Hunting for the right CEO

It took more than a year to find the right person to replace him as CEO, says Matt Leibowitz – the former CEO and co-founder of Australasian online brokerage Stake.

In late January the company announced Jon Howie was appointed to ‘lead the business into its next chapter of growth’, and Leibowitz has since become an executive director of the firm.

Leibowitz had a sense of relief when handing over the reins after seven years at the helm of Stake, which gives retail investors on both sides of the Tasman low-cost access to US equities.

“I’ve really loved it. I get back to doing the things I enjoy, the things I am better at.”

In 2017 Leibowitz used capital he’d gained as a trader at high-frequency trading company Optiver to launch Stake alongside co-founder Dan Silver (the company’s chief operations officer). 

Stake has grown to become Australia’s third-largest online broker with almost A$3 billion of assets under management. It now has around 100 staff and a customer base of more than 500,000. Stake has attracted more than 68,000 users in New Zealand since expanding here just over two years ago.

You don't set out to be a CEO when you start a company, says Leibowitz, you’re simply trying to develop a product that solves a problem.

“You don’t go for a title and it wasn’t something I ultimately wanted to do in terms of a classic CEO, I just needed to do it at the beginning of the business. As the business got bigger, you start moving away from the stuff you enjoy.”

The co-founders decided 18 months ago the business had become more complex and needed someone who had experience running large teams.

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The right fit

Leibowitz’s advice to other founders is to start looking for someone who is a cultural fit well before you want them to start; it took just over a year for the Stake co-founders to find the right candidate.

However, he knew Howie was the one from their first meeting, he says. 

“You need to find someone you can work with, your management team can work with, your team respects, your investors respect. Jon was absolutely perfect, as we shared the same vision for the market.”

“And, yeah, there was a sense of relief. I feel energised again.”

Howie has more than 20 years of financial services experience, gained at Blackrock APAC, Macquarie Bank and VGI Partners. He initially worked at Stake for six months as chief commercial officer –  a bit of a try-before-you-buy situation on both sides, says Leibowitz. When the trial worked out as planned, they took the next step. 

“You need to integrate into the business and understand it. It’s also a nice way for him to get a sense of what we’re about. From day one, he fit in seamlessly,” says Leibowitz.

“Running large teams in financial services, which is complicated and regulated, you need to dot your i’s and cross your t’s all the time in terms of the way you are accountable and set up all those structures. I had never done it before, but Jon had done it and he had the same energy towards the customer that I do, so it’s a really good marriage.” 

Many founders who have stood aside find it difficult to let go, but Leibowitz says he’s happier in his new role, focused on product and strategy.

“Business structure is really important and you need to do it, but it was not something I was naturally curious about and that puts a bit of strain on you as well; you lose your creativity.”

He recalls someone running a large US company telling him that one of their investors would only back a startup where the founder was prepared to step aside for someone who could run a large business, because you have to recognise where your strengths lie. 

“A lot of founders believe ‘it is my business, I will do it my way’, but if it is your business you want the best outcome for it and sometimes that is you not being the CEO.”

Growth plans

Access to US stocks had been limited for local investors wanting to buy into big-name brands when Stake started, however the platform has since been joined by a bunch of competitors, including home-grown Sharesies. 

“It feels like every broker under the sun has come to Australia and New Zealand. When we started in 2017 we were pretty much the only ones focused on the US and now it is standard,” says Leibowitz.

He recalls at the outset of the company an investor saying the idea for Stake wouldn’t get anywhere because only 3 percent of Australians invested in overseas markets. Now that figure has hit 20 percent.

Stake raised A$90 million in 2022 from venture investors including Tiger Global and DST Global at a A$480 million valuation. Some early investors took some money off the table but Leibowitz is understood to still own a 40 percent stake.

The company is still not profitable as money is ploughed back into growth.

Leibowitz says its growth metrics mean he hopes not to have to raise capital again.

“A lot of people don’t recognise that raising money takes up time and effort and obviously we’ve got lots in the bank still and we’re moving in a strong direction so it’s not something that is on our radar.”

Stake’s platform originally had a zero-brokerage business model, making money off the foreign exchange fees it charged traders. But in January last year it began charging A$3 for transactions of up to US$30,000 in US shares. 

Stake also rolled out a self-managed superannuation product (SMSF) in 2021 and Leibowitz says the company is moving more into the wealth space.

It made an unsuccessful bid last year to acquire ASX-listed retail trading platform SelfWealth at 17.5 Australian cents per share, which its board rebuffed, saying it undervalued the company.

Leibowitz says acquisitions are generally hard and if a deal is not going to be straightforward, he’d prefer to focus on Stake’s existing customers. 

“Word of mouth is a much better growth tool than anything else. You’ve also got to be opportunistic but it takes two to tango so if the opportunities are not there, or if they’re not interested, we just have to keep focusing on our customer.”

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