Latest / Masters in Business / Sarah Kirshbaum Levy on the Value of Marketing

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Sarah Kirshbaum Levy on the Value of Marketing · Masters in Business

• 0:02
  Speaker 1: This is Master's in Business with Barry rid Hoolds on
• 0:06
  Speaker 1: Bloomberg Radio. This week on the podcast, I have an
• 0:09
  Speaker 1: extra special guest. Sarah Kirschbaum Levy, CEO of Betterment, has
• 0:15
  Speaker 1: a fascinating background in media, brand building, marketing as well
• 0:20
  Speaker 1: as finance. She started out as an intern at Goldman Sachs.
• 0:25
  Speaker 1: She had stints at Disney before going on to be
• 0:29
  Speaker 1: chief operating officer at Nickelodeon and then eventually the Viacom
• 0:35
  Speaker 1: Media Network. If you want to see someone who's been
• 0:38
  Speaker 1: immersed in branding and media and marketing for her whole career,
• 0:43
  Speaker 1: it's harder to find somebody with Sarah's breadth of experience.
• 0:48
  Speaker 1: The pivot into digital asset management at Betterment was a
• 0:53
  Speaker 1: little bit of a surprise, but a lot of the
• 0:56
  Speaker 1: skills are very transferable, and she's really done a substantial
• 1:01
  Speaker 1: job at Betterment. They're now over forty billion dollars. I
• 1:04
  Speaker 1: think they're the largest independent digital advisor that's out there. Yes,
• 1:10
  Speaker 1: Schwab and Vanguard and Fidelity have their own, but obviously
• 1:14
  Speaker 1: they're coming off of trillions of dollars. This is a
• 1:16
  Speaker 1: company that's barely a decade old and is ramped up
• 1:20
  Speaker 1: to over forty billion dollars pretty quickly. If you're interested
• 1:25
  Speaker 1: in marketing, branding, asset management, how to use digital tools
• 1:32
  Speaker 1: to not only make the process less expensive and the
• 1:37
  Speaker 1: user experience better, but just to give customers what they want.
• 1:42
  Speaker 1: I think you'll find this conversation to be quite fascinating.
• 1:46
  Speaker 1: Full disclosure. My firm, Results Wealth Management works with Betterment,
• 1:51
  Speaker 1: which powers our digital investment platform. With no further ado
• 1:56
  Speaker 1: my discussion with Betterment CEO Sarah Kirshboun.
• 2:00
  Speaker 2: Thank you so much, Barry for having me.
• 2:02
  Speaker 1: Thank you for coming. I've been looking forward to this
• 2:05
  Speaker 1: since we started chatting. Was that at future Proof in September? Right,
• 2:09
  Speaker 1: So it's been a couple of months. So so let's
• 2:12
  Speaker 1: talk a little bit about your early career, which is
• 2:14
  Speaker 1: kind of fascinating. You work as an analyst at Disney
• 2:18
  Speaker 1: and then you're a summer intern at Goldman Sachs. What
• 2:22
  Speaker 1: was the career plan?
• 2:24
  Speaker 2: So, I don't know if it was so much a plan.
• 2:27
  Speaker 2: I was just out of college and I loved the
• 2:30
  Speaker 2: media business, you know, thinking about why did I land
• 2:34
  Speaker 2: at Disney as my first job. I always looked to
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  Speaker 2: my parents and their careers in terms of what they loved.
• 2:40
  Speaker 2: And I had a belief early on that if you
• 2:43
  Speaker 2: loved what you were doing, you were going to give
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  Speaker 2: your all and you were going to excel, and you
• 2:47
  Speaker 2: were going to want to make it, you know, a
• 2:49
  Speaker 2: bigger and bigger part of your life. So my father
• 2:51
  Speaker 2: was a book publisher and my mother was an antiques dealer,
• 2:55
  Speaker 2: And if you asked them on the weekends, you know,
• 2:57
  Speaker 2: what do you want to do? My father would roam
• 3:00
  Speaker 2: bookstores and my mother would go antiquing at flea markets
• 3:04
  Speaker 2: and things. So I thought, what do I love? And
• 3:06
  Speaker 2: I loved the movies? So I thought, is there a
• 3:08
  Speaker 2: way to be in the movie business well as a
• 3:10
  Speaker 2: business executive. Once you learn a little bit about the movies,
• 3:13
  Speaker 2: you realize the movie business is not so much a
• 3:16
  Speaker 2: great business. But Disney as a brand really excited me,
• 3:21
  Speaker 2: and so I thought I could learn sort of beyond movies,
• 3:24
  Speaker 2: and I could learn intellectual property, and I could learn
• 3:26
  Speaker 2: brands and all that. So I started at Disney and
• 3:30
  Speaker 2: I was in the corporate group where we did a
• 3:33
  Speaker 2: lot of M and A and strategic work on behalf
• 3:35
  Speaker 2: of the film and Television division. And my summer pivot
• 3:40
  Speaker 2: was really I was doing deals, and I was doing media,
• 3:43
  Speaker 2: and so the question for me was is it media
• 3:45
  Speaker 2: I love or is it deals I love? And I
• 3:47
  Speaker 2: tested that thesis by spending the summer at Goldman and
• 3:51
  Speaker 2: I worked. I had a great experience there, again, great brand,
• 3:54
  Speaker 2: great company, learned, learned as much as you can learn
• 3:57
  Speaker 2: in a summer summer job, but really loved the media
• 4:02
  Speaker 2: project I was working on more than the other projects.
• 4:05
  Speaker 2: And so that kind of led me back to media
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  Speaker 2: for full time.
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  Speaker 1: From Goldman Sachs as a summer associate to Nickelodeon. I
• 4:13
  Speaker 1: guess you made the decision that it was media over banking.
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  Speaker 2: I did. That's exactly right.
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  Speaker 1: And how did it go when you began as an
• 4:22
  Speaker 1: early employee at Nickelodeon.
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  Speaker 2: Well, the thing that I was attracted to at Nickelodeon
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  Speaker 2: really harkened back to my Disney start, which was it
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  Speaker 2: was a great brand and they had a great mission,
• 4:34
  Speaker 2: which which was what's good for kids is good for
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  Speaker 2: business and or I don't know if that's a mission
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  Speaker 2: so much as a a.
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  Speaker 1: Good good slogan anyway, good tagline.
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  Speaker 2: Good tagline, but I think it's it was really what
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  Speaker 2: kind of powered our thinking about our products and our
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  Speaker 2: services was how, you know, how can we enrich the
• 4:50
  Speaker 2: content we were making for kids? And if you told
• 4:53
  Speaker 2: people you worked for Nickelodeon, sort of like if you
• 4:55
  Speaker 2: told them you worked for Disney, they would smile. And I,
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  Speaker 2: you know, I really loved that, and I thought working
• 5:00
  Speaker 2: for a brand that everybody loves is a really powerful idea.
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  Speaker 2: And so I started in strategy and I didn't know
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  Speaker 2: where it would take me, honestly, and grew up at
• 5:10
  Speaker 2: the business. It was the time. I mean hard to
• 5:13
  Speaker 2: look at it now, but at the time, cable was
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  Speaker 2: in its growth innings, and you know, we were growing
• 5:18
  Speaker 2: thirty plus percent a year and it was fun.
• 5:21
  Speaker 1: I can imagine that was a lot of fun. So
• 5:24
  Speaker 1: from strategy, tell us about the rest of the career
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  Speaker 1: path you took at Nickelodeon, and eventually we'll get to Viacom.
• 5:30
  Speaker 2: Yes, so Nickelodeon, in fact, is a division of Viacom,
• 5:34
  Speaker 2: And so at the time, each of the brands were
• 5:37
  Speaker 2: run as their own distinct business units.
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  Speaker 1: How siloed was that, because as I was looking through
• 5:44
  Speaker 1: your resume and you start looking at Viacom, it's MTV,
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  Speaker 1: it's Nickelodeon, it's Comedy Central, it's bt. There's like a
• 5:50
  Speaker 1: dozen or more brands. I wasn't sure these will run
• 5:54
  Speaker 1: independently or are they run as part of a big
• 5:57
  Speaker 1: conglomerate or a little bit of each.
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  Speaker 2: So over my two plus decades at the company, the
• 6:02
  Speaker 2: answer is yes and yes. Right, So, there was a
• 6:05
  Speaker 2: lot of organizational change. But in the early days when
• 6:08
  Speaker 2: we were growing really fast, the organizational design principle was
• 6:11
  Speaker 2: really around audiences, right, and what audience you served, and
• 6:15
  Speaker 2: so each of the brand groups, so to speak, were
• 6:19
  Speaker 2: designed around really understanding your customer segment and super serving them.
