Julian: Hey everyone. Thank you so much for joining the Behind Company Lines podcast. Today we have Jean Smart Founder and CEO of Penelope, a time and savings plan for small businesses. We're gonna get into the weeds of what that means, especially within, you know, the world today where people may or may not be prepared for retirement.

And and I think there's a lot of logistic and maybe even structural issues that we'll get into. Jean, I'm so excited to have you on the show and talk about not only your background experience, but you know, kind of how you view the whole landscape within, you know, retirements and savings and even with the economy.

We'll obviously get into all those little you know, nitty gritty details, but again, really excited to have you on the show and just to jump on into it before we get into Penelope and what you're building right now. Illuminate us a little bit what percentage of Americans don't have a retirement plan and how many of those Americans are just generally unprepared.

Jean: So first of all, thank you for having me, Julian. Between our love of coffee and FinTech and all things start up, I think we have a lot in common here from the east coast and West coast. And welcome everybody. I'm really excited to share what we're building here at Penelope. So, retirement stats it's pretty.

Not as strong, I would say. Right now, these are well-known stats. About 25% of Americans have zero saved for retirement. Yeah. Two thirds are living primarily paycheck to paycheck. In a recent study in cnbc, Bloomberg came out with. Households over 250,000 are still living paycheck to paycheck.

So I think as a society we're going through some interesting times in the economy, but as a society, especially with the advent of internet and everything that the web can provide us in terms of access and information, we've done an awfully good job of teaching people how to spend money and buy now, pay later, put things on layaway.

That's what it used to be called when I was younger and foregoing that we, there, there's so much power for good in turning our spending behaviors into saving and investing. And we need it more than ever before. The income gap and the disparities around those that are predominantly very small sleeve are making enough to save, to retire, to invest and go beyond, versus those that.

are For making minimum wage to just trying to struggle month by month or year by year. We are, we're hoping to help mitigate that and teach people how to get started now, and quite frankly, I had to turn $300 into $1.8 million. And you do it over time a little bit at a time, investing a little bit, learning about the power of compounded interest.

Waiting and being patient. So, that, that's I'm really here and excited to actually share what we can do.  

Julian: It's incredible to think about the consumer behaviors and, and how they influence kind of a long-term deficit in the ability to save and have a plan later on in life. And then I think there's a lot of residual costs from that.

And speak to the effect of the residual costs of not being prepared for retirement and not having the opportunity to have, you know, a a cushion almost when you know, either you find. Without the ability to work kind of at your full capacity or or completely, what are some of the, you know, not to get too negative, but what are some of the outcomes that you've seen that are Yeah. You know, less positive?  

Jean: Yeah. I, there's so many that impact sort of, the ability to work. I mean, depending on the kind of work you have, if you're, as you get older in your sixties, seventies and eighties, you may not be able to do that kind of. Without savings you may not be able to sort of take care of other responsibilities, family and other dependents without, and this isn't even talking about the emotional and sort of psychological impact about financial stresses, right?

We all experience it some, somewhere or another, and everyone's got a number and those, that number kind of changes over time depending on what you do. So I think the idea of paying yourself. , putting a little bit of way a little bit away through your employer in a employer sponsored retirement plan is something that can go a long ways, and it's a very little cost upfront to do it.

So the residual effects are pretty dire, but there's way out, there are a lot of different options and it's literally starting today is better than starting yesterday or tomorrow. And so there, there's always an, it's never too late to begin. .  

Julian: Yeah. And for companies that, you know, traditionally don't offer plans and want or maybe want to or and don't have the access, is that access just in terms of information or is it technology, is it what is in particular that is not enabling companies or supporting them to start plans for their employees, even if they're not a big corporation?

Jean: Yeah, I think part of it is when you're a small business and there are a lot. So, 32 million companies in the country. I think the SBA Small Business Association defines all companies under 500 employees. It's a vast majority by and large companies, probably under 50 employees, and under 20 they're probably less restricted or have more challenges because predominantly these 401k products or employer sponsored retirement plans in the industry have been.

and for a lot of advisors and retirement consultants, plan consultants who've gone out to companies there've been enough to support larger companies to provide a plan that the smaller ones have been widely sort of ignored or the information is difficult to get. Now I think we're entering a new period especially post covid, when if you weren't online before, you certainly had to have an.

