SALLIE KRAWCHECK: Media messages around money to women tend to be shame-inducing — you’re getting too many facials, you’re buying too many lattes, my gosh, too, way too many pumpkin spice lattes.

What I loved about last summer is going to see the Taylor Swift concert, Beyoncé, Barbie. We’re like, you know what? Just leave us the frick alone. We’re going to buy those bracelets, and we’re going to dress up, and we’re going to go out, and we’re going to dance, and we’re going to do it again, and we are going to change the U.S. economy as a result of it. 

BOB SAFIAN: That’s Sallie Krawcheck, founder and CEO of the women-led investment platform, Ellevest. Since Sallie was last on the show, Ellevest has grown considerably, announcing in March that it reached the impressive milestone of $2 billion in assets. I wanted to talk to Sallie to understand what a milestone like that really means for a start-up like Ellevest, and more, what it indicates about the pursuit of gender equity and what she calls “the feminization of wealth.” We also explore how The Great Wealth Transfer is primed to turn the economy on its head. There’s a lot to get to, so let’s dive in. This is Rapid Response. 

I’m Bob Safian, and I’m here with Sallie Krawcheck, founder and CEO of Ellevest. Sallie thanks for joining us.

KRAWCHECK: Yeah, Bob, happy to be back.

From a crazy idea to an important idea

SAFIAN: So you spent many years at the top of Wall Street and banking world at Citi at Merrill Lynch, and then you decide to go your own way, launching Ellevest to specifically support and encourage women to invest. And it’s a focus that some big banking houses had tried before some start-ups, but you’ve succeeded at a scale that no one else has previously. Just a few weeks ago, Ellevest announced that it had reached 2 billion in assets under management, a substantial threshold. Did it feel to you like you’d reached a pinnacle, like getting to that moment?

KRAWCHECK: No, no, no, of course not. It, it, you know, we did ring the bell, um, the opening bell of the New York Stock Exchange.

I didn’t think a thing about it until I was there and then saw all of the Ellevest signage all over the floor of the very traditional, very male, very haunted, New York Stock Exchange. And, I do admit that I said, okay, just slow, slow your roll, Sallie. Just have a moment. 

I got a little emotional, to be honest, but it’s gone from, when we launched, this is a dumb idea. We don’t need anything that serves women. We serve women too. Look, we have some women clients. Look at them over there. They’re those women clients. Women don’t need their own thing.

Women just need more financial education. There was one article that said we were solving the wrong problem, that women building wealth was not the problem. The pay gap was the problem. I’m like, we can’t have two problems. I think there are two problems. 

So over time, as we got that first hundred million, first billion, second billion, you have a sense of, okay, we’re really proving something here. More importantly, though, honestly, we’re changing women’s lives. I can’t leave my house with my Ellevest bag without some woman stopping me and, wanting to talk about it, wanting to tell me how she’s a client, wanting to thank the team. And so it’s been this sort of steady drumbeat of going from a crazy idea to an important idea.

SAFIAN: I mean, that sounds pretty good and pretty energizing, but it sounds like at the same time you feel the burdens or the barrier still there.

KRAWCHECK: For sure, it’s important that we are even more successful for our daughters. You know, you can’t just say, oh, we got to 2 billion. We’re good. Particularly in a day and age when women are being knocked back economically and financially, you may have seen some of the research that says that women are leaving C-suites at a record type of level that women are in the workforce.

But when they get to the top, they’re not staying. You may have heard that women’s bodily rights have been stripped from them, which is an economic and financial issue. You may have heard that Time’s Up and Me Too, which were movements really pushing against sexism, and the misogyny collapsed. So, there’s a lot of work to be done.

And in a capitalist society, money is power. And so the way to change society is to help women build wealth as we do at Ellevest.

SAFIAN: I mean, this moment to me, it’s a little confusing. ‘Cause you look at women’s sports, right? Like Caitlin Clark’s notoriety has become global, and women’s sports are watching record numbers. And it can feel like we’re at a tipping point for women economically.

