Fix Our Hearts or Die: Investing, Collectivism, and Coffee Can
When David Lynch passed away last month, I took the opportunity to dive into pieces and reflections on a director who somehow had mostly escaped my viewing. I had seen his interpretation of Dune a few years back and had always meant to watch his other works, but an alignment between remembering, mood, and access mostly stymied these attempts. Much like Prince’s passing in 2016, I came late to the party of an artist whom I really should have discovered while they were still alive. Lynch’s ability to find the horror in the mundane and the mundane in horror is a surface-level way of explaining his oeuvre, but it belies a lot of what beats at the center of his craft: an unbelievable empathy for people and a steadfast Humanist outlook on the world.
Humanism is a predilection that I have been nurturing since high school. Breakfast of Champions was on a book report list for my Junior year AP English class that had stuck out amongst the usual literary fare. I had heard of Kurt Vonnegut in passing before that; after all, he had taught at the prestigious Iowa Writers’ Workshop just a half-hour’s drive down I-380. Whether it was by this subconscious remembrance, or a gentle nudge from a knowing Mrs. Knutsen, I ended up reading a book that has had the biggest effect on my life.
Vonnegut was crass, he was angry, he would not suffer fools. He would draw crude 4-line puckered assholes in his work to prove in part that he could. But it all served to make a point: he knew that we as a people could do better, and only through limitations placed by ourselves and by the callous and feckless in power were we unable to do so. While Vonnegut used science-fiction as a vessel for his Humanist message, Lynch wrapped his pill in a deli meat slice of macabre weirdness in such a way that “Lynchian” has become the default term in which to describe such a style. There is excellent piece over at Bright Wall/Dark Room by Zach Vasquez that puts its thesis right in its title: “Fix Your Heart or Die: The Startling Empathy of David Lynch”. The phase itself*, uttered by Lynch as his character in Twin Peaks: The Return, is Humanism at its core. It is a mantra, a reminder to strive to be better not for future fortunes or rewards in an afterlife, but because kindness and empathy are the way toward making life for yourself and others better and happier in the present
It is also a threat, because if we do not introduce kindness and empathy and love into the world, we will live in fear, conflict, and anger; a self-made, living hell.
The pendulum of the American Experience has once again swung back to a toxic over-emphasis on the Manifest Destiny, rugged Individualism, and bootstrapping that is crudely deified in history textbooks and national myth. It is the belief that this country was shaped and formed by singular, great (white) men bending the will of the people, the economy, and even the land itself to their very whims. It is simple, it is set up to be inspiring, and it is completely and utterly wrong**.
It is erasure of the millions of everyday people who fought day after day after day for change.
It is the erasure of thousands of others who stood up to unjust systems and were punished, jailed, or even killed for having the gall to believe that everyone deserve their fair shake.
It is an attempt to package our national story into a neat little box, instead of the messy, mistake-prone slog to progress that 249 years of fighting and struggling and “two steps forward, 1.9 steps back” that it has been.
The marketing arm of the finance industry lionizes the tip of the right tail winners of investing, but for the other 99.99% of us, it is a way to secure enough wealth for us to retire without having the specter of having to worry about being able to afford a daily life in reasonable comfort. Why do we continue to chase the right tail with crypto schemes and sports betting and gamified investment platforms and the lottery when we should be focusing on stable, long-term investments that allow us the peace of mind to devote our time and effort to our families, friends, and communities? Maybe it’s the eternally-optimistic Humanist in me, but if we want to have a successful, fulfilling life, shouldn’t we share that with the people and places we most care about?
Fortunately, some countries in the world have taken this concept to heart and have made public pensions a core edict of their governmental duty. The CFA Institute puts out their Global Pension Index annually, and countries with strong pensions like the Netherlands, Singapore, and Australia see the burden of saving for retirement mostly off the shoulders of individuals and on to the shoulders of professionals. While the United States still comes in at a passing grade of C+, it is mostly saved by its “damning-with-faint-praise” Adequacy score and harmed by low scores in the Sustainability and Integrity factors. Sure, Social Security is the largest pension fund in the world, but it is also one that is treated less like a bedrock of government responsibility and more like a political football with the Sword of Damocles constantly hanging over it.
Historically, public pensions in the US would be supplemented by private pensions for employees. You get a job at a stalwart American company, you serve your decades, and you retire with a gold watch and a pension to make your retirement comfortable. Of course, this private pension system was replaced over time with the 401(k), essentially taking the burden of investing off of the shoulders of paid professionals either employed or contracted by these companies, and placing it on the less-informed, individual investor. Being a Mechanical Engineer or an Emergency Medicine doctor both require an immense amount of work, effort, and intelligence, but forcing the onus of investing on to them instead of a paid professional makes for a less-efficient, more stressful system.