So even for your business to access resources, a lot of small businesses that are dealing with health insurance, payroll, other HR, sort of, elements are going online and those tools are plentiful. So I think access is available more than ever. The way to decide and make those choices are still challenging.

And what we aim to do is reduce the jargon, try to make the pricing. The offer and the investments and the experience as straightforward as possible. And give our small business owners just the bit of information that they need to activate to get started and fulfill their mandate. And what I mean by mandate is if small businesses didn't think about it before, more and more they will.

So thus far about 14 states have passed mandates. California being. That if you have more than five employees or 20 employees and 25 employees in other states, you must have a qualified retirement plan. And there are a lot of different options, a lot of places to go. But in California, I think it was by June 30th, if you had more than five employees, you had to have a plan.

If not companies will start being imposed $250 fine per employee, and then six months later, another 500. So if you have 10 employees, that's 7,500. And for us to support a company with 10 employees, that would be 2,500. So it's a fraction of the cost. So you're starting to see this sea change happen. So for small businesses who didn't know about it before, I think over the next couple years they'll hear about it more and more.

Julian: Yeah. Outside of the negative consequences of not having a retirement plan set set up as a small business, what are some of the positive incentives that they might not be aware of about set, about setting up a retirement plan for their employees?  

Jean: Tax breaks. So the recent Secure Act, , small businesses love tax breaks, so  

Julian: we love to hear tax breaks.

Jean: Absolutely. So they're small businesses can earn up to 15 or get a credit of up to $16,500 over the first three years if they have a qualified retirement plan. So, There's a lot to take advantage of in that capacity. The other thing is what small businesses need, no matter what, regardless of the economy, in order to stay alive, you need to attract and retain good employees.

There's a significant amount of resources putting, put, being put towards these employees. And more and more, even the younger ones, whether they're millennials or Gen Z, are asking for these benefits. So we have several clients that embarked on search. Because look, I didn't wanna do it. I didn't even think about it, but I'm not gonna be able to hire this person if we don't have it.

So it's almost becoming table stakes. Not only do you get a salary or do you have health insurance, but people are asking about this today.  

Julian: Wow. Yeah. It's wild to think about, you know, it felt like it was traditionally for a long time, such a built-in benefit. And then I feel like it kind of got lost in the shuffle and now it's being almost reengaged.

And is that because in terms of, you know, we think about social security and all these other resources that are slightly depleting or not gonna be as accessible is that kind of moving a shift towards empowering the day-to-day individual to really take advantage and or? Take steps into helping themselves kind of long term and now companies are kind of in finding tools to enable them, or do you see something else in the market?

Jean: So I think the shift is like a lot, there's so many different elements. So externally, things that we can't always control. It is true. I'm a Gen Xer and I've been told. I remember when I was younger, social security's gonna run out by the time they retire. And I thought, that's insane. That will never happen.

But if you actually go to the Department of Labor website, it has a year 2037, that's like 14 years away. So if, when you see those numbers, I don't, I personally don't think it's gonna fully go away, but the. The, we won't be able to rely on as much, and I think this is probably connected to why so many states, especially the smaller the business are starting to create these mandates, right?

So that's one. So there are external pressures that you can't control, but in terms of arising or for an appetite for workers and small business owners to take more control and pick their options around providing it and trying to get ahead. Being fined or compete for the best resources. I think those are like many of our clients saying, I wanna do this now and take care of it now so that I can continue to grow and not worry about this and make sure my employees are taken care of.

And then on the consumer side, I, people know so much more about it. The 401k is pretty in TikTok, if you go to FinTech, you'd be surprised at how. Fin talk influencers really young that know about 401K is right. So for, it was a generation ago when a lot of people just counted on their 401k to retire.

That was it. And you get a little bit of social security and if that's gonna run out and if younger people are having harder times purchasing homes or if there's other challenges, this is the one thing you can do. We all work that you can put away tax. and build on and just make sure you're solidifying your own personal social security.

Julian: Yeah. And and taking a, I guess a a trip back through time. I'm always curious to talk to founders about their journey in particular and what were you doing before you started Penelope? I know you had a few different you worked at a few different companies and it seems very much, you know, finance focused.

And I'm curious on not only what was your experience working at companies you did and then kind of what inspired the move to then start.  

