WEBVTT - The Investors Everybody Ignored 0:00:15.316 --> 0:00:22.956 Pushkin. So of course I knew about the wage gap. 0:00:23.316 --> 0:00:26.436 You know, on average, women earn less than men for 0:00:26.516 --> 0:00:30.596 comparable work. What I did not know about was the 0:00:30.756 --> 0:00:35.836 investing gap. Even when you control for variables like wealth 0:00:35.876 --> 0:00:39.356 and income, women are much less likely than men to 0:00:39.516 --> 0:00:43.556 invest in real estate or the stock market. And that, 0:00:43.676 --> 0:00:46.716 of course means that women are much less likely than 0:00:46.756 --> 0:00:51.316 men to build wealth over time. And this problem has 0:00:51.316 --> 0:00:56.356 gone largely unnoticed and unaddressed, in part because most investment 0:00:56.436 --> 0:01:05.756 companies have been run by and for men. I'm Jacob 0:01:05.756 --> 0:01:08.596 Goldstein and this is What's Your Problem, the show where 0:01:08.716 --> 0:01:11.276 entrepreneur and engineers talk about how they're going to change 0:01:11.276 --> 0:01:14.476 the world once they solve a few problems. My guest 0:01:14.516 --> 0:01:19.236 today is Sally Crotchet, founder and CEO of laves. It's 0:01:19.276 --> 0:01:22.436 an investment firm aimed at women, and it has around 0:01:22.476 --> 0:01:27.196 one point five billion dollars in assets under management. Sally's 0:01:27.196 --> 0:01:30.796 problem is this, how do you convince women to become investors? 0:01:31.836 --> 0:01:35.836 Before Sally founded Lavest, she spent decades working in finance, 0:01:36.156 --> 0:01:38.876 and as she worked her way up to top jobs 0:01:38.916 --> 0:01:42.676 at City Bank and Merrill Lynch, one thing kept being true. 0:01:43.036 --> 0:01:46.036 She was often the only woman in the room. She 0:01:46.116 --> 0:01:49.076 told me that started way back at her first job 0:01:49.076 --> 0:01:52.036 in finance at Solomon Brothers back in the late eighties. 0:01:53.916 --> 0:01:58.836 It was stay up all night, run for the airplane, 0:01:59.636 --> 0:02:06.636 work on deals, sharp elbows, lots of gender discrimination, all 0:02:06.676 --> 0:02:09.676 the stuff you read. Just take it, you know, if 0:02:09.676 --> 0:02:12.436 that's a five, take it to a ten. Well, what 0:02:12.556 --> 0:02:15.356 was it like being a woman there? It was horrible. 0:02:15.636 --> 0:02:18.756 It was horrible. It was horrible everything about it. I 0:02:18.836 --> 0:02:22.596 remember my literally my very first day, literally my very 0:02:22.636 --> 0:02:24.316 vers day. I'm sitting there. I grew up in Charleston, 0:02:24.356 --> 0:02:27.436 South Carolina. I went to UNC. I was wearing the 0:02:27.516 --> 0:02:31.556 absolute most professional thing you could buy in the city 0:02:31.556 --> 0:02:35.636 of Charleston, South Carolina. It was a you know, sort 0:02:35.636 --> 0:02:40.276 of loosely fitting jacket and a loosely fitting sort of 0:02:40.436 --> 0:02:44.876 longish skirt. And I remember standing by my desk, Oh, look, 0:02:44.996 --> 0:02:49.916 here are my pencils, and smelled cigar smoke. And a 0:02:49.916 --> 0:02:53.516 man went by smoking a cigar. He pauses, he looks 0:02:53.556 --> 0:02:57.796 at me, he says, what is that effing discount maternity wear? 0:02:58.836 --> 0:03:01.036 He kept going And I said to someone, who the 0:03:01.076 --> 0:03:04.436 heck was that, Oh, that's the head of the department. 0:03:04.476 --> 0:03:07.916 Your boss's boss's boss's boss. From there on it got worse. 0:03:08.276 --> 0:03:13.076 And it's interesting because I read now research that sexual 0:03:13.116 --> 0:03:16.756 harassment you think it comes from powerful men, but apparently 0:03:16.756 --> 0:03:19.956 it comes from men who want to be powerful. And 0:03:20.076 --> 0:03:23.356 so for those individuals who were a leveler two ahead 0:03:23.356 --> 0:03:26.676 of me, you know, in the evening, putting xerots copies 0:03:26.716 --> 0:03:31.116 of male genitalia on my desk. On one level, I 0:03:31.156 --> 0:03:33.956 know I shouldn't be surprised, like I read Liar's Poker. 