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Creating Wealth with Brooker Belcourt of Covey

How do you find the next great analyst? In this episode we sat down with Brooker Belcourt, CEO and Founder of Covey – a platform designed to allow analysts to compete and learn from one another, to talk about a new approach to investment strategies.

Payments & Fintech Insights In This Episode

  • The importance of creating a space to foster investment education and idea sharing.
  • Why personal wealth is being eroded by high-end barriers to entry and new investment innovations.
  • How leveling the playing field creates access to endless opportunities.
  • Navigating venture capital investment with a product focused on social leverage.
  • And so much more!

Featured on the Show

Episode Transcript

Heather: Welcome to “PayPod: The Payments and Fintech Podcast.” Listen along as we interview entrepreneurs and thought leaders from across the fintech world. From merchant services to microlending, from banking to Bitcoin, we cover it all. Hi, everyone. Welcome to PayPod. I’m your host, Heather Bodie. And today, we are going to be talking about creating wealth. Everybody’s favorite topic. Joining me is Brooker Belcourt, the founder of Covey, a company on a mission to reinvent the investing model of today. Brooker, welcome to the show.

Brooker: Thanks for having me.

Heather: Absolutely. So, kick us off by telling us a little bit about you. I can’t help but notice that you founded a company in March of 2020.

Brooker: Yes. So, yeah.

Heather: So, how’d you get here? What was your path like?

Brooker: How I got there? Well, I’m Canadian and I moved to New York, where I am now in 2008. And I was working at Goldman Sachs in investment banking, and I covered fintech. So, this was the early days of fintech back when people were taking different services that existed in big banks, like payments and realizing that they could do a better job. And they were taking it out of big banks. And so slowly, like taking all these things and these new companies were created, like Vantiv, it was the rise of global payments, and Heartland, and all these, ISOs that I’m sure your audience is familiar with. So, I was doing banking there for a while, four years, and then got into the hedge fund world where I worked at Coatue, Tiger Cub, and most recently Citadel, where I was an analyst covering fintech companies and internet companies. And then that led me to found Covey in March, 2020.

And the reason we exist is, it’s really hard to find the next great investment analyst. And so if I asked you to find the next great basketball player or the next great baseball player, we would be able to do that in 60 seconds. We could look online, there’s rankings of it, there’s leaderboards all over the world, and there’s scouts everywhere trying to find these people. But if I asked you who’s the next great investment analyst, it would be really hard to find that person. And it sucks, from two perspective. One, that person will never be discovered. They can shout all they want on Twitter, and they’ll never be found. And then from the other side, it’s a disservice to everyone else. Because if we knew who that person was, we could copy their ideas and we could generate more wealth for ourselves. So, it sucks that we haven’t been able to find them. And that’s what Covey seeks to do, is find and reward the next great investment analyst. So, we can all copy their portfolio of ideas and benefit.

Heather: How do you do it? How does it work?

Brooker: Yeah. So, Covey is open to anyone. People join and they create a virtual portfolio of equities, ETFs, or cryptocurrencies. So, it’s like entering, you know, Facebook, 10%, global payments, 10%, Google, 10%. Putting these positions in. And then they’re entered into our competition. And we track them in real-time with 50 metrics, hedge fund-level metrics. So, you start to credentialize yourself. And then, at the end of the month, we reward the best people on Covey. And so we have this leaderboard. And that allows you to rise to the top. So, you can say I’m the best analyst on Covey. And then you can use that track record to do a lot of things, just to share with your friends, prove how great you are as an analyst. You can use it to get a job, we have students getting jobs off these track records. And we’ll be launching a product in 2023, which will allow other people to get access to these ideas of our top analysts. So, there’s a lot happening in this community.

Heather: You use the word community, do the individuals who are part of the Covey community and are sort of in it, I think you use the word competition…

Brooker: Yeah.

Heather: …are they in communication with one another? Is there discussion going on amongst those members? Or is everyone on their own little island?

