Acquiring
Carry's 401k
Business
A comprehensive analysis of the opportunity for Lettuce to acquire Carry's 401k management business — completing the Solo OS, unlocking compounding revenue, and blocking competitive threats.
Understanding Carry's
Revenue Engine
Carry generates ~$2.7M/year from two primary revenue streams. The DriveWealth interest share (~$62K/month) is included within the BD/RIA fees — not additive. Understanding this composition is critical for valuation.
Subscription Fees
Standard SaaS revenue from 4,052 paid subscribers at $299–$499/year. Grows linearly with customer acquisition. The most predictable but also most replaceable stream.
BD + RIA Fees (incl. Interest)
Combined revenue from custodian partnerships (DriveWealth, AET), advisory fees on managed accounts, and the DriveWealth interest share on $41.4M in customer cash. This entire bucket scales with AUM.
| Revenue Stream | Monthly | Annualized |
|---|---|---|
| Subscription Fees | $153,355 | $1,840,260 |
BD + RIA Fees Includes ~$62K/mo DriveWealth interest share | $70,000 | $840,000 |
| Total Annualized Revenue | ~$223K | ~$2,680,260 |
Revenue correction note: The "State of the Union" document lists DriveWealth interest ($61,902) as a separate line item, but it is almost certainly included within the $70K/month BD+RIA figure. If it were additive, Ankur would report the higher $3.4M number. The non-interest BD/RIA revenue is therefore only ~$8K/month — which has major implications for the managed accounts analysis below.
Key insight: Even at $2.7M, 32% of revenue ($840K) comes from asset-based and interest-based sources that compound over time. The same customers generate more revenue each year as they contribute to their retirement accounts (up to $72K/year per person) and markets appreciate existing balances.
The Hidden Upsell Opportunity
The $8K/month in non-interest BD/RIA revenue reveals that very few Carry accounts use the managed robo-advisor. This isn't a weakness — it's an untapped growth lever.
Reverse-Engineering Managed Accounts
If the non-interest BD/RIA revenue is ~$8K/month ($96K/year), and we subtract ~$3K–$4K/month in transaction revenue (PFOF, trading fees across 3,325 funded accounts), the pure advisory fee revenue is approximately $4K–$5K/month ($48K–$60K/year).
| Advisory Fee Rate | Implied Managed AUM | % of Total AUM |
|---|---|---|
| 0.25% | $19M–$24M | 9%–11% |
| 0.30% | $16M–$20M | 7%–9% |
| 0.50% | $9.6M–$12M | 4%–5% |
Translation: Only ~10%–15% of Carry's $218.8M AUM is in managed/robo-advisor accounts. The vast majority of customers are self-directed — they pick their own investments. This makes sense: Solo 401k users tend to be sophisticated solopreneurs who want control. But it means there's a massive upsell opportunity.
The Upsell: Growing Managed AUM
Post-acquisition, Lettuce can make the robo-advisor the default for new customers, offer a "Lettuce Managed" tier, and use AI-powered recommendations to migrate self-directed users toward managed portfolios.
Revenue Impact: Advisory Fee Growth Alone
Moving managed AUM from 10% to 30% of total — without acquiring a single new customer — would increase advisory fee revenue from ~$55K/year to ~$180K/year. That's a 3x increase in the advisory fee line. Combined with natural AUM growth from customer contributions ($72K/year max per person) and market appreciation, the total BD/RIA bucket could grow from $840K to $1M+ within 2 years.
The strategic play: Bundle the robo-advisor as a default feature within Lettuce Pro. Use AI-powered portfolio recommendations to make managed investing the path of least resistance. Every dollar that moves from self-directed to managed generates recurring advisory fee revenue.
The Players
Carry
The TargetFounded in 2022 by Ankur Nagpal (founder of Teachable, sold for ~$250M). Modern retirement and tax-planning tools for the self-employed. Raised $14.5M at $75M valuation (July 2024).
Lettuce
The AcquirerBuilding the definitive "Solo OS" — an integrated financial operating system for high-earning solopreneurs. Recent $28M raise and BeSolo acquisition. Covers S Corp, banking, payroll, accounting, tax, and healthcare.
The Missing Piece
Retirement is the single most significant gap in the Solo OS. Currently outsourced to Carry via a partnership — creating a seam in the UX and leaving revenue on the table.
