How I Built This with Guy Raz

Advice Line with Jon Stein of Betterment

February 5, 2026

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  • Founders should sequence growth paths by picking one primary lane to go deep on, rather than pursuing too many simultaneous opportunities, which can dilute focus. 
  • When constrained by capacity, a founder should evaluate whether to raise prices dramatically to increase margins or to expand into standardized, repeatable products to scale revenue. 
  • For consumer brands selling through third-party retailers like Chewy, the retailer channel can be leveraged as a customer acquisition marketing expense, with efforts made to drive subsequent orders directly to the DTC site for better margins. 

Segments

Introduction and Guest Context
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(00:01:14)
  • Key Takeaway: Jon Stein founded Betterment after being laid off in 2008 to democratize financial advice using algorithms and robo-advisors.
  • Summary: Guy Raz introduces the Advice Line segment featuring Jon Stein, founder and chairman of Betterment. Betterment was founded in 2008 following the financial crisis to provide investment advice at a fraction of traditional advisor fees. The platform combines algorithms with human advisors, managing nearly $60 billion in assets for over a million Americans as of the recording.
Stein’s New Venture: Advisor Directory
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(00:03:06)
  • Key Takeaway: Jon Stein is building a definitive, data-driven directory for financial advisors to solve the current referral-based discovery limitation.
  • Summary: Stein’s new business addresses the outdated, referral-based method of finding financial advisors, which naturally limits consumer options. The new platform aims to be the definitive directory, leveraging Zoom’s reach to connect consumers with sympathetic and suitable advisors nationwide. The goal is to help consumers make informed choices while rewarding advisors who deliver great work.
Starting Business During Uncertainty
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(00:05:03)
  • Key Takeaway: Starting a business during economic downturns, like the financial crisis, can be advantageous as market conditions may be favorable and competitors are often hesitant.
  • Summary: Stein notes that starting Betterment during the 2008 downturn was fortunate because other firms were not entering the financial services space. He suggests that current uncertainty presents opportunities for new businesses, referencing historical periods where life and business continued despite market headlines. Founders should recognize that markets still exist for great ideas even when headlines suggest fear.
Caller 1: Heretic Yerba Growth Paths
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(00:07:17)
  • Key Takeaway: Heretic Yerba needs to sequence its growth paths—loose leaf, energy drinks, and coffee shop concentrates—by prioritizing the channel that offers the best combination of revenue engine and customer learning.
  • Summary: Dan from Heretic Yerba is seeking advice on prioritizing growth across loose leaf, energy drinks, and coffee shop concentrates, each requiring different resources. Stein advises focusing on one primary lane for the next 6-18 months, emphasizing the channel where the founder is most passionate or learns the most from the customer. Dan noted that loose leaf and coffee shop concentrates offer more direct customer feedback than the anonymous energy drink channel.
Caller 2: MTS Woodworking Expansion Dilemma
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(00:19:33)
  • Key Takeaway: MTS Woodworking must choose between raising prices significantly to maximize profit on custom work or carefully expanding capacity via small, low-commitment steps to handle standardized pieces.
  • Summary: Mike Smith, a solo craftsman, is constrained by his basement workshop space and needs advice on taking on debt for expansion versus waiting. Stein suggests two safe options: dramatically raise prices on custom work to increase margins (aiming for 80% profit) or scale by hiring part-time help for standardized pieces while keeping custom work as the core. Mike should explore low-commitment expansion options like subletting space instead of immediately taking on large debt for a home addition or commercial lease.
Caller 3: Floofball Channel Focus
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(00:32:59)
  • Key Takeaway: Floofball should focus resources on the channel providing the clearest signal for scalable, repeatable customer return, potentially shifting focus from expensive DTC marketing to wholesale or platform marketing like Chewy.
  • Summary: Maggie McDonald of Floofball is struggling to scale due to high direct-to-consumer marketing costs and is considering shifting focus from DTC. Stein validates Chewy as a significant channel, suggesting it can be viewed as a marketing platform where brand connection can still be built via packaging. The best focus is the channel that offers the clearest path to scale, such as wholesale or club partnerships, even while maintaining a DTC presence for brand connection.