Brooker: There’s definitely discussion. And the cool part is they can share their ideas as they talk about it. So, we all talk in discord. We have a server set up there. And it’s fun because you can talk about a stock and then you can see if that person is actually invested in the stock, which makes the conversation a little bit more powerful, a little bit more accountable.

Heather: As opposed to that, you know, when you first said share with friends, it’s like bragging rights at the barbecue. But we all tend to preach about the things that are hardest for us to practice in our own lives. So, I think it’s a cool accountability component, too, to say, yeah, this is what I think we should be doing. This is what I’m actually invested in what I’m doing. That’s awesome. That’s really, really cool.

Brooker: Yeah. It’s fun people. They love it for two purposes, right? Just one being like a fun outlet to share your ideas. And then another more serious one of you can build a career off of your Covey track record.

Heather: So, is this your first time then taking an entrepreneurial track? When you talked a little bit about your path here, I didn’t pick up on any individual companies that I didn’t recognize. So, is this your first time out on your own?

Brooker: It’s the first time doing something totally on my own. When I was in the hedge fund world, I joined a partner of mine who was seeded by Tiger Management. So, it was a hedge fund that we launched, and he ran it. And we received capital from a very famous investor who, unfortunately, just passed away last week, Julian Robertson, and we received one of his largest checks. And we launched this hedge fund together. And that lasted for a couple years. It was the one hedge fund I was at that didn’t work out. There’s lots of reasons to that. But it was kind of an interesting experience to go through because, to build this hedge fund cost us $300,000. And that’s a huge entry cost to get into creating your own fund. And that always struck me as odd. And part of the reason I created Covey was we should allow anyone to show their track record and be able to almost launch a fund themselves. And I think with a lot of these new technologies, like the internet and Web3, you’re taking the cost to create something new, like a website or an online store. And you’re driving that really like almost down to zero. So, I think in the future, what Covey hopes to do is take that $300,000 barrier to entry of creating your own fund and drive that almost down to zero. And I think you would get a lot more people to manage your money and a lot more prospects if we could do that.

Heather: That’s an incredible mission. And I think that transcends just wealth management. I think there are a lot of different areas in our society where if we were to be able to financially reduce the burden of entry that we could see some really cool and creative ideas. So, I think it’s really neat. So, talk to me about the barrier to entry. I know your website says, “Wall Street has barriers. We don’t.” Does that apply exclusively to the individuals who are members? Or can everyday folks who are looking to build their own wealth engage with your platform and the individuals on it in a less barrier-filled way?

Brooker: I think it’s a great question. So, there’s two types of people who use Covey. There’s this analyst, so someone trying to prove themselves, become great, passionate about investing. That’s the analyst. And they hope to become a manager. And then on the other side, there’s the investor, who’s just looking to get access to these great ideas and these great analysts, and they just want to copy them. And so that’s more common. Talking about each of those, so, on the analyst side, the barriers to entry is basically the one I was speaking about before, where, no matter how good you are of an analyst, the chances of you being found in this world are so slim. Unless you went to an Ivy League school or you work at some top-tier investment bank or private equity shop, you will be lost. And I don’t think there’s any correlation between people who went to Harvard and being great analysts, I really think it can be anyone, and they can be in any geography, they can speak any language. And right now, we’re going after that stereotypical Harvard grad as the great analyst, which is unfair. And so there’s that barrier that we’re removing. We’re allowing anyone to be great on Covey. So that’s the analyst barrier we’re removing.

And then the other side is if you are an investor and you want to get access to a lot of the great ideas that you’re hearing about on Reddit, that you’re hearing about in these, like, WallStreetBets, you’re hearing about all these retail analysts making money, and then you’re looking at your mutual fund and it’s down. And you’re like, “What is going on?” So, you have this fear of missing out emotion hitting you. And it’s because there are these barriers. And so a lot of very talented analysts are sitting, working at hedge funds. And to be able to get access to that idea stream, you need at least a million dollars in net worth. That’s not everyone. And so you can’t get access to that. And so then you turn to these mutual funds. The trouble with mutual funds is they haven’t really integrated over the last 20 to 30 years. And so they’re seeing massive outflows. They’ve lost $3 trillion in assets over the last decade. And so there’s something wrong with that business model.

