Interview With The Founder Of LearnVest (Financial Planning Software) | My First Million 05/27/2020

Alexa Von Tobel

Getting the fancy car doesn't make you happy because then you have to clean the car. Or getting a bigger home out of the city doesn't necessarily make you happy because then you commute farther to your work.

Shaan Puri

Cool! Alexa, thanks for joining us on the podcast. We have a special guest. I'll let you do your intro because I really am terrible at introductions. But, you know, I'll admit we didn't do a ton of background research because I like to just talk in the moment. I actually prefer not to have too much prepared in my mind because then I'm always referencing my notes and things like that. I'd rather just kind of do it more organically. But you were the CEO of LearnVest.

Sam Parr

hey speak for speak for yourself I know a bunch about learnvest

Shaan Puri

I'm just saying, I personally prefer to do it this way. Sam personally prepares. Actually, he already knew about it. You didn't even do the research; you just already knew. For those who don't know what LearnVest is, give us your maybe 2 or 3 minute background so that people know who you are.

Alexa Von Tobel

Sure, I think so. I'll start from the beginning. I grew up in Florida and I've always been an entrepreneur. I love entrepreneurs and building companies. I went to Harvard for my undergraduate studies and focused on happiness, which I always mention because I think it has been very helpful in life. I ended up going back to business school there but dropped out during the worst recession in 81 years. Now, I feel like this may be our own COVID moment, which is obviously something that's worrisome. I built a financial planning software company called LearnVest with a really simple mission. LearnVest became the TurboTax for financial planning. So, literally, every American family could get access to a financial plan and an adviser for an affordable price. On our fifth birthday, on March 25, 2015, I sold the business to Northwestern Mutual for about $375 million. I then spent the next few years as part of that business at Northwestern Mutual. Through all that, I wrote some books, including a best-selling book called *Financially Fearless* and then *Financially Forward*, which is about the future of your wallet. I'm just a die-hard entrepreneur. I love entrepreneurs and I love to build businesses. Now, I'm the managing partner of a $200 million venture fund called Inspired Capital, which is headquartered in New York City. We pay it forward and invest in seed and Series A entrepreneurs of tomorrow who are building big ideas. It's really fun to be on both sides of this. Now, I'm on the investing side. That's me! I'm married, I live in New York City, and I have three beautiful little babies: a 5-year-old, a 2-year-old, and a 1-year-old, which means I'm completely crazy. But that's who I am.

Shaan Puri

wow impressive wow

Sam Parr

you're not you're not you're not new york city right now I see are you I see greenery

Alexa Von Tobel

No, I'm not. Which... no. So, I have been in Florida. I'm actually sitting in my high school bedroom, which is bringing it all back full circle. We came down here for spring break and just haven't gone back.

Shaan Puri

do you have like a justin timberlake poster on the wall or something or what what's what's in the high school room

Alexa Von Tobel

Nope, no. But you know, it's amazing. Look at this! I literally am sitting on my year box, which is just incredible. I mean, it's so cute. My mom has literally kept all of the things. Some days I'm like, "Mom, why didn't you throw some of this stuff away?" But she kept all my pictures, all of my artwork, and all of my silly stuff.

Shaan Puri

I'll start because Sam's probably still blown away. He loves Harvard. You had him at Harvard. Then you sold a company for $375,000,000. And then financial planning... he's a total financial planning nerd, personal finance nerd. So, Sam, do you need a moment to just sort of gather your thoughts, or are you ready to go?

Sam Parr

No, he's joking a little. I did not go to Harvard. I wish! But I do have an odd fascination with it. People say I have a Harvard sweatshirt, and they always say, "Oh, you went to Harvard." I was like, "Yeah, I went there. I paid money and took a tour, and they showed me around."

Alexa Von Tobel

I will just say, while Harvard was a great education, I think there are lots of things in life that are much cooler than Harvard. I just did an MBA. I graduated undergrad and then I dropped out of Harvard Business School.

Shaan Puri

Gotcha. You said you studied happiness. What is that like? One class? I took a class called "Getting Rich," but that wasn't my major. It was just one class.

Alexa Von Tobel

no

Sam Parr

is that really a class

Alexa Von Tobel

Yeah, so I actually studied psychology. I started in a track called Mind, Brain, Behavior, and then ended up in psychology. Specifically, there was a happiness lab that Dan Gilbert was running, where we focused on how people make decisions and what makes us happy. Basically, the headline of my whole experience was that we're really bad at making decisions that make us happy. We do things that we think will make us happy, but in fact, getting the fancy car doesn't make you happy because then you have to clean the car. Or getting a bigger home out of the city doesn't necessarily make you happy because then you commute farther to your work. So, it's just really a good perspective that it's the little things that really keep us happy.

Shaan Puri

I love that you know this is very on topic. So, I remember back in the day, there was a guy who was, I think, a professor at Harvard named Sean Achor. Is that somebody who was...?

Alexa Von Tobel

Yeah, that's what he was. He is one of my teachers, Sean Achor. Yeah, he's wonderful. Actually, his core professors, Tal Ben-Shahar and Philip Stone, were my thesis advisers.

Shaan Puri

This TED Talk is pretty great. I still remember it, and I watched this thing like 10 years ago. You know, some talks just stick with you. It was called, I think, "The Happiness Advantage" or something like that. If I remember correctly, the thesis was that being happy is actually an advantage to getting great results. Some people think about it the other way: "If a great thing happens, then I'll be happy." His advice, if I remember from 10 years ago, was that "If I am happy, I'll have better results." Is that a good summary? Am I accurate, or am I just totally misremembering?

Alexa Von Tobel

So, the short term is that under extreme duress and extreme stress, you can outperform. However, if you're actually very happy, relaxed, and fulfilled, you outperform in the long term. When you're building teams for long-term success, I've inspired Capital, a venture fund. We have a really unique group of people that have come together to build this firm, and we're trying to build a long-term fund. I'm very focused on ensuring we have long-term happiness because you outperform in the long run. Another thing I learned from Sean and Tal, my professors, is that positive energy and attitude are actually undervalued resources. People are very naturally drawn to those who are positive. If you're super negative over and over, people don't want to be around you. They don't want to work with you, and they don't want to show up for you. So, one thing people always ask me is, "What would I tell high schoolers?" I'm like, "Have a good attitude." It goes really far, and it's part of that.

