FULL TRANSCRIPT (AI GENERATED):
Finimize Studio (00:01.729)
Hello, Dave. I'm very well. How are you today? Well, thank you so much for joining us. Dave, I want to get straight into it because you're an engineer on the team that built the very first iPhone. It's probably the product that's had the most impact on the world in recent history. Can you just tell us what that experience was like? What lessons have you learned from your time at Apple that stick with you today?
David Myszewski (00:03.02)
Hey Max, how are you?
I'm doing great, thank you.
David Myszewski (00:23.308)
Yeah.
David Myszewski (00:27.246)
Yeah, I could probably fill a whole podcast with that, but that's a, it was a fantastic, it's a fantastic experience. I mean, we was able to work with some of the best engineers and designers on the planet. And I think one of the things that really struck me in working on it was just how small the team was. You know, it was maybe 40 or so people behind a closed door in terms of people who were working on the UI, maybe 400 people in total. And we did an all hands with everybody, which is not that much bigger than Wealthfront.
Finimize Studio (00:30.881)
We've got time.
David Myszewski (00:56.366)
And I think one of the lessons that really has kept with me is how much, if you have a very talented small team, you can accomplish way more than having a big team of average talent. And so that's one of the things that I always look for is having a team that's very, very talented and great at what they do. And if you do that, I think you're going to accomplish a lot. And I think one of the other lessons that I learned on the iPhone was how much
If one has a surprise, how much one can really expand the market. And, you know, after we announced the iPhone, we all came back to the office the next day. We were pretty happy. We saw lots of nice articles. But then one thing really caught our attention, which is that we have a bug tracker and we saw all of these requests for, can I build an app? Can I build an app? Can I build an app? And it not only was highly requested, but at the time people were having trouble finding anything else that had ever been requested that much in history.
And then when we launched the iPhone, we had people hacking the iPhone so that they could build apps on it. And they were coming up with their own software development kit so that they could build apps. And I think that's one of those things where you just saw the pull of demand really ripping a feature out of your hands. So not only did people buy the product, but you had all of these developers who were just absolutely desperate to build apps. And so of course, Apple built the App Store the next year. And now what was the world like without apps?
running on your phone. Nobody really knows the difference anymore. And so I think that was pretty impressive.
Finimize Studio (02:28.161)
Yeah that is incredible because you think, especially for a product like the iPhone, you think it's some sort of strategic genius move. But the way you just describe it there is just such a logical step, right? You just listen to the feedback that comes in and then you give the people what they want. Did it feel like that at the time?
David Myszewski (02:46.958)
I mean, if it were only that easy, and people wanted everything, you know, when the iPhone came out, there was people didn't know if the software keyboard was going to work. Now we knew because we had been using it, we learned we were actually pretty fast at typing. So we knew that that was not a concern, but they, they wanted a faster internet connection, 3G, they wanted cut, copy, paste. They wanted all these things and you can't build them all. And so I think you have to listen to your customers, but you really have to figure out, you know,
what it is that you can do that will create the most value. And perhaps ironically, the thing that generated value for the iPhone wasn't actually the phone itself, the phone app. There were a few nice things that we did, like visual voicemail. But at the end of the day, the thing that really made the iPhone so powerful was it was putting the entire internet in your pocket in an easy and convenient way. And fortunately, we had a lot of people who wanted to build apps, and that is something that we invested pretty heavily in.
But we still, we didn't 10x the size of the team. We still had a small team all throughout. And so I think really just focusing on what your customers want. And then one of the things that I've learned over the years is that you don't just give them what they want, but often giving them more of what they want at the end of the day is really what will lead to outsize success.
Finimize Studio (04:07.169)
And what do you mean by that when you say give them more of what they want?
David Myszewski (04:10.732)
You know, I think sometimes when you build a feature and it's working well or a product and it's working well, there's almost a human natural reaction to move on to the next shiny thing. And so often, or to look at what's broken in the product and fix what's broken. And most of the time you get far more success by doubling down on what's working well and doing more of that than fixing a problem. So, you know, the original iPhone was not known for
its ability to take phone calls, it dropped phone calls at a rate that was perhaps higher than what the phone that you had previously using was. But people didn't care because they were desperate for all of the other things. You know, text messages that you didn't have to tap, you know, the one key, the two key, the three key to talk to somebody. And so, you know, I think just working on things where you are doubling down on what's working and you have to fix problems too. But.
that's often not going to lead to the market success. What leads to market success is by really reinforcing and building upon the things that are working. And so when you ship a product, you have to figure out what's working well and why, and then what can you do to really amplify that and make that even better?
