Elliot is currently the VP of Product & Growth at Wealthfront, and he previously served as the Senior Director of Product Management at LinkedIn where he led growth and helped LinkedIn go from 20-200 million users.
→ His background as a VP of Product & Growth at Wealthfront
→ He helped grow LinkedIn from 20 million members to 200 million
→ What was his initial strategy
→ His hardest part about the growing LinkedIn
→ How he inspires them to keep going
→ How he uses this kind of principle with the endorsement screen
→ What kind of team that he builds at LinkedIn
→ What is Wealthfront
→ What is his growth strategy going to be for Wealthfront
→ And a whole lot more
Bronson: Welcome to another episode of Growth Hacker TV. I’m Bronson Taylor and today I have Elliot Schmuck here with us. Elliot, thanks so much for coming on the program.
Elliot: Thanks for having me.
Bronson: Yeah, now, you’re definitely one of the one of the all stars that we’ve had on you. You’ve done something pretty special. So currently you’re the VP of product and growth at Wealthfront. But before that, you were previously the senior director of product management at LinkedIn, a company that some people might have heard of. So we’re going to start with LinkedIn and then we’ll talk a little bit about your current role at Wealthfront. Now at LinkedIn, if the if the law is correct, you were tasked by Reid Hoffman to just basically, quote, get more signups. Is that right?
Elliot: That’s about right. LinkedIn had a number of growth women throughout its history. But when I arrived kind of in late 2007, early 2008, no one was really focused on growth and growth was actually slowing down. And the company was pretty worried about, you know, hitting its numbers, hitting the plan for the year. And so Reid Hoffman asked for volunteers. My hand went up. And, you know, after after doing a brief review of what my thinking was, he said, go and do it.
Bronson: So what made you raise your hand to just a great challenge or you love math or.
Elliot: Well, all of those. I’m actually a, you know, a very quantitative guy. So I love looking at the numbers and seeing how things work. And, you know, the kind of growth engine of LinkedIn really fascinated me as soon as I arrived. There are so many numbers and so many things going on and so much thought had gone into it long before I was there that it just seemed like a fascinating thing to work on and something that really resonated with me.
Bronson: Yeah, absolutely. Now, while you were there, you helped grow Lincoln from 20 million members to 200 million members. Is that correct?
Elliot: That’s right.
Bronson: That’s right. That’s quite a growth story. And how many years of that take place during.
Elliot: That took about about five years to get.
Bronson: Yeah. So in five years ago, from 20 to 200 million. And did you ever think that you would get to 200 million when you raise your hand and said, yeah, I’ll sign up to try this?
Elliot: But it definitely seemed a long way away. So, you know, we were just crossing kind of the 20 million figure and it seemed very hard to even think about hundreds of millions. Yeah, but once you kind of get used to the math of growth, you realize that those curves are possible, right? If you just, you know, if you’re doubling the site every year, you’re growing by 50% every year. It doesn’t take that long to get to the really large numbers, even though they seem very far away.
Bronson: Yeah, I think that’s one of the things that experience people kind of have in their tool bag is the confidence to know it’s possible. Yeah, it’s possible for everyone. They just don’t know it. But when you’ve actually seen it, it’s not fantasy anymore. You know, it can happen. You know, you can double the growth year after year and you know that 200 million is possible even if it’s far away. So I think.
Elliot: Yeah, that’s why it’s great to work for, you know, a company that’s successful that has a great growth curve so that you can see and feel it. And so you kind of know what’s actually possible out there.
Bronson: Yeah, for sure. Now, you said that I read kind of looked over your strategy initially after you raise your hand. What was your initial strategy? What was that you told him you were going to try?
Elliot: Well, what I did is I basically took the weekend to look at how LinkedIn was grow today, really dig into the numbers and understand all those channels of growth that we’re already working to some extent, not as well as the company wanted, but we’re working to some extent. And then for each channel of the growth, I came up with a set of ideas on how to improve. Okay. And basically, you know, I think I came out with a, you know, a 40 or 50 slide presentation, Fareed, that had all of those ideas. And it had a mix of small things. That had a mix of large things. Mm hmm. Now, in reality, 90% of those ideas ended up being wrong. Okay.