Why Carry is Selling —
And What It Means for You
Ankur is exiting Carry entirely — selling both the marketing business and the 401k management portion to different buyers. This is a value-maximization unbundling strategy.
Full Exit via Unbundling
The marketing/content business appeals to media companies. The 401k management business appeals to fintechs like Lettuce. By selling separately, Ankur extracts the highest price from each buyer type.
Your Pricing Leverage
The $75M Series A valuation (July 2024) is deeply disconnected from the 2026 SaaS crash reality. Public SaaS multiples compressed from 15x–30x to 5x–8x. A motivated seller splitting assets signals willingness to negotiate.
Revised Valuation: Post-2026 SaaS Crash
| Valuation Lens | Pre-Crash (2024) | Post-Crash (2026) | |
|---|---|---|---|
| SaaS Multiple (sub revenue) | 7x–15x ARR | 2.5x–5x ARR | |
| RIA Multiple (on AUM) | 1.5%–2.5% | 1.0%–2.0% | |
| Blended Estimate | $15M–$25M | $6M–$13M | |
Anchor Low
Open at $6M–$8M. Frame RIA compliance costs and the corrected $2.7M revenue as significant.
Buyer-Specific Premium
You're the best buyer — but make clear you have alternatives (build vs. buy).
Structure Creatively
Earn-out tied to customer retention over 12–18 months. Protects against churn risk.
Competitive Landscape
Lettuce operates in a rapidly intensifying market. The Carry acquisition must be evaluated not just on its own merits, but as a competitive weapon in a landscape where AI is leveling the playing field and well-funded rivals are closing in.
The Threat Matrix
| Company | Funding | Retirement | Healthcare |
|---|---|---|---|
| Lettuce | $49M | ✅ (Carry) | ✅ (BeSolo) |
| Collective | $78.5M | ❌ | ❌ |
| Formations | $11.5M | ✅ | ✅ |
| Company | Funding | Threat Level |
|---|---|---|
| Intuit | Public ($14.4B rev) | Critical |
| Pilot | $150M+ | High |
| Bench | $113M | Medium |
| FlyFin AI | $8M | Medium |
How Carry Strengthens Lettuce's Competitive Position
Only Complete Solo OS
No competitor offers S Corp + automated tax + banking + bookkeeping + healthcare + retirement in one platform. Collective has no healthcare or retirement. Pilot has no S Corp. Intuit has none of the above. Carry closes the last gap.
Ecosystem Lock-In
Retirement assets are the stickiest financial product. Once a customer's 401k is on your platform, switching costs are enormous. This creates the "ecosystem lock-in" that the competitive analysis identifies as one of three keys to winning.
Data Moat Expansion
Carry's retirement data (contribution patterns, investment behavior, withdrawal triggers) combined with Lettuce's tax and income data creates the most comprehensive solopreneur financial dataset — fuel for AI-powered proactive tax optimization that no competitor can match.
AI-Powered Tax Optimization
With retirement data in-house, Lettuce AI can proactively recommend: "Contribute $X to your Solo 401k before Dec 31 to save $Y in taxes." This is the highest-value AI application for solopreneurs — and requires owning the retirement data.
The AI Urgency Factor
On February 24, 2026, Intuit announced a partnership with Anthropic to deploy customizable AI agents across its entire ecosystem. Pilot launched a "fully autonomous AI Accountant" on February 4. AI adoption in accounting jumped from 9% to 41% in a single year.
The implication: AI is the great equalizer — it lets smaller companies compete with giants on execution speed and service quality. But it does NOT equalize distribution, brand trust, or proprietary data. Acquiring Carry gives Lettuce a proprietary data advantage and distribution channel that AI alone cannot replicate.
The Strategic Upside
The AI Displacement Factor
As AI displaces roles and creates career volatility, a robust Solo 401k becomes more critical than ever. The loan provisions (borrow up to $50K) and Rule 72(t) withdrawal options provide a crucial safety net for solopreneurs whose incomes may fluctuate. Owning this capability makes the Solo OS indispensable.
The Compounding Revenue Engine
Subscription revenue requires continuous effort. But BD/RIA fees and interest income grow automatically — customers contribute up to $72K/year, markets appreciate existing balances, and fee revenue increases without acquiring a single new customer.
Retirement assets are sticky. Average funded account is ~$50K, largest is $4.2M. Even if businesses fluctuate, retirement assets stay on the platform for decades. Once the money is in, it tends to stay in.
