- Sallie Krawcheck is the founder and CEO of Ellevest, an investment company for women.
- Krawcheck’s résumé includes running the wealth management branches of Bank of America (Merrill Lynch) and Citi, and she was regularly referred to in the media as “the most powerful woman on Wall Street.”
- She shared lessons learned from navigating the boys club of finance, and why it inspired her to become a champion for women in the workplace.
Sallie Krawcheck has run Smith Barney, Merrill Lynch Wealth Management, US Trust, and Citi Private Bank, and was also Citi’s CFO. Now she runs Ellevest, an investment firm aimed at helping women create wealth for themselves.
But, perhaps surprisingly, she doesn’t like the phrase “empowering women.”
“That isn’t about empowering anybody,” Krawcheck said on Business Insider’s podcast, “Success! How I Did It.”
“That’s about us recognising the power we have, the strength we have, and using it,” she said.
Over her career, Krawcheck has held a lot of sway, but her time on Wall Street has been far from rosy.
Listen to the full episode here:
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- Retired Navy SEAL Jocko Willink
- Duolingo founder Luis von Ahn
- Audible founder and CEO Don Katz
The following transcript has been edited for clarity.
Rich Feloni: We’re here in our office downtown in the financial district. You were saying that you were kind of getting –
Sallie Krawcheck: PTSD.
Feloni: Yeah. Why? What was that about?
Krawcheck: Well, I’ve worked down here a few times. The first time was in the late ’80s, when I worked for Salomon Brothers and investment banking right out of college. It was the absolute wild west of, “Don’t do that much all day, work all night, don’t take a shower, run for the aeroplane, go the strip bars. Are those people snorting cocaine?”
I mean, it was just the wild west, what you hear about old Wall Street.
Feloni: Frat club basically.
Krawcheck: Frat club. Lots of sexual harassment, like we’re hearing about in the #MeToo era. Then I worked down here right after business school, for DLJ, when they had the first World Trade Center bombing. I worked for Bernstein when they had the World Trade Center bombing, and was down here a lot after that. Then I worked down here when I worked for Merrill, where we looked right over the World Trade Center site, the Ground Zero site. I got reorg’d out of that job. I can’t say there’s been a lot of positive stuff I can remember being down here, so if I vomit in the middle on this podcast you’ll know why.
Feloni: OK, well, sorry about that. Maybe we could get you in a better frame of mind. When you were a kid, did you imagine yourself on Wall Street as some powerful exec?
Krawcheck: Oh, God no. I didn’t even know what Wall Street was. In fact, if I were to let you in on a secret, when I showed up on Wall Street, I really, really didn’t know what a stock was. I kept reading the definition, but I didn’t know what it was. Pretty soon after I got here, we had the crash of ’87 – I mean, weeks after I got here. So there’s always a sense of being really sort of off-kilter. No, but when I was a little girl I wanted to be a princess obviously. My second choice was banker.
Feloni: Where did you grow up? What were you like as a kid?
Krawcheck: I grew up in Charleston, South Carolina, family of four kids, young parents. The four kids’ age difference was, oldest to youngest, 3 years and 11 months, no twins. The maths actually can work. And I was, as you’d imagine, sort of bossy.
Feloni: You wrote that you were bullied out of your all-girls middle school.
Krawcheck: Oh, I was that kid. I was that kid. It was Waspy. My family has been in Charleston for hundreds of years, and I was the little bit too smart kid with the Coke-bottle-thick glasses, the corrective shoes, who just didn’t fit in very well, and I got bullied by my all-girls middle school to the point where I started seventh grade making A’s, and by the end of it was making C’s, ate lunch all by myself. So I love to say there was nothing they could do to me on Wall Street that was worse than seventh grade.
Feloni: Because of this, did you have to adjust your personality as you were growing up?
Krawcheck: No, I didn’t adjust my personality. You certainly get – I don’t want to say a chip on the shoulder – you certainly feel like you have something to prove. High school, college, even as an adult, there is a sense of – for the hurt kid that you’ve left in your past – that you’re sort of taking care of her a little bit and you’re proving that you can be successful and make it after having a period in your life in which you’re that miserable and alone.
