Stake CEO Jon Howie on why now’s the time to start a business, despite economic gloom

Starting a business can be daunting at the best of times, but in the current economic climate, it can feel overwhelming. 

With the cost of living continuing to crunch, new data from online investment platform Stake reveals how financial pressure is steering Kiwis away from beginning their startup journey.

The annual Ambition Report surveyed over a thousand non-retired Kiwis to gain insights into their approach to money, investment, and future plans.  

Caffeine caught up with Stake CEO Jon Howie to unpack what the data told us and his advice to aspiring startups and investors.  

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The Ambition report found that only 26% of Kiwis see starting their own business as a marker of financial success. What is driving that low figure?

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I think that Kiwis are just being thoughtful around the risks that they want to take where they spend their money. 

What is really interesting is how our investors, both here in New Zealand and also across the ditch, are reacting. Ultimately, we see that younger investors aren’t actually compromising on their long-term plan, but rather planning a better financial future. 

What they’re doing is thinking carefully about how much money they spend on entertainment and travel and going out things like that. They’re reducing spending in those areas, but they’re maintaining the discipline and the focus to invest and to build financial futures, which we think is great. 

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What stood out to you in the Stake Ambition report when comparing Kiwis and Australians?

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I think the one thing that really stands out for us is that the Kiwis really, they kind of think globally first where I think, I think locally first and globally second. The thing that we notice is Kiwis are more open to investing more, more actively internationally. Kiwis really have a very strong openness to the opportunities the whole world presents. 

They’re extremely well-travelled, and generally, they are very well-educated and have a global perspective. 

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What do you think drives some of that global outlook?

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When I started in financial services, it was almost impossible to buy US equities. It was easy to buy New Zealand equities, Aussie equities but it was really hard to buy Apple shares or Microsoft shares and they were super expensive. That was hard for me as a young guy with not much money to invest but wanting to participate.

Thinking: “I know what all these companies do and I think like some of them I think are great companies but to go and invest a few $1000 in like Apple Stock or Microsoft Stock is just cost prohibitive! “And the truth is, these days, that’s absolutely not the case. 

So we see many young investors who understand these companies often better than older investors, and they can participate, which we think is a great thing. 

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What would your advice be to a New Zealand startup who is taking the plunge?

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You have to live as the customer. You have to not just think about who is going to buy this product but how they are going to feel when they buy it. Why am I going to make them feel good, more confident, more inspired, more relaxed, whatever it is. 

I think in my experience that the only times that I’ve seen new businesses or new product lines inside bigger businesses fail is when it might be intellectually a fantastic idea but when you haven’t considered, what’s the customer actually going to feel at the point of purchase? 

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What’s the most common mistake you see startups making?

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When kicking off a business, and I’ve been guilty of this myself, you can get carried away with how big your idea could be. Sure, it’s the super exciting part of starting new businesses, and starting new products. 

But once you’ve got carried away with how big it could be - which is great and you should do that - come back and be very thoughtful about taking small steps and just get those first few wins on the board and prove out that you can do the small things well. 

Ultimately, it’s about showing others that you can do the small things well. When you decide you want to do things like raise capital in the future, going to someone who might invest in your business with an amazing idea but no demonstration of ability to execute is honestly going to be a really hard conversation. 

Instead go in with a great idea and a track record of executing, even just a couple of small things. 

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Despite the gloom, is there a world where now is the best time to start your business?

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Necessity is the mother of invention. 

When everything is pretty cruisy, and everyone’s in a job that’s pretty comfortable, and everyone’s pretty relaxed about kind of where the next dollar is coming from, the incentive to take that risk is lower. 

Sometimes, we all fall into the trap of being a little bit complacent when times are good, and actually, what we do need is that fire that’s inside us. 

Saying to yourself: “It’s going to be painful at times, and I know it’s going to be a little bit scary, but I believe in this, and I’m just going to go and do it.