Tim Chen is the co-founder and CEO of NerdWallet which is a personal finance website and app, that provides unbiased advice. From finding the best credit card to buying a house to investing their next dollar, and more. The company has raised over $69 million from investors such as IVP, RRE, iGlobe Partners, Core Innovation Capital, or Silicon Valley Bank.
In this episode you will learn:
- Top questions to ask potential investors to find the best fit
- Ways to build and scale a business without outside investment
- The importance of surveying employees to have a powerful culture
- How to know if content marketing is right for your startup
- How to run a 340+ employee company
- Creating the company culture you really want to see
- Why paid marketing and content marketing don’t go together.
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
ACCESS THE PITCH DECK TEMPLATE
About Tim Chen:
Tim Chen, CEO of NerdWallet, co-founded the personal finance company in 2009 after working on Wall Street and realizing there isn’t much transparency when it comes to financial decisions.
As CEO, Chen sets the strategic vision for NerdWallet and is determined to give consumers clarity around all of life’s financial decisions.
In addition to leading NerdWallet toward its ambitious vision, Tim sits on the board of the National Foundation for Credit Counseling (NFCC).
Before founding NerdWallet, Tim was a hedge fund analyst at Perry Capital investing in payment processing firms, credit card networks and technology companies.
He also worked as an equity analyst at Credit Suisse First Boston.
Tim has a bachelor’s degree in economics from Stanford University.
Connect with Tim Chen:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone and welcome to the DealMakers show. Today we have a founder that I think we’re going to be learning a lot from. Obviously, he’s been spending the past ten years on this business with a lot of ups and downs. Definitely, one of the biggest Series A financings that I have heard of in a while, and we’re going to be learning a lot about content as well. So, without further ado, I’d like to welcome Tim Chen, founder of NerdWallet. Welcome to the show today, Tim.
Tim Chen: Thank you for having me.
Alejandro: Tim, you were born in Houston, but raised in Atlanta, I believe. How as life growing up there?
Tim Chen: Yeah. That was a great place to grow up. I’d say it felt very normal and it’s really interesting. I ended up spending a lot of time in New York and San Francisco after college, and it’s quite different culturally than growing up in the South. So, I’ve taken that with me.
Alejandro: Got it. You went to Stanford. Is that right?
Tim Chen: That’s right.
Alejandro: Why did you go to Stanford and study Economics, and then all of the sudden landed here in New York City?
Tim Chen: I really loved that Stanford was really far away from where I grew up. It also just had an entrepreneurial reputation. I’ve always been fascinated by the amount of discovery and invention that was happening in Silicon Valley. So, that was a huge draw.
Alejandro: Then why after going to Stanford where you hear all the big stories like the Googles, and so coming out of there, you decide to go into Corporate America? Why?
Tim Chen: Yeah. Well, to be fair, I got to Stanford before Google existed, but right around the time it was being invented. I think a lot of my cohort at the time was interested in going into financial services for the best career opportunities, and I think it was actually a great training ground for becoming an entrepreneur down the road.
Alejandro: Let’s talk about your first job. That was at CSFB. What were you doing there?
Tim Chen: I was helping institutional investors like pension funds, mutual funds, and hedge fund evaluate which technology companies to buy stocks in or to sell stocks in. It was really fundamental analysis-driven equity research approach.
Alejandro: In terms of doing all this research, were there patterns you were able to discover on why certain companies would perform better than others?
Tim Chen: I would summarize my five years on the advice side and sole side with a simple lesson, which is that some companies have a lot of power in terms of their market positioning, and some companies are competing each other to death. The ones you tend to want to invest in are the ones that have some kind of moats that are giving them pricing power. A pretty good indicator of that, I think is whether a company is raising prices every year, or whether a company is purely competing on price. So, that has been a really formative lesson in terms of how I think about business opportunities as well as how I invest my portfolio today.
Alejandro: Very interesting. So, you actually did a couple of stints here in the investing world. You went to Perry Capital afterward, and then you went to a hedge fund where you were doing long/short equity type of stuff. What happened there on the hedge fund because I believe this was during the tough years. 2008 and 2009 were where people were getting fired left and right. The economic turn as well. So how was this being in the financial service space during this time?
