Customer Case Study with Philip Picariello (VP of Finance & Ops at Stocktwits)Stocktwits is a platform for over 6 million users to share ideas and insights about stocks and the financial markets. Founded in 2009, Stocktwits has raised almost $50 million in venture funding including a recent Series B financing. Their investors include Foundry, True Ventures, ffVC and Social Leverage.
You have a ton of experience in financial services. Why use Meow versus a legacy bank?
“Asset management fees are incredibly overpriced for just buying U.S. Treasuries at legacy banks.
We have seen fees range from 25 to 100 basis points (or 0.25% - 1%) for an asset manager as well as a markup from the trading desk.
These management fees make no sense for something as simple as a laddered U.S. Treasuries portfolio compared to building a full blown portfolio across multiple asset classes.
It also comes down to service and not just being another client number having to talk to multiple people and red tape to get adjustments made to the product.
And it just wastes a lot of time. We have other providers and you get some support email that takes hours and days to get efficient responses on.
What makes me feel valued?
There is no red tape or bureaucracy.”
But what about the legacy bank “free” money market funds?
“Money market funds always have an expense ratio meaning you are paying something. Depending on the share class, those fees can range between 25 and 100 basis points. Always look at the Fund Fact Sheet. When looking at Government Money Market funds, inquire about the approved repo collateral as some funds will take Agency Mortgage Backed Bonds which might not align with your firm’s investment strategy. And based on Rule 2a-7, those funds are required to carry certain daily and weekly liquidity buckets to fund all investor outflows. Based on your company’s cash needs, a dedicated portfolio would better allow you to optimize your cash’s return on a risk adjusted basis.
However, more importantly these money market funds are mostly omnibus accounts which means your funds are stuck with everyone else and you don’t have a direct relationship with your own cash.
But why don’t you just go to TreasuryDirect (government website) to buy Treasury Bills?
“I could, but it’s not an efficient use of time. Treasury Direct allows for the purchase of the Treasuries in the primary and secondary market but also requires you to set up a relationship with a brokerage firm if you want to liquidate those securities. So now I need two vendors to do what Meow can do for me."
Anything else that you find important?
“I looked under the hood at Meow. You need to when you’re parking your cash.
And that’s what matters for my investors and board.
You guys are the tech platform on top which makes it nice and easy. And you’re hyper transparent about the fees showing all yields in the dashboard net of fees which I appreciate.
Look, every startup works hard to raise their money.
They want to invest their cash and extend their runway. And it doesn’t make sense to pay it all in fees which is why I love your Costco model for financial services. Cut costs and keep it transparent for the customers.”
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