00:01 - Intro
Nalu FM Finance Podcast. Insight into the financial markets.
00:10 - Nikki Varanasi
I think success isn't just a scale or how big a company you've built or how big of a round you've raised. I think it's about trust. If you can change even one user's life in the trajectory of their investing journey, I think you've done it right.
00:24 - Sponsor
This podcast is powered by Vestr, the engine behind active management. Vestr is a Switzerland-based fintech startup that provides software for issuers of actively managed certificates to automate their value chain fully. Visit Vestr, V-E-S-T-R. Com, to schedule a meeting with an expert and to learn more about Vestr.
00:47 - Stefan Wagner
Welcome, everybody, to the Nalu Finance podcast. In today's episode, we are diving into one of the most powerful shifts in modern finance, the democratization of professional investment strategies. For decades, the best-performing portfolios and sophisticated investment approaches were largely out of reach for everyday investors. My guest today is Nikki Varanasi, CEO and co founder of Parrot Finance, a platform designed to let investors mirror the portfolios of hedge funds, asset managers, and even well-known public Fintals, all through their existing brokerage accounts. Welcome, Nicki.
01:22 - Nikki Varanasi
Thank you, Stefan, for having me. Very excited to be here on the Nalu podcast and chat about Parrot Finance.
01:31 - Stefan Wagner
Great. Let's start with what inspired you and your cofounders to start Parrot Finance, and what specific probably did you aim to solve?
01:40 - Nikki Varanasi
Yeah, great question. Parrot really started from a very simple frustration. The best investing strategies aren't actually available to most people. Hedge funds, top asset managers, even, let's say, political disclosures, that information all exists, but it's just really hard to act on it or access it, and it can be very expensive or just impossible for everyday investors. We wanted to really flip that. The original vision was, what if anyone could invest the way professionals do without needing a finance degree, investment advisor, or millions of dollars? Not just seeing what these investors do, but being able to mimic them seenlessly, responsibly, and at scale. That's very important to the mission of Parrot.
02:23 - Stefan Wagner
It's great to see that you're leveling the playing field for the everyday investors. Is there a little bit how you can go into how your approach differs from other investing platforms?
02:35 - Nikki Varanasi
Yeah. A lot of platforms, they give you education or execution, but rarely both together. I think Parrot sits really in between. We turn real professional strategies into something you can actually invest in. Again, you're not really copying random social posts or trading signals from a Discord server or a TikTok influencer. We're following these real portfolios, real disclosures, real track records from real big names of funds, and on top of all of that, seeing real returns. I think what users gain is the confidence and leverage, which they're not really doing guesswork or learning alongside people that are untrustworthy. I think that's the big differentiator from us and a lot of other trading type of platforms. There's no guesswork. We're giving you these proven strategies and allowing you to mimic them. Game-changing never really done before the way we're doing it. Yeah, very excited to see where we go from here.
03:32 - Stefan Wagner
You told us. That's actually something I want to come to is that you and your cofounders, Victoria and Lucy, came from pretty impressive backgrounds and decided to leave that all behind to do your own startup. How did the three How did each of you meet and decide to be paired together? I mean, what strengths bring each of you to the table?
03:51 - Nikki Varanasi
Yeah, funny story. Actually, right after college, Lucy and I were interviewing for a Goldman Sachs role in New York City, and we were both in the waiting room. We ended up staying in touch, became good friends over time. Then during COVID, we got closer in terms of looking at different business ideas that we could do together. I had this idea where I brought her and her other co-founder sister, Victoria. The three of us actually started in that way. They all bring different skill sets. Actually, Victoria is technical and more product engineering-focused, and Lucy is more finance-focused and operational-focused. The three of us, although we come from similar financial institutions, we have different skill sets. I think we work very well together.
04:38 - Stefan Wagner
Now, you named the company Parrot. That's an interesting name for a financing platform, why did you choose that name? I have a suspicion, but...
04:50 - Nikki Varanasi
It's funny. I think it's pretty obvious. It's about parading strategies in the smart way. I think a parrot, as a bird, it doesn't invent a language. It repeats very accurately and precisely. That's what we're enabling, precise replication, not speculation. It's very playful, memorable, and I think it's very honest about what the product does. It's also a funny mascot to have. I think it's catchy. Investing is already intimidating enough, so it'd be nice to have a cute furry animal be your logo.