Finimize Studio (05:24.033)
And did you expect the reaction when the iPhone launched out, you know, you'd already spent a long time building that product. And then when you put it out into the wild, did you expect the reaction to be that visceral and that strong?
David Myszewski (05:35.694)
No, I don't think anybody did. I mean, I think we knew that we had a product that we wanted. We had no idea if it was going to be a commercial success, you know, at the price point that it was initially launched at. And I mean, the amount of hype and conversation was just so big, it was really overwhelming. I think my understanding from the PR team is that they used to track every single article written by external reporters. And when the iPhone launched, they couldn't do it because there was so much written.
And so they had to pick and choose who they were going to track. So I think the response was just outside of anything that we had imagined. And I think it was a big honor and privilege to work on it, but also it meant that we got to go out and build the next one and make it even better and serve people even better. And so it was even a bigger responsibility because of its success.
Finimize Studio (06:24.673)
I'd just like to touch on that point where, you know, you talk about the importance of having a small team of great people. I've actually heard this quite a lot recently. It doesn't seem like a massive surprise, but what is difficult is, is how do you know when you have, like, what do you look for in a good team? What does that feel like when you're surrounded by a small, really good team? If you think back to those days, what was that that made you realize these people I'm working with are all A players and able to deliver, you know, a market changing product.
David Myszewski (06:54.318)
Yeah, I one of my first examples, I had demoed an animation that I think one of the software leaders has thought was pretty terrible. And I was feeling good because I made it better. I showed it to him. He's like, yeah, that's better. But this other thing in this demo that you showed me is slow. You can make that faster too. And it was a constant. And so as a fairly new college grad, I was maybe a couple of years out of college, that was asking for more when I kind of wanted a little compliment too.
was something, but then what I realized is that, well, actually, if he has that high of a standard for somebody who's a couple of years out of school, imagine the standards that he has for people four years and seven years and 10 years out of school who are very seasoned at what they do. And I think having high standards and making sure that people live up to them is just super important. And I think one of the things that I look for in a quality team, like how do you know that you have a quality team? I think one thing is they should surprise you.
every now and then, you know, maybe not every day. And some of the surprises will be negative. And that's actually a good thing if you have maybe one out of 10 surprises is a negative surprise. But I think they should be surprising you with the insights that they have or a corner that they saw around that you weren't even thinking about. And so I think you really want a team who I think has a diverse set of skill sets that complement one another and that...
will surprise you because of their talent.
Finimize Studio (08:25.345)
Amazing. So just as we move on, I think, you know, I'm loving hearing that, you know, a great team with a lot of talent, with a lot of focus is important, but also keep hearing you, you know, you're, you're almost looking out for surprises, good and bad in everything, whether that's listening to the customers, how the product is performing. I wonder if that's a part of your, you know, your, your expertise in product and what allows you to build new and exciting and innovative products.
So I'd like to transition a little bit into the... no, go on. Am I right there? Am I onto something?
David Myszewski (08:55.02)
Yeah.
David Myszewski (08:59.884)
No, you're right. And I think there's, I mean, I'll take you through the process that we use at Wealthfront in a little bit, but there's really three things that we look for when we launch a product. Number one is identify who is desperate. I mean, that's pretty essential. You have to know who your customers are who actually like the product. Number two is identify the surprises. So how are people using the product in ways that you don't expect? And then number three is, is there exponential organic growth?
In terms of surprises, you know, you can get smart people sitting around talking about what a product might do or should do or how people might receive it. Just the other day, you don't really know. You know, you can increase the odds of success, but you don't really know what's going to happen. And so, you know, there were a couple of examples of this on the iPhone. I think one was that I always thought the camera was pretty terrible and had never used a phone camera in my life. And...
when I finally got to take it out and use it a little bit, what I found was that, well, actually I didn't bring my other camera there. So the comparison to the other camera was absolutely irrelevant because it was the camera that you had. The camera that you have is infinitely better than the camera that you don't have. And standing in line and being able to use the internet and do work while I'm standing in line, like those are things that you don't necessarily think about when you're working on the product all the time. But when you actually are using it as a customer, you find that you're actually getting different value than what you expected.
