Weapon of Choice

 
 

Addepar

We shortened this case study to accommodate humanity’s collective inability to pay attention for a long period of time. For the full monty, click here.

DNA: Mechanic  

The Challenge

How to articulate the value of real-time data mining for an industry stuck in its ways.

Addepar Inc. is working overtime to bring thefinance sector up to 21st-century speed. It offers a cloud-based platform for the global wealth and investment management market that enables financial and wealth managers to be more agile and transparent with their clients.

With a mission to solve the challenges of modern investment management and re-conceptualize what technology can do to bring the industry more in line with the modern world—the world of Google and Amazon—Addepar’s team understood that the company needed to build momentum around its fit in the market in a way that ultimately would establish the company not only as a leader in financial technology but also as the future of the industry. It also sought to create abrandthat would appeal to top technology talent—potential hires.

 

The Aha!

Our research revealed that Addepar was perceived as a weapon for investment managers to deliver a step change in decision-making for their clients. But how that weapon worked wasn’t readily apparent, especially to established old-school investment firms that were used to working in a relatively low-tech, often disorganized environment—basic Excel rather than Olympic-level programming.

Although the company’s game-changing data-mining and interactive platform initially led the management team to toy with the idea of positioning as a Missionary, the DNA exercise ultimately revealed Addpear to be a Mechanic. the firm is driven predominantly by engineering and technology with a customer experience that is reliant on its ability to provide a superior product. Additional discussion also revealed that the idea of redefining money management—a Missionary undertaking—wasn’t likely to appeal to the finance industry, which is notably conservative.

The next step was to determine the agree-upon parameters put forth by the management team, which would both encompass and constrain Addepar’s position as well as let the group know when they’d landed on it. In the end, the team decided on just two criteria.

  • Balance today’s appeal with tomorrow’s promise.

  • Attract and energize investors and potential hires.

What really changed the conversation for Addepar was the first, the idea of being the future of something that already exists. All of which led us to the conclusion that highlighting Addepar’s ability to bring something new to wealth management software—its ability to supply valuable insight previously \unavailable to the market—was the very thing that would secure its position as the industry’s future.

The Outcome

Clarifying Addepar’s position in the market contributed to a $50million series C raise in 2014. (In June 2017 the company concluded a series D funding round that pulled in an additional $140 million.) Addepar has positioned itself as a solution for today’s investor and developed a concise corporative narrative focused on key messages that have been tested in the market (integrity, transparency, and impact). Ultimately, Addepar’s high-quality, product-centric DNA became the bridge to a corresponding brand that appeals to customers and potential hires both in Silicon Valley and on Wall Street.

Weapon of Choice

 
 

The Challenge

How to articulate the value of real-time data mining for an industry stuck in its ways.

 Although the “finance sector spends more on technology, as a proportion of its revenues than any other industry,” wrote The Economist, ”compared with the world of e-commerce, banking still sometimes gives the impression of a Volkswagen Beetle instead of a Formula1 racing car.” 

Silicon Valley’s Addepar Inc. is working overtime to bring thefinance sector up to 21st-century speed. It offers a cloud-based platform for the global wealth and investment management market that enables financial and wealth managers to be more agile and transparent with their clients.

CEO Eric Poirier describes Addepar as purpose-built technology for investment and wealth managers to pull together in one central place all the information about complex investment portfolios, provide intuitive tools that enable them to slice and dice those portfolios, and then succinctly outline the details of those portfolios. Addepar does that by providing interactive analysis that renders complex portfolios easy to understand. “If I’m a client of a wealth manager, the plain-English questions I want answers to are ‘What’s my net worth? How are my assets allocated, and how does that vary across accounts? How many funds am I invested in? How are the funds doing? How exposed am I to whatever’s going on this week with Apple? I saw this weird thing happen with crude oil. How did that affect me?’”

There’s a problem, however: “When you start asking these questions, more often than not an advisor says, ‘I’ll get back to you in a week or two.’ Butwhatthatadvisor really means, is, ‘I live in an Excel world andI’llhavetodoallthisstuffmanuallybypullingdataoutof oldaccountingsystems.’ Whatwe’redoingisusingtechnologytosolve problemsthatforthelastfewdecadeshaverequiredmanualeffort.”

There’s a problem, however: “When you start asking these questions, more often than not an advisor says, ‘I’ll get back to you in a week or two.’ But what that advisor really means, is, ‘I live in an Excel world and I’ll have to do allthis stuff manually by pulling data out of old accounting systems.’ What we’re doing is using technology to solve problems that for the last few decades have required manual effort.”

Addepar’s platform brings a simpler, more commonsense approach to investing, Poirier said, one that has beenlost as the investing world has become increasingly complex. “You might think, ‘Well, of course that technologyalready exists.’ Because it does exist—in different forms—on Google and Amazon, but what you’d find is that it doesn’t exist in the financial world. So many investment dollars have been poured into poured into buildingtechnology within banks. But each of those banks has technology that’s basically locked within a walled garden; the technology isn’t shared by other banks.”

