Jason Cozens and Ben Davies are on a mission to shake up the whole financial world using humanity’s oldest currency. Their Glint app has taken three years and £7 million in investment to digitise gold…
When RSNG meets Glint Pay co-founders Jason Cozens and Ben Davies in the City of London hotspot The Ned, we don’t expect a history lesson. Then Cozens produces a gold coin, small but hefty, and tells me it was minted in The North East of England in 50BC. ‘It’s a Staten. An ounce of gold around that time would buy you a really nice toga,’ he says. ‘Today an ounce of gold is worth around $1300, so whatever your readers’ tastes I’m sure they can buy a really nice outfit with that. Consistently, over 2,000 years, gold has maintained its value, whereas just in the last 100 years the pound and the dollar have dropped by 98% of their value.’
This is the problem that lies at the heart of what Davies, the former hedge fund co-founder, and Cozens, the e-commerce entrepreneur, think has gone wrong with finance, as well as public trust in the institutional banks and governments of the world, since the financial crash of 2007-2008. And they think that they have a revolutionary solution in Glint Pay, the app that allows you to transfer money into it, then buy gold for a 0.5% fee. The clever bit is that it also allows you to touch pay, or use the app’s accompanying Mastercard, to pay for everyday expenses – in your gold. So how did they go from startup to challenging the status quo?
RSNG You seem like men on a mission, so what is Glint’s philosophy?
JASON COZEN, CO-FOUNDER ‘Glint is for everybody, there’s no minimum account opening – you can buy £1 worth of gold or 100m worth. For me, a reliable and independent form of money should be available to everybody. Our clients are from all walks of life. We have 18-85 year olds and we do have a big proportion of our database of people from the top 15% most affluent in the UK, but we do have University leavers and people aged between 18-35 who just fundamentally get it, and believe that a reliable independent form of money protects them from inflation and from systemic risk.’
‘An IOU is what money is, the ledger of promises between people. Those promises should be sacrosanct they shouldn’t be worth less in six months time, whereas with the rate of UK inflation, for example, at 4.1% RPI we know that your money’s purchasing value is going to be half of what’s it is now in 10 years time. We can look at the past 100 years and see that the pound and the dollar has dropped by 98% of its value, and for me that’s a really big problem.’
RSNG So, why should we be concerned by future risks to the banking system?
BEN DAVIES, CO-FOUNDER ‘We are at such a critical point now in the history of the modern investment monetary system (it’s only really been 60-70 years since we have had modern finance), that we are going to be tested – we have been tested with the financial crash and we have not solved it, we’ve just created more debt.’
‘Every sector of the economy in the world has more debt, whether that is corporate debt or student debt. Why is a professor paid $400,000 when it used to be $100,000 only 15 years ago? It’s because there is too much debt fuelling school fees. Worldwide debt is at a record $233 trillion.’
JC ‘I thought that banks were a safe deposit for my money, and also that money was a constant thing that I could rely on. What woke me up in the last financial crisis was these things are The Emperor’s New Clothes.’
‘With the Brexit referendum sterling went down 25% in two days – gold didn’t move’
RSNG OK, so we can see why gold might be a good hedge against crises but what about the people who say there is too much volatility in the gold price?
BD ‘Half of the underlying volatility is from the currency. As an extreme example, with Brexit Sterling went down 25% in two days. Gold didn’t move.’
RSNG How did the idea for Glint itself come about?
JC ‘What started all of this off was that someone said to me: “Gold is a great store of value but you can’t buy your coffee with it, so it’s not a means of exchange.” What we have done is take technology and combine it with gold to make the ultimate form of money.’
RSNG Do you think there’s a desire for a new way for us to keep and invest our money?
BD ‘Cryptocurrencies tell a story that people want an alternative system. And that’s really important. Sadly most of the millennial stepkids that we have got, they have all been speculating in cryptos because that’s the only thing that they feel they can get rich on, because they are out of the housing market.’
JC ‘It’s all about bringing back that constant, and we can do it from the grassroots up. We want to dispel the myth that you have to be wealthy to have gold. Our whole stall is that gold is the constant. By re-introducing a store of wealth, which is absolutely needed for a currency, you keep this equaliser in the system.’
RSNG Do you think the perception that gold is only for the wealthy has put people off it?
JC ‘Maybe in the past gold was only something rich people could buy. If you want to buy even a small bar of gold it costs £3000. But with Glint you can buy one pence worth of gold. The fee is 0.5% and the price you see includes that 0.5%.’
BD ‘That’s the cheapest you’ll be able to buy gold anywhere in the world.’
RSNG There’s been a burst in the cryptocurrency bubble, but what about blockchain as a long-term financial alternative?
JC ‘The original philosophy around bitcoin was to create a reliable and independent source of money, and the expression of the thirst for that has done a lot of good for us. It has helped to put the idea on the table. But as far as we are concerned anything that involves humans is subject to corruption.’
‘Even with Bitcoin, for instance, the company who run it were divided about which direction it should go and ended up splitting in two. Gold is created when two neutron stars collide in a supernova so unless you’ve got a couple of those in your pocket you’re not going to be quantitative easing or printing gold out the back. And we don’t need governments to come in with a new gold standard, we can do it ourselves.’
‘The real challenge for a fintech company is first you need credibility – how do you get that?’
RSNG As a fintech startup, what was the biggest challenge to getting off the ground?