You know, when we launched the cash account at Wealthfront, we had our biggest net deposit day in history on the first day. We had over a billion dollars of net deposits in the first few months. And I think that was just an, I think we were expecting it to be a success, but the magnitude was just far and away higher than what we expected. And when you see customers that are just rushing, rushing towards your product, you really got to figure out what's working and, and why, and really figure out how you can amplify that.
Finimize Studio (10:57.473)
So putting yourself in the shoes, I guess it's putting yourself in the shoes of a customer, but actually just being the customer. And do you take that approach still with Wealthfront? Are you using the product on a regular basis?
David Myszewski (11:08.11)
Yeah, I mean, I have every single account that Wealthfront offers pretty much, except for maybe a trust account, but that's an account that I should have. Yeah, I...
Finimize Studio (11:15.777)
And you encourage your teams to do the same.
David Myszewski (11:18.798)
I'm a big believer in, I mean, we refer to it as dog fooding sort of at Apple. I think in general, the industry does as well, but I'm a big fan of using your product. Now, I don't think that everybody has that privilege because if you're building a product, you're not always going to building build a product for whom you are the target market. But if you are, then certainly use it. And if you're not, you can at least see if the user experience is any good. But I think that you.
You gain a lot if you are in the target market and you're using the product. And a lot of times we can learn how people are using it. And I think one of the things that we found at Wealthfront is that when our engineers adopt a product at a high rate, it's a pretty good sign of success. If they adopt it at a lower rate, it's kind of a sign that it's not going to be a broad market success. And so I think we do. And we take a lot of feedback very considerate in the product. So I...
I'm a big believer and you don't really know what you have until you're actually using the product.
Finimize Studio (12:22.241)
It's also fascinating just listening to you because a lot of the signals you mentioned are pure organic signals. You know, like the excitement of the engineering team. It's not something you're not going to optimize for, but it's a signal that tells you we're doing something right here.
David Myszewski (12:37.486)
Yeah, absolutely. And I think one of the things that we build our organization to do is to learn. So when we launch a product, it's not the first time that anybody has ever used the product. We figure out how we can strip down the product to get to something that we can launch internally so that we can use it and figure out what are the things that we didn't realize as we're building the product. And then we iterate based on that.
Finimize Studio (13:06.241)
Well, this is a great time. Let's talk about the Wealthfront product process. So talk us through the consistent framework that you follow to continuously build the amazing products that Wealthfront have been putting out.
David Myszewski (13:18.862)
Yeah, we really want to orient our product process around learning. And if the goal of an end product is to get to exponential organic growth, in order to do that, you have to have customers who are absolutely desperate for the solution. They can't be saying, well, this solution is 10 % better than what I'm using. In the finance space, I think one of our biggest competitors is inertia. People don't want to make changes.
And so you really have to create a product that they're desperate for and motivated to change. And I think a lot of times when the product has tangible benefits. So for example, cash has a couple of those characteristics. There's sort of the 5 % APY. There's the $8 million of FDIC insurance. Those are very tangible. And you can go out and compare that to other solutions. And there are a lot of people who are desperate for that. But ultimately,
You don't know if a product is going to succeed until you ship it. That's the only true measure of a product's success. So then the question is, how do you increase the odds of success? And one of the things that we generally believe is that you can't always tell from the outcome of a decision whether or not the decision was a good decision or a bad decision. Because you can make good decisions that
for no fault of your own, just don't work out. And you can make bad decisions that work out. So, you know, a couple of examples of that were, you know, we were building some features on top of the cash account that would make it a better account. And then all of a sudden COVID happened and rates dropped to zero. Well, all of a sudden, if the APY is one of the value propositions, customers aren't going to be quite as desperate for something that's just a little bit better than what they're currently getting. And so we really want to figure out through our process, what is...
likely to work and the goal is to fail fast cheaply. Sometimes we have to get regulatory approval to launch a new feature and sometimes we have a six or 12 month development effort. Ideally we learn before we go through that as opposed to after we go through that.
