The Enterprise Cloud for Investment Managers

April 23rd 2020:

In this on-demand webinar, we talk to Ridgeline about how investment managers can leverage enterprise cloud solutions to run their businesses more efficiently. Fund Recs CEO, Alan Meaney is joined by Ridgeline’s Head of Strategy and Dave Blair, VP of Product Strategy. Ridgeline comes with its own fascinating back story, and we’ll cover its origin, mission and culture. Watch now. 

Ridgeline are currently hiring for several roles which you can view here: www.ridgelineapps.com/careers/

Webinar recording: The Enterprise Cloud for Investment Managers

Featuring Alan Meaney, Jack Lynch and Dave Blair

Video Transcription

Introduction


Alan Meaney:
Welcome everyone, to join us for this webinar to discuss enterprise technology in the cloud for investment management, with Jack Lynch and Dave Blair from Ridgeline. I'm Alan Meaney CEO of Fund Recs for anyone that doesn't know me. I'd like to give the two gents a chance to introduce themselves briefly. A quick bit on their background and then we can get stuck into the agenda. We've 30 minutes for this column and a bunch of stuff to talk about, so we'll try and get everything crammed in. We will be trying to pick up Q&A from the Q&A section, so if anyone wants a question answered as we're going through it, fire through there, and we'll do a dedicated few minutes towards the end of the call, if we don't manage to slip them in the middle. Maybe Jack I'll start off with you first if you want to briefly introduce yourself and a bit about your background would be great.

Jack Lynch: Thanks Alan. Thanks Fund Recs team for having us. My name's Jack Lynch. I'm the head of strategy at Ridgeline. Been with the company since we founded in late 2017. We got ourselves into the broader investment management market in the fall of 2018. We've been at this for about just over 17 months. Prior to joining Ridgeline I had a stint at IBM where I was a part of the business analytics and data group, which eventually was where the IBM Watson Group was born out of.

Jack Lynch: I had the great opportunity of being a part of the team that worked on the first commercially available products that used Watson technology. We took those to a variety of industries, healthcare, industrial manufacturing, and ultimately financial services. So if you have a JP Morgan Chase credit card, and you get a fraud alert, that was a lot of the work that we did in the early days on applying all sorts of artificial intelligence and machine learning concepts to enterprise products. And I ultimately had this opportunity to meet Dave Duffield, who we'll talk a little bit about, our founder of Ridgeline in the summer of 2017. Shortly thereafter, we founded Ridgeline. I left to join this team. So far it's been an absolute pleasure to lead strategy. I've brought with me Dave Blair, who is our vice president of product strategy and I'd like to have him introduce himself.

Dave Blair: Yeah, hi folks. Dave Blair. I'm a newbie at Ridgeline. I'm a few weeks into joining Ridgeline. I came to Ridgeline from SSNC Advent. I had a long, long 28 year career, and I've been going way way back to almost the MS Dos and the Windows days. I've done a lot of things but I've had a long stint on the Geneva products. We are talking in the fund space here. On the Geneva product I was product management. I worked on a lot of credit derivatives, file functionality, and reporting. I was really covering a lot of Geneva product, working with a lot of funds and fund admins. From there I had tours of duty at various management efforts on the product development side. Most recently in a mid-market asset management tool set that produces APX Moxie and Genesis. I was a member of the leadership team at Advent.

Dave Blair: Probably I'd say after 28 years, why the switch? Jack found me. Ridgeline really appealed to me for three principal reasons. There's an enterprise platform DNA through, and I'm going to steal a little bit of Jack's thunder here. Dave Duffield the founder and his WorkDay and PeopleSoft experience. Super talented team. It's been a great... I virtually onboarded with the pandemic going on, but it's been fantastic. One thing near and dear to my heart was a customer-centric partnership approach to building software.

Alan Meaney: Excellent. I think that's a fantastic starting point because it really... It gets to the essence of the intersection of tech and investment funds industry that you're trying to bring together. Ridgeline and... I know Jack, you have some slides prepared. I don't know if you have them open. I might try and make you presenter or maybe we can use that for a bit of structure as we go through everything. One second. Now I just switched you over the host.

Jack Lynch: Dave's going to grab control.

