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Financial Engines Uses Technology To Help investors

Publication Date: 
April 17, 2011
San Jose Mercury News
Pete Carey

Professor Joseph Grundfest spoke with Pete Carey of the San Jose Mercury News on what led to the formation of Financial Engines, an online investment advice provider which recently gained attention with its $127 million public offering.

Until last year, Financial Engines was one of Silicon Valley's sleepers -- it doesn't make gadgets and it was co-founded by a Stanford economist, not by a Stanford engineer.

But it got everyone's attention with a March 2010 public offering that raised $127 million. Its share price has soared about 60 percent since then.


Sharpe is now a director emeritus of the company, while co-founder Joseph Grundfest, a Stanford law professor and former SEC commissioner, still serves on its board. The third co-founder was the late Craig Johnson, then chairman of the Venture Law Group.

Grundfest recalls the conversation he had with Sharpe in 1996 that led to the formation of Financial Engines as "your average cup of coffee between a Nobel laureate and a washed up SEC commissioner." Sharpe described "all this software that could run on this new thing called the Internet, that would help people manage their money," Grundfest recalled. Grundfest said he volunteered that "if he was really serious about trying to make the world a better place by improving the retail investor's ability to better manage money, we needed to start a company."