The silver lining: while investing in America continues to be a fight on two fronts between an arduous slog toward democratization and beating back snake oil and bullshit, its arc is bending toward progress. Index funds, online brokerages, and ETFs have all been leaps forward in putting investing in the hands of the individual in ways that would make J.P. Morgan jealous. The tools are there for investors to secure wealth for themselves, but the industry specifically and our society at-large place an emphasis on siloing yourself and the generation of your wealth away from others. Sure, you can invest in assets with titles like “mutual fund”, but you’re jumping into a pot with faceless others while the fund manager takes their 2-3% for occasionally moving the ship’s steering wheel a bit every quarter. Worse yet, you can attempt to go it alone, investing for yourself on platforms designed for constant interaction and updates. Hey, you invested in VOO! Here’s some confetti! Now come back every day and silently celebrate with the line is green and audibly groan when the line is red.
Again, the pieces are there, but they’re not being offered in a way that they should be. When an investing platform prioritizes packaging and selling their users’ order flow data and does not give users any return on the platform lending out the stocks owned in individual accounts, their incentive is not the long-term generation of wealth for their users: it is getting as many orders as possible to increase the size and importance of their data. Derivatives and the hot new crypto coin and prediction markets are speculation, not buy-and-hold investments, but the platforms can’t increase profit margins through recommending a basket of index funds. The interest of the user and the interest of the platform diverge, and the platform will serve its own interests above those of its users every. single. time. Because, at the end of the day, that’s what you are: a user. Not a customer.
What we need is a platform where customers can come and invest in an environment that aims for long-term wealth preservation and generation that takes the stress and burden off of the individual.
A platform where the interests of the platform and the interests of the customers are one and the same.
A platform bereft of flashy UX and hollow offerings.
A platform that brings the individual investor into a community of friends, families, neighbors, locals, and others who want the world around them to share in their success.
Because that’s the answer. The only way out of this is together, lifting one another up. Fix our hearts or die.
This is Coffee Can.
Well, it’s a flow map of a proposed Coffee Can platform. A digital blueprint. You can toggle around with it at this link right here.
The name of the platform comes from a seminal article by Robert Kirby, in which he describes the “Coffee Can” portfolio as a “set and forget” investment, akin to the Old West methodology of taking one’s funds, putting them in a coffee can, and tucking the can underneath one’s bed. No fees, no costs, just the quality of the assets placed in the can allowed to age over time. Minimalism is the name of the game here: by avoiding a slew of transactions, rebalancing, and emotional, panicked adjustments of the portfolio (usually to its detriment), an investor can achieve better returns than a more-active strategy.
That simplicity is at the heart of Coffee Can: select which assets you want to invest in, set your periodic timespan and investment amount, and let it go to work. Monthly $100 deposits into VOO? Sure. Quarterly deposits into SYLD? Yep.
While that’s at the center of the platform, it is further buttressed by some additional features to bolster this investment process. I hinted at a lot of concepts that I wanted to install into Coffee Can in prior posts, specifically “Fixing Retail Investing Part II”.
No selling of user data. Full stop. There’s no way possible to have a platform that sells customer data to third parties and is also acting in their customers’ best interests.
Securities lending payments are shared with the users. There would be a split on any securities lent out: part going to the platform, part going to the customer whose securities are being lent, and part going to a lottery that I’ll talk about in a bit.
No gamification. Investing isn’t supposed to be sexy. Cheap entertainment with bright colors and flashy visuals usually hides something more sinister. This is platform that is all about utilitarianism. The original Game Boy had only four colors and did pretty alright for itself.
Lock-up periods on investments. This sounds a bit overbearing to prevent investors from accessing their own money, but how is it any different than an IRA or a retirement target date fund? The idea behind the lock up is to remove the urge to fiddle around with your portfolio, which creates a vicious feedback loop that can destroy wealth. However, we’re not just walling off your investment from you without considerations.
Lower fees for longer lockups. Want to treat your Coffee Can portfolio as a quasi-IRA? Great, your annual maintenance fees will be really low. Like, near-zero. Want to treat Coffee Can like a speculation engine? Your fees will be closer to the 2-and-20 that hedge funds demand for a similar structure.
Annuity payments as an option. That being said, we’re not making CC portfolios a completely walled-off garden. There will be an option to get back a small portion of your investments each year, either from the overall portfolio and/or the past year’s return. Yes, it will have an effect on compounding returns, but a 1% payout on a 20% return year isn’t going to break your investment goals, and it’d be nice to have some walking-around money to spend in the now.