Alan Meaney: Do you want Dave to drive the slides or not? Here we go.

Jack Lynch: I can drive them too. I got them right here.

Alan Meaney: Okay, perfect. You should be able to do it from there.

Jack Lynch: Can you see?.

Alan Meaney: Yep. See your screen. Yep. Just need to present and you're good to go. Perfect.

Jack Lynch: So we're Dave and Jack. We're trying to solve a pretty hard problem and I will turn it over to Dave to get us going.

Dave Blair: Yeah. We'll start out just calling all... We're new, we're looking to be a new entrant into it. We're taking a very humble approach. We know that we are trying to solve a hard problem. We are hiring. We are looking for engineers, product leaders and industry experts. We're also looking to talk to any and all firms who are interested in talking to us and talking about what we're doing and some of the challenges they're up against. Please, please get in touch if there's any interest as we go through this deck today.

Alan Meaney: On the hiring side, I think he definitely detailed it there. And then on the partnership side, it's really firms that are looking to use new technology and a new enterprise stack and talk to you guys to see what you're planning and get your feedback and get their input on the problems they're having to art themselves currently and seeing where you could help fill those gaps for them.

Dave Blair: Correct. Correct. I'll talk a little bit at a very high level Jack's going to talk about product vision, and hopefully give a little bit of grounding on where we're headed right now.

Alan Meaney: Cool.

Dave Blair: Agenda, we'll keep it light, but we're just got a few slides we've got to do and then we can get to some Q&A. The problem we're trying to solve and get a nice picture of Lake Tahoe. Our headquarters is actually at Enclave Village, Nevada. A slightly different location, although I'm coming to you today from San Francisco as you can see the picture behind me. The problem we're trying to solve and I'm sure to this audience on the webinar, this is all very familiar topics. But first and foremost, obviously everybody's been under margin pressure. Until the recent pandemic turbulence, it's been pretty much a straight up market, but it hasn't actually been the margin growth with those growth in assets.

Dave Blair: And I think people are looking at their operational footprints, their overall operations or technology footprint and seeing what opportunities there are to find that margin. Obviously it's changing investor preference. Everybody wants to pay less and get more, try and give themselves differentiated service. I think technology can really help with that problem. Cyber security threats are ever present. Obviously we have very confidential data. People would like to get at it. It increasingly eats up budget as well as mind space and regular regulatory uncertainty is (an) omnipresent challenge that we deal with that eats up budget and adds complexity to the lives every day in the financial services sector.

Alan Meaney: Great. I think that I took a line down that I saw recently that summarized that quite well into one sentence, and it was this, "That investors want better returns at a lower cost with more transparency." Which sounds like a small thing, but when you feed that into everything that's going on from the front, the back office operationally, it's a huge amount of work to make that happen. If you could maybe share some of your plans of how you're going to help solve that problem for people and the approach. What struck me when I spoke to Jack before was the unique approach, which feeds over from the culture with Dave Duffield in his previous companies.

Legacy Technology Equals Excel Hell

Dave Blair: We'll get there in a second, Alan. That's a great question. We'd like to walk through this one slide. We call it Legacy Technology Equals Excel Hell. We see in the industry and there are a lot of disparate siloed applications that have to be stitched together. And stitching together is expensive and it's complicated.

Dave Blair: Adding in terms of outdated interfaces, it's expensive to maintain. And then you've got to upgrade all of this. People choose not to upgrade it because it just gets so expensive and complex to upgrade because you've got the data and all of these silos, which leads really to just operational overhead in terms of doesn't scale or human error or batch processing. Trying to get a cash deposit or a cash withdrawal through four or five different systems can they're just... A lot of pain in the day. Obviously Excel and tools overlay all of this to try and make it work. It really gets to the core of the problem that Ridgeline is trying to solve. We've got the flames in there and it adds a little heat to the day when there is human error or batch processing or something goes wrong there. This is really the problem we're looking to solve at Ridgeline.


Alan Meaney:
Very good. Yeah. I think everyone can share in that pain. Anyone that's worked in investment management operations, be it an investment manager or be it on the service provider side has seen that spaghetti junction of systems that don't necessarily interface or talk well with each other. Maybe I think there's definitely a problem to be solved.