Tim Chen: Yeah. It was a pretty challenging time. I was let go at the end of 2008. From the day I joined the hedge fund to the day I left, I think the NASDAQ dropped by 50%, so it was a pretty turbulent year. But yeah, I’d say like there are a lot of good lessons learned, and in hindsight, it was a really great experience for just learning how businesses work and which ones thrive in this environment.
Alejandro: I believe that when you were actually let go, I think that was a blessing for you. You received a phone call from your sister, and there was something that sparked a big idea, and this triggered your entrepreneurial spirit. So, what happened?
Tim Chen: Yeah, that’s exactly right. So, my sister called me one day and said, “Which credit card should I get?” I said, “Let me Google that for you.” I was a little bit surprised by what I found. To put it in perspective, I was a financial analyst. I was used to looking at spreadsheets and thinking quantitatively about what the right decision is. What I found instead was a bunch of marketing materials kind of steering me in one direction or another, and it didn’t feel like it gave much of a rationale or transparent analysis of why one product versus another. So, I created a spreadsheet, and I sent it to my sister and some friends, and it got forwarded around. That’s really where the genesis of the idea came from.
Alejandro: How long did it take you to put that spreadsheet together?
Tim Chen: The spreadsheet? Probably about four or five hours. I had some time to kill. Then between then and actually turning it into a web app was maybe two or three weeks. I hadn’t programmed in probably ten years at that point. It was like riding a bicycle. I figured out how to build a website and put it back up there.
Alejandro: So, you all the sudden got this idea. You started thinking about, “I can’t believe this is out there. I’m just going to send this to these people to add some value.” But one thing is to help them with that research, and the other thing is to actually say, “I’m going to build a business around that.” So, can you walk us through what that bridge was from adding value to really building a business? What was that process for you like?
Tim Chen: Sure, yeah. I would the define the consumer problem as – well, NerdWallet’s mission really is to provide clarity for all of life’s financial decisions. So, we want to make sure that the 99% get as good information as the 1% who has access to great Cadillac advisors and things like that. Bridging that into a business, what I realized once I put up the first version of the website is that no matter how good our product was, our biggest struggle for the next few years was to let people know that we exist. It sounds like a very simple problem, but I think I had this incorrect assumption going in, which is that if you build something great that people will come. I think it’s probably why most startups fail. Especially in financial services acquiring customers is so expensive and so difficult because you’re competing against entrenched incumbents with absolutely massive customer acquisition budgets. So, how do you differentiate yourself so that people will show up? Our entire strategy became, “Let’s just be so much more helpful than everyone else. So helpful that we will get journalists to write about us, that we’ll get free coverage from the press, that we’ll really engage people on our website, that we’ll spread slowly by word of mouth. But that strategy is actually a lot harder to implement than it sounds. It was a real struggle for the first two or three years finding that traction.
Alejandro: Why did you guys go to San Francisco? You were in Manhattan when you got laid off.
Tim Chen: Yeah. The story is not as planned out as you would expect. My co-founder’s wife really wanted to move to San Francisco. So, the two of us ended up on opposite coasts for a while. Then we ended up both hiring interns, me in New York, and him in Redwood City. Things just worked out really well with the intern we hired in Redwood City. She became our first full-time employee. Then we ended up hiring a lot more there. So, we eventually ended up in the Bay Area.
Alejandro: How did you meet your co-founder, Tim?
Tim Chen: My co-founder is my best friend from middle school and high school. You hear a lot of advice to entrepreneurs not to work with your friends, but that one really worked out for us.
Alejandro: Then, in this case, Jacob Gibson. What did he have that was his strength, and what did you have that was your strength that matched each other’s weaknesses?
Tim Chen: I would say that Jacob, a great operator, communicator, and he had some of those really natural leadership abilities. I think I was very strong in terms of strategy and maybe had done a little more coding and financial analysis. So, we had complementary skill sets, but still a lot of overlap as well.
Alejandro: You eluded to “build it, and they will come.” You realized that was not that effective, so I understand that the first couple of years were brutal. The first year, how much revenue did you guys do?