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  Speaker 2: So my group was the kids group. We then grew
• 6:26
  Speaker 2: up into the Kids and Family group and added other
• 6:28
  Speaker 2: brands into our portfolio. But there were a lot of
• 6:31
  Speaker 2: organizational design changes over the years. And then fast forward
• 6:34
  Speaker 2: to my second decade when I started to move up
• 6:38
  Speaker 2: to Viacom and expand beyond Nickelodeon. In those days, we
• 6:42
  Speaker 2: moved to more of a platform where each of the
• 6:45
  Speaker 2: brands certainly had separate leadership, but that leadership was really
• 6:48
  Speaker 2: focused on content and marketing, but all of the commercial
• 6:51
  Speaker 2: execution was put together.
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  Speaker 1: So as you're moving up the ladder at Nickelodeon, you
• 6:57
  Speaker 1: end up as COO at Nickelodeon. That's it, right, How
• 7:00
  Speaker 1: long did you do that for and what was that? Like?
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  Speaker 2: I did that for over a decade.
• 7:03
  Speaker 1: I think, oh really, that's yeah, and that was that
• 7:06
  Speaker 1: the springboard to COO at parent company Viacom.
• 7:10
  Speaker 2: That was the springboard. So what happened was to your
• 7:13
  Speaker 2: organizational design changes point is basically we started to merge
• 7:17
  Speaker 2: different pieces of the business and realized that we needed
• 7:21
  Speaker 2: to be a more efficient platform. Right. Obviously, the pressure
• 7:23
  Speaker 2: of streaming started and we started to see, you know,
• 7:26
  Speaker 2: a lot more pressure on the AD business. So you
• 7:28
  Speaker 2: had a top line that was challenged and you had
• 7:31
  Speaker 2: to rethink the organizational design. And so we started to
• 7:34
  Speaker 2: put the pieces together and I emerged and moved up
• 7:37
  Speaker 2: to corporate to oversee essentially the combining of the various brands.
• 7:42
  Speaker 1: Does anything at Viacom today, what's their streaming business?
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  Speaker 2: Like, Well, now it's they've renamed the company and so
• 7:49
  Speaker 2: now it's called Paramount Global, right, and so they have
• 7:51
  Speaker 2: Paramount Plus, which is a okay, there you go. And
• 7:56
  Speaker 2: they also have Pluto TV, which we bought while I
• 7:59
  Speaker 2: was there, which is and AD supported. I think they
• 8:01
  Speaker 2: now call them fast Channels but ad supported streaming.
• 8:04
  Speaker 1: Channels, free ad supported television. There you go, huh, that's
• 8:08
  Speaker 1: really interesting. So you're there, really in an amazing transition.
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  Speaker 1: You're there as we as the Internet explodes. Like when
• 8:17
  Speaker 1: I was growing up with the Internet in the nineties,
• 8:19
  Speaker 1: it was kind of pokey and dial up. It wasn't
• 8:22
  Speaker 1: until a little later that there was any real bandwidth
• 8:25
  Speaker 1: post dot com implosion. You're there as streaming ramps up,
• 8:31
  Speaker 1: as video games become substantial. How do you think about
• 8:36
  Speaker 1: how you guys did handling those changes? And then I
• 8:39
  Speaker 1: want to ask, how do you think the rest of
• 8:42
  Speaker 1: the media industry has done.
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  Speaker 2: Look, I think one of the reasons I made the
• 8:47
  Speaker 2: career pivot i did is because it's really hard to
• 8:50
  Speaker 2: be the analog incumbent who needs to you know, fight
• 8:54
  Speaker 2: a fight in a digital war when the newbies so
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  Speaker 2: to speak, have cheap capital, right and have the ability
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  Speaker 2: to candidly to invest and lose money in ways that
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  Speaker 2: the incumbents can't. So I think, you know, definitionally we
• 9:10
  Speaker 2: were risk averse.
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  Speaker 1: So you know, also, a giant legacy infrastructure with.
• 9:15
  Speaker 2: Great economics, right, a giant legacy infrastructure that had dual
• 9:18
  Speaker 2: revenue streams and that had incredible margins. And you know,
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  Speaker 2: it's always hard to compare a dollar invested in the
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  Speaker 2: core business that's going to return you know, sixty cents
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  Speaker 2: versus a dollar invested in the new business, which you
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  Speaker 2: know is your future, but that's going to lose money
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  Speaker 2: out of the gate.
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  Speaker 1: Right, But classic innovator's dilemma.
• 9:36
  Speaker 2: There you go. So so I think, you know, again,
• 9:38
  Speaker 2: this is sort of the catalyst for my career pivot later.
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  Speaker 2: But I think the reality is, how did we do?
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  Speaker 2: You know, the streaming businesses ate our lunch, but they
• 9:47
  Speaker 2: had a structural advantage and we were not brave. Huh.
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  Speaker 1: That's really interesting, by the way, it's easy to eat
• 9:54
  Speaker 1: people's lunch when you're willing to lose billions of dollars
• 9:57
  Speaker 1: a year to establish a brand and capture market.
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  Speaker 2: Share, and when capital is largely free or cheap, right.
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  Speaker 2: So I think the combination of those things just put
• 10:06
  Speaker 2: us at a disadvantage. And it's interesting to watch now
• 10:09
  Speaker 2: actually because one of the insights, right, the insights that
• 10:11
  Speaker 2: the streamers had were all about the customer experience. They
• 10:15
  Speaker 2: were about you know, ads being you know, interruptive to
• 10:17
  Speaker 2: the content and consumers didn't like that, right, so they
• 10:21
  Speaker 2: went at it and said, we're gonna We're going to
• 10:22
  Speaker 2: design something that's delightful for the consumer. I think what
• 10:26
  Speaker 2: they are now learning is that the economic model that
• 10:29
  Speaker 2: they started with was not a sustainable economic model, meaning
• 10:34
  Speaker 2: they're now introducing ads. The dual revenue stream they're seeing,
• 10:37
  Speaker 2: and the price point at which they were offering call
• 10:39
  Speaker 2: it unlimited content really just more content, was again not sustainable, right, and.
• 10:44
  Speaker 1: They've all raised their prices dramatically. Although I would push
• 10:48
  Speaker 1: back on the phrase delightful because if you've ever gone
• 10:53
  Speaker 1: and this is true for everybody from Netflix to Amazon
• 10:57
  Speaker 1: to HBO, if you've ever tried to surface content, Hey,
• 11:02
  Speaker 1: I like these movies. Show me that, Show me what
• 11:05
  Speaker 1: else I might like. They're not especially good at that.
• 11:09
  Speaker 1: I don't think anyone's been good at that since back
• 11:11
  Speaker 1: in the days of the Netflix of DVD by mail.
• 11:14
  Speaker 1: But everybody is. My wife is like, are you really
• 11:17
  Speaker 1: going to just spend a half hour scrolling through nonsense?
• 11:20
  Speaker 1: It's they don't seem to have figured that out yet,
• 11:23
  Speaker 1: and I'm surprised.
• 11:24
  Speaker 2: I agree with that. I mean, I think the sort
• 11:26
  Speaker 2: of you know, the algorithmic recommendation was sort of the
• 11:30
  Speaker 2: holy grail, and I think it hasn't It hasn't worked
• 11:33
  Speaker 2: as well. Not that good, it's not that good. But again,
• 11:36
  Speaker 2: if you think again, think back to the cable days,
• 11:38
  Speaker 2: what our brands did is our brand's organized content around
• 11:42
  Speaker 2: audiences and interests, right, and so you sort of had
• 11:45
  Speaker 2: an advantage.
• 11:46
  Speaker 1: Right.
• 11:46
  Speaker 2: What Netflix is trying to do is serve everybody, and
• 11:49
  Speaker 2: so you have this sea of content and how do
• 11:51
  Speaker 2: you sift through it? So it's a difficult challenge.
• 11:54
  Speaker 1: Yeah, that recommendation engine that people who liked ABC should
• 11:58
  Speaker 1: also like one, two three. I'm surprised that hasn't gotten better.
• 12:03
  Speaker 1: But last subject before we pivot. So you're at Viacom
• 12:08
  Speaker 1: and you're driving a lot of change. You're spearheading new segments.
• 12:14
  Speaker 1: You're pushing into retail, digital gaming, consumer products, even broadway shows,
• 12:20
  Speaker 1: things like that theme parks video on demand. I'm going
• 12:25
  Speaker 1: to assume you don't think that you thought that was
• 12:27
  Speaker 1: necessary but not sufficient to fight off the big streamers.