Jean: So, Compared to a lot of founders who've been doing this their whole life, I've probably been doing it for about a minute. I came from the other world in corporate America.

So, I was born in Korea and like sort of a good immigrant kid coming here to the US and growing up in Southern California, you know, my parents' big vision. All of their kids, they go to good schools, they do well. They become doctors, lawyers, professionals. And so you just sort of follow that path and you stay on the path and you have responsibilities and you continue to do that.

So I did it in my twenties and thirties. Think, oh, I wanna be a FinTech founder. That's not it. It was almost reversed. What I found in my professional life was that the more senior I got, or the more season. . In some ways sort of the less control I had to clients to making big changes and working at large organizations, it operates a little bit differently.

And I think probably Covid was the final straw where you're working from home you're working tirelessly, you see your family and you realize life is short, there are opportunities, why not take this shot? And then when it comes to, I knew I wanted to do just so. within financial services, because that's been my background by and large.

I'd always done marketing, product, marketing, sales strategy within the corporate services space, working on four plans, stock plans and financial wellness. The companies were just very big, so there was an opportunity to focus on very small companies, under 20 employees, under 50 employees, and help them because they've got the least amount of resources and it's 20.

We've got technology we have a venue and a platform that investments that we select are extremely cost efficient. You couldn't do this 20 years ago, even 10 years ago, or 30 years ago. So the things that we could do to operationalize and to simplify and make super easy for a very small business.

Is never been seen before. So th this is the time. And then I guess the final part is even though I've worked for large companies in financial services, my roots are still small business. I mean, I'm an immigrant. I grew up in my parents' restaurant and their dry cleaning store and their bodegas always sort of working behind the scenes, reading my parents' mail because they didn't understand English and helping them navigate whatever they were doing.

So, I feel comfort. In it and it speaks to me. Yeah. So the possibility of doing something for other businesses like my parents who had no clue coming when they first came here with the language and the laws and just how to get things set up just really speaks to me.  

Julian: Yeah. It's incredible to hear that story.

And, you know, I share not as the same story, but similar in terms of, you know, my family came from Mexico. . But I, it's awesome to hear that founder. It's almost like a personality trait, an archetype. It's like, you know, the comfort in just discovering new information, ideas or challenges.

It's amazing to hear, even picking up the mail, I'm sure you didn't know what you were reading at the age you were reading it at, but it's it that comfortability, I'm sure that's probably led to a lot of success. And I'm always curious for those who come from larger companies and then, you know, startups, what have you taken from those large company experiences that's translated over to Penelope?

Is it something structurally what are they doing well, essentially that you think has benefited in terms of Penelope's whether it's structure or team or something alike.  

Jean: Yeah. Yeah. There and there's a lot. There's a lot. First of all every place I've worked has. Built building blocks to where I am today.

And I would say large companies, what they're really good at is education, mitigating risk, organizational structure, managing a p and l, all the core foundations of running and operating a business. Now, when you're starting up going from zero to one, you don't do that at a large company. You're trying to go from one to three or three to 30 or there, there's so many other.

But I think a lot of the foundations of project managing or thinking of something from A to Z and all of the components of things that could happen has given me honestly a headstart and much against. There are a lot of founders who graduate in engineering and really young and ready to go, and I think that's fantastic, but I think Covid just didn't create this great resign.

there's been a great reinvention of professionals who've been in a category for 20 years, right? People who are thinking, wait, I could start my own thing. It's easier to do than I've done before. I've gotten more control. So I think you will see people that have deeper roots, either in a large company and some machinations, start their own companies.

And I think that's great because it's just, it's never been easier to set up your own. and there, there's just so much institutional knowledge that professionals who've been doing one work or one function for a long time. So to be able to bring that and work with a lot of young talent around building sort of a modern tech stack, a modern digital record keeping retirement plan is literally the thrill of  

my  

Julian: life.

Right. I love that. And I love that little thing that you said about the advantage about someone coming from an industry for, you know, x amount of time and that experience, and how rapidly do you think that's led to, whether it's the creation of technology or the maturity of where Penelope is.

Do you feel that it was almost like a hack into, you know, once you got the necessary team in technology and structure around it from a a platform stand. Was that just your superpower into creating kind of Penelope to where it is today?  

