My Ride with a Unicorn Rocketship

By Peter Johnson
7/28/2020

(A Personal Capital Story)

The recent announcement that a Jump Capital portfolio company, Personal Capital, will be acquired by Empower Retirement for $1 billion is an incredibly exciting development for Jump and Personal Capital. The company and its journey are also particularly important to me as Personal Capital was the first investment I led for Jump back in 2014.

Since that time, the company has grown exponentially. Today, over 2.5 million people use the Personal Capital dashboard to aggregate and track over $700 billion, and Personal Capital has demonstrated the ability to attract mass-affluent and high net-worth wealth management clients at scale.

Now that I have had several weeks to reflect on the announcement, when I think back to when we initially invested in Personal Capital 2014, its success was by no means a forgone conclusion. But what stands out to me most is the importance that vision, execution, and experience played in what has become a highly successful growth story and tremendous outcome for the company, its employees, as well as its investors including Jump.

Vision

As a thesis-driven investor, we look for companies that are creative in imagining the future of industries, and Personal Capital had a prescient vision for the future of wealth management. Under the leadership of Bill Harris, the Personal Capital team foresaw many of the shifts that were coming to the industry long before others, including the value of account aggregation, the potential of the human/digital advisor model, and the shift to remote advisory. However, I believe the most significant insight Personal Capital had was that managing investors’ wealth is deeply, well…personal.

Before investing in Personal Capital, we looked at many of the “robo-advisors” who were providing low-cost automated portfolios, but found they were providing incomplete and inadequate solutions. Investing is not just about the mechanics of optimizing asset allocations – it is also about the hopes and dreams that money represents – of a great retirement, of sending one’s kids to school, or of contributing to meaningful causes. Investing is also about getting comfortable with complicated topics, managing emotions, and staying the course when markets are going crazy. What the robos missed – and what Personal Capital saw - is that investors are humans, and that investing for the future is deeply important, sometimes a little emotional, and mostly very personal.

Execution

Personal Capital has also been a model of disciplined operational execution. Jay Shah took over as CEO of Personal Capital as the company moved to the execution phase of their corporate development and has been the consummate disciplined operator. The company is deeply metrics driven, and tests and measures everything. This has given them a deep understanding of how the machine that is Personal Capital works, and how exactly adjusting different financial and operational levers will impact their results. As an operationally focused venture firm, we deeply respect the company’s excellence in operational execution, and know this was a key to both their explosive growth, and their agile navigation of COVID and market volatility.

Due to our experience with wealth management theory and practice, we also greatly appreciated Personal Capital’s execution of these concepts. Prior to joining Jump Capital, my educational and career experience — which included becoming a CFA, studying analytic finance, and later working as a consultant and investment banker — I have worked with asset managers, brokerages, and banks. I learned how investors should optimize their portfolios by allocating assets to globally diversified portfolios that align with their goals and risk/return tolerance, utilize low-cost index funds, regularly rebalance, and tax lost harvest. I also saw how the financial services industry failed to execute on bringing these concepts to investors. Finding a company that executed on these concepts was core to the investment thesis that led us to Personal Capital.

Experience

Simply put, Personal Capital’s extraordinary and deeply experienced management team—led by the visionary Bill Harris and exceptional operator Jay Shah—set the tone and executed on the vision. When we invested, the management team included experienced leaders including Mark Goines, Fritz Robbins, Jim Del Favero, Kyle Ryan, Craig Birk, and Eric Weiss. Over time, this amazing team only got stronger with the addition of key individuals including Mike Armsby, Porter Gale, and James Burton. We look to invest in compelling management teams, and rarely do we find startups with the depth of experience that we found at Personal Capital.

What’s Next

It is still very early in the Personal Capital journey, as the assets they manage still represent only a very small portion of the $50 trillion or so of U.S. household investable assets, and I could not be more excited to see what the future holds for this unicorn rocketship.

The author of this piece is an investor, via Jump Capital, in Personal Capital Corporation. While not speaking as a client, he is also a client of Personal Capital Advisors Corporation.

Advisory services are offered for a fee and provided by Personal Capital Advisors Corporation, a wholly owned subsidiary of Personal Capital Corporation. Personal Capital Advisors Corporation is a registered investment advisor with the Securities and Exchange Commission (“SEC”). SEC registration does not imply a certain level of skill or training.

By Peter Johnson
7/28/2020

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