Finimize Studio (15:30.337)
And what does that, can you give us a clarity on what that learning looks like for you?
David Myszewski (15:34.892)
Yeah, so we have a couple of things that we do before we start the project. So we want to validate two things. We want to validate the concept and validate the implementation. Now, what we want to do is we want to have an insight that allows us to test a particular hypothesis. The insight could come from a variety of ways. It could come from people calling or phoning our
a client support team. It could come from an idea that an engineer has because they've observed a technical change that all of a sudden they figured out we can take advantage of it or it could be a market dynamic or a legal regulatory dynamic. And so a few examples of each of those. So step one is identify the insight. So a technical change might be when we founded our Wealthfront service in 2011.
One of the insights was there were all these APIs becoming available. So whereas maybe five or 10 years ago, you couldn't automate everything, now all of a sudden you could automate a pretty good investing portfolio. And then for a legal regulatory change, one example of that in the US is the Durbin Amendment, which capped interchange rates on banks above $10 billion. And so some startups were able to then work with banks to earn interchange revenue and through a software solution.
that's low cost have a business model that's built on interchange. And there have been some successful startups along those lines. And I think there's some market inflection points as well. There's certainly during the COVID era in the US, mortgages picked up quite a lot because rates went to zero. You had a lot of refinancing. So anybody in the mortgage business did well. Now that turned out to be a temporary market change. And that's the one thing that you have to be careful about is what's temporary versus permanent. And then.
Data is another way to develop an insight. So when we were working on our cash account, what we found was that a lot of our customers who were using us for investments actually had a bunch of cash earning next to nothing elsewhere. And so what we decided was, well, we could probably find a way for them to earn a little bit more than what they're earning. And so what should the shape of that look like? So once you have the insight,
David Myszewski (17:58.318)
like customers have a lot of lower earning cash held elsewhere, then we want to create kind of a concept, test a concept with them. So we can do that through a variety of means. So we can do that through a combination of talking to customers, surveys. We've done some signal tests as well. There are a variety of ways that we can test whether or not people are interested in an idea, like I could.
earned a little bit more money if I took this action. But then what we really want to do is we want to test a particular implementation. So what I mean by that is what we like to do is go through a process called a design sprint. And this is inspired from a book written by someone from Google Ventures, where you can take a look at the design sprint.
an idea to a testable prototype within a few days. We've done shorter versions as well. And what we like to do is, as an input to that, align everybody on what is our hypothesis. So one of the things that we've done is we've
Finimize Studio (19:07.905)
Is that a line everyone internally on what your hypothesis is out the back of the research that you've done?
David Myszewski (19:13.738)
Yes, it's to align everybody internally. And so we have to do that. One of the mechanisms that we have is we write a blog post. And so this is sort of inspired by Amazon's six page memos where they do a press release. We tend to announce with blog posts. So we call it a blog post. But in that, we're really trying to articulate very succinctly who is the target audience. What is it that we're building?
The value proposition should be very clear. An example of its use. How does it fit within Wealthfront's products and services? And how does it fit with our long -term vision? And I'm a big believer that writing is thinking, and it really forces you to clarify your thoughts. And oftentimes when you're actually writing that blog post, you're realizing that there's some missing pieces to your thinking. So by the time that we've written the blog post, we've done a lot of good thinking. And now we have an artifact that
we can use to align everybody on what it is that we're trying to do. And then our design sprint typically has a question that we're trying to answer. And that process ends with us having an actual UI mock -up that we can then test with customers.
And then we proceed to what we call customer development.
Finimize Studio (20:33.665)
So what I'd love to do just quickly is to dive into each of those stages. Cause I think, you know, we were speaking about this before, right? It's a process is very easy to follow, but to do it well and to deliver a transformative product is very difficult. So just on the research, what makes the difference between getting great research and great insights versus getting insights that are, you know, poor inputs to building the product.
David Myszewski (20:59.374)
Yeah, I think we like to use a combination of qualitative and quantitative data to uncover the insights. And I think we, as we've been doing research for quite a while, we've built up a foundational body of research that really gives us a good mental model into our clients. And what we really want to do is uncover the insights and why somebody might be truly desperate. So who...
Who might this product appeal to? What are their needs? How urgent are they? How desperate they are? What qualifies as a desperate customer?
