“Don’t let external circumstances divert you from your goals”, With Douglas Brown and Ksenia Yudina

Don’t let external circumstances divert you from your goals. Example — when the pandemic hit, we considered whether we should continue fundraising. The conventional wisdom pointed to the need for person to person interaction to both meet with investors and handle the due diligence process. We decided that wouldn’t let the pandemic impact our ability to raise […]

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Don’t let external circumstances divert you from your goals. Example — when the pandemic hit, we considered whether we should continue fundraising. The conventional wisdom pointed to the need for person to person interaction to both meet with investors and handle the due diligence process. We decided that wouldn’t let the pandemic impact our ability to raise our A round and convinced ourselves that we may be able to streamline the process by using video-conferencing, and eliminating travel around the country to get the round in place. This proved to be the case.

As a part of my series about “Lessons from Inspirational Women Leaders in Tech”, I had the pleasure of interviewing Ksenia Yudina, Founder and CEO of UNest, the first mobile app that makes it easier than ever before for parents to save for their children’s future. Ksenia is an entrepreneur and financial expert with over ten years of experience in the financial industry. As a wealth manager she helped affluent parents access smarter saving and investment options. She founded UNest to extend the same financial acumen to parents across all income levels and backgrounds. To date, UNest has helped tens of thousands of parents save millions of dollars for their kids’ future.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?

I came to the US from Russia when I was 18 and put myself through college. I was always passionate about Finance and Investment Management, and spent a few years running my own real estate brokerage firm during the financial crisis specializing in residential short sales. Alongside this, I received my MBA from UCLA Anderson and my CFA designation. After the MBA program, I joined Capital Group/ American Funds, which is the largest provider of 529 plans in the nation. That’s where I realized there is a huge problem in the country with student debt.

In addition to my own situation in which I graduated from UCLA Anderson with over 180,000 dollars in student debt, many of my friends were impacted by this issue. During my time as an SVP at Capital Group I grew to believe that saving for college should be the #1 priority for parents. I realized that countless families did not have access to a convenient way to avoid the kind of loans and debt I had experienced. Additionally, when my friends asked me to help them financially plan for their child’s future education, I would send them a long 15-page application form. They were seriously put off by the paperwork, and having to FedEx forms around, etc. They were using apps like Venmo and Robinhood, so filling out long forms was alien to them. I realized that this was an opportunity to solve a huge problem for an entire generation of parents and their kids using technology. It was tough to see how a large financial institution couldn’t move quickly enough to solve the problem, so I decided to do it myself.

This inspired me to leave what could be considered by many, a dream financial job, and invest my own money in building an app that would make it exponentially easier for parents to set up and manage their and their kid’s financial lives.

In March 2018, I launched UNest with a mission to help parents’ save for their child’s future. We believe that families from all economic backgrounds deserve this opportunity.

Can you share the most interesting story that happened to you since you began at your company?

I think the most interesting aspect of our recent growth as a company was the acquisition of a complimentary platform. The timing, during the midst of the pandemic, definitely elevated our growth across the board.

In June, we received a note from one of our Advisors that Littlefund, an early stage Fintech company, might consider a sale due to pandemic-related capital constraints. Littlefund was founded by two exceptional entrepreneurs with a similar mission to UNest, namely helping parents build a better future for their kids. We quickly evaluated the opportunity, and the team got very excited about the prospects to work together, since Littlefund helps grandparents, friends and other family members send monetary gifts into a child’s account. This capability was something we were interested in building for a very long time based on demand from our families. I believe it will become one of the most popular features in our product. Recent research that we conducted with Harris pointed to the fact that the new generation of parent’s value cash and electronic money transfers more than toys, gifts and other items that their kids may never use. In addition, I think the acquisition will drive social engagement by involving a community in the process of building a saving’s nest for a child.

