The RIA world's provacateur, Raj Udeshi, left Orion to go 'nuts,' bears no grudges after the Riskalyze assault, and reveals his one regret was taking too little risk

Raj Udeshi has gone “nuts,” but he offers assurances his latest endeavor -- pistachio farming -- is low risk. 

The co-founder of HiddenLevers has traded in his big-city, high-electricity existence as a risk software guru, and is beginning to think about how RIAs can follow him in more agricultural pursuits.

The 11-year entrepreneur, lawyer and philosophy major sold his New York City risk and data firm, spent 18 months with the buyer, Orion Advisor Solutions, as an “innovation officer," made a handful of RIA industry people boiling mad, then retreated in 2022 to Kern County, home to Bakersfield in California's Central Valley. 

Now, Udeshi is dreaming of building a marketplace or fund so RIAs can make syndicated investments in agricultural-technology and agricultural production. The hook: “high single digit” returns in a downmarket that increasingly favors value investments.

“It’s an easy asset class for RIAs to get into … [and with the] huge downdraft in tech last year, a good 10% return turns people's eyes," he says. 

"[Agriculture investment] can [also] give identity the way a Goldman bond can’t … It’s not a vanity project [with] me riding a tractor," Udeshi continues.

"I started farming pistachios seven years ago … and when the [HiddenLevers] sale came I decided to become a general partner in my own farm … [so] same day [as the sale] … I bought a distressed pistachio farm at the bottom of the pandemic," he explains.

Leading RIA outsourcer Orion Advisor Solutions acquired HiddenLevers in early 2021. See: Orion buys HiddenLevers.

The ‘gentleman farmer’

Now, Udeshi spends at least once a week out in the fields of his 2,000 acre estate, populated by slow-growing eight-year-old pistachio trees, half way to maturity.

California's pistachio farming industry is projected to produce over 1.4 billion pounds annually by 2026. Crop yields range between 4,300 pounds and 2,800 pounds per acre, depending on weather conditions. 

Profit-per-acre in the United States ranges from $2,400 to $6,000, but it can take seven years for trees to start yielding nuts and 15- to 20-years for them to reach full growth. 

Once mature, each pistachio tree will produce a biennial crop of roughly 22 kilos (48.5 pounds).

“I try to have my hand in the dirt," says Udeshi, who labels himself a “gentleman farmer” and “recovering technology entrepreneur," on his LinkedIn profile. 

Launch deck

A team of roughly 40 people manage the day-to-day work on his farming venture, FarmClub, both on and off the land, including farm hands, a management team, accountants and lawyers, according to Udeshi.

“[FarmClub] is a refined story about a private equity membership club. We’re still making the deck ... [and] we're pre-launch, trying to get everything together, to have the right partners, but things are happening," he says.

“It’s [going to be] experiential marketing for agriculture investment … [maybe with] off roading, horseback [riding], some petting zoo, [and] the house has a pool looking onto the farm – it’s a good start," he explains.

Regrets? I've had a few

Yet, as the mostly Dallas-based and famously outspoken Udeshi looks back on his time with HiddenLevers – before and after its sale – he says he has one major regret, namely that his risk management shop didn't take on enough risks.

“We cared about profit and margin now … We were the most profitable division of Orion … We were really safe, super-bootstrapped, [with] no advisory board, or venture capital. I wish we spent a little more instead of being too safe," he says.

“Because we were bootstrapped, and kept the team small … it created revenues and eyeballs … We crushed on those things," he says.

In hindsight, "I’d have put more money back in instead of maximizing EBITDA , because in the end, you get paid a revenue multiple [on sale],” he explains.

Pony show

Udeshi has no non-compete agreement with Orion, although he remains a “sizable” shareholder.

Orion continues to sell HiddenLevers software on a standalone basis, albeit under the new brand of Orion Risk Intelligence (ORI).

Like other risk management software, ORI assesses a client's risk tolerance, but it also tracks forward-looking macroeconomic risks to portfolios by gaming hypothetical scenarios.

“HiddenLevers [is] not just a one-trick pony," says Udeshi.

"It was portfolio stress-test[ing] in 2010, [but] by 2020 HiddenLevers was a pretty comprehensive toolkit, [including] proposal generation, [and] business intelligence.

“Risk technology is in a good place," he adds. 

"The value proposition is stronger than it has ever been, because of the [global] uncertainties [meaning] advisors [need] to talk to [risk] in everything they do,” he concludes.

Natural transition

Orion is slowly hooking up Udeshi's one-time baby to all its data pipes, including portfolio management, according to Clarke, who confirms Udeshi's 2022 departure was no bolt from the blue.

"[Udeshi's exit] was a natural transition,” says Clarke, via email.

“As the founder of HiddenLevers, [Udeshi] made a significant contribution to our business and we thank him for helping us expand and build Orion’s next generation of business intelligence, risk analytics and economic research tools," he adds.

Clarke deserves praise too, notably for his ability to reinvent himself as Orion grew from a small indie RIA outsourcer shop to a giant TAMP and software company that rivals Envestnet, according to Udeshi.

"Eric has courage. The guy lived through the financial crisis and the DotCom [crash], all with the same company. That’s crazy! A ton [of people] would have given up and retired, but he’s still rocking it." 