Finimize Studio (21:33.249)
What does that look like when you land on it? Because I imagine you've got a very large customer base. You must have a very broad set of insights. Like how do you know when someone, when you get that signal, someone is desperate for this product and how do you know that that is worth focusing on?
David Myszewski (21:48.174)
Yeah, so we do a process called customer development. So we take a prototype and put it in front of clients. And one of the examples that I like to give when I'm onboarding people into Wealthfront is when we did the cash account, I think one of the observations that we had in addition to they weren't earning money on their cash was the institutions in which they were not earning a lot of money on their cash also had things like money market funds that they could access. And so we initially thought that we needed to provide
value far and away beyond additional yield. And so we built a prototype with a lot of automation that helped you figure out how much is your, should your emergency fund be, help you plan for bills. And we put that in front of customers and most of them hated it. And then we kept asking, well, that's a little strange. They don't want this extra money. Why, why, why? What do they like? And what we found was that, well, what was actually resonating a little bit was the yield.
And so what we did then is we massively simplified the product and we said, okay, what if you have a product that has high yield FDIC insurance on unlimited transfers and all of a sudden the same market loved it. And I think this is one of the lessons that we learn over and over, which is oftentimes, and this is very counterintuitive, oftentimes removing features makes a product better. And that's very powerful because removing features also saves you time. So you can get a product to market faster.
And it's more compelling, but you have to be confident that you found a truly desperate customer. And the reason why we were able to do that was we were able to put a prototype in front of customers, get their reaction, iterate and updated the prototype. And then what tends to happen when we're... So number one, we ask a hard question. So one of the things about having hundreds of thousands of clients who like your service is that they tend to not want to disappoint you.
So if you say, hey, do you like this? Well, if they don't like it, they're not going to say, no, I hate it. It's awful. They're going to say, well, yeah, I might try it. And so what we try to do is to, you know, people are very polite. So we try to ask them a question that is really hard to give kind of a maybe a lukewarm answer. So, you know, well, if this existed today, would you deposit $10 ,000? And.
David Myszewski (24:06.594)
you know, if they're kind of lukewarm about it, they'll probably say, eh, probably not, or give some maybe answer, or they'll say, no, I wouldn't do that. Now for us, maybe is the same as a no. And the only thing that's a yes is when people will ask things like, sometimes they'll interrupt you as you're showing them the product and say, well, when is this available? And they'll just literally lean over the table and you know that that person is desperate because they're already asking for it before you've even done anything.
And so I think that is what we really like to look for is that true desperation.
Finimize Studio (24:39.937)
Yeah. And that's another one of these, you know, organic signals that is not taught in the sort of the startup metric framework, that you're tapping into. I love that. And at Finomize, we had a very similar thing where, you know, the first product we ever built, we listened to our customers, and it was like a financial planning tool that would map out all of your, stuck in all of your transactions, then sort of plan your life for you because it's what everyone told us that they wanted. And even, you know, even in the interviews and user research phase, we, people were saying, yeah, this is great. This is exactly what I want.
And then when they went home, we saw the data, no one was engaging with it. No one was using it for a myriad of different reasons, but I love that putting this forcing function where you're just optimizing for that, you know, that, that organic growth that you mentioned at the moment, at the beginning of this podcast is a such a great way to sort of root your product team in building things that are actually going to matter and sort of resetting that research loop. If you haven't landed on something just yet.
David Myszewski (25:35.118)
Yeah, yeah, I think we're really looking for customers to be absolutely elated by the products that we ship. We don't want them to like it. We want them to love it. And if they love it, the other side effect that will happen is that when friends say, hey, I have this money I'm trying to figure out what to do with, they'll say, I use Wealthfront and I absolutely love it. And so that organic word of mouth also helps you grow the business as well.
Finimize Studio (25:57.345)
Well, I wanted to ask that, ask you about that because everyone that I've, you know, my whole career in finance, everyone will tell you finance is about trust, but when you introduce digital products, that building trust is different. You know, it's very different to meeting someone face to face that you build rapport with over time. And you can, you know, you can build that trust through, through the personal connection. But at Wealthfront, you've been very successful, probably more successful than any other platform at building up.
trust digitally enough that they're willing to deposit over $50 ,000, which is a large sum of money. If you had to sum it up, like how do you build a product that builds enough trust for people to deposit large sums of capital without meeting a person face to face?