Bronson: That was my next question.
Elliot: That’s right. But, you know, I think know Reed was was just making sure that I had the ideas and was generating ideas that were at least on the right track.
Bronson: Yeah. Now that you’ve been away from LinkedIn, you’re in a new role. You can kind of look at it with some perspective. Overall, what was the hardest part about growing LinkedIn? We’ll get into specifics on there about how you did it, but what was the hardest thing kind of looking back?
Elliot: Well, I think the hardest thing was. Really keeping the momentum going in terms of generating growth wins quickly. It was very tempting for the company at the time and everyone around you to kind of be satisfied with a certain growth level. You know, we’d find something that improves growth by 50%. We sell off rated and then, you know, that was it. We won, right? What else is there to do? But in reality, we need to keep generating those kind of growth improvements over time. If you hope to really achieve the big numbers. And so the hardest part was really keeping the team and the company and everyone going in the cause of growth. Even though you are doing well.
Bronson: Well, how did you do that? Because that does seem difficult, because if you increase something by 50%, I mean, that’s when you celebrate and that’s when you stop.
Bronson: So what do you do? Is it a carrot? Is it a stick? Is it a mixture? How do you inspire them to keep going?
Elliot: I think what worked for me was was kind of looking longer term. You know, if we had a big growth win in 2008, I would start talking about 2009 or 2010 and I would kind of start to show how this growth when was good. But we need a lot more work to hit our goals in 2009 and 2010. Yeah. And so kind of extending the timeline, you know, working out a longer term, put a lot of things in perspective.
Bronson: Is that a part of being kind of someone that can do what you did? Is that you’re just not satisfied that no matter how good the win is today, you just you don’t you’re not happy with it. It’s not like the end goal is that is part is dissatisfaction a part of growing something of 200 million?
Elliot: I think so. I mean, to some extent, I wouldn’t quite call it dissatisfaction with the you know, I look at it in a in a more positive light, which is, you know, I want the numbers to be as big as possible.
Bronson: Mm hmm.
Elliot: And no matter how hard they are today, I want to go for the next goal. Yeah. And I think that’s an important quality of people that work on growth.
Bronson: Yeah, for sure. Now, as you took on the task of getting more users, let’s kind of get into the details now because, you know, throughout this process, it seems like you came up with a number of kind of rules, for lack of a better word. These kind of go to phrases that seem to be true most of the time in most situations. Right.
Bronson: But not, you know, in Darby all rules. And I know you give caveats to some of these, but there are really solid rules. So let’s start with one, the first ones, which is break up your metric into smaller steps. So Reed comes to you and says, get more sign ups. What do you do with that?
Elliot: Well, you have to understand what makes up a sign up. Where do sign ups come from? You know, typically when you’re given a big metric like that and it doesn’t have to be sign ups, it can be page views, it could be more users coming every day. It could be any metric that you can imagine in the context of a website. The first thing to do is understand, Well, how do I get a sense for how that number actually moves and how it works? You know what makes that number higher today than it was yesterday? Why did it drop today? What are the components of that number? So we looked at signups for LinkedIn. You know, one of the first insights was we had two major sources of signups. One was our viral growth, what we call warm signups, people that were invited. And the other element were non-viable signups, people that were just coming to the site for whatever reason.
Bronson: Mm hmm.
Elliot: And obviously, the strategies that you would apply to those two different segments of signups would be different.
Elliot: But if you didn’t understand what the segments of signups were at the beginning, it it’s pretty hard to understand, but you need to separate strategies and pretty hard to prioritize which strategy to focus on. So for any metric that you’re given, try to break it up into what actually makes up that metric, what are the components? And then you can focus on those components and understand how do I move those components?
Bronson: Yeah. Let me ask you kind of a follow up question. You know, and maybe this is getting too granular, but you know, you know, when you have a metric, you break up into smaller metrics. Now, you could also break up those smaller metrics into even smaller metrics. Right. No, you’re you’ve hit upon the metric that you actually need to do something about and not just break it down even further when you you know, you’ve kind of got to the constituent parts of it.