Tim Chen: I think we were less than $100 in revenue the first year. You raise a really good point because I think every entrepreneur has their comfort zone. It’s the thing that you were doing in your last profession that you’re really comfortable with that you’re good at. For me, it’s analyzing stuff, building spreadsheets, building data sets, building and iterating on products. But then at some point, you hit a wall, and you realize that you have to totally go out of your comfort zone if you want to get any further in life or if you want your company to survive. I realized that I had to pick up the phone and cold call reporters, for example, which was a terrifying thing for me. I realized I had to learn how to use programming languages that I wasn’t familiar with. I didn’t love a lot of the elements of debugging and learning how all this stuff worked. I realized I had to learn how to hire and manage people. So, some examples of forcing myself to do really uncomfortable things.
Alejandro: For example, getting with reporters, what was uncomfortable about it? Was it like how they would judge you, or how they would write about you, or what you would say or not say? What was that?
Tim Chen: We thought that we had built a much better credit card comparison tool and eventually comparison tools for every financial product. But no one was writing about us. No one knew we existed. First of all, I didn’t know how to pitch a reporter. I didn’t know how to talk to them. I didn’t know what they cared about, what they were thinking about day to day in terms of doing their job or making their lives easier. So, I had to learn a lot of these things by talking to friends who are in the industry or eventually doing it myself and learning by trial and error.
Alejandro: I understand as well that to save money, you even moved with your girlfriend. So, I’m sure that she was probably happy, but also not so happy of where things were going. Right?
Tim Chen: Yeah, I think her roommate was even less happy. A little-known fact is that for those of you entrepreneurs out there, you can use the health insurance plan of your “domestic partner.” You don’t have to be married. I was on her health insurance plan for a while.
Alejandro: Got it. Really cool. Then what was the turning point? Here you are. The first year, no revenue or just a tiny bit. Then the second year, it seems that things are picking up a little bit, but then there’s something that happened. What was that?
Tim Chen: To be honest, we never really had that breakthrough moment. It was all a slow build over time. We kind of just did 10 to 15% better every month. There are definitely some high points. I still remember the first time we got covered by Lifehacker as just being this really helpful site for shopping for financial products. We got a couple thousand people clicking through that day. That was the first day where we generated over $1,000 in revenue. Still not enough to sustain a business, but it gave some early indications that there was some product/market fit for what we were trying to do. So, those kinds of things really helped energize us even though the business was not really on sound financial footing until probably mid-way through year three.
Alejandro: Then, at what point do you realize, or maybe you told your girlfriend, “I think this is going to work.”
Tim Chen: I think towards the end of year two, there was just this momentum we were feeling. In terms of every month, we would have thousands more people coming and thousands more dollars coming in. We definitely felt that the trajectory was starting to hit this point where we knew that we’d be able to start paying ourselves a salary by your three and start to hire our first interns and employees. That was a big turning point for us.
Alejandro: Just out of curiosity, when you have a business where you haven’t raised any money. It’s bootstrapped, and you’re making some money here and there, what kind of framework to establish both of your salaries did you guys follow?
Tim Chen: For us, it was pretty arbitrary. We basically paid ourselves zero. Then we had a frank conversation about what we would need to get by for the next year, year three. Then we settle upon a number there, the minimum number we thought was viable. Eventually, when we started getting into tens or dozens of employees, then we started looking more at market compensation data and try to set ourselves into the lower end of that for our size.
Alejandro: Got it. You were talking about speaking with reporters. What were some of the growth tactic early on that helped you guys to let the world know that NerdWallet was here?
Tim Chen: It was really obvious that our survival was dependent on figuring out how to get audience to show up. One of the things I really needed up gravitating towards, I would look and examine every single competitor in the industry and learn what was working for them in terms of building things like links and press mentions to their site. I would literally try every single one of those tactics and see what fit in with us as long as it fit within our mission and our values, which was quite a diverse set of things. In reflecting on this, over time, I think we were just willing to try more things, and be more openminded, and hungrier, and work harder than everyone else. Eventually, those things started compounding. Before the book, The Lean Startup came out, we really started implementing very similar tactics. What we would do is we would look at everything as a hypothesis. We would try a bunch of things every week. At the end of the week, we would postmortem to see what worked and what didn’t work. As a result, we would then come up with new hypotheses for the subsequent week. So, we became pretty rigorous about this process. It didn’t really matter what the metric was. We definitely did it when we were thinking about content marketing and getting press coverage, but we also did it in other aspects of our business as well. Thinking of everything as a hypothesis, I think is a very powerful thing for an entrepreneur and an organization.