• 12:32
  Speaker 2: Well, I think that wasn't about fighting off the streamers
• 12:35
  Speaker 2: so much as about expanding the business. If you think
• 12:40
  Speaker 2: about really the kids intellectual property. More so, when I
• 12:43
  Speaker 2: joined Nickelodeon. It was really about joining a kid's brand
• 12:46
  Speaker 2: because I understood the power from my experience at Disney
• 12:49
  Speaker 2: of kids love and passion for characters and stories and
• 12:53
  Speaker 2: how you could deepen their engagement with your brand through
• 12:57
  Speaker 2: products and experiences. And so one of the reasons I
• 12:59
  Speaker 2: went to nickelode was really on that thesis, which was
• 13:02
  Speaker 2: they were a cable channel and really a platform more
• 13:05
  Speaker 2: than anything. Right, they were a platform. We were at
• 13:07
  Speaker 2: that time sort of pre YouTube. We had sixty or
• 13:12
  Speaker 2: seventy percent of all kids entertainment time was spent on Nickelodeon.
• 13:16
  Speaker 2: It was an amazingly powerful platform. And so the question was,
• 13:20
  Speaker 2: you have their attention, you're building these characters and stories
• 13:22
  Speaker 2: they love, how do you take that love and immerse
• 13:25
  Speaker 2: them more deeply in your brand? And those characters, from
• 13:29
  Speaker 2: SpongeBob to Dora the Explorer to the teenage mutant Ninja Turtles, right,
• 13:32
  Speaker 2: these were the great brands of my tenure there, and
• 13:36
  Speaker 2: so so that's what we did. We said, Okay, you know,
• 13:39
  Speaker 2: look at Disney, right, they have theme parks, they have hotels,
• 13:41
  Speaker 2: they have toys and t shirts, et cetera, et cetera,
• 13:44
  Speaker 2: and all of that was opportunity. I think that was
• 13:46
  Speaker 2: less so an opportunity in the in the adult targeted brands. Right, adults,
• 13:51
  Speaker 2: don't you know when they fall in love with a
• 13:53
  Speaker 2: character a story like there's only so much Jersey Shore
• 13:55
  Speaker 2: you want to wear on your T shirt? Right?
• 13:58
  Speaker 1: To say the very least, we discussed Nickelodeon's entrance into
• 14:02
  Speaker 1: gamings and products and other things. How did you come
• 14:07
  Speaker 1: away from that experience? Was it just about maximizing revenue
• 14:12
  Speaker 1: or was it really about building out the brand?
• 14:16
  Speaker 2: I think for me, it was about building out the brand,
• 14:19
  Speaker 2: and it was also about scaling and optimizing an operation.
• 14:25
  Speaker 1: So I just picture a big boardroom when you're going
• 14:29
  Speaker 1: in to make the pitch. Hey, we have to go
• 14:31
  Speaker 1: beyond just doing shows for kids. There's a whole universe
• 14:35
  Speaker 1: of ways we can monetize our intellectual property. What was
• 14:40
  Speaker 1: that pitch? Like? Am I remotely close to you know?
• 14:45
  Speaker 1: That stereotypical image? And how difficult was it to get
• 14:50
  Speaker 1: a big, giant and already successful company to embrace a
• 14:55
  Speaker 1: whole new set of revenue streams?
• 14:57
  Speaker 2: So I just shivered when you put the image of
• 14:59
  Speaker 2: the big board room back in my mind? Right? That No,
• 15:04
  Speaker 2: that's accurate for sure. I think, you know, the pitch,
• 15:07
  Speaker 2: the way in which we entered the business. And again
• 15:10
  Speaker 2: back to my comment earlier that you know, I don't
• 15:13
  Speaker 2: think we were brave. We were. We licensed the content
• 15:17
  Speaker 2: so it didn't require an enormous investment, right, So we
• 15:19
  Speaker 2: would work with toy companies, We worked with a hotel business,
• 15:22
  Speaker 2: We worked with cruise ships and basically len them our
• 15:25
  Speaker 2: characters in exchange for revenue. So there was a really
• 15:28
  Speaker 2: a lot of scrutiny around kind of the brand impact
• 15:31
  Speaker 2: and the brand risk potential, thinking about the downside of
• 15:34
  Speaker 2: doing some of that, right, Right, what if a kid
• 15:36
  Speaker 2: gets hurt with a toy? You know that kind of thing, right, So,
• 15:40
  Speaker 2: so I think we put we we thought about that
• 15:42
  Speaker 2: quite a bit, and there were products and services we
• 15:44
  Speaker 2: were unwilling like people would pitch us things like a
• 15:47
  Speaker 2: kid's credit card, right, and encouraging kids to go into
• 15:51
  Speaker 2: debt was not exactly part of the brand plan, right.
• 15:54
  Speaker 1: It's it's great because they are not eighteen, so they
• 15:57
  Speaker 1: could walk away from the debt, right or did their
• 16:00
  Speaker 1: parents have to coast?
• 16:01
  Speaker 2: I think the what's good for kids is good for
• 16:03
  Speaker 2: business really prevailed on that one. So in any event,
• 16:06
  Speaker 2: we considered all sorts of things and people would pitch us.
• 16:09
  Speaker 1: So I SpongeBob, bow and Arrow didn't didn't, it didn't.
• 16:13
  Speaker 2: It didn't make the cut now, not at all. But
• 16:15
  Speaker 2: I will say that we did have a few times
• 16:19
  Speaker 2: when we had some sort of braver ideas around, you know,
• 16:22
  Speaker 2: investing more deeply in some of these segments, and those
• 16:24
  Speaker 2: did require pitches you know, exactly as you exactly as
• 16:27
  Speaker 2: you say, and we ultimately didn't decide to go forward
• 16:31
  Speaker 2: with bigger investments, right, buying a part of a theme park,
• 16:34
  Speaker 2: you know, franchise, for example. So we never we never
• 16:37
  Speaker 2: made that move. Other companies made other decisions there, right NBC, Universal, right,
• 16:41
  Speaker 2: Right Disney, etcetera.
• 16:43
  Speaker 1: It's interesting to see that the more successful a company is,
• 16:48
  Speaker 1: the more risk averse they tend to be. They don't
• 16:51
  Speaker 1: want to you know, don't kill the goose that lays
• 16:54
  Speaker 1: the golden eggs.
• 16:55
  Speaker 2: I mean, it's inevitable.
• 16:56
  Speaker 1: Right.
• 16:56
  Speaker 2: You're also your public company, You're living quarter to quarter,
• 16:59
  Speaker 2: and the considerations are.
• 17:01
  Speaker 1: Different, to say the very least. So let's talk a
• 17:05
  Speaker 1: little bit about media as so different than finance. But
• 17:11
  Speaker 1: really does it all come down to these are consumer brands.
• 17:15
  Speaker 1: And if you can build a brand and show its
• 17:19
  Speaker 1: value proposition and present it in a smart way to
• 17:23
  Speaker 1: an audience, it doesn't matter whether it's digital investing or
• 17:27
  Speaker 1: kids programming. Branding is branding.
• 17:30
  Speaker 2: I mean, I think from a branding and marketing standpoint, yes,
• 17:33
  Speaker 2: I do think it translates incredibly well. And I think
• 17:36
  Speaker 2: ultimately your brand needs to meet a need or solve
• 17:39
  Speaker 2: a pain point for a consumer, right, and so it
• 17:41
  Speaker 2: all starts with the consumer and the consumer research. And
• 17:44
  Speaker 2: that was something that we were incredibly good at at
• 17:46
  Speaker 2: Viacom with all of these really really targeted niche brands.
• 17:50
  Speaker 2: We really invested a lot in our research and in
• 17:53
  Speaker 2: understanding that consumer. So I think that translates incredibly well.
• 17:56
  Speaker 1: Tell us a little bit about what that process is like,
• 17:58
  Speaker 1: because you always picture a bunch of people in a
• 18:02
  Speaker 1: room with the two way mirror and asked showing them
• 18:05
  Speaker 1: clips or showing them toys. What was the consumer research
• 18:09
  Speaker 1: like at Viacom?
• 18:11
  Speaker 2: So, I mean there's so many levels, you know, both
• 18:15
  Speaker 2: quantitative and qualitative. So there were a lot of focus groups,
• 18:18
  Speaker 2: there was a lot of instant feedback in the form
• 18:20
  Speaker 2: of ratings and analysis sort of you know, post facto
• 18:23
  Speaker 2: right after you air the programming. There was pilot testing.
• 18:26
  Speaker 2: I mean we would sit with kids and show them
• 18:28
  Speaker 2: pictures of characters, and you know, they would comment at
• 18:32
  Speaker 2: every step of the way. We were basically bringing things
• 18:36
  Speaker 2: to kids and watching them react. Do they laugh, you know,
• 18:39
  Speaker 2: do they hug the toy? You know they are they
• 18:42
  Speaker 2: drawn into the character. So we tested storylines, we tested characters,
• 18:48
  Speaker 2: and then that was sort of early days in content.