Jean: We've been probably live for about seven, eight months and we've got a lot of clients, a lot of employees participating, people saving a lot, which we're beyond thrilled about.

So this is super exciting. I think the speed in which we've gotten is like I've many founders, it's just pure. and focus, laser focus and a lot of humble pie, humility. So at the beginning, if there are like a hundred mistakes you can make as a first time founder I'm like, bring it on. Let's make 10 more, 10 more.

But the thing is they're like more mistakes to make, but each one of those, you've gotta just pull yourself back up and move on to the next phase. And I think that comes with maturity too. . So things go. They go wrong, but you don't go lopsided because you've experienced so many ups and downs already that you've keep your vision, you understand who you are, and you really know who you are, especially if you've built your personal wealth through this product and you're building it for your family and your, you're thinking of other like business.

It only for me, it feels to validate how I've been thinking. And also the hum humility or he pie is there are oftentimes with venture folks, I'm pitching to somebody a lot younger, maybe not as familiar with the space. Yeah. I thought, wait, I know so much more than this kid. But the reality is they're your first store in and to start humbly no matter where you are.

And taking advice and input and read and study and figure it out and be on that constant improvement journey. That's what I meant by the thrill of your life. Because if you do something for a long time, you get a little bit more comfortable and things get normalized. So the heat of this and how every day is different It is super exciting and scary.

Julian: Yeah. Yeah. Yeah. What's something that you know, at the start of Penelope maybe had not been so good at, but recently feel more improved? Is there certain, a particular aspect of being a founder that you were like, I wasn't very good at that, but now I feel like I, I have a good grasp of this particular aspect of the job or responsibility or element of, of running a. company of running a company?

Jean: People managing people, making decisions faster. Yeah. Yeah. Because in a large company there's so many different processes, but I think trusting my gut higher, slow fire, fast, you know, all of those things that startup folks say, but trying people out and also listening and taking in advice from others.

I think the people judgment, if anything. My, my North Star around what I really believe in staying focused on that has hardened and has really Yeah. Solidified.  

Julian: Yeah. Amazing. . Tell us a little bit about Penelope and the technology and how you're enabling companies to help their employees to, to put money aside and really think long-term for their future.

What's a part of the technology? What's exciting about it? What's particularly, you know, I think maybe not different, but in, in terms of you know, building and incumbents previously, what are you focusing on that you think is an important feature that Penelope has.  

Jean: Yeah. So what we're striving for in our mission is to have a DIY 401(k) platform saving platform.

So I think I mentioned to you historically, this has been a platform of solution that's been sold by very by professionals. We're very seasoned. If you're large company, got 5,000 employees, 10,000. Absolutely. That makes sense. If you have 500, you may have very sophisticated plans, but as a small business owner, time is.

you wanna understand if you have to do something, if you decide you wanna get the core facts, you wanna see what it looks like, what it's gonna cost, how your employees will benefit, and you wanna execute, and those are the areas that we're focused on. So what we built in a modern tech stack is an onboarding platform that takes less than 10 minutes to actually set up yourself.

As we've been in beta, we've been had retirement specialists work with a lot of our companies to actually get input on making it a little bit more streamlined. And then we make the decisioning. Instead of answering 130 questions, we make the questions really simple and brief in terms of eligibility.

and the type of employees that they wanna include. And then we set everything on an automatic basis for their employees. Automatic contribution, automatic matching, automatic investment selection. So we provide what's called target date funds by Vanguard, which is very well known. As you can imagine, target date funds are a mix of security based on risk, based on the age of the participants.

So we. To that age based on the employee data that we get. So for somebody who's going on a first time trying to figure out what funds do I put, how much do I put in, we've made that baseline. If you wanna go in and change it, you can. And then from an operation platform, the UX ui, it's like everything else we use in our brokerage account or in our checking account even more stripped down, right.

Just to the. And one of the things that since we've launched is one of the things we're working on very much to expand a lot of our content because people are now wondering, wait, I've been putting money into my retirement for five years and I've got X, is that good? Is that bad? Or, I'm thinking about buying a house in five years.

Should I borrow from this or not? So I think there's a lot of richness related to your core investment. And where you think you should be and what you can do with it that we're starting to build on that content. So that's one piece that we're working on. And then we're doing a lot of new things because we're built on a modern tech stack.