Alexa Von Tobel

Of happiness is an advantage so is positivity

Shaan Puri

I always talk about this: enthusiasm is sort of in complete undersupply among successful people. So, you know, when you're trying to compete and you're trying to be successful...

Alexa Von Tobel

you're talking to the wrong person I'm like the stupidest person

Shaan Puri

Well, obviously you bought in on this. What I'm saying is that for most people, or in most of the environments I've been around—whether it's entrepreneurs or investors—right now I'm at a bigger company because my company got acquired. It's like the executives at this company, in some ways, see enthusiasm as a low-status thing to do. It's like, "Oh, you know," being reserved is somehow more, I don't know, prestigious or powerful in some way. I've gone in the complete opposite direction where I'm overly enthusiastic. I'm like, "Dude, I have one-tenth of the skills of all the people that have been around me," but I've been able to go so far because I think enthusiasm is such a superpower that most people could tap into and totally don't for whatever reason.

Alexa Von Tobel

I mean, I totally agree with you. And beyond that, not only do I totally agree with you, I also think it's worth saying that having a positive outlook is a skill we can all adopt. Trying to be positive and trying to be joyful is something we can all work on. I can't grow taller or get better at certain traits that I just don't have, but being positive is possible. It may not be easy for everybody to do, but it is achievable.

Shaan Puri

sam are you an enthusiastic guy

Sam Parr

I think I am. I think that's why people like this podcast. We have a very loyal audience, and I think it's because people feel as though Sean and I have a little bit of a contagious energy. Yeah, it is positivity, or it's very positive. But I think some of my coworkers will say that I'm kind of grumpy because I've got to be the bad guy, unfortunately, a lot of times.

Shaan Puri

I think you have like an **angry enthusiasm**. Your switch flips from extreme enthusiasm, and it's super infectious, to quickly becoming very angry or grumpy about something. Then you switch back sort of effortlessly. But for the people around you, they're probably just getting rocked by it.

Sam Parr

It’s funny, I like to think maybe you were like this too, but I will fight with my executives at my company. Then, we can just hug it out. We're good, we're good. But I've definitely... can we talk about Learn Best a little bit? I used you guys when you first came out. I mean, I was just starting to use it because I didn't have a lot of money, and that was an issue. What was the premise behind the business? Because I think it kind of pivoted a fair amount once or twice, right?

Alexa Von Tobel

so we started it was the business plan was always the same it was content tools and advice and I started the out of my own savings so we started with content because back in 2008 in new york city I actually founded the company in 2007 you can do a free newsletter and just kinda get going and so we started creating a brand we started trying to talk to our users and just have a really authentic voice to say you know for me it was pretty it was pretty stupefying that I could graduate from a great school you know I worked on wall street I was really good at math really good at economics but when it came to just the basic questions of my wallet how many credit cards should I have what's a credit score exactly and how do I make sure I keep it safe what are the activities I need to do in to to make sure my wallet is strong how do I you know how much can I afford and rent really basic questions the fact that very clear answers was kind of wild so we started with content and then we always said it would be content tools and advice and so once we finally raised enough money to build a proper tech team we started with a budgeting app which was a place for you to see all your finances in one place and then what we quickly realized was people wanted advice and I had no idea what advice look like chat what it look like phone calls call center open 24 hours a day I had no idea and we just said we'll follow the customers and we originally started when you build content you wanna focus on on an audience a specific one so we started with female millennials and then what we quickly by the time we get to advice we just served households so it was never a pivot it was very much just like an extension of what we were doing and by the time we get to advice we actually built financial planning software that could take any family and ingest 60 data points about them and then would spit out exactly what we call gps for your money so literally a living and breathing financial plan and we connect you to I I'm a certified financial planner and we connect people to a trusted advisor that worked full time for us and so that's what we did and it was a subscription service and then by the end we had companies buying learn best software for all of their employees as a a a benefit you you know akin to your health benefits and your 4 zero one k benefits and so that's what learnvest became we became the the the largest fastest growing online financial planning company

Sam Parr

You know, how long did it take to go from... So, I don't know if you know about my business. We're hosting this podcast called **The Hustle**. It's content as well, and we're also building tools. How long did it take? I'm very familiar with the content game and the strategy. I think it's great, but most people fail at it. I think it's quite hard. So, how long did it take to go from content to creating your products?

Alexa Von Tobel

so we started content in I may of 2007 is when I founded the company my then boyfriend's now he's my husband his dad was our lawyer so shout out to him he was the best and my mom was a secretary literally like like signed the formal paperwork I'll never forget it and then I'd read a 75 page business plan and then by the time that I dropped out of hbs it was december 18 2008 moved to new york and started I remember I gave myself christmas I said you get basically a week and then it's go time and so I started building january 1 2009 and then by the time we launched the company like truly launched to our first 10,000 users was the following january we launched we launched this thing called boot camp which were 10 day programs that people could go through to learn about their wallet and they were free and we quickly one day realized holy smokes 10,000 people have signed up in a week to to go through one of these programs and from there we just kept building and we kept talking to our customers and saying what kind of tools do you want what what do you want advice to look like and one day people would write in and say I really wanna talk to a customer or sorry to I really wanna talk to somebody I have questions I have questions and so we then keep in mind it's a regulated business to become a financial adviser and so we had to go get regulated and became a registered investment adviser and we then opened it up that you could pay to talk to an adviser and we said let's make it super honest really transparent no hidden cost just on the site exactly what it costs and while like you step back it seems really logical like what we were doing was never illogical but it actually flipped the whole industry on its head the industry used to pretend to give advice away for free but then charge you deeply on all the products that they would give you and all of those fees would actually be pretty material so if you had a $100,000 you're paying $2,000 a year for advice and that didn't always feel good people were very distrustful and so we just said flip it over make it $500 for the year to get access to unlimited advice and we'll sell no products so you always can trust that our advice is the right advice and so that's what learnvest did and again it seemed at the time it was actually pretty groundbreaking to build financial planning software for everybody for the masses and so we also said we'll take you a few $30,000 in income or 30,000,000 again not that wild right it it just let's be let's be a good business that takes care of people but what we realized is that alone that brand positioning is pretty powerful

Sam Parr

employees did you have like in the first two years or so to build all that

Alexa Von Tobel

So, we were small in the beginning. You know, we got to about 50 employees by, call it, the first real 2 to 3 years of being up and running.

