A Stanford Alumni in computer science, Satyen Kothari spent 15 years in Silicon Valley. He revolutionized the digital payment system in India by launching Citrus Payments, that he sold for $130M in 2016. His new venture Cube Wealth is aiming to democratize investing by offering a host of investment products under one roof. The five-time entrepreneur chats with Morningstar about how his firm is differentiating itself in the online investment space.
Many apps/online investment firms have sprung up which help investors invest in mutual funds. How are you differentiating yourself?
Cube Wealth is for wealth creation. And we don’t believe having just mutual funds translates into the right portfolio for every stage of life and every person. At the same time, we believe too many choices are confusing too. Hence, we provide a variety of assets for different stages of life and different levels of risk, but we also carefully select these before adding them to Cube. You as an investor get the best of both worlds - variety and quality.
Our idea is to simplify access to quality investments for busy professionals. The biggest convenience we bring to users is having their entire portfolio tracked at one place and that too guided by quality money managers who have at least a 10-year track record of returns above 20 % as a cumulative average per year.
You allow Indian investors to invest in US stocks directly. How has been the response and what was the rationale for launching it?
The US is home to some of the most innovative and impactful companies of our times such as Apple, Google, Amazon, Microsoft, Tesla, Facebook, etc. However, Indian investors cannot buy a piece of these business easily. With Cube, we handle everything from sending money abroad to opening your US brokerage account to helping you create a global portfolio from over 3,000 stocks and Exchange Traded Funds (ETFs). All via the same Cube app that you use for your India portfolio. One. Simplified. View.
Investing in US stocks does not only help you diversify your portfolio but also allows you to regularly send money abroad for life expenses such as college education. Moreover, it is a hedge against the value depreciation of Rupee as compared to USD. Our initial users are now proud investors into some of the best-performing stocks in the world and they are simply loving the seamless experience.
How has gamification helped you build stickiness on the Cube Wealth app?
Even when we know what's best for us, we generally find it difficult to get into the habit of doing things. With Cube Games, our idea is to cultivate investing discipline among individuals by creating a daily or weekly habit of investing and seeing how quickly your money can grow. On top, there are exciting rewards and great returns. Like any good game, Cube Games are fun and help reinforce positive habits.
Besides mutual funds and PMS, which other products do you offer?
We have twelve asset classes, ranging from the short term to midterm to the long term, and also divided by low to high risk. Some of our investment options, other than MFs, include equities, gold, foreign stocks and long-term equity advisory. Last year, the company tied up with a leading online peer-to-peer platform Faircent, through which users can directly invest in P2P lending, which can return between 11 to 20 %. Besides, we also provide emergency fund options which have returned as much as 7.5%.
Your platform also offers PMS. Tell us more about this service.
Most HNIs go with PMSs for their aggressive, long term portfolio. There are over 700 such schemes in India. Cube’s team has curated and picked PMS to offer to our users, and the management team has personally invested in these funds as a show of confidence. We have done the work of selecting - our users get to enjoy the simplicity.
SEBI has asked PMS players to launch a direct plan which bypasses distributors. How do you see this rule impacting your business?
Cube Wealth is a multifaceted product with a healthy distribution of users across asset classes. Those who use Cube Wealth have gotten accustomed to the hassle-free experience and quality we offer. Business models will evolve as the industry evolves and we are comfortable with that fluidity. Our primary focus is to do right by the customer.
Which new products are in the pipeline?
Soon you will see new offerings that start adding intelligence around your existing portfolio.
How do you invest your personal money? You also make investments in start-ups. What kind of businesses attract you? What filters do you apply while shortlisting investments?
Of course, I invest in Cube’s assets. Plus being a five-time entrepreneur, I invest heavily in start-ups - both directly and as a partner in a few funds. I am also an active investment committee member in the India chapter of Stanford Angels and Entrepreneurs, where we have invested in several well-known companies such as Unacademy, KopyKitaab, and others. And finally, I invested in both my India ventures - Cube and Citrus Pay!
What would be your advice to budding entrepreneurs?
Solve what you are passionate about. Ensure the problem you are tackling is big enough to justify the pain you will go through. And be grateful - for the opportunity of our era that lets you dream and go for your dreams. It wasn’t always the case.
How do you unwind?
Travel, great food, exotic drives, and being the best dad I can be.