Dave Blair: 100%. At Ridgeline we're really looking to make tech a fundamental part of your investment firm's strategy. That we can really bring tech to solve this, particularly with the changes that are going on in terms of public cloud etc., That are really accelerating in the business.

Alan Meaney: How would you think that will help leverage how you're solving this problem? I presume it's trying to use some of that scalability, some of the extra features that are available with the cloud that you can take from the tech world and apply to investment operations.

Dave Blair: We can talk about that in a sec. Actually I want to... I've talked about the problem. I'm going to turn it over to Jack and he's been talking a little bit about the company and the product.

The Problem: Asset Management Firms Are Under Pressure

Jack Lynch: Thanks Dave. Let me just give you the audience a quick feel for who we are. Part one was there's a big problem to be solved. The pressures in this industry create an opening for a new entrant and entrepreneurs like us. We saw that opening and we founded Ridgeline and we've assembled a team that we think is a really important factor in solving the problem that we've signed up to solve. The team starts with our founder and probably one of the most unique things about Ridgeline. Ridgeline was founded by Dave Duffield. Dave has founded six companies. He is most notable as one of the most successful entrepreneurs in enterprise technology of all time. He founded PeopleSoft. PeopleSoft in its day was an early pioneer in enterprise resource planning systems.

Jack Lynch: Along with SAP and Oracle, they essentially created that category and enterprise resource planning systems are oftentimes abbreviated as ERP took a very fundamentally different approach to building suites of business applications that share common technology, that share common service, that share common data so that entire departments like the office of human resources, the office of finance could essentially operate their entire department on one application stack, one set of workflows, one version of the truth.

Jack Lynch: PeopleSoft was infamously acquired hostily by Oracle in 2003 and that left some angst with Dave. In fact, I think a lot of that led to why many companies are now founded with dual class shares, so that founders can retain voting rights, especially if their companies go public. But two years later, he and his head of strategy from PeopleSoft, Aneel Bhusri, founded Workday. Maybe some of the participants on the call are familiar with Workday, but Workday ran a very similar playbook to PeopleSoft in essence that its products were focused on the office of finance and the office of human resources, but they weren't... They were delivered entirely over the internet.

Jack Lynch: This was in 2005 and in 2005, there were stories of David and his team and the market saying, "You guys are heretics for saying, I'm going to move my data to someone else's data center." This is back when the chief information officer was still king and they still have huge capital projects to build data centers. It was years before SaaS was a household term. And I would say along with salesforce.com, Workday really pioneered this category in a very meaningful way. I believe that the teams at Workday and Salesforce really created the first concept of service level agreements and what you needed to have to deliver software over the internet. Today Workday is the second largest cloud software company in the market behind salesforce.com. They employ about 13,000 people.

Jack Lynch: They have about 2,750 customers and they service a significant part of the Fortune 500, but almost a third of the Fortune 100. They have a very scalable cloud delivered offering and companies like General motors, Walmart and Amazon rely on Workday for back office operations and finance and HR. While Dave remains the chairman of Workday, he's a serial entrepreneur. The guy just loves growth startups and that led to him founding Ridgeline in late 2017. We're enterprise technologists and so when we met with all the other strategy leaders in this industry, what we heard over and over again is, "Take this playbook that Dave has assembled," this ERP playbook, which is really important part of the equation, but then also take delivering it on the cloud in a very scalable way and apply that to industry. Apply that very purposely and very specifically to industry.

Jack Lynch: Ultimately, that's why we exist. It's to take this playbook and apply it to the investment management industry in a very purposeful built way. That's Ridgeline. Now, the team that we've assembled to solve the problem has to be a multifaceted team. Our leadership team comes for the most part from enterprise technology. We come from leading companies like SAP and IBM and Workday and PeopleSoft. We've assembled a leadership team with individuals like Danny. Danny for 25 years has worked at PeopleSoft and Workday. But what he has built are the general ledger systems, the financial consolidation systems, the systems that large Fortune 500 companies use to consolidate the entire office of finance. Gosh we're excited to build another GL. But, at the same time we've had to marry this team with a leadership part of our management team that really understands the problem that we exist to solve.

