BE: Hi, everyone, welcome to the podcast. I'm here today with Deborah Yang who is the CEO of Daizy. So Deborah, do you want to tell us a little bit about yourself? Where you're zooming in from, a little bit about your story as the CEO of Daizy?
DY: Sure. I'm Deborah Yang. I'm the CEO of Daizy. And I'm so thrilled to be here! I am the CEO of an investment app that's building a community of conscious investors. What we do at Daizy is we analyze the risk and sustainability of US-listed stocks, ETFs, and we cover over 200 cryptos, and also provide a complete portfolio view. Before Daizy I was the Global Head of ESG Indexes at MSCI serving many of the world's largest professional investors for more than a decade, and I was also named Financial News’ “A hundred Most Influential Women in European Finance,” and I'm here calling in from Paris today and such a pleasure to be here.
BE: Thank you, Deborah. Not a bad place to be calling in from, to say the least. So a little bit about Daizy. You know, the motto, the slogan on the website is that Daizy is the investing app for people who care more about just performance. So if you care about any other aspect of the impact that your stock has on the world, Daizy is the place for you. With such a value-driven company, Deborah, how do you infuse your personal values into the work that you do every day?
DY: I have a very basic mantra that I'm a very stubborn believer that you could marry commercial and do good at the same time. And they can work well together. I think commercial motivation is very strong and effective. But it's also well placed alongside the goal of doing good. There are plenty of people who make money just for money’s sake. But when you're driven with a passion to do something positive, I think you become even stronger. And so that is a basic mantra that I have. On the fintech side, I think there is a revolution of democratization of trading with $0 trading, with RobinHood or Alinea breaking through women's communities. $0 trading means everybody can trade, the do-it-yourself investment movement has taken off. I think the pain point for me is that building investment is different from gambling. And that's not super easy. No serious professional investor would disregard risk, diversification, and today, sustainability, they should at least consider it. And so these decisions are not accessible to individuals. And so with that information asymmetry, it's not a fair playing ground. So for us at Daizy, we think every day, we want investors to have access to the insights, eventually, automated tools to be able to access better outcomes, democratize the mainstream, and make investing as opposed to gambling decisions.
BE: Yes, absolutely. And just so we have a sense of what the space looked like before platforms like Daizy, if you wanted to get a sustainability analysis of your stocks, how would you do that? Is that even possible prior to Daizy?
DY: Yeah, I think many of the next-generation investors went to TikTok and YouTube and they had to piece it together, they grabbed snippets, but it was never personalized for your portfolio, the stocks you care about; you're doing a deep dive on one particular company, it's not easy. And so we wanted to make it as easy as possible. So professional investors have created great tools, but it's just not accessible for everyday mainstream investors. And that was our goal, just to break through that and democratize the insights and information and help people become more informed as investors and eventually also become conscious investors.
BE: Absolutely. And the sustainability analysis feature is just so interesting. I played around with it a bit, both on your website and in the app. One example in particular, on the website, you show Tesla's emissions in relation to the global warming rate. Are there any other companies that are equally if not more shocking to see visualized on the chart?
DY: Yeah, thanks. Thanks so much for coming over and downloading the Daizy app. What you can see is, for example, Tesla has 2.4 degrees warming, it's still above the 1.5 degree Paris Accord target, but it's doing a great job compared to, let's say, General Motors, they have 4.3-degree warming. But the story is much more complicated than that. So General Motors said they're going to reduce emissions to zero in all vehicles by 2035. But guess what? That's more than a decade away from collecting carbon from their emissions. But on the other hand, General Motors has a woman CEO, Mary Barra, and they have 50% women on their board, which is exciting. That's versus 25% of the s&p 500 market. So they're doing well. So now that the data is out there, you can make a decision ‘Do you prefer Tesla? Do you prefer GM?’ These are different types of data that you can decide, ‘What are your priorities?’ Is it about women’s empowerment, the belief that they will be making the right decisions? Or are you talking about right now who's better on the carbon footprint side?
BE: Yeah, and on this idea of, you know, equal access to information, that's an amazing tool for us to practice conscious inclusivity. And especially in the FinTech space, I know, we chatted about this a little bit earlier, but this is a male-dominated space. So what are the best ways for those of us in the FinTech or the financial services space to practice inclusivity financially, in an environmental sense, or otherwise?