Sam Parr

yeah so that's that's a you're hiring a

Shaan Puri

lot of people that's 50 0.50 is good

Alexa Von Tobel

And by the time we got acquired, we were about 150 people, which, you know, meant we were a real business. For me, that represented so much personal growth. As a young entrepreneur, you don't know what you don't know. At times, it seemed really big to me. So, how big was the audience?

Shaan Puri

Before you started launching those products and the advice, how... because you're what I'll call an audience-first company. You first build it through content loyalty, and then when you have a service to offer, or a product or tool to offer, you've got your customer sitting there. You just need to convert X% of them. So, how big was the audience?

Alexa Von Tobel

Well, I mean, I can't tell you... it's all from memory. By the time we get acquired, we're about 2.5 million users. So by the time that we went...

Shaan Puri

your video disappeared we can hear you there okay you're back

Sam Parr

so there it is

Alexa Von Tobel

Okay, perfect. There we go. I don't know what happened, but by the time that we got acquired, we were about $2.5 million. What?

Sam Parr

what's a user

Alexa Von Tobel

I was somebody who had signed up for to to make an account so they oh

Shaan Puri

that's a

Alexa Von Tobel

had signed

Shaan Puri

up for

Alexa Von Tobel

Yeah, no, it's... I mean, it's funny. We're really old school. We actually didn't spend on advertising. I think by the year we got acquired, we hadn't even spent $1,000,000 on advertising. It was really old school. We were very focused on finding customers through business partnerships and relationships, and creating content. We wrote books and did all these other things to really build a following, and then we kept converting them into that. For the tools where people would link all their finances and we would see their full wallets, we had about half a million of those. Then, on the paying customer side, when we got acquired, we had about, depending on how you cut it, we had about 100,000 customers on the payment side.

Sam Parr

Before Facebook, too. I mean, it was right when Facebook was... it wasn't the same. It was different.

Alexa Von Tobel

Yeah, so I mean, Mark Zuckerberg, I went to college with him. I was his classmate. Facebook definitely existed before I started learning best, but in 2007 and 2008, when I was starting the idea, Facebook was founded in 2004. So it existed, but you weren't really building your business on Facebook at that time.

Shaan Puri

that's what I'm saying you were at harvard when you launched facebook at harvard

Alexa Von Tobel

yeah I was

Shaan Puri

just like my

Alexa Von Tobel

classmate so 2,000

Shaan Puri

when you heard about facebook

Alexa Von Tobel

Do we remember? Are you kidding? You could never have forgotten! I remember, actually, at the end of your username would be the number of Facebook users you were. I was like in the 100s, so I was roughly around 150. You knew it because it was just the most helpful thing on the planet. It'd be like, "Oh, what's that person's name again? I can look them up." I always joke with my husband that when he asked me out, I couldn't look up who he was yet. He'd asked me out before Facebook existed, and I remember being like, "Oh, I can't remember who he is. Is it this guy or that guy?" My kids will never know a world where you can't look somebody up. I mean, it's just really hard.

Shaan Puri

at that time what is it gonna be a big deal or were you like this is useful for harvard and that's you know

Alexa Von Tobel

I mean, could you foresee that it was going to be like a $75,000,000,000 company? You know, I can't take credit for having something that was that kind of crystal ball-ish, but you knew it was a big deal really quickly. You could just tell by the amount of time you were spending on it and how quickly it was spreading. When it went to other colleges and you could look up your friends at those schools, when you could poke people... I mean, to the credit of Mark, it was an incredibly infectious platform.

Shaan Puri

know him personally or no so I

Alexa Von Tobel

I didn't know when we were in undergrad. I met him a handful of times, and I know his family and his siblings pretty well. But no, when he was starting at undergrad...

Shaan Puri

I don't know him. When it was, it's like, "Hey, this thing is kind of taking off." I'm a student at Harvard. You were thinking about dropping out of business school anyway to start a business.

Alexa Von Tobel

I actually was thinking at that time of dropping out of Harvard to start Learn Best, basically. So my mom convinced me to graduate. I said to her, "I want to go start a company. I know I need to." My mom was like, "Can you just graduate? Pretty please? I've gotten you into Harvard Business School." To my mom's credit, I did. I'm glad I did. But that itch to go start something was pretty alive. To the credit of someone like Mark Zuckerberg, when you are so close to seeing businesses get built, you know, I think they called it the "Facebook effect." When you can see how powerful the internet can be, and if you're a hardworking person who has skills, you're like, "Maybe I should go do something." So yes, I will definitely say I think Facebook spawned an entire set of entrepreneurs.

Shaan Puri

You got acquired when you guys had... I forgot how many, but I've read a blog post that said, "Hey, LearnVisc gets acquired for whatever, $100 million." It seemed to me, when I was doing my kind of back-of-the-envelope math, that you guys were doing less than $10 million in revenue and got acquired for $375 million. That's a huge multiple! So first, did I just lose a zero somewhere? And secondly, why did you get such a big outcome?

