Blooom, an award-winning startup that provides online 401(k) management advice, has laid off nearly one-third of its staff and refocused to be solely a direct-to-consumer business.
The 4-year-old Leawood-based company, winner of several entrepreneurial awards, was “pulling itself too thin” by serving a business-to-business market as well, said co-founder and CEO Chris Costello.
“I’ve never felt better about Blooom than in the four years we’ve been in business,” Costello said Thursday. “We needed to focus. The tone is absolutely not sadness at all. It’s just a fact of business that unfortunately affects humans.”
Since paring its staff from 34 to 24 in late April, Costello said the company is “empowered to serve the underserved, neglected retirement savers” who are “trying to DIY their retirement savings.”
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He said the concept continues to generate investor interest. In February, Blooom raised $9.15 million.
The changes mean no longer devoting staff to marketing the company’s digitized portfolio management to investment advisers, brokers or companies. It also led to the resignation of Greg Smith, Blooom’s president since 2015.
Costello said Blooom’s four professional financial advisers and its support staff now are focused on growing their business “for the 70 to 80 million Americans who aren’t interested in doing their own money management or aren’t wealthy enough to have their own investment advisers.”
“It’s a decision that maybe we should have made earlier, and it certainly was hard,” Costello said.
The business provides proprietary, automated investment management for about 7,500 clients who have entered their basic retirement account information on the secure online site. The service costs $10 a month. It manages about $800 million in assets for its clients.
Soon after its founding, Blooom won a 2014 Best of Show award at Finovate, a national technology conference for the financial and banking industries. In 2015, it won the One in a Million competition at the Kauffman Foundation during Global Entrepreneurship Week. It also won a LaunchKC startup contest. And last year, it received the Entrepreneurial Small Business of the Year honor from the Greater Kansas City Chamber of Commerce.