The acquisition was a fascinating process on all levels. We had to move quickly and opportunistically to seal the deal. We also had to trust our due diligence and deal-making capabilities to complete the transaction. Right now, we’re in the middle of the integration of our technology and teams and are looking forward to releasing this exciting feature in time for the holidays.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

When we were raising our first round of serious funding, we spent an inordinate amount of time pitching to investors whose motives and understanding of our potential were seriously askew. It wasn’t particularly funny at the time, but in retrospect I am amused by just how off base some of those early investor meetings were, and how we inadvertently contributed to the wheel-spinning.

By way of an example, I made the mistake of disclosing my valuation expectations to one venture fund midway through the process of him writing us a term sheet. The VC panicked and withdrew the offer. Apparently, his fund had a certain mandate that wouldn’t allow him to invest above a specific benchmark. It seemed like a setback at the time, but we soon received a term sheet on significantly better terms from much bigger VCs.

This mistake seems pretty funny to me now, since one of the rules in fundraising is to not disclose valuation expectations and let the market determine it, but it resulted in us getting the term sheet at the terms we wanted. The lesson learned from this is that sometimes being bold and believing in your potential, mission and the size of the opportunity can bring you to much better outcome than simply following the rules. I was forever grateful to be steered away from the wrong type of investor and was able to find a much better-aligned lead investor for our company.

Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?

Trying to raise capital as a sole female founder in a male-dominated industry like Fintech is no picnic. At the seed round stage female founders are already perceived as high risk, and it was particularly hard for me without a technical co-founder or a CTO. I received multiple rejections from VCs claiming that the company was ‘too early’, that the market is too small, or that they didn’t understand the business model.

I finally gave myself three months to either find the money or quit because I couldn’t keep adding to the burden on my family. Worst of all, I felt I was sacrificing time with my children and husband, as well as digging deep into our family savings. However, as my three-month window neared the end, I felt that the right momentum was building. I received a few ‘Yesses’ from investors, I found several people who strongly believed in the idea and became my advisors, and I received introductions to the amazing people who agreed to join the company should we raise our Seed round.

What gave me courage to not give up was the support from my family and my advisors as well as the understanding that if I give up now, I will never see what’s on the other side of fundraising. It was important for me to see what I can actually accomplish if I have the capital, team and product to enable me to execute on my vision.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

Leslie Goldman, Managing Partner of the Artemis Fund, a Venture Capital fund in Houston, has been a major factor in the success of UNest. Leslie is a big supporter of female founders. Her mission is to back exceptional female entrepreneurs that historically had limited access to institutional capital (statistically only 2% of VC backed companies are founded by female leaders).

Leslie was instrumental in closing our first institutional round of funding by becoming a lead investor and performing an extensive due diligence on the company that gave other investors a lot of confidence about legitimacy of our business. She also invited Frank Mastrangelo to take the Board seat at UNest. She recognized that Frank’s stellar reputation within financial services would be a great value add for UNest.

Leslie has been a source of inspiration and guidance from our first meeting. Her belief in UNest has helped open doors and provided a path to additional funding and multiple business opportunities.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“If it was easy, everyone would do it” really rings true for me. As a founder I wake up every day to a new challenge, but I persevere because I remind myself that true success is not meant to be easy. By embracing that fact, the challenges become more fun (not always!) and seem less like insurmountable problems and more like opportunities to excel. The reason no one else has disrupted the college saving space isn’t because I’m the first person to have the idea. It is because others gave up while I refused to.

Thank you for all that. Let’s now shift to the main focus of our interview. We’d love to learn a bit about your company. What is the pain point that your company is helping to address?

The ever-increasing cost of higher education has placed a huge burden on American families. Standing at 1.7 trillion dollars, student debt is a massive drag on the economy as a whole. The situation is exacerbated by the fact that good financial planning is typically only available to affluent families. When it comes to saving for their children’s future, lower income families are faced with an array of resources that are often contradictory, and nearly always confusing. As an example, it takes an average of eight hours for parents to research a 529 college savings plan without any guarantee that they will end with the plan that is best aligned with their situation and goals.