Becoming the ‘most powerful woman on Wall Street’
Feloni: So when you ended up on Wall Street, did you immediately want to start rising up a hierarchy?
Krawcheck: I immediately wanted to get out. Really, my 20s were just directionless. I knew I didn’t like investment banking. I didn’t get it. I didn’t enjoy it. I didn’t love the work. I loved parts of it. So, really, my 20s, instead of “I want to go and be senior” it was “I haven’t found a fit yet.” I went to business school after working at Salomon Brothers with the sole intention of getting out of Wall Street and switching careers, and I wanted to go into media. So I got the plumb job, the summer internship at Time magazine, like the job of my dreams. The summer was OK, not great. They were actually even then laying people off. This sort of long wave of traditional media shrinking, so that was already happening.
Devastatingly, I didn’t get a job offer coming out of the summer. The guy who I worked with did and ended up going on to be one of the most senior people at Time Warner, so they obviously made a very good decision, but that was devastating. I then got a job offer at Disney, which was my dream job – dream job – and I thought, “Well, this is how it’s supposed to work out. I didn’t get that job offer. I got this other really better one.” But it was in California and I was married. My husband was also on Wall Street and was not interested in moving to California, so I turned it down. A few months later I found out he was having an affair with a friend of mine. I’m like, “Dude, dude – could you maybe have mentioned the affair when I was turning down my dream job?”
So I ended up back on Wall Street after business school, just devastated, throwing up between orientation sessions because my marriage had fallen apart and I was in a job I didn’t want, and I made the move to business school to switch. Anyway, so no. No, my 20s were not about becoming senior. My 20s were actually about finding a fit, which I finally did in equity research. When that insight came to me that that’s what I wanted to do, it was the scales fell away, and I knew that was a job that I was going to love and I hoped to be successful at.
Feloni: So your dreams of just escaping Wall Street, getting into media or Disney, was that just kind of anything but Wall Street, but then when you found something within it you maybe wanted to stay?
Krawcheck: It wasn’t quite anything but Wall Street. It was no to investment banking. Here is this other idea. Oh that didn’t work out. Then I was a stay-at-home mum, which I hated. I mean, I love my kids, but I hated being a stay-at-home mum. It was interesting because that gave me the time and space to let things fall into place where, OK, I just didn’t get the two top media jobs I wanted, I don’t like banking, but what did I like about banking, what was I looking for in media? I learned about myself. I love building earnings models. It’s like, I love it. I really like writing, even though it’s hard. I like dealing with smart people. I didn’t like the team “Eat what you kill” dynamic of investment banking. So where else can you have those things with a lot of personal responsibility? And equity research is where I went. The timing was spectacular because it was right before that period, which I don’t think we’ll ever see again, when equity-research analysts were sort of the kings of Wall Street.
Feloni: And you ended up being referred to, commonly in the business press, as “the most powerful woman on Wall Street.” How did you feel when you saw that phrase?
Krawcheck: Pretty awesome – pretty good, pretty good.
Feloni: Did it feel strange in the sense that this was, you were trying to escape Wall Street and now you’re in this position?
Krawcheck: Well, it was not Wall Street. I tried to escape investment banking, but I was successful quickly as a research analyst. I become director of research for Bernstein and put in place a very different strategy from the rest of Wall Street or the rest of equity research, and where most research analysts were in both in investment banking and in research sort of straddled the two, fundamental conflict between the two, because if you’re a corporate you want to sell your stock high, if you’re a individual investor or corporate investor, you want to buy that stock low. Who are you advising? At Bernstein I was out of the investment-banking business, gave up a lot of money, but it ended up being the right call. So there was this level of success that occurred relatively quickly mostly because I found a really good fit.
Feloni: What did you learn about power dynamics dealing with CEOs of large banks?
Krawcheck: How long do we have? It depends on the CEO. I believe I have worked directly for more big financial institution CEOs than anybody else on the planet. And they were all different. Some of them are inclusive and expansive and confident and run your business and call me when I can help, and here’s some coaching and here’s how I’m going to help you get better and here is how I’m going to celebrate my leadership team. And others are micromanaging and directive and have to be the smartest guy in the room and you can’t find a way in with them. I’ve sort of worked for all kinds.
