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From CEO to 'zero': StashAway boss went from Zalora chief to starting investment robo-advisory from scratch
StashAway co-founder and chief executive officer Michele Ferrario shares how he went from Zalora boss to start-up entrepreneur in Singapore.
SINGAPORE — Would you go from CEO to "zero" to start your own company?
Michele Ferrario, the chief executive and co-founder of digital wealth management app StashAway, didn't earn a salary in the six months after launching the start-up, when he previously earned an annual "six-figure" sum as the CEO of fashion retailer Zalora.
Ferrario, 43, along with StashAway co-founders Freddy Lim and Nino Ulsamer, came together in 2016 to create one of the region's first robo-advisory investment platforms. StashAway now boasts over USD1 billion of assets under management (AUM) and a presence in five markets globally.
"Seven years later, I'm still making less than what I used to. But I'm not at zero now, of course," the ex-Zalora CEO joked.
Quest for automation
The idea of an automated investment management platform wasn't novel, but it wasn't well known in Singapore when Ferrario launched the start-up. He first realised there was a gap in the market from the frustration he felt engaging with local banks to invest his savings. He had approached them with the intention of setting up a recurrent investment of his savings into a diversified portfolio consisting of ETFs (exchange-traded funds), a practice that the Italian said he was used to in Europe.
"They told me I would have to buy it myself through their platform and that it was not possible to automate it, which was what I wanted to do," Ferrario recalled.
Ferrario said he did nothing until he had an "eureka" moment when he stumbled upon US-based robo-advisor Betterment in an earnings report.
"I searched (online) to find a local player, but I couldn't find any. Then I thought, maybe that's what I should be doing rather than selling T-shirts," said Ferrario.
From corporate to start-up
At that point, Ferrario was already in the process of stepping back from his role at the online fashion company. Zalora was then being merged into what would become Global Fashion Group (GFG).
Ferrario was a consultant at McKinsey & Company at the start of his career prior to joining Rocket Internet, the seed investor and original founder of Zalora. Ferrario said that he left on friendly terms.
To make his idea a reality, Ferrario needed a tech co-founder and an experienced investment manager. In July 2016, Ferrario was introduced to Nino Ulsamer, StashAway's current chief technology officer (CTO), by a "stroke of luck". Both men had experience building companies and were familiar with the concept as it was available in Europe. Soon, they were introduced to Freddy Lim, StashAway's first chief investment officer (CIO).
Also read: Singapore entrepreneur sold family home twice to fund start-ups, and gave up S$750,000 annual salary
The trio incorporated the company in September, started operating at a co-working space by October with a team of five, and applied for regulatory licensing by November. A year later, in July 2017, the StashAway platform was live.
To fund the start-up, the three co-founders raised some S$550,000, along with six investors. Ferrario, the largest investor, said that he put in "around one year's worth" of his previous salary. The co-founders went without pay for the first six months.
"There was a financial risk of losing maybe one year of salary in case things didn't work out. I knew that I was taking a risk, but... it wasn't going to bankrupt my family," said Ferrario, who was his family's sole breadwinner at the time. He had two young children then.
Addressing early sceptics
In its early years, many investors were sceptical about StashAway's business model, making it difficult for the founders to continue raising funds or find early backers.
"The biggest challenge of the first couple of years was that institutional investors or venture capitalists didn't think that direct-to-consumer wealth platforms would work. This is a model that requires capital to build because of regulations and the market. You cannot be bootstrapped," said Ferrario.
Your business is going to be built by people, creativity, and ingenuity. Whether you're going to make it or not – there is luck and vision – a lot of it is getting stuff done right and thoughtfully, and that's done by yourself and the people around you whom you hired.Michele Ferrario, CEO, StashAway
To overcome investor scepticism, the company had to show that it had the numbers. According to Ferrario, by the end of 2017, StashAway had an AUM of about S$20 million.
"At the end of the day, venture capitalists are looking for numbers. At the beginning, we didn't have any numbers, so you're looking for people that believe in the model, and there weren't many. But once we started having a year and a half of numbers, then we actually had quite a few people who were interested," said Ferrario.
People matter
Ferrario said that having the right motivation for starting a business from scratch is essential to its success.
"If your motivation is financial, keep your job. The risk-reward of building a business doesn't pay enough compared to what you can do if you just stay at a high level of the corporate ladder. For me, helping people make the right investment decisions, and build financial security, is extremely important," he shared.
Ferrario added that surrounding yourself with the right people, starting with co-founders, is crucial to achieving success as an entrepreneur.
"Your business is going to be built by people, creativity, and ingenuity. Whether you're going to make it or not – there is luck and vision – a lot of it is getting stuff done right and thoughtfully, and that's done by yourself and the people around you whom you hired," said Ferrario.
"I am motivated by young talent, growing, doing things and being successful, and building teams. This is what drives me more than the financial outcome."
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