2014|Case No.E477| Length 14 pgs.
The Wealthfront case tells the story of Andrew Rachleff, co-founder of Benchmark Capital and Stanford GSB faculty member, who starts a new company in 2007 based on his personal interest to provide endowment-quality investment management to the mainstream. Rachleff soon joins forces with Dan Carroll, an entrepreneur who launched a gaming site which allows people to manage virtual portfolios. The combined company, kaChing, offered users the ability to either manage virtual portfolios on Caroll’s game platform OR the opportunity to have their stock portfolios managed by amateur “expert” investors who had been hand selected. kaChing’s first major inflection point was when it decided it must shut down the game platform to focus 100% of its efforts on the money management portion of the business. The reincarnation of the company is renamed “Wealthfront”, differentiated not only by its name but by a stable of vetted professional financial advisors who have finally agreed to provide services on the site now that the company has achieved significant traction. Despite building up high quality supply, Rachleff soon realized that customer demand is lacking and must face either shutting the company down or convincing his engineering team to undertake yet another major repositioning to help the company survive.
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The learning objective of the case is to help the student understand the circumstances which must lead the company to undertake a pivot, and the internal and external challenges, from the perspective of the CEO, of navigating those pivots.