0:03:33.996 --> 0:03:38.356 I've read research, and yet it's strangely still shocking to me. 0:03:38.476 --> 0:03:40.476 I know better than to be shocked, and yet I 0:03:40.516 --> 0:03:43.596 am shocked. I know, I know, but there was nothing 0:03:43.636 --> 0:03:48.676 I could do except just keep going. I had signed 0:03:48.716 --> 0:03:51.876 a lease, a twelve month lease in New York City 0:03:51.916 --> 0:03:54.196 that I did not have money in the bank, of course, 0:03:54.276 --> 0:03:56.796 to pay for. My parents did not have money in 0:03:56.836 --> 0:03:59.396 the bank to pay for. All I could do was 0:03:59.556 --> 0:04:03.236 keep going to work and just survive through it, and 0:04:04.196 --> 0:04:10.476 over time be good enough, be indispensable enough that that 0:04:10.796 --> 0:04:12.916 stuff had to fall away. And then over time, as 0:04:12.956 --> 0:04:15.436 I became more senior. Of course, don't don't stand for it. 0:04:16.716 --> 0:04:18.956 And it seems like, I mean, this is jumping ahead 0:04:18.996 --> 0:04:21.716 a bit now, but it seems like you eventually really 0:04:21.956 --> 0:04:25.196 kind of found your your niche, your groove in finance 0:04:25.316 --> 0:04:28.676 as an analyst. Um, tell tell me about that part 0:04:28.676 --> 0:04:31.196 of your career. Oh, I loved it. I loved it, 0:04:31.636 --> 0:04:35.116 and probably part of what it went to things I 0:04:35.156 --> 0:04:38.756 love to do. I your your listeners gonna be like, 0:04:38.756 --> 0:04:41.756 she's such a she's such a goober. Um, I love 0:04:41.836 --> 0:04:46.356 to get lost in. It's a very good I mean, 0:04:46.636 --> 0:04:49.916 I you know, I will start looking at at an 0:04:49.916 --> 0:04:52.996 Excel spreadsheet or Google sheets and I will look up 0:04:53.036 --> 0:04:55.636 in four hours have passed and how did that happen? 0:04:56.236 --> 0:04:59.596 That was being a research annelist. I loved it. It 0:04:59.756 --> 0:05:04.276 probably helped that one. I found that job at Sanford Bernstein, 0:05:04.396 --> 0:05:07.076 which you know was a group of I used to 0:05:07.076 --> 0:05:09.556 call it the Island of the misfit toys. It was 0:05:09.636 --> 0:05:13.716 not sor to wear traditional Wall Street pulled from, and 0:05:14.716 --> 0:05:18.156 that the sexism sort of fell away because you were 0:05:18.156 --> 0:05:21.996 an individual contributor. You weren't working on teams and jostling 0:05:22.076 --> 0:05:25.556 with folks, and people wanted to make money and if 0:05:25.556 --> 0:05:28.116 you could help them make money or have insights that 0:05:28.196 --> 0:05:32.876 others didn't, there was something about it where the sexism 0:05:32.956 --> 0:05:36.116 sort of fell away, And in fact, I would argue 0:05:36.116 --> 0:05:39.796 that being a woman probably helped me because if I 0:05:39.836 --> 0:05:43.356 was competing against fifteen men, you couldn't forget me, and 0:05:43.436 --> 0:05:46.676 particularly if the research was any good, which humbly it was, 0:05:47.076 --> 0:05:51.716 you couldn't forget me. So there's one piece of research 0:05:51.756 --> 0:05:55.396 in particular that seems to sort of stand out, and 0:05:55.436 --> 0:05:59.916 that was this report you wrote about American General. Tell 0:05:59.956 --> 0:06:02.076 me just a little bit about that, like very like, 0:06:02.516 --> 0:06:04.476 what was that? When was that? Why was it important? 0:06:04.476 --> 0:06:06.236 For years? So it was actually my first piece of 0:06:06.276 --> 0:06:08.756 research before I knew how the game was supposed to 0:06:08.756 --> 0:06:13.156 be playing, which which was a benefit. And American General 0:06:13.156 --> 0:06:16.716 was an insurance company and they were finding growth in 0:06:17.076 --> 0:06:21.036 lending and making loans, and the analyst at the time said, oh, 0:06:21.036 --> 0:06:23.676 look they've found this avenue to growth. This is exciting, 0:06:23.716 --> 0:06:27.436 this is an outperform. And I, using the same information 0:06:27.476 --> 0:06:30.276 other analysts had looked at it and said, you know, 0:06:31.076 --> 0:06:36.636 the credit quality appears fine when you look at it 0:06:37.116 --> 0:06:41.276 versus today's loans, but credit quality only emerges over time, right, 0:06:41.356 --> 0:06:44.476 bad credit quality? So let me lag the ratios and 0:06:44.516 --> 0:06:48.316 see how today's credit quality looks versus last year's loans. 