Elliot: Yeah. So a good rule of thumb is if you can look at a metric and immediately generate very specific ideas for how to move that particular metric. And by specific, I mean literally change this particular page on the site to move it.
Elliot: So if you can look at a metric and start generating those ideas with that specificity, you’re probably at the right place.
Bronson: Yeah. Because, you know, when it comes to just, you know, get more sign ups, like, what do you change to get more signups or. There’s no answer in one sense because everything’s an answer.
Elliot: Correct. Correct. But once you break it down, once you realize, well, half of our signups are driven by invitations, so now you’re already closer. Now you know, you can zero in on whichever flows or pages drive invitations. You can move that half of sign up. Yeah. Right. As you break it up, you start to zero in on the right places to attack.
Bronson: Yeah. Now, you talked about how those two flows already. You know, you have the invitation, the warm signup, and then you kind of have the organic. Maybe they just typed in link into the browser. They did a search on Google something. So the second rule might apply to that. You say that it’s easier to build on a stream than it is to improve a weakness. What do you mean by that?
Elliot: Yeah, that’s right. Well, the one of the biggest problems in running a growth team is prioritizing. Mm hmm. Right. You know, when I started working on growth, I basically had one engineer, an engineering manager who would help. So maybe one and a half engineer. And so one engineer or a small team of engineers can only do so much. And with growth, it’s important to get the win as soon as possible. Right. If I get a growth win tomorrow versus three months from now, that means I’ve had three months of additional growth. Mm hmm. And so it’s actually pretty critical to be right in what you work on, especially given the small team sizes. So the rules I came up with, including the one you mentioned, were basically things I learned from trying different avenues, trying different ideas, and seeing which ones worked and which ones didn’t. Mm hmm. And the rule you mentioned, you know, really stems from a very important principle, which is it’s very hard to change behavior. Mm hmm. Very hard to get someone to do something that they’re not already doing. Mm hmm. So to make it specific, you know, one of my ideas for LinkedIn was. Okay, well, one of our biggest drivers of invitations are address book uploads to the site address book. And for it’s kind of a well-known growth strategy for social networks. Well, let me try to get more people to empower. Right. But that seems like a good idea.
Bronson: Yeah, sounds good.
Elliot: Yeah. But it’s actually incredibly hard because someone that doesn’t want to import, it’s very hard to convince them to actually do it. So that’s changing user behavior. Yeah. It’s a lot easier to take someone who is already trying to import.
Bronson: Mm hmm.
Elliot: And just make them more successful at doing that, you know, make sure they have less errors when they try it. Make sure they have a higher quality of data coming back. Make sure they invite more. Yeah, because you’re not actually changing their motivation. You’re not changing their behavior they already want to import. Yeah, you’re making it easier and better. Yeah. So that’s really what that rule means. You know, find things that are already working fine behaviors on your site that users are already taking. Mm hmm. And make them better. That’s going to be a lot easier than trying to change user behavior.
Bronson: Yeah, and it’s so tempting to not do this. I know in one of the presentations you gave, you talked about how when you looked at the numbers and the different flows of people signing up, you know, for the organic kind of SEO flow, I think it was like a 4% conversion rate for some of the people came and signed up. So it’s easy to think, wow, you know, if we can just get that to 7% or 8%, then we’re getting a huge win. But the problem is that only 4% of people doing it for a reason, they don’t want to do it. So if you actually ended up focusing on the thing that was having a 25% conversion rate and overall, that was a better win for you, right?
Elliot: That’s right. That’s right. And this is, you know, quite honestly, this is the biggest mistake I made when starting to work on growth at LinkedIn. Most of my ideas, the ideas that we talked about earlier presenting three were about changing user behavior or about getting more people to upload address books when they didn’t really seem to want to be doing those kinds of things. And eventually we were able to move all those in euros at LinkedIn. But the first few experiments I tried were failures along those dimensions. And it wasn’t until I started focusing on things that were already working and making them better, that. We started to have successes.
Bronson: Yeah, that’s such great insight. Now, your third rule is people will recognize right away what it means. You have to tell us. But it says it’s equivalently easy to improve any flows conversion rate by 10%. What does that mean?