• 18:51
  Speaker 2: We did less. I think now when you think about
• 18:53
  Speaker 2: digital testing and you think about sort of a b
• 18:55
  Speaker 2: testing messages, the ability to do that really was transformed
• 19:00
  Speaker 2: over time as we started to build a digital footprint.
• 19:03
  Speaker 2: But again, all of this was in service of asking
• 19:06
  Speaker 2: the right questions of your consumer and getting to them
• 19:08
  Speaker 2: in kind of different ways and then triangulating where to next.
• 19:13
  Speaker 2: And then we had to take these brands, of course,
• 19:15
  Speaker 2: and move them off of television, not just into toys,
• 19:18
  Speaker 2: but building a digital footprint was sort of the next
• 19:20
  Speaker 2: you know, the next act and you realize and there
• 19:22
  Speaker 2: was a tension in that too, right because there was
• 19:25
  Speaker 2: sort of are you giving away your content for free
• 19:27
  Speaker 2: or are you immersing your audience in the content and
• 19:30
  Speaker 2: understanding each of these platforms was different, and so I
• 19:33
  Speaker 2: think all of that really translates as you build a brand.
• 19:36
  Speaker 2: You you have to think about what platforms are you
• 19:39
  Speaker 2: on and what's the purpose of being in those you
• 19:41
  Speaker 2: know on those platforms.
• 19:42
  Speaker 1: So really, really really interesting how different is children's programming
• 19:49
  Speaker 1: when you're doing that sort of research to adults, Because
• 19:52
  Speaker 1: there are so many infamous stories about shows testing poorly
• 19:57
  Speaker 1: and hanging on and that Seinfeld comes to mind to
• 20:00
  Speaker 1: that really poorly goes on to become one of the
• 20:03
  Speaker 1: most popular shows of all time, and things like Raiders
• 20:07
  Speaker 1: of the Lost Arc couldn't get couldn't get made, or
• 20:10
  Speaker 1: Star Wars had trouble finding a studio that nobody liked
• 20:14
  Speaker 1: the tests of it. Is it different with kids? Are
• 20:17
  Speaker 1: they more unguarded and immediate? And then how do you
• 20:20
  Speaker 1: figure out how to apply that when you're looking at
• 20:24
  Speaker 1: BEET or Comedy Central or even MTV, which is sort
• 20:27
  Speaker 1: of in between.
• 20:28
  Speaker 2: Age Wise, we thought of everything as an input, right,
• 20:32
  Speaker 2: and so I think you have to take everything with
• 20:34
  Speaker 2: a grain of salt in the sense that let's say
• 20:36
  Speaker 2: you're doing, you know, three or four focus groups, You've
• 20:38
  Speaker 2: got ten or so people in each of those focus groups,
• 20:41
  Speaker 2: you're trying to pull themes and insights. Sometimes one loud
• 20:45
  Speaker 2: person in the focus group can impact everybody else, so
• 20:48
  Speaker 2: you're watching for that. I think in kids, what you're
• 20:51
  Speaker 2: really looking for is you're just looking for sparks. And
• 20:55
  Speaker 2: sometimes their physical reaction is as much as they're Sometimes
• 20:58
  Speaker 2: they don't have the vocabulary we had school television, right,
• 21:01
  Speaker 2: Sometimes they don't have the vocabulary to articulate in the
• 21:03
  Speaker 2: way that adults do. You know, I didn't like that character,
• 21:06
  Speaker 2: he was mean or whatever, right, but you could just
• 21:08
  Speaker 2: see them shiver or you could see them smile or right.
• 21:10
  Speaker 1: So authentic and organic. You don't have to worry. The
• 21:13
  Speaker 1: words don't matter.
• 21:13
  Speaker 2: That's right, and and some stuff is again we do
• 21:16
  Speaker 2: quantitative testing. Qualitative testing. Sometimes you would do dial testing
• 21:20
  Speaker 2: right during you'd air an episode and you'd see, like,
• 21:23
  Speaker 2: what are the places where they either laugh or turn
• 21:25
  Speaker 2: up the dial or down the dial. So all sorts
• 21:27
  Speaker 2: of different tactics and methods, but it's art and science.
• 21:32
  Speaker 2: I think that's you know, the great creators have an
• 21:35
  Speaker 2: instinct and it can't just be about you know, what
• 21:39
  Speaker 2: happened in that focus group.
• 21:40
  Speaker 1: So now let's pivot to thinking about digital investing platforms
• 21:46
  Speaker 1: and betterment. How transferable are these skills when you're looking
• 21:51
  Speaker 1: into what does an online investor really want?
• 21:56
  Speaker 2: So I think there are transferable skills, and then there
• 21:59
  Speaker 2: are there's a I had to learn. Right, So in
• 22:02
  Speaker 2: terms of transferable skills, you know, we were talking earlier
• 22:04
  Speaker 2: about branding and marketing, right, I think that media is
• 22:07
  Speaker 2: particularly excellent at that, right, And we had not just
• 22:10
  Speaker 2: a house of brands in terms of Nickelodeon and MTV
• 22:13
  Speaker 2: and Comedy Central, but then each of our intellectual properties,
• 22:16
  Speaker 2: each of our shows was effectively a brand, right you
• 22:19
  Speaker 2: had to launch it, and you needed to have a
• 22:21
  Speaker 2: brand plan. So SpongeBob had, and I'm sure has today
• 22:25
  Speaker 2: a ten or fifteen year brand plan at all times.
• 22:28
  Speaker 1: Fifteen years for SpongeBob, out ahead, out ahead, like let's
• 22:32
  Speaker 1: plan on these kids who will be born in a decade.
• 22:35
  Speaker 2: That's right, Wow's right. You're thinking about movies, you're thinking
• 22:37
  Speaker 2: about television series, you're thinking about how to you know,
• 22:40
  Speaker 2: how to how to keep the excitement alive themes. So anyway,
• 22:44
  Speaker 2: so all of that discipline is I think an incredibly
• 22:48
  Speaker 2: good learning ground that then can apply to any brand building.
• 22:51
  Speaker 2: I think similarly, as we were talking about all the platforms, right,
• 22:54
  Speaker 2: the idea of how do you expose your brand? Where
• 22:56
  Speaker 2: do you expose your brand? So all of that I
• 22:58
  Speaker 2: think I think works incredibly well regardless of industry. Operational
• 23:03
  Speaker 2: excellence is something that in any business, right, you need
• 23:06
  Speaker 2: to figure out, which comes down to setting, you know,
• 23:11
  Speaker 2: setting the rules and the parameters, and what do you
• 23:13
  Speaker 2: measure right? And how important is efficiency relative to growth?
• 23:18
  Speaker 1: Right?
• 23:18
  Speaker 2: These are all concepts that travel across businesses. And then
• 23:22
  Speaker 2: I think people management and organizational design is a really
• 23:27
  Speaker 2: important part of any business, right is how do you
• 23:31
  Speaker 2: build a team that works well together? And how do
• 23:34
  Speaker 2: you put sort of the right structure around that team
• 23:37
  Speaker 2: and the right organizational design. And I had a lot
• 23:40
  Speaker 2: of learning there because you know, we reorganized every i
• 23:43
  Speaker 2: don't know, twelve or eighteen months over my twenty years
• 23:46
  Speaker 2: at Viacom. So I think that all of that is
• 23:49
  Speaker 2: is transferable.
• 23:50
  Speaker 1: Huh, really really intriguing. So let's talk a little bit
• 23:53
  Speaker 1: about eight hundred thousand customers. That's a lot of customers, yes,
• 23:57
  Speaker 1: it is. What is it like trying to stay on
• 24:00
  Speaker 1: top of all of that? That seems like that's an
• 24:03
  Speaker 1: immense number of users.
• 24:06
  Speaker 2: Well, we've been at it a long time, so you
• 24:09
  Speaker 2: know when did Betterment launch. Betterment launched in twenty ten,
• 24:13
  Speaker 2: So thirteen years strong.
• 24:16
  Speaker 1: Seems I mean, my farm is ten years old and
• 24:18
  Speaker 1: it went by like that. Thirteen years seems not, you know, not,
• 24:23
  Speaker 1: you guys are relatively new, not as new as we are,
• 24:27
  Speaker 1: but still relatively young, right, Sure.
• 24:29
  Speaker 2: I mean in the if you think about the arc
• 24:31
  Speaker 2: of the wealth management business, sure we're relatively young. But
• 24:35
  Speaker 2: I think when you consider the digital wealth management space,
• 24:39
  Speaker 2: we were early and I'm one of the ogs, if
• 24:42
  Speaker 2: you will. Sure, but those eight hundred thousand customers actually
• 24:47
  Speaker 2: are across three lines of business. So we are best
• 24:50
  Speaker 2: known for our what was once called a robo advisor.