05:23 - Stefan Wagner
I think regulation has made investing very scary things. It shouldn't be. I think people should feel comfortable to.
05:33 - Nikki Varanasi
Totally.
05:34 - Stefan Wagner
Engage with it. But maybe you can walk us a little bit through how Parrot works from a user perspective. If I would have an account, or how do I need to do it? I need to download the app. What do I do with my brokerage? Existing how would it work for me if I would be a user?
05:51 - Nikki Varanasi
I guess just zooming out to your summary a bit, Parrot is really a platform that lets everyday investors invest the way professionals do. So not everyone has high networth or has an investment advisor. So Parrot uses AI to analyze your interests and goals and recommends expert portfolios for you to mimic. So essentially how it works is, one, you create an account with us. It's very simple on the app store. You download it, you put in your information, and you link your brokerage. You can link any existing brokerage you have. We work with a lot of the top American brokerages. So Vanguard, Fidelity, We have Weeble, Schwab, so you name it, we have that connection.
Then you can browse different portfolios you'd want to follow and subscribe into. But our AI tool also recommends certain portfolios, like I said. We ask you a series of onboarding questions, maybe 10 questions on your risk tolerance, your goals, your certain interests. Then we basically synthesize all of that data and we give you these recommendations for these funds. Then you can choose how much capital you want to allocate and then which funds you want to allocate that capital to. Then Parrot goes ahead and handles the syncing. Whenever those portfolios change from the funds, your account automatically updates.
That's why we work with a lot of these top asset managers and hedge funds to ensure you're getting the best, like Vanguard, BlackRock, Fidelity, Dimensional, Invesco, and many more. These strategies are typically only offered to investment advisors working with high-network clients, and They are not going to take in smaller account sizes like a $10,000 account. For us, we built the technology for an RAA to be scalable, basically recommend and automate the trades for you. It's very simple on the user end, but it's a very intricate process and product we built on the back-end. That's the beauty of it all, simplifying a very complex process.
07:55 - Stefan Wagner
I probably would feel comfortable, but what you call, I think, an auto-invest feature that automatically mirror the trades. How can I be sure that this actually works? Is there some safeguards involved or that it's executed correctly?
08:13 - Nikki Varanasi
Yeah, super important question we think about every single day at the team here. And so behind the scenes, we translate portfolio changes into brokerage-specific orders with timing and allocation checks. So there's tons of safeguards that include trade validation, liquidity checks, position limits, execution monitoring, and users always retain the control. So nothing happens invisibly. And also, since it's part of a third-party brokerage link, we don't hold deposits or actually execute your trades. We send those orders to your third-party broker. Everything on pair is extremely safe and the auto investor is extremely transparent. We tell you when we're going to rebalance your portfolio, when everything is looking good. We also give you clear representation of your PnL. Any gains or losses you may have, it's very clearly displayed.
09:05 - Stefan Wagner
You mentioned quite a few names already. Parrot lets users follow a wide range of portfolios from hedge funds. As you mentioned, you made in public figures, particularly, I think in the US with the politicians, what they're allowed to do. That's quite interesting. How do you source and select which portfolios to feature? But also, how do you actually convince some of these firms to actually let you do this? Or how do you incentivize them to replicate their strategies?
09:32 - Nikki Varanasi
We do have fund partnerships. Because we are an RIA, Registered Investment Advisor by the SEC in FINRA, we basically have a regulatory license that lets us look into these model portfolios, essentially, that are available on these big asset managers, for example, Vanguard or BlackRock. They are only available to RIAs, and we partner with them for their data. We act as a middle ground data a partner. We source in all those portfolios, and on the other side, the user gets access to that. At the end of the day, these are widely available portfolios, but not to everybody. There's no real incentive needed for the asset manager. They're huge companies with big names and AUM, so they're not really looking to monetize off of us, but they act as great partners.
