The almost unfathomable Silicon Valley investment being poured into creating wealth management software a catch-up move after decades of falling behind

July 21, 2014 — 7:59 PM UTC by Brooke Southall


Brooke’s Note: It sounds good as hell on paper: Find a big-time industry that somehow got caught in a back eddy of technological advancement, raise a bunch of capital, hire the world’s best engineers and set them to work bringing the technology for that industry into the modern era. Addepar is essentially building to that blueprint in the financial advice business. The company’s resolve to do just that is even more abundantly clear after it raised more money to keep engineering — and keep burning cash — even after many believe its offering, on a purely technical level, is already at another level.

Since Eric Poirier and Karen White to lead Addepar a year ago, the Silicon Valley company says it has grown its revenues and assets administered nearly five-fold and, going forward, will continue to hew to the same strategy: Do some business development but emphasize engineering.

The hires of Poirier and White came more sharply into focus when Mike Paulus left unexpectedly in March. The buzz around the industry was that Addepar was finally bringing in 'grown-up’ leadership to deal with the boring but necessary tasks of getting to the next level — i.e. taking Addepar from science project to business project. See: The face of Addepar leaves the company amid intrigue about just where it stands with the RIA market. Poirier and White declined to disclose how much in revenues or assets the company had before the five-fold growth multiple kicked in.

The Mountain View, Calif.-based company founded in 2009 and known to have raised $68 million of venture capital continues to bring on the customers with the thorniest asset aggregation issues i.e. advisors serving the super-wealthy who hold a hodgepodge of private assets, hedge assets and public assets held at various custodians.

A mystery to RIAs

But the growth is apparently satisfactory to some so-called smart-money investors who no doubt are privy to the hard numbers and invested $50 million in May — a round led by Yammer founder and former PayPal chief operating officer David O. Sacks and Chicago-based Valor Equity Partners. Other backers included Tesla, SpaceX and Solar City. Among others who tossed in some capital were San Francisco-based Formation 8, Stanley Druckenmiller, and money manager and real estate mogul Harrison LeFrak.

Addepar raised $16 million in previous funding rounds through investors including Peter Thiel and Blumberg Capital. See: Addepar hits $50 billion of assets and turns its eyes to Advent-Black Diamond’s plump RIA market.

But even as Addepar becomes better known among elite VC investors, it continues to be somewhat of an enigma to the many of the RIAs and RIA business participants who are considered to be among its core customers.

Representatives of Addepar briefly seemed to be showing at RIA industry events but regular attendees note that they have been conspicuously absent of late. When, the question goes, will Addepar shift gears from its hyper-engineering mode to a time where it becomes more overtly client focused?

Running to stay in place

Eric Poirer says Addepar's task is to 'solve the entire problem' of making a world of data gel.
Eric Poirier says Addepar’s task is
to 'solve the entire problem’ of
making a world of data gel.

“Not anytime soon” is the de facto answer that comes from its new chief executive, Poirier. In his opinion, Addepar is already tops in the business of reporting and aggregating for financial advisors of all stripes who manage $250 million or more of assets. See: Addepar means to be the only technology platform RIAs will ever need — and has MIT minds and PayPal money to back it up.

But Poirier says that the advice industry should continue to expect him to direct his firm’s capital toward more engineering. He declined to say what weaknesses, if any, that his company is trying to shore up. See: Addepar slashes prices, opens up its architecture and shows RIA custodians some love as it confronts market realities.

But if you don’t get ahead, way ahead, you fall behind, White says.

“What the market wants today is evolutionary and if you don’t [advance] every day, you fall behind.” See: Top 12 crucial technology happenings affecting RIAs in 2012, Part 2.


Performance reporting software has, the Addepar thinking goes, been stuck in place for decades and Addepar, on behalf of the whole industry, is working to play the long game of catch-up on its own. See: Why a disconnect between reporting software and advisors to UHNW assets persists — and what makes the problem so thorny.

“We have to solve the entire problem” of making a world of data gel so that an advisor can advise on a whole portfolio of assets, Poirier says.

Poirier was most recently at Palantir Technologies, a multi-billion dollar software company that helps organizations to reconcile disparate data. He joined the company as a developer in 2006 — one of the firm’s first 20 hires — when the Palo Alto-based firm was pre-revenue.

Previously, Poirier worked in the fixed-income analytics group at Lehman Brothers where he built tools to model, simulate and analyze data on a variety of debt and credit instruments. See: Addepar hires an Advent talent to help head sales, an ex-Lehman exec as COO and an ex-Merrill Lynch strategist.