Elliot: All right. So that’s more of a rule of thumb. It’s actually an extension of the previous rule that gets you to some of the same results. But it’s more of a rule of thumb to say, you know, let’s say I have several flows on the site and 25% of people get to one flow, but only 5% of people get through another flow. Mm hmm. You know, it’s much easier to move that 25% to 27.5% than it is to move the 5% to, you know, or it’s equivalently easy to move that 25 to 27.5 as it is to move the five to the 5.5, despite the big differences in those starting numbers.
Elliot: That ends up being ends up being true. And it really links to the last rule. The reason you get 25% of people through flow, number one is because they want to. Yeah.
Bronson: There’s something behavior.
Elliot: There’s something good at the end of that flow. Yeah. The reason that only 5% complete full number two is probably because they don’t want to there isn’t enough incentive for them to do it. And so what you end up seeing, if you kind of use this rule of thumb of it’s going to be equivalently easy or equivalently hard to move every flow conversion rate by 10%. You end up gravitating toward the flows that are already working. Yeah.
Bronson: That’s great. And then this last rule, you’ve already touched on it. You say it’s easier to get an active user to do a lot more than it is to get an inactive user to do anything. And you might talk about, you know, the reasons why that is. You’re the one the guy is, I think, headed up to the endorsement. You endorse another user. Tell us how you use this kind of principle with the endorsement screen.
Elliot: That’s right. That’s right. So in endorsements, those of you that have tried it, you know, once you endorse someone or once you get endorsed and come back to the site to accept that endorsement, you’ll see that we ask you to endorse a lot more. And that’s kind of a, you know, a critical technique that you can use for growth, which is once a user has demonstrated that they like doing something, will try to shift them to do something else, get them to do a lot more of that. Mm hmm. I just did one endorsement. You know, I’m probably very, like, going to do ten or 15. Yeah, I. If I haven’t done any endorsements, I’m very unlikely to even do one.
Elliot: Right. And so it’s a it’s an important principle to think about. It’s an important strategy to try. And and again, it actually links to, you know, my earlier point about changing user behavior once I did an endorsement, you know, that’s a behavior that I want to execute on. And so you don’t have to change it to get me to do more endorsements. If I don’t like endorsements or, you know, I don’t think it’s valuable or I don’t want to do it for whatever reason, getting me to change that view, to change that behavior is a lot more difficult.
Bronson: Yeah. You know, it’s funny, I think about running with the bulls in Spain for some reason when you talk about changing user behavior and that just imagine us building websites and running against the bulls. You know, when you run with bulls, you run with bulls. Like they’re the ones deciding what they’re going to do, the general flow of their direction. Like you have to run with them. You may be able to guide them and tweak them and turn them, but you can’t literally change into a 180 with what they’re going to do. And the same thing with that, all these users are bulls are going to do what they’re going to do. They are who they are, you know, find a way to win because of their behavior and not win by changing their behavior, right?
Elliot: Correct. I think that’s a great analogy. Of course, you can redirect that bull with, you know, a show of immense strength for, you know, a big tank in their way or something like that. So there are ways to redirect the bulls as well. It’s just much more difficult than running with the bulls.
Bronson: Yeah. And a lot of us don’t have the resources to do those kind of wholesale changes with user bases, you know. So let’s talk now about kind of the team that you built at LinkedIn around growth because like you said earlier, when you started there, it was you and one and a half engineers, I believe you said, all right, so it was you and just, you know, want to have other people eventually before you left, I think it was over 20 people. Is that right? Right.
Elliot: That’s about right. Yeah.
Elliot: I don’t think there’s a super hard and fast rule. I think, you know, there’s two kinds of companies out there where this answer is probably very different. A company like LinkedIn or another social network like Facebook, growth is not just something good, something that you want. Growth is actually required. Right? The value of a social network is very much tied to how many people are on it. Are your friends, are your colleagues on it already? Right. That’s how you get value. And so for a company like LinkedIn, like Facebook, like communication tools and other categories of company where having a large number of users of your service is critical to the value of that service, you probably should have everyone thinking about growth, at least at the beginning. Mm hmm. Now, there are other kinds of companies. If you think about productivity tools, tools like Evernote, for example, Evernote works great even if no one else is using it. All right. I don’t need other people on that service. And so, you know, this question is a lot more relevant for that category of companies. And in that case, you know, my advice is generally, you know, you can only grow good products. All the things I’ve done at LinkedIn were made possible by the fact that people actually liked LinkedIn and got value out of LinkedIn. And so, you know, for a company where growth is not required to make the product useful, you may want to take a little bit more time to verify that your product is actually in pretty solid shape. Yeah, to verify that the people that are signing up on their own or through public relations or TechCrunch coverage or what have you, are actually becoming active users of your product. And once you see that, that’s when you start thinking about how do we scale this up, how do we get more users?
