Fintech
May 24, 2021

Vestwell’s Aaron Schumm Is Striking Gold Twice—and Advises Fintech Founders Skip Investors Who Don’t Get their Space

In 2016, Aaron Schumm took on the $33 trillion retirement savings market when he founded Vestwell, an entirely new kind of digital workplace savings platform helping make quality, low-cost, flexible 401(k)s more accessible to the small plan market.

Primary got in at the seed round, was one of the first 401(k) plans onboarded to the platform, and we’ve never looked back. In addition to some of the major partnerships they launched over the last year (Franklin Templeton, QuickBooks, and a number of other soon-to-be-released household names), they are also working with BNY Mellon to power a significant number of mandated state retirement plans.

Aaron is a force. His last startup, wealth management fintech platform FolioDynamix, powers $800 billion in assets for over 100,000 advisors. He has a traditional financial background (Citigroup) and has served on the board of directors and the advisory board for several fintech companies, including Quovo (acquired by Plaid), Vestorly, OfColor, and Chalice Financial Network. In short, he very much knows what he’s doing, and is a voice up-and-coming fintech founders will do very well listening to. 

What’s a key piece of early advice you’d want to give a new fintech founder on day one? 

My advice to any fintech founder is to surround yourself with incredible talent, both from an investor and industry knowledge standpoint. Your path will never be linear. So find great people you can trust to talk through scenarios on the good days and the bad.  

What are a few key documents and/or processes you’d suggest founders focus on at early stages? Tips for making them most effective?

Never underestimate or shortcut cybersecurity, data security, or process. Investing in it later down the line is far more expensive than doing the work upfront. It pays for itself many times over. You should be able to run through a SOC1 Type 1 & Type 2 process with regular pen tests early in the company’s life. The work is daunting and sometimes seems endless, but it sets the foundation for a secure future.  

What’s one thing you learned as you did your first few seed-round pitches? What do you think investors most want to see from fintech founders at this stage? 

One thing I learned is to not waste time with investors who may seem great on paper, but don’t understand your space well. If they don’t have intrinsic knowledge of your play, your time will be better spent elsewhere. Also, be open to feedback. Ask for it, even though it may not be what you want to hear.  Put yourself in the investors’ shoes and think about how to speak about an area or topic differently.

The biggest thing I believe investors want at the seed stage is an awesome team (not just a founder), deep understanding of the space, and a well-defined path to product-market fit.

What kinds of early hires are most important in this industry? What kinds of characteristics and backgrounds should they have? And how did you approach finding them? 

Know yourself, your strengths and weaknesses, and who you need around you to be successful. When founding Vestwell, I knew the industry, the players, the distribution channel partners, the pain points, and how to enter the market. I didn’t know how to code or create the details of the tech stack. I hired the compliance, security, engineering, and design/product people I needed to pull the pieces together. Luckily, this was not my first rodeo, so I either knew someone directly, or I knew of someone who could introduce me to the type of person I wanted.  
When bringing someone on, be honest, candid, and specific up front about your expectations from them, for the company, and how you want to engage.  Also, make absolutely sure they are fully committed to the company, at least for the first several years.  

What was a key turning point in discovering your product-market fit? What kinds of questions do you suggest fintech founders ask themselves to get here? 

Having been in the industry, and speaking with a lot of people about the idea before endeavoring into it, I felt very confident in what we were going to build. But, I think the turning point of product-market fit was when we realized that we were essentially spending $0 on digital and demand-gen marketing (still mostly are), with a handful of sales people (still do), and everyone was talking about us and bringing us business. We knew we still had a lot to build that we felt was critical before we wanted to really ramp the business, but the word got out ahead of us. That’s not a bad place to be in, but it does put a lot of pressure to deliver on aspects of the business faster and faster. 

The question I ask myself over and over and over is, “Why?”  I ask “why” until I can’t any longer. To me, it’s my half life of a nuclear species. I keep splitting “why” and it never ends. If it gets sliced enough times, you’ll have a far clearer depiction of the direction you need to go and why that’s the right path.  

What tools, resources, and communities should startups in this space know about?

Honestly, just reach out and talk to people you want to speak with… or just find interesting. It’s amazing how many people will be open to a quick chat with anyone. Come prepared and ask pointed questions. Don’t ask for a life story. Get specific. Don’t ask for a favor or try to sell them on something. Just ask for input or how they were able to accomplish “x scenario.”  You’d be surprised how many people are willing to share more than you’ve asked for.  

What fintech trends or predictions are you thinking about most right now?

Infrastructure has been a key driver of the industry. Taking it a step further, process improvements and expedition with a drive toward immediacy will play into the next phase of fintech. Faster, cheaper, and scalable, will remain the themes. The incumbents will be forced to partner, buy, or be marginalized in areas where fintechs are focused. 

What’s most exciting to you about the NYC startup community right now?

The most exciting part of the NYC startup community is the strong resilience in the COVID world, and now working back to a modified level of normalcy. People are eager to get back to seeing their colleagues in person, even if it’s only two or three days a week. There will be a renewed collaborative energy. Most are weary of isolation and longing to engage with other professionals in-person. The engagement is going to spawn new ideas and initiatives that will spin up more and more startups. New York is always changing, but those of us that have been here long enough (personally 20 years) know it will never go dormant.  



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