0:06:48.636 --> 0:06:52.116 The answer was terrible. So I wrote this up. I said, 0:06:52.156 --> 0:06:55.796 you know what, they're growing because they're they're reducing their 0:06:55.876 --> 0:06:58.996 credit standards and making loans other people won't. This is 0:06:58.996 --> 0:07:01.236 going to blow up. I published it. I called it 0:07:01.276 --> 0:07:06.036 woan ally. The company was furious, other analysts were furious, 0:07:06.476 --> 0:07:09.956 and a couple months later, damn it if it didn't 0:07:09.956 --> 0:07:12.916 blow up. And when the bubble burst and we stood 0:07:12.916 --> 0:07:15.156 alone and our business exploded, I was on the cover 0:07:15.236 --> 0:07:18.596 of Fortune as the Last honest Analyst, which is still 0:07:19.316 --> 0:07:21.316 still when I think back on it, is like the 0:07:21.316 --> 0:07:24.596 most surreal thing that ever happened to me. Uh say, 0:07:24.596 --> 0:07:27.956 more surreal, how because your face is on the cover 0:07:28.036 --> 0:07:30.676 of a magazine and you walk through the airport, You're like, 0:07:30.716 --> 0:07:33.356 there's my face on the cover of a magazine. And 0:07:33.636 --> 0:07:36.676 by the way, the face on the cover was bigger 0:07:36.716 --> 0:07:39.996 than my own actual face. I think, did you hold 0:07:40.036 --> 0:07:41.876 it up? I would have definitely held it up to 0:07:41.876 --> 0:07:43.756 see it. But I held it up and tried to 0:07:43.796 --> 0:07:46.596 track it, and it was even so big that there 0:07:46.676 --> 0:07:48.636 was a little mole on my chin that I thought 0:07:48.676 --> 0:07:50.556 i'd have removed. And I started the magazine. I'm like 0:07:50.596 --> 0:07:52.796 it didn't. They didn't fully get that little mold, did they. 0:07:54.436 --> 0:07:58.676 So so you're like Nerd famous at this point, you're 0:07:58.716 --> 0:08:04.116 Wall Street famous, right, you know you ascend. Right. You 0:08:04.236 --> 0:08:09.236 have a very senior job at was it Smith Barney 0:08:09.276 --> 0:08:13.196 within City and you lose that job. And then you 0:08:13.276 --> 0:08:16.316 have a very senior job at Mary Lynch when it's 0:08:16.356 --> 0:08:19.756 part of Bank of America after the financial crisis, and 0:08:19.836 --> 0:08:22.756 you lose that job. Thanks for bringing that up. Really, 0:08:23.916 --> 0:08:27.196 you know, it's a story has a happy is a 0:08:27.236 --> 0:08:30.556 happy ending. Um, we know, we know it's going to 0:08:30.636 --> 0:08:33.476 work out. But tell me tell me about losing that 0:08:33.476 --> 0:08:35.156 second job. I mean, it seems like that sets you 0:08:35.236 --> 0:08:38.916 up to found Elves. So yeah, tell me about about 0:08:38.996 --> 0:08:42.956 losing the merrilleam. So it was it was a shocker, 0:08:43.036 --> 0:08:50.796 and it wasn't. Um it wasn't because um, I knew 0:08:50.836 --> 0:08:53.516 the CEO and I were not big buddies. He never 0:08:53.636 --> 0:08:55.716 stopped by my office on the way to the leadership 0:08:55.716 --> 0:08:57.916 team meeting and said, Hey, Sally, can I run something 0:08:58.076 --> 0:09:00.636 by you? You know I would. I was the last 0:09:00.676 --> 0:09:03.516 on the leadership team to know. It was a surprise 0:09:04.276 --> 0:09:07.956 because we had turned the business around, the business was growing, 0:09:07.996 --> 0:09:11.836 we were gaining share. We were beating plan and I remember, 0:09:12.596 --> 0:09:14.276 you know, saying to my husband, I mean, he doesn't 0:09:14.396 --> 0:09:17.836 we're not getting along, but the results are there. And 0:09:17.836 --> 0:09:19.836 we were like, well, if the results are there, and 0:09:19.876 --> 0:09:22.756 I would check in with