Masters of Scale: Rapid Response Transcript – Sallie Krawcheck Click here to listen to the full Masters of Scale: Rapid Response episode with Sallie Krawcheck. SALLIE KRAWCHECK: Going into March, we were pulling together an investment ​ round. The investor pulled away. And so I am looking at this uncertainty knowing that we have a limited amount of runway. Having discussions and debates at the leadership team saying, “the business may be imploding. Should we lay off 25% of the company or 30% of the company?” I don't think I've ever been lonelier in my life. We ended up, in the course of the year, taking things back up and avoiding what in hindsight would have been a fatal error for the business. One thing I just can't believe we're not talking about every minute of every day, sitting here, looking at 2020, is that one in five women have left the workforce this year. What? Women are recognizing they're getting disproportionally hit. Women are recognizing no one's coming to save us. We've got a long way to go in terms of getting past venture funding and being a profitable company. But the impact we're having today, given the size of the community and the message we've got is something. Money's women's number one source of stress. Taking action around it is the number one driver of their confidence in their future. What we're doing is so much bigger than just money, it's really life changing. BOB SAFIAN: That’s Sallie Krawcheck, CEO of Ellevest, a fin-tech platform dedicated to ​ serving women investors. 2020 was harrowing for her, even though her business ultimately performed strongly. I’m Bob Safian, former editor of Fast Company, founder of The Flux Group and host of Masters of Scale: Rapid Response. I wanted to talk with Sallie because women have been hit particularly hard by the financial fallout of the pandemic, and no one has a better perspective than her on what it will take to recover from that pain. Sallie used to work at the very top of Wall Street behemoths like Citi and Bank of America and Merrill Lynch. So she has deep understanding of stock market dynamics and the advantages that big players have over little ones. But she also believes in the agility of startups and is demonstrating the impact that entrepreneurship can have, for all of us. [THEME MUSIC] SAFIAN: I’m Bob Safian, and I'm here with Sallie Krawcheck, the CEO of Ellevest. Sallie is ​ coming to us from her home in Manhattan as I ask my questions from my home in nearby Brooklyn. Sallie, thanks for joining us. KRAWCHECK: Good to be here. Wish we were in person. ​ SAFIAN: Yeah. Wow, what a year. It's almost hard to look ahead with all of the challenges and ​ the traumas behind us. We'll get to the future. But first, I want to ask you to take us back. How did 2020 open for you and when did you realize it was going to be a different sort of year? KRAWCHECK: I remember standing in my kitchen in February. Saturday morning, I was ​ the only one awake in my home. I was sipping that first cup of coffee. And I remember thinking, “Things feel really good.” And I swear to you, Bob, I stopped myself and I thought the last time I had this thought was 2007, right before the financial crisis. And I stopped in my tracks and thought, "Ah, you know that's not going to happen again." And for several months after that, it was all downhill, every day. And there were days in which I missed 2007 and 2008. They felt like such a cakewalk compared to what was happening as a startup CEO in 2020. SAFIAN: So what was harder about this period than back in 2007, 2008? ​ KRAWCHECK: A lot. First of all, 2007, 2008, we weren't worried about our health, our ​ children's health, our parents' health, our spouse's health, the people in our company's health, our friend's health. The stock market correction, which was plenty scary and plenty unprecedented, was just the beginning. And so it was everything that was terrible about 2007, 2008, plus the health. And then the part that I'm really still processing is that in 2008, I was at Citi. And so you could be with people physically, catch somebody in the hall. I was part of a team there of senior leaders, where we were in it together. And so when you lagged a little bit, there was somebody who would pick you up and dust you off and put you back in. And so this one was not only the health fear, but as a startup CEO, the overriding, all encompassing loneliness of the experience. SAFIAN: Most organizations had a really hard time at the beginning of the pandemic. And then ​ it split. You've got your airlines and your hotels still losing a ton of money. And then you've got other businesses that are thriving, big tech firms and Target and cleaning products like Clorox, right? So where did Ellevest’s business fit in that continuum? KRAWCHECK: Well, the issue was it wasn't clear for a period of time. And maybe for ​ another day, I will tell you about all the ways potential investors, venture capitalists told me that Ellevest would not work, and so they wouldn't invest. One of the reasons for saying no: "Well, you have a lot of millennial women." And so you can grow when it's a good market. But when it's a bad market, it's going to be bad. If things get bad, they're going to freak out. Yes, Bob, there was the underlying “women get hysterical” message. And so we go into March and April and the markets are crashing and now we sit here and it's hard to remember it, but it was terrifying. And even for me, I've been through many of these downturns. And so it wasn't clear for a period of time. And in fact, I'll tell you, I didn't even look at our numbers. What was I going to do if the client base, the user base was panicking and taking their money out? There was really nothing different I could do. And so all that I could do was turn the whole company over to a pledge to our community of, “We'll answer any money question you've got. Ask it on Instagram, email us. Send us a note.” We'll do Instagram lives. We'll do LinkedIn lives.” Of course, there was a complete deluge. SAFIAN: And did the panic in the questions translate into panic in the business? ​ KRAWCHECK: Nope. ​ SAFIAN: So the concerns that the women investors are- ​ KRAWCHECK: I'll take it one step further. We had net inflows every week this year. So ​ not only did they not pull their money out, part of the way we invest in Ellevest or advise people is a little bit out of every paycheck. And of course there were people who said, "I lost my job. I need to ba-ba." But we also tell them, "It's got to be long-term money. This isn't playing around, right? You should invest with us that which you can have for the long term." And so, yeah, we saw a little bit of an uptick in outflows. But we continue to see the inflows, such that we never missed a beat. SAFIAN: So are there things then about the business that you run differently now? ​ KRAWCHECK: We changed the entire business model, Bob, in June. Changed the ​ entire model. We took a step back and we said, "All right, now let's catch our breath for half a second." Now that we've answered most questions that people can think of. What should be different? I remember calling my head of product, the terrific Alex Stried, and ​ ​ said, "What should we do differently in our product plan going forward?" And over the next couple of months, we changed almost everything. We went in our digital-side from being investment management only to adding savings and banking, to adding, interestingly, coaching and learning. Within the newer investors, the digital business we said, "She is asking us for a lot more. And so let's break the mold. Let's not be just a financial products company. Let's bring that learning and coaching. Let's change our pricing to a subscription model instead of an asset-based model, in order to support these additional capabilities and provide additional value for her." SAFIAN: As you describe this shift you made, it reminds me of all the discussion during 2020 ​ about how important it was to be agile. Making the move like what you did with your business to do that at Citi would have taken months, years, right? KRAWCHECK: Oh, we couldn't have done it. Couldn't have done it. Well, let's add ​ another one, Bob, which is that as we got into June, end of May, June, and there was a renewed impetus for racial justice, we at Ellevest, we've always enabled our investor, our users to invest in advancing women. But we can't be about advancing women investments for those who choose to do so without also being anti-racist. So let's add an anti-racist lens for those users and clients who are looking for it.