KRAWCHECK: And do you know what percent of the… so Caitlin was the number one draft of the WNBA versus the number one draft of the NBA, do you know what percent of his salary she’s making?

SAFIAN: Tiny.

KRAWCHECK: Less than one, less than one. So, you know, yay, progress, yay, more money. Now she’s, you know, going to have all these deals and everything.

And so she’s going to be just fine. But, you and I’ve talked about this before. It feels like everything should be moving towards more fairness. That it’s, you know, there’s just little bumps along the road, but that doesn’t happen without tremendous effort. And from where I sit, if we can get money to women, that gets power to women, and they can start businesses that can build greater wealth and can serve other women in their families. They can strengthen their family. As we say, nothing bad happens when women have more money.

Sallie Krawcheck on the “feminization of wealth”

SAFIAN: You’ve been talking, writing about the Great Wealth Transfer and what you call the feminization of wealth. Can you explain that?

KRAWCHECK: So, I don’t know if your listeners are familiar with the Great Wealth Transfer, but tens of trillions of dollars are going to be in motion. Baby boomers accumulated and built historic amounts of wealth. Baby boomers are now beginning to die. And the baby boomers who die first are the men.

Women live six to eight years longer than men do. Half of marriages, of course, end in divorce. And so this transition of money will absolutely, as some say, go to the Millennials and the Gen Zs. It’s also going to women.

The feminization of wealth is a good thing because women tend to spend their money differently than men, tend to invest their money differently than men, donate their money differently than men, vote their money differently than men. 

And it’s time to see what women could do with a little impact investing. We have hints. We have hints. We see what Mackenzie Bezos is doing with her wealth. We saw Dr. Ruth Gottesman, who took the billion dollars her husband left her and gave it to the Albert Einstein Medical School, so young people don’t have to pay tuition anymore. That’s the feminization of wealth, and it’s a good thing for all of us.

How women impacted the economy in 2023

SAFIAN: And you said women spend differently. I mean, sometimes women don’t always get their due when it comes to their economic impact. I mean, last summer we saw this sort of wave of women supporting economic activity, right?

KRAWCHECK: Yeah. Oh, well, and you’re welcome. Save the economy from recession. Going to see the Taylor Swift concert, Beyoncé, Barbie. What I really loved about it, Bob, is media messages around money to women tend to be shame inducing: you’re overspending, you’re spending in the wrong way, you’re getting too many facials, you’re buying too many lattes, my gosh, too, way too many pumpkin spice lattes and this sort of mockery around it and this disdain and, you know, there’s a little patronizing, a little bit of it’s your own fault, you don’t have as much money, forget the gender pay gap, it’s obviously you, you bought too much.

A latte or two, too many and therefore will not be able to retire, and women have sort of bought that. What I loved about last summer is when we’re like, you know what? Just leave us the frick alone. We’re going to buy those bracelets, and we’re going to dress up, and we’re going to go out, and we’re going to dance, and we’re going to do it again, and we are going to change the U.S. economy as a result of it. Again, the feminization of wealth, a very positive thing with women spending money, and supporting the economy.

SAFIAN: Hmm. And yet, for all the talk about having more women in VC and more money invested in women-led businesses, that still hasn’t really moved.

KRAWCHECK: Has not moved, which is not surprising in a way because we’ve had a venture downturn over the past couple of years. And what do you typically see in downturns? Typically, diversity takes a step back. Same thing, Bob, happened, you’ll recall, in Wall Street after the subprime crisis.

You woulda thunk, ‘Hey, these are the folks who caused the subprime crisis. Let’s move them out of the way. And let’s bring in underrepresented groups to run the businesses from here.’ The exact opposite happened. And I was at those tables and, you know, heard those conversations and the conversations went along the lines of, well, diversity is a very good idea.

We just can’t afford to do it now. We really need someone in the position who we can trust. We’re going through a very difficult time. We’d better have people who really understand the ins and outs at the time of the CDO market. You’re like, but it’s their fault, but they’ve got the experience. You’re like, ‘Oh, they get to win no matter what. Ah, either way.’ And  I haven’t been at the venture capital firms for similar conversations, but when you’re under stress, it is much easier to work with people you really know, who remind you of yourself, who have the same perspectives, who have the same backgrounds that it is to inject diversity at that point.