“It was at Lehman that Eric first became passionate about re-imagining large-scale financial technology, so that it empowers professionals with transparent, unified data and powerful, intuitive tools,” according to a statement from Addepar.

Poirer co-founded his first business, focused on scaling websites, when he was 15 and won eBay and Priceline as customers. Poirier also stuck to his schooling and graduated from Columbia University with a B.S. in computer science.

Playing on dissatisfaction

White, now president and chief operating officer at Addepar, was senior vice president at Oracle from 1993 to 2000, most recently heading worldwide business development. In her seven years at Oracle, she held a variety of executive management positions, reporting to its chief, Larry Ellison, and president Ray Lane.

White was most recently chief executive at Santa Clara, Calif.-based Syncplicity, a cloud-based file management company that was acquired by EMC Corp. in 2012. She helped grow the company to more than 30,000 business customers in three years. Previously, she led business development at SolarWinds, joining while it was privately held, and saw out its successful IPO in May 2009.

White will help scale operations and expand globally, managing sales, marketing, business development, finance, operations and human resources a Addepar.

She says that she is seeing plenty of early signs that her company is on track.

“We’re winning customers from Advent Software Diamond (An independent business group of Advent)”: every quarter. There’s a lot of market dissatisfaction out there,” White says. See: Black Diamond divulges 'unbelievable’ data about how Advent is doing, two years after its $73-million buy.

Chief rival

White declined to name any advisors who have made the switch from San Francisco-based Advent Software or its Black Diamond division based in Jacksonville, Fla.

Advent and Black Diamond continue to experience their own explosive growth. See: Black Diamond blows the lid off asset growth in Dave Welling’s first year in charge.

Mentioned in this article:

Portfolio Management System
Top Executive: Eric Poirier

Share your thoughts and opinions with the author or other readers.


Jeff Spears said:

July 22, 2014 — 5:14 PM UTC

The ONLY professional that appears to be missing at Addepar is someone with experience in the Wealth Management business. If/when they add that piece they will be hard to beat.


J L Livermore said:

July 22, 2014 — 7:05 PM UTC

Mr. Spears:

Aren’t we being a bit caustic? After all the boy-genius progenitors of Addepar successfully built multi-billion dollar Palantir. There is no difference in snooping on John Q and reporting on wealth right? Why would you need any wealth management experience anyway? Its just a bunch of numbers – right? Streams of data carried by digital conveyor belt into a massive data crunching machine that just spits out what everyone wants – right? There is the small matter of taking on Darth Vader (spelled A-d-v-e-n-t), but a newly filled purse of $50MM should make building a worldwide sales organization child’s play – right?

With five-fold growth they should have no worries right? But are revenues proportionate to assets? Imagining they had $20B in assets to start generating a $1MM in revenue. Today they are $100B in assets with $5MM in revenue. Take the 80-100 engineers and executive staff and we are burning how much cash? Oh and lest we forget that we are in a consolidating market. Hmmmm

Till death and data do us part:-D



Mike Golaszewski said:

July 24, 2014 — 7:04 PM UTC

Here’s the thing about Addepar: they’re not only hiring engineers, they are hiring some of the country’s best engineers and computer scientists.

They are interesting precisely because they are behaving so differently than the rest of the technology vendors serving the Wealth Management industry.

I find the whole thing refreshing.


Brooke Southall said:

July 24, 2014 — 10:53 PM UTC


What is a reasonable framework for assessing whether a company is getting carried away with engineering or just showing phenomenal discipline in building the engine before plunking it into the race car?

And how much can be 'engineered’. Isn’t much of the challenge in making this all work come down to providers agreeing to work with each other, an exercise in diplomacy as much as technology?

These are not facetious or rhetorical questions. I really am trying to come to grips.

thank you,



Mike Golaszewski said:

July 25, 2014 — 11:16 AM UTC


Fair questions.

The most reasonable, objective framework that I’m aware of for any company investing in R&D or product development is a financial one (after all, companies exist to make money). So, whether somebody spends time calculating NPVs or does simple back-of-the-napkin ROIs, the most reasonable standard really ought to be answering the question “will this investment of capital generate a favorable return commensurate with the risks?”

Considered from that perspective, it’s sort of rational to conclude that the best people to ascertain whether or not these investments make sense are Addepar’s shareholders and investors. And clearly those VCs are liking what they keep buying. Without the same set of facts, you and I are simply speculating as to the wisdom of these investments. Time will tell, I suppose.

