Jon Stein, founder @ Betterment

Jon Stein

I'm john I'm the founder and ceo of betterment raise your hand if you've heard of betterment oh my god okay good so most of you raise your hand if you're a customer of betterment okay like a little less I'd like to get that ratio better but that's not why we're here today you're here to hear about my failures and experiences and understand how those might help you in your own entrepreneurial journey so I'm excited to talk about that I'll just say quickly for context betterment is an online financial advisor we take all the things a great financial advisor would do if you had one and we make them smarter faster cheaper and better for instance if you have a bunch of you know expenses and you've got your direct deposit coming in and you find yourself trying to manage your cash flow month to month in your bank account we'll do that for you automatically we'll sweep money back and forth where it needs to be to help you make the most of it or if you're planning for your family's retirement or your kid's college savings we'll tell you what accounts to open how much to put in each of those accounts and keep you on track to your goals that's what I mean by financial advice when we when we started back in the early days I had a had a belief that I would just kind of get to think about things and and and work on the product and my co founder my first co founder sean used to say what you have to do john is you have to make it real as quickly as possible I would talk about all the things that I wanted to build and the services that I wanted to deliver and he'd say you know what before we can design all these like these graphs and things you just have to you have to make a sign up that people can use and do those basic things print your business cards and this advice has stuck with me really more than anything else that that I've learned in the in the past many years when we would go to pitch vcs and early advisors and things like this the thing that made a difference with them was when we could show them something tangible right so actually having a sign up process that worked and having a website that worked making it real for them it wasn't just a concept but it was a tangible thing made all the difference in the world and so when people ask me what's the number one thing that I should do to get my company off the ground who do I need to talk to just go out and make it real make it happen and and make it something that people can can touch and feel so people believe in your story at that time I was doing everything by myself I I I was I was coding I would I would get into these like 24 hour you know almost trance like states of just trying to perfect a certain part of the site and I loved that time right like that flow that you get into when you're really working on something that you're passionate about and and and I was doing the engineering I bought like 40 legal books about securities regulation and derivatives and all of the things that I have to know to to set up a regulated financial entity it was too much I took on everything and and over time I I realized that I wasn't gonna be able to do everything by myself and I started talking to friends and those friends started wanting to join up and sign up and and help me and what I learned early on was the role of a founder is to try to have nothing to do you've got to build a team you've got to find other people who can take all that work off of you just this week I was talking to one of my team members and I said to her you know this is gonna sound crazy but if I have work to do it's a really bad thing right you don't wanna be relying on me for this deliverable right we've gotta find somebody else to do this it takes an amazing team and you have to constantly be delegating we found you know fortunately people came to us over the years and the reason that they came to us was primarily for the mission from day 1 I was talking about how I wanted to change the world I wanted to build financial services around the customer in a way that they hadn't been done before and that mission that idea of changing a really broken industry resonated with people and that's why amazing people like dan egan or alex behnke or all of our our team came to join us and left great jobs in you know big financial service companies where they had great incomes and a lot of job security they came for the mission and to me that that mission is the one thing about betterment that hasn't changed this is something I feel like we we got right from the beginning having a mission is so critical I believe to building your business and attracting talent and attracting capital and that passion that you feel about the mission is going to come through in every one of your conversations I see many of you smiling and nodding you feel it you know it and don't be afraid of that conviction I feel like some people it won't resonate with them right like they're gonna be like you're a little crazy like what are you doing but I think the right people are gonna be attracted to that passion and they're going to join your cause and that's going to serve you for years to come you've got to hang on to that I've been doing this 10 years now I've been building betterment for a long long time and it's been the majority of my professional career at this.

