[MUSIC] >> Welcome to Category Visionaries, the show dedicated to exploring exciting visions for the future from the founders or in the front lines building it. In each episode, we'll speak with a visionary founder who's building a new category or reimagining an existing one. We'll learn about the problem they solve, how their technology works, and unpack their vision for the future. I'm your host, Brett Stapper, CEO of Frontlines Media. Now, let's dive right into today's episode. [MUSIC] >> Hey everyone and welcome back to Category Visionaries. They were speaking with Dan Beck, CEO and co-founder of 401Go, a retirement benefits platform that's raised over 14 million in funding. Dan, welcome to the show. >> Thanks, Brett, happy to be here. >> Let's go ahead and just kick off with a quick summary of who you are and a bit more about your background. >> Sure, so I've started a number of businesses prior to 401Go. My brother, who is one of the co-founders here, he and I for over a decade have been building businesses. Most of my prior experience is in more consumer products, so we did a lot of everything from e-commerce to one point, we had a consultancy in China with an office there, doing a lot of importing from different parts of the world. A lot of Southeast Asia, but even Pakistan, Italy. I still have a couple of businesses outside of 401Go, but right now this is my day job. >> What's the most random business that you have, would you say? >> I had a food truck. I had an ice cream food truck that after two seasons finally threw in the towel. Most businesses I've been able to, part of being a serial entrepreneur, is trying to figure out how to fill early with expending as little as possible. So not every business that I've started has turned into something successful. But the food truck was probably one of the worst. I think in total, we lost over 100k on that one, but it was still a lot of fun. At the end of the day, it's not just about money, that's not why I'm doing this. But yeah, we had a food truck, I've got some little kids, so they thought that was pretty cool at the end of the school year. I showed up with the food truck and served ice cream to their classes and that sort of thing. Well, we had it. It was fun, but I got admitted. I wasn't too sad to sell that one off, or essentially the assets. >> And looking through your LinkedIn, it looks like at least three of them had exits. What's the common pattern there? Is there a common pattern between those three that did have an exit? >> Not really, so the biggest exit was one company, it was called TechMat. It was firearm cleaning accessory. And that one, and it started, it was very much direct consumer, but eventually it got to the point where 90% of the cells were wholesale. Whereas some of the other businesses were more kind of mixed models, so a little bit of wholesale, a little bit of direct consumer. So for me, a lot of the reason I would start maybe a new business or a new idea was to kind of explore these different distribution opportunities. I wanted to know what it was like to sell and do like a Kickstarter. And so that's where I launched Renovo. It was a water filter product, pretty revolutionary for kind of what we were doing. So I'd say each one of these was an experiment and all three were different. Maybe the one common theme is they were related to outdoor sporting goods. Once you build relationships with buyers in a certain category, it just makes sense to kind of stay true to that as much as possible. Kind of leverage that additional opportunity. >> And then what happened with 401 GO? That sounds like a very different product than you were previously in, or very different business than you were previously in. How did you make that jump? Talk to us about that jump. >> Yeah, so I had a very blue collar upbringing. I was taught to really be frugal, work hard, a lot of good life lessons, but I didn't get a lot of education around finances. And so it wasn't until college that I took a personal finance class. And kind of at that point, that's when I became, say, a financial nerd, where I realized how I could get money to work for me. And it just kind of changed my mindset in the way that I viewed money. It was such an eye-opening experience for me that oftentimes, later when I have these different businesses, if an employee came to me, maybe asking for a payday advance or just needed some help financially, I would help them out, but also kind of use that as an opportunity to try to help them see money differently. And I thought if we had a 401K and we had a generous employer match, I bet I could get just about everybody here saving for retirement. And it's a really good way to start kind of that overcome what I call that first dollar hurdle. Because oftentimes, it's not until you have a few hundred dollars in the account. And you can see how that grows as the stock market appreciates that you kind of catch that excitement of going, wow, this is incredible. I'm starting to build a nest egg. And so I feel like the sooner someone can figure that out, better off they're going to be. And so this was something that my brother and I, we wanted to offer this for our employees. And we had tried to set up 401K benefit a couple of different times. And the second time, we were about two weeks in, and then I learned about what a fiduciary was and decided as a small business owner without like an HR team to help administer this benefit, it was too much to take on. And so we ultimately abandoned the idea. And a few years later, it just kind of stayed with me. I went to lunch with a friend who's a financial advisor. He had just taken a new position at a benefit broker to set up their own kind of internal 401K division. And so he and I were talking about kind of some of my experiences. And I was asking him, why is this such a complicated thing for small businesses? And after an explanation, he kind of mentioned, man, there just really are no good solutions for small businesses. And so as an entrepreneur, kind of got the wheels turning and I started looking at the landscape. And we really spent probably about a year looking at this opportunity, evaluating it before we finally decided to write that first line of code. After that line of code, what did the first six months look like? So a lot of it was not having any prior industry experience. Number