Pocket money is a good way to teach children about the importance of money.
Since they were born, we’ve had a simple rule for our three children. In return for some sort of contribution to household chores, they receive their age in pocket money each week. They can do whatever they want with the money but the rule is that they have to sort out any issues they have directly with the bank. Last week, my son came downstairs to tell me he thought his account had been hacked because there was only £6 left in it. He thought there should have been about £20.
So I told him to call the number on the back of his bank card. He did so and I listened for what I knew was about to come. It took 25 minutes for anything to happen (the length of time it took the call centre to answer the call) and then I listened to the comedy sketch of a 12-year-old explaining that ‘someone has taken my money’ to someone in the fraud team who was having trouble identifying him. The call ended and my son came back to see me.
His first experience with a bank had been dreadful. He simply couldn’t understand why ‘they’re just so bad’. ‘They can’t even answer the phone’, ‘Why are they blaming Covid for being so crap?’, ‘Why do I have to tell them the same thing three times when I’ve already entered all those details on my phone?’ And the final nail in the coffin – ‘Why are people even customers of a company like that?’.
His final question was, in my view, the most interesting. And it’s interesting on two levels.
In the hands of the customers
The first is his expectation that there shouldn’t be any friction in his interaction with a company. He’s grown up in a world where customer experience can be painless. Case in point being Amazon where he can order something tonight and see it magically appear in the morning. Or the fact that he doesn’t need to think too hard on YouTube because the content has already been personalised to him. This is, in his eyes, ‘normal’. So when he’s forced to deal with a company that’s still stuck (as he describes it) in the 1950s, it’s enormously frustrating. And he’d happily move his account somewhere else (he’s already asked but he’s not allowed to move to the same bank as his sisters until he’s 16). I think we can be relatively confident that the old adage about people changing their husband or wife more frequently than their bank account is definitely not going to happen in the future.
Behaviour is everything
The second level is more principled. You only need to listen to my children talk about companies to see how quickly the world is changing. They’re far more purpose led in the decisions they make. They’re very clear that they only want to work for, buy from or engage with good companies. And the world is now so connected and so transparent that they instinctively know whether a company is ‘good’ or ‘bad’. In this world, behaviour is everything. They expect companies to do the right thing, even when no one is watching.
The companies they engage with need to have a purpose (beyond making money). Ultimately, they want to talk about these companies as if they were their friends and an extension of their own beliefs. My son’s bank clearly falls a long way short of this standard – if it was a person, it wouldn’t have any friends. In fact, it would probably be standing in the corner of the room facing the other way.
A new breed of business
A new breed of company, which understands that how it behaves is important as what it does, will be the one that wins in the future. And this ‘win’ will be measured in two ways. Both in terms of its contribution to helping solve some of society’s biggest problems as well as generating supernormal returns for its early investors.
That’s why I’m so pleased that we’re launching a new sustainable Venture Capital Trust targeting some of the most exciting, purpose-led high growth companies in the UK.
Managed by Octopus Ventures, one of the largest VC investors in Europe, we’re looking for companies that can generate a 10x return for investors while transforming the world in which we live. The VCT’s mandate is to invest into companies within three themes: building a more sustainable planet, empowering people and revitalising healthcare.
And because we believe that how we behave is just as important as what we do, I’m proud to say that 10% of our annual management fee will go to our charitable foundation, Octopus Giving.
Risks to bear in mind
Notwithstanding all this exciting news, the VCT will invest in early stage companies, so investors need to be aware that the value of investments can fall as well as rise. You could get back less than the full amount you invest and shares prices can experience a more volatile ride. Additionally, the VCT shares may also be more difficult to sell when you look to exit your position compared to other listed companies.
This is an advertisement and not a prospectus. Any decision to invest should only be made on the basis of the information contained in the prospectus and the Key Information Document (KID) available at octopusinvestments.com