I recently had the opportunity to sit down and speak with Joseph Sanberg, a distinguished business founder and advocate for promoting solutions to income inequality. He is currently Co-Founder and Chair of the Board of Advisors for Aspiration as well as a Founding Investor in Blue Apron. Additionally, he works with several other promising companies and organizations that all have a focus on doing well and doing good.
If you haven't heard of Aspiration, you can learn more in my previous blog post here. In short it is a new age consumer financial service company that is helping to democratize wealth through its access to financial products that have historically only been available to the wealthy.
Check out our conversation below to learn more about Joseph Sanberg and the amazing work he is doing with Aspiration to create a new age of financial services that can help to promote trust and authenticity, something that has been sorely lacking from this industry for some time...
CL: Thanks for taking the time today to speak with me Joseph. Definitely excited to sit down and chat with you.
I’d like to just take a moment and hear a bit more about your interesting background including your time at Blackstone and Tiger Global Management, and what led you to become an entrepreneur that has helped to found both Aspiration and Blue Apron in recent years?
JS: I think my passion for building companies comes from my experience as a young person raised by my mom and experiencing economic experiences like many others do. In high school my home was foreclosed on, we got kicked out of my home, my whole family. I saw first hand how difficult and unstable an unstable financial life can be for people.
I started on Wall Street out of college because I needed to support my mom and stayed on Wall Street for a period of time to build up my savings. Then I left to pursue what really speaks to my heart which is to change the world. I think building companies that are purpose driven is a way to do that. The bigger the problem a company tries to solve the more valuable a company can become.
At Aspiration we have set out to solve a tremendous moral crisis. Almost everyone isn’t receiving the financial opportunity to live a full life, but it doesn’t have to be that way. The financial institution works really well for a small number of people and we want to make it work really well for everyone. Not some or most but all and that is possible.
These products serving the few can serve everyone and that’s our mission. We are looking to scale Aspiration as fast as possible because there are tens of millions of households that need these financial services, and we feel that we have an idea that speaks to people’s hearts.
People are skeptical of approaches based on imagery rather than substance. The “pay what is fair” approach that we are using is how you build trust. The thing about trust is you don’t get to ask for trust you have to give trust first, and it takes a lot of guts to do that and I’m proud to co-found this company with someone who wants to build a financial firm for all.
CL: For those who don’t know about Aspiration, how would you define Aspiration and its mission?
JS: Aspiration is a consumer financial firm that brings the core banking account you need for everyday life and brings investment and retirement services and will eventually bring a whole suite of services for your life.
We build trust based relationship with you, by letting you pay what you think is fair and by delivering products that are objectively best in class in what our customers need and want.
CL: What led to this idea of founding a new age investment firm for the masses with this social spin?
JS: Well Andrei Cherny and I both grew up in families that experienced a lot of economic insecurity and saw from different perspectives over the course of our careers how the system has lost its course of serving the many.
Andrei and I were friends at the time and we talked often about how to serve families like us, and you have those moments when you look at each other and realize it’s time to take action and that’s why we cofounded Aspiration.
We want to build a financial firms that will make our moms proud and that our cousins and aunts and uncles would use, and if we do that we will make life better for millions of hardworking Americans.
CL: One of the challenges I would expect in trying to reach a potentially less financially savvy consumer is that it’s hard to get the message to them. How do you get your message to this type of consumer?
JS: Aspiration is uniquely positive because of social media. Aspiration has a social media presence by objective data measures that is the most socially positive company in the U.S. of any American financial company. We have social activity greater than any individual firm and several of the biggest banks in the U.S. combined because social media requires authenticity and standing for something.
The challenge many Fintech consumer companies have right now is that these companies don’t mean anything. Pick any of the Fintech names and ask what does this mean to their customers. I would feel strongly that the only one you get a clear answer for is Aspiration, and that’s why we could reach people quickly, cost effectively and with scale. It takes courage to build something that stands for something but when you do, you are gratified by the response.
To build a company with a voluntary fee structure that has such a clear brand proposition as Aspiration does is not without risk. We were mocked and scorned by the New York Times and The Wall Street Journal as these crazy Californians.
I feel that if no one criticizes you, no one will be passionate about you either. If you want to build, a strong consumer company you have to illicit a passionate following and the only way to do that is if your message means something to people.
CL: My understanding is that the investment products you provide have UBS involvement, what did that process look like in intriguing UBS to join forces with such a radically different type of firm?
JS: All of our investment products are built and owned by Aspiration and then we hire subadvisors to manage those strategies on a day to day basis. We are the owner and brand of those products and are responsible for creating the soups and nuts. I have found that the analogy that Aspiration is Apple and UBS is Foxconn is very explanatory.
What’s really exciting is Aspiration only pays our subadvisors what our customers choose to pay us so our subadvisors don’t get a fixed payment from Aspiration, they get a percentage of what our customers choose to pay us. So our subadvisors are subject to the same payment guidelines as us, if we get paid zero, they get paid zero.
CL: So how did you convince UBS this was a good idea?
JS: UBS and a lot of other firms recognize there is a huge and growing population of young and middle class investors they aren’t reaching and a partnership with us is an effective way to reach that group of investors.
CL: Going off of that, there has been a lot of talk recently about whether Fintech is revolutionary or renovation in nature. Do you think that Fintech firms need to work with the banks in order to be successful or can startups like Aspiration change the game alone?
JS: I think it’s a case by case thing. I think we all are very cautious of making broad generalizations. Fintech is such a broad term, it can mean B2B, payment, business to consumer, and it’s occurring to such a large addressable market.
