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Sometimes great ideas occur on a red-eye flight.

At least this was the case for Dave Fanger, who wanted a way to invest in companies creating positive impact in the world.

Pacific Life, a Fortune 500 financial services company and Dave’s employer, offered the resources to push the idea forward. With the initial concept, Dave approached IDEO to help design, build, and launch Swell Investing, an impact investing platform that allows consumers to invest in stocks that align with their values.

Swell identifies high-impact, high-potential companies that are focused on a positive future, and makes their stocks available to investors via six thematic impact portfolios.

Dave teamed up with Carl Fudge, Director of New Ventures at IDEO; a team of IDEO designers to research and gather deep human insights that would guide the creation of a fintech product that meets the needs of socially-conscious consumers. Over the course of a year, they went from user interviews to a prototype to an SEC-registered digital platform with investors.

At the Money2020 conference in Las Vegas, Dave—now CEO and co-founder of Swell—and Carl took the stage to reflect on the journey of Swell, from takeoff to landing.

Moderator: What was the insight that made you believe there was an opportunity to build a new financial technology platform?

Dave Fanger: I was working in mergers and acquisitions at Pacific Life, traveling the country to evaluate companies to potentially acquire. Like many ideas, the one for Swell came into existence on a red-eye flight with a colleague. The asset managers we were evaluating didn’t feel purpose-driven. You could tell their staff wasn’t happy, and this affected our valuation. I wanted to find a way to invest in that concept—that good companies drive higher valuations and make good investments.

This led us to ask: What would we like to see and invest in? My colleague wanted to end poverty in Cape Town. I wanted to end diabetes in my family. And that was how the idea for Swell was born.

Building a business of this size and scale is no small undertaking. How did you go out there and start doing it?

Dave: We were building a new and different business—very different than anything Pacific Life had done before. It required new resources and capital.

We began with a small test of the concept for Swell. We created portfolios of companies that donated money to charity and built a DIY website, then tested the idea with people. I remember talking to people one-on-one at an event to see if they’d want to invest on this type of platform. We decided to bring on IDEO to help us better understand our end consumer and partner with us to design the business.

Dave, Carl, and the IDEO and Swell teams worked closely together, using human-centered design principles to ensure the product met investors’ needs.

Carl Fudge: Understanding consumers is really the heart of human-centered design. When starting this journey with Dave and Swell, we first wanted to deeply understand people and their needs, before designing a solution to meet those needs.

We started by conducting survey and in-person interviews. These proved that people really did want to invest in a way that aligned with their values, without sacrificing returns. But there weren’t any great solutions out there. This, in essence, was the design challenge.

What specific design choices were made with the needs and desires of users in mind?

Dave: One of the challenges we experienced in the first iteration of Swell was that the portfolio companies we showed people were donating to charity, but consumers didn’t consider them “good” companies—big companies that donate, but aren’t necessarily shaping a positive world.

In the Swell 2.0 portfolios, we decided to only include companies “walking the walk”—those with revenues in alignment with a UN Sustainable Development Goal. These goals help governments and organizations around the globe mobilize efforts to tackle issues like climate change, poverty, and inequality.

Carl: This notion of “walking the walk” applies to Swell, too. Our research highlighted that if we’re going to hold ourselves and our investments to a higher standard, then we have to deliver on this promise in all aspects of the customer experience and business.

This is why we emphasized transparency in Swell’s design. One of the questions people have when investing is, “Why was this company selected for the portfolio?” A lot of times with exchange-traded or mutual funds, this information isn’t available. We made a point to be straightforward. Each stock in Swell’s portfolios has a “company card,” where you can learn who the company is and the positive impact it’s making in the world.

The team’s sketches of Swell explored how to emphasize transparency in the product’s communication, features, and overall design.

Why would Pacific Life—a 150-year-old life insurance company—choose to build a fintech from within? There are many other ways for a company of this size and stature to acquire or partner with an organization that’s already in the marketplace.

Dave: Pacific Life has been around for 150 years, and they want to be around for another 150. This requires innovation and evolution. It’s an opportunity for the company to learn about consumers, advance their digital capabilities, and share knowledge more broadly. In addition to Swell, Pacific Life has incubated other companies and continues to explore this as a path to growth.

Carl: What Pacific Life did with Swell is something many large companies find difficult: Setting up the conditions to foster innovation and growth from within. In this case, we had executive-level support for Swell, both for strategic and organizational reasons. Pacific Life saw a promising idea and they gave it the space, resources, and time to flourish.

Companies in the financial space are great at quantifying risk. Yet, innovation often requires us to embrace ambiguity to uncover something new and meaningful to customers. How did you explore innovative ideas and take new products to market in a financial services environment?

Carl: A company’s biggest fear is that they end up building a product that no one wants, which is expensive and harms their reputation. But at the same time, they know that continuing the status quo is also risky—everyone knows innovation and change is imperative.

The key questions become: How can you reduce the risk of moving forward with new venture concepts? And how can you spend as little time and money possible to validate that you have something worth investing in?

For us, building prototypes was the solution—low-cost product simulations that we tested with real users. Prototyping is cheap and a great way to validate product demand in a matter of weeks, rather than months or years. We also had users excited about the product vision at an early stage. They were willing to leave their email address, give feedback, and invest cash in rough, early versions of the product.

For companies sitting on a bunch of new product ideas and aren’t getting them out of the parking lot, what’s one thing you’d recommend?

Carl: Run a week-long design sprint with a few team members. In five days, you’ll have a more fleshed out vision for the product that you can get in front of real users. Having a prototype and user feedback is typically more compelling than a huge powerpoint deck of market analysis.

Dave: Find your champion. Is there a leader or team who will listen to you and your ideas? Make your case and take any opportunity given to you. For example, Pacific Life has an innovation committee—that’s a place I brought the idea for Swell and developed it.

This Q+A is excerpted from an interview at Money2020, October 2018. Watch the full interview here.

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