So, what people are now doing is they’re all investing themselves. We’re all downloading Robin Hood, and we’re out there buying these stocks on our own. And the sad part is, a lot of people are just not beating the market. And this is your wealth that is being eroded. And maybe you’re not the best one to be managing your own investments. And so you’ve got these barriers, you’re being forced to download itself. And the trouble is, at the end of the day, you just don’t trust anyone to manage your money. And I find myself in that boat as well. I don’t trust someone at Wells Fargo to manage my money. Like, their track record is just not great. So, I wanna find someone to trust. And wouldn’t it be great if I could go to totally transparent meritocracy, and find the absolute best person there? And give them my money with no fear of them stealing my money, just investing in them based purely on their past performance and giving them some eager young kid who is so passionate about this and who would do an amazing job, giving them my money to manage and getting the upside from that as well. So, that’s what Covey seeks to do on both sides.

Heather: It struck me while you were talking about the incredible benefit you offer of giving everybody a chance to enter this competition, so to speak, and to prove their worth as an analyst, and that they wouldn’t be otherwise found. The question that was coming up for me was, how do you find these people? Are you outwardly seeking people to join the Covey community? Or are you finding that people are drawn to you?

Brooker: Yeah, we’re getting a little bit of both. There is this desire out there for people who are really passionate about investing to have some training ground and be able to learn from others. And so it’s almost like the first time you play cards, you play with your hands open. And so you get to see what other people are doing, how they’re making moves. On Covey, it’s like that. It’s for the early investor, who’s, let’s say you are investing for the first time, you get to see what everyone else is doing, see how they’re building their portfolio. How many ideas do they have in their portfolio? And then you can go to the top of the leaderboard and see, okay, this person’s always in the top of the leaderboard, how many ideas are they doing? How big are they in each idea? What ideas are they in? And so you can learn from these great people. So we attract them. And then we also attract the more experienced people who maybe they’re working in credit investing or debt investing. And then they wanna get into managing other people’s money, they start to credentialize themselves on Covey. So, we’re taking that burden of $300,000 to credentialize yourself, you can do that for free on Covey. And so we’re building it that way and spreading through word of mouth that way. And then we’re actually just getting more into marketing right now and doing stuff like this, explaining our business to different audiences and seeing if we can find the right match.

Heather: With that many barriers to entry, you’re disrupting something that has such extreme barriers to entry. Like you were saying, with the Harvard grad is, for some strange reason, synonymous with a quality analyst. There has to be, like you said, some correlation with the name associated with the educational institution, and also with the relationships that are tied to that. So, that there are these other people who do not have maybe as a well-known education but are just as qualified. That was a long way to get to it. But my question is this, in an industry with that many barriers to entry, you are disrupting a longstanding precedent for how this field functions, what pushback have you gotten?

Brooker: There’s definitely a pushback. There’s one way to try and raise money for this idea. I had the impression that if you went to venture capitalists with some idea that they’ve never seen before, that they would just give you the money, right? Because it’s like, why not take this shot? This has never existed before. But that is not the case. They definitely play it a little bit more safe with their money than I thought. And so it took a while to find people who were so courageous that would want to take this crazy bet on something that’s never happened before. So, that was hard, but we found some great PCs in Portage and Social Leverage that were willing to take this risk and try to do something that’s never been done before, which is gonna have like a significantly higher failure rate. So, that’s hard.