DY: Yeah, first of all, I think it's really important to think about why people are investing. So a lot of people are interested in aligning their personal values alongside your financial logic, meaning you want it to perform and make money and be risk-controlled. But understanding that you don't always have to have a compromise about personal alignment. That's the first thing I think, that's for everybody. It's for men, for women, for all diverse communities, it's really to understand the why. And that's the motivation for a lot of investors today is they want to customize their values with their portfolios. And then there's the financial logic. So sustainability has had evidence of risk management benefits as well as occasionally the ability to outperform if you select leaders in the category, or if you're selecting companies that have the potential of going up, or you start selecting companies that have the potential of blow-ups. And so there is a financial logic behind this. And what we're finding at Daizy is we have about 80% of our users naturally come to us looking for this information. And they're men, we value that audience, I would love to reach out and get more of the women, the different diverse populations. And we do have to target women and consider the different gaps that are out there, including the income data gap, the investing gap, and ultimately the wealth gap. So I do a lot of extra effort to try to outreach to women, and I'm so happy to hear that you have parity in your audience. And we would love to have people start thinking about investing early. And one there are several studies that talk about women being very risk averse. I think it has to do with women not necessarily talking about investing and investing can't be a dirty word. So, if we could start talking about it then we wouldn't feel so risky or risk averse towards this important category.
BE: Absolutely. I totally agree with what you're saying there. I think for women, especially younger women, college-aged women, they hear ‘investing,’ and it's inherently just the word itself is associated with risk, when in reality like the best investing stress strategies are really not very risky at all because you're thinking in the long term and you're diversifying your portfolio. So I agree with the concept of the need to separate the two notions from each other there. So, the Daizy App is a really complete and conscious picture of a company's relation to society, to the environment, and overall risk. Is there anything that you wish you could show your Daizy users but haven't quite been able to quantify yet? Are there any missing pieces of the conscious investing puzzle today?
DY: Gosh, we're at the tip of the iceberg in terms of all the things that we could do. Today I'm really proud of what we have today. So, today our most popular features you have a stock or crypto in mind and you come into the Daizy app and you do a search on Tesla or GM or any other stock, ETF, or crypto and then you'll be able to see some of the insights on risk. How diversified is your portfolio? What's the environmental impact and social, what is the corporate nutrition around cards? So we're really proud of what we have today. And we can roll all this up into portfolios or portfolios across multiple brokerages that you have, it could be on Alinea, on RobinHood, and so forth. And we can consolidate that and give you rolled up information or insight. I think that's just the beginning of what we can provide. It's really exciting. So, there are gaps in coverage and the smaller gap, the smaller companies, there are some gaps in international companies as well. And while we're beginning to capture some of the crypto risks, there's so much more that we could do on the sustainability of crypto. So, the data is just maturing, and we're doing our best to try to aggregate, simplify and make it available, so that you can listen to the narrative of your portfolio from a risk and sustainability point of view.
BE: Yeah, and I'm glad you brought up sustainability in the crypto space. You know, Mooch, we aren't quite in the crypto space but we do DeFi rewards, so, we store funds in stablecoins with the ability for our app users to earn interest on those holdings. So, I see the merge is coming up and crypto in general gets a lot of flack for basic lack of sustainability and lack of consciousness around buying and trading crypto. What are your thoughts on that space? And are you a crypto investor?
DY: Yeah, we have such great statistics on this. I am personally a crypto investor. And I think there is a lot of logic behind crypto. Because of the different correlations with the stock, cash, and bond risk assets they behave differently. Of course, during market downturns we have seen in the 1970s, when there's inflation, inflation regime, stocks, and bonds that are naturally not correlated begin to have a positive correlation on the downside. We're beginning to see that with crypto as well. So, it is a maturing asset class and it does have a value from the potential for outperformance on a risk-adjusted basis because they behaved differently. And from a modern portfolio theory point of view having a little bit of crypto in your portfolio could be useful and interesting depending on the price that you enter. Now there's a lot that we're still learning about the technology, how it can be used, and all the different platforms. There are 200 cryptos that we cover. So, each one I think stock or crypto selection is extremely important. There is an important concept that is just evolving. For example, is there enough liquidity when you buy them on the upside and when everyone's trying to get out at the same time? What happens to the potential price? I think there's a lot that's emerging in this space. And ESG sustainability is one of the most important topics. We all know that cryptos use a lot of energy. There's a lot of movement such as the Merge where they're moving to Ethereum to proof of stake versus proof of work. And I think that there's a lot of other ideas out there. Innovation is not about not using energy. It's about how we can be efficient with using energy and how we can use clean energy. And so more data that we have as these crypto organizations try to find the most efficient use of energy. I think there's a lot of opportunity in this transition.