one, it gave us a fresh perspective, which was especially helpful in those early stages. But at the same time, the challenges, you don't know what you don't know. And so we brought in some consultants to help us and provide some guidance. And really that first six months was spending a lot of time kind of trying to close what I call the feedback loop. Whenever we launched new products, new brands, I tried to move to market as quickly as possible so that I could immediately start to get feedback on the products that we were offering. And so we took that same approach with 401Go. The first company that we set up was one that I owned. But the companies that we set up after that, we had them associated with financial advisors. And so that gave us the benefit of having these industry partners from a distribution standpoint. But also they were able to quickly show us things that we needed to further develop, what needed to change. So we really just spent definitely more than the first six months, I'd say the first year and a half. There was a lot of just kind of continual change and developments that we made in partnership with, you know, mostly the financial advisors that we were working with at the time. This show is brought to you by Frontlines Media, a podcast production studio that helps B2B founders launch, manage and grow their own podcast. Now, if you're a founder, you may be thinking, I don't have time to host a podcast. I've got a company to build. Well, that's exactly what we built our service to do. You show up and host and we handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io/podcast. Now back to today's episode. Why do you think this market is so underserved? Is it just due to the complexity or why is no one serving this market? The complexity is certainly a big factor. But as we really looked into it, a lot of the complexity arises from the way that the industry's approach this benefit. So it's been largely corporate America that kind of pioneered 401ks, if you will. And so you're typically dealing with separate record keeper, a third party administrator, separate custodian, then you have a financial advisor who's the fiduciary on the plan. And then some of the time, even more service providers are layered on top in order to offer that benefit. So that ended up itself trying to work with three or four different vendors with different fee schedules, getting everything synchronized, bringing in whoever's doing payroll, if that's being done internally. Or if you're using a payroll company, getting that all connected is extremely complicated. It also makes it so that the financial advisors who are predominantly the ones outselling 401ks to businesses, when you have all these different service providers, they're really left to charge just an asset base fee. And so the problem with small businesses and especially startup plans, they start with zero assets. And if there's few employees and especially employees that aren't making a lot of money, which is oftentimes the case of early small businesses, it's going to be years before that advisor can monetize that. So naturally, they have zero inclination prior to us, you know, realigning some of those incentives. They had zero inclination to go after the segment of the market. A lot of that has shifted, especially because there are now mandates in 17 states have passed legislation. About half of those are, you know, they've started implementation. So for example, in California, employers with five or more employees, they have to offer retirement benefit fairly soon. If not, you know, I can't remember all the different timelines, but it's almost to the point where as soon as you hire your first employee, you have to offer retirement benefit. So this has created a lot of demand. And now those industry incumbents that previously didn't really care so much about this end of the market, or really, they couldn't make the financial aspects of it work out, there's now interest. And so that's really where we've certainly benefited from being in the right place at the right time. Did you think regulation like that was ever going to come back in 2017 when you founded the company? Oregon saves was some legislation that was already or a remand date that was already in place. And so we felt that there would be more of that. But honestly, that really didn't go into our decision-making at the time. At the time, we felt that, hey, there are probably a lot of small businesses that were in a similar situation as ours. And that was sufficient demand to go after this. You know, it just got that much better once all these other states started passing similar mandates. When you're having conversations with your customers, what are the top misconceptions they tend to have about retirement benefits? First and foremost, I've got a lot of friends that are entrepreneurs and have businesses. And, you know, when I first started doing this, they'd be like, "Oh, how small a company do you support?" And I'd tell them companies are small as one. And they wouldn't set anything up in maybe a few months or a year or so later. They'd ask me again. And I have kept telling people over and over again, like, we've really simplified it. I know benefits are traditionally very complicated to set up, but you can literally set this up in 10 or 15 minutes. You don't have to talk to anybody unless you want to. We certainly have people here to help. Most of our users have us kind of guided them through that set of process. But you really could do it on your own in as little as 10 or 15 minutes without speaking to anybody. So the biggest thing is just most small business owners, if they've been around for some time, they may have looked at this and realized it's expensive and it's complex, but that's changed. We're not the only ones in this space. There's others that have also kind of helped to close that access gap for small businesses. But first and foremost, it comes down to complexity. And then obviously, when complexity is high, cost is generally high as well. So we've been able to drive down both the cost and the complexity. And so I think it's just a matter of more businesses realizing that this is a lot easier to offer than maybe it was five or six years ago. What's the approach to marketing? Or maybe a better question there is, what's the marketing strategy look like today? So we