Sallie Krawcheck on the backlash against DEI & ESG

SAFIAN: We’ve also seen really a backlash against the term DEI, you know? So what, what do you make of that?

KRAWCHECK: Or, and ESG, you know, DEI and ESG two things which are demonstrably positive. Okay. So, you know, diversity, equity, inclusion, and environmental, social, and governance investing. Indeed, DEI has been shown diversity at the top of these companies has been shown, as we just said, to lead to superior results.

ESG. Investing with an eye towards a positive impact and a financial return is also very positive. You know, sometimes people don’t like change. Sometimes when things are uncomfortable, let’s go back to the old way. Boy, it worked really well for me if I was in an overrepresented group. That was good.

I enjoyed that more. When things just didn’t feel like they were moving so quickly. 

SAFIAN: Yeah. I mean, it’s interesting how it’s become politicized too, that even though it’s an economic issue, it’s become politicized as so many things have in this country.

KRAWCHECK: I think we can politicize anything in this country right now. If it’s something you just don’t care for or don’t understand, turn it into a political issue. If there’s any difference from you, turn it into a political issue, when in fact it is diversity that has made this country so great, that the waves of immigrants who came in and brought all the diversity of experience and background and built this into an economy that the world has never seen before.

And that on a micro basis, diversity and leadership teams being the only thing. As a former and recovering research analyst, the only metric that I can see correlates with business success in a leadership team, but yet again, that drive for, let me be comfortable, is a bigger urge.

SAFIAN: Well, and we see in some places, businesses that have not done as well as they had hoped that that is being blamed on, ‘Oh, they were distracted by their diversity efforts. You know that they should have spent their time on other things.’

KRAWCHECK: Well, that’s what they said, right, Silicon Valley Bank, when it went under or almost went under last year at this time. I think there was an op-ed in the Wall Street Journal that said they were distracted by DEI. Oh, what? Seriously, people. Seriously, people. But, there was a Wall Street Journal op-ed — I wrote about it in our Ellevest newsletter today — that talked about the gender pay gap, and it doesn’t exist at all. It really is just because of women’s choices, that women are choosing to work fewer hours than men.

I guess women are choosing not to get promoted as well, even though they all have good performance reviews. So, people just find the lens that makes them most comfortable.

SAFIAN: You’re just not buying it.

KRAWCHECK: I ain’t buying it. I ain’t buying it. Because because I’m an analyst at heart, so facts are stubborn things, analyses are stubborn things. This is not my opinion. This is what the facts show.

The economic impact of restricting reproductive rights

SAFIAN: I know you mentioned this earlier. I know you’re upset about recent reproductive rights being constrained for women. Is your position about that an economic position also? Is it a personal position? Like, how do you think about it?

KRAWCHECK: Well, I don’t know that it matters which of those it is and, and who cares about my personal position. I am all about what helps women and their families economically advance. And the numbers are irrefutable. That if women have got bodily autonomy, they can make the economic and financial choices that make the most sense for them and their families, which by the way, then can be economic and financial choices that can grow state economies as well.

Those states that have restricted women’s rights are not as economically strong or growing as quickly as those that have not because if a woman is forced to have a child, that can often pull her out of the workforce. It gives her family a greater chance of being in poverty.

I mean, you can’t help but look at the numbers around this.

SAFIAN: Sallie’s data-driven perspective doesn’t often carry the day, whether we’re talking about diversity in business leadership or reproductive rights. It makes you wonder how public policy and corporate activity might adjust if those numbers were prioritized. 

After the break, Sallie digs into risks Ellevest took that didn’t pan out. And what’s easier about managing a team of 30,000 on Wall Street than a team of 85. So stay with us. 