On the flip side, we do partnerships with Boutique Hedge Funds. We are evolving into a marketplace model where a Boutique Hedge Fund, let's say under 50 million, but has great returns, like maybe 65% and above per year, comes on the platform, and they want to charge their own fee, like a monthly subscription fee. We can do that for them, and users can subscribe separately into those funds, but they're going to be higher risk because they're not balanced through these bigger names. If you're willing to take on higher risk, you can enter into those funds. We do revenue sharing with those with those hedge funds. They can keep a percentage with the profits, and so do we. That's a huge incentive for them to join.
11:02 - Stefan Wagner
I can imagine, yeah.
11:03 - Nikki Varanasi
Yeah, as well as being able to target a newer audience that otherwise they would never be able to take them into their fund.
11:10 - Stefan Wagner
It's always a struggle, particularly when you're small hedge funds, you spend your time on researching more on getting better returns or are you trying to find AUMs?
11:20 - Nikki Varanasi
Exactly. We help them scale that up.
11:22 - Stefan Wagner
I mean, investing always comes with risks. You touched already quite a bit of it, but especially when you're copying someone else's trade, There's something in Germany that there's something like this, but you at least seem to be... You only make the ones available that you've onboarded yourself and you've checked up, I presume. How do you make sure that the users understand what they're getting it and that you are also still, I presume, a gatekeeper in this process.
11:48 - Nikki Varanasi
When you hit the nail on the head there, we do screen every portfolio that comes in. We have that authority to do that. Obviously, with being an investment advisor ourselves and licensed firmly, we have a fiduciary responsibility to make sure we're providing the best portfolios to our users and making sure that we're balancing their risk accordingly based on their financial goals. We do take all of that into account. But at the end of the day, we have disclaimers everywhere that do say-
12:16 - Stefan Wagner
You have to in these days.
12:17 - Nikki Varanasi
Copying isn't risk-free. At the end of the day, every portfolio includes context, volatility, turnover, time, horizon, suitability. We also emphasize diversification in long-term thinking, but But again, Parrot it isn't about day trading. It's about learning, disciplined, investing, and following real strategy. The risk is there, but very highly minimized compared to how Gen Z is actually actively trading today.
12:42 - Stefan Wagner
Game stocks.
12:43 - Nikki Varanasi
Yeah. Roaring Kinne and AMC, it's very far from that. I guess there is an inherent risk, but then the data very significantly decreased from what's happening today. If we can help even this generation learn a bit of that, they'll just well off in the next 20, 30 years as they plan for retirement versus who knows, they can all go to zero if they're doing individual risky trades.
13:09 - Stefan Wagner
When you guys set this up, you probably had a certain idea in mind where you wanted to go. But what's the biggest challenge when you started building?
13:20 - Nikki Varanasi
I think the biggest thing is obviously building a world-class product that people love and enjoy using. I think coming up with the correct user experience is super hard because there's a number of apps out there. How can we be different? How can we be more addicting? And how can we be more exciting? But I think one of the largest challenges in fintech as a theme is regulation and infrastructure really hard early on. Like you said, finance is just not forgiving if you get things wrong. We leaned into compliance early and built slowly but correctly. Now that we're officially registered with the SEC, I think our next challenge is scale. How can we grow without losing trust or product integrity is going to be very important for us because we have all the checks in place. We have the product, we have regulatory licenses. Now it's about how can we scale this up to millions of users without losing the quality of user as well as not losing your trust.
14:19 - Stefan Wagner
Obviously, if you start copying a really well-performing strategy, more and more people might want to follow that one. At one point, that might actually diminish the returns that the strategy produce, or you might even be accused of market manipulation because you're so big in the market. How do you deal with that?
14:38 - Nikki Varanasi
I think we get that question a lot. It's actually a very optimistic question, a great problem to have.
14:43 - Stefan Wagner
I know.
14:44 - Nikki Varanasi
It means we have a so much activity happening that we need to place caps. We do have some thresholds in place. To any certain point, X number of capital cannot be allocated to this or this. That really prevents market movement. It's like these are model portfolios. A lot of these asset managers expect a lot of high net-worth people to use it. Naturally, there's a lot of AUM behind these types of portfolios. Where I would find this really risky is if we were letting you copy influencers where a guy from a Discord channel is saying, buy this individual stock, and he drives up the price with his 100,000 members in his channel, benefits off of it himself, and then leaves, that can get him in trouble very much so. I think we don't have that risk because what we're working with is more institutions and funds that expect a certain number of AUM to be invested in those. But again, as a safeguard, we can enter some caps or allocation caps. But I think it's a great problem to have at the end of the day, so I'm looking forward to that.