Bronson: Yeah, that’s great input and thanks for kind of dividing the companies into two categories to help us really think so. We know based on what situation we’re in now. Let me ask you this. What types of people should ultimately be on a grow team? Maybe the teams, five people, maybe ten people, maybe it’s a hundred people. Who knows? But what kinds of people do you need? You said earlier you were very quantitative. You know, you’re kind of math oriented. You said you had an engineer by your side. So I’m assuming there’s an engineer in that team. Tell us about the makeup of that team, though.
Elliot: Yeah. So of course, you need all the functions that you would find in a normal product team, right? You need product managers, you get engineers in UI designers, you need analysts. So all of those functions are required in the team over time. At the beginning, when you have a small team, maybe people are doing multiple functions, right? When when I started the team in 2008, I was both the product manager and the analyst and did some of the UI design. Right, because we didn’t have a big team. So so sometimes you have to wear multiple hats, but over time, as you build the team, all the key functions need to be represented. The key capabilities that you want people to have is you do want to attract people to the team that are incredibly numbers driven. Incredibly working on growth is just an incredibly quantitative discipline. You really want to measure everything and you want to watch everything and you want to optimize every key number. And so you want people to get excited about that.
Elliot: Right. They get excited about looking at the numbers every day or every hour or every 15 minutes and seeing how things are doing and seeing the impact of their work. If things are going well and kind of reacting to numbers dropping by fixing things or understanding what’s going on. So you want that kind of person. You also want people that are willing to get into a lot of detail. We spent a lot of time working on growth, trying to address very complex situations that maybe only touched five or 10% of our users. But we knew if we fixed it, we’d get five or 10% more growth, which is good. So. You want people that are willing to dig down into the numbers and into what’s going on and deal with a lot of complexity and deal with a lot of edge case edge cases that you typically have to solve when you’re when you’re building these features.
Bronson: Yeah. Do you feel like there’s any unsung heroes of the types of people you just mentioned? Are there any types that maybe are overlooked? You know, you mentioned you in there that might be overlooked. You mentioned analyst. Maybe we just assume that someone else is an analyst along with something else. Are there any unsung heroes that you felt just brought immense value but may not be on the top of the list to hire?
Elliot: Yeah. I mean, the there were heroes on my team and other superstars in my team that brought value above and beyond their role. For example, one of my growth analysts, you know, actually very quickly was able to build models to forecast growth forecasts. What we were going to do, which for a large company that’s trying to meet its goals. And ultimately a public company like LinkedIn that’s trying to meet quarterly financial targets. That’s actually a critical function. And yet most people don’t think about that. They don’t think about forecasting. Yeah, there are also you are designers that are actually particularly great at growth related work, which, you know, I didn’t realize those existed until we had a hard sell for the growth team. But there you are, designers that actually have the growth mindset and are able to get into the details and like look at the numbers. So for every function you can kind of find superstars that really align with what a growth team is to do.
Bronson: Yeah. Did you learn anything looking back that maybe should be avoided when putting together a team like this? Were there any missteps you made? And, you know, I’m not going to ask you to call out, you know, people by name that you wish you had hired or anything. But, I mean, in general, you know, the creation of the team itself. Is there anything you would do differently or do you think it’s kind of the way it needed to be?
Elliot: I think if it worked out well, I don’t think there were any any large mistakes that we made. I think, you know, the the nature of a growth team is is such that even when we made a mistake, kind of people usually self-selected themselves out of the team. Right. You know, growth teams tend to run pretty quickly. It’s all numbers driven and there’s a lot of small features. And so in cases where we hire people that just didn’t like that mode of working, you know, they very quickly realized that and found something else. So I don’t think there is anything in particular that I can look back on. That was a really dramatic mistake for the team.