his you know, entourage, or 0:09:22.756 --> 0:09:25.236 am I doing okay? Yeah, you're doing fine. You're doing fine. 0:09:26.476 --> 0:09:30.076 And then you know, one day after, you know, just 0:09:30.116 --> 0:09:33.316 as I'm feeling like this is great, I was pulled 0:09:33.316 --> 0:09:36.676 into his office and he said, we're gonna reorg. You're out. 0:09:37.556 --> 0:09:41.876 We're going to have this gentleman who happened to be 0:09:42.516 --> 0:09:45.956 a white man in his I think early sixties, who 0:09:45.956 --> 0:09:49.836 had worked with the you know, the CEO in the past, 0:09:50.276 --> 0:09:53.116 who would never run a wealth management business. But we 0:09:53.316 --> 0:09:55.596 you know, essentially, we think this guy who's never done 0:09:55.636 --> 0:09:57.996 this job before can do a better job than you 0:09:59.036 --> 0:10:01.196 when it's what you do in your career and you've 0:10:01.276 --> 0:10:05.316 you've actually turned the business around by and just like 0:10:05.636 --> 0:10:10.276 what and and hes sort of hearing, well, we don't 0:10:10.276 --> 0:10:15.036 think you're a culture fit, which is you know, code 0:10:15.116 --> 0:10:17.316 language obviously for we all like you, you know, or 0:10:17.316 --> 0:10:21.156 you're too loud, or you're too flashy, or you're too something. 0:10:22.116 --> 0:10:25.116 But that was sort of a shocker because I always 0:10:25.156 --> 0:10:29.276 sort of thought, just deliver the results, be respectful, keep 0:10:29.316 --> 0:10:32.476 your head down, and good things will happen. And it didn't. 0:10:32.556 --> 0:10:37.396 It did not. And what did you do when you 0:10:37.516 --> 0:10:40.676 got fired? What? What? What happened next? Yeah? So I 0:10:40.716 --> 0:10:45.676 went home and drank Okaya Classic for a reason, you 0:10:45.716 --> 0:10:50.436 know why not? Drank and felt sorry for myself for 0:10:50.956 --> 0:10:54.076 a day, and then you know, I do remember, I 0:10:54.116 --> 0:10:57.196 absolutely remember thinking to myself, first of all, recognizing that 0:10:57.276 --> 0:11:00.116 success and failure two sides of the same coin. Right, 0:11:00.196 --> 0:11:03.076 the you're not a culture fit means you're standing out 0:11:03.116 --> 0:11:06.196 too much. Well, in order to actually get to where 0:11:06.236 --> 0:11:08.196 I was, Remember, as we just talked about, I had 0:11:08.196 --> 0:11:11.196 to stand out. If I'd played the game the same 0:11:11.236 --> 0:11:13.796 way everybody played it, I never would have gotten to 0:11:13.836 --> 0:11:17.836 those senior levels. I had to see the research differently, 0:11:18.316 --> 0:11:21.716 have different strategies. And what's my evidence of that, Well, 0:11:21.756 --> 0:11:23.636 if you look up at the time, there were like 0:11:23.876 --> 0:11:27.476 zero women in senior leadership, and so I had to 0:11:27.476 --> 0:11:30.276 play the game differently. By playing the game differently, I 0:11:30.316 --> 0:11:33.316 stood out and therefore risk losing my job. And you 0:11:33.356 --> 0:11:35.876 can't have I wish I had the secret for a 0:11:35.876 --> 0:11:38.236 while you can be super successful, but without taking risks, 0:11:38.236 --> 0:11:42.436 you can't do that. So the second day, I definitely knew. 0:11:42.596 --> 0:11:45.836 At the time, I knew it was one of the 0:11:45.836 --> 0:11:48.156 best things that ever happened to me. I knew I 0:11:48.196 --> 0:11:49.636 was going to look back on that day and be like, 0:11:49.716 --> 0:11:53.676 thank goodness, why, because honestly, I wasn't happy there. You know, 0:11:53.716 --> 0:11:56.116 if you're not part of the inner team and your 0:11:56.236 --> 0:11:58.676 leadership team and you feel out, that's not a good 0:11:58.676 --> 0:12:01.236 place to be. But I never could have left. I 0:12:01.316 --> 0:12:03.316 never could have called my dad and said, hey, Dad, 0:12:03.636 --> 0:12:05.956 I have X tens of thousands people reporting to me. 0:12:06.036 --> 0:12:08.796 We're turning around command of the financial crisis. I just 0:12:08.796 --> 0:12:11.916 don't feel like I'm part of the inner team. I 0:12:11.956 --> 0:12:15.076 just feel like I should leave. Never would I have 0:12:15.196 --> 0:12:19.556 done that, But I knew this was a catalyst for 0:12:19.636 --> 0:12:22.636 me to do something different and bigger and more important. 