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Wet Socks and the Stock Market

June 21, 2016

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You may be wondering what wet socks have to do with the stock market. It’s not an obvious connection, but there is one. It started for me one October on my way to an important meeting with an investment bank in New York City. Not surprisingly, it was one of those cold rainy days that only real New Yorkers know how to handle. Equally unsurprising, I managed to step in a puddle on my way into the building. Needless to say, I was NOT in a good mood during the meeting.

After the meeting, I couldn’t help but wonder how the cold squishiness in my shoe affected my decision-making during the meeting. And, being the curious sort, I started to wonder how mood might affect other people at work, and how I could use that to my advantage.

As I do, I kept noodling on that thought which ultimately expanded into a broader idea about what things occur in our lives that lead to a good or bad start to the day, and how that affects our decision making. And, because I live in the intersection of data, human behavior, and product, I decided to turn all this into a model that attempted to understand this interesting and complex problem. My goal was to discover if some of the movement in the stock market over the first hour or two of trading could be linked back to factors that had no basis in economics, but rather to the mood of the people who trade in the stock market. Factors like weather, commute, sports scores, etc. Without going into all the details, I built a model that did show some correlation of mood with stock market movement, and reinforced the basic hypothesis that mood does impact decision-making, even in an otherwise very logical environment.

To me, this explains a significant part our approach at Varo.  We are obsessively focused on solutions that embrace human behavior and emotion, rather than just developing well-meaning products based solely on logical features. To be successful, we must incorporate our deep understanding of people's relationship with money. That means helping our customers to feel more in control, to build a positive relationship with money and to achieve better financial outcomes regardless of their unconscious or conscious tendencies, regardless of their underlying motivations, and regardless of what money means to them.

Like Colin’s post from last week, I think there are a number of principles that will be key to achieving success. I'll write more in the coming weeks about them. But, for now, here they are:

  1. Find the Deep Truth - We must always be exploring people's differing relationships with money.

  2. Recognize the Individual - We must build technology that will allow us to understand each customer individually and build tools that are adaptable to each customer.

  3. Go with the Flow - We must offer our customers solutions that allow them to be who they are.

  4. Obsess over Customer Benefit - If we don't offer real benefit and positive outcomes for our customers, we can't expect them to stick around.

I'm thrilled to be part of Varo and our mission of helping our customers create financial freedom and security. I can’t imagine a better purpose or place to apply my obsession with data, behavior, and decision making.
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