Families that would benefit the most from these savings plans are typically the ones that are also least aware that they exist. There are a variety of reasons for this. Families that are not affluent enough to use financial planners or wealth managers have to research through a confusing array of plans to try and identify the best option. This is assuming that they are already aware of 529 plans, which 70% of the population are not.

Once they have selected a plan parents are confronted with voluminous amounts of paperwork. The whole process takes an average of eight hours with only a limited chance that the parents have even selected a program that is aligned with their requirements and situation.

UNest is on a mission to eliminate these pain points. Our mobile app provides parents with a simple way to save for their children’s future. Our mission is to democratize the availability of solid financial planning for families of all income levels and backgrounds.

What do you think makes your company stand out? Can you share a story?

Many successful startups can boast about the experience and diversity of their teams. Very few can point to the doggedness and persistence that has helped UNest overcome the entrenched thinking and processes of very large institutions and governmental agencies.

This is well represented in our dealings with the incumbent providers of 529 college savings plans. Offered by states with support from large financial institutions, 529s are marketed by these organizations as a way for families of all income levels and backgrounds to save for their children’s future college fees and expenses. The reality is far from this. It emerged pretty quickly in our journey as a company that many of the organizations entrusted with providing a way to avoid student debt were actually only interested in working with large account sizes that were inevitably being funded by affluent families.

Faced with this, less experienced companies, or ones that lacked a real sense of purpose, would have surrendered to the industry trend of avoiding lower income families. The UNest team has distinguished itself by staying true to its mission of democratizing the availability of good financial planning and savings solutions for all families, regardless of race, income or background.

Are you working on any exciting new projects now? How do you think that will help people?

UNest is in the process of adding a gifting feature that will allow and simplify the process of gifting money to contribute to the children’s savings plans from family and friends.

We are also continually enhancing the platform allowing it to reach more families by building impactful partnerships with large organizations increasing the reach of UNest to families of all income levels and backgrounds. These partnerships will confidently alleviate the stress associated with financial planning, time-consuming application process, and complexities of saving for your children’s education.

Let’s zoom out a bit and talk in more broad terms. Are you currently satisfied with the status quo regarding women in tech? What specific changes do you think are needed to change the status quo?

No, I’m not satisfied with the current status of women in tech. I think the amount of venture capital allocated to female founders is shameful. I also think that valuations are often lower for the women who are successful in their fundraising. To add to this distorted reality field, venture-funded women have consistently proven that they are more likely to be successful than men!

In order to change the status quo, there are few things that need to happen in my opinion:

  1. Women entrepreneurs need to play on a level playing field with men at the Seed stage. This is the most critical point in the company’s formation, and more often than not, female founders are perceived as a higher risk
  2. Limited partners at venture funds need to mandate that the VCs who are investing their money have a defined percentage of female founders in their portfolio. This needs to be actively monitored, regulated and enforced
  3. There should be more venture capital funds like Artemis and Halogen Ventures formed to exclusively support female founders. Since women tend to be more conservative, less confident, and over mentored compared to men, these funds should focus on these unique challenges and provide the right framework for success.

In your opinion, what are the biggest challenges faced by women in tech that aren’t typically faced by their male counterparts?

Unfortunately, some male investors fail to look at women as leaders. I found myself in a number of investor meetings with my male CMO, and the investor would direct the question to him rather than to me. It was really quite awkward initially, but then I realized that if the investor wasn’t smart enough to understand I was leading the ship, I didn’t want them on my cap table anyway! This helped me narrow my pool of investors to focus on strong value-added mission aligned investors.

Another challenge is that women typically lack an established network in tech. When I started the company and tried to partner with a CTO, I had to start my search from scratch by going to networking events and asking around, while a lot of my male counterparts already had friends who were working at startups or large established companies.

Lastly, investors tend to stereotype female founders and consequently ask them questions that are heavily focused on how they mitigate risk, and what happens if they fail. Male founders, on the other hand, get questions related to potential, growth and how to defeat competition.