And then legally, it’s going to be quite difficult to allow anyone to invest in the ideas of anyone else. There’s some quite large regulatory roadblocks for us, barriers for us, as you’re saying, that we’ll have to get around. And a big part of the reason we have to raise the $2.5 million that we raised is to get through these regulatory headwinds. And companies like Covey have been created overseas. There’s eToro has this product called CopyTrading, which is kind of similar to what we’re doing. And they’ve been able to do it overseas. And they’re a billion-dollar company, and they’ve had a hard time being able to launch this product in the U.S. And so we hope we found a way to get it to Americans, to be able to experience the upside of this. And hopefully, we can do that.

Heather: I hope so, personally.

Brooker: I really hope so, too, because I wanna give these analysts my money because I do not trust anyone else with it. And these analysts are amazing. The top 1% in our community is up like 20% this year when the market’s down 10% to 15%.

Heather: That’s incredible.

Brooker: Yeah, we’re midway through 2022. So, they’re just doing so well, and they’re working so hard. I really wanna get them some more capital to grow and be able to manage more money and have a successful career off of this.

Heather: Did you have, or can you name a singular moment where you saw the company go from idea to reality? One of those satisfying the communities talking to one another, things are happening moments.

Brooker: Yeah. Early on, when we launched the product, we had a lot of student-run investment clubs be very interested in what we were doing. So, if you imagine, if you go to all these different schools, the people who are passionate about investing or any other thing, generally, they create a club around it. A lot of schools, I’m sure your listeners have seen this. A lot of schools have investment clubs. And so early on, they reached out to us and they wanted to create little mini-communities within our broader community, where they could compete and learn from each other. They expressed interest. And then they started using their track records on Covey to get jobs in the investing world. And it was just so cool to see. We started to rank the Harvard kids who were on Covey with the University of New Mexico kids on Covey, with the UMass Boston kids on here. And it was amazing to see how all these different schools, it was more about how passionate each club was, which drove them up in the rankings when they compared to others. And it wasn’t really about if you went to an Ivy League, they had the best returns. It was just so cool to see how great analysts can be found anywhere. And didn’t really matter what school they went to. It was just a lot about how passionate they were. So, that was a fun moment is the investment clubs. And we’ll continue to support them. We love them. And getting more students passionate about investing is an awesome thing to be a part of.

Heather: I wanna address something that you’re gonna have to bear with me if this rubs against my lack of knowledge in this particular area. But there’s this, what I think is kind of a misnomer of finite amount of resources, right? So, if somebody is allowed a piece of pie, they’re stealing from the amount of pie that I can then eat, has that been part of the conversation at all? That if everybody has access to the number one way or approach to building wealth, then it is no longer sort of this coveted, private…you know, just this sort of there isn’t enough to go around feeling.

Brooker: Yeah. You’re spot on. So, if you have some strategy that beats the market and then you go and tell everyone about it, it’s probably not gonna beat the market anymore, everyone’s gonna take away your alpha, as they call it, like the amount that you beat the market by, will be gone. So, you could say the same thing with Covey. Well, if it’s all transparent and it’s all out there, once you figure out who are these best analysts, then everyone’s going to copy them. But we’ve done some really cool things. And this is gonna get like a little bit technical, but we’ve basically found ways to allow our community to be a little bit like walled off. So, the people who are generating ideas can retain some of the value of those ideas and profit from the other people copying their ideas.

So, we do cool stuff, where we post all our analysts’ ideas to the blockchain. And so they’ve got this immutable timestamp track record of all their trades. That allows anyone to see it, but at the same time, it’s anonymous. So, it would be hard for someone to go and see that this person’s ideas and the collection of them are here and be able to track them. So, you kind of need a little bit of help to be able to do that. And that’s where you can extract a bit of value and be able to maintain this strategy over long periods of time is, is using this open transparent blockchain, but at the same time, keeping it anonymous and allowing Covey to be that connection that de-anonymizes the data. A little bit technical. We probably lost some people there. Definitely.

Heather: No, I really appreciate you providing clarity around that. I’m glad I followed my instinct on that question because I imagine I’m not the only one wondering that same thing listening.