BD ‘The real challenge for a fintech company is first you need credibility. How do you do that? We have a very experienced management team, a blend of younger and older people, whereas most fintechs tend to be younger. We have all run businesses, and have gone through the highs and lows of those.’
‘It took us a year to get the FCA licence but we were so well prepared that when we delivered the documents we got it in six weeks, which they said was a first. We had that stamp of approval and then the banks were prepared to talk to us.’
RSNG Digitising gold in this way has never been done before, so what were the obstacles?
BD ‘For fintech the biggest hurdle for payments companies is getting safeguarded card accounts at the bank, because the banks have been so battered by the regulators that they are scared of their own shadows. We do enhanced due diligence and the strictures around us are probably greater than they are for the banks – we have to be whiter than white. Now Glint’s accepted at 35 million places around the world and tens of thousands of people are using it.’
RSNG So, what if I wanted to get my hands on the physical gold?
BD ‘The gold is legally owned by you, it’s 100% guaranteed. Right now you transfer paper money or electronic money into the system and you have a choice of when you want to buy the gold, and you own this physical gold stored in the vault in Zurich, independent of the banking system, and as soon as you buy the gold we confer right of ownership to you.’
‘We had to solve how do you take a block of gold, split it into incremental fractions of gold and still give you ownership of it, legally? Because if someone does want to take delivery of the gold, which is their right, then we need to provide it.’
RSNG How did you secure the original investment you needed – venture capital?
JC ‘I don’t think that the Venture Capital world in the UK is really as venture as they like to make out. If you have got a business where all the KPIs are proven and it just needs money to scale then what’s the venture in that? There’s no risk, you’ve already proven it. But I think there is a good, strong group of people in the UK who are independent thinkers, who can say: “I really believe in this and I’m going to bet on it.” And that’s what we did, we went out and we raised money from those people.’
‘If everyone says it’s a bad idea then perhaps it is but if you get hot and cold at the same time you’re onto something’
RSNG Jason, what advice would you pass on to other entrepreneurs, from your experience?
JC ‘The first thing they should do is convince some experienced and well-networked non-exec board members to join your board because they can give you advice and perspective. To be an entrepreneur you have to have massive amounts of self-delusion because to drive yourself through everyone telling you it won’t work you need that. But at the same time you need someone to ask you have you thought about this or that? Glint is not an iterative innovation, it’s a step-change innovation. Nobody else in the world has managed to allow gold to be used as payment at the electronic point of sale.’
‘When you’re bringing in something completely new there are people saying to you ‘this is crazy’ or they love it, and the best thing is to look for that contrarian view. If everybody says it’s great then it’s probably something that already exists, if everyone says it’s a bad idea then perhaps it is but if you get hot and cold at the same time then I really think you’re onto something.’
RSNG Ben, why did you co-found Glint after being former head of trading at RBS Greenwich and co-founding hedge fund Hinde Capital?
BD ‘When you get into gold and you realise the honesty of it, you think this has to be a better way. I was sick of being part of the investment speculation, and the opportunity came to join up with Jason, who stepped out ahead of me, and made that first foray in the first couple of years where it’s very hard and no one really wants to talk to you.’
‘Even I was going: “I just don’t know if people are going to engage with it.” I think the turning point was when Android Wallet came along with that change in technology and innovation.’
RSNG When it comes to new business ideas, is it innovation or execution that makes the difference between success or failure?
BD ‘Innovation typically isn’t necessarily the original concept, it’s the application of the idea. We’re using cutting-edge technology. Has it been created before? Absolutely, it’s the application and how we are using that technology that is truly innovative. No one has been able to create an instant settlement for physical gold, which has been an impediment to the use of gold. We’ve taken a moribund asset and we’ve mobilised it around the world.’
‘We still have to energise people with our belief system, and we already know that there is an $8 trillion market out there, including jewellery and central bank assets – $3 trillion in terms of paying for things with gold.’
RSNG How much of your success so far has been the acceptance of banking by app?
JC ‘In some parts of the world there is a strong proclivity for gold but in the new generations that has been waning. Even so, 25% of our user base are 18-24 year olds. The fact that it’s on the mobile phone means that they can have a new love affair with gold. They can go to their friends: “I just paid for my drink with gold, how cool is that?”’
RSNG You clearly have big ambitions for Glint – is this the start of something much bigger as the shift away from big banks continues?
BD ‘The shift is happening – the banks will not be the intermediary that we think they are going to be. Lending is already happening on different platforms. Imagine lending gold off your platform – and that can be done one-to-one, completely provenly.’
JC ‘We have got the opportunity to completely change the monetary system when people can start sending things peer-to-peer, paying for things in gold.’
BD ‘When you talk about a black hole and the singularity, this is it: in the singularity when those two novas collide this rock is born and this is what’s happening today, we are having this monetary singularity. We are going to go down to one form of money and we believe that it’s going to be a digital form of gold because it is the one asset that transcends all currencies, all governments.’
WHAT NEXT? If you want to find out more about how the purchasing power of gold has been maintained over the centuries then check out Roy Jastram’s book and e-book The Golden Constant, which has been updated to include the period since 1970 when gold was unanchored from the pound and the dollar.
Comments are for information only and should not be taken as, or replace, financial advice. Currencies can fall in value.
Follow the writer @mattfitnessray