The Flywheel: Cross-Selling Lettuce to Carry Customers
Carry's 2,951 active Solo 401k members earn ~$196K+ annually (required to max contributions). These are your ideal Lettuce Pro customers. Offer them a first-year discount and convert:
Full-Stack Revenue Per Customer
| Model | Lettuce | Total/Year | Uplift |
|---|---|---|---|
| Current (Referral) | $3,588 | $3,588 | — |
| Bundled Free | $3,588 | $3,841 | +7.1% |
| With Retirement Sub | $3,588 | $4,140 | +15.4% |
What if You Don't Buy?
If you pass, a competitor (Betterment, Human Interest, Guideline, JPMorgan — or worse, Collective or Pilot) will acquire Carry. The partnership gets terminated. Your best customers get poached.
Customer Poaching
A competitor gains direct access to your most valuable customers — the high-income solopreneurs currently using the Lettuce-Carry integration. They can market competing services directly.
Narrative Collapse
You lose the ability to claim the most complete Solo OS. A competitor with Carry's retirement platform plus their own services builds a competing ecosystem using your former partner's customer base.
| Scenario | Customers at Risk | Churn Rate | Annual Revenue Lost |
|---|---|---|---|
| 10% overlap, moderate | 405 | 30% | $438K/yr |
| 10% overlap, high | 405 | 50% | $728K/yr |
| 20% overlap, moderate | 810 | 30% | $872K/yr |
| 20% overlap, high | 810 | 50% | $1.45M/yr |
The Cost Reality
Acquiring an SEC-registered RIA is not like acquiring a SaaS product. The regulatory compliance burden is real and must be budgeted honestly.
Direct Compliance Costs
| Category | Annual Estimate |
|---|---|
| Chief Compliance Officer | $120K–$200K |
| SEC Exam Prep & Participation | $50K–$70K per exam |
| E&O Insurance | $5K–$15K |
| Fiduciary Liability Insurance | $10K–$25K |
| Cybersecurity Compliance | $15K–$30K |
| Legal Counsel (Ongoing) | $20K–$50K |
| Audit & Financial Reporting | $15K–$30K |
| Technology & Reporting Tools | $20K–$50K |
| IARD & State Registration | $2K–$5K |
| Compliance Training | $5K–$10K |
| Total Direct Compliance | $262K–$485K/yr |
Hidden Costs
Management Distraction
Regulatory inquiries and compliance reviews consume executive time — your scarcest resource.
Integration Engineering
6–12 months of dev effort. 3–5 engineers at $200K–$250K each = $300K–$750K one-time.
Custodian Renegotiation
DriveWealth/AET may use ownership change to renegotiate interest share and fee terms.
Migration Churn
Expect 5–10% customer loss during transition = $90K–$180K in lost annual subscription revenue.
Interest Rate Risk
If Fed cuts rates by 200bps, DriveWealth interest income drops 40–50% to ~$370K–$445K/yr.
Fiduciary Liability
Legal duty to act in customers' best interests. Investment losses could trigger lawsuits.
Total Cost of Ownership: Year 1
| Acquisition Price | $6M–$13M |
| Direct Compliance (Year 1) | $262K–$485K |
| Integration Engineering | $300K–$750K |
| Migration Churn Loss | $90K–$180K |
| Total Year 1 All-In | $6.65M–$14.4M |
Against ~$2.7M/year in acquired revenue plus $526K–$877K in flywheel revenue. Estimated payback period: 2–4 years.
The Decision
Buy Carry's 401k
Completes Solo OS, unlocks compounding AUM revenue, creates flywheel, blocks competitors, builds data moat for AI
$6M–$13M+ cost, regulatory complexity, management distraction, integration risk
Maintain Partnership
No capital outlay, no regulatory burden
Partnership is fragile if Carry sells to a competitor; you remain dependent on a third party; no data moat
Build Your Own
Full control, custom-built for Lettuce
18–24 months to build, $1M–$3M in dev, no existing AUM or customer base, regulatory setup from scratch
The 2026 SaaS crash gives you a once-in-a-cycle opportunity.
Acquire a strategically critical asset at a fraction of what it would have cost 18 months ago. The compounding revenue model, the flywheel opportunity, the competitive moat, and the defensive necessity all point in the same direction.