0:12:22.756 --> 0:12:24.596 It's just at the time I didn't know what it was. 0:12:24.916 --> 0:12:28.116 So how do you get from there to founding Elvest Law? 0:12:28.276 --> 0:12:31.036 It was a law, It was not overnight. How did 0:12:31.036 --> 0:12:34.676 I get here? Well, people said to me, when I'm 0:12:34.716 --> 0:12:37.556 on a little journey, you should start an investing firm 0:12:37.596 --> 0:12:41.916 for women, And I thought that is no, no, no, no no, 0:12:42.396 --> 0:12:45.276 women do not need their own thing. And by the way, 0:12:45.276 --> 0:12:47.716 if I'm going to be honest, I'm a varsity player. 0:12:47.756 --> 0:12:52.316 I'm not going to do some look at us girls together, right. 0:12:52.476 --> 0:12:54.916 I mean there is a way in which the idea 0:12:55.036 --> 0:12:59.556 could be seen as as patronizing, right for sure. And 0:12:59.876 --> 0:13:03.556 when we launched, a double digit percent of women told 0:13:03.636 --> 0:13:07.316 us so we had it, Like that was your first response, 0:13:08.556 --> 0:13:13.596 that is, why why do girls need a special Like, yeah, 0:13:11.916 --> 0:13:17.476 we can do that, we don't need. But the issue 0:13:17.636 --> 0:13:21.876 is we don't. We don't. How did you go from? 0:13:21.916 --> 0:13:24.836 How did you go from thinking that's that's an insult 0:13:24.876 --> 0:13:27.436 to women to being, oh, that's actually something women need. 0:13:27.436 --> 0:13:29.876 How did you how did you get from you know, 0:13:29.916 --> 0:13:32.716 I went around a corner and threw a pasture and 0:13:32.956 --> 0:13:37.556 ended up. And the momentum was actually when I was 0:13:37.636 --> 0:13:39.916 one morning putting on my mask era and just was 0:13:39.956 --> 0:13:42.476 sort of, you know, my mind is wandering, and all 0:13:42.556 --> 0:13:44.676 of a sudden I had I thought, I'm gonna have 0:13:44.756 --> 0:13:50.036 a big insight and I did, and I did. I 0:13:50.036 --> 0:13:51.916 don't know it. Sometimes it happens to me where I'll 0:13:51.956 --> 0:13:54.796 be like I'm about to like, some thing's coming together 0:13:55.476 --> 0:13:59.876 and the thing that came together was that the retirement 0:13:59.996 --> 0:14:04.756 saving shortfall in this country is a woman's problem. It's 0:14:04.796 --> 0:14:08.356 a woman's issue. Why because eighty percent of women die single, 0:14:09.156 --> 0:14:11.036 We live sixty eight years longer than the men. In 0:14:11.076 --> 0:14:13.396 our lives. Half of marriage is end in divorce. We 0:14:13.516 --> 0:14:16.516 end up sadly alone. I mean, look at any nursing 0:14:16.516 --> 0:14:18.356 home in this country and you know this to be true. 0:14:19.116 --> 0:14:23.956 And so therefore, if there's not enough money for retirement, 0:14:24.156 --> 0:14:29.196 it's us huh huh. So that in that universe, even 0:14:29.236 --> 0:14:32.676 if everybody has the same amount of money saved at 0:14:32.716 --> 0:14:36.316 age whatever, sixty, it's still a bigger problem for women, 0:14:36.396 --> 0:14:39.556 just because women will live longer than men be more 0:14:39.596 --> 0:14:41.676 likely to run out of money as a result. And 0:14:41.716 --> 0:14:43.156 by the way, add to that, if you want to 0:14:43.156 --> 0:14:45.876 back up, that women earn less for doing the same jobs, 0:14:46.276 --> 0:14:48.996 we take more career breaks and our salaries peak sooner. 