Jon Stein – Co-founder and CEO of Betterment

[quote style=”boxed”]I’m a talker. I love nothing more than talking to my mentors, friends, and customers about my vision for Betterment. It’s a great way to sound out the potential (or lack thereof) of my ideas. [/quote]

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 in 2007.

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 are you working on right now?

I’m working on growing my startup – Betterment. It is a personal investment product that blends the simplicity of online banking with the higher returns of stocks and bonds.

We tend to act very quickly on new features and product updates, which is the beautiful thing about being a startup. We’ve grown to 10,000 users and $15mill under management in under two years.

We’re rolling out IRAs in December, we launched a goals feature and peer comparison tool earlier this year, we’re working with our clearinghouse to speed up transactions, and always working on site and mobile application improvements.

I’m also working with a number of like-minded partners on an industry initiative,, which encourages transparency and customer focused practices in the financial services industry.

What does your typical day look like?

Generally, 7:30 to noon I spend working. I’m pretty structured about this morning block so I can get through my never-ending to-do list and devote focus to longer-term projects. Noon to 5 I’m in meetings, and 5 to late I catch up on work and emails. The details of these blocks vary greatly – it’s one of the fun things about being in a startup. No two days are the same.

One thing that hasn’t changed since the early days is customer interaction. At Betterment, we all participate in answering customer phone calls and emails – even me. I’ve always enjoyed talking to customers and it helps me keep informed with what customers want. In fact, over the past few weeks I have been scheduling phone calls with some of our customers to get their feedback, which is extremely valuable.

3 trends that excite you?

Dashboards, the rate of adoption (and adaption) of technology in the developing world, and niche communities.

How do you bring ideas to life?

I’m a talker. I love nothing more than talking to my mentors, friends, and customers about my vision for Betterment. It’s a great way to sound out the potential (or lack thereof) of my ideas. Having said that, at the end of the day you have to trust your own convictions and stick to the plan. I have a great team of people in place who “get it”.  We discuss every possibility and opportunity, but we don’t change direction on a whim. It’s the best way to execute our collaborative vision.

What inspires you?

I’m an engineer. My “polestars” are efficiency, transparency, reliability, process, and fairness. What excites me most about my work is making everyday activities and products more efficient, accessible, and easy to use.

What is one mistake you’ve made, and what did you learn from it?

The basic idea for Betterment came from an investing mistake I made.

I’ve always been told there’s one optimal portfolio to own: the market portfolio. In class after class at Harvard – nearly every economics class, the idea was pounded into me.

Then I went out and started investing on my own. The first thing I did was to invest in Enron, a company whose growth seemed remarkable, but which had just hit a road bump, and its share price had fallen. I thought I was getting a great deal – buying something at half price!

Of course, the stock soon fell to zero, and I lost that first investment.

It taught me an important lesson – I’m no smarter than thousands of others looking at the market, and I don’t have better information. And I had forgotten the cardinal lesson of modern portfolio theory – that there’s no better portfolio to own than the market portfolio.

My knowledge of modern portfolio theory and first hand experience being swayed by behavioral influences planted the seeds that have grown into Betterment.

What is one business idea that you’re willing to give away to our readers?

Make it easier to analyze a database. This should not be so complicated as it is for non-technical folks. In general, summarizing information down to usable insights is a hot area these days.

What do you read every day? Why?

Customer service emails. Because I want to know what our customers want.

What is the one book that you recommend our community should read, and why?

Ben Franklin’s Autobiography, because he’s the original American entrepreneur.

What is your favorite gadget, app or piece of software that helps you every day?

My bike. It’s old-fashioned technology, but it works great to get me where I need to go in Manhattan efficiently.

Who would you love to see interviewed on IdeaMensch?

Charlie Rose.

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On Twitter: @betterment
Jon Stein on Twitter:  @JonStein