Buying Back a Business: ShareBuilder 401k CEO Stuart Robertson (Part 2)

Sramana Mitra: What happens next?

Stuart Robertson: I jumped into telecom for seven years. At that time, telecom was going to be deregulated. They were hiring all these marketers. My first job out of grad school was running what is now part of AT&T. I was launching caller IDs and consumer voice mail.

I next jumped over into online travel. I started as a consultant for Orbitz. I was filling in for a friend. I was just loving it. She came back from maternity leave after five months. Expedia Corporate Travel was looking for someone to help them launch that whole new arena. They have done consumer products, but they haven’t done B2B.

They recruited me over to Seattle. It was a blast. You had founders there. That process is what brought me into Sharebuilder. They were about to launch this product, and they were an online brokerage trying to help the average American. They were trying to do a startup within a startup.

The Board Members were from Expedia and they were like, “You’ve to talk to Stuart.” They became relentless and they said, “You got to come on this thing.” I left to do Sharebuilder.

Sramana Mitra: Sharebuilder is a spinout of Expedia?

Stuart Robertson: One of the board members at Sharebuilder was one of the heads at Expedia.

Sramana Mitra: I see. It was an independent company that was looking for somebody to run it.

Stuart Robertson: Exactly. I went over.

Sramana Mitra: This is an entrepreneur journey story. What is the genesis of Sharebuilder? How did they build the company? At what stage did you get involved?

Stuart Robertson: Sharebuilder launched a few years before. They started an online brokerage. At that time, they were looking to see how they can expand into helping people save. That was when 401k came to life. This is VC-backed. That’s how it all began. This concept of, “can we scale a 401k online and expand the marketplace?” was the genesis.

Sramana Mitra: It was venture-backed and was already in business for several years when you got involved.

Stuart Robertson: This is basically a startup within a startup.

Sramana Mitra: Sharebuilder is one company and Sharebuilder 401k is another company?

Stuart Robertson: Sharebuilder Corporation ended up holding two different businesses. One was a broker dealer, which is Sharebuilder.com. It no longer exists. The other is Sharebuilder 401k, which sells 401k plans. 

Sramana Mitra: You launched this 401k business?

Stuart Robertson: Yes, I was brought in to get it up and running.

Sramana Mitra: Tell me when you launched it. Strategically, what were the underpinnings of that business?

Stuart Robertson: There are about 30 million businesses in America. There are 24 million that are self-employed or sole proprietorship and 6 million that have employees, but you have less than 600,000 401k plans, which is the predominant retirement offering in America.

401k plans were paper-based. You’d work with a financial advisor. If you’re a small business, the only reason that financial advisor might help you with the 401k plan is because they have the wealth management of the owner. They weren’t going to make much money off of this 401k plan for years.

If we can take this online and take out the complexity of managing an investment roster for a small business and back it with high-service skilled people, would we be able to scale this? So a business could have a low-cost benefit 401k that they can save with. That was the big bet. No one had proved that.

We were the first to build an online quote, purchase, and install process for 401k plans. We are the first to use all index funds. What a lot of folks don’t realize is that when you buy a plan, the owner then has to say, “What is the investment roster?” A lot of times the financial advisor would say, “Here are a hundred funds. We suggest these 20.” The advisor might get paid some of those funds.

We have our own CFA. We just take that off and shoulder it. They don’t have to pick the funds. We just tried to streamline everything around what makes a great plan. What allows a business of one to have just as great a plan as a Fortune 100 firm. That was the whole genesis and thinking of what we wanted to bring to market. It remains to be the core of what we are doing now. 

This segment is part 2 in the series : Buying Back a Business: ShareBuilder 401k CEO Stuart Robertson
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