David Myszewski (26:43.756)
I'm a big believer in the old adage that trust arrives on foot and leaves on horseback. And so I think one of the things that is very important to us is not only that we build trust, but that we retain it over a long period of time. And I think there's a variety of things that we do. I think very clear, simple explanations helps everybody. One of the things that we want to do in general is whatever product that we build,
we want to be a quality product that's recognized as quality by people in the industry. So there are a lot of products that we could build that would probably get consumers' attention, but they'd be junk. We don't want to build junk. We want to build quality products. And so if you can build a product that people in the industry say, yeah, that's the right thing, the right way to do things, then that typically helps as well. And then those people can be reference points for...
others who are a little less familiar with wealth. So that sort of combination of having the savvy people saying, yes, this is a good strategy and the people who are a little less savvy being able to use them as reference points and then also, but field empowered by the simple communication that we use. Another thing that, you know, one example of that was when we were building our advisory portfolio, you know, we had a...
long -term passive diversified portfolio that people could recognize that yes, passive is the right way and you should have a diversified portfolio. And there were some people who, when we offered that, said, well, that's a great strategy, but I can do that on my own. And then when we offered tax loss harvesting, where we look at...
accounts every day to find opportunities to harvest losses. Now people say, well, I can't do that on my own. Like I can do that maybe once a quarter, once a year, but it's painful and annoying. I can't do that. And so I think when you're also able to use automation to build in things that people simply can't do on their own, I think it really is very powerful. I think we also saw this in our automated bond ladder, which is our latest product where, you know, if you wanted to create say a
David Myszewski (28:57.006)
six year ladder with treasuries maturing monthly, you have to buy at least 62 different instruments. Like you can't do that on your own. That would be super annoying. And so I think people who, if you have people who recognize the strategy as being quality and then build very simple, easy to understand user interfaces that are high quality, people really gravitate towards that.
Finimize Studio (29:21.441)
And it makes so much sense because in finance, if you think of the influences on that decision, you know, it's, it's family and it's people who work in the finance industry that are within your network that drive that word of mouth. You know, we see it time and time again, like who do people go to ask, where to invest and who to invest with is their friend or family member that works in finance. So I love that, you know, you're building a foot with those people in mind as sort of a quality check. And then.
building a product that is, you know, is, is giving clear value is not possible to do on your own, without the wealth front product. I think that's fantastic advice for anyone building a FinTech products out there and trying to deliver value. The most common question I get asked by our clients and people in the, in the, in the business community that we're building is how do we genuinely drive?
Deposits because everyone wants more people to invest. How do we generally drive deposits into investment accounts and into into other products? Because especially more so in the UK, but it's very common that people were sat with too much cash for their own, you know, for their own good and Companies are sat there thinking. Okay. What features do I need to build that is going to nudge? Customers to make better decisions for themselves and move out of cash into investment products at Wealthfront. You built some amazing features. Just love to know.
from the features that you've built, where has that success been for you in driving greater share of wallet, greater product adoption, and better customer outcomes?
David Myszewski (30:57.678)
Yeah, I think a big part of it is just our focus on a high quality digital experience. So we have very simple, intuitive designs. And so much of our audience also comes from the tech industry as well. And they really have a high bar for what a quality consumer technology product is. And we really focus on creating a good consumer technology experience. And I think one of the things that we...
like to do is to help people recognize the value of taking action over time. So a couple of concrete examples that we've done when it comes to holding money in cash, we can certainly help people understand that we can make the benefits tangible. And we do so through automating our platform so we can offer services at low cost. So that reduces the friction. The lower the cost, the lower the friction.
And we can nudge people into certain behaviors, like saying, well, you have this money over here. If you moved it over to the cash account, this is how much interest you would make at 5 % over the next 12 months. And so that really makes something like an APY that is intangible into some, I mean, it's a tangible number, but people don't know what it means to them, and then turns it into something that is very tangible to them. And investing, I think one of the challenges is that,
No one can guarantee returns, and no one should guarantee returns. And so you can't make it tangible, but you can nudge people to change behavior over time. One of the things that we like to do on the investing side is nudge people to make recurring deposits. I think in the investment industry, you always want people to be investing regularly and over a long period of time.
