Fireside Chat with Founder and CEO of Peanut Butter, David Aronson

Recently I had the pleasure of sitting down with David Aronson, Founder and CEO of Peanut Butter, one of the first Student Loan Contribution Employee Benefit Companies. He is working to develop much needed changes to employee benefits and student loan debt (Feel free to read more about this new industry in my previous blog post) with his Chicago based team and I am excited to share with you our interesting discussion below...
CL: Thanks for taking the time today to speak with me David. Definitely excited to sit down and chat with you.

Before we jump into the business side of things can you tell me a bit more about your interesting background between working for Sears, a bakery and also founding Caysh.com, before founding Peanut Butter?

DA: So, I worked for Gevity (now a part of TriNet), which was one of the largest outsourced human resource providers for small and mid-size businesses. During my time there I learned about what motivates employers, what engages employees, and what worked for Gevity stuck with me.

Then while I was working at Sears Holdings to build its health and wellness solutions business, I read a piece of research from Aon Hewitt which found that more than half of working Millennials aren’t contributing to 401k plans to the extent employers are willing to match.

So I started talking with executives, and business owners, by and large they said we rather contribute dollars to something employees value verse what they don’t. But man that also sounds like a pain in the butt. How do we do keep all of our employee loan information safe and secure? How do we get HR to work with finance to make payments, and send reports… and should we hire more HR people answer employee phone calls?

So I said maybe I can help with this. I felt that there are a few things in my background especially working with Gevity that make me well suited to lead this organization. I have also been involved in founding six different businesses, all in different spaces.

I founded Caysh.com working part-time in 2014, I helped organize a multi-billion dollar health and wellness business for Sears, I built a brand licensing program for Kenmore, Craftsman, and DieHard, I created Endive energy, I’ve started up before.

I grew up as part of a family business with a principle’s mindset. Working in the family business is where I learned to work hard. You can either do nothing and then everyone else slacks off or you can work hard and people will try and work as hard as the son of the boss. I chose the latter and it stuck with me.

When I was at Sears and Gevity I was always involved in new business development creating channel partnerships, selling new businesses, and I feel that what we do here at Peanut Butter is a good complement.

CL: Can you describe what Peanut Butter does? How would you define it for those who haven’t heard of it before?

DA: Our goal is to make it easy for employers to attract and retain talent by contributing to student loans. We work with companies to set up effective student loan repayment plans to meet their talent goals. Every case is different, in some situations an employer might be trying to get the best sales people, whereas in other situations employers are trying to retain staff in a call center.

We handle employee enrollment, provide reporting, and handle support where questions may arise. We work with the employer to iterate on the contribution plan and analyze the results of this service, which helps us to figure out the best way to deploy capital and help their employees pay off their loans.

CL: How did you decide to go after the student loan contribution space? Are you trying to ride the trend of rising student loan debt? Did you have the technology already to do so?

DA: From my time in HR outsourcing, I knew what companies expected from benefit administrators and how to think through the process and create something for the needs of the employers. That’s the perspective we’ve taken in building Peanut Butter.

CL: I know that Peanut Butter has had some involvement in helping to promote the passing of legislation to make student loan contributions tax deductible, can you tell us a bit more about that?

DA: We think that with the government underwriting a lot of the student debt out there, there is big opportunity to reduce default rates by incentivizing employers to make contributions to this employee debt. When that is reduced it can have positive impact on the federal budget. That positive financial impact is only part of the story though.

The real opportunity we have is to help companies to work with employees to reach a shared accomplishment. Individuals are no longer on their own in trying to figure out how to pay their debts off.

Our approach with government relations to date has really been very light. We have been fortunate that legislators have taken notice. In 2015 we sponsored the Millennial Benefits Preferences study, which is available on our website and has the implications of what advantages can be realized by providing this type of employee benefit.

With that report we reached out to legislators and said we think there is something here worth pursuing. Whether or not that legislation passes there is a benefit for employers to offer this.

But we have been speaking with Congressman Dold and Congressman Davis who is sponsoring The Employer Participation and Student Loan Assistance Act. We also have been speaking with Senator Durbin. Everyone we have spoken with have all been very thoughtful and brings their own perspective on why it’s imperative that we solve America’s student loan problem.

CL: That’s great to hear. Do you find that the lack of legislation is a hindrance to growing adoption of student loan contribution plans?

DA: For some companies it is, but we are already seeing top employers in technology, financial service, and healthcare start to offer these plans. I think it will proliferate through those industries first. The top companies that are competing for talent will follow suit behind the leaders.

Getting the next third of companies in those industries to offer the benefit would happen quicker if legislation were passed, and it’s the same with companies in other industries. But there is enough of a need that between differentiating the employee value proposition, and improving the overall well-being of employees that employers will eventually take up on this.

CL: Going off of that, what are the needs of these early adopter of services like Peanut Butter and what do they look like in terms of company profile?

DA: It really depends on the industry, the geography, how the company has positioned itself in the market. A lot of companies big and small are winning on culture, and creating a collaborative work environment. In those cases it is so important to support their people, which this helps to do.