0:14:49.356 --> 0:14:53.556 So there's actually compounding issues here as well. So I'm 0:14:53.676 --> 0:14:57.996 I'm looking at this and I'm saying that is a problem. Huh. 0:14:58.036 --> 0:15:02.996 And eventually got to women have thirty cents of wealth 0:15:03.076 --> 0:15:07.556 for every dollar men have. Black women a penny. Okay, 0:15:07.596 --> 0:15:09.996 so we talk about your your listeners may have heard 0:15:09.996 --> 0:15:11.996 of the gender pay gap, and it's eighty cents. The 0:15:12.036 --> 0:15:14.236 wealth gap, which is what we keep and what we 0:15:14.316 --> 0:15:17.116 have is thirty something since to a man's dollar and 0:15:17.196 --> 0:15:20.316 going in the wrong direction. You've used the phrase, and 0:15:20.396 --> 0:15:22.796 forgive me if you're about to get there. You used 0:15:22.796 --> 0:15:26.796 the phrase investing gap. What's the investing gap? Well, there 0:15:26.796 --> 0:15:30.516 are two ways that we have built wealth in this 0:15:30.596 --> 0:15:34.356 country over time, right. One is real estate, in buying 0:15:34.396 --> 0:15:36.356 real estate, and the other is investing in the stock market. 0:15:36.716 --> 0:15:39.356 And when I look at this and said, well, how 0:15:39.356 --> 0:15:42.556 do we close this gap? Right, A lot of people 0:15:42.556 --> 0:15:45.476 are working on the pay gap, but this investing gap, 0:15:45.836 --> 0:15:48.636 where women keep the majority of their money in cash, 0:15:49.396 --> 0:15:52.996 is costing women hundreds of thousands, some women millions of 0:15:53.036 --> 0:15:56.836 dollars over the course their lives. This is the issue. Ah, well, 0:15:56.916 --> 0:16:00.156 let me turn around. Yep, So you touched on in passing. 0:16:00.276 --> 0:16:03.356 But you just said women keep the majority of their 0:16:03.396 --> 0:16:06.796 wealth in cash. Yeah? About that? Like, is this this 0:16:06.916 --> 0:16:09.916 thing you knew before? Did you discover that this period? 0:16:10.356 --> 0:16:13.436 So there were things I knew, So I sort of 0:16:13.516 --> 0:16:15.876 knew women didn't invest as men as much as men do. 0:16:15.996 --> 0:16:19.356 What I really knew, having run Merrill and Smith Barney, 0:16:19.636 --> 0:16:23.676 is that women leave the financial advisor they and their 0:16:23.676 --> 0:16:26.876 spouse have in the year after their partner's death or 0:16:26.916 --> 0:16:28.676 in the year after a divorce, at a rate of 0:16:28.756 --> 0:16:32.676 eighty to ninety. So I knew that men are very 0:16:32.676 --> 0:16:35.756 happy with their financial advisor, but women leave. What I 0:16:35.916 --> 0:16:39.316 also knew is the industry is aware of this. The 0:16:39.436 --> 0:16:47.236 industry's narrative around this, which I accepted, is well, it's 0:16:47.236 --> 0:16:51.196 because women are risk averse. It's because women aren't as 0:16:51.236 --> 0:16:55.236 good with money. It's because men enjoy investing more. It's 0:16:55.276 --> 0:16:58.476 because women need more financial education. In other words, it's 0:16:58.476 --> 0:17:02.516 her fault and everything we as an industry do. The 0:17:02.596 --> 0:17:06.876 products we offer are super. They're super. Women just have 0:17:06.996 --> 0:17:11.076 this issue. Okay, so let's put together a marketing plan. 0:17:11.836 --> 0:17:15.476 Let's market at women and tell them they should invest in. 0:17:15.796 --> 0:17:18.796 I said that, You know, I didn't quite happen that 0:17:18.876 --> 0:17:20.596 day with the mask era, but as I sort of 0:17:20.636 --> 0:17:25.956 process through it will wait a minute, maybe maybe that's 0:17:25.996 --> 0:17:28.916 what is going on. But maybe in an industry where 0:17:29.356 --> 0:17:31.676 ninety eight percent of mutual fund dollars are managed by 0:17:31.676 --> 0:17:34.916 men and ninety nine percent of investment dollars are owned 0:17:35.116 --> 0:17:37.316 and managed to companies owned by men and eighty six 0:17:37.356 --> 0:17:40.316 percent of financial advisors, and maybe they built a business 0:17:40.316 --> 0:17:44.396 for themselves. What if we center instead on women. What 0:17:44.516 --> 0:17:47.356 if that's what we build and that was the genesis 0:17:47.396 --> 0:17:50.956 of ls. Why don't we change the underlying product to 0:17:50.996 --> 0:17:54.876 take into account the thousands of different needs women have 0:17:55.156 --> 0:18:01.156 that you know the industry isn't. So that's the big idea, 0:18:01.236 --> 0:18:04.996 But how does it actually work? What specific problems do 0:18:05.036 --> 0:18:08.116 you have to solve to build an investing firm for women? 