Manufacturing Luck

How this startup’s acquisition has led to a solution both broader and deeper than any competitor in the marketplace.

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My entrepreneurial journey started with a mission. Having worked in the investment arm of Lehman Brothers during the financial crisis, I watched a 150-year-old brand lose all of its equity, with billions of capital evaporating overnight. The financial advisors tasked with helping wealthy people invest in complex asset allocations could not prepare their clients for what happened. Even worse, those advisers were structurally unable and unwilling to help individual investors that needed help the most — regular Americans with much lower assets and a basic need for a sound investment plan. As a result of this observation, I founded NestEgg Wealth. Our premise was that personal technology, combined with exchange-traded funds in a healthy diversified portfolio, would democratize access to wealth management for everyone.

My partners were Columbia MBA clustermate Ben Zhuk '11 (serial entrepreneur), an undergraduate classmate from Amherst College (our technology genius), and later on another Columbia grad, Vladimir Baranov '13. We built a prototype in a few months and immediately received interest from angel investors through the Columbia network. There was no exit plan — we simply wanted to make a dent in how the world works. But as any entrepreneur will tell you about their experience, the world made a dent in us instead.

By definition, an entrepreneur is a luck manufacturer.

Over the next five years, our team shifted, adjusted and reconfigured, trying to learn from every wrong turn, mistake, power imbalance, and obstacle. In 2010, the term Roboadvisor did not exist and few people believed in the potential of democratized investing. As we spent more time in the marketplace, a key understanding emerged: customer acquisition cost online was prohibitively expensive.

One of our well-known peers, also founded by a Columbia MBA, pursued the path of building a consumer brand. This company is Betterment. It has raised over $100 million in venture financing to reach the end consumer through direct marketing and advertising. Ours was different — we realized that partnering with financial institutions, rather than attempting to disrupt them, was a more impactful approach to growing market share. NestEgg began working with wealth managers and banks by licensing digital advice technology, which in turn helped them service retail customers.

By 2013, what was initially a small corner of the universe became a talking point for every investment management firm on the Street. I had just graduated from Columbia, and was looking for the highest leverage way to fulfill the company’s mission. Sales conversations naturally turned into partnership opportunities, and our board began exploring different strategic alternatives that could provide a return for investors and enhance the company’s impact.

We had three serious suitors, each reflecting a type of channel that I still strongly believe in. The first was a well-known financial media brand with over 20 million monthly uniques, launching its own Roboadvisor. Unfortunately, there were fundamental management and investor challenges at the helm, and the deal lingered in limbo. The second aspiring acquirer was a boutique investment bank, trying to reinvigorate its brand in the retail market place with a modern offering. Though we understood and agreed with the vision, it became clear over time that the financial stability of the firm was in question.

Third, we had a close working relationship on a client opportunity with wealth management technology company Vanare. The firm was led by the talented and experienced CEO Rich Cancro, and backed by a proven management team focused on integrity and client success. As a byproduct of those values, Vanare was gaining major traction in the industry. With strong support from our board, we bet on Vanare as the counterparty best aligned with our goals and personal values.

Integrating into an advisor-centric ecosystem has exponentially increased our reach. Today, the NestEgg product touches over 25,000 accounts and $1.5 billion in assets. Demand for an offering that combines a Roboadvisor with a full wealth management platform is at an all-time high, and our solution is both deeper and broader than any competitor in the marketplace.

I was lucky in meeting the right fellow travelers at the right time, with whom NestEgg now shares a journey. But luck is not an accident. By definition, an entrepreneur is a luck manufacturer. Every time we were turned down, I worked twice as hard to find a new path and new options. Every email, phone call and meeting that came our way was an opportunity to plant seeds for the future. Take care of the seeds, take care of yourself, and your vision will blossom.

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