Advice Line with Jon Stein of Betterment

What It Covers

Betterment founder Jon Stein advises three early-stage entrepreneurs on scaling challenges: a yerba mate beverage company navigating multiple growth channels, a custom furniture maker constrained by basement workshop space, and a soccer-themed dog toy brand deciding between direct-to-consumer versus wholesale distribution strategies.

Key Questions Answered

• •Channel sequencing over simultaneous expansion: When facing multiple promising growth paths, select one primary channel for six to twelve months of deep focus rather than spreading resources thin. Choose based on fastest learning rate or highest passion, establish trigger points for success metrics, then sequence into additional channels systematically to avoid diluting operational effectiveness and capital.
• •Pricing power for custom craftspeople: Skilled artisans should target 80 percent profit margins with 20 percent cost of goods sold, not 50-50 splits. Custom work commands premium pricing in current markets where skilled labor faces high demand and long wait lists. Raising prices creates room for workspace expansion and hiring without taking on risky debt loads.
• •Marketplace platforms as customer acquisition: Treat major retail platforms like Chewy as marketing channels rather than pure revenue sources. Accept lower margins on these sales while using branded packaging, QR codes, and inserts to convert platform customers into direct relationships. This approach reduces direct-to-consumer acquisition costs while building brand awareness through trusted distribution partners.
• •Minimum viable expansion strategy: Growth-stage founders should identify the smallest possible capacity increase that meaningfully changes income before committing to debt or long-term leases. Options include subletting corner space in existing shops, part-time labor without full employment commitments, or shared maker spaces. Incremental expansion reduces risk while proving demand at each stage.
• •Economic uncertainty as opportunity timing: Downturns create favorable conditions for new market entrants when competitors retreat and customer needs intensify. Betterment launched during the 2008 financial crisis when established firms avoided financial services, allowing the robo-advisor to define a new category. Founders should pursue ideas when others show fear, funding growth through current sales rather than premature debt.