[AD BREAK]

Before the break, Ellevest’s Sallie Krawcheck talked about “the feminization of wealth” and economic data that proves the positive impact of gender diversity. Now, Sallie opens up about the epidemic of loneliness at work, and what she calls the “pink bubblegum” effect of having the wrong investors. Plus the different mistakes that men make versus women when it comes to their portfolios. Let’s dive back in. 

Loneliness at work

SAFIAN: You’ve written about loneliness that you feel sometimes working. Where does that come from? And what do you do to manage that feeling? Is that just because you’re a leader at the top?

KRAWCHECK: The difference between when I was at the big Wall Street firms, there were big teams there, right? You had the leadership team of Citigroup or Bank of America and you know, at Ellevest, we absolutely have a leadership team.

I can’t take the team on every part of the journey all the time. There are parts of the journey I have to go on by myself. For example, when I did our last raise, it was brutal. The markets were good. Our numbers were terrific.

It should have been easy. But as it turned out, we weren’t a crypto company and within FinTech, people wanted crypto. They wanted, you know, vertical growth, not upward sloping growth. And so you hear again and again, oh, I had a hundred meetings. I mean, I didn’t have a hundred meetings.

I had 200 or 300 meetings to get the thing raised. And I remember being in LA one Friday night. Checking into a hotel and just lying on the bed and just, you know, the tears are running down my face. I refuse to say I cried because it was, I wasn’t sobbing, but there was a… it was involuntary.

I can’t share that with anybody. I mean, that’s the thing you have to carry. I knew we’d get there. I knew we’d get there because I just wasn’t going to stop until we did. But things like that, you have to sort of carry that. You have to, sure, be candid with the group, but you can’t take them on every step of the road.

SAFIAN: And, but the pressure feels different when, I mean, because you ran organizations, you had 30,000 people working for you. I mean, you’ve —

KRAWCHECK: Totally different. Totally. And it shouldn’t be. What, we’ve got 85 people at Ellevest versus 30,000. It should have been so much more, and it wasn’t easy, but it’s just different. 

Why you must invest in the long term

SAFIAN: I mean, you, you’ve been a student of investment markets since those days in research at Sanford Bernstein, you guys advocate a long-term investment approach at Ellevest. You talked about 10 years, 15 years, the markets have been, I feel kind of nutty this year, like a huge run-up dropping off. Is there anything you’re noticing that might be good for our listeners to know, and to appreciate about the ups and downs, the daily ebbs and flows that we are seeing in the market.

KRAWCHECK: Same as it ever was. Same. You know, I have this memory, Bob, of being a research analyst in 1994. And, someone saying to me, a legendary investor, the markets seem the most confusing now that they ever have. And every year since then, somebody says that, boy, the markets, I don’t get it. I just don’t understand, every time, right?

You know, and of course, it seems like the past was so predictable. What do they call it? Creeping determinism? Where it was clear. Absolutely clear that the internet bubble was going to burst. And this subprime bubble was completely clear. How couldn’t anybody know it? And it’s just because you know how the movie turned out.

So this is no different. The market is, you know, the aggregation of thousands and thousands and thousands and millions and millions of trades and opinions and perspectives that are changing in any given day or any given hour in a volatile market just means that it hasn’t figured it out. The market to be a little more concerned about always is that calm market because there’s so much that can happen.

That when a market is calm, you think, okay, Jaws, doo, doo, doo, doo, doo, doo, doo, it is coming right around the corner. And that’s why you have to invest for the long term. If you’re in the equity markets for a trade, you’re just going to lose. 

The research is clear. So investing for the long term, which means that you’re investing in innovation. It means that you’re investing in this economy, in the global economy, those are fantastic bets. You know, it’s betting on this economy, the global economy, and then, ah, giving it time so it compounds, ah, compounding that eighth wonder of the world that still doesn’t really make intuitive sense, you know, which you earn, earn money on your money and then money on your money. That’s the way to go, for sure.

SAFIAN: I mean, it sounds so simple the way you say it. And yet so many people are focused on beating the market or like winning against someone else.