spent the first couple of years evaluating all the various ways we could go to market. So that involved selling direct. So trying to find small businesses or medium-sized businesses that needed this benefit, working through partners. So from day one, we were very advisor-centric, financial advisor-centric. We felt that the optimal outcomes were going to be a combination of a high-tech platform and high-touch service that you get from an advisor. So we want to both. And that is unique because a lot of times FinTechs are operating kind of at odds with financial advisors and we felt we wanted to bring them along. So that also provided a unique distribution channel. So we've been able to really do that from day one. We've also worked with Benefit Brokers, CPAs, really anybody that has a relationship with a small business. But we realized maybe a year and a half, two years ago, the best go-to-market motion was just leveraging those partnerships. So we kind of abandoned the direct go-to-market approach where we're trying to find businesses. We still have a number of direct businesses that come to our website and will sign up directly with us without a partner. But right now about 80% of the plans that we set up on an ongoing basis come through either a financial advisor and then another big kind of emerging channel for us are also payroll companies. So oftentimes, if you're a small business and let's say maybe you get a letter saying you need to comply with this mandate or you have employees that are asking about this benefit, you would go to your payroll supplier because oftentimes they have other benefits that they can offer beyond just core payroll products. What do you think has been the most important marketing decision that you've made? Was it to switch gears there and really focus on marketing for partnerships? Or what would that be? I really feel like it was building a platform that was advisor-centric. I always talk about codes of commodity. It's easy to write code that interfaces with APIs and other technology. But it's really hard to build a platform that's going to get the approval from a bunch of different unique individuals from different backgrounds that all have kind of their own unique go-to-market and service profile. And so for us to take on such a difficult challenge that early on, it made it so that we had to build out an extremely robust product, which today has really kind of catapulted us to the front in terms of position when it comes to customer satisfaction, advisor adoption, number of metrics that we use to kind of measure our efficacy within the industry. So it was certainly hard kind of making that approach because again, when you're trying to listen to several hundred different voices and figure out how that could influence the product roadmap, it was a challenge. But I'm certainly glad that we did that because it's also made it so we can really easily plug into really any partnership at this point because we've done the hard work first. This show is brought to you by the Global Talent Co., a marketing leader's best friend in these times of budget cuts and efficient growth. We help marketing leaders find, hire, vet, and manage amazing marketing talent for 50 to 70 percent less than their US and European counterparts. To book a free consultation, visit globaltalent.co. Can you give us an idea of the growth that you're seeing today? Yeah, our month over month growth is about 8 to 10 percent. We're starting to see a lot of acceleration now as we kind of bring on these bigger partnerships where they're apparel companies that have existing 401ks on maybe these older platforms where they're having service issues, the costs are too high, there's challenges with administration. And so some of these providers that we've slowly been building relationships with over the past several months, they're now coming to us and saying, "Hey, we've got a block of several hundred plans that we want to move over." So we are seeing growth accelerate. But really since day one, we've been very fortunate that we've had very strong positive growth really every month since our very start. I'm sure any founder listening in would love to be able to answer that question in the same way. If you reflect on the success and the growth that you've had, what do you think you've really just nailed and really gotten right as an organization? A lot of it comes down to the level of service that we can provide. So oftentimes I feel like when a user or a small business owner, somebody's engaging with a provider that is predominantly, let's say digital or digital first, there's an expectation that there's going to be perhaps low service. So it's like, okay, it'll be pretty efficient, a lot of automation, integrations, all of that. But if I need help, it's going to be FAQs and emails and long response times. And our goal has been, let's provide that very high tech efficient automated experience, but then also the same level of service that you would get from a small five person 401K firm down the street. And we've been able to do that. So by spending so much time working on these not very sexy back end, back office administrative functions, automating those and just doing a lot of kind of that hard work upfront, it's allowed us to make sure that when we're hiring people, they can spend more time being proactive when it comes to customer service, identifying issues before they actually become real issues. And so just our general approach to the product, the automation and the way that we bring in people has made a world of difference to where, you know, if you go and compare, let's say you know, just Google 401 Go versus pick your competitor, we're always going to rank number one and a lot of that is a testament to number one, the people that we have, you know, takes people to build an incredible product and it takes people to offer this great service. But the nice thing is because we have such a robust platform, we can hire client success managers that are focused that are really just exceptional when it comes to working with people, even though most of them have almost little to no 401K experience, they're incredible at their jobs. And we certainly have those 401K experts, we call them plan specialists that are there for our client success managers to leverage when needed, but we've really built a very extremely