The financial sector is the largest non-farm sector of the economy. For those reasons we need to be cautious of generalizations. There will be a lot of winners in Fintech, I don’t think it will be like other areas of internet construction where winner takes all. I think there will be tens and tens and tens of valuable financial brands built. Financial services are a unique sector where if you could capture a tiny sector of the market you can be worth millions of dollars. Depending on the part of the financial sector you are in, 1% share can be worth $10B dollars.
As far as Aspiration, we focus on what we do. Our success is executing and scaling on our plan and delivering for our customers. We keep our eyes on ourselves and that’s great for all entrepreneurs to know. People need to not worry as much about what others are doing.
People’s success is defined by their actions rarely others.
CL: With the landscape of the future in mind for banks, where do you see Aspiration in five years, and what is your goal for the firm?
JS: I don’t think about the business in five year segments. Aspiration isn’t something we are building to sell, we are building it to be the leading consumer financial company in the United States and once we establish ourselves as the leader we will maintain and innovate it for the rest of our lives.
So I don’t think about it in 5 year segments I think of it as how do we get to serving 100 million households. I know we will be at it as long as it takes to achieve that.
So, where will we be in 5 years? We will have many more customers, a broader suite of customers and services and we will be continuing to push the innovation envelope.
CL: To date, how has adoption been with customers? What is it about your message that most resonates with acquired customers?
JS: Well I think the message works because it’s clear and it’s real. When we say we are a firm built on trust we authenticate that by allowing customers to choose their fee and that makes it attractive because it’s authentic.
Usually they try and make it with commercials with whales coming out of the ocean and pretty music, and people, I think are skeptical of that approach, and more skeptical than they have been in the past. Authenticity is important and we are growing extremely fast. In 2015 we doubled our number of customers every six weeks and we are continuing to grow at an extremely fast pace in 2016.
CL: In terms of people paying what they think is fair, that’s a pretty radical idea. How has that played out thus far?
JS: They have been incredibly honest and its working. We are building great relationships that are longstanding. Over 90% pay us equal to the industry average. When you trust people they generally do the right thing. I’m not surprised though I believe in people. When you treat people right, they treat you right in return. Over 90% of our customers pay us.
CL: Can you tell us a bit more about how Aspiration’s “Dimes Worth of Difference” dollars are utilized in the not for profit sector, I know you have been working with microfinance firm, Accion? How has that been going?
JS: We donate 10% of what our customers pay us to Accion which is a not for profit micro-lender to low income Americans starting businesses. Accion is the largest micro-lender in the U.S.
And we think it’s an effective way of implementing a one-for-one model where we deliver opportunity to our customers with the products we create, and by donating to Accion we are giving people a chance to build themselves who don’t have enough to be an Aspiration customer yet.
CL: When looking for partners like the Sierra Club to work with Aspiration, what do you look for and expect from a partner?
JS: First of all we are looking for partners whose values align with our customer’s values and partners who are excited about working with us. We are a fast moving, fast growing company that is changing for the good, one of the biggest industries in the U.S. What we love about Sierra Club is their excitement to be a part of that mission.
CL: Switching gears here a little bit I’d like to try something I call the “Minute Rundown” that will help us to better understand a little bit more about you and learn something from a seasoned founder.
The Minute Rundown with Joseph Sandberg
CL: So, if you could provide one lesson to someone considering starting their own company, what would it be?
JS: Only do it if you want that company’s mission to succeed more than you want to breathe. Building a company is really hard. If you are going to build the mission of the company you have to believe in it more than anything in the whole wide world. I want it so much to build this company with every fiber in my being and that’s what you need to build a disruptive company because it’s really hard.
CL: Can you tell us a bit more about the Golden State Opportunity Foundation and what your goal for this organization is?
JS: The Golden State Opportunity Fund is my effort to create economic security for low income Californians so our first major mission has to be sponsor CAL4me which has barnstormed through California to connect low income Californians with pretax perforation services and tax credits which are wage subsidies for Californians making $6 to $13K a year. My conviction is that we need to bring economic security to all, that when you experience economic insecurity it makes it hard to participate fully in life and in being fully human.
A lot of knowledge and science has authenticated that when kids grow up in economic insecurity it hurts brain development and the ability to trust others. There is no one who needs to live in economic insecurity that’s not something I believe in.
It’s happened because of wrong decisions we have made in economic society and I believe in spreading it to those who don’t yet have it.
CL: What are the main characteristics you look for in a Co-Founder?
JS: Some of it is just mission driven. I’m looking for someone who is passionate and determined and then someone who compliments me and my strengths and has different strengths.
My advice to folks considering cofounding ensure you and your cofounder bring different things to the table, you don’t want two copies of the same person you want the sum of the parts to be greater than the individual. Where one is weak you want the other to be strong. Where one is strong it’s okay for the other to be weak.
CL: If you had to select one CEO you would like to model yourself after who would it be, and what can we learn from them?
JS: Marc Benioff, Founder of Salesforce. I think he stands above the rest in his commitment to use his platform for social justice. He is building a company that lives out his values and the values of his team.
CL: Outside of Fintech and at home food delivery, what areas interest you for investment?
JS: I think there is a huge opportunity in healthcare and democratizing access to healthcare and opportunity in disruption and making those tools available to the many. I’m invested in Bright Funds that is spearheading many promising approaches there.
From my time speaking with Joseph one thing is certain. He is a passionate and dedicated individual who truly believes in his work and stands behind each and every action he takes to make the world a better place.
He is a distinguished individual who is rapidly helping to shape the future of consumer finance alongside the whole Aspiration team. The Aspiration team brings together experience and a drive to change the game that is hard not to take notice of. I expect nothing but upside for this tremendously talented company.
If you want to learn more about Joseph and Aspiration you can check out the links below.