Sam Parr

that's what I wanted to know

Alexa Von Tobel

Yeah, no. So, we're definitely doing a lot more in revenue than that. But, you know, I think what we developed was a pretty powerful software. We had about **eight patents** on our software. We built **cash flow-based financial planning software**, which didn't exist. It's really silly if you think about it. Most of the financial planning software out there was focused on helping people who are quite wealthy think about how to build more wealth. But it didn't address the question: "Can you pay your bills?" For **95% of the country**, right now, **78%** of the country lives paycheck to paycheck. So, actually, the software that existed would never work for the majority of the entire country. We built cash flow-based financial planning software that actually says, "How much cash do you have, and can you pay your bills?" If you have something left, then where do we go put it? It was a pretty profound technology platform. In fact, I even chatted with somebody else the other day who's trying to build a similar company to learn from us because there's still demand for these software platforms by these big financial institutions. They're really hard and very tedious to build. And then, **Northwestern Mutual** is just an incredible business. They have **5 million+ families** across the country that they serve. For them to be able to take our software and deliver plans to everybody was a very powerful concept that the CEO had. So, yeah, basically...

Shaan Puri

I calculated your revenue right if you had more revenue

Alexa Von Tobel

than that

Shaan Puri

And so that was the first bit. Then the second... and that's good to know. What was the sort of differentiator?

Alexa Von Tobel

It's just a technology asset that's really powerful that could drive material outcomes.

Sam Parr

So, I want to come back to what you were saying about talking to people who are building similar tools. I want to return to that in a second, but I have two questions for you. Were you profitable when you guys sold?

Alexa Von Tobel

We were like within profitability, meaning that depending on how we were spending, we were near profitable and could have been profitable. One thing that's worth saying is that we were incredibly lean in how we had run the business. We had just raised $35,000,000, so my mandate was to continue growing and build out business units at that time. But again, I’m a recession entrepreneur in my DNA. We always lived as though we didn’t have extra money. I think we went through a moment post-2010 where it was all about growth and getting as big as you can, with no mindset towards profitability. My roots, first of all, are that I’m naturally very, very frugal and scrappy. Every dollar we started spending was my own money in the early days; that’s how I stood the company up. I had read a few different founders saying that this is the best way to be a founder, and I lived it because I felt like it was the right way to run the business. So even when we were spending, there were no dollars that were not going somewhere. I’m going to get this number roughly right, but we had something like $45,000,000 of cash on the balance sheet when we got acquired, meaning that we were never spending that.

Sam Parr

Much money! Why raise so much? If you just raised $30,000,000 and you had $45,000,000 in the bank, that means you had some like $10,000,000 or $15,000,000 when you raised your last round. If you're making good revenue, why raise in the first place? And also, why sell?

Alexa Von Tobel

So, great question. First of all, we had literally just raised funds when we got acquired. Northwestern Mutual actually had just invested, and then they came and said, "Actually, we'd like to acquire you guys." So, that's that. Now, why sell? What we were building was aimed at growing our direct-to-consumer business. I remember every day we were signing up 40 families, or households, to get financial plans. Some days we would even sign up 200. I remember thinking, "We built this incredibly valuable asset." We built it because we really believed it should expand as quickly as possible across the country. However, getting people to financially plan is really hard. It's not like anyone walks down the street and says, "Oh, I can't wait to get a financial plan today." That concept didn't exist. I always joked that I was telling an entrepreneur today, "God, I really did run a hard business to build." In retrospect, I think that made me an even scrappier entrepreneur than I thought. If that makes sense, if I was selling shoes online, how much fun would that be? I feel like that's an easy business to build. But I was selling something that was hard. We were productizing a financial plan that nobody was ever super excited about. There were parts of the population that loved it, but we were telling people, "Hey, a financial plan's going to make you better." Once they tasted it, they loved it. Our customers are super sticky. But I remember thinking to myself, "Oh my goodness, Northwestern Mutual has 8,000 financial advisers that passionately care about the mission in the same way I do." They can actually use this platform to reach more families faster. If I really believe in our mission, that's probably the right thing to do for this business. If you could tell me that I could go from 100,000 to 5,000,000 in a short time...

Alexa Von Tobel

Of time and... like, guarantee that that would happen. Like, that actually is a better use of what I built. It does make sense, if that makes sense.

Sam Parr

So, did the company Northwestern Mutual acquire you based on the frame or the valuation? Was it based on how many customers you currently had? Or did they just say, "Ah, that's... we don't really care about your users. What we want to do is just take what you built and plug it into our back end"?

Alexa Von Tobel

Yeah, I mean, I think... and again, I can't speak for how they value the company exactly. It wasn't part of those conversations on the back end. But I think that what they viewed it as were three really powerful things. The first was an incredible software that they could plug in and offer to their customers. The second was our entire platform. If you go to northwesternmutual.com today, you can see that we effectively learned best. We just moved over the tech stack, made it so you could log in, see your finances, and use a lot of the tools we launched, including their mobile apps. Everything leveraged all of that. Then the final thing was the team. One of the things I was most proud of is that by the time I joined the management team, roughly a third of the management team of Northwestern Mutual was the LearnVest original team. Northwestern Mutual is an incredible company. If you remember, they do call it $35 to $40 billion in revenue; they'd be a Fortune 50 company. And the little tiny startup... by the way, I forget how many assets they have, but it's like half a trillion in assets. They are massive, they're blue chip, and they are solid as can be. They've been here for 163 years. But for a little tiny startup that they acquired to come in and be such a big part of the future of the company really shows you the talent, the innovation, and the thinking. They also have a whole campus in New York City that they still have today, which became a bit of their digital headquarters. Again, it was 150 people when we got acquired.

Alexa Von Tobel

It became close to 5,600 people that were envisioning growing it to be their full cut of...

Sam Parr

when they offered do

Shaan Puri

you just like tell you

Sam Parr

Out in or because you had just raised... I mean, if you said yourself, it sounds like it was a slog a little bit. If I'm kind of reading between the lines, you're like, "Oh my God, it's 40 users a day. This is really freaking hard." Where they offer you that, were you like, "Yep"? What was that like?

