Walter Cruttenden is turning gamification on its head in the fintech space. After pioneering the micro-investing platform Acorns, he then turned his attention to micro-earning, bringing his innovative ideas straight to the source: games and the gamers who play them. His new company, Blast, allows gamers to save money simply by doing what they already enjoy. We caught up with Cruttenden to ask him about how to solve the difficult problem of saving, what he finds compelling in the fintech space, and how to ensure that more of the population is benefiting from fintech tools and services.
Brandon Huang "BH": Acorns has become the leader in spare change investing — you helped people save more than $25 million just in your first 8 months. Why do you think it took off so quickly?
Walter Cruttenden "WC": Those savings are now pushing a billion dollars, but Acorns grew quickly for multiple reasons. Making a big decision small was key, but of course great UI, UX, and efficient UA also play major roles. If the app isn’t beautiful and intuitive, people don’t want to use it. Our team understood this and we spared no effort in making a great product and a rewarding customer experience. This is the essence of any strong brand.
BH: Savings is a famously hard problem to solve—most people don’t think about it, prioritize it, or think they can do it effectively. How did you change that perception with Acorns?
WC: As our behavioral economics advisor, Shlomo Benartzi, likes to say: "You can’t change people’s behavior very easily. But if you can attach a positive outcome to something they already do and love (like spending or playing games), then you can change their lives.” So we really didn’t change anything at Acorns—we just attached a positive outcome to an existing behavior.
BH: You make that sound easy; were there other challenges, technical or otherwise, that you weren't necessarily expecting when you started out building?
WC: Oh, there were plenty of technical challenges, including finding highly talented engineers, coming up with a great design (after multiple attempts), building an Admin System that regulators would approve, and getting the whole backend to work seamlessly with our omnibus self-clearing broker-dealer platform. But the right product market-fit (linking spending with investing) was the real driver.
BH: As Acorns grew, how did you observe its user base changing? Where do you think we still need to go in order to ensure that more of the population is benefiting from fintech tools and services?
WC: Our base grew from millennials and male early-adopters to people and all genders and ages who just want a simpler way to invest. Alas, 46 percent of the population still has less than $400 in savings, so clearly a lot of work still needs to be done. This is why we started Blast to complement Acorns—to reach even more people in more ways—at their point of passion.
BH: Tell us about Blast—what’s your mission and what are you building?
WC: Blast turns virtually all video games into investment channels or tools through trigger savings based on in-game activity. Funds are held in an omnibus savings account paying the highest possible rate of savings, currently 1.0 percent. It also allows the user to earn dividends on top of the interest for going on missions: trying and testing new games, or achieving new levels in existing games. Combining the two, our gamer savers are actually seeing returns more like 6-7 percent during our beta phase, while playing games! Also, our game company customers get more engaged users. It’s a win-win.
BH: How did you decide that this was a winning formula? Did you experiment with various other iterations before figuring this out?
WC: There were a number of factors. It began with a gut feeling that everything in the future would be more aligned with things that people truly love to do. We know there are 2.6 billion gamers worldwide and mobile UA is growing at a terrific rate. The Mary Meeker report last year identified that a whole generation had grown up playing games, and game-based interfaces and experiences were seeping into every industry. But we noticed financial services were behind the times. And yes we did do a fair bit of testing to see if gamers would indeed enjoy saving and generating incremental income through games. Indeed, they were so enthusiastic they practically designed the product for us, including our leaderboard!
BH: Gamification was a huge buzzword a few years ago, with the rise of social apps. But it never really came to fintech in as big a way as people might have expected. So why now?
WC: Rather than trying to gamify investing or savings, which as you noted hasn’t worked at scale, we turn all existing games into ways to micro-save and micro-earn. We believe that by turning the formula upside down like this—investitizing games, rather than gamifying investments—we can tap into already huge audiences and ride the coattails of the world’s biggest games. Our goal is to make saving so fun (by embedding it in games people already love) and so rewarding (paying high rates of return and micro-income) that millions will start saving or be encouraged to save more.
BH: Pulling back for a second, I want to ask you about scaling. In order to keep up with demand, some of your previous companies scaled quite fast. We’re going through some of that too at Plaid. What was that like? How did you get the support you needed?
WC: Yes, scaling is always a challenge. Acorns was my fourth startup, but with each one, time passes and there are more tools that can be leveraged. Today, we leverage the ubiquity of the smartphone and app stores, and utilize AWS, Plaid, and other cool infrastructure to grow even faster. None of this existed 10 years ago. Building on the latest successes also makes it easier to attract a very smart team early on. Smart people like to play on the edge of innovation.
BH: After the success of Acorns, what made you want to do a second act in fintech? Why do you find fintech so compelling?
WC: Acorns focuses on micro-investing whereas Blast is helping people micro-save and micro-earn through games. I study history and philosophy and have always believed that in the future, people will make money doing what they love most (as they did in the very distant past). Because there are now billions of gamers worldwide, playing for hundreds of billions of hours, I felt it important, and advantageous, to attach a positive outcome to all that time and money spent in this activity. To make it work was the challenge. We actually had to build an applications service layer that ingests game data, similar to the way Plaid ingests banking data, to allow our gamers to set triggers and save automatically through game play. It now works with virtually all mobile games and we support some of the largest PC games like Counter Strike and League of Legends, with more coming soon!
BH: One of the challenges with fintech is that the existing system is so entrenched, most apps and services are being built on top of or within that system. What are the biggest challenges with building a platform on top of an existing industry?
WC: While it is true we need to interface with the traditional banking industry, Plaid makes it slam dunk easy. This allows companies like Acorns and Blast to focus on micro-investing or micro-savings, and create great customer experiences, without building everything ourselves.
BH: How do you think traditional financial services is evolving—what has evolved since you first started Acorns, and what's still lacking?
WC: So fintech has merged with investing to create robo-investing. We are merging fintech and gaming to make savings more accessible and exciting. Fintech and the insurance industry are merging to reduce costs and create all sorts of on demand solutions. And I just heard fintech and HR are merging to commit employers to automatically payoff student loans as part of the employment contract. Innovative ways to buy and pay for things are like rails to the locomotive of commerce. The only thing lacking is imagination.
BH: You mentioned that Blast is your fourth startup; if you could go back and give yourself advice on your first start-up, what would it be? / What do you wish you knew as a first time founder?
WC: What a question! Part of me thinks first-time entrepreneurs are better off not knowing all the trials and tribulations they will face creating new companies and new industries. But seriously, I would say think bigger and go bolder.
BH: From a social psychology perspective, what have you learned about using gaming techniques to incentivize user behavior?
WC: It all gets back to improving outcomes from existing behaviors. Let people do what they love and enjoy—try to make it even better for them—and we all win. It’s that simple. Check out Blast.com!
BH: What do you want to see two years from now?
WC: I expect to see more people doing what they love. It’s the way things evolve. There is a whole science to it, as I described in my book Lost Star of Myth and Time. Sure there are ups and downs. But there has never been a better time to start a new company. Lots of people waking up right now! What a wonderful world.