Udeshi says he was in Omaha, Jan. 5, and Clark had just gotten back the night before with a full calendar, but offered to meet for breakfast at 7:30 in the morning. 

"He’s the epitome of a servant leader,” Udeshi says.

Shared mindset

Clarke's ability to roll with change is something Udeshi hopes to teach the present and next generation of Californian farmers.

"I see a ton of opportunity.  I’m getting the ear of people in the community … [but it’s] run by people in their 60s and 70s. The same succession planning dilemma facing RIAs faces farmers.  They’d like new voices,” Udeshi says. 

“I'm trying to bring some of my innovative mindset into an industry run by boomers.”

Colorful language

Udeshi has, however, courted controversy during his career, primarily as a result of his track-record for brazen critiques. See: Raj Udeshi invokes 'Theranos' fraud in testy exchanges over data collection with Envestnet's Bill Crager.

In 2019, at the Tiburon CEO Summit in New York City, during a panel moderated by Clarke, Udeshi called out a series of competitors, most notably Envestnet-Yodlee over data protection. He allegedly said "the industry is having its Theranos moment." 

Udeshi denies that he specifically equated Envestnet to Theranos.

Instead, he says he stated that a “Theranos moment” was coming, and that it has, with the recent crypto crash as evidence.

“Did I mean a huge fraud? No, just some [people] creating technology with nothing underneath … There were a lot of garbage companies … at no point did I say Envestnet is Theranos,” he explains.

“BlackRock spent $150 million on a robo-advisor [FutureAdvisor]. Would they do that again? No,” he says. See: Why BlackRock's purchase of FutureAdvisor for $152 million could be a deal of destiny.

BlackRock recently agreed to sell FutureAdvisor's legacy retail customers to Ritholtz Wealth.

Also in 2019, Udeshi colorfully described his firm – after its capture of the Focus Financial account – as a 20-person, bootstrapped company that "dropped a bomb in [BlackRock's] backyard." See: HiddenLevers' Raj Udeshi takes victory lap.

No hard feelings

Yet, by far the largest industry imbroglio involving Udeshi came soon after Orion acquired HiddenLevers. Orion found itself embroiled in a bitter war-of-words with another risk shop, Riskalyze, at the latter firm's instigation. See: Riskalyze blindsides Orion with full-scale attack.

In a blistering May 2021 attack, Riskalyze called out HiddenLevers' forward-looking “methodologies," and the company's use of the term "Kung Flu" in a streamed 2020 risk simulation.

Now, Udeshi says both he and Orion look prescient for getting into the pandemic weeds so early.

“The Orion guys were patting us on the back. This [was] evidence for the world to see [that we] had a global pandemic scenario around COVID in December 2019 [4 months early],” he explains.

Clarke and Riskalyze CEO Aaron Klein shared the stage at a recent industry event, and Udeshi says he wanted Klein to know he's moved on. He considers their spat water under the bridge.

Hustler Start-up vibe

“People were expecting a pissing contest … [but] putting [our] hands in [our] pockets was the right thing to do ... we’re pretty classy and held our heads high,” Udeshi explains.

“I [also] reached out to Aaron [Klein] to say I hope its all going well after they had a recapitalization event … [and said] thanks for helping make the risk category what it is today,” Udeshi adds. See: Riskalyze de-risks by cashing out investors at a $300-million-plus valuation.

Clarke gets risk, too, and the need to refresh company culture, according to Udeshi.

“Hat tipped to Eric [Clarke] … he wants to keep that hustler, start-up vibe as much as you can at a 1,300 person organization … [so] for the last six months my whole job was that – push up ideas that get pushed down by the status quo. It’s not a diss on Orion.”

“[Clarke] would give me an area of the business with an issue or bottleneck. I was the internal McKinsey interview[ing] dozens of people involved. The CEO people always give an overly rosy picture. [In HiddenLevers co-founder] Praveen [Ghanta] and I, [Clarke] bought the bootstrapper.”

Ghanta left Orion in June 2022. He founded a new start-up, fraction.work, which sources software engineers for businesses based out of Atlanta in April 2022.

A Ralph Lauren estate

Udeshi is keeping some decisions in more mystical realms, however, even as the RIA bug hovers.

“I did think about having some [animals]; we have … 20 acres of non-planted land … [and] llamas are a beautiful, peaceful animal.”

"[But] tweed outfits? For sure, [It’s a] Ralph Lauren estate," he adds.

Yet Udeshi, who became a father during the COVID-19 pandemic, recognizes that his ambition to use a pistachio farm as a springboard to bring in agricultural investment for clients of RIAs may not make it off the drawing board.

“I’m comfortable owning it all myself and reaping the harvest, but if I can create a quasi-fixed income vehicle part of [FarmClub] then I think there’d be something interesting there,” he says.

“[There will never be] a headline, a record year for milk and eggs ... [but] after young people lost their shirt in crypto [and] Cathie Woods [of Ark Invest] type [investments] ... high single digit returns have never been more desirable,” he continues.

“I'm in a good place. There’s dirt under my finger nails … but if there's going to be generation Z and millennial interest in agriculture [investing], I [hope to have] helped get it there, and make it cool.”