0:18:08.676 --> 0:18:19.756 That's up in a minute. Now back to the show. 0:18:20.436 --> 0:18:23.876 In some ways, lavest is pretty straightforward. You can join 0:18:23.916 --> 0:18:25.996 for a few dollars a month, they help you invest 0:18:26.036 --> 0:18:29.036 in low cost ETFs, or if you have more money 0:18:29.036 --> 0:18:31.316 to manage, you can pay higher fees and get a 0:18:31.356 --> 0:18:34.796 financial advisor. But of course there is this big twist. 0:18:35.476 --> 0:18:39.196 Lavest is for women, and part of that is branding 0:18:39.276 --> 0:18:42.356 and marketing, but part of it is that they actually 0:18:42.396 --> 0:18:47.396 make different investment recommendations based on gender. I asked Sally 0:18:47.476 --> 0:18:49.916 how that part works. If you have a man and 0:18:49.916 --> 0:18:52.796 a woman with the same income, same net worth, same 0:18:52.836 --> 0:18:56.916 investing goals, why do you need different investing strategies? She 0:18:57.156 --> 0:19:04.396 lives longer than he does, she earns less, or her 0:19:04.516 --> 0:19:07.236 salary trajectory. From the point if you're saying they both 0:19:07.276 --> 0:19:09.796 are earning the same, her salary trajector will be lower 0:19:09.836 --> 0:19:13.756 and her salar will peak sooner. All things being equal, 0:19:13.796 --> 0:19:17.316 then some things have to be different. One thing could 0:19:17.356 --> 0:19:21.396 be that we give her a portfolio with more risk 0:19:21.436 --> 0:19:23.876 in it because she can afford to take that risk 0:19:23.996 --> 0:19:27.436 because of her longer life. But another change could be 0:19:27.516 --> 0:19:30.676 that she invests more. Right, she invests, I mean a 0:19:30.756 --> 0:19:34.196 higher percentage of her exactly right, that's exactly right. So 0:19:34.356 --> 0:19:38.476 and it depends on what she's comfortable with. Our solutions 0:19:38.476 --> 0:19:41.756 are highly customized, so she can do that back and forth. So, yes, 0:19:42.356 --> 0:19:46.196 there is that core difference in the algorithm based on gender, 0:19:46.796 --> 0:19:49.916 but there are a thousand other small things in the 0:19:49.996 --> 0:19:53.636 product that are different. One of the things we learned 0:19:54.516 --> 0:19:58.876 is men will if they see jargon in an investing flow, 0:19:59.596 --> 0:20:05.436 they will oftentimes keep going. Women will stop oftentimes and say, WHOA, 0:20:05.556 --> 0:20:08.796 that seems important. So what we discovered is in the 0:20:09.116 --> 0:20:12.196 on the onboarding, you ask a man is risk tolerance? 0:20:12.276 --> 0:20:15.036 He's not sure. He takes an educated guest and continues. 0:20:15.236 --> 0:20:18.716 She stops and leaves. Oh, I've got to figure that out. 0:20:18.836 --> 0:20:22.956 So we spent a couple of years doing deep research, 0:20:23.676 --> 0:20:28.076 finding those little points of friction, little points of friction 0:20:28.116 --> 0:20:31.476 along the way to make the experience feel effortless. So 0:20:31.636 --> 0:20:36.476 you start the company, women are investing with you. You 0:20:36.556 --> 0:20:39.756 have well at this point you have a billion, more 0:20:39.756 --> 0:20:42.956 than a billion dollars under management. Then yeah, one point four, 0:20:43.076 --> 0:20:47.796 one point five. And then at some point, not that 0:20:47.876 --> 0:20:49.756 long ago, you have to raise a Series B. Right, 0:20:49.796 --> 0:20:52.396 you want to raise more money to keep the company. 