The new startup from Olaf Scholz's nephews offers investments in ETF portfolios for everyone. Fabian Scholz, co-founder and CEO of rubarb, explains how this works and why they named their start-up after the rhubarb plant.
In November 2020 your app was launched, can you tell us a bit more about it? Why did you found your startup, what problem are you addressing and how do you solve it?
With rubarb, we want to completely rethink the topic of "savings accounts". It is still only a fraction of the population that is willing to invest their money in financial market products. The majority still relies on traditional savings products, even though these hardly yield any profits in the face of low interest rates and inflation. We have therefore asked ourselves the question: Do saving and investing necessarily exclude each other at all? We think: no! If the hurdles for investment beginners are lowered, many more people may be willing to try their hand at the capital market.
And this is exactly where we came in and developed rubarb, an app that allows users to invest without much effort. The principle behind it is called 'rounding up'. This means that each user can link either their current account, credit card or Paypal account to the app. Every amount of money spent is then rounded up to the next full euro; the difference amounts collected in this way are then invested once a week in one of a total of three globally diversified ETF portfolios.
Your target audience is, as you say yourself, the general population. You want to make finance and investments accessible to everyone. What special features does that entail, what do you have to pay attention to?
That's right - our app is aimed at the 85 percent of the population who have yet to use any financial market products at all. They either don't trust themselves to invest, or are afraid of doing something wrong and ending up losing their money altogether. We want to alleviate these worries by making our app as easy to understand and clear as possible, by making the processes behind it transparent and, above all, by enabling users to access their invested money at any time. With our app, there is no minimum term or minimum investment amount; instead, we create the lowest possible threshold for accessing the investment market.
What were the biggest challenges you had to overcome in the beginning?
We founded rubarb in the midst of one of the biggest economic crises in history - and took a full risk. In retrospect, there would certainly have been a more relaxed time for the foundation. At the same time, however, we see the crisis as an opportunity. After all, it shows us every day how important the idea behind our business model is: if you want to be secure in times of crisis, you'd be well advised to put money aside early on. At the moment, of course, this seems to be difficult for many people. This is where our app comes in and fills a glaring gap in the market.
What was the most valuable piece of advice someone gave you during the start-up phase?
"Hire experienced people for the most important core functions and expect that the majority will not share your enthusiasm for the idea at first" - both pieces of advice come from good friends and both have proven true. Especially in the beginning, we looked at different ways to find the balance of experience, speed of implementation and cost. Freelancers, agencies and others admittedly often have a super pitch and make big promises. Ultimately, however, the personal effort of each individual, when a team is sworn in and building a product without distraction, is simply unique. In the short term, of course, the experienced colleague is a bit more expensive. Twelve months after the startup, however, it already pays back several times over to have built an extremely stable and high-quality product that can be scaled and for which the necessary knowledge is available within the company.
And on the second point: In Germany, everyone is doubly critical at first anyway - it's simply in the genes of many here. But also with the admission of risk chapters one must bring along straight at the beginning a lot of composure. In the end, if it were so obvious and easy, someone would have done it already. So every new idea is always one that many don't understand at first. In the meantime, fortunately, it has become very clear that we have brought an insanely useful product to the market.
Your app is called rubarb (German: Rhabarber); at first glance, one would assume a food startup. But what does rhubarb have to do with finance and how did you come up with the name?
This is an exciting question. In the beginning we were very analytical in finding a name and didn't make it easy for ourselves. We wanted a name with which we could also operate internationally, that is, which is not negatively afflicted in other languages. Ultimately, we see a parallel to the topic of saving in the English term rhubarb: With money it's like with rhubarb - no one really dares to touch the raw vegetables, but everyone loves what you make out of them.
One of your product promises is "financial wellness", how do you create this for your customers?
Our aim is for our users to create a solid financial basis so that they can look to the future without worries. To do this, they need to put money aside regularly over a longer period of time - just like with a savings account or call money. The rounding up of purchases involves small sums that are not really missing from the account at the end of the month. Overall, however, an amount comes together that is worth investing. Our experience so far has shown that the average user saves about 30 euros per month. Depending on their risk affinity, the money is then invested in one of our three ETF portfolios and yields a corresponding return. The associated effort for our users is extremely low, but the effect is still great! By the way, we also offer a savings plan on a daily, weekly or monthly basis - and of course one-off deposits are also possible at any time!
You're offering rubarb for free at first, so let's be honest: How do you earn your bread (or rather your rhubarb) with it?
The use of the app is completely free of charge; anything else would also contradict our conviction that we really want to offer investments to everyone. In the medium to long term, however, we want to further expand our offering. For example, we plan to offer some premium features in the app soon, which our users can add for a fee if they are interested. The idea is to gradually expand rubarb into a personal finance app that helps our customers identify potential savings in their spending habits. Of course, at the moment we're most interested in what our users actually want. That's why we regularly gather feedback, engage in exchange and develop new ideas from it.
Where do you see your startup in three years?
We want to establish rubarb as a trustworthy partner in terms of asset investment for the vast majority of the population. It is also planned to make our business model known beyond the country's borders. This year, for example, we want to launch the rubarb app in at least one more EU country - after three years, we're aiming for a substantial six-figure user base in several EU member states. We are very excited about this journey ahead.
Do you have a role model and if so, who is it?
For me personally, it's actually a lot of my friends and people, from my extended circle of acquaintances. My brother Jakob has a clear favorite there, though: Jeff Bezos. On the one hand, of course, because of his rigorous product focus, which Jakob also exemplifies every day and which has made Amazon what it is today. But more importantly, because without him, he probably never would have founded it.
I've had a few more years of experience in the startup scene there, and I've also talked Jakob up a lot. But in the end, he watched an interview with Jeff Bezos about how he made the decision to leave his well-paying hedge fund job to start Amazon. He asked himself the question: When I'm 80 and look back on my life, will I regret not making the move? For him, the decision was then clear - he could live with giving it the benefit of the doubt and failing. But he couldn't live with not having tried. That's when the penny finally dropped for Jacob, too: In the end, everyone boils with water after all. The question is what motivates you, what stories do you want to be able to tell the next generations later? We think we're on the right track at the moment.
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