We're super flexible. We're able to connect with a lot of different types of partners and I'm not gonna go public with anything right now, but there are a lot of strategic partners that we're working with Fixed Span who help other small business owners make decision on employer benefits. So, it's a lot more efficient too.

We don't have the weight of a lot of client data assets or old. This is just brand spanking news. So we've made sure we've modularized it for maybe different languages, maybe different platforms, different, a lot of things that we have in our roadmap that is being defined by the type of partnerships and clients that are coming our way.

Julian: Incredible. What are some of the biggest risks that Penelope faces today?  

Jean: The big risks, and this is like any startup founder, we've done a good job of going zero to one. We're trying to get to three now, right? We've been in business for about a year. And the risks are we recently did a fundraising round, so we're our burn rate's pretty good.

So we're not in, in this struggle of what are we stretching do, but we still have to think as if we've got a limited amount and how do we maximize it and. A lot of the employees that I've got at the company right now come from very self-directed roots. Very much make yourself, so I think we're all thinking about, I think a lot of people could probably make more money doing other things, but they came to start a in, in trying to help small business owners and Americans save in the same mission Sure.

And path that I have. And the risks are probably. As we scale, how fast can we service and still provide that sort of good hybrid high touch that we have right now as we scale? So we've got plan B, c, d, set if partnership, 1, 2, 3 come in place, but it'll be about execution. So as much as you plan things out, it's still about execution.

So I think a bunch of us have come from large organiz. A lot of us have come from very scrappy startup world, and the ability to marry that will actually help us get through that next phase.  

Julian: Incredible. If everything goes well, what's the long term vision for Penelope?  

Jean: Oh, there, there's so many different ways to go.

So in many ways, the 401(k) plan is the stepping stones to building wealth for yourself and for the next generation. . So you can imagine a scenario in which you've got a 401K plan. It's a few years, you add a beneficiary, and the beneficiary was born last month. Ah, maybe that person had a trial. Could be a time to talk about five 20 nines.

College savings plan. Yeah. Or let's say you've been putting 5% of your salary every two weeks and it's been a hundred dollars or $500 and all of a sudden it's a thousand. Maybe you got a raise. So it's an opportunity to talk about a financial plan there. There's so. Think or if you clicked on, I'm looking for a loan.

Maybe you're looking for a loan for your first time house. Maybe there's an opportunity to work with the bank around mortgages. So where you work is the genesis of building financial security for yourself and then for your household. And as it expands and there's a lot of rich sort of information that we're able to help our participants and our employer.

So there, there are a lot of ways to be servicing participants. And then on the small business side I have partnered tangentially on the referral side with small business cards, small business loans, small business health small business enablement platform. So there's a lot of potential opportunity.

to help small businesses sort of bundle these capabilities together. So we continue to talk to a lot of prospective partners, but right now we're like deadly focused Yeah. On that small business and making sure we've got the most robust point for them.  

Julian: Incredible. What's particularly hard about your job?

Jean: Making sure my family doesn't kick me out. So I my husband, my daughter my dog lives me no matter what. It's, it is a sacrifice. It's a lot. Yeah. Right. It's it's a lot of time. It's a lot of you are doing it pretty much 24 7. So I think balancing. Making sure that they're okay.

Unfortunately, I'm married to an amazing person who literally does way more than 50% of the line chair of all the things at home, so that helps keep our home sort of in balance. Yeah. And then I've got elderly parents who are in Southern California, so I need to make sure that I spend time with them. I have friends.

So I think that all those other parts of you, other than. and other than this business person , needs to be nurtured and needs to I can't just completely avoid that. So I think it's that balance and that's my New Year's resolution to still make sure that I do more in that realm because I have been all in with the company for a year and a half. So I don't wanna lose that.  

Julian: Yeah. I appreciate that answer. I think it's extremely honest and a lot of founders, you know, work from the conversations I've had it work to find that balance and incorporate the different aspects. Cuz I think it, it reinvigorates the energy and motivation that you have when you're focusing on, you know, the product or the company when you're working on.

If you weren't working on Penelope, what else would you be doing?

Jean: I would maybe have a restaurant. Yeah. , even though it's really hard work, I clearly like to work hard. I like to suffer , but I grew up in restaurants. I love cooking. I really do. And I think I'm pretty decent at it. And I only, I used to cook a lot more when I lived in California and since I moved to New York, when your kitchen's very small and there's so many options to go out, you don't go out.

