Jon Stein. He’s the CEO and founder of Betterment. With his passion about making life better and his career experience advising banks and brokers, he founded Betterment in 2008. Jon is a graduate of Harvard University and Columbia Business School. He holds a Series 72463 and he’s a CFA (Chartered Financial Analyst). His interests lie in the intersection of behavior, psychology and economics. What excites him most about his work is making everyday activity and products more efficient, accessible and easy to use.

Famous Five:

Favorite Book? – The First Tycoon: The Epic Life of Cornelius Vanderbilt
What CEO do you follow? – Jeff Bezos
Favorite online tool? — Greenhouse
How many hours of sleep do you get? — 6-7
If you could let your 20-year old self, know one thing, what would it be? – Jon could have taken risks a bit earlier in life

Time Stamped Show Notes:

01:15 – Nathan introduces Jon to the show
02:05 – Betterment is the largest independent investment advisor online
- 02:10 – Betterment manages your money in the way old institutions can’t
- 02:19 – Betterment automates the best practices of investing and the same technology drives the cost down for you
- 02:32 – Betterment is leading in their industry
02:45 – Betterment charges a fee that is the percentage of the asset finder management
- 02:50 – It is 2.5%, which is the lowest in the industry
03:15 – “We have to put our customers’ best interest first”
03:30 – Betterment currently manages $8.2B
03:50 – Jon studied economics and behavioral biology as an undergraduate
- 03:58 – When Jon graduated from Harvard, 80% of the graduates took to the finance industry
- 04:47 – Jon didn’t want to follow the people he knew in finance
- 04:31 – Jon wanted to help people so he thought he’d study medicine
04:50 – Jon found himself back in New York, consulting banks
- 04:58 – It was 2001-2002 when Jon got his pre-med from Harvard
- 05:13 – Jon was 23 when he went back to New York, in 2003
- 05:45 – The banks were not paying attention to what their customers wanted
- 06:58 – Jon realized that the industry was fundamentally flawed
- 07:12 – There was no scaled advisor that served the market and the people like Jon could
07:28 – Jon started at Columbia Business School in 2008 and he already the idea for Betterment even before he started there
08:10 – Jon didn’t know how to code when he started and just learned in business school
08:46 – Jon didn’t have student debt while he was in business school and he saved some money from his consulting
09:14 – During the early days, Jon and his co-founders didn’t need a lot of money
09:30 – Jon and his co-founders have invested their own money into Betterment
- 09:39 – Their initial investment was less than 400K
10:14 – Betterment has raised a total of $205M
10:34 – “I always wanted to build a company that would impact the lives of millions of people for the better”
11:04 – From Day 1, Jon knew that Betterment would be a capital intensive business
11:20 – Team size is 220
- 11:26 – About half of the team are engineers and product managers
- 11:31 – Most of the team is involved in building the business
12:14 – Most of Betterment’s customers are from word-of-mouth
12:46 – Betterment’s paid acquisition
13:03 – Betterment’s goal as a company is to make noise
13:11 – There’s now a better way to manage money
14:11 – People should put their money in Betterment rather than in Vanguard because they’re burning money
- 14:18 – Betterment can make them more money on their assets
- 14:39 – Warren Buffett is an active investor himself
- 14:45 – Jon thinks that Warren Buffett’s advice was great during his time, but the technology has moved forward
15:11 – Betterment will make you more money than you would make in a single fund
- 15:27 – Betterment’s website has all the information about how they work
16:00 – Betterment’s role is to maximize people’s money
16:07 – Vanguard is a fund company that sells you funds
16:10 – Betterment is independent from their funds
17:17 – “We are growing faster than any firm in the history of this space”
17:42 – People are becoming aware of what Betterment is doing
18:21 – 240K customers have invested in Betterment
- 18:44 – There’s no minimum amount to invest
19:24 – “We’re building an institution for the next century and we’re not interested at selling right now”
19:35 – Betterment’s revenue is driven from their 2.5% of the asset management finder
19:48 – Average revenue
21:05 – The Famous Five

3 Key Points:

Just because it has worked in the past, does NOT mean it will still work today.
There are better ways to manage your money, especially with the new advancements we have in technology.
Take risks as early on as you can.

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
Organifi – The juice was Nathan’s life saver during his trip in Southeast Asia
Klipfolio – Track your business performance across all departments for FREE
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
Freshbooks – Nathan doesn’t waste time so he uses Freshbooks to send out invoices and collect his money. Get your free month NOW

Show Notes provided by Mallard Creatives

670: Betterment Vs. Vanguard, Betterment Passes 200,000 Investors, $8B in AUM with CEO Jon Stein

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