Alexa Von Tobel

No, it wasn't that simple. We had a handful of other acquirers at the table, and I actually took my job very seriously. As CEO, my job in those moments is to take my role seriously. My responsibility is to gather all of the opportunities and unemotionally present them to the board. I would say, "Here are all the different paths that we can take forward." Then, the board would come together and make a decision on what we thought was best for us. I actually waited until that day, which was the morning that we signed, to make my decision. My job is to gather all the different opportunities and present them to the board, saying, "Here's what we have in front of us. We can go this path, this path, or this path." To be crystal clear, it was never a stressful decision. Staying private was also a really good decision. As I said, we had about $50,000,000 of cash—actually, it goes to $52,000,000 if I remember correctly—on the balance sheet. We were growing, and it was starting to get easier and easier because we launched Learn Best at Work, which was growing rapidly. We were selling the software subscription in tens of thousands. That's way more fun than, you know, a hundred a day. You're like, "Great! I can do this!" That business was really taking off, and I just started to see the oxygen of it.

Alexa Von Tobel

That I'm making is every minute to getting there was a lot of work. It was never one of these businesses that just, like, overnight, 7,000 people show up to Chipotle and can't wait to eat our salads. It was not anything like that. So, I didn't make the decision until that morning. I took it very seriously because, as I said, I had about 150 employees. I had over 100 shareholders who had been part of the company at some point, and then all of our investors. I had to think on behalf of all of these people. I felt like your CEO job is actually a really serious one, which is to bring it to the table and then make the best decision on everyone's behalf. I knew that some people would be thrilled about an acquisition, while others might wonder, "Why are you selling? This is such a good business; it's going well." I just also knew it was...

Sam Parr

Just going to be a good investment about that journey. I mean, would you take back selling, or are you happy with that? Would you take back raising all that money, or are you happy with that? Is there anything that you're like, "I really..."

Alexa Von Tobel

oh I don't regret a single thing I have to say the ceo john shlisky at northwestern mutual was one of the best leaders that I ever have had the chance to work next to he is visionary and honestly like what he did I think I'm blown away by as as big companies think about you know I ingesting innovation he was brilliant I think in how he did it and I I think there's another guy named christian mitchell who's the head of strategy and he was instrumental it it actually it really was his idea the acquisition he became a best friend and somebody I admire and you know to take a fast moving go fast break stuff start up in new york city with a 150 people who are forward leaning in every way and then taking a a company that literally is about as blue chip as you can get the the a 163 years you know they will look through every major challenge that we could go through as a society and to put us together it was kind of a brilliant marriage and we always said what what cemented us was our values of we believe every american family should have a financial plan it was a very simple marriage but it was like a it was the odd couple I actually think some story one day wrote like the odd couple came together and we felt like we made we made each other better and I think you know personally I got to grow a lot through it most times when a startup ceo gets acquired they like sneak out the back door as quickly as they can and I care deeply that by the end of it that I I wanted to make sure they felt great and I wanted to feel like I had done what I I said I was gonna do and so I end up staying 4 years because I had such a good time and I think that that that speaks volumes to to northwestern mutual which again I was chatting with a few friends who sold their business in the last week and they were like how did you stay 4 years and I'm like I loved it and that doesn't mean there weren't hard days there were brutal days there were really hard days you know we got down the learnvest brand at one.

Alexa Von Tobel

Because it really made more sense for it to live on the parent company. I've been a rep for 163 years, and LearnVest was a tiny little brand. I was proud of that decision, also because it was the right one for what we promised we were going to do.

Sam Parr

crazy interesting I know sean's get thinking of something

Shaan Puri

I was just going to say, if you can be this enthusiastic about Northwestern Mutual, you sure do have the enthusiasm skill mastered. So, I commend you for that. What are you looking at now? You invest now; you got a fund, Inspire Capital. What spaces are interesting to you nowadays?

Alexa Von Tobel

so so inspire capital we're an early stage fund so seed series a we're totally generalist we're literally looking right now at everything from restaurant tech so food tech which is really interesting it's a mix of fintech and sourcing of any type of food that we will all eat from straight to agriculture you know farms to your coffee shops that we're pretty excited about we're really focused on the future of money movement and there's some really cool things we're working on there we are we just invest in the company in the the trucking logistics space which we think and hope can put lots of people to work and so you know really focusing on what is the next decade gonna look like we actually published today a future of work study and I heard this great quote we basically started the year in 2020 and we're ending this year 2030 just in how much we have just advanced the ball on who how and who we all are and how we will think and you know being a a working mom how amazing it is is it that I can actually excel at my job truly excel and actually see my kids probably an hour and a half to 2 per day more I mean it's I I will say I think we're living through one of the bit bit biggest seismic shifts on our planet right now ever maybe the probably biggest in my lifetime the global health world is collaborating in ways that you've never seen because we are all focused on a common enemy of covid and I just think the world is incredibly exciting and I will say when you see asymmetric dislocation like we see right now because the world is on its tilt that's when innovators go nuts and this is like my favorite thing I talk to 10 entrepreneurs a day and as you can tell I'm honestly just a junkie for founders I I I love building businesses my brain loves nothing more than hard problem solving and I was just saying to a founder before this you know companies have seasons right you have spring summer fall and winter winter sucks right and as I just said I had plenty of winters at learnvest summer is when it's fun and things are exciting and I like to say that you know the inspired capital team we we are our best when it's winter and for a lot of businesses right now this is a winter it's a scary time and so this is when you wanna be the best teammate I I

Shaan Puri

Was just gonna ask you... You talked about the future of work and you think there's a huge shift going on. I think a lot of people right now are talking about remote work. What does that mean? Is this sort of permanent? Is this temporary? What are the secondary effects? I'm curious, what's something... you know, it's the Peter Thiel question: what's something that you believe about the future of work that is not sort of consensus right now? It's not something that everybody is saying. Do you have any sort of original views or contrarian views around the future of work?

