‘Not just Sallie’s view’: How Sallie Krawcheck sets Ellevest apart

Ellevest’s brand has something no other digital investment startup has: Sallie Krawcheck.

If you’re a customer of Ellevest, you get targeted Instagram advice in the form of short “Ask Sallie” questions, answers and video clips, interspersed with quotes from iconic women. You’re also receiving weekly newsletters from Krawcheck called “What the Elle,” in which she provides her thoughts and advice. And sometimes you’re getting emails from Krawcheck with quick reactions to current events to let clients know where Ellevest stands. The company has been developing its brand without a big marketing or creative team, Krawcheck said. It launched in May 2016. Last month it hired its first chief marketing officer.

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Ellevest has 24,300 followers on Instagram, whereas Betterment’s following stops at 2,419. Wealthfront’s account isn’t active. Krawcheck, once a Wall Street heavy hitter and now Ellevest CEO, said she’s used her own brand to get Ellevest going.

“You do it from a standing start at Ellevest, with one Twitter follower, and it’s hard to make a lot of impact there. But given that I’ve got a substantial following, beginning the conversation there and also bringing it to Ellevest made a lot of sense.”

“It’s really important to get this message out,” Krawcheck said. “We talk a lot about equality and empowerment and the positive impact of women moving ahead, but the truth is money is at the bottom of so much power in a capitalist society. But it’s sort of viewed as tacky to talk about.”

But Krawcheck has been building her own personal brand since before the launch. If you’ve seen her in the news for the past two years, you’ve probably seen her talk about how women’s careers are different from men’s — so their retirement planning should be too; how women control over $5 trillion in investable assets; or why men and women won’t be equal until they’re financially equal.

The timing couldn’t be better. Krawcheck’s vision for Ellevest extends back long before the 2016 U.S. presidential election, but she said the business began seeing significant momentum this spring — shortly after Donald Trump moved into the White House, inciting the Year of the Woman and the movement to make women’s voices heard better now than ever. It’s a very good time for Krawcheck, who’s already so outspoken, well known and politically “on,” to tie her own brand into Ellevest’s.

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Krawcheck does not hesitate to talk about her own experiences — failures, specifically.

“On the messaging branding side it really came from putting our heads together,” Krawcheck said. “From spending time with and understanding Elle.” “Elle” is the name Ellevest employees use to personify their typical customer.

But there’s a level of Inception-like marketing-speak. “But it came from us too because we are, to some extent, Elle.”

Today, 40 percent of Ellevest engineers are female; women comprise 47 percent of its product engineering organizations. Its executive leadership is 70 percent female.

Again and again Krawcheck tells stories during media appearances of the two times she was publicly fired when she was at the top of her game (in her last career) first as CFO of Citigroup and then as president of Bank of America’s global wealth and investment management division; about how much the timing of her outings sucked since her children were hospitalized shortly after that; why she thinks she was fired because she was a woman (since women tend to be more focused on client relationships and long-term outcomes than men); or when she learned of her ex-husband’s affair with a friend.

And she makes fun of herself, noting how “after drinking all the wine” she picked herself up, or quipping: “I’ve got nothing against middle-age white guys. I’ve been married to a couple of them.” Of course, she’s always selling Ellevest to readers and viewers. But Krawcheck’s cult of personality is so strong, maybe the ones that can tell don’t mind.

“We are looking to build a company for the long term,” Krawcheck said. “That said, what we hear from Elle is she wants to know us, know who’s behind the company and she wants to take her measure of them. Naturally that means it’s me.”

It’s not just the fintech companies whose products are starting to look the same. Just as they’re adding human advice, legacy firms whose value proposition have always centered around human advice are adding the digital feature. The growing competition doesn’t phase Krawcheck, who believes multiple firms can meet the array of different client needs. It’s harder for legacy firms though, who may not fully understand their clients, she said.

“Everybody is kind of borderline offering the same thing,” she said. “I will argue until the end of today with you that ours is better in X number of ways, that there are a number of things we do that are technologically more advanced than others and I expect that people will catch up with that at some point… but I think the truly great, iconic companies are ones that had great brands and really understand their client base.”

Last week Ellevest raised $34.6 million in fresh funding. Its lead investors — Rethink Impact, a new U.S. venture capital impact fund with a gender lens, and PSP Growth and Salesforce Ventures — are pretty on-brand for Ellevest. At the head of PSP Capital is Penny Pritzker, the former U.S. Secretary of Commerce.

“I went to sleep one night and thought to myself, if I could have any investor who would it be? And I woke up at 3:30 in the morning and thought: Penny Pritzker. Because of the work she had done at the Commerce Department for advancing women and because of their reputation for building long-term successful companies.”

Krawcheck maintains that despite how well her own brand has translated to the Ellevest brand, there’s an important distinction between the two, noting that Ellevest isn’t about “just Sallie’s view for what women want.” The company has clients in the office frequently to hear about their needs and what they want to see in the service.

“Everybody told me not to [start Ellevest]. ‘Women don’t wanna invest, their husbands do it for them, they’re risk averse’ — I’ve heard it all. But so be it… if I want to make an impact in this life, in this world, and given my background, this is really the way to do it.”

Photo: Getty Images

Ellevest is using its new funding round to add human advisors

Ellevest, the digital investment startup aimed at women, is the latest “robo-advisor” to offer human advisors to its clients for a premium.