• 24:53
  Speaker 2: I like to think of it as a digital wealth
• 24:55
  Speaker 2: management platform.
• 24:56
  Speaker 1: I hate the name robo advisor.
• 24:58
  Speaker 2: I agree with you.
• 24:59
  Speaker 1: It's not a robot and it's not there to provide advice.
• 25:01
  Speaker 1: It's a platform that you build on top of. That's
• 25:04
  Speaker 1: at least that's how I think of it.
• 25:06
  Speaker 2: But well, I think that in the I think that's
• 25:08
  Speaker 2: exactly right. I also think that in the early days,
• 25:11
  Speaker 2: it was a simpler idea, right, which was fulfilling a
• 25:16
  Speaker 2: simple promise of low cost and automation and bringing access
• 25:20
  Speaker 2: to investors who previously didn't have access to great advice,
• 25:24
  Speaker 2: bringing sort of the simplest and clearest advice to that group,
• 25:29
  Speaker 2: and therefore expanding access. Now, what we're learning and we'll
• 25:34
  Speaker 2: get it, we'll get into sort of the what's happened
• 25:36
  Speaker 2: over the last decade is that that's really only the beginning.
• 25:39
  Speaker 2: And so for us, I think we think of sort
• 25:42
  Speaker 2: of the robo advisor as the first act. And we
• 25:44
  Speaker 2: then took that platform and thought long and hard about
• 25:47
  Speaker 2: what do the clients really need and some of them
• 25:50
  Speaker 2: want human advice for example. Right, the technology is not
• 25:53
  Speaker 2: sufficient unto itself, right, so we extended that platform to
• 25:58
  Speaker 2: the advisor community, to our right. So the idea there
• 26:02
  Speaker 2: was we have great tools, great technology that can scale
• 26:05
  Speaker 2: and that can help advisors scale their practices. We don't
• 26:08
  Speaker 2: need to compete with advisors. We can actually enable their success.
• 26:11
  Speaker 2: So that was the next business line, and then we
• 26:14
  Speaker 2: added a third business line, which is a four oh
• 26:17
  Speaker 2: one K business for small and medium sized businesses. And
• 26:21
  Speaker 2: so that is interesting because in all three business lines
• 26:24
  Speaker 2: they're very different. The customer segments are very different. But
• 26:27
  Speaker 2: what they share is that the big guys and the
• 26:30
  Speaker 2: established incumbents all sort of enterprise incredibly well and serve
• 26:35
  Speaker 2: wealthy people incredibly well. And in all three instances we
• 26:38
  Speaker 2: are expanding access through the use of technology.
• 26:41
  Speaker 1: So you mentioned low cost and automation, and I wanted
• 26:44
  Speaker 1: to circle back to that because the automation is what
• 26:49
  Speaker 1: enables low cost in fact, so for again good what
• 26:54
  Speaker 1: we do with liftoff is we have betterment power our
• 26:59
  Speaker 1: day digital platform, but we attach a live human advisor
• 27:03
  Speaker 1: to that, and that wouldn't be financially viable if you're
• 27:08
  Speaker 1: doing everything the way a traditional ria does it, because
• 27:12
  Speaker 1: that's pricy. There's a lot of people, there's a lot
• 27:14
  Speaker 1: of work, there's a lot of costs. You guys on
• 27:18
  Speaker 1: the back end plugged into this make it very, very
• 27:21
  Speaker 1: cost efficient so that the minimums go away. Forget five
• 27:25
  Speaker 1: million or one million, there's no minimum. You want to
• 27:28
  Speaker 1: open account with ten thousand dollars, you can and a
• 27:31
  Speaker 1: person can talk to you about it. But the process
• 27:34
  Speaker 1: of opening the account, funding it, onboarding it, all the
• 27:38
  Speaker 1: labor intensive human activities that a ten million dollar client
• 27:42
  Speaker 1: want someone holding their hands. You guys have come up
• 27:45
  Speaker 1: with a really really great set of technologies to automate that.
• 27:48
  Speaker 2: Thank you. That's exactly right. I couldn't have said it
• 27:51
  Speaker 2: better myself.
• 27:52
  Speaker 1: So what made you early on? Some of your competitors
• 27:56
  Speaker 1: thought the RIN industry was very much there competitors, how
• 28:02
  Speaker 1: did you guys look at And I know some of
• 28:04
  Speaker 1: this predates your your tenure, but what made Bennerman say, hey,
• 28:09
  Speaker 1: this is a part of the industry that we shouldn't ignore.
• 28:14
  Speaker 2: It does predate me. I think that's right. So I've
• 28:17
  Speaker 2: been in the CEO seat for three years. So John Stein,
• 28:20
  Speaker 2: our founder, he really saw around corners, right, And I think,
• 28:25
  Speaker 2: you know, what was so great about him, and I
• 28:27
  Speaker 2: think tends to be true of founders in general, is
• 28:30
  Speaker 2: they're always innovating. They're always thinking about the next idea.
• 28:34
  Speaker 2: And I think there were sort of two motivations for him.
• 28:38
  Speaker 2: You know, One was, well, wait a minute, why don't
• 28:41
  Speaker 2: the ri as, Why don't the human advisors like us?
• 28:44
  Speaker 2: Why do they see us as a threat? And as
• 28:46
  Speaker 2: he started to dig in, he said, well, wait a minute,
• 28:49
  Speaker 2: we don't have to be a threat. And this is
• 28:51
  Speaker 2: another this is another way to meet customers where they
• 28:54
  Speaker 2: are right, because some customers you know, young digital savvy,
• 28:58
  Speaker 2: you know, not a huge amount of assets yet may
• 29:01
  Speaker 2: be okay with a completely digital solution. But what he
• 29:04
  Speaker 2: started to understand and through you know, talking to customers,
• 29:07
  Speaker 2: was that as customers became more sophisticated and had life events, right,
• 29:11
  Speaker 2: got married, bought a home, their needs became more complex
• 29:14
  Speaker 2: and they wanted to talk to someone. And so understanding that,
• 29:18
  Speaker 2: he understood that there were limitations sort of to the
• 29:22
  Speaker 2: to the reach that you could have if you were
• 29:24
  Speaker 2: only serving customers directly. And so rather than say, you know,
• 29:29
  Speaker 2: we're anti human interaction, we said, he said, let's embrace that,
• 29:33
  Speaker 2: and let's understand that technology plus humans is better. So
• 29:37
  Speaker 2: how can we be great technology and great service? And
• 29:40
  Speaker 2: the way to do that was through the RIA community.
• 29:43
  Speaker 2: But you're right that in the early days it wasn't
• 29:45
  Speaker 2: so much that we saw the rias as our competitors.
• 29:48
  Speaker 2: It's that they saw us as a competitor, right.
• 29:50
  Speaker 1: And so one of your competitors, who I won't mention
• 29:53
  Speaker 1: by name, was very adversarial with the RIA community. They
• 29:57
  Speaker 1: have you know, a fraction of your ass but they
• 30:01
  Speaker 1: also aren't really working with advisors recognizing the different market
• 30:06
  Speaker 1: segments seem to have been a big win for you guys.
• 30:09
  Speaker 2: Yeah, I mean I think that it's a mistake to
• 30:12
  Speaker 2: not embrace the whole market, right, and to not recognize that, Look,
• 30:17
  Speaker 2: there are customers who feel comfortable. I've had a financial
• 30:20
  Speaker 2: advisor myself personally for twenty years, right, and that provides,
• 30:25
  Speaker 2: you know, peace of mind, and it provides and it's
• 30:28
  Speaker 2: a relationship, right, This is a relationship. Technology is never
• 30:31
  Speaker 2: going to replace a relationship. Technology can enhance the service
• 30:37
  Speaker 2: that that relationship provider can give you, but it's never
• 30:40
  Speaker 2: going to replace it. And I think recognizing that is
• 30:43
  Speaker 2: one of the things that differentiates us as a brand.
• 30:45
  Speaker 1: Yeah. Absolutely. So you mentioned John Stein. You come in
• 30:51
  Speaker 1: to CEO of Betterment following a founder. That's always a
• 30:55
  Speaker 1: tough spot. Tell us a little bit what that was like.