What would you advise to another tech leader who initially went through years of successive growth, but has now reached a standstill? From your experience do you have any general advice about how to boost growth or sales and “restart their engines”?

Firstly, look at your team. Do they still have the same enthusiasm as when the company was experiencing growth? It is inevitable that later hires may not have the same drive or entrepreneurial instincts as the founding team and the first few employees. This can create tension within your team and can be damaging.

Isolate internal team issues and identify the true leaders that can inspire and motivate each team member within the company. This can be more difficult when you don’t have a daily interaction with each employee, but it’s crucial to understand the team dynamics that may be holding you back.

Once you have addressed internal team-related issues, look at the marketplace as objectively as possible. Navel-gazing is much less productive than a cold, hard assessment of how your solutions truly rank against your competition. Talk to ex-customers if you can. They will likely give you better insight on why they left than your own team members. Understand your solution’s weaknesses and adjust your product strategy, service levels, and possibly your pricing, accordingly.

Then the tech leader should take a look at your marketing. They should think outside of the box and get creative in how they engage with their target audiences. Oftentimes, it is not the most expensive marketing campaign that performs the best. For examples, we had videos created by some of our early adopters that did very well on Facebook and outperformed far more expensive content. Part of this is because they were authentic to our brand. The tech leader should spend some time revisiting the mission, values, and gameplan that gave them their initial success. The market may have evolved, but chances are they can re-charge their sales by returning to the core elements that helped build their customer base.

Do you have any advice about how companies can create very high performing sales teams?

My advice would be to establish a good compensation plan that provides incentives in the short and long term. I usually give team members milestone-driven equity incentives that would align everyone on the company metrics and motivate them to achieve the same sales goals. Cash bonuses for achieving or exceeding sales quota also work great. It’s important to understand individual preferences of the team members, since some employees prefer equity (having stake in the future potential), while others may prefer cash (more short-term and instant type of compensation).

In your specific industry what methods have you found to be most effective in order to find and attract the right customers? Can you share any stories or examples?

Our customers are typically parents, and we believe in engaging with them when their children are young. If you start saving for your child’s college education when they are in high school it will likely be too narrow a window. With this in mind we partner with brands and businesses that appeal to millennial parents who are comfortable managing their finances on their phones. These parents often have student debt themselves and don’t want to burden their children with the same problem.

We also rely heavily on analytics when targeting customers. In digital marketing, we use AI to identify the customers that most actively engage with our brand. We optimize a lot of different parameters in identifying the ideal customer. Data and analytics drive all our marketing decisions. As an example, we use attribution analytics to help identify which channels brought the most customers, who have actually converted and funded their children’s savings accounts, and at what cost. This knowledge helps us optimize our channels and continually improve our cost of acquisition.

Based on your experience, can you share 3 or 4 strategies to give your customers the best possible user experience and customer service?

Talk to your customer frequently! They are the best source of information regarding your product. At UNest, we frequently survey our parents not just about our app but about their lives so we can better understand their needs. There are many tools out there that you can use to A/B test features, graphics, and messaging. I recommend testing all changes to your product thoroughly prior to releasing. Make incremental improvements over major overhauls. This will make your customer experience seem more fluid and won’t disrupt their normal behavior.

Another rule of thumb is asking departing customers why they decided to stop using your product. Sometimes it is simply because they don’t understand or relate to the product and require a bit more information. Sometimes it’s inefficiencies or inconsistencies in the product, but receiving feedback helps us make necessary improvements and fix issues.

Finally, we’re trying to minimize time to respond to customer inquiries. Sometimes you can save the customer by demonstrating that you’re on top of their needs and ready to answer their questions in a manner that is convenient for them. Our Customer Success Specialists are available even on the weekend to make sure we address client’s questions in a timely manner.