Only vetted securities on offer. This is not a speculation platform. We want customers to be able to invest in high-quality buy-and-hold securities without having to sift through a lot of the chaff that’s out there. In some cases, Coffee Can could offer a generic version of popular indexes, further reducing fees while preserving the investment thesis of the original asset. If you’re not sure what to invest in, you could tap into Barista, a Smart Portfolio builder that will take into account your investing horizon and risk tolerance. You can even test investments before committing to them with Decaf, a paper-trading option. There’s even plans to build out some truly unique investment vehicles on-platform to further push buy-and-hold feasibility to a level that won’t be found anywhere else.
A true investment community. Sure, including something like a Discord channel or forum for users to interact with one another is part of it. But that’s only the beginning. Coffee Campus is financial educational center, offering a U-18 finance course geared toward preparing children for real-world applications of finance. We’ll also have courses for all ages to learn more about investing, as well as an Informed Investor exam that will aim toward granting Accredited Investor status to those who pass it. We’ll also have a community lottery from excess funds as well as a nomination and voting system for users to give back to local non-profits and community betterment organizations. While the investing portion of the platform is going to be aimed toward non-interaction, the hope is that the community aspects of the platform will be where customer activity thrives.
Of course, all of this sounds well and good, but how can you guarantee that Coffee Can will never do a face-heel turn and leave its own users behind in the quest for a higher profit margin? Well, I’ll lift directly from a past post to explain this.
These nudges may sound great and all, but as someone who is a firm believer in words being useless without actions that back them up, I would be hesitant to trust in these proposals without proof that the platform is truly seeking a unified alignment in incentives. Even a company with the best intentions to start can see its morality erode over time: remember, Google used to have “don’t be evil” in the preface of their code of conduct. How can you assure current and potential users that you have their best interests at-heart and provide concrete actions to reinforce that position?
Simple: make the company a non-profit.
This is definitely a rarity for the FinTech industry, but there are instances of non-profit corporations popping up in atypical industries. I would remiss to not mention Ex Novo Brewing as the initial inspiration for this idea. Despite a fairly minimal overlap between FinTech and craft beer, the root concept is quite applicable to a wide array of industries. In this case, any excess profit generated by the platform would be redirected to local betterment organizations. This does a few things. First and foremost, it removes an incentive by the platform to seek out aggressive profit-seeking activities, removing any impetus to, say, package user data for third parties. Secondly, it gives users transparency into where the fees collected by lock-ups and securities lending are being allocated. Finally, it builds a community around the platform through the collective action of users deciding which organizations will receive donations.
There you have it: a non-profit FinTech platform aimed at working in-concert with its customers to help them achieve their investment goals through a platform that promotes quality long-term investing strategies and action, as well as a community built up around investing education, collectivism, and the improvement of local betterment organizations.
Naturally, such an atypical idea means that it doesn’t quite fit into the standard startup development framework. Having Coffee Can get its start through VC funding leads to ownership of the platform in a way that more-than-likely clashes with the non-profit, collectivist nature of the platform itself. There are non-profit funding organizations out there, so this is still a possibility, but the overall pool of funding resources is significantly smaller. So, how to proceed? The hope is that those interested in a platform such as Coffee Can can help contribute to its creation. Have experience with developing in the FinTech space? Great, we need someone to help build out an MVP! Want to come on to manage the whole shebang? Sure! Collectivism is at the root of Coffee Can, so why wouldn’t its development be the same?
If you’re at all interested in Coffee Can, whether it be in investing or creating or anything else, don’t hesitate to reach out to us, either via the “Contact” page at the top of site or to me directly.
Homo sapiens, throughout our relatively brief history in the time horizon of the Earth, have been social creatures. Hunting parties, farming villages, tribes, communes: we are stronger together than we are going it alone. So why has the largest driver of security and happiness in our lives become so brutally isolated? Why are we expected to invest alone instead of together, navigating an extremely complex and technical field with any mistake erasing literal months or even years of labor? We have the capacity to lift ourselves up, but the burden is much lighter when everyone lifts together.
As I was putting together the outline of what would become Coffee Can, I found myself going back to Vonnegut time and time again. My favorite quotation of his felt the most apt to this work, and despite being from one of his lesser-known works, I think it is the perfect encapsulation of Humanism, Collectivism, and the core nature of our species. It was what I was aiming for when designing this platform. I hope it landed its mark, and I pray it continues to do so as we proceed.
“Hello babies. Welcome to Earth. It's hot in the summer and cold in the winter. It's round and wet and crowded. On the outside, babies, you've got a hundred years here. There's only one rule that I know of, babies:-‘God damn it, you've got to be kind.’”
Fix our hearts or die.
* In the context of the scene, Lynch actually says “fix their hearts or die”, but the meaning is preserved with Vasquez’s change in his piece’s title.
** Check out A People’s History of the United States by Howard Zinn for a comprehensive work covering this idea.