Sam, that this is the only way to success—is to educate first, uh, provide context, right?
CJ: Absolutely. And then ultimately to provide, you know, good investment opportunities as well. I mean, there are a few names on here, and maybe I won’t call them out, but we’re going to see what their returns are in a couple of years, and they’re not going to be good for investors because their fees are exorbitant and they’re hidden. And they’re not, frankly, doing what they say they’re doing.
Sam: True. Well, you know what, listen, at the end of the day, performance trumps all. Now, our performance can be evaluated differently, Sam, through what was our education valuable? Did it inform? So we have different metrics to be judged upon rather than just, you know, were your investments successful? So if we’re going to be truly holistic, we have to start on the front end and yet also perform on the investment back end.
CJ: Wondering about the siloed approach—should this really be included after the last slide, Sam?
Sam: You mean it’s duplicative?
CJ: Yeah, do you think so?
Sam: I think so.
CJ: What do you think?
Sam: Yeah, no, I think what it gets at is that, you know, this gets back to the fragmentation point, including among, um, the new entrants. And, you know, we’re exciting. We’re trying to solve it. You know, education—everyone has an insights tab on their website, but, uh, it’s not—it’s not a revenue driver for them. It’s not a P&L driver. So it’s an afterthought. For us, it’s an actual product. And that drives our network effect, whereas for them, it’s, uh, you know, a check-the-box to make sure it’s there for SEO or something.
CJ: Got it.
CJ: I’m really happy that we took the time to do this and, uh, you know, in how we’re building this fund, this fundraising effort so comprehensively. I’m glad that we really listened and talked and surveyed potential customers. We learned a lot, right?
Sam: Well, I think these speak for themselves. I mean, if we do the reciprocal of the one on the right there, the number is that 93% of young investors don’t speak to traditional financial advisers.
CJ: Shocking number.
Sam: It is. I can tell you with the faces in the room when I presented that, where most of the attendees were traditional legacy financial advisers at the Global WealthTech Summit when I was the keynote, they did not respond well to that. They saw their end in clear view.
CJ: Good start. We have a long way to go, right Sam?
Sam: Good start.
CJ: Yep. Why you shouldn’t—you know, content is hard and expensive, Sam, it really is. There’s a lot of people in the so-called wealthtech category. We’re pretty young, with the exception of Mah. Everyone else is. And we don’t care about sales value. Can those be responded to?
Sam: Absolutely. I think because we’re taking a funnel-based approach, you know, first of all, we’re young. We think we’re good at content. We know it’s hard; it’s going to be expensive as well, but we are capital efficient. Secondly, we have multiple shots on goal because we have multiple products. It’s not a binary transaction like most of our competitors are peddling. And lastly, I think it’s becoming increasingly clear to everyone in the industry that this cold outbound approach has run its course. I think, you know, it worked in the heyday of email. But if you talk to someone under 30 about how they’re going to be reached, it’s not via email. And that is fundamentally what we’re laser focused on over the last 18 months and over, you know, the next—.
CJ: By the way, it took me as a 56-year-old a long time to come to that reality that you and all the other team were so clear on. I was just grasping, or I was gripping that email—so that old legacy email outbound bias. We were great mentality for all it was worth, and it’s not worth anything. There is a way to nurture, but it’s not outbound email.
Sam: Yeah, agreed. And that’s what our whole approach is about. As I’ve said before, thank God for generative AI or thank God for image AI. It helped me a lot here. Great team. Good start. Really, I’m really proud to work with everyone.
CJ: Interesting things. I am super enthusiastic about working with IBM and Converge on the AI-powered personal risk score. What do you think about the reality of that by the end of the year?
Sam: I think New Academy is exciting. Good point. I do definitely think it’s attainable, especially with some of these new AI models and tools that have come out. It’s become much more so. And we’re going to be first to market with that. And then I’m also personally excited about the Academy product as well. You know, like we’ve said, most people just don’t know what a Sortino ratio is, and they don’t have to know. I mean, that’s not the point. But making this industry and market accessible to them is fundamentally why we’re here. And if they want a more rigorous entry into the private investing world, that is what the Academy is going to accomplish. It’s almost like the Academy could be the Rosetta Stone between the individual aspirational investor and the professional investment advisors. They’re going to need translation, right?
CJ: I think it’s an interesting idea to call it a Rosetta Stone.
Sam: Yeah, I think it’s a good analogy. Also, who said that? Tris? Also, “The Bridge” is another way to call it.
CJ: Or Coy said it. So, we can’t end this little presentation without saying we’re raising money. We’re doing it in a different way. It’s an open safe in three different tranches with three different discounts. The first tranche is $3 million with a 25% discount. We don’t want to take bandwidth every year having to do another round. So, we don’t do the same old, same old. It’s part of our mantra. We do things differently, and that extends to how we’re raising capital. But we have a great start. Thank you, Sam. It’s been great talking to you about what we’re about to get started on.
Sam: Likewise. Thanks, CJ.
CJ: All right. See you soon, Sam.
Sam: Bye.
