Jon Stein of Betterment on focus, pricing, and scaling channels

Executive overview

Early-stage founders routinely face the same trap: multiple promising growth paths open at once, and pursuing all of them dilutes focus enough to stall momentum on each. Jon Stein, who grew Betterment to $60B+ in assets, works through this challenge with three callers across a beverage brand, a custom furniture maker, and a pet accessories startup.

The through-line across all three: sequence your bets, pick the channel that teaches you most right now, and raise prices before taking on debt or complexity.

Spread across too many channels too early and you win nothing; pick one lane, go deep, then sequence the rest.

Starting a business in uncertain times

• Stein started Betterment during the 2008 financial crisis — a moment others avoided financial services.
• Uncertainty creates opportunity: competitors retreat, conditions that seem hostile often mark a bottom.
• Long-term: staying invested in a diversified portfolio outperforms reacting to macro fear.

Caller 1: Heretic Yerba — which channel to prioritise

Dan Chris co-founded a yerba mate and guayusa brand in Longview, WA. Selling loose leaf, energy drinks (in development), and coffee shop concentrates. ~$60K revenue, doubling year-on-year. Question: how to allocate focus across channels with different capital, expertise, and timing needs.

• Pick one channel as the engine for the next 12–18 months; treat others as proof points, not parallel bets.
• Go deep personally on the channel where you're learning fastest from direct customer contact.
• Loose leaf: highest learning (direct customer interaction); energy drinks: highest long-term upside, highest cost and risk; coffee shop concentrate: fastest to revenue, lowest barrier.
• The brand positioning — "question your caffeine" — is a defensible angle; lean into it as the clean, low-acid coffee alternative.
• At farmers markets, capture emails and build community; Liquid Death's success was built on brand loyalty, not just product.
• Retail/grocery presence can function as customer acquisition even when margins are thin; retention flows back through DTC.

Caller 2: MTS Woodworking — expand or pay down debt first

Mike Smith runs a custom furniture business out of a 12x24 basement workshop in Salem, NH. ~$68K gross revenue, ~50% margin. No advertising, fully booked on custom work. Question: take on debt to expand space, or wait and pay down personal debt first.

• Throughput is the binding constraint — not demand; demand already exceeds capacity.
• Before debt: identify the smallest expansion that meaningfully changes income.
• Options in ascending risk order: raise prices, sublease space from an existing shop, short-term commercial lease, home addition.
• Avoid maker spaces if you need storage across multi-day projects — they don't solve that problem.
• Target margin benchmark: 80% gross margin, 20% cost of goods — current ~50% margin leaves pricing headroom.
• Standardised products (Adirondack chairs, outdoor libraries) are scalable and hireable; custom work is not — consider a hybrid model.
• Skilled craftspeople are underpriced relative to demand; raising prices is the lowest-risk first move.

Caller 3: Floofball — where to focus for scale

Maggie McDonald founded Floofball in Atlanta: soccer-themed dog toys and accessories using parody designs inspired by club teams. Selling DTC, wholesale (gift/pet/soccer shops), Chewy, and club partnerships. ~$75K expected revenue. Question: DTC marketing costs are rising; where to shift focus?

• Being on Chewy is real validation — it signals operational sophistication and trust, not just a sales channel.
• When DTC hits a ceiling, B2B and wholesale provide a more repeatable, scalable sales motion.
• Soccer specialty stores show the highest conversion and repeat rate in wholesale — that's the signal to follow.
• Club partnerships (e.g. El Paso Locomotive) produce best margins at lower-league level; larger clubs introduce licensing complexity.
• Treat Chewy as a marketing channel: invest in on-platform promotion, branded packaging, and QR codes that convert Chewy buyers into DTC repeat customers.
• Focus doesn't mean exclusivity — keep DTC alive as brand origin, but direct marginal dollars toward channels that scale.

Jon Stein's closing advice

• The hardest and most unpredictable part of any startup is finding early product-market fit.
• Once you find it, lean in — and give yourself grace that it takes time.
• Keep talking to customers throughout; it's the only reliable way to navigate the uncertainty.