Simply put, the financial world was stuck in an outdated, error-prone, and byzantine process that relied predominantly on people using 30-year-old software and thumbing through reams of spreadsheets. Addeparmodernizes the experience, with advisors drawing data directly from banks over fully secure and encrypted channels, thus enabling wealth managers to answer clients’ questions instantly using only a single computer or tablet. 

With a mission to solve the challenges of modern investment management and reconceptualize what technologycan do to bring the financial industry more in line with the modern world—the world of Google and Amazon—Poirier and his team understood that the company needed to build momentum around its fit in the market in a waythat ultimately would establish Addepar not only as a leader in financial technology but also as the future of theindustry. To achieve that leadership and promise, it also sought to create a brand that would appeal to top technology talent—potential hires.

Customer interviews we conducted as part of our research revealed that Addepar was perceived as a weapon forinvestment managers to deliver a step change in decision-making for their clients. But how that weapon worked wasn’t readily apparent, especially to established old-school investment firms that were used to working in arelatively low-tech, often disorganized environment—basic Excel rather than Olympic-level programming. Inessence, said Poirier, “Addepar was long on R&D and short on communication.”

 

The Aha!

Although the company’s game-changing data-mining and interactive platform initially led the management team to toy with the idea of positioning the company as a Missionary, the DNA exercise  ultimately revealed that Addepar was a Mechanic. Although Missionary makes up more than a few strands of Addepar’s DNA, it became clear that the firm is driven predominantly by engineering and technology with a customer experience that is reliant on its ability to provide a superior product, not customer service. In true Mechanic fashion, approximately half of Addepar’s 250 employees were either engineers or data scientists. Further, among those 250 employees, just 4 are salespeople. According to Poirier, most customers discover Addepar via word-of- mouth referrals—yet another indication of Mechanic status. 

Additional discussion also revealed that the idea of redefining money management—a Missionary undertaking—wasn’t likely to appeal to the outside world. The finance industry is notably conservative, and any disruption would be likely to engender more trepidation than excitement.

Thus far, all fairly straightforward. As was determining that the company offers its customers value (its Mechanic genotype) thanks to a technology platform that sifts through large data sets to extract patterns and trends that were previously inaccessible. Just as Waze mines and prioritizes traffic data to offer the best route to circumvent an accident snarling the road, Addepar mines big chunks of data to bypass outdated and expensive manualprocesses to expose information that provides investors with immediate and valuable insight.

The next step was to determine the agreed-upon parameters put forth by the management team, which would both encompass and constrain Addepar’s position as well as let the group know when they’d landed on it. In the end, the team decided on just two criteria.

• Balance today’s appeal with tomorrow’s promise

• Attract and energize investors and potential hires

What really changed the conversation for Addepar was the first, the idea of being the future of something thatalready exists. The company could, of course, create a new category for financial investing, but the wealthmanagement industry was crowded enough. Not to mention that the introduction of something “new” to a traditional industry wasn’t likely to be a winning strategy.

Smart investors, however, are a different story, and if your company is the future of something—of anything; itdoesn’t matter which industry—forward-thinking people focused on that something will want to talk to you. All of which led us to the conclusion that highlighting Addepar’s ability to bring something new to the realm of wealth management software—its ability to supply valuable insight previously unavailable to the market—was the verything that would secure its position as the industry’s future.

And that future? “What we really want is to be the operating system for the global financial system,” Poirier said.Visit the company’s website and you’ll find that positioning front and center. 

• Today’s appeal: “Addepar is the first investment management platform that easily handles all of your assets, connecting your financial goals and objectives with real world actionable insights.” 

• Tomorrow’s promise: “Explore the new operating system for your financial world.”

 

The Outcome

Clarifying Addepar’s position in the market contributed to a $50 million series C raise in 2014. (In June 2017 the company concluded a series D funding round that pulled in an additional $140 million.) Addepar has positioneditself as a solution for today’s investor and developed a concise corporative narrative focused on key messagesthat have been tested in the market (integrity, transparency, and impact). Ultimately, Addepar’s high-quality,product-centric DNA became the bridge to a corresponding brand that appeals to customers and potential hires both in Silicon Valley and on Wall Street.

Although Addepar’s overwhelming focus on technology ensures its Mechanic status, it is important to note that both its identity and the groundbreaking nature of its data-driven technology platform are built in large part on the company’s supporting Missionary DNA. And although that DNA may continue to play a secondary role in the company’s future as it looks to expand both overseas and further into different market segments, it also means that a DNA change down the road isn’t out of the question. Addepar is built on an open platform; anyone can build on top of it. It’s an attitude entirely in keeping with a company determined to be the “operating system for ourfinancial world.”

For now, however, Addepar is content to position itself as a Value Mechanic. “We’ve been really consistent with our identity as a product company,” Poirier said. “We pushed ourselves to envision what the financial system would look like with one really well built, highly configurable, and highly customizable product that you can push into $120 trillion of assets,” complete with a back end that unifies everything. “I think we’ve hit that inflection point where it’s become a standard for certain pockets of the industry,” he said. “At this point, if you don’t have it and everyone else, does, you’re at a disadvantage.”

In short, “If you’re still riding your horse and everyone else is flying by in their Ford, you’re behind.” 

Do aspects of this story sound familiar?

 


Andy Cunningham