Jack Lynch: And so we've added individuals like Dave that have had 28 years working in the industry solving problems like this. Brian who came to us from the Siebel Industry team and Velocity was just acquired by Salesforce two weeks ago. And most recently Bank Site, a financial city services, CRM system that he founded. Or Jeremy, our chief security information officer. Jeremy was the CSO at Workday. We hired him really early because we think this industry needs to place a greater focus on security and trust and this crisis is really accelerating that focus in a big way as the industry realizes the significant number of physical dependencies that exist to operate their businesses today and the early 2000s VPNs that are failing at 25 or 30% low to just get access to the systems you need to run your business.

Jack Lynch: So Jeremy's here to help us think about a modern, secure cloud infrastructure. It's really where the magic happens when we're trying to solve a company or a problem like Ridgeline's aspiring to solve. It's the optimal blend of enterprise technology expertise from companies like we've recruited from like IBM and Workday and Uber. But it's mirroring that together with individuals that really understand the business problem we exist to solve from the investment management industry and financial services at large like Dave, and for us, it's having a culture that is centered in core values and a culture that drives very meaningful relationships and a team that is taking a very long-term view to solving the problem that we exist to solve. Let me share a little bit about what an early stage company like us thinks about in terms of the vision we have for our products.

Make Tech A Fundamental Part of Your Firm's Strategy

Jack Lynch: And if our aspiration is to make technology a fundamental part of the firm's strategy, we want to do that with our enterprise cloud offering and there are three principles that we are thinking about in the design and development of this platform. The first is that it's enterprise grade. A system that's truly born in the cloud. Cloud native. Not virtualized and Kubernetes and dockerized and running in someone else's cloud, but truly a cloud native services oriented approach to delivering our products as a service. What that allows us to do with investments in developer operations, oftentimes abbreviated dev ops is to drive a pipeline of continuous innovation and delivery to our customers. We think this is huge.

Jack Lynch: If you look at the way that this industry has to maintain its existing systems, there is a tremendous amount of downtime maintenance and low value operational activity going on just to upgrade the systems. Not to mention when you build integrations to other systems, oftentimes you have to stay on the current version of the product, because if you upgrade, you'll break the system. Ridgeline's designing a pipeline that resembles that of what you might find in the consumer internet company like Netflix. Netflix upgrades it software a hundred times a day. You just don't know about it.

Jack Lynch: I think we need to be a little sensitive to how often this industry wants to get upgrades, but the architecture is there and it's a highly scalable architecture. We're making a huge investment in a technology called serverless computing, whereby because we are born on the public cloud, we can create this equilibrium for the compute that our products and our customers need with the demand, with the supply, for that compute at the lowest possible cost. Where we need it when we need it and for the demand that needs it for. Now, because we're born on the public cloud and investing in the serverless architecture, it should create some really interesting operational efficiencies in the cost to serve a solution like the one we're building. And of course, a major focus on zero downtime.

Jack Lynch: The second principle that's driving our strategy is a focus on the industry. We have seen a lot of entrepreneurs enter this industry and enter it with Silicon Valley cloud and a lot of capital, but they don't understand \the problem they exist to solve. We are greatly humbled by the problem. It's a long-term value building exercise focused entirely on modernizing the systems of record that power this industry with a customer centric approach to developing the solutions that we are going to put in the marketplace. It's this underlying sense of humility and modesty I think that really, we emphasize as something really important to be a successful partner with this industry. Go ahead, Alan. You have questions.

Alan Meaney: Sorry, no. I just misclicked, but yeah no sounds great so far Jack. Don't want to stop you in your stride there.

Jack Lynch: I would say the last principle is we take a one platform approach. One of the things that Workday is most proud of is that all 2,700 odd customers run the same version of the code. There are no custom instances. We let that set in. Because in this industry, there's a tremendous amount of customized software. The second you customize your vendors products, you essentially lose the integrity of those products. The vendor can no longer add innovation or add upgrades or fix things because of the custom nature of the product, so we believe in one platform. One that is not customizable, but highly configurable, so that that configurability can drive our ability as your partner to drive innovation and drive new capabilities and new features into the product very quickly. We think we can aspire to help the industry reduce their vendor footprint. It's difficult to manage 10, 15, 20 different vendors with different relationships, different billing, different pricing.