0:20:54.636 --> 0:20:57.596 A lot of people say, why, blah, what tell me 0:20:57.636 --> 0:21:00.996 about why do you hate it's terrible Series B? Just 0:21:00.996 --> 0:21:04.476 to be clear, it means raising more venture capital funding, right, basically, yea, 0:21:05.356 --> 0:21:10.636 why what? Why so bad? Well, you may have heard 0:21:11.796 --> 0:21:17.516 the research that says that women, despite women, run startups 0:21:17.516 --> 0:21:22.196 delivering higher returns, and men run startups despite that, women 0:21:22.356 --> 0:21:26.156 raise just want you know, four or five percent of 0:21:26.236 --> 0:21:33.596 venture dollars and Series B later stage call it one percent? Okay, 0:21:34.276 --> 0:21:38.716 so even less so the gap between what women founded 0:21:38.756 --> 0:21:41.996 companies and men founded companies, It actually gets bigger once 0:21:42.036 --> 0:21:45.476 the companies are up and running, yep, which you think 0:21:45.476 --> 0:21:50.636 it wouldn't because if the returns and the numbers are there. 0:21:50.636 --> 0:21:54.596 Why not? But it's that's a long couple glasses of 0:21:54.596 --> 0:21:58.556 wine about gendered expectations and all the all the things 0:21:59.036 --> 0:22:01.036 you have called this. I don't know if you made 0:22:01.076 --> 0:22:03.276 this up, but I saw it in connection you did. 0:22:03.516 --> 0:22:06.396 Did you make up the phrase series B cliff? I 0:22:06.436 --> 0:22:09.036 didn't know that I did, but then somebody told me 0:22:09.196 --> 0:22:10.876 I did, and then I googled it and like, I 0:22:10.916 --> 0:22:12.996 think I made that up. And so just to be clear, 0:22:13.156 --> 0:22:16.276 what is the series B cliff? So there is today 0:22:16.676 --> 0:22:19.836 a fair amount of capital coming in to fund women 0:22:20.076 --> 0:22:23.076 startup CEOs. Seed stage that's when you have just the 0:22:23.076 --> 0:22:26.516 PowerPoint presentation. Series A that's when you raise the first 0:22:26.556 --> 0:22:28.996 real chunk of money. Then Series B is when you 0:22:29.036 --> 0:22:31.956 tend to raise more and the company's product market fit 0:22:32.036 --> 0:22:35.396 has been proven. You know, things aren't perfect, but you've 0:22:35.476 --> 0:22:38.476 you've got a real business here. You've you're motoring along. 0:22:38.996 --> 0:22:42.516 You would think Series B women would raise more because 0:22:42.556 --> 0:22:46.636 the numbers are there, but I hypothesize there are fewer 0:22:46.996 --> 0:22:49.156 people on the other side of the table venture. There's 0:22:49.196 --> 0:22:50.916 a fair amount of capital coming in at seed in 0:22:50.996 --> 0:22:55.116 series A women funding women, They're they're really much fewer 0:22:55.356 --> 0:23:00.556 women writing the big checks, writing the big Series B checks. Yeah, 0:23:00.596 --> 0:23:04.436 and so I still found even at Series B, even 0:23:04.516 --> 0:23:07.236 with the numbers, and the numbers were good, the payback 0:23:07.356 --> 0:23:09.676 was within it. You know, every marketing all we spent, 0:23:09.716 --> 0:23:13.116 the payback was took eight months. Is former CFO you 0:23:13.196 --> 0:23:16.756 do that all day long. But what I found was 0:23:16.796 --> 0:23:21.316 I still got well, but don't their husbands and well, 0:23:21.596 --> 0:23:23.596 you know, your numbers are good, but they're going to 0:23:23.636 --> 0:23:25.916 get worse because you're going to scale through your early 0:23:25.916 --> 0:23:28.756 adopters because your target market. I mean, like, how many 0:23:28.756 --> 0:23:31.196 women really want to invest? I'm like pretty much. I 0:23:31.236 --> 0:23:34.676 think all of them should be. And you still you 0:23:34.796 --> 0:23:38.036 still get the if what if Fidelity gets in? You're like, 0:23:38.116 --> 0:23:40.956 the market's plenty big, plenty big, right, there are plenty 0:23:40.996 --> 0:23:44.556 of multi billion dollar wealth tech companies serving man. Yeah, 0:23:44.796 --> 0:23:48.836 I don't know. So the Series B is tough. So 0:23:48.876 --> 0:23:50.876 when you ask why did you make a face when 0:23:50.956 --> 0:23:54.156 I talked about raising your Series B, that is why. 0:23:54.196 --> 0:23:57.676 That is why, Because the amount of time and just 0:23:57.876 --> 0:24:01.516 pain is tremendous. And so what happened in the end, 0:24:01.916 --> 0:24:03.356 I mean that was not that long ago that you 0:24:03.396 --> 0:24:05.356