Certainly where you find industries with more talent and educated workforces, employers will be more likely to adopt this type of service. It is of greater interest to companies in urban and suburban areas. But we are seeing companies like manufacturing companies where they have engineers that support folks in the plants, and big corporate staff that we didn’t initially think about being our customer. It has turned out that we have a good value proposition for them as well.

CL: So if we are to put legislation aside, it sounds like Peanut Butter is gaining traction. What are the next steps for Peanut Butter to continue to grow?

DA: For us we do what we do. We help employers structure their plans, we facilitate enrollment, we help get employees on the right plan and help run the process. We are working to make more employers aware of this tactic as a means to accomplish their strategic talent goals.

Companies are increasingly becoming aware of student loan repayment and we’re working with them to build business cases and prepare to offer the plan. Every day I am out there speaking with employers to see if this is a benefit that can create strategic advantage for their companies.

CL: There is a lot of talk around the startup space about VC funding drying up these days. How do you think about obtaining capital from VC’s and are you even interested?

DA: It really depends on the company. We are sufficiently capitalized, comfortable with the rate we are growing, and satisfied with our ability to serve large and small clients. We don’t need capital but we are interested in partners, partners that can help us get to more companies. That’s where we spend a lot of our time. I’m not concerned with the capital markets. Me and my crew are focused on getting to the employers we can help.

CL: That makes a lot of sense to me. So when you are pitching to these companies how does Peanut Butter differentiate itself from the competition such as Student Loan Genius, and Tuition.io?

DA: We come from HR outsourcing, we are thinking about things from the employer’s perspective such as how do they manage an effective benefit plan? It’s that approach that differentiates us at first and the way our technology supports their processes and systems that differentiates us once they’re onboard.

CL: At the end of the day, what are the drivers of success for the student loan contribution space?

DA: The Millennial generation is continuing to increase as a proportion of the U.S. workforce. Along side, the amount of student loan debt continues to increase, but not only amongst that population of Millennials.

There is also a high employee turnover rate these days which is a positive driver of this type of benefit. And I think low unemployment is helping right now. So all of those things are kind of positive macro-trends that are helping to make this thing happen.

At a more micro-level companies are becoming more aware of the implications for financial well-being for their populations, and the impact that could have on absenteeism, presenteeism, on health issues outside the workplace that will help adoption. And the competitive environment for talent will help as well. Employers that offer this benefit will drive competing companies that are competing for top talent against one another to follow suit.

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 David Aronson

CL: So, if you could provide one lesson to someone considering starting their own company, what would it be? 

DA: There are so many. My single most important piece of advice is to focus on solving a worthwhile problem.

CL: Can you talk a bit about the startup environment in Chicago? Why not build your startups in one of the tech hubs? 

DA: It’s awesome in Chicago, especially at 1871. There is such a vibrant energy and there are a lot of smart people. I equate it to business school. I was fortunate to go to a top business school, and you look around the startup scene here and you can see a lot of similarities. It’s a group of smart people spending a couple hundred thousand dollars and a few years of their life to do something meaningful. The talent and network are both similar to B-School.

CL: Can you tell us more about 1871, sounds like an interesting place to start a company? 

DA: So 1871 was recently named the number one tech incubator in the country. There is a co-working space component along with private office spaces where we work, but it is way more than just a space.

What’s unique about this place is the network. It’s the all the people, whether or not you work here. Your company is involved, yourself is involved, your company holds events here and invest here, but your network here is phenomenal. It’s putting startups in a great place to succeed.

CL: Who started this organization and runs it?

DA: 1871 is a not-for-profit organization that’s part of the Chicagoland Entrepreneurial Center. Howard Tullman, (CEO) and Tom Alexander, (COO) run it, along with a top notch team, and a group of highly engaged advisors who are some of most successful entrepreneurs in Chicago.

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? 

DA: I would have to say Tom Rickets, the owner of the Cubs. He acquired the Cubs in 2008 and has taken this franchise from a poor facility and a lackluster talent pipeline that prior owners didn’t invest in and he’s built a great place to play and a great group of people to play there.

It’s really neat to see what the Cubs have done and it extends beyond Ricketts because he’s brought in so many good people with himThe guys on the field are supporting one another, when one guy is at bat they are all in it together. He has done a great job building value for himself as a principal shareholder of the company but has also done it by building a great team on and off the field that has a really positive culture.

CL: Outside of the Student Loan Contribution space what areas interest you for investment?  

DA: AI (Artificial Intelligence), there is so much that can be done through the power of casual interactions. We are only starting to realize how valuable that can be. All the prior models were very formalized. AI is now making it easy to get relevant information. It’s kind of like how we communicate via text. You look and say how do we make something complicated come across in an easy to swallow way and we are starting to see that now in AI.

In closing: 

David and I had a fantastic discussion. What I took away from our conversation is that David brings to the Student Loan Contribution space a seasoned, measured, team oriented approach as a Founder and CEO who is using both his experience and location to his advantage to win. I am very bullish on where team Peanut Butter under the helm of David Aronson is headed.

Thanks for your time David and best of luck to the whole team.

If you want to learn more and follow along with the Peanut Butter team you can follow David and Peanut Butter on Twitter @DavidAronson, @peanutbutterget

You can also read more on the Millenial Benefits Preferences study here.

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