• 30:59
  Speaker 2: Well, it's funny. So I came from such a different world, right,
• 31:01
  Speaker 2: I came from the corporate world, and I didn't know
• 31:05
  Speaker 2: from founders, and so I had no expectation. And in
• 31:09
  Speaker 2: my experience, changes of leadership were somewhat commonplace. Right. Oh,
• 31:14
  Speaker 2: you know, when you're at a big company, things change
• 31:16
  Speaker 2: and so and so I met John through a actually
• 31:21
  Speaker 2: a business school classmate of mine. Knew a board member
• 31:24
  Speaker 2: at Betterment, which was kind of my path to Betterment,
• 31:27
  Speaker 2: and so I first met this board member and she
• 31:30
  Speaker 2: introduced me to John, and I think he was at
• 31:32
  Speaker 2: a moment in his career where he was thinking, look,
• 31:35
  Speaker 2: I built this thing, and I'm sort of I'm getting antsy,
• 31:37
  Speaker 2: I'm kind of ready for the next and I want
• 31:40
  Speaker 2: this to be a big business to scale, whether it
• 31:42
  Speaker 2: goes public or whatever. The next act of this business is.
• 31:46
  Speaker 2: It's an act that I have not had experience in.
• 31:48
  Speaker 2: And he was self aware enough to understand that now
• 31:52
  Speaker 2: maybe was the time if Betterment was going to kind
• 31:55
  Speaker 2: of take the next step, maybe there was a different
• 31:57
  Speaker 2: kind of leadership that could help do that. He was
• 32:00
  Speaker 2: meeting candidates and we met and we got along incredibly well.
• 32:04
  Speaker 2: He's still on the board, so he's a sounding board
• 32:07
  Speaker 2: for things, but we brought really different skills to the party. Right.
• 32:10
  Speaker 2: He was not a marketer and a brand builder, and
• 32:12
  Speaker 2: I think in the early days there was a thought
• 32:15
  Speaker 2: here that sort of if you build it, they will come,
• 32:17
  Speaker 2: and this idea that like, you know, a product led
• 32:20
  Speaker 2: product led growth was the sort of holy grail, right,
• 32:24
  Speaker 2: And I think that in the early days. That was
• 32:26
  Speaker 2: a good theory. I think the reality is what John
• 32:31
  Speaker 2: and others who sort of innovated around his time did
• 32:35
  Speaker 2: is they pushed the whole industry to embrace technology, maybe
• 32:39
  Speaker 2: faster than they would have right out of fear, right,
• 32:43
  Speaker 2: not unlike my experience in the media business, right, which
• 32:45
  Speaker 2: was you can't ignore. You can't put blinders on and
• 32:47
  Speaker 2: ignore streaming. You got to jump in.
• 32:49
  Speaker 1: It's so funny you say that, because it's streaming and media.
• 32:53
  Speaker 1: It's Tesla and the rest of the auto industry and evs,
• 32:57
  Speaker 1: it's Amazon forcing everybody to have some online line retail.
• 33:02
  Speaker 1: A technological disruptor comes in, and it's not just that
• 33:06
  Speaker 1: one company. The entire industry has to take notice and say,
• 33:10
  Speaker 1: either we adapt or we get left behind. That's right,
• 33:14
  Speaker 1: and that's really really substantial. So from where you sit,
• 33:18
  Speaker 1: coming from a media background, is it safe to say
• 33:21
  Speaker 1: leadership is leadership. It doesn't matter what the product is
• 33:25
  Speaker 1: that you're selling, you're leading people.
• 33:28
  Speaker 2: I think so. I mean, I think that there's certainly
• 33:32
  Speaker 2: you need some experts in the mix. Right. I'm not
• 33:34
  Speaker 2: going to say that, you know, no industry experience needed here, right,
• 33:38
  Speaker 2: But you can do that within the context of a
• 33:40
  Speaker 2: balanced team. And so I think, you know, I happened
• 33:43
  Speaker 2: to I happen to have a fantastic team. And the
• 33:46
  Speaker 2: team is really made up of a bunch of folks
• 33:49
  Speaker 2: who were here before I was and are really deep
• 33:51
  Speaker 2: experts in the space, and then we complemented them with
• 33:54
  Speaker 2: a handful four or five new folks who I brought
• 33:57
  Speaker 2: from the outside, who had a fresh perspective and maybe
• 34:00
  Speaker 2: at a different skill set.
• 34:01
  Speaker 1: Huh. Really intriguing. So let's talk a little bit about
• 34:04
  Speaker 1: the history of the digital investment platforms. These more or
• 34:09
  Speaker 1: less launched after the financial crisis kind of twenty tens
• 34:14
  Speaker 1: or so. There were some great expectations when some of
• 34:17
  Speaker 1: the initial companies launched. Many of your competitors have not
• 34:23
  Speaker 1: lived up to those lofty expectations. How do you look
• 34:28
  Speaker 1: at the field and say, why have some of these
• 34:32
  Speaker 1: companies just not gotten it done? So?
• 34:35
  Speaker 2: I think in general, there was a sort of a
• 34:38
  Speaker 2: fear slash expectation right that digital was going to take
• 34:44
  Speaker 2: over the business, right, and so that obviously had big
• 34:47
  Speaker 2: dollar signs in people's eyes.
• 34:48
  Speaker 1: It was a gold rush for a while. People spent
• 34:50
  Speaker 1: a lot of money buying digital platforms. Many of those
• 34:54
  Speaker 1: purchases did not work out, but it was pretty It
• 34:59
  Speaker 1: looked like, hey, these guys would come and eat on lunch.
• 35:02
  Speaker 2: Right, And I think, look, that's not unlike the sort
• 35:04
  Speaker 2: of digital boom and bust in every industry, right, which
• 35:07
  Speaker 2: is think about Amazon. Right, Amazon won, but there was
• 35:10
  Speaker 2: there there was a lot of roadkill by the side
• 35:12
  Speaker 2: of the road, right, whether it was e Toys or
• 35:16
  Speaker 2: you know to right to remember just a brand name, right,
• 35:18
  Speaker 2: there were a whole number of these firms.
• 35:20
  Speaker 1: Pets dot Com is the one that sticks out to me.
• 35:23
  Speaker 2: Right, like they all emerged, they all I mean Amazon
• 35:25
  Speaker 2: was books, right, It wasn't the everything store, it was books.
• 35:28
  Speaker 2: And I think you know, they they won because they
• 35:31
  Speaker 2: were excellent, right, and they delivered, they had They were
• 35:34
  Speaker 2: maniacal about the consumer, right, and they and they just
• 35:38
  Speaker 2: continued to build off of super serving that consumer.
• 35:42
  Speaker 1: And regardless of profit, they were will want to post
• 35:44
  Speaker 1: bone joy in order to do.
• 35:46
  Speaker 2: The reserve, right because they knew that referrals and customers
• 35:50
  Speaker 2: who loved them was the holy grail, right, And so
• 35:54
  Speaker 2: you know, they won. So I think the same can
• 35:57
  Speaker 2: be said in any industry, right, I mean, Netflix has
• 35:59
  Speaker 2: is is the clear leader in the streaming space, and
• 36:03
  Speaker 2: I think, you know, I intend for Betterment to be
• 36:05
  Speaker 2: the clear leader in the digital wealth management space.
• 36:08
  Speaker 1: So what does Betterment have to do to distinguish itself
• 36:12
  Speaker 1: from the rest of the pack. And the rest of
• 36:14
  Speaker 1: the pack includes Vanguard as well as a bunch of
• 36:18
  Speaker 1: other much smaller clean sheet startups in the space.
• 36:24
  Speaker 2: So my aspiration is sort of what Amazon did for Walmart, right,
• 36:29
  Speaker 2: which is it pushed them to be better, but ultimately
• 36:33
  Speaker 2: there's room for both. I think that is very true
• 36:36
  Speaker 2: in the wealth management space as well. So I think,
• 36:38
  Speaker 2: you know, Schwab and Fidelity and Vanguard, like those are
• 36:41
  Speaker 2: the great brands. Those are my parents' brands.
• 36:44
  Speaker 1: Right, and they all have their own in house digital platform.
• 36:47
  Speaker 2: That's right because they knew that that has to be
• 36:49
  Speaker 2: part of the mix. And I think similarly, right if
• 36:52
  Speaker 2: I think about those as brands, I think the technology
• 36:55
  Speaker 2: is a start, but I think building a brand that
• 36:57
  Speaker 2: understands the customer segment you serve is going to be
• 37:00
  Speaker 2: critically important in terms of who wins and who loses.
• 37:04
  Speaker 2: And so what I aspire to for Betterment is that
• 37:07
  Speaker 2: we should become the millennial and gen Z Wealth Management
• 37:12
  Speaker 2: brand the way Schwab or Fidelity serves our parents.
• 37:17
  Speaker 1: Huh. That's intriguing. So when you're doing the sort of
• 37:23
  Speaker 1: customer analysis that you did back at Viacom at Betterment,
• 37:28
  Speaker 1: what are you finding from both your existing clients and
• 37:32
  Speaker 1: people who are potential clients. What is it that the
• 37:35
  Speaker 1: consumer is looking for in advice from a digital platform.