Alexa Von Tobel

I mean I'll just say a few things I've been thinking about lot lately I don't know that we I I don't we will go back to offices so let's be clear but I think a lot of the fat will be cut and what I mean by that is we used I don't know about you guys but I used to like be in cabs and running in ubers and subways and sprinting in planes and trains and like the frenzy of what I used to do because there's so many social norms like if I'm gonna see you in this city I wouldn't be like hey let me just zoom you right you'd be like that's rude come visit me why like there so just I think the amount of what I'm gonna call like useless friction that we used to apply to our lives that now looks calmer so that's great I think you know I'm really bullish on just equalizing households I actually think that this is this is a great equalizer everybody's partaking in so many parts of running a household these days because we're locked in our homes and that's gonna create some permanent habits that I think are gonna be better and you know I I I'm really fortunate to have a phenomenal partner in my husband and we really do both a lot of everything around our home and I think that that's gonna be hopefully more normalized going forward as I think a lot of parents are gonna realize it's not a choice stay home or work like there's this very powerful middle path and so you know I think the big economy going into this intermittent work economy is just exploding right now like you can work 20 hours a week if you want to you can work 70 hours a week if you want to and I think that we're gonna so the only other thing I'll I'll say that's I'm not contented I am deeply worried about how 40,000,000 americans are gonna get back to work and I think you know the markets right now main street and wall street are completely disconnected I honestly wake up at 3 o'clock to in the morning wondering how are 15,000,000 households gonna be absorbed when those jobs don't come back and I'm worried about that a lot so that's one thing I'll say I don't I I sometimes wonder why more people aren't talking about what we're gonna do with the jobs that do not come back and

Sam Parr

are you

Alexa Von Tobel

that bores me a lot

Sam Parr

what type of what's your background your what part of florida are you from

Alexa Von Tobel

I grew up in Jacksonville, Florida. I was born in Kentucky. My mom's side of the family is from South Bend, Indiana. My grandfather was a welder his whole life, and my grandmother worked at AT&T as an operator. [I’m doing the spinning motion; she was literally an operator.] My dad's side of the family, the Von Tobels, is Swiss Belgian. Both my parents were in the Army as doctors and nurses. My brother was born in Germany, and I was born in Kentucky.

Sam Parr

Well, you... it sounds like you. I'm from Missouri, and then I lived in Tennessee. So, I'm from a normal family, like not a Silicon Valley or Manhattan family. I live in San Francisco now, and I'm definitely on the inside of a lot of the, you know, the San Francisco nerds. It sounds like you are on the inside of the Manhattan relatively elite circle. I mean, the partner for your capital firm is like a pretty big deal—the Pritzker family. So, does it ever feel like you're an outsider? I mean, do you feel a little bit more connected to your roots? You mentioned Main Street and Wall Street. Does it feel more like you're connected to your roots where you grew up, or do you identify more with this... I mean, and I say this because I'm in this crew too a little bit. Like, we're pretty elite, right? We're in this relatively tight circle. I mean, where are you an outsider, do you think?

Alexa Von Tobel

I'm so glad you asked this question. I'm glad for a bunch of reasons. I think what's really obvious to me is that it is an incredible competitive advantage. Right now, we're in a world where the country is very disconnected. I'm actually hoping that COVID is something that unifies us a bit more. There are days when I worry it's moving in the wrong direction, and there are days when I feel hopeful. The fact that I came from a really unique background reminds me every day that the bubble we live in is completely ridiculous. My dad was in the army as a doctor, and my mom went to boot camp and became a nurse. My mom is now a nurse practitioner. My dad passed away when I was younger, so I was actually raised by a single mom with three kids. I have two older brothers who are also both doctors. As a certified financial planner who has stared at America's wallets for a decade, the headline is that people can't afford anything, and everyone's stressed. If you don't have the dignity to put food on the table for your family, that's a pretty stressful situation. If you're not sure how you're going to feed people right now, forget about saving for retirement. Now that I've become a parent, that stress feels so much more visceral. I think it's a real competitive advantage to remember that there are over 330 million households in this country and that not everybody is on the same page. Technology isn't always moving everyone forward, and I think it's a major advantage to not forget that. Right now, I'm literally in Jacksonville, Florida, in Ponte Vedra, in my childhood bedroom. I'm so proud of my roots and my family and what they've helped me accomplish. Goodness gracious, do I feel like we need to do more.

Sam Parr

This is a good segue because earlier you said that people are actually still trying to solve the problem that you were trying to solve. What opportunities exist in this financial planning and personal finance space? I'm a huge nerd in this. I use Wealthfront, I use Personal Capital, I've used MIT, and I use spreadsheets. I love this stuff!

Alexa Von Tobel

well first I I loved you for caring

Sam Parr

so much you you guys I was a customer of yours

Alexa Von Tobel

I know, thank you. It means so much to me; you have no idea. I still honestly have days where that makes me so proud. You know, I think a few things. First, the problem of our wallets in America is bigger than just great software. There are a lot of what I'm going to call infrastructure problems that tech can't solve. What's the minimum wage? How do we handle working mothers when 25% of the country's moms are single moms? How do we handle daycare? Blah, blah, blah. There are a lot of other big problems around wallets in America that a cool technology app doesn't solve. That said, I don't feel like LearnVest solved everything. In fact, I have this itch that we've wanted to scratch for a long time. I was a part of the population where I wanted to talk to a financial planner. For me, there's a certain user type—about 22% of the country, based on our data—that wanted to talk to an advisor. But about 78% of the country doesn't want to talk to anybody; they just want the problems of their wallet to be solved for them. So, I get really excited about the future of self-driving wallets because I actually think that every hour, when you have an extra dollar, penny, $10, $100, or $1,000, it should go to the exact right pocket instantly. I believe more innovation will happen, and I think that's one of the things that we get pretty excited to talk about. I wrote a book called *Financially Forward* literally just to force myself to think about what the future of our wallet could look like—a self-driving wallet. It's software where every app you put rules and controls around it, saying, "My checking account always needs at least $400 in it, but every dollar above that, please go put it in the exact right place."

Sam Parr

what would you do

Alexa Von Tobel

take care of it

Sam Parr

And would you... so, I use Simple.com. I've been toying around with that, but what I learned was that it's a checking and savings account. They actually use... I forget what it's called, but it's whatever the biggest bank in the world is. They put their software on top of another bank's checking account. Because opening up a bank is really hard, is that what you would do? I mean, how would you go about solving this?

Alexa Von Tobel

Yeah, so if I remember correctly, Simple got acquired by BBVA. I think actually right before LearnVest firm.

