How I Made It: He dreamed of a career in politics. Now he's shaking up consumer banking

Andrei Cherny is CEO and co-founder of Aspiration, a financial tech firm in Marina del Rey that offers what it calls sustainable banking services and socially conscious investing to online customers.

Staff Writer

July 21, 2019 7 AM PT

Andrei Cherny is chief executive of Aspiration, a 4-year-old Marina del Rey firm that markets itself with the slogan “Save Money, Save the Planet.” The financial technology firm offers what it calls socially conscious online banking and investing services, a strategy aimed at digital-savvy millennials.

Co-founded by Cherny and Los Angeles investor Joseph Sanberg, Aspiration is among a gaggle of “neo-banks” competing to disrupt the financial industry’s branch-based model at a time when high fees and big-bank transgressions — think Wells Fargo’s fake accounts — are angering consumers.

The 200-employee fintech startup distinguishes itself from mainstream banks by pledging to invest customer account money with the climate crisis in mind.

“The four biggest global bankers of fossil fuels are all U.S. banks — JPMorgan Chase, Wells Fargo, Citi, and Bank of America,” the firm’s website asserts, citing annual studies by Rainforest Action Network, the Sierra Club and BankTrack on lending to oil, gas and coal producers.

Cherny, who pivoted to finance from a career in politics, has raised $110 million from venture capital funds that include Social Impact Finance, Allen & Co., Omidyar Network and Alpha Edison, along with individual investors such as Clippers coach Doc Rivers and actor Leonardo DiCaprio.

Aspiration reports it has 1.5 million customers in its hybrid checking-savings accounts, with 200,000 more signing up each month.

Valley boy

Cherny, 43, was born and raised in the San Fernando Valley, the son of Jewish immigrants who fled communist Czechoslovakia.

At age 12, he volunteered at a Los Angeles campaign office of Democratic presidential candidate Michael Dukakis.

“I walked in and said I’d like to work on foreign policy,” he recalled. “They laughed and said, ‘There’s something else you can do,’ and they directed me to the vacuum cleaner in the back. Eventually I got to work the phone banks.”

Rapid rise

After North Hollywood High School, Cherny attended Harvard College on a scholarship. In his senior year, he wrote an analysis of then-President Clinton’s 1996 victory for the student newspaper. It caught the eye of a White House staffer. A week after graduation, he had a job writing speeches for Vice President Al Gore.

In 1999, Cherny returned to California, enrolling at UC Berkeley’s law school. He envisioned a career in politics. In 2002, while still in law school, he ran for a San Fernando Valley state Assembly seat but lost in the Democratic primary.

Arizona move

A few years later, after marrying Stephanie Fleischman, a USC law school graduate from Tucson, Cherny found himself working as a criminal prosecutor in Arizona.

“I wanted to be in L.A. and she wanted to be in Arizona — so we compromised and moved to Arizona,” he said with a chuckle.

Cherny ran for Arizona state treasurer as the 2010 Democratic nominee but lost in the general election. He then served as chairman of the Arizona Democratic Party. In 2012, he ran for the U.S. House of Representatives, losing to Kyrsten Sinema in the primary.

“After the last race, I felt that chapter of my life had come to an end,” Cherny said. “But the same values that brought me to politics still mattered a lot to me. I was looking for a way to be part of a cause larger than myself.”

Progressive finance

After a stint at the public relations firm Burson-Marsteller, Cherny found a new calling.

“A lot of the clients were big financial institutions,” he said. “They had hundreds of millions of customers who didn’t like them or trust them and were looking for something different.”

Cherny began brainstorming with his friend Sanberg, a progressive California Democrat who had worked for private equity and hedge fund firms.

“Joe knew how the financial industry operates,” Cherny said. “Very well-paid professionals work for super-wealthy individuals and families, but the vast majority of Americans are left behind.”

Arizona versus L.A.

Cherny was still living in Arizona, but the two friends decided to launch Aspiration in Los Angeles. Sanberg provided the initial capital and helped craft the vision. Cherny runs the day-to-day operation.

Today, in a squat office building half a mile from the shore, Aspiration headquarters overflow with 20- and 30-somethings working on laptops around conference tables and sprawled on the lobby’s couches. The company is running out of space.

“The talent you need to build something like this is in L.A.,” Cherny said. “There are a lot of successful start-ups here and a real technology ecosystem. When we have to relocate people from the Bay Area or New York, L.A. is a magnet.”

Cherny commutes from his home in Phoenix, spending four days a week in Marina del Rey. He is in the office by 7 a.m. and works as late as 11 p.m., he said. “Start-up hours are long, so it never made sense to pull our family into L.A.”

Cherny and his wife, who works as chief of staff to the Maricopa County sheriff, have two children, Benjamin, 11, and Arabelle, 8.

Pay nothing?

U.S. banks collect more than $30 billion a year in monthly service charges, overdraft penalties and ATM fees on checking and savings accounts.

Under Aspiration’s Pay What’s Fair policy, clients sign up for a cash management account with a debit card and choose whatever fee they want to pay, even nothing. They earn 2% annual interest — more than mainstream banks pay for savings accounts. They get cash back on debit card purchases, and free ATM use worldwide.

“We only make money when our customers are wowed by what we do,” Cherny said. “The vast majority choose to pay, even when they don’t have to.”

Besides the voluntary fees, Aspiration earns revenue from businesses in debit-card transactions, and from the interest it collects from parking client funds in federally insured banks — ones vetted for avoiding fossil fuel lending.

Eco-banking

Like many financial firms, Aspiration offers a mutual fund that screens companies for their environmental, social and governance practices. But where the firm is often cited as an innovator is in retail banking.

“There are other neo-banks,” Cherny said. “But we are the only one to build products around social conscience and sustainability. It is not just marketing.”

Besides what it calls “fossil-fuel free deposits,” Aspiration gives 10% of its revenue from customers to Accion U.S. Network, a micro-lending nonprofit, and other charities. But its most unusual feature is an “Aspiration Impact Score,” which allows clients to track the social and environmental effect of their spending.

To build the algorithm, Aspiration’s data scientists combed through 75,000 data points in public filings, news accounts and corporate reports. They track 30 issues at more than 5,000 public and private companies from greenhouse gas emissions and recycling to CEO pay and worker benefits.

“You can compare CVS to Walgreens,” Cherny said. “It’s like a Fitbit for sustainable shopping,”

The millennial market

Two-thirds of Aspiration’s clients are under 40. Their median annual income is $52,000. Just 6% live in the liberal enclaves of Los Angeles, New York City or the San Francisco Bay Area. “There are conscious consumers all over America,” Cherny said.

But he concedes Aspiration has yet to turn a profit. “We are well on the way, but we don’t have a specific date,” he said.