It’s the team, stupid: Vestwell’s new $30MM the result of constant leveling up
Vestwell, the digital retirement platform we funded in 2016, has had a big 2019. In January we shared the news of their BNY Mellon partnership. Today marks an even more significant milestone, as the company announced it raised $30 million in Series B financing led by Goldman Sachs. Goldman was joined in the round by fintech experts Point 72 and several strategic financial services players like BNY Mellon. Primary was also excited to join the party and increase our stake in this exciting company, which has seen 10x client growth in the last 12 months. More on this round here.
Raising a big financing is by no means an endpoint, however. Vestwell CEO and Founder Aaron Schumm and his team still have the hard work of building a business of enduring scale to come. But when we see a company get this far, it means a lot has been done right, and we think it worthy to pause and reflect on we’ve learned along the way. At Vestwell, that’s almost all about effective team and organizational capacity building.
When I look at Aaron’s success at driving a fast growing company in the three years since we first invested, I would say that while his incredible depth of industry knowledge and relationships is the easy answer to a question of the secrets to his success, his early epiphany about the importance of a relentless focus on leveling up his org has been as critical as anything.
Aaron is a founder who recognizes the importance of strategic hiring and doesn’t need to be convinced that he can’t go it alone. He’s opened up to us about team-building before. But he had to learn, as Vestwell began to rapidly ramp, that if you’re not constantly reevaluating your team, you’re doomed to fall behind.
“The real key to succeeding at scaling a high growth organization is realizing that every new phase of growth requires a new set of activities and skills. And that will inevitably mean a number of new faces in the organization. Sometimes that’s about hiring someone new to build a capability that you previously haven’t had — like a first head of people, or VP of finance. But just as important is realizing that your first leader of any given function is unlikely to be the optimal leader for more than a couple of your distinct phases of growth — that sales leader who drives your first customer wins will unlikely be the right one to build a well-oiled sales machine. As leaders and managers, we all want to see people successfully grow and develop, and it’s amazing when they do that at pace, but sometimes a successful organization grows faster than any individual could reasonably be expected to. When that happens, our job as leaders is to be honest with ourselves, our organizations, and those individuals.”
“This stuff is so tough, though. Loyalty is a critical, powerful attribute of a leader. But balancing loyalty to an individual with loyalty to the broader company and all of its constituencies is your real duty as a CEO. Early on at Vestwell I let loyalty to the individuals who got us to a given point on our path leave me hesitant to make some changes that were likely obviously necessary to an outsider.”
So loyalty to the individual always loses, then?
“No, not at all. I actually think that loyalty to the individual means putting that person in a position where they can succeed. And sometimes that means bringing someone in that they can learn from. Often that means hiring over their head. Sometimes that means supplementing them laterally in the organization. We have several people at Vestwell who once led a functional area but are now reporting to someone more senior. These people are thriving, and they’re learning from some amazing new people we’ve been able to bring into the business.”
Aaron acknowledges that it’s never quite as simple as you want it to be. “This kind of change will always be complicated. I’ve had to learn a lot about bringing a whole organization along on these processes, and I’m still learning. But the thing I would encourage every founder to take away from this is the importance of regularly and repeatedly asking yourself just what skills you need for a particular role and matching that against the people in your organization. There will always be gaps — heck, there are plenty of gaps for me as a CEO! But where those gaps appear large, and more important, where the gaps look to be growing, start thinking about your responsibility to be building a team for the challenges in front of you, not the challenges you just cleared.”
Valuable wisdom from a proven leader. Thanks to Aaron for his generosity with his thoughts. And congrats to the ever-evolving Team Vestwell on this latest success. For more information on the Series B announcement, head here.
— Brad Svrluga, Primary General Partner