There are many different ways to be successful as a CEO, and I don’t think there’s a single rule of thumb about how to be successful with a CEO. I thought there was. During the course of working for a number of them, deliver your numbers, do it in an ethical way, be open, share the numbers with everybody, try to be the good egg who is the least of the CEO’s problems. And sometimes that didn’t work either. In fact, when I got reorganized out of Bank of America, when I was running Merrill, I don’t think my numbers had ever been better. We were beating plan. We were gaining share. We had turned the business around as we were directed to do a couple of years before. We were growing. I think we’re the only business at the company that was growing at the time, and that was my business and I got reorg’d out, which was sort of a real eye-opener, because if you’re brought up to believe in sort of a fundamental fairness, that feels below the belt.
Feloni: For context, it was 2011, Bank of America’s CEO, Brian Moynihan. He didn’t fire you but gave you an offer he knew that you would refuse –
Krawcheck: No, he – and I’m doing air quotes here – he reorganized me out, and a couple of other folks, and this one was demoted and demoted again, and then she was fired. And so it was, it wasn’t a single bullet to the skull. But the truth is, it felt like that. You know, when you’re brought into a CEO’s office and informed of a reorg and given 20 minutes from the time you’re told to the time you see it on CNBC, it doesn’t feel unemotional. Of course with any reorg you can say, “Well, it’s, there’s nothing personal about it, but you choose who to reorg and you choose who to keep.” So there’s just as much pain on a reorg as there is in a what would be considered a traditional firing.
Feloni: Around that time there were reports there were factions out to get you because of the CEO who hired you, Ken Lewis, and then, when he stepped down, there was some politics. Is there any validity to that?
Krawcheck: I’m pausing because it’s hard to know if there are. I’ve read stuff like that, but what I’d say is that when you’re brought in by one CEO and then you’re working for another CEO, and the second CEO didn’t bring you in, you’re at risk. Individuals tend to want to have people around them who they’re comfortable with, who they have confidence in, who they have selected. I totally understand that. When you look at my career and I was brought in to turn around first Smith Barney by Sandy Weill, and then there was check prints and there was Vikram Pandit. Then I was brought in to turn around Merrill by Ken Lewis, and there was Brian Moynihan. When you have that kind of change, what one CEO thought was important may not be what the next one thinks is important. What one prioritised may not be what the other prioritised. What one was looking for in an executive is not what another one is looking for in an executive perhaps. So navigating the volatility is challenging. To go back I also got fired by Vikram when I was running Smith Barney over at Citi, different story, different circumstances.
Feloni: In 2008.
Krawcheck: This was 2008. Smith Barney had mis-sold products to clients that we thought were low risk and ended up being high risk, and we thought would lose a little money in the downturn. It lost all the money in the downturn. I advocated returning the funds and Vikram disagreed, and there was a back-and-forth that went to the board, and I won, but got fired, which happens when you go up against your CEO. But anyway, to back up, you think about that move from Sandy Weill to check prints to Vikram Pandit, and if you look, if I tend to look at my experience in isolation, I say, “Well, Vikram fired me.” Well, actually I was the very last of any of Sandy Weill’s direct reports to still be reporting to Vikram. So if you think about our leadership team, the entire leadership team got wiped out and rebuilt amongst those three CEOs. It’s not at all unusual, particularly in times of crisis, that if you’re going to have different CEOs, your chances of losing your job skyrocket.
Feloni: Then in your book, “Own It,” you mention your firing from Citi. You think it was at least partially because of your being a woman.
Krawcheck: I know – very scandalous, isn’t it? You say it, “She went there. She went there. Oh my gosh. She’s playing the woman card.” Let me explain.