Bronson: Now, that’s good insight, though, that it kind of self-correct, you know, so that’s even good to know. Now, currently, you’re the VP of product and growth at Wealthfront. Now Wealthfront is not near as well known as LinkedIn, but I’m actually really excited about this company. I heard about it, I guess a few months back and you know, it piqued my interest in a way that few companies do. And so then when I found out you were there, I was really excited about this interview. So tell our audience first. What is Wealthfront?
Elliot: Sure. Well, Warfront is an online financial manager. So basically, Wealthfront will manage your money for you by investing it in a broad portfolio in the financial markets. So rather than working with, you know, a traditional financial advisor or trying to invest money on your own and kind of learn the right ways to do it well, from what we use our software based platform to invest your money for you automatically rebalance it, automatically making sure that your investments are correct for your risk tolerance, and also implementing a bunch of, you know, software based features that are really only possible when you have a, you know, an automated investment manager like Wealthfront, like our tax loss harvesting product. Mm hmm. So we’ll actually save money on your taxes if the market goes down or if you have any assets that have lost value.
Bronson: Yeah. So what is it fair to say that you guys are kind of bringing, you know, Web products to the financial space, that you’re bringing algorithms and you’re bringing, you know, more engineering to what used to just be a very high touch, hands on client base sort of service. Is that fair enough?
Elliot: I think that’s right. I think that’s right. We like to think of ourselves as really democratizing access to very sophisticated financial advice. Yeah. Yeah. If you have. You know, multiple millions of dollars, maybe as much as 10 million. You can get very good financial advice out there in the industry. But if you’re below those kinds of thresholds, you really can’t there really isn’t the product out there. So what we’re trying to do is take that type of sophisticated financial advice that you would get at with 10 to $20 million and make it available to everyone.
Bronson: And you’re also bringing down the fees to manage that money, is that correct? What’s the fee, you know, with Ameriprise or, you know, one of those guys as opposed to your else fees?
Elliot: That’s right. So most people, if they’re working with a traditional financial advisor, they’re paying 1% of their assets on a given year. Now, that doesn’t sound like a lot.
Bronson: I think for 20, that’s a huge amount.
Elliot: But it’s actually a really huge amount. You know, if if the market’s only going to return 7% a year every year, then you’re taking a big chunk of your return and just giving it as a fee to your financial advisor. So Wealthfront are a much lower fee at a quarter of 1%.
Bronson: Yeah. So you’ve essentially cut it by a fourth?
Elliot: Yeah. Yeah. We’re 75% lower than that.
Bronson: That’s great. Now, coming from LinkedIn, you know, you see this opportunity of Wealthfront. What excited you about the opportunity to go there and be a part of the growth and product?
Elliot: Well, two things. I actually have experience the same problem that we’re all trying to solve very personally. I was lucky enough to sell a startup company during the web 1.0 boom in kind of the late nineties and suddenly needed, you know, I had significant assets that I wanted to invest and didn’t know how. And, you know, and worked with traditional financial advisors and very quickly realized that the 1% fee they were charging was very, very high. And they weren’t necessarily giving me great financial advice. And I really didn’t have enough money for them to give me great financial advice or for them to care. And so, you know, at the time there was no Wealthfront. So my only choice was to kind of stick with the system as it was or learn how to manage my money on my own. And I decided to learn to do it myself. Yeah. But what’s great about Wealthfront is it would have solved my problem. Mm hmm. It would have given me great financial advice without charging me a massive fee and without the type of biases that traditional financial advisors are. So the product had a very personal relevance to me, and that became even stronger as LinkedIn went public. And a lot of my colleagues, you know, ran into the same situation that I faced, you know, more than ten years ago. Mm hmm. And because they knew that I was into this stuff, I was managing my money. They kept coming to me for help.
Bronson: Mm hmm.
Elliot: And I realized that, you know, one of the best pieces of advice I could give them is tell them to check out. Well, you know, because I knew they kind of would be covered. And so it sort of brought home to me how important this product was and how much value it could create in the world. And that’s really what excited me.