BE: Absolutely. Especially with the use of clean energy in the crypto space. I think that's something I'm really excited to watch develop in the next couple of years. So, if you could guide the entire industry, not just the crypto industry, but basically the financial services industry as a whole, if you could guide all of us to make a change for the better, what would that be?
DY: After the financial crisis in Europe, the regulator mandated risk measurement to be reported on all funds; they use Value at Risk so that all funds could be measured across a standard measure of risk. I would love the portfolios to have much more information that's been reported about the risk for Main Street investors as well. Obviously, many people have been hurt by the market volatility and the crashes. And I would love that risk and sustainability were more broadly accessible for investors so that they understand their current position, let's say it's a very concentrated position, it's not well diversified. And you started our session today talking about ways to build a more immunized portfolio in terms of risk management, and I wish people had more access to this. I also believe what gets measured gets done, meaning if people were watching risk measurements and sustainability, ultimately, that would factor into their portfolios, and we would all be doing better.
BE: Absolutely. And it really reminds me of one of the foundational concepts in game theory which is that the number one cause of negotiation failure it’s a lack of access to information, basically asymmetrical information. And this is, as an example, that people don't have access to all of the information plus they cannot make the best-informed decisions about how to proceed with their investments and what their finances are. So, it's interesting, you know, these principles are constant throughout all of these different spaces.
DY: Absolutely, I completely agree with that. And I think that the Gen Zed community, they are actually one of the most amazing generations because they're the first ones to go and invest so early in their lives, they have a huge potential because failure is the ability to take a risk, and you have to fail in order to succeed. And they're the ones who took a step forward. And I think they have the Gen Zed and the millennials have a chance to show the rest of the world how investing should happen.
BE: Absolutely. Gen Z is a growing economic force. I believe by 2035, in the next 10 years, 15 years, Gen Zed, Gen Z, like you said, is going to be the main economic force for good, hopefully. And, you know, they're like you mentioned, they're already a driving force for change in the financial services space. What sets Gen Z apart in their investment strategies from other age groups in your app? I believe you said they make up about a third of your audience. Is that correct?
DY: Yeah, yeah. So, about half of our audience are more actually millennials and Gen Zed, so, a third are Gen Zed, and the other half are millennials, and then we have all age groups represented. One thing, well, we have 1,000s of downloads, we have 25,000 users, and we served up a million insights. We've got about 10,000 portfolio users that have uploaded their portfolios from all over whether it's Fidelity or RobinHood, and so forth. And we've done surveys on different generations and what's important to them: number one per Gen Zed is sustainability. When we ask them why they come to Daizy they would tell us they came primarily because of their interest in sustainability.
Of course, we only have information at the aggregate but we can also see that many of the portfolios have tech or mean stocks or consumer stocks and that they are very concentrated. This generation has huge exposure to crypto or some exposure to crypto compared to later generations who tell us they won't touch it. And of all the users that we surveyed 50% already have exposure to crypto. So, this is a widely used asset class, and about 25% are saying they're still interested in participating. So, it's a really interesting generation. I think, furthermore, the baby boomers use financial advisors for their advice, whereas the next generations are very skeptical of using financial advisors. And they're looking for a different type of solution with greater insights, automation, and servicing that's 24/7. So they're changing the landscape of investing and I'm kind of thrilled to watch all of that unlock.
BE: Absolutely. And now that we've touched on what Gen Z is changing, and what is the directional switching of the investment space, what do you expect to stay the same in the next 20 years in this space?