And people are receptive to that message when times are really good. And then when times aren't so good and the market pulls back, people tend to leave the recurring deposits on. So you've not only motivated behavior that helps the business, but more importantly, you've nudged people into a consumer behavior such that their default in six months is I'm going to invest as opposed to the default is I'm not investing. And I think anytime that you can make the default decision of inertia.
David Myszewski (33:22.658)
to do the right thing, you're gonna be better off and your clients will be better off.
Finimize Studio (33:26.753)
that's really powerful because I think it's something that a lot of institutions miss, right? Like it's so easy to try and change the behavior of the consumer. Okay. We all know that, you know, when times are down, we should see it as a, as a, you know, stocks being on set on sale and that's the time to invest, but actually in reality, that's not what people do. That's not how people engage their digital platforms. So it's fascinating that you are building products for how the modern investor.
engages with their investing platforms. And it's also really interesting that, you know, you're delivering better customer outcomes.
David Myszewski (34:02.606)
Yeah, and I think part of that is also as we're building our products, like we target a volatility that people are a little bit more comfortable with. If your portfolio is moving up and down 30 % every year, it's really hard to maintain that behavior. And so I think we also have to think about portfolio construction as a way to drive client behavior as well. And then also making sure that we're on the same page as to what is the purpose of money.
Finimize Studio (34:25.761)
That's amazing.
Finimize Studio (34:30.561)
What do you mean by that? That's interesting.
David Myszewski (34:33.39)
Well, I think our clients are investing for different time periods. And one of the things that if you step back, most of our clients are in their accumulation phase. So they're getting promotions, they're earning more, they're working for a startup and having a liquidity event. And so they are going to be earning more every single year. And so the mental model is they're adding to their accounts, and then when they retire, they will take away from their accounts. But.
The world's way more complex than that, right? People want to buy a home in the US. And so how do you save for home? What account should you use and how should you withdraw? And so sort of, you know, some clients don't want to have any risk at all. So something like putting money in your Wealthfront Cash account where you can earn more. It's not going to grow as much as investment portfolio might over a long time horizon. But if you're going to buy your house in three months, that's a good place to have it. Whereas if you're saving maybe in a couple of years or three years.
then maybe something like our automated bond ladder would be a great place for that money. And if you're saving for the long -term diversified portfolio. But some people will be comfortable changing their situation. So if they might want to invest for the potential to earn more, but if markets pull back, they'll just buy a house later. Whereas others might really want to buy a house in two years. And so you have to keep that money safer. And so I think having sort of the wide variety of products for different time horizons.
and then helping people understand which product they should use is a powerful way to drive people to action that also will create the best outcomes for them.
Finimize Studio (36:12.289)
How do you do that? Final piece you just mentioned about, you know, educating people and what the right product might be for them. I guess my question is like, how do you balance the customer going on a self -directed journey to decide that they need this product now versus nudging them towards products that may be best for them?
David Myszewski (36:31.702)
I think this is a problem that I would love to solve in a very, very elegant way over a longer time horizon. But I think one of the things that we find that we've done over the years is we write blog posts about some of these topics. And so it is really helpful to be able to point people to blog posts about it. And then we can use data from what people are using to identify what's resonating with clients. And then we can use that to tell people,
about how you should use the various accounts or why you might use various accounts. One of the things I'm very excited about from the consumer technology experience is there's been so much effort the last 15 years into nudging behavior to drive things like engagement. So going back to your social media posting and all of that. And I think there's just a wealth of knowledge there that can be used in finance. And I think there's a wealth of behavioral knowledge as well in terms of.
behavioral finance. So like one of the examples that we have, Meier -Statman, who's on our investment advisory board, wrote about the difference between bond ETFs and buying an individual treasury by itself. And one of the things that we find is that people don't like the feeling of loss. And so if you buy a bond and hold it to maturity, you know that you're getting your money back plus interest.
Whereas if you buy a bond ETF, that money is going to go up and down and it will be sort of replaced on a daily basis. And so some people like the just the feeling that they're not losing anything. You know, even if they end up losing to inflation, they're more comfortable with that. And so I think leveraging the best of behavioral finance is, I think, going to be important, especially as the product portfolio expands as well.