As you likely know, this HBR article demonstrates that studies have shown that retaining customers can be far more lucrative than finding new ones. Do you use any specific initiatives to limit customer attrition or customer churn? Can you share some of your advice from your experience about how to limit customer churn?

We are very fortunate to have extremely low churn. This is partially due to the fact that because of the long-term nature of our savings plans most parents set their goals and only check-in periodically. Our customers understand that consistency is key to success when planning for their children’s future. We provide additional resources to stay engaged and to reinforce that our customers are on track. This includes financial literacy content and advocacy resources to help parents access financial advice at the right time and in a format that is compelling.

When we first launched our app, we identified that some customers lacked a good enough understanding of our product and its benefits. This led to some limited churn. We corrected this by implementing a series of educational emails and blogs that made it easy for customers to understand the value proposition, differences compared to other investment products, and the cost savings we were offering them. This helped us structure initiatives focused on preventing attrition by proactively addressing areas of confusion.

One other area that we have placed a lot of emphasis on is helping customers build confidence in our brand so that they felt comfortable providing sensitive information to open their account. We build trust by providing independent validation points about our company — articles about us, app store ratings etc. — and outlining how much attention we place on data protection and security.

Here is the main question of our discussion. Based on your experience and success, what are the five most important things one should know in order to create a very successful tech company? Please share a story or an example for each.

  1. Be prepared to work harder than you have ever worked in your life. My time as a Vice President at the Capital Group prior to founding UNest was definitely full of long days, but it doesn’t come close to the commitment required to starting a company and maintaining the momentum through rounds of funding, and growth across all areas of the business.
  2. Surround yourself early with smart, experienced, and enthusiastic people (and incentivize them with equity!). In the very early stages of the company I realized that I needed someone really talented to lead our customer acquisition effort. I had a number of decent options, but one person stood out, and he was by far the least available! It took a lot of persuading (multiple meetings, lunches and conversations) and creativity to pry the person from their existing position, but it was absolutely worth the effort — he has exceeded expectations and been a fundamental contributor to our success.
  3. Stay focused. Example — make fundraising your single priority during your Seed round. I got a ton of well-intentioned advice on how I need to change my product, who I need to bring to my team, and what traction I need to have before I raise. The truth of the matter is when you have money in the bank it’s much easier to hire the team, build the product and get customers.
  4. Don’t let external circumstances divert you from your goals. Example — when the pandemic hit, we considered whether we should continue fundraising. The conventional wisdom pointed to the need for person to person interaction to both meet with investors and handle the due diligence process. We decided that wouldn’t let the pandemic impact our ability to raise our A round and convinced ourselves that we may be able to streamline the process by using video-conferencing, and eliminating travel around the country to get the round in place. This proved to be the case.
  5. Build and maintain relationships regardless of how tenuous they may appear to be. One of our prospective business partners went through a merger and our contact person decided to leave. In spite of this we maintained our monthly calls with him, and several months later he introduced us to Littlefund, the company that we acquired.

Wonderful. We are nearly done. Here are the final “meaty” questions of our discussion. You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

Working with kids in underserved communities is a key part of our mission and is the inspirational starting point for our movement. With this in mind, we have been working with our brand ambassador, NBA All Star Baron Davis, to initiate and support inner city programs that help parents gain access to savings plans and financial advice that will help build their children’s future.

We are very blessed that very prominent leaders read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch with, and why? He or she might just see this if we tag them 🙂

Melinda Gates is someone I deeply respect. I think her philanthropic work on public health and education causes is remarkable. I look to Melinda for inspiration because she perseveres despite setbacks and continues working on projects that she believes will better humanity. She also supports women and promotes gender equality, the problem that’s near and dear to my heart.

As I think about the future of UNest I hope to have a similar positive impact on families. I would love the opportunity to learn from her and share our vision for how we will help millions of families create a better financial future for their children and how we will achieve gender equality by joining her movement.

Thank you so much for this. This was very inspirational, and we wish you only continued success!

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