• 37:39
  Speaker 2: So I think first and foremost, they are looking for
• 37:43
  Speaker 2: great technology and great service.
• 37:45
  Speaker 1: So when you say great technology, I think of ease
• 37:48
  Speaker 1: of use, user interface, those sorts of things.
• 37:51
  Speaker 2: That's exactly right, that's exactly right. And they've grown up
• 37:54
  Speaker 2: right with a phone in their hand, so to speak, right,
• 37:57
  Speaker 2: and so I think what worked for customers a generation
• 38:02
  Speaker 2: to go? I think the expectations are just raised, right,
• 38:05
  Speaker 2: And so in terms of what technology can deliver, it
• 38:08
  Speaker 2: has to be on mobile. Not just ease of use,
• 38:10
  Speaker 2: but ease of use on mobile. I want to be
• 38:11
  Speaker 2: able to do everything on my phone. Don't make me
• 38:13
  Speaker 2: sit down at the computer, for example, right, And that's
• 38:16
  Speaker 2: actually not the way we were born. Right a decade ago,
• 38:19
  Speaker 2: these digital platforms were online as opposed to digital, and
• 38:22
  Speaker 2: we've moved the word online to digital because really we
• 38:25
  Speaker 2: need to be mobile first, right, And I think I
• 38:28
  Speaker 2: wouldn't say that Betterment was sort of first in its
• 38:32
  Speaker 2: class on recognizing the power of mobile in this space
• 38:35
  Speaker 2: because when we were when we originated the brand and
• 38:38
  Speaker 2: the business, we thought, this is a considered purchase, and
• 38:42
  Speaker 2: as a considered purchase, people are going to sit down
• 38:44
  Speaker 2: at their desktop and they're going to do their research.
• 38:46
  Speaker 2: And that still is true for a lot of folks
• 38:48
  Speaker 2: when they sign up. But once you have this your
• 38:52
  Speaker 2: wealth somewhere, you want to be able to check it
• 38:53
  Speaker 2: and you want to be able to check it wherever
• 38:55
  Speaker 2: you are, you know, in the bathroom, online wherever you are,
• 38:59
  Speaker 2: and that's on your phone. And so that's been a
• 39:01
  Speaker 2: huge push, you know, during my tenure in the last
• 39:03
  Speaker 2: couple of years, it's saying we need to think mobile first.
• 39:05
  Speaker 2: So that's just an example of sort of usability and
• 39:08
  Speaker 2: where you need to be and perhaps obvious but critical.
• 39:11
  Speaker 1: All right, So you started with an online platform, you
• 39:15
  Speaker 1: go to mobile. If we're looking at the next great technology,
• 39:19
  Speaker 1: it's almost a cliche to say AI is going to
• 39:22
  Speaker 1: change all these things. How does a digital online investment
• 39:26
  Speaker 1: platform use AI to make itself and its products more
• 39:31
  Speaker 1: desirable to its clients.
• 39:33
  Speaker 2: So AI think of it as supercharging everything we do. Right,
• 39:37
  Speaker 2: So it's causing us really to re litigate every process
• 39:41
  Speaker 2: we have and say can we do it better, stronger, faster,
• 39:45
  Speaker 2: and how can technology enable that? So we're starting really
• 39:49
  Speaker 2: in the back office, and that's both internal and customer facing.
• 39:52
  Speaker 2: So think about, you know, writing first drafts of marketing pieces, right,
• 39:57
  Speaker 2: get you know, putting some inputs, giving an assignment to
• 39:59
  Speaker 2: the AI and letting them draft something that you can
• 40:01
  Speaker 2: then use as a jumping off point. Think about customer
• 40:04
  Speaker 2: that's just an example. Think about customer service. Not necessarily
• 40:09
  Speaker 2: I think a chatbot can answer simple questions, but also
• 40:13
  Speaker 2: you can have AI develop more sophisticated answers that then
• 40:17
  Speaker 2: the human service operator can translate for the consumer. Right,
• 40:21
  Speaker 2: So speeding up every one of those interactions. Think about
• 40:24
  Speaker 2: a brand new engineer joining the team who doesn't know,
• 40:27
  Speaker 2: you know, anything about betterment and needs to find, you know,
• 40:30
  Speaker 2: find his or her way. You know, we have an
• 40:33
  Speaker 2: opportunity to get them up to speed faster, right because
• 40:36
  Speaker 2: there is just more information easily accessible at their at
• 40:39
  Speaker 2: their fingertips. So what I don't see AI doing or
• 40:42
  Speaker 2: at least not yet is replacing the fiduciary role that
• 40:49
  Speaker 2: we play, right, which is we have a responsibility to
• 40:52
  Speaker 2: our customers that is highly regulated and that requires that
• 40:57
  Speaker 2: we act in their best interest. And there still is
• 40:59
  Speaker 2: a lot in the technology where there's what they call hallucination,
• 41:03
  Speaker 2: right are they giving good advice? So so we think
• 41:05
  Speaker 2: that the technology is an enabler. Enabler but not so
• 41:09
  Speaker 2: much a replacement.
• 41:10
  Speaker 1: For so I love the term hallucination. You never worked
• 41:14
  Speaker 1: at Roku and you never worked at ubs. But when
• 41:17
  Speaker 1: I'm done with my research, I'll then run it through
• 41:22
  Speaker 1: CHATCHBT four and perplexity, which are one as clawed and
• 41:26
  Speaker 1: one as the I forgot the other driver, just to
• 41:28
  Speaker 1: see what comes up and oh I missed? How did
• 41:31
  Speaker 1: I miss Roku? How did I miss Ubs? Turns out
• 41:34
  Speaker 1: I didn't. They were wrong and hallucinating, which is why
• 41:38
  Speaker 1: you have to have a human double check it. But
• 41:40
  Speaker 1: it still has this reach and depth that it's so
• 41:45
  Speaker 1: quick and so easy it really creates, you know, a
• 41:51
  Speaker 1: first draft is really a good way to think about it,
• 41:53
  Speaker 1: as long as you're fact checking it and where that
• 41:55
  Speaker 1: it's often wrong.
• 41:56
  Speaker 2: That's right, and you have to have guardrails, right, And
• 41:59
  Speaker 2: so I think we're being very thoughtful in how we
• 42:02
  Speaker 2: deploy AI. But I think we would be foolish not
• 42:05
  Speaker 2: to be embracing the technology because you know, if we
• 42:07
  Speaker 2: can speed everything up we do by ten percent or
• 42:09
  Speaker 2: fifteen percent using the technology, then you know, better, stronger.
• 42:13
  Speaker 1: Faster, right, And we usually measure productivity gains in you know,
• 42:17
  Speaker 1: single decimal points. Ten percent or fifteen percent is just immense.
• 42:22
  Speaker 1: That's that's a game changing improvement.
• 42:25
  Speaker 2: Yeah. I mean you talk about do more with less, right,
• 42:27
  Speaker 2: I mean this is the greatest example. Yeah.
• 42:29
  Speaker 1: Absolutely. So before we get to a favorite questions, I
• 42:32
  Speaker 1: have a curveball question to throw at you. You are
• 42:35
  Speaker 1: currently a board member for the Lucius and Littower Foundation,
• 42:41
  Speaker 1: as well as Funko and Catalyite. Tell us a little
• 42:44
  Speaker 1: bit about those organizations.
• 42:46
  Speaker 2: Sure, So I'll start with Lucia's Litower is a foundation
• 42:50
  Speaker 2: and we support access to opportunity and we support a
• 42:54
  Speaker 2: series of Jewish causes. There was a man named Lucius
• 42:57
  Speaker 2: Littower and he passed away without any airs, and so
• 43:01
  Speaker 2: we have a group of people who are entrusted to
• 43:04
  Speaker 2: carry on his legacy. So that's been a great one
• 43:08
  Speaker 2: for more than ten years. I've been doing that. Funko Inc.
• 43:11
  Speaker 2: Is a pop culture company. It's a public company. You
• 43:14
  Speaker 2: may have heard of Funko pop which are like little
• 43:16
  Speaker 2: sort of plastic characters. That's the signature item we sell.
• 43:20
  Speaker 2: But really, when you think about fandom, it's a fan company.
• 43:24
  Speaker 2: And that's been again a lot of fun. That's been
• 43:26
  Speaker 2: my first public company board. And then Catalyite is a
• 43:31
  Speaker 2: more recent board that I joined, and that is a
• 43:34
  Speaker 2: company that sits actually at the intersection of AI and
• 43:37
  Speaker 2: diversity and inclusion, and it's about creating pathways for underrepresented
• 43:41
  Speaker 2: groups who don't have four year college degrees into higher
• 43:45
  Speaker 2: earning jobs, using AI to understand aptitude and likelihood of success.
• 43:52
  Speaker 2: And it's cool company.