But Covid made me sort of rein based cooking. and like we had a dinner party last weekend and I really, it gives me immense pleasure. So I think I would have a restaurant.  

Julian: Yep. I love that. I love that. I always like to ask this next question, not only for the audience, but for selfish research purposes. Whether with early a career now, what books or people have influenced you the most?  

Jean: I know I've read a lot of good books, but none of 'em are coming to me right now. But the influencers they change all the time. Oh my goodness.

Right now, I'm just going to say my immediate family because that's I'm really, I've been spending a lot of time with my family and reengaging, so I just mentioned my parents are aging. One of the things when they first came to the States was they started businesses and they were working all the time.

So as they get older, I am forgetting some of their stories, like the town that they grew up in, the friends that they had. The first the sports that they really enjoyed. So, I, we live very far, so I've been, every time I visit my parents, I've been recording a lot of their history. My daughter just turned 11.

She's influencing me an awful lot. The company's actually named after her. She's putting off me cuz she is literally the direct beneficiary of everything my husband and I are working on. And some friends, some founder. and some friends that I've had for a long time because that's front and center.

So I will read more books and I will be out there, but I can say, sure, I can say Michelle Obama I love her and they're a lot of other folks in the atmosphere. But I've been trying to really this holiday season engage with them and I would say they're right there. I'm gonna have to email you a list, julian.

Julian: No, no worries. You know, I think we I asked that question because I think a lot of audience members, myself included and other founders take a lot of that information and use it and, you know, reinvest and also maybe reflect on, you know, what influences them and impacts them. So it's really cool that to hear everyone's answer.

Is there anything I didn't ask you or anything that I should have asked you that I didn't?  

Jean: Well, I'm gonna, I wanna add one thing right now because this wasn't, it was just an article about Nom Chomsky, the anthropologist and linguist and it was an article and he's somebody I've read in college a little bit afterwards, and there's something about no matter how educated or how much he studied language in people, Ability to communicate very simply is very clear.

So, I would say that is somebody that's present, but there's no, that's it. I think one thing I wanted to say is this co-founder community, I've been so appreciative. It is so hard, and there's no one else that goes through all the ups and downs, whether it's fundraising, hiring, firing, trying to grow, trying to scale, trying to figure out your product market fit, all those words that we.

but it is, you do get up in the middle of the night thinking about it stressing, and it's not just once, twice, it's almost like every day. So unless you are talking to other people, which I have through a lot of female FinTech founders get friends that are in that same space because. You need it and they are going through exactly the same thing you are.

And if you can find somebody who's been a stage or two in front of you, even better. But I have to say people have literally gone through the experience, have been the greatest sort of source of comfort. Yeah. Even to just bounce off and they are, no one else knows exactly the seat that you've been in.

So that would be sort of my lasting. People probably already know this, but for me, that's been a huge game changer for me over the last six months in, in really finding a small network of people who are in the exact same shoe as me.  

Julian: I love that. Yeah. The community aspect I think is something people don't rate as highly as until they're in it and involved in especially founding a company.

Because yeah, you're right, those conversations, so. Make you not feel so alone, but also reinvigorate maybe some inspiration or some other strategy or different way or perspective to look into Yeah. The problems that you're solving. So it's always and I'm the beneficiary of chatting with people like yourself because I'm getting it almost at an expedited rate.

But Jean I know we're at the end of the episode and I always like to give our guests a chance to give us your. What are your LinkedIns your websites, your Twitters? Where can we get involved with npi? And if I'm a prospective, you know, customer where can I get the product and start working with the platform?

Jean: Yes. Sign, sign up for a demo. You can always email us hello@penelope.co. P n e l o p e, and our website is penelope.co and we're on LinkedIn. And we are on Instagram and Facebook and all of those places, but the best place is just to email us or go on the website and sign up for a 15 minute demo.

We've got a great promotion going on right now where we're giving three months off on our admin cost plus waiving the $500 setup, so that's 875 bucks. So we'd love to hear from you and help you get.  

Julian: Incredible. Jean, I hope you enjoyed yourself and thank you again for being on the Behind Company Lines podcast.

Jean: You're welcome. It was awesome to meet you, Julian. Thank you so much.