15:55 - Stefan Wagner
Then there actually is potentially also maybe a challenge on the other side If somebody only has 10,000, probably it starts introducing tracking records, particularly if somebody wants to buy, I don't know, Warren Buffet in the Berkshire Hathaway, who only trades at 50,000 or something like this.
16:14 - Nikki Varanasi
How auto invest works is you have to choose five portfolios to allocate. You cannot put all your money into Warren Buffet. We don't even actually allow that. You can't put your money all into, let's say, Vanguard. You have to choose five of the ones we recommend to you or you choose on your own, and then your capital gets allocated across a percentage weight. I think that's another layer added to your question on how can we minimize this risk internally for market movement. Also, not just that, but the user risk of getting their portfolio to a safe place where they're not putting all their eggs in one basket. I think it goes both ways. But we built the system primarily for that.
16:56 - Stefan Wagner
You clearly have thought about it.
16:58 - Nikki Varanasi
No, we've been through our round here on our side.
17:01 - Stefan Wagner
Looking further ahead, what's the long term vision for Parrot? If everything goes as planned, where do you see Parrot in 5, maybe even 10 years, who knows?
17:11 - Nikki Varanasi
I think for us in the next 5, 10 years, becoming a marketplace where you can access a hedge fund, XYZ hedge fund, that you could have never accessed 5 years ago because of your networth. Now with that same networth, you're able to get in. I I think that's the goal. I think if we've done our job right, investing feels less intimidating, more aligned with how professionals actually operate. When you go to bed at night, you know that your portfolio is in good hands, and it's not just in the very volatile markets with individual stocks and heavyweights. It's well diversified and also strategized behind these well-known funds and firms.
17:53 - Stefan Wagner
If it's okay, I want to go a little bit more on a personal note, because you already talked about there's so much information out there. How do you actually yourself go about to structure your own information diet? What conversations do you and sources do you use for you to stay ahead in finance and tech? How do you operate?
18:15 - Nikki Varanasi
I do prioritize conversations over content. I can read as many books as I want, but I'll never really understand the footsteps of the person that's walked the path I want to walk in if I'm not speaking to them. I think for me, my information diet really consists of talking to people in real life for coffee chats or on Zoom calls. I do talk with a lot of investors, other founders, operators, sorry, constantly. I read select a group. I do love reading long-form thinking blogs, listening to thought leaders on podcasts as I believe so. But I think avoiding noise in this generation is super, super important.
18:54 - Stefan Wagner
Another question for you. What is your definition of success?
18:58 - Nikki Varanasi
I think there's a lot of ways to go about this one. But to me, I think definition of success, especially in this role, is really building something that genuinely improves how people make decisions and doing it with integrity. I think Success isn't just a scale or how big a company you've built or how big of a round you've raised. I think it's about trust. If you can change even one user's life in the trajectory of their investing journey, I think you've done it right. I think another definition of success for me is finally being able to mentor after being mentored all these years. I think giving back to the community of the next generation of female founders or young founders, I think it's very important to me because I didn't just go through this journey to conceal all my information and learnings. I want to share and give back and help entrepreneurs. If they can avoid those same mistakes I made early on, I would love to help.
19:55 - Stefan Wagner
You mentioned that you like to read.
19:57 - Nikki Varanasi
Yeah.
19:57 - Stefan Wagner
What is your favorite finance book and why?
20:00 - Nikki Varanasi
Oh, gosh, there's so many out there. I mean, Secrets of...
20:04
You can go up to three if you need to.
