Aaron Klein. His career has largely been in the intersection of finance and technology. As co-founder and CEO at Riskalyze, he led the company twice to being one of The World’s Top 10 Most Innovative Companies in Finance by Fast Company Magazine. Today, over 150 riskalyzers served thousands of advisors. Aaron has served as a Sierra College trustee and in his spare time, co-founded a school project for orphans and vulnerable kids in Ethiopia. Investment News has honored him as one of the industry’s 40 Under 40 executives.

Famous Five:

Favorite Book? – Extreme Ownership
What CEO do you follow? – Ben Horowitz
Favorite online tool? — Twitter, Evernote and Uber
How many hours of sleep do you get?— 7
If you could let your 20-year old self, know one thing, what would it be? – “The most important skill that you will ever have in starting a company is making great hiring decisions”

Time Stamped Show Notes:

01:15 – Nathan introduces Aaron to the show
02:07 – Riskalyze’s mission is to empower the world to invest fiercely
02:20 – An average consumer struggles to invest and understand the concept of investing
02:39 – Warren Buffett said “Stock for the one thing the American consumer refuses to buy when they were at their cheapest and only wants to buy at their most expensive”
02:48 – Riskalyze invented risk numbers that they can create for short-term
- 03:06 – Riskalyze’s focuses on the short term
- 03:43 – The harm usually comes from short-term decisions
03:58 – Riskalyze needs a context to understand how to make a good short-term decision
04:11 – Investors who don’t use Riskalyze would normally ask if the 2% down on their portfolio is still okay
- 04:18 – 8% of that portfolio is actually normal
04:56 – “We tend to stereotype people based on their age”
- 05:12 – The typical questions in the industry would often base on the age of the investor
05:41 – Riskalyze has a team of academics who delve into the data and methodology behind the risk number
06:00 – Riskalyze’s technology helps the advisor assess how much risk they can handle in a quantitative-objective way
06:27 – Riskalyze works with financial advisors and helps their investors become more successful
06:45 – Riskalyze is a SaaS business
06:48 – Riskalyze is launching their auto-pilot platform
07:19 – Pricing starts at $145 a month
07:36 – Riskalyze was launched in 2011
07:41 – Prior to Riskalyze, Aaron was in a brokerage firm and saw firsthand how poorly average investors thought about risk
07:54 – Aaron told his financial advisor friend about the risk and they founded Riskalyze
- 08:07 – Equity was 50/50 at first
- 08:27 – They’ve raised and brought in investors along the way
09:03 – Investors have seen a good return of up to 10X
09:48 – Riskalyze is currently focused on going to financial advisors first
09:59 – Riskalyze was capital efficient
10:02 – First round of funding was around $420K all equity
10:23 – Riskalyze is a substantial business and their ARR was a multiple of the capital deployed
10:40 – Total funds raised to date is $24M
11:10 – Team size is 175 from 90 last October
11:24 – Based in Auburn, California
12:21 – Riskalyze currently serves 19K advisors
- 12:25 – There’s no free plan
12:42 – Advisors are known to be money efficient
12:59 – Riskalyze tried a free version
- 13:23 – The plan was originally $99 a month
- 13:40 – After they tested to push the price up, their conversion rate tripled
14:10 – Gross annual churn
14:32 – Riskalyze typically loses an advisor to retirement or death
- 14:48 – Riskalyze found a solution for retirement
15:33 – Aaron doesn’t have the number for their net expansion RPU yet
- 15:50 – Riskalyze rolled out their advisor product in March 2013
- 15:53 – Then, they went into hyper-growth mode, from 380 customers to 2000
- 16:24 – They lost track of the data with only 4 people
16:50 – Cost to acquire new customers
17:10 – LTV
18:00 – Nathan recommends Klipfolio as a dashboard for Aaron
18:15 – Aaron rolled out a premier tier of Riskalyze in February which is $225
19:18 – Average MRR
21:30 – Aaron shares why Warren Buffett recommends investing in Vanguard
- 21:31 – Vanguard fits the people who are in their 70s and 80s
22:04 – Buffett also said that going to an advisor isn’t necessary
22:18 – Aaron believes that Vanguard should still be a part of a person’s portfolio; but what about someone who is a risk 45 and Vanguard is a risk 78?
24:45 – Nathan never went to an advisor as he found them fishy
25:15 – Aaron doesn’t have any financial advisors at the moment but he will in 2-3 years
- 25:20 – Aaron believes that an advisor can help him maximize the money that he has for the future
- 26:08 – The reason to use an advisor
- 26:32 – Riskalyze wants people to get risk aligned with the risk they can handle
26:48 – Advisor charges a flat fee based on the investor’s asset
27:34 – The value of human vice
29:14 – The Famous Five

3 Key Points:

If an average consumer knows his risk number, he will be more confident to invest.
An advisor will not only help you manage your money, but show you how you can grow it.
Focus on your hiring—this will contribute to a fast-growing company.

Resources Mentioned:

The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
Klipfolio – Track your business performance across all departments for FREE
Hotjar – Nathan uses Hotjar to track what you’re doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
Audible– Nathan uses Audible when he’s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books

Show Notes provided by Mallard Creatives

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