Alejandro: For sure. As you were thinking about building the business, a business that relies on content like this, how were you thinking about the early team members and who were the first hires?
Tim Chen: In hindsight, I’m not sure I would do it exactly the same way again, but we were very oriented towards doing as much as possible with as little money as possible. We hired our first 20 people, half off of Craigslist and the other half through our personal networks. It was a really interesting mix of people. We had a lot of people, roughly the same age as me who were all ex-financial industry veterans. Then the other half were new college grads who were pretty green. It was a fun environment, and we got a lot done; but in hindsight, we were probably lacking some experienced people in more diverse areas. In hindsight, I think I would have gone back and brought in some people who had more experience on things like the HR side of the house, or the paid marketing side of the house, or the product development side of the house. We really had very little of that.
Alejandro: You were talking about building models and taking a look at data. If you were to look at the data, and if you were to take a look at the people that you hired via Craigslist and the other people that you hired from your own network, which side would you say brought the best employees?
Tim Chen: You know what? One of my biggest learnings is that there’s a very nuanced definition of what is a best employee. So, coming out of the financial services industry, I feel like there’s a pretty set definition of what that person is. Maybe in banking, it’s someone who has some business development skills, but also quantitative skills and things like that. Maybe coming out of the hedge fund side, it’s the ability to connect the dots and that kind of thing. But I was very humbled by my experience in the early stage because some of the most productive employees really were not anything that fit my mold. People with exceptionally high intuition as to how to make groups of people work well together, for example, or people who had really good intuition in terms of how to make reporters’ lives easier by packaging stories in a way that was really helpful. Things like this, we would have never figured out, and the diversity really helped.
Alejandro: Got it. For the folks that are listening, what ended up becoming the business model behind NerdWallet?
Tim Chen: We think of us as matchmakers. We match up consumers with financial products that help them out. We think of it as a win/win for both the financial institution and the consumer. Really, the loser is the financial institution with the mediocre products that people don’t end up getting.
Alejandro: Then how do you guys go about monetization because when you’re putting out content, I think that one of the toughest parts is, “This is great. I’m adding value.” But making money at the end of the day is helping to keep the light on, so how did you go about that?
Tim Chen: We know that when we create really helpful content, people have some small chance of eventually coming back to our site when they need a financial product and shopping with us. So, we really think about our content in terms of relationship building, especially on the educational side. Then we have marketplaces that people can come back to and transparently compare a lot of different options. So, it adds to the business.
Alejandro: You guys founded the business in 2009, and you raised money in 2015. Why did you wait so long?
Tim Chen: This might be a bit of an unexpected answer, but we’ve been profitable pretty much of our whole existence, so we really didn’t need capital from investors. But the problem with building a company in Silicon Valley is once you start needing to hire product engineering and design people, they really come in looking for social validation. They ask, “Who invested in you?” That social proof is really important in terms of getting people to accept your job. It’s much easier to hire people out of a consulting or finance industry when you can show them your income statement, and they understand what’s going on. So, it was mainly to hire engineers.
Alejandro: You guys raised one of the biggest Series A that I’ve seen. How much was that?
Tim Chen: We raised 69 million at the beginning of 2015.
Alejandro: Wow. In total for the business, how much have you guys raised to date?
Tim Chen: That’s the only round of financing we’ve done. Like I mentioned, we’re profitable, and we’re funding our own growth and really happy about the trajectory we’re on.
Alejandro: This is amazing, Tim. Your story and how you’re able to control your destiny is unbelievable. Here you have a story where you’re going out to get investors to prove the social aspect of it. What were you looking for in investors? I’m sure that you had VCs showing up at doorstep of your office with coffee in the mornings. Do have stories like that or not?
Tim Chen: Yeah. We really thought about it. I was fortunate to get great advice from other entrepreneurs in Silicon Valley. One of the best things about this place is people are really willing to pay it forward. The advice I got was think about it like you’re getting married. You should really have very frank discussions upfront about what success looks like for the investor. I think every entrepreneur should ask the question, how will you decide if this is a successful investment in three years, five year, seven years? What is your time horizon? Can you talk me through how your investment committee works? What’s your position on your investment committee? How will your firm decide whether to do a follow-on investment, etc. etc. I think just having very upfront conversations about these things really sets the right tone on both sides.