robust platform that allows us to, what we kind of have is saying, we automate everything but relationships, you know, it's a big deal for us. If you call in to any of our help numbers, you're not going to hear a dial tree that says push one for this, two for that, you'll talk to an actual human, everybody has dedicated client success managers, dedicated email and direct dial numbers. And so we really provide an incredible level of service that even the incumbents that they kind of stake, they can't necessarily claim automation or technology, we're even able to run laps around them just because of how proactive we are with compliance testing and a lot of the stuff that's associated with 401K administration. What about on the topic of fundraising, really just lessons learned? So as I mentioned there in the intro, you've raised over 14 million to date. What have you learned about fundraising throughout this journey? It's going to be a lot easier if you have some traction. So for us, it wasn't too difficult. It was difficult. I just speak to probably several hundred VCs in order to get the term sheets that we did and have the successful rounds that we've had. But a lot of that is because we were able to bootstrap this for the first several years. We had about probably a hundred clients on a platform. We could show a good year or two of success with some of these clients to those early investors. And so it made it a lot easier. Also, the fact that we had some prior experience. The other thing too is finding every market, no matter how small, is going to have some startup ecosystem, there's going to likely be associations or VCs that operate in that area. And oftentimes just calling them up and I think the saying is it's like ask for advice and get money, ask for money and get advice. So some of the time calling up some of those first VCs and say, "I'd love to pitch you." But more important than asking for money, I really need to understand how I can successfully fundraise in my area with what I'm doing. And I find most VCs are very open to kind of providing that advice and that mentorship. And they really have to because it is a fairly tight-knit community wherever you are. So we're here in Utah and there's a pretty good startup community here. And so these VCs have a reputation to maintain. If they're not trading these entrepreneurs, no matter whether they do successfully fundraise or not, if they're not trading them well, that comes back to bite them. And so leveraging their experience is beneficial. So it might be hard to connect with them directly through email or over the phone. It might mean finding an event that they're at or some networking event, but just getting in front of them and asking for advice I think is really invaluable. And then pitch every opportunity you have, like even though we're not fundraising now, I've probably got, I'm still pitching, I go out to some of these conferences and they ask us to pitch. And I know a lot of founders will say, "No, we're not fundraising now, I'm always pitching." And number one, it makes kind of my pitching skills better, but then also, you never know. Like it helps to build relationships for that next round, whether it's in two years, year and a half or whenever that may be. I'm building those relationships now. I'm getting us ready for that next fundraising opportunity when or if it should come. Final question for you, let's zoom out three to five years into the future. What's the big picture vision look like? The big picture vision is we feel that we're doing some really innovative things, not just from kind of a technology or go-to-market standpoint, but really even the way that we view participants. So some really good data that I love to share is when we look at the youngest cohort that we track, so that's 25 and under, traditionally, industry average participation amongst that age group is going to be like 20%, or they have access to a 401(k). For us, it's over 52%. So we're doing really well with a segment of the working population that's always been underserved. Also, when we look at the median account balance for that same cohort, industries around 1000, for us, it's over 4000. So we've done a really effective job at overcoming that first dollar hurdle. And so we feel like a lot of kind of the way that we view the company that's offering the 401(k) and the participants, it's somewhat unique. And we hope that that has a ripple effect throughout the industry so that we can drive up participation rates overall. And to me, that's a successful outcome. If we can do that, then naturally, we're going to have a very valuable company with a lot of enterprise value if we can significantly influence an industry in that way. And so for us, that's the ultimate goal. We've already had some acquisition interest, and that's ongoing. I feel it's a little early for us to be acquired, but those conversations, like I said, they've started. And whether we go public or we're acquired, whatever that might look like, my hope is that we have kind of a lasting impact on the industry. And therefore, those individuals that have traditionally been underserved. Amazing. Love the vision. All right, Daniel, we are up on time. So we're going to wrap here. Before we do, if there's any founders that are listening in that want to follow along with your journey, or maybe some founders that are interested in being a customer, or should they go? I'm going to stay pretty active on LinkedIn some of the time, honestly, I can't get to most messages, but I do try to post that regularly, both information related to 401Ks, financial services, but then also just kind of the journey of entrepreneurship and what it is to be an entrepreneur. So you can find me on LinkedIn, Daniel Beck, or Dan Beck, 401Go. And then also our website, 401Go.com, that's a great place to go to learn, or if you want to get started, you could anytime get your 401K set up. Amazing. Love it. Daniel, thanks so much. This episode of Category Visionaries is brought to you by Frontlines Media, Silicon Valley's leading podcast production studio. If you're a B2B founder looking for help launching and growing your own podcast, visit Frontlines.io/podcast. And for the latest episodes, search for Category Visionaries on your podcast platform of choice. Thanks for listening, and we'll catch you on the next episode. [MUSIC]