Jon Stein

An amazing spot to to learn a lot about growing and running a business but it takes constant energy to do that and one of the things that really keeps me going is coming back to the mission coming back to why I started this coming back to our customers and that that helps drive me forward as well I mentioned that mission is important and customers are important customers is the is the other thing that really keeps me going just over thanksgiving I was home in dallas where I'm from with my my parents and and I had coffee with a couple of customers there at betterment we do this program where we send out emails to people in our hometowns and a lot of the product and marketing teams do this I I got so much energy from these conversations it was it's amazing to connect with like real like random people you don't know and and hear their stories and in this case it was great because they they had no issues with the service they were like you know just mega fans right they were so excited to be talking with me and sharing what they wanted to see on the platform that was new and they they loved the high interest smart saver account and they loved the account aggregation and so on it was great and I brought that energy back to the team now we do lots of things at betterment to try to build customers into everything that we do we do customer week where every single person in the company is on the phones with our customers this is a bit of a throwback to the early days when literally it was a room of you know 4 to 10 people as we scaled and at that time we had no customer service and there was just a phone tree and it would sort of like ring at one person's desk and then ring at the next person's desk and we would see like you know how long we could wait like with the phones ringing before somebody picked it up but I was talking to all the customers back in those days and we all were and we all had this very close relationship with them and I loved that and when someone was on the phone with the customer if they had a problem you knew because you're in the same room with them and and so you'd hear what customers needed from us all the time as we've scaled we're now almost 250 people and we're no longer all on the same floor we're not even all in the same building and it's harder now to keep in touch with our customers I get to do it because I can go and sit with the the customer experience team anytime I want and and I still do customer week and all that but a lot of our team doesn't have that same access and like and and memory and and and ability to to connect so my new year's resolution for 2018 was to bring the customer to life within betterment we've done so much more this year to research our customers we've done more surveys more panels more getting out there and I just I like to me this is all back to basic stuff but it's a reminder to me of how important it is because I felt like as we were growing we're getting further and further from the reason we're doing this we were getting further from our customers in the early days we didn't have to do panels because like like many of you who are who are hustling and and entrepreneurial we we were constantly ourselves out talking to customers and I just I can't overemphasize the importance of that and those insights and cataloging them and acting on them you have a great instinct if you're talking to your customers all the time one of our values at betterment is is iterate to breakthrough we have this concept of constantly trying to improve things and I boil that down into this lesson of never settle I think it's possible to get to a spot where you feel like things are pretty good and the product is working and maybe maybe you're you're dominant in the market or you don't see any competition but it's coming I I I personally can tell you like we been at this for 10 years now we're the market leader in the space and every year there are new entrants there's new competition there's new people coming after us and they're doing interesting things and you gotta keep your eyes open and continue to iterate and improve as a as a founder you'll you'll appreciate that you're never quite satisfied with what you've got you always want it to be better right you're thinking you've got this long list of things and you may talk to people and your customers and they may say I love your product and I bet sometimes when you hear that you think oh it's it should be so much better like it's not it's not what I want it to be yet and that that drive to improve you're going to feel that more than your customers are going to feel that you're going to feel that more than your team is going to feel that you have to help all of them feel that you have to paint for them the vision of what could be and how much better the service could be and constantly drive to improve it and iterate and make it better we have another value our first value is pursue happiness it's a little bit of a funny you know construction and pursue happiness and and and what it means to us is that we're constantly striving we're constantly going after something that we may never fully attain but we enjoy that struggle we enjoy the journey and we enjoy struggling together that idea of pursuing happiness is about struggling and striving and I think it comes back to this this concept of not settling and always trying for more and that's been an important part of how we've continued to innovate and iterate and grow there's a counter.