KRAWCHECK: So many men are focused on beating the market. Women, and that’s one of our big insights at Ellevest, they’re not interested in that game. Sure, some of them are. Yes. You know, Susie over there has a RobinHood account, but what women are interested in, they’re busy. They’re like, you know, I want to be able to buy a house in five years.

I want to be able to retire at the age of 73. I want to be able to help me get there. I don’t want to have to watch one of the trading shows to figure out whether I’m supposed to be zigging or zagging.

The winning way to invest has been to, you know, put together a plan, put together an asset allocation based on your personal characteristics, based on what you want to achieve, put in a recurring deposit if you’re able to, and then let the market do its work. The biggest investing mistake men make is they over trade. The biggest investing mistake women make is they don’t invest. Very different mistakes.

How Ellevest has focused on financial planning

SAFIAN: When you look at how far Ellevest has come and where you wanted to get to, what are the bets that you, this year, are leaning into, and are there bets that you’re like, not right?

KRAWCHECK: Great question. Great question. So, Ellevest exists today, helping women invest and financially plan from their first dollar through to multiple tens of millions of dollars. We’ve made some missteps along the way. We got into banking for six minutes and, you know, just really didn’t listen to her.

Her acute issue was building wealth in order to buy this or retire this way. She never told us, ‘Boy, do I need a better debit card.’ And so we, you know, everybody was doing it though. An, frankly, in order to get funded at the time, neo-banks were sort of it. And so we brought out a debit card, like everybody brought out a debit card and pretty quickly realized, and it was a beautiful debit card, mind you, that a beautiful debit card wasn’t going to do it.

It wasn’t solving a problem for her. We had career coaches, which had a moment. During the pandemic where women were like, “I need help with this.” And then the moment sort of passed. So we’ve really pulled into, nope, we are about financial planning and building wealth. We, you know, our customer base, our client base are women with agency over their money and their families as well, and we will stick to our knitting and build those out, hire more financial advisors, more financial planners, for example.

SAFIAN: I mean, it’s hard to focus when there are so many different options of places you can go and where you want to go.

KRAWCHECK: And where you want to go, and they all look great and the financial services, the TAMs are so huge. Like one of my early decks, I’m like, if I get 1 percent market share, it’s a multi-gazillion dollar business, right? So anything you do, can be big — focus matters, solving the right problem matters.

But, you know, the other thing I’d say, you know, is investors matter. You’re raising a round, and you’re getting a big check from an investor who tends to think that, you know, pink bubblegum is the way to go. If you have a hundred people offering you checks, you’re like, we’re not all about pink bubblegum.

But if you got one lead investor, and that’s what you got, then pink bubblegum might be the direction you’re going whether you actually want to or not because you got to fund the company. Now, let me be clear, I have a terrific board. No one ever put us into pink bubblegum, but I do have friends who have had these issues because it’s the one check “I gotta do it.” You know, and they got the one unpleasant, you know venture investor on the board, the implications of women raising less money and having fewer options than men. I don’t think we, I don’t think people tend to fully think them through.

SAFIAN: And the implications of that are that your business gets distorted by what might be one, maybe well-intentioned, but ill-informed investor.

KRAWCHECK: That’s exactly right. There’s just a different balance of power. If you have a thousand checks coming in, if you’re Adam Neumann, you’re in a different position than if you’re a young gal, you know, who’s scraping together the first million bucks.

SAFIAN: Yeah. It’s kind of amazing that so much money is being laid at this gentleman’s feet.

KRAWCHECK: Don’t even.

SAFIAN: It really is, it is extraordinary. Amazing. 

It’s always great to talk to you. Thanks for doing this.

KRAWCHECK: Good to see you. 

SAFIAN: Every time I talk to Sallie, I come away with a more educated and nuanced perspective on the role of gender in the working world as well as what matters most in investing. She often calls me out on some of my naivete, and honestly, it’s great. That’s one of the reasons why talking about DEI and ESG — or whatever terms we might use — is so important. Being pushed out of our comfort zone is an essential part of learning. And when you see a platform like Ellevest reach a big milestone, it’s hard not to be hopeful.

I’m Bob Safian. Thanks for listening.