DY: Yeah, I think trying it is really important. People care about financial outcomes which mean the same truths hold to be true. So, the power of compounding – invest early, invest in a well-constructed portfolio that will lead to greater wealth, and financial freedom. So, none of those things change. And I am an ardent believer in Warren Buffett saying you should invest in the things that you know, and I know I did that for my personal life. I invested in the companies I always wanted to. To own especially during market downturns I tried to find the quality companies that I thought were amazing and try to enter in at early enough levels. I may not get to the bottom and the markets may continue to crash, but I'm certainly not hitting the top of the market at this point. And that's the same for Gen Zed. I mean they have a good understanding of products and companies that matter to them. An example is Tesla. I mean they've been really supportive of Tesla before probably previous generations. And again I go back to what I said earlier- I do expect that these investors will be some of the best in the world in terms of the best of all generations because they took risks. Many of them had bumps along the way. They've learned and now they're trying to learn how to build better portfolios and they're learning that early. They have their digital natives. And they expect more, better, and faster with the need for sustainability. So I love this vision. I think it's a really exciting time ahead.
BE: Absolutely. I think Gen Z over the last two and a half years has really been on a roller coaster of market conditions, so they should be prepared from here on out, to say the least.
DY: Yeah, I love what Gen Zed has done in terms of breaking the ground of expectations and doing things to disrupt the traditional world. Finance has a lot of mistrust built in. And I think it's time for us to build all the communities that we want to have and all the tools and insights and everything to be able to build the world of conscious investors as I mentioned.
BE: Absolutely. It's so exciting that now really for the first time we can build a financial services space not just in investing but in everything from credit to loans to, you know, the ability even just for women to get credit, you know, we have the chance to make a difference now more than ever and we can build the inclusive space that we want. So that's really exciting.
Final question here, Deborah, just you personally, I'd love to hear your story about getting into investing in the financial services space. And then if you have any parting words of advice for young folks looking to break into this space as well.
DY: Sure. So I've always loved numbers to back up business ideas. And 20 years ago I became a financial advisor and I felt the industry needed better information automation tools. Eventually, I went to work for a company called MSCI. That's an index company that automated the construction of portfolios. It could be any part of the market, the US market, global markets, any strategy value investing, growth investing, high yield any sector or theme, and then moved on to climate change and sustainability. It became really exciting for me because that was a space I was interested in for so long but it was really quite niched. And it really caught on. Because of this basic notion that financial materiality alongside doing good actually can come together. And that's where we had almost unanimity of opinion among professional investors that there is a climate risk, there is a sustainability risk, and that should be factored into your portfolio building. So, I was thrilled to do this. But there quickly I realized ‘Wow, everyone's investing but retail investors or mainstream investors don't have access to this’. And it was a very complicated world that's been built by professionals. Let's break it down. Let's make it easy. This stuff shouldn't be that hard. And let's give it to the rest of the investors out there. And that's why we go, Daizy, I mean, the ETFs and indexes that were constructed, became so complicated that there were more ETFs and stocks out there. So ETFs were meant to be simplifying. But now when do you use an ETF? When do you use stock? When do you know how you put it together with crypto? I think there are great tools that should come out and should be built and we're excited to have one part of it so far, and we're happy to have a community of others who are building as well. Because I think understanding risk, the ability to sleep at night, and being able to listen to the narrative of your portfolio- I think everyone has a right to this.
BE: Absolutely. And do you have any parting words of advice for young folks looking to break into the space?
DY: Yeah, I think being bold without going ‘All-in’. I think the whole notion of poker is where you go ‘All-in’. I wouldn't do it in these types of markets. I really believe that you want to be bold. And when I say ‘bold’ I mean start to invest. But do dollar cost averaging, start putting your toes in the water, start winning and failing, learning from your failures, and then putting in a little bit more so I do want people to learn along the way. And I think there is a strategy with gambling and there's a time when you go All-in, but I wouldn't do those things right now. I would definitely find a way to be bold just by acting.
BE: Thank you so much, Deborah. That's Deborah Yang of Daizy. It's an app for conscious and social investing. Check it out on the App Store. It's amazing. Thanks for listening to everyone.
We spoke with Deborah Yang, CEO and Co-founder of Daizy, a sustainability insights app for conscious investing. Deborah talks us through sustainability and investing, the marriage of commercial and the ability to do good, and the revolution of democratization of finance.