I very much believe – I know that I was fired from Citi because I was different, and that I was literally told by individuals who said, “I’m carrying a message from the CEO. Literally sit down and shut up.” Like, “Literally sit down and shut up.” And I wouldn’t because I really believed that we had made a mistake, that there was a path to curing the mistake, that it was client-friendly, that it would actually save the bank money over not a quarter but over some period of years, it would enhance the reputation of the business, I truly believed that. And what the research tells me is that when you look at the difference and the genders, and there are differences, that women tend to be more relationship-focused, more long-term-focused, more mission- and purpose-focused, and when you sort of think about how those fed into my position versus the position of the guys, you say, “OK, that’s a difference that led to my having a different point of view that led to my getting fired.” I would never say it was directly like, “Hey, she’s a girl. Let’s get rid of her.” But something more subtle.
Inspiring women to recognise their power
Feloni: As a way to counterbalance that, you said you were against this idea of “empowering” women. What did you mean by that?
Krawcheck: So everybody talks about empowering women, and it seems a little – frankly – patronizing to me, because women have plenty of power. We are more than half the workforce. We control $US5 trillion in investable assets. We control with our spouses and partners another 6 trillion. We direct the majority of consumer spending, whether it’s 80% or 75% – we can debate that – but we have massive amounts of power.
The issue is, we haven’t been using it. The other issue is that so much of the pop-culture advice to professional women for years has told us that we individually can advance. “Ask for that raise. Take the seat at the table. You go, girl.” There was this sense of, “I own my destiny, and if I follow these instructions that successful women write about, then I can be successful too, and if I’m not successful, then I didn’t follow the directions well enough.” And it hasn’t worked. It just hasn’t worked. What has worked, and we’re seeing it more recently, is women coming together, whether it’s The New York Times, where there are women’s-diversity groups banded together to request and make the case for a longer parental leave, whether it’s the women of Nike coming together and exposing some of the tough things about the culture there, whether it’s the actresses coming together with Harvey Weinstein, whether it’s women rallying around Susan Fowler on Uber, that’s what is working now, is not the individual woman trying to make it on her own separated from the pack, but really women who are supporting each other and coming together and driving real cultural change for the first time. That isn’t about empowering anybody. That’s about us recognising the power we have, the strength we have, and using it.
Feloni: And that ties into the company you founded in 2015, Ellevest. What is it?
Krawcheck: Ellevest is an investing platform for women, tech-enabled. We started as a digital platform only. We’ve added financial advisers and certified financial planners. For those who are listening who are saying, “Gosh, an investing platform for women. I don’t know about that. It seems to me that numbers are pretty gender-neutral, and do women really need their own thing?” The answer is, I thought that, too, and came to the conclusion that we do need our own thing.
Despite the fact I just said we’ve got the $US5 trillion of investable assets, we’ve kept too much of it in the bank versus men: We’ve kept more than 70% of our money in the bank, missing out on the market returns that you can get from investing. And it cost the women who are listening to this certainly hundreds of thousands, for some number of them millions over the course of lives, or some number of them it’s a bigger deal than the gender pay gap. I sort of stood back and said, “Something on Wall Street, in the investing industry, is not working for these women.” Maybe it’s because when an industry is 86% of financial advisers are men it’s not too big a leap to come to the conclusion that the industry was built more around what men are looking for and things like outperforming and beating the market and picking the winners. I mean, this seemed like very competitive things when we talk to women about investing. They’re not competitive. They don’t care about winning. They care about reaching their goals.
In addition, so many of the investing algorithms such as with medical research, with research on cars, is built to a male prototype. Well, OK, except women live longer, our salaries peak sooner, we take more career breaks. Oops. If you’re investing to a male, according to a male algorithm, you got a problem if you’re a female. As we dug into it, there were certain preferences that women had that were holding them back from investing, and there were certain ways that technology has been pulled together, which, as in so many areas, really favour the men over the women.
Feloni: What have you learned about yourself in leadership style from running your own business?
Krawcheck: I really have been meant to be an entrepreneur. People keep saying to me, “But you ran Smith Barney and Merrill, so you’ve run big complex companies.” Yes, and I was also a research analyst where if I didn’t do something every day nothing happened. It’s sort of the same with being an entrepreneur. If you take a day off, like, nothing happens because you’re trying to build something from nothing. I love our mission of getting women more money, therefore getting women more power, therefore making the economy stronger, making society stronger. I mean, I just am so passionate about our mission and what we’re doing. So I’ve learned I’m very mission-driven, much more so than, “Hey, let’s manage this complex company.”
