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Innovators: Betterment CEO Jon Stein

Jon Stein

Innovators. They come in many forms. They dream big but they aren’t just dreamers. They form raw ideas into cool products with disruptive business models. They shatter entire industries and leave established leviathans running scared with their tails between their legs. The Innovators interview series connects you with the most driven people on the planet. What makes them tick? What advice do they have for tech founders? What tools do they use to get the job done? Read on to find out. 

Jon Stein is reinventing the investing industry. After seeing product after product that made the investing process more complicated than it needed to be, he set out to create a broadly accessible investment company that would help investors achieve the best return (factoring in costs) for the least risk. Passionate about helping people make smart decisions with their money, he founded Betterment in 2008.

Previously, Jon spent his career developing financial products, platforms, and investment strategies for international banks, brokers and other financial institutions, and advising them on strategies to mitigate the risks inherent in their products. Most recently, Jon held the position of senior consultant at First Manhattan Consulting Group, where he counseled a number of the world’s most prominent financial institutions. Jon has in-depth knowledge of retail banking and investing and is a Chartered Financial Analyst (CFA).

Jon is a graduate of Harvard University and Columbia Business School. His interests lie at the intersection of behavior, psychology, and economics.

What do you enjoy most about your work and why?

The most fulfilling thing about my day-to-day is knowing that I am improving people’s lives. We make financial services more customer-centric and help our customers make better financial decisions. Before founding Betterment, I was a consultant for big banks and saw that most of their goals were aligned with company profits rather than customer needs. In fact, many of their activities completely disregarded what was best for the customer.

I sought to change that, and with each product update, customer communication, and new service Betterment brings, I know we are doing right by the millions of people out there who are seeking better financial advice and service at a reasonable price.

In fact, the coolest thing about my work is talking to Betterment customers. If you call our customer service line, you just might get me on the other end. It’s from these conversations that I learn the most about what our customers like and what their Betterment “wish lists” are. It’s really rewarding to hear directly from the customers how much they’ve benefited from Betterment’s services and what they are looking forward to.

Where does your entrepreneurial passion come from? What drives you, inspires you, excites you?

I’m an engineer, and I strongly believe in efficiency, transparency, reliability, process, and fairness. What inspires me most is making everyday activities and products more efficient, accessible, and easy to use.

For example, Betterment launched goal-based investing back in September 2011. From my background in consumer psychology and behavioral economics, I read many studies on how consumers mentally accounted for their income. Typically, consumers place their money into different mental “buckets,” whether one bucket is for an emergency fund, one is for education, or another is for retirement. It struck me that these “buckets” could be brought to life and added to the Betterment platform to make investing even more accessible. Creating a tool that allowed our customers to invest their money in sub accounts representing specific long term goals, with just the right asset allocations and contributions for each, was something that really got me hyped.

It’s these types of improvements and ideas that drive me to continue to innovate.

Someone reading this wants to start a tech company. What’s your best advice for them?

Build it, put it in people’s hands, make it real. The sooner the better.

If you’re pitching to Angels or VCs, you’re going to have a much easier time if you have something you can show them. Prove that you can execute. Build that prototype. Get your business cards. Start using your @[yourdomain] email address. Every little bit that you make it more real, then others around you will start to believe it, too.

Don’t just say, we can get this market – show survey data that indicated demand. Buy cheap ads on Facebook and show click-through rates.

If you’re building a consumer product, you want to get it in their hands and start getting real feedback as early as possible. If you wait until it’s perfect, you’ll never be done. Get it out there, get people using it, make it real.

What are a few tech startups that you’re really excited about right now and why?

We love the guys at ZocDoc, Group Commerce, ADstruc, and General Assembly. I think Codecademy is just so cool.

What tech tools (websites, apps, gadgets, etc.) do you rely on both for work and in your down time?

I like Pageonce’s mobile financial dashboard. Dropbox has changed the way we all work. I’m a huge fan of foursquare – I love getting restaurant recommendations from them, seeing what my friends like. We want to do more peer-based advice, like them!

Jira is killer for tracking workflow. Rapportive lets me know a lot about who’s emailing me.

I’m still trying to figure out what to do with my iPad…

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