Finimize Studio (38:23.809)
So what's exciting to me about Wealthfront, you know, at Finomize, if there's one thing we know, it's content. And you're not just serving that out to customers to help engage and educate them. You're actually using it as intent signals. And we think that we spend so much time, or institutions and platforms spend so much time obsessing over demographics or sort of financial position, but actually the content they're engaging with is probably the best metric of intent or what position they are on that journey.
David Myszewski (38:51.662)
Yeah, it definitely gives us insights into what people are thinking about and also how that's changing over time because as markets change, people get interested in different things as well. A lot more people, we're talking a few days after GameStop had a big massive rally because of one tweet that had nothing to do with economics and there's some illogical behavior too.
Finimize Studio (39:13.665)
I love it. Well, we could talk all day about content, but I'm interested, you know, wealth front has done an incredible job at attracting this sort of next generation of affluent and high net worth investor. If you had to pick single out any key traits, you know, for the people that are listening and interested in this audience, key traits that differentiate modern investors for any previous investment, any previous generation of investors, what would they be?
David Myszewski (39:39.214)
Yeah, well, I think, yeah. So I think if I think about sort of the holistic transition, it used to be you talked to somebody and then, you know, with Charles Schwab, you called somebody on the phone to make a trade. And today, you use an app for things. And I think our generation, you know, if we're sitting here in 2024, the iPhone's been out for 17 years. So, you know, starting next year, every single adult was born after the iPhone and people really...
want to use their mobile apps to make a lot of their decisions. And so I think that focus on technology is always there. I have an eight -year -old son who, when he touches a computer without a touchscreen, it kind of feels broken to him. And that's a very different way of thinking than those of us who grew up without the internet. And so I think that's one of the big things that's changed is just people see high -quality technology products. And...
A lot of them would prefer to interact only through the technology products, not by talking to people. And so much of the industry is not optimized for that. We have a bunch of brick and mortar branches that are all scattered about. We have sort of one of the most common ways to transfer money, the ACH system. I can drive from here to New York before I can finish an ACH transfer. And in a world where you can watch a
video on YouTube and you can FaceTime with people halfway across the world. It's totally different expectations that people have. And I think really building a platform where people can get what they want instantly without talking to anybody. And also, one of the curious things that we find is that sometimes people prefer to use an app because there's no human providing judgment. So if they talk to a human, they feel like they have to get their act in order. They have to feel like they have to ask smart questions, not
dumb questions, whereas when you're interacting with a piece of technology, there's no judgment. And so I think that really enables all sorts of different new ways to interact with finances that we'll be building over the next decade.
Finimize Studio (41:51.009)
And I guess because there's so much wealth sat in older generations, it's kind of defending the finance industry a little bit from how drastic this shift is going to be when everyone that has grown up with an iPhone is used to engaging with the finance and investing industry through digital channels and no longer has any interest in working with their face -to -face financial advisor. And Dave, thank you so much for your time today. I just want to finish the same way I finish every one of these episodes. Your lessons.
as a product leader. So, you know, one of the first engineers on the iPhone through to leading, you know, one of the most innovative companies in wealth management. If you had to give one piece of advice to someone trying to build a transformative product, what would it be?
David Myszewski (42:38.318)
Yeah, so I think it's really a three -step process. Find a desperate audience. Once you ship a product for them, savor the surprise and lean into what's working. Don't worry so much about what's broken. Really worry about what's working and why and make that even better. And I think if you're, that's much easier said than done. But if you do those three things, I think you'll be maximizing your chances of success.
Finimize Studio (43:03.425)
I love it. What a great way to wrap this episode up. Dave, I personally, I'm going to leave this with constantly aiming for exponential organic growth and nothing less from now on, because it just sets the bar so high. And it also means that, you know, you're looking for these signals that you mentioned, right? Like, you know, what it feels like when it's palpable, that you're building a product that people love. And that may not be something that you optimize for on a day by day basis. It's just a feeling that, you know, when you've got something right.
David Myszewski (43:11.47)
Yes, yes, yes.
Finimize Studio (43:29.665)
It's so refreshing to hear that and thank you so much for your time today.
David Myszewski (43:33.966)
Thank you so much for your time. It's been great chatting with you.
.webp)
.webp)