Bronson: Yeah. Now, this is kind of a side note, but a kind of fun fact. So there’s a questionnaire that you fill out when, you know, to kind of assess your risk tolerance that you mentioned earlier. But then after the fact, you can change your risk tolerance. You can say, well, I’m actually a little more risk here than the questioner said, or I’m actually a little more, you know, prude than it says. I’ve heard. And you can tell me if this is true or not, that actually younger people lower their risk tolerance after the fact. And older people raise their risk tolerance after the fact. Is that what the numbers have shown?
Elliot: Yeah. Well, to be honest with you, very few people actually change. Okay.
Bronson: So a huge data set either way.
Elliot: So so whatever data that there is, it’s pretty sparse. Yeah. But, yeah, you know, setting the right risk score and having the right risk tolerance is actually a very complex problem. We try to do a good job with the questionnaire, but, you know, we know that not in all cases are we getting it right. And in some cases, as people see their investments perform, they may recognize that they can’t tolerate that much risk or they want to push it a little bit. Yeah. And so it’s something that we continue to think about. I think, you know, one of my themes for this year in terms of the wealth of our product is really to try to get better at estimating your risk score and your risk tolerance without creating a lot more work for you. You know, the users signing up.
Bronson: Yeah, absolutely. Now, let’s talk about your growth strategy at Wealthfront. Sure. Sure. It’s going to be, you know, very different than LinkedIn, given that you’re dealing with a much smaller pool of potential customers. You know, LinkedIn, you know, the world is its oyster. You know, Wealthfront, successful people in the world is it’s always terminal. So you kind of constrain who your market is. And it’s a very different kind of product. You know, it’s not something you come in, sign up and then you’re done. You can network with people. So what’s your growth strategy going to be for Wealthfront, you know, compared to some of the things you’ve done in the past?
Elliot: Sure. Absolutely. So. Well, one thing to remember is that LinkedIn was a niche product, too. You know, it may seem like the world is its oyster, that it caters to everyone and it certainly caters to everyone I know. But it really is only focused on professionals, not on people in a certain position with a certain income and those kinds of characteristics. That’s one of the big reasons, for example, why LinkedIn has 200 million members while Facebook has billions. Yeah, it’s not because Facebook and LinkedIn use different strategies for growth. We largely did very similar things. It’s because the Facebook product appeals to literally everyone, as well as friends and family. Whereas the LinkedIn product really only appeals to people that care about a certain level of professional success, care about career, which is, you know, I started to believe for me sometimes it’s not true.
Bronson: Yeah, right.
Elliot: And so, you know, Wealthfront is very similar in that way where again, it’s not for everyone, but it’s, it’s not a super niche either, you know, I think because we’re democratizing financial advice with Wealthfront, we’re actually a useful product to anyone that has some money to invest. You know, it could be as low as $5,000, but in the stock market, we don’t need just people with a certain level of assets to sign up. So it’s broader than it May 1st appear. Yeah, the big difference, of course, is that LinkedIn was a product where, you know, virality were touching. Other members of LinkedIn or nonmembers was a key part of what you did in the product right on LinkedIn, as you build out your network, you actually helped LinkedIn grow while front is falls into kind of the the second of the categories I mentioned earlier where it’s a product that works just great even if no one else is using it, you know, will manage your money perfectly, even if there’s no one else that’s using the service right now. So it really takes a slightly different approach. You know, there’s less emphasis on morality and more emphasis on more traditional techniques of acquiring users such as advertising and, you know, those kinds of techniques. So it’ll just cause us to overlay certain techniques that LinkedIn didn’t have to use, but that we’re going to have to use a lot.
Bronson: Yeah, absolutely. Now, when I when I try to imagine the growth of Wealthfront, the way I kind of imagine it in my mind is, you know, someone uses it and literally face to face, they tell a friend about it. It just seems like uniquely perfect for kind of word of mouth, you know, spread because it is, you know, it’s people with money hanging out with people with a lot of money talking about how they’re managing their money. And it’s great. Anything they found. Do you foresee that being a huge part of the growth of this thing?