Jack Lynch: It can be pretty expensive to manage and maintain all the vendors that the industry needs to work with to operate their business. Fewer integrations across systems. Although we're very ready and aware that we will need to be highly integratable and extensible. And so we're focused on building a modern, rest based API strategy that will allow us to both ingest but also extend to other systems that our customers are using and drive a more efficient operation with one platform and make compliance a lot easier. As Dave mentioned, the regulatory environment is bringing a lot of uncertainty. I think traditional regulators like FINRA and the SEC are going to create more uncertainty and then on the other side of this pandemic, we may see new regulations like we saw post 2008. But at the same time, there's a whole other set of regulations coming to this industry and coming into this country in the form of what's already happened in Alan's part of the world with GDPR and a massive focus on data privacy.

Jack Lynch: It's already happening in California. There's already data privacy reform in California. It's very likely in the United States that will happen at a national level. The world is becoming more focused on data privacy and data governance and security, and none of these systems were ever designed to handle that. We see a whole new set of regulations coming that will,...that we hope to help firms navigate more efficiently and effectively. These are ultimately the principles driving our product development, and Alan it's so great to have you bring us on the call. It was very early days for us. We are looking for people that want to join our team. We're also looking for some industry participants that share this vision. We have more questions than we have answers for today. We think there are some visionary firms out there that share our vision and want to go on this journey together.

Alan Meaney: Great, Jack that's super. I couldn't agree more with what you said, especially around the configurability. The speed of the development will only happen if you're not customizing versions left right and center. I think around the API strategy as well, I think the industry that we're seeing some green shoots of APIs becoming available and I think it's going to be a five to ten-year transition before they become ubiquitous. It's inevitable really, when you think about it. This idea of being able to transfer data via flat file formats just doesn't make any sense. The beauty of API is it allows you to build products on top of that data. So you're not limited by the connectivity. You want to add in there, Dave? I see a question. So I'm just going to shoot over and see what the question is.

Jack Lynch: No.

How Far Are Ridgeline From A Product?

Alan Meaney: Okay. One query in from Brian is, "How far are you from a product?" I guess development partners, partners going to be interested in this part. How far away do you think you are to, to getting something that people can start playing with?

Jack Lynch: Sure. Thank you Brian for that question. I'll answer a couple of key points. This is a massive market. It's a difficult segment to market, highly nuanced. Where Ridgeline has chosen to play first so that we can stay in our lane is within the asset management part of the market. Today we're working with a handful of partners that I would say are from simple to complex asset managers that have portfolios in a fairly diverse set of assets. Our first customer actually trades mostly in convertible debt, but there's a component of fixed income in US equities as well. For the better part of the last year and beyond we've been working to drive towards a minimum viable product for that, for that customer, capable of replacing their existing accounting packages, capable of replacing their existing order management packages and in a subset of the reporting needs that they have.

Jack Lynch: I would say we have aspired for breadth upfront because we think that the industry... We want to look at the industry investment lifecycle as a comprehensive process, that you go all the way from portfolio construction through to managing those portfolios through trading in those portfolios through to settling the trades and ultimately creating the accounting and the journal entries to drive that accounting and the reporting. We've looked at over the last 16 months, how to get thin threaded across all that over time. I think the answer to your question is really about adding depth and being able to support the many different asset types and instrument types that this industry needs at large. That's drive and development. We are not here to say we have anything to sell today, but rather we're looking for partners that want to be involved in that development process and this partner in particular is involved quite a lot.

Do You Have To Buy The Whole Ridgeline Suite?


Alan Meaney:
I think we've talked about it before Jack. It's a five or 10 year project to get to the level that you're hoping to get to. So it will be a constant iteration of the platform. Related to that, one further question from Mark is, "Will you be able to buy components of the stack or do you have to buy the whole suite?" That's more related to how you have started to think early and it is still very early a bit, how the commercial side of it might work.