The second thing is I love to work. I just do. I don’t like to manage as much. The whole “It’s time for your quarterly review” and “Here are our salary bands” and all that stuff. I love writing our newsletter, and I love being out there and meeting with potential clients, and I love talking to people about what we’re doing and I love leading. I’ve learned that, on the leader-manager, I tend to lean more toward the leader than the manager, and I’ve learned that I think we’ve got a huge opportunity in front of us that this market – which is literally, literally even called a niche market by the industry for years – is massive and is activated and understands, is beginning to understand how not having as much money in the men and their lives have kept them in jobs they might not want to be in, in relationships they might not want to be in, not taking the trip around the world they want to take, that it has been limiting to them. And this, as we go to them and we engage with them on it, the sense that it’s not your fault. There’s sort of a sense of tremendous relief.
Feloni: And what do you have coming up next?
Krawcheck: Why would I tell you that?
Feloni: We’ll just keep it top secret.
Krawcheck: Well, I’ll tell you what you’ve just brought out. It almost feels like it’s next because it’s so new. Another thing we hear from women is, it’s something like about 85% of them are interested in impact investing. Impact investing, for those of your listeners who are not familiar with it, is investing for financial return, yes, and to have a positive, working to have a positive social or economic impact. At Ellevest, our Ellevest impact portfolios do that and do it both by getting money into the hands of women and working to advance women. Now this can seem a little strange at first. “What? Women? I don’t know. That feels niche-y.” Again, half, 51% of the population, and if you’re not investing in women, you’re investing in men, who are awesome. However, I might invite you to consider that when you give a woman a loan – and they’re less likely to get loans today than men – they are more likely to pay it back. When they build wealth, the vast majority of it goes into their community and into their families, that companies that are run by women or with more women in senior leadership outperform those that are men only, not by a little bit, by a ton. I would argue there is the opportunity not just to earn good return, competitive returns, but to look at these superior business results that occur. And that the other thing I would say is diversification is sort of this holy grail of investing, and if we’re wholly invested in, almost wholly invested in the guys, it might be time to bring in the gals in a little bit too. We’ve recently rolled that out. As I said the majority of women express interest, just a single-digit per cent of financial advisers have even spoken to them about it. So we had real excitement when we brought that out with our little bit of an Ellevest twist.
Feloni: How do you personally define success now?
Krawcheck: It’s impact. I thought about this a lot. After I left Bank of America, I spent the better part of a year trying to decide what was important to me. Success is impact. I could have gone back to a big company. I could have had a much bigger office. I could’ve been more comfortable on a day-to-day basis. The great thing about what’s going on in business today is you can have an impact, maybe even a greater impact at a small company, whereas historically it had to be at a big company. If you have a great idea, you can get it out there for free. For free. You head on to Twitter, head over to Facebook. It doesn’t necessarily have to go viral. By being out there with that idea consistently, and if it’s a good one, people will listen to it, gravitate toward it, and there are many more press outlets as well so that you can find places that are interested in something that may not have been as interesting for a broad audience. Combine that with at a startup you can move so much more quickly, so much more quickly than a big company, all of a sudden I can make the argument you can have a greater impact on people’s behaviour from a startup than you can from one of the big guys.
Feloni: We’ve talked a lot about different aspects of your career, but is there maybe a single best piece of advice that you would give to someone who’s maybe really in their career just starting out?
Krawcheck: Yeah. It’s “Work hard.” I don’t know of a better bit of advice than that. Be persistent, be resilient, work hard. The correlation between hard work and success is pretty strong. It’s not every year, and it’s not every few years maybe, periods when they sort of split off, but in general if you keep at something, you’ll be successful. I am no smarter than any other individual who started in Salomon Brothers in 1987. But I just kept at it and refused to go away and worked hard and found things I loved and wanted to work hard at. So I don’t have any hacks or tricks for success. I just love my work, love what I’m doing, realise how fortunate I am to be able to do it, have that insecurity from seventh grade that keeps me going. Just work.
Feloni: Well, thank you very much, Sallie.
Krawcheck: Good. Thanks for having me.
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