Purple Group’s EasyEquities, the low-cost trading platform that pioneered fractional ownership of shares to democratise investment in South Africa, turns 10 this year. That’s no mean feat: statistically, only 9% of start-ups make it to a decade. This is an excerpt from the company’s first-half results interview with Purple CEO Charles Savage.

In the first year of EasyEquities in 2014, you had 1,400 registered users and there were only 280,000 active retail users on the entire JSE. You alone now have 945,000 active users. How did you get here?
CS: The community fell in love with us from day one, or at least our purpose and what we were trying to do. And so they took it upon themselves to be part of the cause, wore the Easy badge and helped us grow the business. It’s truly South African: not only was it built and delivered here but it serves the demographic of South Africa: 42% female, 58% male (so we can do a little better there) of young, black South Africans.
The media fell in love with us and we got lots more coverage than we deserved; we won partnerships that we didn’t deserve, like Satrix. And then Sanlam bought a meaningful stake about two years later. And that was followed by Bidvest and Capitec. I think we got a disproportionate share of voice for a company that was really nothing except a cool idea, or a naive idea, with a strong purpose.
I don’t think the media fell in love with you; they were quite sceptical.
CS: Well, we always got a disproportionate share of voice when you consider how small we are. I can’t think of a small cap listed on the JSE that gets as much attention from the media today, so I’m very grateful for that.
You made R25m from the new “Thrive” fee of R25 per account, introduced to encourage more trading activity. But there was a huge backlash and an almost visceral sense of betrayal from users that you’d gone back on your word to remain free. Why not just say: we need the fee to be more sustainable?
CS: There are huge areas of our customer base that are exempt: if you’re under 21 or over 65 you’re not included. For the balance, Thrive was developed to encourage the right investor behaviour. We targeted two things: I want to be front of mind, once a month, with my investors; I want you to think about me – negatively or positively – and then take action. Your action could be education, so you’d avoid paying the fee and earn your Thrive. Alternatively, you could choose to pay the fee because you value the platform.
The real test is: what has activity done since we launched Thrive. We had a declining deposit and number of depositors rate since November 2021. Since we’ve launched Thrive, we have increased depositors and deposit value by 25%. In February, we had a record deposit month.
Have we betrayed customers? No – you can earn your free platform as it was before by just allocating some of your time. What we didn’t predict was the media storm, but you can’t talk about fees in the context of an industry without talking about everyone’s fees, so the dialogue shifted. Prior to Thrive, for every customer we lost to competitors, we would win about 1½ customers. Post Thrive that ratio has gone to 1:4, so for every customer we lose we gain four.
Are there big expenses ahead for Purple? Especially if you want to keep growing at this rate?
CS: We ramped up our cost base to deliver to the customers who arrived in the past five years. But when you look at it through the lens of cost per customer, it’s actually come down. We didn’t give any increases to staff in the past 12 months. Can we do that again? No, we can’t. I have to say, these results, as good as they are – my view is that they will be the worst set of results we publish over the next three years. And I’m not trying to be bullish.
But that is bullish, isn’t it?
CS: Well, why do I say that? Because we’ve delivered these numbers in the toughest of economic times, we’ve got no bull market, we’ve got no tailwinds from lowering interest rates, we got no tailwinds from anything. These results were hard fought. But inflation is coming under control, interest rates will start to decline, and so economic activity will return. The other reason I’m so bullish: prior to the past two years we’d only ever navigated our business in a bull market, and as a result we hadn’t engineered the business to be more resilient regardless of the economic conditions. We’ve now done that.
What’s happening in the Philippines, where you’ve spent R40m to establish yourselves – and it’s still costing R1.2m a month. When’s that going to pay off?
CS: If I thought through all the things that could have gone wrong that have gone wrong there, I’d never have started it. But we’ve got the biggest possible partner that gives us access to 80-million customers – they are the case study for mobile wallets in Southeast Asia, called GCash. We have staff there building code for the group at a much lower rate than we were doing elsewhere, and they’ve helped turn on our 24-hour operation.
What have we got wrong? We naively thought the regulator would recognise our value and just allow us into the market. We didn’t pay enough respect to how difficult that was going to be. Rather than waiting for the regulator for permission on what is not currently allowed (like US shares) we’re focusing on what is allowed, like local stocks. We’ve been working with GCash to leverage our technology to replicate what we’ve done in South Africa with local products. I think we have a carrying cost of at least another 18 months before we start to reap the rewards.