(BTW, it’s probably not completely fair to say they have an engine but no car—they do have a product, and they are winning deals).

As to your second question, one of my all-time favorite managers had a great saying which I’ll totally plagiarize here. “Mike,” he’d say, “you can build almost anything you want with enough money and time” (he was also fond of pointing out that we weren’t building rocket ships, but I digress).

The point is that almost anything can be engineered—that’s what modern innovation is about. Now, I can’t claim to speak for Addepar, but they don’t seem to want to simply build a better Portfolio Management & Performance Reporting system. According to their website, they want to “reinvent the technical infrastructure of finance.” That’s sort of a lofty language that extends beyond the standard, uninspired trope of building something of marginal value just because it’s new and shiny. It’s aspirational, even if it is somewhat nebulous. Maybe that explains all the engineers hanging out on Terra Bella Ave.

Look, I really don’t have a dog in this race. I’m clearly fond of Advent and many of my close friends here in San Francisco have a stake in the continued success of Schwab’s PortfolioCenter product (there’s also a rumor that I once crashed a Tamarac industry afterparty, a rumor with I can neither confirm nor deny).

Addepar , though, is acting and investing differently. This is clearly frustrating for other market participants as well as RIAs who are trying to figure out where their product fits in the technology value chain (my personal opinion is that the opaqueness around what is clearly a superior product offering does them a pretty big disservice). Their actions, however, are interesting. Who else in our space is recruiting engineers away from the likes of Google and Facebook?

In an industry vertical with a history of staid, uninspired innovation—it’s refreshing…no matter what the end game ends up looking like.


Brooke Southall said:

July 25, 2014 — 3:57 PM UTC


Very well put, and reminds why Advent and Schwab used you in key spots.

It’s near impossible to disagree about your point that the effort as a whole is a refreshing
even if refreshing candor is not yet a part of their modus operandi.

thank you for taking the time to fully explain your point,



Peter Giza said:

July 31, 2014 — 10:30 PM UTC

Brooke, Mike,

Ok I can’t resist; cars, money, engineers – yeah baby, yeah! Watching Addepar closely now for the past 24 months or so I agree that if nothing else they are inspirational. It is the type of inspiration that spurs forward thinkers in this industry to think higher and outside the box and innovate.

Opacity is a double-edged sword. On the one hand it allows you to keep the competition guessing. One the other hand it can be misconstrued as disorganized, arrogant, out of touch with your prospects and industry. Its a balance and something that has to be monitored.

The visual aspects of Addepar are impressive there is no taking that away. As you Mike you can throw money and engineers at a problem and build really amazing things. But you can also build an amazing race track on the south pole. Its cool but has little chance of generating revenue via spectators of Scuderia Ferrari, Mercedes AMG Petronas, et al.

With Advent at top of the mountain for 30+ year there is a begging for “King of the mountain” shove-fest. I a lot of folks are wondering where’s the money in the services side of the advisory industry to support the magnitude of investment in technology that Addepar represents.

If the advisory ranks are compressing as purported and the aging firm principal is not interested in fixing something they do not feel is broken – how do you capture the revenue? For most advisors, migrating from one portfolio accounting and reporting platform to another can be very unpleasant and expensive if the provider doesn’t know how to get the job done.There has to be a more compelling value proposition than prettier reports and better infrastructure.

The race is on and the drivers and cars are as varied as Michael Schumacher in his Team Scuderia Ferrari F1 and John Surtees behind the wheel of Team Ferrari 312 circa 1965.



Brooke Southall said:

July 31, 2014 — 10:48 PM UTC


Would you consider speaking at the annual RIA reporters dinner? You can begin with the informed quote: Opacity is a double-edged sword.

We could hardly agree more.

I have heard the concern that all the dollars currently spent on advisory software combined would barely be enough to get Addepar the kind of ROI that its founders are accustomed to. This advisory business is a smaller world than it may appear to an outsider.

But there is something to the dictum about supply creating its own demand. None of us could imagine how much we’d be willing to spend on the Comcast triple play, the Sprint unlimited data plan and the second accounts for all that at our office.

Who could have foreseen that the world could support ten of thousands of coffee shops, Starbucks, Peets etc. where you spend as much for a latte as your parents spent for a month’s worth of Maxwell House.

So if Addepar truly leaps ahead two generations, couldn’t there be a similar effect?


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