Before co-founding Wealthfront — a pioneering robo-advisor company — Dan Carroll worked as a trader. Then he saw what happened to his parents’ money after the 2008 financial crisis and knew things had to change. So he decided to start a financial planning services company that was accessible to everyone — and, he estimates, will “save consumers over $150 billion in fees over the next 20 years.” Under his leadership as chief strategy officer, Wealthfront has become a premiere choice for robo-investing, now managing more than $11 billion in assets. Last year, it was named one of CB Insight’s Top Fintech Startups.
Each week, GOBankingRates sets out to discover what makes the people behind top companies tick. We like to call this series “Best in Business” — and Carroll really is one of the best. He told us what it was like to convince people to let robots manage their money, what it really takes to launch a multi-billion dollar business — and shared a few ways that you can find (or build) your own dream job, too. Below, find our favorite moments from the story of how Carroll launched his business.
He Discovered His Parents Were Being “Ripped Off” by a Financial Advisor
The summer right before the financial crisis in 2008, I went home to visit my parents in the small town of Glen Ellyn, Ill. Like most know-it-all 20-somethings, I thought I knew what my parents should be doing with their money, so I decided to open their statement from their financial advisor. My parents had modest salaries with jobs as a fifth grade teacher and insurance claims adjuster, so they had no business affording a financial advisor — they were driving Fords, not Mercedes.
When I opened that financial statement, [I saw that] every cliche about how Americans get ripped off on their investments applied — high management fees, high commissions, mutual funds with kickbacks, etc. You name it, and it was happening. That moment forever changed me, and propelled me on a crusade to fight for everyday Americans to receive sophisticated financial advice.
— Daniel Carroll (@danielcarroll) May 2, 2018
Learn More: 25 Investing Myths No One Should Believe
He Worried More About His Relationship Than His New Company — at First
At the beginning [of the process of starting a company], many times founders are just so excited about the idea and working on their hobby that they don’t stop to think about what could possibly go wrong. You are just trying to scratch your own itch and hope that a bunch of people feel the same way you do. This rang true for me. I was actually more worried about moving from Chicago to the Bay Area and what that meant for my relationship with the girl I was madly in love with (now my wife and mother of my two daughters).
He Came Up with a Genius Method for Hiring the Right People
Life’s too short to work with unpleasant people. At Wealthfront, we aim to hire people that not only strongly believe in the mission, but are genuinely nice people to be around. Some people refer to this as the “airplane rule” — would you be okay sitting next to this person on a cross-country flight? If the answer is no, it usually is a bad sign. I also genuinely believe in hiring people smarter than you, as evidenced by the Wealthfront employees and executive team. They are far smarter than me, and I learn every day from them.
For example, our CTO David Fortunato is one of the smartest people I know, and we couldn’t think any differently — which I love and value. And I am incredibly fortunate to have a co-founder in Andy Rachleff, who founded one of the most successful venture capital firms of all time in Benchmark Capital. So needless to say, raising capital wasn’t a muscle I had to build in trial-by-fire like most entrepreneurs.
When I look at Wealthfront employees, I see a group of people that aren’t satisfied with the status quo in financial services. It’s our job every day to fight like heck to build a financial services company that you don’t just like, you love.
— Daniel Carroll (@danielcarroll) June 15, 2017
He Figured Out How to Make Robots Trustworthy
When we launched Wealthfront, the hardest part was getting people to not only care, but to buy into [the idea] that software was a legitimate and better solution to manage your investments. Most people thought we were totally crazy. I was in an interview with famed tech reporter Kara Swisher, and she looked at me skeptically and said, “I’m supposed to trust a robot with my money?” No one — even many in the tech community — thought this would work.
And we understood why. Trust in financial services had been synonymous with brand and size. As a startup, we didn’t have either, so we had to be really honest about how we’d get consumers to trust us. I would have coffee after coffee with Facebook engineers to get their feedback and implement it into the product. And it worked — we quickly grew from $0 to $500 million to $1 billion — and today over $11 billion.
Deloitte estimates there will be over $5 trillion in robo-advisors by 2025. I think it turns out people are pretty willing to trust a “robot” with their money after all.
He Learned How to Answer the Only Question That Really Matters
The reality is that starting a company is one of the most electrifying, nerve-wracking, exciting and exhausting experiences you will ever have in your life, and you need to be relentlessly passionate about what you’re building — no matter how many people tell you “no.”
So with that in mind, the biggest question I’d have for [anyone who wants to start their own business] is, “Why are you doing this?” My co-founder teaches a class at Stanford in which he discusses that entrepreneurs typically start companies for three reasons: They want to change the world, they want to make a lot of money — or they want to build a great company.
If you are doing it for the money and the fancy headlines, I would say don’t do it. There are far easier ways to make money than starting a company. If you truly have a passion for something and a unique insight into why you will win, then go for it — just realize you likely will be spending the next 10 years of your life solving this problem 24/7.
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- Watch: We Know Warren Buffett’s Investing Secret — Do You?
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This interview has been edited and condensed.