20:07
Yeah. Secrets of Sandhill Road is a big one, I think, that teaches you the ways of investing. Sandhill Road is for context, like a road in Palo Alto in Silicon Valley, where a lot of VCs reside and where it all started. It's right across Stanford University. So Mecca for tech and investing. Very cool book. I love that. I always have it on my table. I think a big one here, though, I will say, I'm a huge fan of Nival Rebicant. I listen to a lot of his podcasts. He's a guest on them as well as the book is called The Almanac of Nival Rebicant. It's one of my favorites. There's a lot of tidbits there that give you a ton of information with little effort to read.
One of my favorite lines from there is actually, Easy choices, hard life, and hard choices, easy life. I think that's very important because you can choose to just relax on the couch and have an easy life right now, but that means you'll have a hard life later on, versus if you make those hard decisions, take those challenges on early on, you will reach success and have an easy life. I think it's contradictory, and I live with that every day, is I chose these hard choices, but it'll pay off, right? I love that way.
21:22 - Stefan Wagner
I like his Almanac. I always like to pull it out and remind myself a few good bits.
21:30 - Nikki Varanasi
It's amazing.
21:31 - Stefan Wagner
I think it's only whenever I have been asking you questions all the time, it's only fair to give you the opportunity to ask me one if you feel like. You don't have to. It's purely optional.
21:42 - Nikki Varanasi
Yeah, I would love to. I think one of my questions I have for you is on this topic we're on, right? With all the success you've reached in terms of your podcast, too, and in the financial world. I think my question ties to or it's investing. What investing habit do you think matters the most and actually doesn't get talked about enough? Because you interview a lot of people and you listen to a lot of content, so I'd love to hear from you on that.
22:12 - Stefan Wagner
Okay, that's a whole, it could be a long... I think I always have this question from my friends who call me up, say, Oh, you're an investor. Should I buy the stock? Do you think they will go up or go down? My usual response to that one is always, If I really could predict what the market will do. If I could really time the market, we wouldn't have this conversation. We'd be on my private jet on our way to avoid because I would have made so much money. So I think timing the market is nearly impossible. You can only always work very hard to get your position correctly. Should be invested pretty much all the time. But in what you invested, I always look on a relative basis what my risk return is.
So if I can suddenly make 13% return on something that is fully backed with an asset that is very stable versus something that is very hedge fund-like, leveraged five times, then you need to shift from one to the other side. I think that's very important that you keep that always in mind and monitor your portfolio. Am I actually in the right thing? Actually, where the opportunities are? Because I think, for example, right now, what's happening in market is, again, probably will be a shift, and there will be interesting opportunities. I see this in the market and I've done the same thing. No, I'm currently keeping a little bit my firepower dry because I think there's going to be some really interesting opportunities coming from where the market is going. But I think stay invested, regularly invest, but always compare where you invested versus what is maybe an alternative out there.
23:52 - Nikki Varanasi
Yeah, I actually really love that answer. I think time in the market is more important than timing it. I love that. Yeah, longevity always matters long term. I think just compounding works. I love what you said there.
24:08 - Stefan Wagner
Yeah, I mean, compounding is the secret of everything in the end.
24:13 - Nikki Varanasi
Yeah, agreed.
24:13 - Stefan Wagner
But I also think I always compare it to surfing. You constantly have to put the energy and positioning in you in the right position because you're not there when the opportunity rises, you're never going to get the opportunity to do this. I spend a lot of time positioning correctly.
24:30 - Nikki Varanasi
I love that. That's off your podcast name, Nalu.
24:34 - Stefan Wagner
Nalu. It's the perfect wave to serve.
24:36 - Nikki Varanasi
I love that. Awesome.
24:39 - Stefan Wagner
Thank you. Last question for you. How can people get in contact with you if they're interested in what you said today and would like to stay in contact?
24:50 - Nikki Varanasi
I would love to speak to people. Like I said, I love speaking to all types of people, investors, founders, operators, and anyone who I can even help or mentor. I think I am most active on my email, so you can reach me at niki@parrotfinance.io or directly on LinkedIn or X as my first and last name as my handle, Niki Varanasi. I'm very accessible. I love hearing from anyone and everyone. So please don't hesitate to reach out.
25:18 - Stefan Wagner
Great. Thank you very much, Nicki. Thank you for taking the time.
25:21 - Nikki Varanasi
Thank you so much for having me. This was a pleasure.