At 39 years old, Andrei Cherny has advised presidents, consulted with Fortune 100 companies, worked as a state prosecutor, served as a Naval reserve officer, founded a think tank and policy journal, and written a couple of books. Now he’s adding entrepreneur to the list.
In November Cherny will launch Aspiration Partners LLC, a company which aims to democratize broad swaths of the financial services industry by giving middle class investors access to investment products that had previously only been available to the wealthiest Americans.
Cherny sees the new venture as the culmination of the work he’s done recently in and out of government. While several major policy initiatives from the Obama Administration have been aimed at protecting investors and reining in a financial services industry run amok in the wake of the financial crisis, Cherny says policy is only one of several tools that society needs to address the problem of wealth and income inequality in the U.S.
In some ways, the work actually harkens back to the beginning of Cherny’s career when he worked in the Clinton Administration. Some investors argued that it was his boss’ repeal of the Glass Steagall Act that created the economic conditions which ultimately led to the housing crisis and economic meltdown nearly a decade later.
“What the financial crisis laid bare, was that there really is this two-tiered investment world,” Cherny says.
No matter the cause, the divergent fortunes of America’s rich and poor in the wake of the crisis has been a concern of the Obama Administration for the past few years, and was recently addressed by the new chairman of the Federal Reserve, Janet Yellen.
“The dynamic I just described of what happens when an everyday investor loses a huge chunk of their portfolio… I’ve seen [the problem] as a financial fraud prosecutor and then working with Elizabeth Warren on the Consumer Financial Protection Bureau,” says Cherny. “There’re different pressure points that you can bring to this problem, but what it requires is a private sector solution.”
Cherny remains mum on the actual specifics of his business, deferring for the company’s official launch date in November, but the company intends to offer an array of investment products that had previously only been available through investments in things like hedge funds and private equity funds, says Cherny.
“There’s some mix of the way the political system is set up and some mix of the economic systems and how wall street is set up,” says Cherny. “People do very well investing in [hedge funds], and from an economic standpoint and the way they’ve been set up they have no need or desire to bring those type of products that they’ve created to everybody else. So there’s a real opportunity to be an investment firm for the middle class.”
A slew of companies, have launched services that aim to provide better investment advice for everyday investors through algorithms. Companies like Betterment, FutureAdvisor, Motif Investing, Personal Capital, SigFig Wealth Management, and Wealthfront are all offering retail investors a better way to save money, but it seems as if Cherny’s business is focused on replicating some of the more arcane strategies for everyday investors.
“What we do is bring to people a set of investment products that have historically been out of reach,” says Cherny. “The question is can we provide to everyday investors what hedge funds are supposed to do, which is leveling out volatility.”
Cherny began working on the company two years ago, alongside his longtime friend Joseph N. Sanberg, a former managing director of Tiger Global Management. Over that period he quietly amassed $4.5 million in capital from undisclosed angel investors and began laying the groundwork for the company.
“At the time I was a business consultant and consulting for a lot of tech companies and big banks and seeing these things up close. The conversations were the starting gun of building a business, building a technology, and working with the [Securities and Exchange Commission] for the past year,” Cherny says.
Sanberg has come on board as an advisor alongside heavy hitters in the tech community like Alexis Maybank, one of the founders of Gilt Groupe, and Jeff Skoll, eBay’s former President and the founder of the Skoll Foundation, the Capricorn Investment Group, Participant Media and the Skoll Global Threats Fund.
If Cherny’s board of advisors is impressive, the team he’s assembled is not too shabby either. They include a former executive at the Blackstone Group, the former director of Ryan Seacrest Enterprises, a former user interface designer for Nest Labs, and financial heavy hitters from Merlin Securities and Cantor Fitzgerald.
“The company is a mix of Silicon Valley, Washington, Wall Street, and Hollywood,” says Cherny. “I’m really proud of the team, but I think what I’m most proud of is that shared mission that really infuses the culture of the company.”
For Cherny, someone can be a capitalist and still have a conscience. “That’s been central to why we’ve been able to get these investors, advisors, and team members.”
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