Merrill Lynch Exec Turned Entrepreneur Sallie Krawcheck on Money, Power and Knowing Your Worth
Grow Your Business, Not Your Inbox
In this series, Open Every Door, Entrepreneur staff writer Nina Zipkin shares her conversations with leaders about understanding what you have to offer, navigating the obstacles that will block your path, identifying opportunity and creating it for yourself and for others.
Wall Street executive turned finance entrepreneur Sallie Krawcheck has made it her mission to help women everywhere achieve their goals through financial literacy.
“It’s everything. Money is power," Krawcheck tells Entrepreneur. "Men have more of it than women do and we will not be fully equal with men until we are financially equal with men.”
Her executive career began in the high stakes and male dominated world of Wall Street where she was the CEO of brokerage firm Smith Barney -- now Morgan Stanley Wealth Management -- the CFO of Citigroup and CEO of Merrill Lynch Wealth Management.
She weathered the financial crisis at some of the financial industry's most visible institutions. In 2008, she was fired from her post at Citigroup because she believed that the company had an obligation to pay back some of the funds that the clients lost because of advice from the firm -- and for being a woman.
Today, Krawcheck is the founder and CEO of Ellevest, an investing platform tailored to women and their careers. It takes into account the fact that women live longer, their salaries peak sooner and parenthood can take them out of the working world at a greater rate than their male counterparts.
The company was founded by Krawcheck and Charlie Kroll in November 2014, launched in beta at TechCrunch Disrupt in May 2016 and was officially open to all in November 2016. She leads a team of 32 employees and as of April of 2017, the platform was serving approximately 3,700 users.
“What this industry does that does not make any sense is ask you, 'What’s your risk tolerance?' You have no idea,” Krawcheck says. “As a fiduciary I’m obligated to act in your best interest. I’m going to tell you how much risk you can afford to take. That’s my job. Your job is to tell me what you want to achieve in life: when you want to buy your house, when you want to retire. My job is to do my level best to get you there.”
Krawcheck says she believes that when women have the tools they need to take smart risks in how they invest, it affects the steps that they are able to take in their work lives. “The biggest risk is not taking any career risk," she says. "We all need to be pushing ourselves in different directions, otherwise we risk having the world just pass us by.”
Entrepreneur chatted with Krawcheck for more insights on passion, negotiation and leadership.
Since launching Ellevest, how have you grown and changed as a leader?
I’m probably more of a startup CEO than you would think given my background. I think people look at my resume and see Smith Barney, Merrill Lynch -- she’s going to want her own office and she used to have a staff and all of that stuff.
But the truth is I started as a research analyst where you have to motivate yourself every day because no one is going to do it for you. The scrappiness, the nothing-happens-if-you-don’t-make-it-happen mentality feels more to me like me than the corporate executive ever felt like me.
I try to be humble and I try to keep learning. I’ve learned the importance of product management, which frankly was not a well-developed concept at some of the companies where I have worked. I’ve learned a lot about the importance of design, in not just making products beautiful and easy to use, but in making products that really serve the user and letting the user or the client guide you.
Those are the elements of the craft of the startup that I just didn’t know before. And I try to keep myself open to learning, because why wouldn’t you?
What advice do you have for founders that are about to make the big leap and be their own boss for the first time?
You’ve got to be passionate about it. It’s just too hard otherwise. I’m not kidding you when I say I woke up at 3:30 this morning and didn’t go back to sleep. I promise you that this is all I was thinking about.
I don’t know how people do this if they don’t have a mission. For us around here, we can absolutely build a great company, but also more importantly, change the lives of women -- which changes the lives of their families. It’s this ripple effect. To see their mom in control of their money changes the lives of the daughters and sons and society and the economy. It closes the retirement savings gap.
The ripple effect of what we’re doing can be so important so you have got to have a passion for it in order to do it. But you also have to let go every once in awhile. This whole mythology around startups where you’re working all night is completely unhealthy. It makes for a truly poor company. We always say, personal lives are a priority.
Can you talk about why your mission of giving women the tools to educate themselves about their finances and get that power is so important?
It’s not just the pay gap -- it’s all the gaps. It’s the gender pay gap, the gender work achievement gap, the gender investing gap, the gender expense gap, the gender debt gap, the gender unpaid labor gap and the gender funding gap.
Just the investing gap can cost women millions of dollars over the course of their lives. Some people might think that’s just having the beach house or not. Wrong. That’s leaving your abusive marriage or not. That’s leaving the company job that is dragging you down to start your own business.
I was interviewing a woman to come work with us the other day. I asked her why are you interested in Ellevest and she started to cry. She said that her grandmother was married to her grandfather from the age of 18 to the day she died. He beat her every day, and she couldn’t leave the marriage because she couldn’t afford to do it. That’s our mission.
Can you talk about a moment in your career that you had to advocate for yourself? How did you approach it?
Sandy Weill offered me the job to go from Sanford Bernstein to run Smith Barney. And he needed me.
I knew Sandy because I had covered Citigroup and had some not so nice things to say about it, and he respected me for it. He made me an offer to come run the research business and to sweeten it he put in Smith Barney. It was a job I really wanted, but he offered me flat money.
I was like, "Hold on, let me make sure I understand this. I’m going to go from running 386 people to 40,000 and you believe that my turning around the research business will drive the stock higher, and you want to keep me flat?"
Of course, he was known for being this tough negotiator. It was really hard because I really wanted that job and would have gone for flat, frankly. Just the idea of being one of the very few women to run a whole business, I would have gone. So he and I went back and forth in the negotiations. He ended up more than doubling the offer.
During those negotiations, how did you find the confidence in yourself to stay at the table and fight for what you knew you deserved?
I talked to my husband about it. Having someone you can speak to whether it’s a friend or a spouse. Having someone there to say buck up. I was like well, "What if he takes the offer away?" And my husband said, "He’s not taking the offer away. He needs you more than you need him."
What is not going to happen, which is what a lot of us women think is that if you say, "Hey Sandy, this offer doesn’t feel right. Why don’t you come back with your best offer?" He’s not going to say, "Screw you, I changed my mind." In that instance, I knew my worth.
When was a time in your career that you made a mistake? How did you move forward from it?
I make mistakes all the time. I think the one that I would fess up to is when we were in beta, my co-founder wanted to go more quickly and I wanted to go very slowly. My thinking was if we can bring people in and really follow them and test and iterate and see what changes we can make, then we can make the experience better.
His argument was, we’ve had people sign up and they're excited about it and we’re going to exhaust them and they are going to lose interest. We had several weeks that were a little tense around here. But over the course of several conversations and consulting with our head of product Alexandra Stried, I realized that I was wrong.
I think it was important for me that the team saw that disagreement and that tension. And then saw that I said I was wrong and that we moved on in a path that was not my chosen path.
What do you say to yourself to work through tough moments?
I say, "This difficult moment I’m having? Most of the world’s population would trade places with me." I really mean this honestly. I don’t love it when women do the "Oh, I only got here because I’m so lucky." No, we all work very hard. But we only got here because we are so lucky.
How in the hell did we get to be born in the United States of America? I was born to two parents in South Carolina who went into debt to send us to private school because South Carolina’s public school system is ranked 49 out of 50. How did I get that lucky?
When I’m facing a tough moment, even when I was fired on the front page of The Wall Street Journal, there is part of me that is like, I’m the luckiest woman on the planet.