Sam Parr

for way less money that you guys do which is it's it's it's pretty wild

Alexa Von Tobel

Okay, so I think the thing that's important to note is that, and again, I don't want to totally bore you, but basically underneath it, the problem with Thomas's wallet is **money movement**. Money doesn't move quickly from one bank to another; it moves across an ACH trail from 1971, and they typically take about **5 days** to move the money. So, if you want wallets to actually be able to self-drive, you have to fix money movement. We've written thesis upon thesis papers. I call it actually **liquefied money** as the thesis. Also, I'll give another example: Why do we get paid every **2 weeks**? How does that make any sense? You work every day. Guess what? For a normal American family, getting paid every day would be much more beneficial.

Sam Parr

that's a pretty radical idea

Alexa Von Tobel

really helpful

Sam Parr

why do we get paid every 2 weeks is this like some something that I have I have no idea

Alexa Von Tobel

It's a legacy concept. Some people get paid weekly, but most of us get paid twice a month. If you think about that, people have liquidity crunches in between. That's every day. Why don't you get paid every hour?

Shaan Puri

that solves that problem that tries to solve that problem

Alexa Von Tobel

Well, they're solving a portion of that problem. So, what? But no, I think that there are a few of them. There's Earning, there's Dave, and there's a bunch of others. There's a company called Even, which is... but I'm... they are solving elements of it.

Shaan Puri

I'm actually going to full lot projects that are doing streaming money

Alexa Von Tobel

yeah

Shaan Puri

Which is basically like the way we, you know, we don't download movie files anymore and play them. We stream it bit by bit as we watch. But basically, getting paid like that. So, why don't I get paid by the second that I'm working? It's just streaming into my bank account fractions, basically, of value. Yeah, that's... and there's crypto companies doing it.

Alexa Von Tobel

But even more valuable, it's not just the streaming in; it's then what happens. Your credit card debt actually charges you interest every single night. So, actually paying your credit card bill nightly would materially help save. On average, a family in America has between $9,000 and $16,000 of credit card debt, based on how you cut it. The average savings account is $400. But if every hour you got paid, you could pay your bills and live your life. It would actually stream into your 401(k) and get the matching dollar that same hour, and then auto-invest. Think about that! That is what is the difference between... I always feel like COVID exposed the precariousness of our economy, but it also exposed the precariousness of the American wallet. I think we're going to be in a groundbreaking moment of how do we go fix it. So, any entrepreneurial ideas, I want to talk to you, Alexa, at Inspired Capital. I want to hear your ideas. But these are the big ones when you're counting.

Shaan Puri

off all

Sam Parr

That's a crazy idea, and I think that's a cool idea for someone who wants to... it's kind of like a "go big or go home" situation. That's a pretty cool idea; I like that. What would prevent that from working? What are the barriers?

Shaan Puri

ach

Alexa Von Tobel

it's the infrastructure layer that we I was just saying

Shaan Puri

does that that I mean the the money movement

Sam Parr

Is it money movement, or is it a cultural thing? Because I'm a business owner, I like the two-week buffer for a small business when you're just getting started. Like, businesses, we take advantage of that, right? You're like, "Oh great, I've got like 5 days. I gotta go collect this client's money, and then I can make payroll."

Alexa Von Tobel

Yeah, no, I think that is probable. I mean, you have two leading edge companies. You know, I think in just the last week we saw a few companies say, "I'm working from home forever." But you take a few more that then say, "We're going to pay our employees daily." In fact, Uber started paying its drivers for every ride. That's an example of, "You've worked, you should get paid." Why do we withhold from you? It's a free loan to your employer, and at some point, that will break down. But that's not the thing I think is harder. It's actually the money movement piece. Because our wallets have been unbundled. We used to have wallets in one place, let's say Chase, and you used to have your credit card there, your savings account there, your checking account, your 401(k), etc. You both have named, while you've been on this call, seven places that you have financial accounts. So, it's money movement across those accounts. It moves across an ACH trail. That ACH trail takes about five days, or it mimics it and it'll look like same day. Sometimes that same day is really more of like a magic trick; it's not really there. So then, to be able to pay it out to some other place is very hard. So, it's the rails and money movement that is...

Sam Parr

european company I think it was doing something similar helping what what was it called transfer

Alexa Von Tobel

There's a company called TransferWise, but then actually Europe is miles ahead of us. They're on real-time payment rails, and you can actually... they've let... they're like a full decade ahead of us in terms of payment systems.

Shaan Puri

of yeah

Alexa Von Tobel

you don't even need venmo

Shaan Puri

India just also came out and announced the whole monetary API, basically a mandatory payments infrastructure. I forgot what it's called... UPI or something.

Alexa Von Tobel

I love how much you guys know about fintech and infrastructure

Shaan Puri

I love that! So, if you do, we brainstorm ideas. We just shoot the shit and brainstorm ideas, or we see something interesting and say, "Hey, this is cool. These guys are doing streaming money. What would you do with that?" Hey, why do we get paid every two weeks? That's crazy! It's a free loan to your employer. And so, that's what we do on this podcast twice a week. We like to nerd out about this stuff.

Sam Parr

so it's like we know a we know a medium amount a

Shaan Puri

little bit only a little bit we know a little about a lot that's

Sam Parr

A little bit, yeah. One of my favorite ways to brainstorm is I like to look at companies in other countries and just think, "Do that in America." For example, Gilt Group's Kevin Ryan was like, "Oh, I see this French company is doing this. Let's just do that in America and we'll put a little spin on it." What's a European company or an Indian company that is doing this quite well that I can go and learn about in order to see how this is done? Because this is pretty hard to conceptualize, right? We're like, it's been done this way for who knows how many decades... hundreds of years.

Alexa Von Tobel

Yeah, I mean, to be honest, for the standard of what I want to see built, I don't believe that there's a company that is close. There's a company in the United States that's starting to think about this and doing a good job, also called Tally, where Jason, the founder, is wonderful. He started by helping people pay off their credit card debt faster, which was the core clean, and began automation around it. But, you know, I want to fast forward a decade ahead where we actually get to instant streaming money. I call it liquefied money; you're calling it streaming money. This is where your money can always be optimized to the right place, and that gets pretty powerful when that begins to happen. Most importantly, not only is it powerful, but it meaningfully changes the lives of American families or, you know, families across the globe.

