- Andrei Cherny, Joseph Sanberg
Why It's Disruptive
Three years ago, on the heels of the economic collapse, Aspiration co-founder Andrei Cherny had a novel idea: Customers should be able to decide how much to pay companies to manage their money. The entrepreneur had spent most of his career in the public sector--first as a Clinton administration speechwriter, and later as a financial fraud prosecutor--and saw mounting evidence that some investment firms take advantage of users by charging unreasonably high fees. So in 2014, Cherny decided to start a business on a pledge model: Aspiration asks its customers to pay only what they think is fair, starting as low as zero, to manage their investments. (They may still have to pay some third-party fees, though the company insists the cost will never be higher than 0.5 percent of an investment. If it is, Aspiration covers the difference, or negotiates the price down.) The company also offers a free checking account with up to 1 percent interest. Aspiration primarily generates revenue through the fees that customers elect to pay--and says it's on track to reach $1 million in revenue in 2017. The company today counts around 85,000 users, and more than $180 million in assets under management, up from just $30 million this time last year.
The biggest hurdle, according to Cherny, isn't getting customers to pay something--most already do--but rather convincing them to invest with Aspiration in the first place. "Getting people to make that switch [to a financial technology startup] is hard," he says. Of course, the name-your-own-price model is still unproven in the long run. Aspiration also faces robust competition--both from incumbent banks, such as Charles Schwab, as well as upstarts including Betterment, which counts more than $7 billion assets under management. --Zoë Henry