Elliot: Oh, absolutely. It is already I know we get referrals via via word of mouth consistently. In fact, we have an invitation system on the Wealthfront website where you can invite your colleagues, your friends to join of friends and you know, both you, the investor and person invite get a little bit of a discount. Primarily what we see happening in that invitation system is people use it to follow up on a discussion that they already had in person.
Elliot: Right. They talk about it upfront, they discuss it, and then the invitation system is kind of the way they they follow up and kind of complete that referral. Yeah. And so absolutely. I think there will definitely be some of that. I think, you know, word of mouth and referrals are just amplifiers and everything that’s going on. So this site won’t grow just on word of mouth alone. But as we grow through other channels, as we launch new products and get press coverage, as we buy ads to attract users, you know, word of mouth will continue to amplify the effect of all those actions.
Bronson: Yeah. Given the lack of virality like you mentioned earlier, as opposed to something like a LinkedIn, does that make you want to focus a lot on product? You know, because you’re the VP of product and growth, right? It seems like given this kind of product, you’re going to be putting a lot of emphasis on the product part of that title. Do you think that’s fair to say?
Elliot: I think absolutely. I think the key way that we get to the right place with Wealthfront is that we have a great investment management product. Mm hmm. Right. And that it’s so good that everyone wants to sign up. Yeah. And then we just have to get the word out to make people aware of how great the product is. And so absolutely, obviously, we’re going to have to balance that with things we do purely to drive growth. But it’s finding the easiest way to sign new clients up or advertising the site. But there is going to be a very heavy emphasis on creating a truly great investment.
Bronson: Yeah, totally. Now, let me ask you this. You know, when I think about Wealthfront, you know, I look on the homepage and you kind of got your testimonials there at the bottom, all the photos of people that use it. And you can roll over the photos and see where they work and who they are. And a certain theme emerges really quickly. They’re all in Silicon Valley. They’re all in the tech startup scene. It’s kind of obvious who your initial user base is right now, who the early adopters of Wealthfront are. Do you think you can have a hard time kind of crossing the chasm, you know, to to quote the famous book. Going from that audience to kind of mainstream America that doesn’t know about startups, they don’t go to these cocktail parties. They don’t talk about who’s managing the wealth and if they still have a little bit of money. Do you think it’s going be a problem kind of crossing that chasm or are you thinking about plans of how you’re going to do it? What’s your thoughts on that?
Elliot: I think it will certainly be a challenge when we come to it. I think we have several things going for us. One is that people actually out there in the US, you know, look up to Silicon Valley is as kind of a bastion of innovation. And so the latest and greatest that comes out of Silicon Valley typically gets a pretty good reception.
Bronson: It’s good to point.
Elliot: Out there in the world. And so I’m certainly counting on that to help us. But we’ll see. I think, you know, we started with Silicon Valley because it was a community that we knew, a community that we could serve well, and a community that was going through a wave of IPOs that were generating significant assets that people needed to manage. And so that’s worked out well for us. But as we grow out of that community, certainly, Wolf, will face a challenge that we’ll have to overcome.
Bronson: Yeah. You know, Eliot, this has been a great interview. Let me ask you one last question. It’s kind of a high level question. You can take it in any direction you want. But what’s the best advice that you have for anyone that’s trying to grow a startup? You’ve been there. You’ve done that. What advice do you got for them?
Elliot: Well, it’s very different than the advice I would have given myself many years ago. But these days, one of the best ways to grow is to learn how everyone else is doing it. I mean, that’s honestly true. There’s so much material out there, so many examples of people that have done this well, that you’re doing yourself a disservice if you don’t, you know, dove deeply into how everyone is doing it. Read all the blogs, read all the Quora answers, watch the interviews, but also seek out people in person and talk to them and learn from them, you know, go to conferences or buy people coffee or whatever you have to do. There’s enough material out there. There’s enough knowledge and wisdom out there on how to do this that I think if you’re trying grow today, tapping into that wisdom will really accelerate progress.
Bronson: Absolutely. Well, Eliot, thanks again for coming on the show. It’s been an incredible interview and we’re so glad to have you on.
Elliot: Thank you very much.
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