Alejandro: What would you say, for example, in this case, it was the answer you heard from Institutional Venture Partners, IVP, that made you think these guys may be the ones?
Tim Chen: They’re great partners. They were very aligned around our long-term mission and vision. They really think about the investment in terms of are we a real business that can keep on compounding for years and years into the future in what we’re doing? With that in mind, I think that we’re a really good fit for long-term.
Alejandro: Shifting gears a little bit here; we know that the journey of being a founder has the ups and downs. What was, for example, in you guys’ case and particularly for you a really big breakdown that turned out to be a real breakthrough?
Tim Chen: I would say two or three times in our history, I think we have not been as diligent as we should have been about how we were expanding. When the business is going really, really well, this is a big risk. You really open up the floodgates on hiring, and sometimes you don’t put as much scrutiny into making sure you’re doing that really thoughtfully and being efficient with your resources. There’s a lot of temptation to get a flashy office, to do what a lot of other startups around you are doing to hire the types of people that a lot of other startups around you are hiring. But in hindsight, it’s important to sit back and think about how your business is different from every other business out there, what you specifically need, and what will make your business successful? So, I think it’s a normal growing pain of a lot of first-stage companies, but there have been two or three times in our history where we’ve decided to really pause, digest, and reflect on what we’re doing. Every single time, we’ve come out of it more efficient, leaner, and more re-committed to our mission. I think they’ve actually been very good challenges to run into.
Alejandro: I understand that in 2017, you guys dealt with what I would say, understanding what the real hurdle of expanding so quickly was, and I believe you had to lay off 11% of the workforce. How was that experience for you?
Tim Chen: It was obviously gut-wrenching. These were people that had help build NerdWallet to what it was. Frankly, a lot of the fault really lay with me in not making some of the right decisions around how we were expanding. For example, as we thought about what we were trying to do for the next two or three years ahead, especially around building a membership experience that was going to help proactively notify our members when they should be making smart money moves, we realized this is a big engineering investment. We need to really have top-tier talent in particular areas of platform and consumer engineering in order to achieve these objectives. The ratios in our company weren’t right. We had maybe overinvested in some other areas and underinvested in engineering. So, as we thought about these things, we realized that it was going to be really painful, but good for the long-term in the company to make some of these changes.
Alejandro: When we’re thinking about culture, obviously when you go through an event like this, you can’t stop to think about culture and how that news is probably going to affect other folks as well. How would you say that you go about culture, and especially how do you embrace culture after an event of this nature?
Tim Chen: I would say that a lesson from early on that I realized is that it’s kind of irrelevant what you say about culture because everyone can see the culture and the tone set by me and by the executive team in the company. So, it’s kind of irrelevant what you put on the wall. One of our cultural values is candid and constructive. It is something that I really struggled with early on to the determent of the company that I think I’ve gotten a lot better at over time. I’m actually pretty proud of where I am now. We listed that as a culture, yet we weren’t being completely candid and truthful about like where certain parts of the organization weren’t performing and how certain people were doing, like in say 2011 and 2012, and had to make big changes in terms of first, how I behaved, and then how the culture of the company followed as a result.
Alejandro: We were talking about that you’re big into measuring the data and things like that. For the folks that are listening so they can learn from this, how do you go about tracking really critical KPIs to determine the health of the business, and how to be effective with that? Perhaps share what you have learned so that folks that are listening can also apply that as they’re building their own business.
Tim Chen: I think the business side is a little bit less interesting than say the HR and operational side in terms of tracking KPIs to me. On the business side, we do all the standard stuff. We’ll track our new users, we’ll track our different acquisition channels, we’ll track our conversion rates, and we’ll track, importantly, consumer NPS. Like how many decisions are we helping consumers make, and do they like our product? But, internally, it’s equally interesting. We survey the company every two months, and we ask them questions like what is your confidence level in the CEO? Do you feel like the work you’re doing every day ties into your mission? Would you recommend NerdWallet as a product to other people? Questions like this are really important and helpful for having a high-performing internal organization. I think one of the biggest challenges that a lot of CEOs or entrepreneurs face is actually knowing what is going on in their organization, especially once you scale past 150 people.
