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Aaron Klein. His career has largely been in the intersection of finance and technology. As co-founder and CEO at Riskalyze, he led the company twice to being one of The World\\u2019s Top 10 Most Innovative Companies in Finance by Fast Company Magazine. Today, over 150 riskalyzers served thousands of advisors. Aaron has served as a Sierra College trustee and in his spare time, co-founded a school project for orphans and vulnerable kids in Ethiopia. Investment News has honored him as one of the industry\\u2019s 40 Under 40 executives.

Famous Five:

• Favorite Book? \\u2013 Extreme Ownership
• What CEO do you follow? \\u2013 Ben Horowitz
• Favorite online tool? \\u2014 Twitter, Evernote and Uber
• How many hours of sleep do you get?\\u2014 7
• If you could let your 20-year old self, know one thing, what would it be? \\u2013 \\u201cThe most important skill that you will ever have in starting a company is making great hiring decisions\\u201d

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Time Stamped Show Notes:

• 01:15 \\u2013 Nathan introduces Aaron to the show
• 02:07 \\u2013 Riskalyze\\u2019s mission is to empower the world to invest fiercely
• 02:20 \\u2013 An average consumer struggles to invest and understand the concept of investing
• 02:39 \\u2013 Warren Buffett said \\u201cStock for the one thing the American consumer refuses to buy when they were at their cheapest and only wants to buy at their most expensive\\u201d
• 02:48 \\u2013 Riskalyze invented risk numbers that they can create for short-term
  • 03:06 \\u2013 Riskalyze\\u2019s focuses on the short term
  • 03:43 \\u2013 The harm usually comes from short-term decisions
• 03:58 \\u2013 Riskalyze needs a context to understand how to make a good short-term decision
• 04:11 \\u2013 Investors who don\\u2019t use Riskalyze would normally ask if the 2% down on their portfolio is still okay
  • 04:18 \\u2013 8% of that portfolio is actually normal
• 04:56 \\u2013 \\u201cWe tend to stereotype people based on their age\\u201d
  • 05:12 \\u2013 The typical questions in the industry would often base on the age of the investor
• 05:41 \\u2013 Riskalyze has a team of academics who delve into the data and methodology behind the risk number
• 06:00 \\u2013 Riskalyze\\u2019s technology helps the advisor assess how much risk they can handle in a quantitative-objective way
• 06:27 \\u2013 Riskalyze works with financial advisors and helps their investors become more successful
• 06:45 \\u2013 Riskalyze is a SaaS business
• 06:48 \\u2013 Riskalyze is launching their auto-pilot platform
• 07:19 \\u2013 Pricing starts at $145 a month
• 07:36 \\u2013 Riskalyze was launched in 2011
• 07:41 \\u2013 Prior to Riskalyze, Aaron was in a brokerage firm and saw firsthand how poorly average investors thought about risk
• 07:54 \\u2013 Aaron told his financial advisor friend about the risk and they founded Riskalyze
  • 08:07 \\u2013 Equity was 50/50 at first
  • 08:27 \\u2013 They\\u2019ve raised and brought in investors along the way
• 09:03 \\u2013 Investors have seen a good return of up to 10X
• 09:48 \\u2013 Riskalyze is currently focused on going to financial advisors first
• 09:59 \\u2013 Riskalyze was capital efficient
• 10:02 \\u2013 First round of funding was around $420K all equity
• 10:23 \\u2013 Riskalyze is a substantial business and their ARR was a multiple of the capital deployed
• 10:40 \\u2013 Total funds raised to date is $24M
• 11:10 \\u2013 Team size is 175 from 90 last October
• 11:24 \\u2013 Based in Auburn, California
• 12:21 \\u2013 Riskalyze currently serves 19K advisors
  • 12:25 \\u2013 There\\u2019s no free plan
• 12:42 \\u2013 Advisors are known to be money efficient
• 12:59 \\u2013 Riskalyze tried a free version
  • 13:23 \\u2013 The plan was originally $99 a month
  • 13:40 \\u2013 After they tested to push the price up, their conversion rate tripled
• 14:10 \\u2013 Gross annual churn
• 14:32 \\u2013 Riskalyze typically loses an advisor to retirement or death
  • 14:48 \\u2013 Riskalyze found a solution for retirement
• 15:33 \\u2013 Aaron doesn\\u2019t have the number for their net expansion RPU yet
  • 15:50 \\u2013 Riskalyze rolled out their advisor product in March 2013
  • 15:53 \\u2013 Then, they went into hyper-growth mode, from 380 customers to 2000
  • 16:24 \\u2013 They lost track of the data with only 4 people
• 16:50 \\u2013 Cost to acquire new customers
• 17:10 \\u2013 LTV
• 18:00 \\u2013 Nathan recommends Klipfolio as a dashboard for Aaron
• 18:15 \\u2013 Aaron rolled out a premier tier of Riskalyze in February which is $225
• 19:18 \\u2013 Average MRR
• 21:30 \\u2013 Aaron shares why Warren Buffett recommends investing in Vanguard
  • 21:31 \\u2013 Vanguard fits the people who are in their 70s and 80s
• 22:04 \\u2013 Buffett also said that going to an advisor isn\\u2019t necessary
• 22:18 \\u2013 Aaron believes that Vanguard should still be a part of a person\\u2019s portfolio; but what about someone who is a risk 45 and Vanguard is a risk 78?
• 24:45 \\u2013 Nathan never went to an advisor as he found them fishy
• 25:15 \\u2013 Aaron doesn\\u2019t have any financial advisors at the moment but he will in 2-3 years
  • 25:20 \\u2013 Aaron believes that an advisor can help him maximize the money that he has for the future
  • 26:08 \\u2013 The reason to use an advisor
  • 26:32 \\u2013 Riskalyze wants people to get risk aligned with the risk they can handle
• 26:48 \\u2013 Advisor charges a flat fee based on the investor\\u2019s asset
• 27:34 \\u2013 The value of human vice
• 29:14 \\u2013 The Famous Five

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3 Key Points:

1. If an average consumer knows his risk number, he will be more confident to invest.
2. An advisor will not only help you manage your money, but show you how you can grow it.
3. Focus on your hiring\\u2014this will contribute to a fast-growing company.

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Resources Mentioned:

• The Top Inbox \\u2013 The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
• Klipfolio \\u2013 Track your business performance across all departments for FREE
• Hotjar \\u2013 Nathan uses Hotjar to track what you\\u2019re doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
• Acuity Scheduling \\u2013 Nathan uses Acuity to schedule his podcast interviews and appointments
• Host Gator\\u2013 The site Nathan uses to buy his domain names and hosting for the cheapest price possible
• Audible\\u2013 Nathan uses Audible when he\\u2019s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books

Show Notes provided by Mallard Creatives