Shaan Puri

I'll tell you what the meaningfully changes. I've heard this idea before about basically, "Hey, what's the category of what you built?" It's like PFM or something like that. Yeah, PFM—Personal Finance Manager. The theory is basically you have things like Clarity Money and LearnVest and others that were basically all like, "Hey, we can suggest some things. We can show you some charts and analysis." But fundamentally, you, the user, make the decision. What you're talking about is the software makes the decision, right? Self-driving, basically. It's not like you're sitting in your car and your car suggests to you how you should turn or change lanes. The car changes lanes because it knows where you're trying to get as your destination. I've heard before that, "Hey, what we need is to get AI basically to the point where it can actually make the decisions and optimize the money for you." So that the user doesn't have to make decisions. The user says, "I want... I have these financial goals for myself. This is my income coming in. Here are my bills," and it basically does it. What you added on was the reason that can't happen right now is because the transfer is too slow. But it seems like there's a middle step, which is just right now the software doesn't decide; the user decides. Most users don't want to think about that or make those decisions. Most people are not active with their money management, much to your chagrin, I'm sure. So is it more about software deciding versus user deciding, or is it more about liquefied money?

Alexa Von Tobel

So, liquefied money matters, but then to your point... I want to answer that with a visual question. When we imagine money right now, we think, "Okay, I'm going to log in to my E*TRADE account, stare at all my graphs, and talk to an adviser to tell them my goals." Then, a lot of things are going to be executed. I almost think that we are focusing on the limits and bounds of what technology offers today, as opposed to what the customer really wants. If you ask the customer what they really want, they want enough money to do what they need to do, and they want everything else to be taken care of. For most people, thinking about money all day long is not the goal.

Sam Parr

is actually

Alexa Von Tobel

Not fun or exciting, and in fact, it's quite stressful. So imagine... I almost think we visualize money based on what exists. But imagine a thought exercise. I'll use an Amazon Alexa since there are literally like 17 in my brother's house, and he just likes to yell at me all day. He thinks it's so funny. Basically, let's use an Amazon Alexa. Imagine you could walk into your kitchen every morning and just say, "You have surveillance." You have rules that you set around your wallet. So, has anyone broken my identity? Has anyone done anything bad? Or are there any restrictions that you put on? For example, my kids' credit cards can only spend $50 a month, or whatever it may be. Then you've already clearly laid out goals, and it just does it for you. You walk in and think, "Why do I even need to look at my money? All I care about is, are there any crises?" No? Are the rules I've set up in place? So, any extra money... I need $400 in my savings account for checking, you know, if I need cash. We're going to obviously go away from cash permanently at some point.

Alexa Von Tobel

And then everything else is just optimized for me, and that's math. The thing I love... you know, I am a math geek. I've always liked math growing up; I always loved it. Math is really beautiful because this isn't, you know, we're not trying to cure a disease that we don't know how to address. This isn't a COVID situation where we don't know what to do yet. We are looking for a vaccine to use that as an analogy. This is math for every American wallet. I can mathematically tell you where their next dollar should go to save them money and make their life better. Outside of them telling us what their goals are, the math can do it. It can do it every hour or every minute. When you get there, that is better for the American wallet. So that's the vision of that. That's literally the picture in the back of my head. It's like, when do we get to a place where my money is just doing what it should do at all times? Right now, there's wild amounts of friction: moving it from here, putting it in the savings account, sweeping it into this, doing this with that, paying off the credit card, paying off your student loans. You have to make two payments and tell them, "Please pay the principal, not just the interest." Friction everywhere.

Alexa Von Tobel

It will go away and I will just go as fast as we can and it will be some of my life worth to

Sam Parr

Help out. Very persuasive! I feel like I'm ready to get behind you and say, "Let's go to war." You've got a very good pitch. I had one last question.

Shaan Puri

do you are you a fan

Sam Parr

of ramit sethi's teachings in his book

Alexa Von Tobel

I can teach it very much. He's a great guy. I will say, like every financial planner out there, that's doing the work to help people now and then this.

Shaan Puri

is a lot of your pain management

Alexa Von Tobel

exist I'm excited about

Sam Parr

I'm not poor anymore, but I remember being poor and feeling so afraid to log in to my bank account. Eventually, I created all these systems. It's like a little bit of my paycheck goes here, a little bit of interest goes there, and I jerry-rigged this thing together. Even to this day, I still hate logging into my bank account. For me, it's like PTSD. It's so overwhelming that I don't even automate some stuff because I just don't want to deal with it. I hate it; I really don't like it.

Alexa Von Tobel

Yeah, I think this is a perfect example of where, you know, I really do think I grew up a really normal life. I grew up in Jacksonville, Florida, which is a wonderful place to grow up. I'm interested in technologies that can impact tens of millions of families and really move to fully make our lives better. One last thing, you know, at Inspire Capital, we literally invest across all sectors. I just told you everything from trucking and logistics to consumer software to fintech. But one thing I particularly like about fintech is that any innovation is actually helping the customer. You're not innovating in fintech in a way that gouges the customer. It's like they're constantly making their lives better, cheaper, and less expensive. The pressure it puts on the big incumbents to drive their prices down is really powerful, and I think that's pretty awesome. So, I think it's a great... and this is an awesome place where...

Shaan Puri

We need to write, "Alexa, is there any... you already gave your sort of email address out. Where should people find you? Who should find you? How do people connect with you?"

Alexa Von Tobel

Well, I'd say I'm also on Instagram. I'm just **@AlexaVonTobal**. Our fund is **Inspired Capital**, but you can message me on Instagram. It's the one place I actively try to respond to as many messages that come through. So, **@AlexaVonTobal** on Instagram. Thank you guys for having me! This is so fun. You guys are so wonderful, and again, I'm really honored you reached out.