• 43:53
  Speaker 1: It sounds really interesting, all right, So we only have
• 43:55
  Speaker 1: you for a few more minutes. Let's jump to our
• 43:58
  Speaker 1: favorite questions that we ask all of our guests, starting
• 44:02
  Speaker 1: with you're the perfect person to ask this question. What
• 44:05
  Speaker 1: are you streaming these days? Tell us about what you're
• 44:08
  Speaker 1: watching on Netflix or Amazon or Hulu or Disney or
• 44:12
  Speaker 1: Paramount Plus or anything you might be streaming.
• 44:15
  Speaker 2: So I binge constantly. The new season of Slow Horses
• 44:21
  Speaker 2: Season three, right season three. That that's one that that
• 44:25
  Speaker 2: I've recently streamed.
• 44:28
  Speaker 1: It's a really interesting shows.
• 44:30
  Speaker 2: It's a great show.
• 44:31
  Speaker 1: That's I love it.
• 44:32
  Speaker 2: That's on Apple Yep. I loved Also on Apple, I
• 44:36
  Speaker 2: loved Lessons in Chemistry, which I read.
• 44:38
  Speaker 1: The book, really gotten to it.
• 44:41
  Speaker 2: That's a good one. I really liked it. But I
• 44:43
  Speaker 2: also read the book. So so those are two of
• 44:46
  Speaker 2: my I love them. Oh, I just watched The Pacific,
• 44:49
  Speaker 2: which is an old which is a spin off of
• 44:52
  Speaker 2: Band of Brothers. HBO must have recently sold a bunch
• 44:54
  Speaker 2: of stuff to Netflix, so it surfaced in my algorithm,
• 44:58
  Speaker 2: and it was a spinoff of Band of Brothers and
• 45:00
  Speaker 2: it was about it's about World War Two.
• 45:02
  Speaker 1: Didn't Band of Brothers end up there also?
• 45:04
  Speaker 2: It did? It did, But I had seen that, and
• 45:06
  Speaker 2: I had never heard of The Pacific, but it surfaced
• 45:09
  Speaker 2: and I watched that. It was about the Pacific theater
• 45:10
  Speaker 2: during World War Two.
• 45:11
  Speaker 1: Really interesting since you're mentioning wartime shows, have you seen
• 45:17
  Speaker 1: all the light? You cannot see?
• 45:19
  Speaker 2: So not only have I seen it, but it's one
• 45:21
  Speaker 2: of my favorite books.
• 45:22
  Speaker 1: Fantastic really and they did a great job.
• 45:25
  Speaker 2: They did.
• 45:25
  Speaker 1: They did. It's just what is it six episode something
• 45:28
  Speaker 1: like that. I wanted it to be really Yeah, it
• 45:30
  Speaker 1: was real. It was one of those things you're when
• 45:32
  Speaker 1: you're said when a show ends, it's like, that's how
• 45:34
  Speaker 1: you know it's a really good uh, a really good show.
• 45:37
  Speaker 1: Tell us about your early mentors who helped shape your career.
• 45:41
  Speaker 2: My early mentors were were really my bosses. So I
• 45:46
  Speaker 2: worked early on for a guy at Disney named Peter
• 45:50
  Speaker 2: Murphy who was a great mentor to me. And then
• 45:54
  Speaker 2: a woman named Dan Sarnoff who became ultimately was running
• 45:57
  Speaker 2: the Warner Brothers studio. She she was my first job
• 46:01
  Speaker 2: out of business school. And then a fellow who was
• 46:04
  Speaker 2: the COO at Nickelodeon before I was, named Jeff Dunn,
• 46:07
  Speaker 2: who went on to run Sesame Workshop. Those were probably
• 46:10
  Speaker 2: my three.
• 46:10
  Speaker 1: Let's talk about books. What are some of your favorites.
• 46:13
  Speaker 1: What are you reading right now? So?
• 46:16
  Speaker 2: I love historical fiction and I love a good beach read.
• 46:20
  Speaker 2: So right now I am reading the Elon Musk biography,
• 46:25
  Speaker 2: and I'm also reading Demon Copper Demon Copperhead, which is
• 46:30
  Speaker 2: a Barbara Kinsolver, which is fantastic.
• 46:33
  Speaker 1: Demon Copperhead. What sort of book is that?
• 46:35
  Speaker 2: It's about a little boy who grows up in foster care.
• 46:40
  Speaker 2: And I think it's going to be about the opioids crisis,
• 46:42
  Speaker 2: but I haven't gotten to that. I haven't gotten to
• 46:44
  Speaker 2: that part.
• 46:45
  Speaker 1: Yeah, you know we mentioned innovator's dilemma earlier. Did you
• 46:49
  Speaker 1: ever read loon Shots?
• 46:50
  Speaker 2: I did not, so.
• 46:53
  Speaker 1: By a professor. I'm drawing a blank on his name
• 46:55
  Speaker 1: at the moment. But it's how every company is really
• 46:59
  Speaker 1: two companies. One is that small startup and the other
• 47:02
  Speaker 1: is the company that has its own ongoing revenue source.
• 47:10
  Speaker 1: And how do you balance the need to not eat
• 47:13
  Speaker 1: your seed corn but at the same time take occasional
• 47:15
  Speaker 1: moon shots. And it's a challenge for a lot of companies.
• 47:20
  Speaker 1: Apple is an example of a company that is willing
• 47:23
  Speaker 1: to cannibalize our own products in order to stay ahead
• 47:27
  Speaker 1: of the competent. Really, really just fascinating, and I thought
• 47:30
  Speaker 1: of it because of what you had said earlier. Big
• 47:33
  Speaker 1: companies tend not to do these moonshots. The name of
• 47:37
  Speaker 1: the book is Loonshots. I'm sure it'll pop into my
• 47:39
  Speaker 1: head later. Our last two questions, what sort of advice
• 47:45
  Speaker 1: would you give to a recent college grad interested in
• 47:49
  Speaker 1: a career in either media or investment, So.
• 47:55
  Speaker 2: I always think the training, the investment banking training programs
• 47:58
  Speaker 2: aren't a good way to start. They're sort of like
• 48:00
  Speaker 2: boot camp for a couple of years where they, you know,
• 48:02
  Speaker 2: teach you to understand p and ls and financial modeling,
• 48:05
  Speaker 2: and I think that's a really transferable skill, so I
• 48:08
  Speaker 2: think those are fantastic programs. I also think these days,
• 48:11
  Speaker 2: you know, whether I'm a financial company or a technology
• 48:15
  Speaker 2: company is sort of a question we ask ourselves every day,
• 48:17
  Speaker 2: and I think the answer is both. But engineering in
• 48:20
  Speaker 2: computer science is an incredibly fabulous career these days, and
• 48:24
  Speaker 2: I think opens a lot of doors. But that appeals to,
• 48:27
  Speaker 2: you know, a certain segment of the population.
• 48:31
  Speaker 1: And our final question, what do you know about the
• 48:33
  Speaker 1: world of branding, marketing, or technology and investing today? You
• 48:40
  Speaker 1: wish you knew twenty five or so years ago when
• 48:42
  Speaker 1: you were really getting started.
• 48:45
  Speaker 2: Well the world of investing. I would say I did
• 48:49
  Speaker 2: not fully appreciate the power of starting early and the
• 48:52
  Speaker 2: power of you know, compounding, you know, save what you can.
• 48:56
  Speaker 2: I think I also underappreciated, really until I got to betterment,
• 48:59
  Speaker 2: I under appreciated how much costs and taxes can undermine investing.
• 49:05
  Speaker 2: Returns and so to be to be a cognizant of
• 49:07
  Speaker 2: those things. And then lastly, I would say take advantage
• 49:12
  Speaker 2: early on of the of what the government offers in
• 49:15
  Speaker 2: terms of tax advantaged accounts, because that can be a
• 49:18
  Speaker 2: real step up. So, whether that's for participating in a
• 49:21
  Speaker 2: company four oh and k or iras right, these are
• 49:24
  Speaker 2: all great opportunities for saving.
• 49:26
  Speaker 1: Well, well, thank you Sarah for being so generous with
• 49:29
  Speaker 1: your time. We have been speaking with Sarah Kirshbaum Levy.
• 49:33
  Speaker 1: She is the CEO of Betterment. If you enjoy this conversation, well,
• 49:38
  Speaker 1: check out any of the previous five hundred we've had
• 49:41
  Speaker 1: over the past nine years. You can find those at iTunes, Spotify,
• 49:46
  Speaker 1: Bloomberg YouTube, wherever you find your favorite podcasts. Sign up
• 49:51
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• 49:54
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• 49:57
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• 50:01
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• 50:04
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• 50:08
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• 50:13
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• 50:16
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