Ryan Rafols is the founder and CEO of Newchip. This service is an “Amazon-style” funding marketplace providing investors one place to “shop for” equity deals across a wide-range of leading investment portals. In May 2018, Newchip’s investing app was ranked in Apple’s Top 100 Finance apps list, ranking #1 for startup investing.
The platform and new app has been designed to allow both seasoned investors and new everyday retail investors to invest in pre-IPO companies, securitized tokens, blockchain companies and real estate deals. To discover more, Digital Journal caught up with Ryan Rafols.
Digital Journal: How, in general, is technology impacting on society?
Ryan Rafols: Can you imagine a world without it? I come from a missile defense background so I think a lot about these things. If an EMP blast went off above the U.S., we’d be sent back to the stone age. The majority of the population would die within 48 hours. That is how dependent on technology we are… and it’s scary sometimes.
When you move from “production” societies to “consumer”, which we have just about completely transitioned to, you can no longer survive unless you have a 3rd world country subsidizing the cost with cheaper labor.
The real question is, what will happen when technology has taken over all of civilization, will technology and robotics be able to subsidize everything for everyone? This utopian socialist dream, like all utopian fantasies, is always built on a cheap, disposable workforce or free money. I’m interested to see how it plays out and count myself as one of the few people focused on building the great infrastructure and vision needed to provide “everything for everyone”.
Overall, technology has dramatically improved the lives of billions of people; from the convenience of smartphones to the application of artificial intelligence to solve some of our most pressing issues, to saving my entire life in the cloud- it has allowed businesses to move faster and thrive, which in turn has positively impacted the consumers that benefit from these products. It’s our greatest strength and our greatest weakness.
DJ: Looking at investing specifically, what types of technologies are disrupting the system?
Rafols: For as long as most can remember the big financial institutions and Wall Street have had a chokehold on the industry, you see that right now with the new bank charter Fintech laws getting fought against by the states, they don’t want innovation in the space if they can help it as it kills the bottom dollar. There has been a gradual and fundamental shift as more and more disrupters enter the space looking to change the way people invest though and that’s what we’re passionate about.
I think the biggest change has occurred as a result of people no longer feeling indentured to rely on their brokers, financial advisors, and bankers. More than ever consumers have a say in how they save, spend, and invest their money and they don’t want to be at the mercy of a fund manager that doesn’t care about them.
They can invest in companies they love, exceptional entrepreneurs, and products and causes that they believe will help change the world. And most importantly they can affordably do it. Yes it’s the highest risk and highest return investment class, but if you make it affordable, people can diversify into it. I get asked a lot who this will affect most, and yes it’s the everyday American but it’s also the Angel investor – it will affect the middle class the most because many are investing in this asset class and it’s extremely expensive and hard for them to keep up. Now they have much more opportunity than they did before.
DJ: Is mobile investing catching on?
Rafols: Absolutely. More than 60% of people are accessing the internet via mobile devices which helps account for the massive user growth of companies like Stash, Newchip, and Robinhood. Millennials are investing at record rates and not just them. Grandparents are no longer locked to landlines, technology is becoming easier and easier to use, and companies are focusing on the overall “user experience” as well as making everything simple with tutorials, instructions, and a focus on customer service.
DJ: What are the key benefits?
Rafols: Today, everything is transactional and this couldn’t be truer than with money. People, in general, are becoming more and more aware of the inefficiencies of big finance as well as the almost constant reporting of fraud. People want to feel like they have their money under their mattress in terms of control and access, but they want the protection of a bank vault and 24/7 access. We’re taking private equity, an area that has forever made people feel that only the financially savvy Wall Street people are capable of doing what they do and it’s just not true. Today, there is an unprecedented level of education available that can help people learn how to safely and responsibly invest in the people, causes and products that they care about. That’s what the mobile banking and investment revolution is bringing.
DJ: What types of social trends are driving mobile investing?
Rafols: We hear about social impact a lot and it’s a top driver but it isn’t the only driver. It comes down to a core belief that millennials and Gen Z want to invest in companies with good values, ethics, and morals. They often don’t want to invest in irresponsible companies or companies with any kind of PR issues. There is a strong passion behind charismatic leadership as well even if it means holding an investment longer than they’d ideally like. Elon Musk is a great example of this.
I look up to him myself, however, some of his recent antics have become a bit of a blemish. That being said there is a level of transparency with Musk that you don’t often see in large companies i.e. Enron, Wells Fargo, Experian etc. In an age when a single tweet can send your stock up or down, it’s hard to see the value in social media sometimes, but it is driving investing.
I think in an age where everyone is a reality star and all of us are becoming mini-influencers, everyone is on the stage, and ultimately that leads to people voting them up or down – and if you can do that with money and make money doing it, social media will continue to be a top social driver of markets. Which is both a good and bad thing – the mob is often wrong but the due diligence of the crowd is invaluable.
DJ: What is a good examples of mobile investing apps?
Rafols: I obviously love our app but personally I like Stash and Robinhood. Robinhood is a little less friendly for new investors but I think it prides itself on its audience, whereas Stash is for anyone- which is what we are similarly trying to bring to private equity.
DJ: What makes for a bad example?
Rafols: They tend not to make the top ranks but in general, anything that is too difficult to use, that is not friendly, and that I can’t personally figure out. If a fintech leader cannot use or understand your app, your goals, or even how to make a purchase, then you’re failing and it’s an almost certainty that your users feel the same way.
DJ: How will digital technology shape investing in the future?
Rafols: I really speak to this transactional world that we are growing into. Everything at the end of the day has a value and everything has a price. I believe that is the future we are moving into – a more open future with more transparency into “cost”, from what goes into ATM fees to what it costs to replace the tires on my car, and all of the competition and margins in the middle. Ultimately the consumer will always win in this case hopefully, or mega corporations will take over, lobby to prevent new participants, and there will be monopolies and price gouging.
Companies that are able to innovate, cut out “people” and “emotion” and simply get to the bottom dollar, will be successful. However, this is also this rubber band effect that too much of one side always pops back – leading to segments of society preferring customer service and a focus on service to drive ROI.
There is no cookie cutter solution, to be honest, and it’ll always be a balancing act- that’s why I live by the motto innovate or die.. evolve or die. It’s a brutal world and we’re all competing for the same resources, so we have to develop the best technology to “win” not just for our company but for the entire population to continue growing at the rate it is and this planet be sustainable.