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July, 2018 Volume 17

Culture Matters:  What Do We Value?

Culture and teams are the most important ingredients for success in companies.  This is our conviction at Vestigo which makes us work hard to think about how we define our culture and the behaviors we require to ensure that we are what we want to be as a firm. It might have been easy to be relaxed about issues like culture when it was Ian and Dave and Mark starting the firm.  Because we understand its value, we were not relaxed at all.  We set down principals on how we wanted to behave and what we valued.  We understood our mission quite easily-maximize returns for our LP’s.  Our early thinking was much more about how we would make this mission work.  What culture would we create to make this mission successful? Our team has doubled in size since then.  We added our fourth partner Mike Nugent almost two years ago and more recently our new analyst Frazer Anderson and summer associate Farrah Nekui, PhD candidate.  Each hire has reaffirmed our commitment to the culture we set out to build. We focus on a few key elements of our culture:  respect for entrepreneurs; speed of execution; communication with substantive feedback, and; finally, fact based decision making.   We value diversity of the team’s point of view and make sure all are heard in the process.  If we remain focused on living these values in our culture, then we will reach our mission of maximizing returns for our LP’s.

—Dave & Mark

 

Envision Interview with Frazer Anderson

Frazer Anderson recently joined Vestigo as an analyst.  He discusses his background and early experience at the firm.

Advisory Board Advice Part II:  Incumbents and Innovation

We asked a question of our advisory board related to financial services incumbent innovation.  What is your point of view on incumbents in financial services and how they can innovate?  We got some wonderful insight from their answers. Ray Wang- Innovation is about where you can automate the greatest dissatisfaction that earns you the permission to take on the other parts of the business. Darlene DeRemer- Incumbents need to innovate or die.  They need to cannibalize their own business to be disruptive. Jarrett Lilien- Many incumbents suffer when they believe they have arrived at their end state.  There is never an end state, just the current state.  I believe it is necessary to build and instill a culture of perpetual innovation and continuous improvement to avoid end state thinking. Having an innovative culture means taking some risk, embracing change and allocating time and capital each year to new ideas.  This should apply to outward facing ideas as well as inward ones.  Incumbents should make use of their scale and consistently consider innovations in product, distribution and operations. George Wilbanks- Strong corporate cultures in successful companies can become a tremendous liability during periods of accelerating change.  Make sure to push hard to develop and maintain a highly diverse culture.  Diversity will promote different points of view on risks and opportunity, making it more likely that a realistic assessment of clients and services will lead to faster innovation or more intelligent strategic partnerships. Pete Mattoon- Many established financial services companies have long been flexible and dynamically react to the changing products and client/customer needs.  Capital markets evolution and regulatory changes have forced that culture.  For example – mortgage backed securities were created out of thin air in the early 80s – they grew because they served a great purpose in enhancing the velocity of home loan capital.  But senior management at the big Wall Street firms had to be taught what they are and then decide how much capital to allocate but they did and created new businesses for their firms. Another example -The notion that Robos are going to knock over the incumbents is ludicrous. Vanguard, Schwab and Fidelity easily reacted because they had most of it already in place – it was largely repositioning. So the “incumbents” are smart, dynamic and have near infinite capital. Look at them as partners in many cases, and the ultimate exit — if they haven’t copied your products already.  There are exceptions of course. Andy Putterman- I think many of the incumbents do not have the mindset and ability to make the radical shifts needed in the next few years.  This does not mean “business ends” but will have a profound effect on the ability to attract top talent and new clients.   Many will need to acquire firms that don’t have the legacy issues, which includes pricing models, to slowly migrate to more innovative and adaptable technologies. John Werner- These are new times for incumbents, that have not been like the past.  Experiment with all the emerging tech. Tom Gavin- Change happens slower than you think in the short run and faster than you think in the long run.  Therefore, keep a steady pace of innovation going.  That way you cannibalize your own cash cow with the “next flavor” rather than letting others do it to you. Maliz Beams- First, the days of any one company trying to do everything by itself are over. An old way of thinking was that we had to control every aspect of every transaction and that no other company could do things better than we could.  As technologies and businesses evolved, best performing companies have abandoned that perspective. Instead, they now actively seek out business partners whose capabilities can complement, or in certain cases, replace their own. Building and sustaining “partnership capability” within an operating model takes a very specific set of core competencies.  It’s a new skill set. To innovate as quickly as is needed, import that expertise into your organization. Build a sustainable, internal competency around external partnerships. Second, lead from the top—you can’t delegate innovation.  It takes time, but be acutely aware of disruptors in your market and in adjacent markets.  Go to Silicon Valley, go to Kendall Square.  It’s happening with or without you.  Immerse yourself.  Prepare, anticipate, adapt.

 

TowerIQ Joins Fund As Investment Seven

We completed our seventh investment on July 2nd.  We invested $750K in Tower IQ, an InsurTech platform that is designed to be a broker-first solution for streamlining workflows while capturing the market’s most valuable data.  Our co-investors include Hyperplane Venture Capital, Clocktower Technology Ventures and a number of angel investors with industry expertise and value-added networks. We are impressed with the team leading the company.  Adam Demos is the CEO with a background in FinTech from his stent at EquaMetrics and in a competitive intelligence company named App Annie where he was in a business development role.  Dan Hurwitz is COO and a co-founder with Adam.  He was an associate at Hyperplane Venture Capital where he focused on FinTech startups.  Michail Medvinsky just joined the firm as CTO and given co-founder status given his great technology delivery track record.  He was recently CTO at Plastiq and was at Fidelity prior to that with a large staff of engineers doing core infrastructure.

Portfolio Updates

Latest SLG Blog On Helping Employees

Why your employees are not using your 401k plan.

Insight On Taxation

Steve Gresham from LifeYield shares insights on wealth and taxes.  Its more uplifting than you might think!

Tax Planning Advice Beyond Tax Day

Paul Samuelson always has great insights on taxes.

Digital Banking Insights Part 1

In the first blog on the topic, Micronotes provides insight on the cost of customer attrition.

Insights Part 2

Further insights on turning digital outreach into a tool for growing the bank’s business.

Interesting News

Future Perfect Machine:  Artificial Intelligence in Finance

Artificial intelligence is reshaping how we work, interact and share information and content.  AI can be a threat and opportunity for incumbents.  Momentum will continue to build for AI.

TowerIQ White Paper

Collecting, organizing and managing actionable data remains an impossible undertaking for brokers and carriers alike.

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