Jack Lynch: Yeah. Thanks for the question, Mark. A good conversation I have with my ceiling a lot at night. It is pretty early to understand our go to market. We think that the industry wants easily consumable, digestible modules and the ability to receive value quickly. All vendors take that approach. That being said, I think with the vision and the audacity of the vision we have, we're trying to balance the way the industry has historically consumed solutions like the ones we're developing with maintaining the integrity of the vision we aspire to achieve. We've designed the product in such a way that we can integrate and make the product extensible, but we are in early thought exercises of how do we modularize and go to market in such a way that we don't degrade the long term vision of solving some of the really hard problems? Because a lot of other entrepreneurs they solve on the fringes.

Jack Lynch: Let me just build a product to solve the most immediate pain today. Maybe it's a dashboard. Maybe it's a feature. Maybe it's something to augment an existing process. Our founder has historically taken a really hard look at what is the system of record that drives that process? And oftentimes in this industry we find that on average, many of the vendors that those systems or records come from are 35, 40 years old or older and so we are taking a hard look at the really core systems of record and trying to make decisions around modularity and go to market based on the vision and audacity of the vision we have.

Dave Blair: I would just add to Jack's point. We are starting in the guts of debit, credit, integrated general ledger portfolio accounting, and then also the portfolio management. It's not the stuff around the edges it's right down in the car.

What Types of People Are Ridgeline Hiring?

Alan Meaney: Gotcha. Yeah. I know you've spoken a lot Jack that you're hiring currently, and I'm sure given the current circumstances, there might be people looking to join an exciting firm like Ridgeline. What type of people are you looking for? I know the roles are listed on the careers website, but in terms of characteristics, attitudes, skillsets, what can you give a broad sense about what people should be considered?

Jack Lynch: Sure. We're looking for people that want to go on an adventure. We're based in Lake Tahoe, which is one of the most beautiful places in the United States. We also have offices in New York city. I think first and foremost, I am looking for people who want to do a long-term value building exercise, and that really care about this problem and want to solve it in a totally different way. I think there's probably two buckets of people that we're aspiring to bring onto the team because we're very much in a product build phase.

Jack Lynch: The first would be engineering talent, technical talent. We have some really important jobs to fill around senior engineering managers in individuals with expertise in dev ops and UI architecture, and individuals that have a strong engineering skillset to the team. At the same time, we're looking for some individuals that really understand the business problem and can help us build a commercially viable product strategically. Individuals like Dave have joined the team. Dave really understands the business problem, but he's also been developing the solutions to solve it for the majority of his career. We're also looking for some help in product management, product strategy and product specialty to really help us in the design and in making sure that we can get to parity with the features and capabilities that our competitors have already put into the market. And-

Alan Meaney: Super. It's ridgelineapp.com just in case anyone is trying to find them. Ridgelineapps.com. Perfect.

Jack Lynch: Somebody in Salt Lake City, Utah owns ridgeline.com. I aspire to go get it someday, but we are ridgelineapps.com.

Alan Meaney: I'm sure you'll get there someday with it. One thing to finish on, we discussed it before. Dave has managed to IPO two companies from scratch, of which there is a small subset of people, but I think you shared with me that no one has gone on to IPO three companies from scratch. I think there's a massive opportunity to break that record Ridgeline. We're coming up on time and we've no outstanding questions. I just want to wrap up maybe and wish you the best of luck with the company. I think it's a fascinating story. I think it's bringing together a really talented team. I think you're going to have a huge impact. I just wish you luck, whatever. I'm sure people will be in touch afterwards on the partnership side and on the employment side. Hopefully this call has been useful and thank you for your time as well.

Jack Lynch: Alan the feelings are mutual. We're so impressed with the progress Fund Recs has made and the team that you've assembled to solve similarly challenging problems. A lot of startups take it sort of us versus them approach. Uber's the best example of this. Us versus the taxi industry. I think one of the things that Ridgeline as far as to do, and then we know Fund Recs is already doing is it's really us and them. If we really focus on these challenges, I think we can, over the next decade, do some unbelievably transformative things for this industry. And some things that I'm sure many of the participants on this call dream about. That's one of you then get in touch with us and we look forward to meeting you. So thanks Alan for having us.

Alan Meaney: No problem. Pleasure. Thanks. Thanks Dave. Chat soon.

Dave Blair: Thank you.

Alan Meaney: Take care.

Jack Lynch: Thanks a lot.

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