Alejandro: How many people do you guys have now?
Tim Chen: We’re at just under 500 people right now.
Alejandro: Wow. This is like the first time you’ve led so many people. The other day I think I read that if you’re like a company that is growing at a 2x on a yearly basis, that means that you also as the leader of the business needs to grow at a 2x rate. So, how were you able to grow at the same rate as well? What did that look like?
Tim Chen: I’ll say that it’s very difficult if not impossible to do so, but there is a cheat code, and that cheat code is to basically hire people who have been there and done that, and make sure that they work all together. I’d say that yeah, entrepreneurs for a CEO ceiling is really the average of their executive team. If you’re not willing to hire people that are better or more experienced than you, then you’re going to kind of cap out pretty quickly in terms of what kind of organization you can manage. Then I’d also say yeah, you feel very different things from executives who are scaling versus executives who aren’t. The ones who are scaling are educating you. They’re pulling you along. They’re identifying opportunities to improve the organization and being really vocal about those things, and they’re effective at doing it. The ones that aren’t are having trouble diagnosing what’s going on, why things are a struggle, are looking to others for help, are blaming exogenous factors for the outcomes of the organization. I think those things become pretty apparent. It’s really the only person in the company who can play the role of making sure the right execs are on the field, in the game as the CEO.
Alejandro: When you’re onboarding these people, I agree that it’s all about finding the right people, and obviously convincing them. What is that question, Tim that you always ask these people during the process that is for you the most important answer, and that is a go or a no-go?
Tim Chen: I ask them if they were in my shoes, how they would be hiring for this role? For example, if I’m hiring a head of marketing, I would say, “If you were in my shoes, what attributes would you care most about when hiring a head of marketing?” What I’m really looking for is my belief is that everyone is super busy. Every executive is super busy. They have too many competing priorities to possible do everything well. Where they’re going to spend their time and focus is on the drivers that they think are most impactful and important. That will ultimately determine how effective they are as an executive. If they can be very articulate about what is important in their role, what challenges they’ll face, and how they’ll solve them, and how they’ll build their team, then I have much higher confidence that they’ll end up being successful. If they have very generic candid answers and can’t dive into the common issues that they’re going to run into, then that tends to be a really bad sign.
Alejandro: Got it. As you’re building more of the strategic side of the business, like let’s say either a board of directors or a board of advisors, how would you go about that in terms of the people you onboard?
Tim Chen: My opinion on that one has always been that you’re trying to aggregate a certain set of expertise within your company, and there are many different ways to do it. You can either hire that person as an executive, or an employee, or you can bring them in as an advisor or board member. My approach has always been if this thing is really that important, you’ll hire the person. Why stick them on your board? The person you hire is going to be more embedded and more engaged with what you’re doing every day. So, that’s always been my approach. Of course, it’s always great to have a board with a lot of experience and a great rolodex, but I really see the key stuff as something I need to bring in-house.
Alejandro: I want to ask you this. You have almost 500 employees. That’s incredible. What does your day look like?
Tim Chen: Well, I would describe it this way. When we were sub-100 people, my product was NerdWallet, the website, and the app, and the 100 million+ people coming. Today, I think about my product purely as the organization. So, it’s almost like running a government. You’re the regulator; you write the laws; you enforce the laws, you and the executive team; and you determine the culture based on how you behave. Plus, you create the processes that the company adheres to. This is a really complex problem. If you get this right, the company creates immense economic returns, has really happy and engaged employees. If you do this wrong, it’s fine too. You’re paying people. Ultimately, you can be the selfish, self-aware jerk you want to be and no one’s going to really say anything to you, but you’re not going to get great results as a company. So, I think the whole key to running a 500-person company is to just obsessively focus on your product, which is the company itself, the government of the company.
Alejandro: As a CEO of a hypergrowth business of this nature, what are the three main responsibilities? There are a lot of people talking about, “Yes, you know. CEO, CEO,” especially during the early days. But for the folks that are listening, maybe they’re more at the earlier stages and thinking how they’re going to diversify responsibilities with their co-founders. What would you say are the three main responsibilities of the CEO?
