Nash said when he first joined Wealthfront, it had $100,000 in assets. Then it hit $1 billion last year when the company was two-and-a-half years old, and he expects exponential growth going forward.

“Our advantage as a software company is we don’t have to roll out retail branches, which means we can develop much faster,” Nash explained.

Nash said Wealthfront has studied other successful financial services firms to see how they handled both growth and changes in the markets. “For growth, we looked at Charles Schwab, whose early clients were in their 20s and 30s. Schwab started as a discount brokerage, and now how many services do they offer their clients? And now its average client is 54, and it [Schwab] grew up with that generation.

“Our plan isn’t to be just an automated investment service, but we do want to be the best automated investment service out there today,” he continued. “We don’t provide all of the services that traditional planners offer, but we are basically opening up the market for people to make a different type of choice.”

And Nash said Wealthfront plans to serve its younger-generation clientele for decades to come.

Big Boys Join The Fray
Some observers question the staying power of first-generation robo-advisors such as Wealthfront because they’ve spent tons of money building their platforms and still aren’t profitable. Nash addressed that issue by noting people wondered how Facebook would ever monetize its business model.

“How are you ever going to make money?” Edelman asked.

“We make money every day,” Nash replied as he leaned over and patted Edelman’s right arm in a friendly manner.

“And you lose much more,” Edelman retorted as he leaned over to return the arm pat gesture.

“I’ll make the numbers simple,” Nash said. “Wealthfront has grown 18 times in the two years I’ve been there, and we’ve grown headcount about three times. Continue those curves outward and we’ll have no problem making money. And we have some of the best venture capitalists in the world who agree with us. And the ones who’ve invested in us have been more right than wrong.”