The company has just closed a $34.6 million funding round it plans to use to extend the momentum its business started to notice this spring, Krawcheck said in an interview, and grow its offering.

“The feedback we were getting from women was that they wanted us to do more for them,” Krawcheck said. “They looked for ‘real’ financial planners, people they can engage and interact with. That had not been part of our plan but we were hearing so much of it that we thought: when the client asks, and it makes sense, it’s a good thing to answer.”

The premium service, called Ellevest Ascent, will introduce clients to a financial planner to develop personalized action plans with them across their career and family goals, taxes, cash flow, debt, credit, investments, retirement and insurance. The company hasn’t developed the offering yet, though it has done research with some potential users so far, Krawcheck said. It will continue to test and refine the product during its rollout, as it did with its initial product.

Ellevest, which launched in May 2016, gives clients an interactive financial plan that takes things like the gender pay gap, earnings power over time, risk preferences, women’s longer life spans and caretaking responsibilities into consideration. Women generally earn less than men and their salaries peak earlier than men’s. Women may also have a different take on risk than men do.

The new feature is part of a trend that continues across an industry that at first touted robo-advisory as the future, and soon found that clients actually needed and wanted (and were willing to pay for) the human touch.

Last month, Betterment brought flesh-and-blood advisors to its offerings; for a 0.4 percent annual fee, clients with at least a $100,000 balance can have unlimited access to them. Wealthsimple also gives its Black-level clients (also with a $100,000 in balances) access to human advisors via phone, text or email. Ellevest hasn’t yet determined its fee structure for premium clients.

But there can be multiple firms that meet the different needs of the market, Krawcheck said.

“Everybody is our competitor. Inertia is our biggest competitor. The competition will always be there — that doesn’t mean there’s room for just one or two or three players. The market is enormous. It has trillions of dollars in investable assets. Women today have five or six trillion dollars in investable assets.”

 

The Startups: Who’s shaking things up (Week ending March 6, 2016)

fintech startups shaking things up

[alert type=yellow ]Every week, Tradestreaming highlights startups in the news, making things happen. The following is just part of this week’s news roundup. You can get these updates delivered direct to your inbox by signing up for the Tradestreaming newsletters.[/alert]

Startups raising/Investors investing

European p2p lender, Auxmoney raises Series D from Seven Ventures (p2p banking)
Seven Ventures along with Index Ventures, Union Square Ventures and Foundation Capital invested a double digit million Euro amount. Seven Ventures is the investment arm of ProSiebenSat.1 Media SE, which operates large TV channels in Germany.
Auxmoney trippled loan volume in 2015 compared to 2014. As of January 31st, 2016, according to numbers on file with P2P-Banking.com, the company had originated 441 million EUR in loans since launch, with a monthly loan origination volume of 10.6M for the last month on file (January 2016).

Blockchain-powered loyalty and rewards co, Ribbit.me raises $1.5m (Finextra)
Ribbit.me has built the a universal platform for the loyalty and rewards industry using blockchain and smart contract technology. Currently, program operators such as airlines or hotels, are faced with high operational costs and outdated processes, resulting in a poor customer experience.

Fintech investor: Entrepreneurs need to “smell the weeds” (Fintech Junkie)
QED Investors Frank Rotman explains why certain innovations within finance need to come from people with a deep, deep understanding of the pain points in the industry.

At 50,000 feet you can’t spot a weed in a garden. At 500 feet you might be able to identify that there are weeds in the garden. When you’re on your hands and knees crawling in the garden you can identify every type of weed and one-by-one pick them, pull them or (gasp) even smell them.

The Startups: Who’s shaking things up

Designed for women, Spiff introduces its social savings service (Finovate)
Spiff is a “simple and fun” savings service designed with women in mind. Founder and CEO Carl Wessmann credits the women in his life for helping him understand the importance of savings, and he’s returned the favor with a new technology that “helps connect money with what it can accomplish” for users and their loved ones.

OnDeck Capital: Highly misunderstood company, stock (Seeking Alpha)
The general consensus following the Q4 earnings report was that OnDeck Capital (NYSE:ONDK) provided weak guidance for Q1. The market though appears highly confused regarding the shifting revenues from the marketplace.
The stock collapsed last week and still trades near all-time lows. The small business, online lender trades at only $6.80 after peaking above $28 right after the IPO at the end of 2014. With a market value below $500 million, is the market wildly mispricing this growth stock?

Checkbook lets you email anyone a digital check and deposit it free (TechCrunch)
The startup today launches its digital check service where you can send anyone a check with just their email address, and they can deposit it immediately online to get their money or even print it out. What’s old is new?

Singapore’s UOB partners with Israeli crowdfunding platform (Reuters)
Singapore’s United Overseas Bank said it would invest $10 million in Israel-headquartered crowdfunding platform OurCrowd as part of the companies’ collaboration to help Asian startups raise equity funds. UOB said the deal would allow accredited investors among its clients invest in OurCrowd’s portfolio companies.

Blockchain firm, Digital Asset Holdings names Sallie Krawcheck to board (American Banker)
The blockchain startup Digital Asset Holdings has added Sallie Krawcheck to its board. Krawcheck, former chief executive of Bank of America Wealth Management, is the latest financial industry veteran to join Digital Asset’s board. The New York company has also appointed Sanoke Viswanathan, chief administrative officer of JPMorgan Chase’s corporate and investment banking division, and Catherine Flax, head of commodity derivatives and foreign exchange with the BNP Paribas’ Americas division.