Tim Chen: I would say: 1) Make sure you have cash in the bank. 2) Make sure you have the right players on the field because only you can make sure that you have the right talent to get the job done, and that you’re asking people to move on when the fit is not right. 3) You’re setting the government of the company. Only the CEO can disproportionately affect the values and culture of the company.
Alejandro: Got it. Really, really cool. Now, everyone is talking about content and content marketing. What have you learned about the content landscape as a whole?
Tim Chen: My opinion on this is that content marketing isn’t right for everyone. But for financial services, it’s especially important. I think consumers are very hungry for authenticity and just plain-spoken advice. That was a real opportunity for us to differentiate as a brand because people in our industry had been so heavily oriented towards marketing and monetization that the products just didn’t feel right in terms of consumer need. I’ve learned that content marketing is a really hard and slow process. It’s very challenging under the venture contacts because you’re not going to get the returns that venture capitalists expect. For us being a bootstrapped company and having three, four, five, six years to prove it out before we actually took investing was really important. I imagine in the venture context you would be getting a lot of pressure early on to pivot away from content marketing towards doing things like buying Google AdWords to show those quick returns and to try to scale up that way. I’d say it’s a much better fit for a bootstrap company than a venture-backed company as well.
Alejandro: My personal opinion is that anyone and their mother can just grab a couple of millions and just dump it into Facebook ads and Google Ads and get people in the door. I think that building a sustainable channel that brings people in the door is the toughest part.
Tim Chen: Right. It is. If you think about it, the strategy of content marketing effectively can be at diametric odds with paid marketing because the things that make content marketing successful would not be effective in paid marketing. When your business is primarily focused on paid marketing, you’re thinking only about revenue per visitor, and you’re going to make decisions on things like content and page length, etc. that are going to be not optimized for authenticity and being helpful in building trust.
Alejandro: For any business and especially for all the people that are listening now, what would be the question that they need to ask themselves on whether or not to understand that content marketing is the right fit for their business?
Tim Chen: In my opinion, I would ask, is there a lack of authenticity and trust in the space? If there is, then there’s a big opportunity to create a differentiated brand that’s more driven by trust than it is by ubiquity driven by marketing.
Alejandro: Really interesting. Tim, in a world where the vision of NerdWallet is fully realized, what does that world look like?
Tim Chen: I like to think of it as one day money will be pretty idiot-proof. I can be an idiot at times, and I think what that looks like really is that you have an account with NerdWallet. No matter what you need to do, if you’re shopping for a new product or trying to get educated on something, or you just want us to watch your back and tell you when you should be putting money in an IRA or refinancing your loans, etc. We do that for you. I think this reality is coming in the next couple of years, and the technology is making it possible, and we’re really making the investment on our end to make it possible as well.
Alejandro: You’ve been now with NerdWallet for ten years. You’ve been around the block and like we were saying the ups and downs have been part of what you’ve been dealing with. Knowing what you know now, Tim if you had the opportunity to go back and have a chat with your younger self, with that person that perhaps just got laid off from the hedge fund and was thinking maybe “I’ll go at this idea or not and start a business from it,” what would be that one piece of business advice that you would give to your younger self?
Tim Chen: I would tell myself it takes a lot of ego and self-delusion to start a business, but it takes a lot of humility to make your business survive. The faster you find that humility, the faster your business will grow. I’ll just give you a funny, early anecdote. I had built this spreadsheet. I was so convinced that this was the most helpful product on earth. Then I showed my roommate. He just looked at it and was totally confused, and he was like, “I don’t get what this website is.” Then my reaction was I thought he was stupid. This is probably the dumbest thing an entrepreneur can ever do is when other people don’t get what you’re trying to do to not listen to them. So, over time, we really unblocked our speed of learning by starting to treat everything as a hypothesis and starting to behave with a lot more humility.
Alejandro: That’s amazing, Tim. For the folks who are listening, what is the best way for them to reach out and say hi, Tim?
Tim Chen: You can find me on Twitter, timchen82. You can find us on NerdWallet.com or the app store as well.
Alejandro: Amazing. Tim, thank you so much for being on the DealMakers show today.
Tim Chen: All right. Thanks for having me.
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