Jon Stein

To that which is that you can constantly be trying to do all these things and never get anything done and so the last. I want to make on lessons that I've learned or things that I feel like we could do better is prioritization is key I'm terrible at at this I I always wanna do everything and my team in every planning cycle has to tell me john we can't possibly do all of that you realize we're we're gonna break the company if we try and do this many things we don't have that big of a team we you know we're already doing too much what can we stop doing and so we've tried different approaches of you know stopping things and and and they try to contain me but I just have this desire to do so much I mean we're in the the retail business we're in the b to b business we support advisors we're now doing cash management we've got all this personalization I'm just always trying to do more and you know a little bit this comes back to hiring a great team and finding people who can can support you in those areas where you're less strong I have a great a great management team who do contain me in this area and and you know can talk to me and tell me like what's actually possible we've got great product managers and project managers and product marketers who help us to strictly prioritize and manage things and make sure that they get done I I can't emphasize enough how important it is to to focus and without that focus and drive on what's actually most important we never would have gotten anywhere and those are my very simple lessons or learnings I should say from my past past 10 years at betterment and the things that have helped to drive us forward and and I'd love to to take your questions about anything that I've talked about today or anything about the the business or other things that that we've learned so should we be worried about the yield curve wow this is this is pretty wonky I have a really generic answer to all of these kinds of market questions people say what about china or you know there's something different every week if you're invested for the for your goals if you're thinking about the if you're invested for what's really important to you like if your goal is retirement that's probably 30 + years out for for many people in this room if you're invested for you know down payment on a house that you got to make next year you're going to invest that money really differently you're going to put that into a into a savings account or a high yield money market or something and as long as you're invested for the right duration for your goals you don't have to worry about the news the news is there to scare you and grab your attention and make you you know do things you shouldn't do it's it's not there to help you make the right decision and as a financial advisor I just constantly come back to the idea that make sure your your investments are aligned with your goals and you're going to be fine you don't have to worry about this kind of stuff I frankly think it's crazy that we live in a world where all of you are expected to be financial experts it's like it's the dumbest thing you know we we have 4 zero one k's now and so you have to think about you know how you're invested for your retirement but this is this this is like not something that everyone has time to do it's as though I said you should be responsible for your own health care you can have any drug you want have as much as you want there's no doctors good luck that's just like a dumb way that you never design a health care system that way but that's how our financial system basically works it's like here's is a bunch of bad products go have whatever you want you know like good luck I I believe the future of our industry of financial services designed around customers designed around real people is that you all and I most including myself shouldn't have to worry about this stuff the that that that we there should be intelligence that helps to manage your wallet that helps you to put the next dollar in the right place to make the most of it anyway that's what we're building and that's that's my long answer to should you be worried about the yield curve how do you find the balance between motivating your team to want to be do better and celebrating your team's successes I love to celebrate successes I I think marking occasions is a must we have a lot of traditions at betterment and we celebrate occasions all the time we have we have these traditions I feel like help to help to build the culture they also help to let the team know how much you care about the team so we have 4 tentpole events we do our anniversary party every may we launched it techcrunch disrupt in may of of 2010 and so that's our annie party we do a thanksgiving which is most people's favorite event where it's a potluck and everyone comes and and and brings their own dishes and brings their families and so on and then we do summer and winter retreats we go skiing for a day in the winter and we do like a camp camp thing in the summer I really value this kind of stuff I think it's so important to get the team together to get out of the office to see each other in a different context one of our values is build relationships beyond the task what that means build relationships beyond the task of course if you're like in a project together you have to get to know someone but go beyond that go outside of it get to know them beyond the way that you work with them to me that's important to building a strong team where you have people you can go back to and people who will come to you even if you don't have an immediate need from them them I think that's an important part of building a great company when we when we think about traditions we also do things like the betterment of betterment awards where we have our 7 values and we have 7 hats one that goes with each of the values so like you know our value of embrace efficiency is one of those hats with like the drinking straws you know for like the beers up top because it's an efficient way to drink beer I guess I I think that having in that recognition and we we celebrate people who represent each one of those values I think that's an important way way to to perpetuate your your company's values and and culture how much capital have you raised and why did you choose venture yeah listen I I have a ton of respect for people who bootstrap businesses I think it's an amazing way to go if you if you've got that kind of kind of a business and that kind of a drive where you can can achieve that do it I knew starting out that to build a financial services brand that would reach millions of customers we would have to raise boatloads of money like I just I had looked I I looked at all the examples of people who'd built financial brands and like no one had done it for less than 100 of 1,000,000 of dollars right so I looked at schwab I looked at ing you know you look at all these so and so we we we set out knowing that it would require capital it ended up requiring a lot more capital than even I thought I mean we've raised $280,000,000 to date we we still have a lot of that in the bank we continue to to grow and invest it but when I think about why did we raise it it it was just it was we had to do it what was important to me was finding the right kinds of partners in raising it so there's like there's there's all kinds of venture capitalists out there they all have somewhat similar motivations but you know when you talk to someone if they share your values and if they share your aspirations and hopes for the company our our first venture investor I always talk talk about our our first meeting was love at first pitch because we went out to the the bessemer offices and we sat down with rob stavis who's still on my board today and I told him about the vision for betterment and what we wanted to do and the mission that I talked about earlier of helping customers to do what's best with their money so they can live better and he said that's great we've been looking for a company like this for 2 years and this is the best one I've seen I'd we'd love to be in business together they had a long term horizon he's been invested for for 8 years now and isn't talking at all about you guys should think about you know liquidity or you should be you know moving to find a buyer because they have a very long term horizon at bessemer and that's the thing that was important to me in finding the right kind of partner all of our investors share that same long term view and and that's important to us there are other reasons to hire other investors that obviously doesn't make that right for for everyone some have great expertise in retail distribution or or or other networks so so I chose venture because I knew we need capital and patient capital it would take a long time how did you choose your team early on how did they stick around did they volunteer intern or did you pay them my poor early team we my my cofounder eli and I didn't didn't pay ourselves salaries for at least a year and a half in the early days we really we went through all of our savings we'd put a lot of our savings into the company we hired a couple of a couple of friends I mean my my colleague from fmcg anthony joined us and and then we hired a cto kieran who I knew through the columbia network we paid them not enough you know it was it was well below market like a quarter of what they've been making and we paid them in equity and then after they worked for us for like 9 months we said so we're gonna run out of money and it would be great if you guys could put in some money so that we can continue to pay you and you know fortunately they did so we we were really lucky to have people who were passionate about the the mission and believed in it as much as I did and they helped us to to get through equity is something that we give to every employee at betterment I I think it's part of aligning the team around the around the vision and and the mission and with that I wanna say thank you so much for having me here it's a great honor to get to speak to all of you good luck