Brooker: Yeah. It would take us a while to get to the point that so many people are using this. And I think we’d love to have that problem that so many people are using this, that the alpha’s being eroded. I think we’re a long way from it, but we do have things in place so that when we do get there, we can solve it.

Heather: So, what’s next for Covey? Anything you can sort of pull the curtain back on, or let us in on?

Brooker: Yeah. So, what we’ve been doing the last year is we’ve been paying rewards for anyone who joins Covey and rises to the top of our leaderboard. They get to earn rewards. And we have users from all over the world. And so we paid them out in tokens, in cryptocurrency tokens. And that allows you to pay anyone out anywhere in the world, which would be a lot harder to do if you were using banking rails. And now, over the next few months, we are going to launch our own native tokens or our own token that will be able to capture that value I was speaking about before. And so the value of the community or the ideas of our community will be captured in this token. And you can check out our site, covet.io to learn more about it. It’s really cool. And so now if you join Covey, you get to start earning that token.

So, that token will hit analysts’ wallets September 30th, which will be really fun. That’ll be a big event. And then continuously be able to earn more Covey tokens every single month after that period. And those will be deposited on a monthly basis at the end of the month. So, that’ll be really exciting. And then in 2023, we’ll be launching an app that allows anyone to invest in the ideas of our top analysts, which is what I’m really looking forward to. So, I’m not in the top 1% on Covey. I compete in there all the time, but I haven’t risen to the top 1%. So, I would love to allocate some of my money, and I’ll use this app to be able to allocate my money to the top analyst on Covey. And so that will be launching 2023.

Heather: So exciting. This is really, really cool. I haven’t ever heard of anything like this, and I’m really, really pumped about it. So, I love to close out our show. It put you on the spot a little bit. Can you leave us with one of the best pieces of business advice you’ve ever received, and if you can remember from whom?

Brooker: You have this beautiful phase, in the beginning, when you’re launching a business where you’re just there by yourself, and you’re thinking about all these ideas. And you come up with this thesis. And the hard part is, how do you weigh getting feedback on your idea to make it a better idea versus like sticking to your original vision? So, everyone you tell about your idea, they’re gonna automatically give you feedback. That just seems to be people’s instincts. So, you’re gonna get advice like crazy. And some of that advice is good. But a lot of it will steer you off the direction of your original thesis, your original mission. And I found it really hard, in the beginning, that I would be constantly distracted to go down these avenues. And so we have this mission, for instance, for Covey, we have this mission of allowing anyone to rise to the top of the leaderboard and be found.

So, we could launch a recruiting product that would allow people to get jobs on Covey. And so that’s a whole way down there. We could sell the data on Covey to allow our analysts to profit directly, sell the data to hedge funds. So, there’s all these things you can do. And if you have other people telling you what to do, you can be distracted by that. And then you lose track of your core vision. And so, I would say, to summarize, is just weigh your advice correctly and try to reflect back on that moment when you had the original mission and the original why, and make sure you’re sticking towards that. Because there’s a lot of advice out there. And even this advice that I’m telling you now. So, for me, it was harder to stick to the original vision. It was easier to be distracted by all these different people telling you to do different things. And those can come in the forms of like VCs telling you to do this. And if you do this, they’ll invest in you. And the trouble is if you do that, you may not actually be doing something valuable anymore and they may not invest in you either.

Heather: That does it. Thank you, Brooker, so much for joining us today. If folks wanna get in touch with you or learn more about your company, where should they go?

Brooker: They should go to covey.io, covey.io. And everything’s there. We’ve got tons of content that we put out explaining how to use the product, how to earn tokens on the product as well, how to be a better investor. And all the information about our community is on there. There’s a lot of good information.

Heather: Beautiful. Thank you so much for your time today.

Brooker: Thanks, Heather, I had a great time.

Heather: If you enjoyed this episode and wanna hear more, head on over to soarpay.com/podcast to subscribe on your podcast-listening platform of choice, that’s soarpay.com/podcast.

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