How Capitalize is ‘Making Profit and Purpose Coexist’
One of the most stressful things that can happen to a person is being let go from their job. On a “Life Change Stress Index Scale” created by Dartmouth University, “fired at work” ranks as number eight.
Losing a job — or even changing jobs — is an incredibly volatile time for many people. Especially when you consider that 58 percent of workers in the U.S. are living paycheck to paycheck, according to CNBC.
Throughout Gaurav Sharma’s decade in the financial services industry, he saw not just the stress that occurred when people lose a job or move to a new company, he also saw the long-term financial cost.
“I realized how hard it was for Americans to manage their finances,” said Sharma, CEO and co-founder of Capitalize, in an interview with AlleyWatch. “I also noticed how little people had generally saved for retirement, and concluded that a large issue was what people did with their 401(k)s when they changed jobs.”
WHAT DOES CAPITALIZE DO?
Capitalize is a fintech company that helps people digitally locate their old 401(k) and transfer it seamlessly into a new account at any financial institution. In doing so, Capitalize is modernizing the ‘rollover’ process and helping Americans better save for retirement.
Sharma recognized that there isn’t a simple way to conduct the rollover process for a 401(k), at least not digitally.
“Millions of people cash out their accounts prematurely or leave their retirement funds behind due to administrative hassle and confusion at the point of a job change,” said Sharma, In an interview with AlleyWatch. “There was an opportunity to improve this antiquated customer experience — that inspired us to launch Capitalize to provide consumers with an easier way to tackle the dreaded ‘rollover.’”
Those millions of people to which Sharma is referring end up accounting for around $1.65 trillion in assets among 29.2 million 401(k) accounts, according to estimates from analysts at Capitalize. That amount of money is certainly a large amount collectively, but even on an individual level, it can be life changing. Analysts at Capitalize estimate that this abandoned money could accrue as much as $700,000 in savings over someone’s lifetime.
Analysts at Capitalize estimated that, as of May 2023, there are 29.2 million left-behind or forgotten 401(k) accounts holding approximately $1.65 trillion in assets.
In an interview with AlleyWatch, Sharma commented that Capitalize can help folks who wouldn’t otherwise have access to this kind of financial help. “While some people might get help from their financial advisor, they have to have significant wealth in order to do so,” he said.
Capitalize takes unbiased treatment of finances seriously. One of the core company values, as published on its website, revolves around equality: “We do what’s right for all customers. We don’t distinguish between a customer with $500 in their account or $500,000 — we work hard for each and every one of them. We’re honest with them and get things done for them, no matter the obstacles.”
The mission of Capitalize — helping folks retire with enough money for a secure, dignified life — seeps into nearly every aspect of the work, ensuring the business creates a meaningful impact as well as profits. Another of the company values notes this combination in particular:
“We’re a team that believes it’s possible to do good and make money at the same time. We believe profits and purpose can co-exist, and we reject the idea that there has to be a trade-off between them.”
The Capitalize mission is born from a people-over-profit mentality; however, it doesn’t devalue the profit. How it does both is by helping people make their own profit — not just clients, but employees, as well.
“We believe we can help our users and make profits, rather than profiting at their expense,” the Capitalize website notes. “But if there’s ever a conflict, then we choose to help them — every time. Life’s too short to make a buck at the expense of people who trust you. We do this both because it’s the right thing to do and because over the long-term we believe customers will reward us with their trust.”
We believe we can help our users and make profits, rather than profiting at their expense. But if there’s ever a conflict, then we choose to help them — every time.”
When Ben Warburton joined Capitalize as a senior software engineer, he knew he wanted to find somewhere that genuinely reflected his values.
“When I decided to leave the company I was at, I wanted to find a job where I would help improve the world in a meaningful way,” Warburton said. “I went through a few rounds of interviews at a bunch of places, but a lot of them offered a similar basic proposition: optimize engagement with a market or product. When I learned more about the mission at Capitalize, I knew it was the place for me.”
As new staff are invited to join Capitalize, the hiring choices are made with the same long-term intention as the product. The company notes, “We’re out to build an enduring business that can serve customers for the next century, not just the next year. A long-term perspective allows us to look ahead and focus on what really matters.”
“While we may have different backgrounds and roles, we share the same values and principles — we’re mission driven, ambitious, intellectually honest, persistent, have an ownership mentality and operate with speed,” said Chief of Staff Aditi Bhatia. “You don’t need to always have the right answers, but you need to ask the right questions, use data and be open to healthy debate.”
You don’t need to always have the right answers, but you need to ask the right questions, use data and be open to healthy debate.”
The entire team at Capitalize is encouraged to “think like owners,” meaning that everyone has the power to make decisions and is accountable for their work. It also comes with incentives to do so, like competitive pay and equity in the company.
“We’re building a culture that values asking great questions over knowing all the answers,” commented Sharma. “We empower our team to move fast, try experiments, learn from them and repeat that process. We encourage people to think big, and love it when they propose ambitious, creative ideas. Not all of these ideas will work, but some will, and that’s how we innovate.”
Asking questions and collaborating are important aspects of the team culture at Capitalize — which is important when the team is building a product that can radically impact the quality of life that clients have when they retire.
Sharma concluded, “We’re lucky to come in each day and feel like our work has a positive impact on people’s lives — that animates us, and pushes us to keep building, innovating and serving.”