Meet the Founder – Bill Robbins of WealthForge

John Keeling: Welcome, Venture Fools. I’m John Keeling, Venture Partner, sitting in for Kristine Harjes. As part of our Meet the Founders series, I’m very happy today to be joined by Bill Robbins, CEO of WealthForge, one of our Motley Fool Venture portfolio companies. Welcome, Bill.

Bill Robbins: Hey, John. Thank you.

John Keeling: For those of you who don’t know, WealthForge has created a technology platform that facilitates the investment in alternative assets, things like real estate and private companies. Bill, you’ve said that you hope to make investing in alternative assets as easy as investing in mutual funds or investing in individual stocks through your brokerage account. So tell us a little bit about what you mean by that.

Bill Robbins: Yeah, thanks, John. So most people don’t know really how large that alternative investment market is. Last year, there were over $2.4 trillion, with a T, invested in alternative investments. That includes things like venture capital funds like the Fool ventures fund. It includes private equity, private companies, and real estate-related investments, and a number of other things. The problem with that market is that virtually all of that capital is still being invested with a manual, paper-based subscription process. So when we talk about making alternative investments as easy to own as a mutual fund, really what we’re talking about is streamlining that process and really removing all of the friction that exists today along the path towards ownership.

Bill Robbins: So we’ve built a platform called Altigo that is really designed to streamline and automate that process, which is really just the first step in creating some of the standardized infrastructure that we believe will really allow alternative investments to grow and scale much the same way mutual funds did when that industry rolled out standardized processing infrastructure in the mid-’80s. So our vision is to create a frictionless path to ownership for alternative investments.

John Keeling: I know many of our LPs experienced that friction when they’re investing in the Fool venture fund. And as you know, we tried to develop that investing process in-house. We learned a lot about the challenges, and mainly we learned that we should’ve been working with someone like you. I remember when we were going through that process, we knew each other, we were talking, you were asking questions about whether we really felt comfortable doing this on our own. So let me say publicly, you were right, we were wrong. We will learn from that moving forward. You identify your customers broadly, I think, into two segments, sponsors and advisors. Could you tell us a little bit about what each of those customer segments are and how you support them?

Bill Robbins: Yes. So our platform is called Altigo. Altigo is a two-sided marketplace. So the sellers in our marketplace are the fund managers, the sponsors who create the alternative investment product. That product is sold by the buy-side of our marketplace, which are the wealth managers. So think registered investment advisors, or broker-dealers, wealth managers, trust banks, those types of advisors. So what the Altigo marketplace does is really enables the connections between those advisors and the alternative investment products that they are interested in and then facilitates the transactions. So the essence of it is we start with the path to ownership, which is the initial investment, and we automate and we digitize, what is today, a paper-based process, add things like electronic signature, ultimately, with the goal towards driving towards straight-through processing where that entire subscription process can be done online in an automated fashion, which really then lays the groundwork for all of the other corporate actions and other activities that take place along the life cycle of that investment.

John Keeling: Since you mentioned the name of your platform product, Altigo, let’s talk a little bit about the origin of that name. So I believe that’s alternative investing in good order. Is that kind of the reference to the behind the name? And tell us a little bit about the industry problem within good order investments.

Bill Robbins: You got it. Exactly. Yeah. So Altigo’s a bit of a play on words, alternative investments in good order. One of the problems that the industry experiences when you have a paper-based, manual process, it’s just rife with errors. So you’ll have things like literally someone just forgot to sign on the dotted line at the end of the 200-page document or these documents are not really easy to navigate. If you are investing as an entity, let’s say through a trust, you have to fill out a section that might be Roman numeral three on page eight. Well, that’s different if your entity is an LLC. That’s going to be Roman numeral two on page seven, which is altogether different if you’re a individual or a natural person.

Bill Robbins: So what happens is you have a significant percentage of these requests, these subscriptions that come through with errors, and the industry term for that is not in good order. There was an abbreviation that we called NIGO, for not in good order subscriptions. Of course, NIGO means it needs to be returned to sender, needs to be reworked, the advisor has to get in front of their client, who has to resign in many cases, and that whole process has to go through from beginning to end. That could be a three-week process after you get through all of that mailing and processing of that manual paperwork. Amazingly, based on the sponsors that we’ve spoken to already, 40% NIGO rates. In other words, 40% to maybe 50% of every subscription that comes in is wrong the first time, it’s NIGO. So, what’s the opposite of not in good order? Well, Altigo is a play on words. It’s alternative investments in good order. So that’s how got the name.

John Keeling: Well, you made me feel bad, now I feel a little better. We had plenty of NIGO situations, but I think our success rate may have been a little bit better than that industry rate of 50% or whatever you quoted. I feel slightly better, but I’m sure our LPs right now are throwing rocks at the screen at me for having been involved in creating that suboptimal investing process. But in any case, we talked a little bit about Altigo facilitating investment into alternative investments like real estate and private companies, are those the primary types of investments you support? Are there others? Looking on the horizon, do you anticipate different classes coming on the platform, or is it primarily real estate and private company?

Bill Robbins: It’s primarily real estate today. Yes, we do anticipate other asset classes and other investment types to be on the platform. The real estate market is a big market for us. It’s really where most of the activity that we see on the platform is related to real estate securities. I was at a conference last week and I heard some interesting statistics, and I made a few notes here. I have them in front of me. If you include residential real estate, so our houses, our homes, the real estate assets in the United States are over $217 trillion. The equity assets, so the stock market, are-

John Keeling: A fraction.

Bill Robbins: … somewhere around $31 trillion in the bond market. Fixed income, according to Bloomberg, is a little over $40 trillion. So really, real estate as an asset class is larger than the equity and fixed income market combined. So we really think that real estate securities are effectively a fourth asset class to go along with stocks, bonds, and cash. Now, the good news is in the big-picture opportunity for us with the Altigo platform is that the problem that we solve related to subscription automation and making the path to ownership frictionless is also experienced by other non-real estate assets. So every venture capital fund, every private equity fund, every hedge fund, for example, structurally, those are Reg D private placements. Operationally, they are all fulfilled with a paper-based subscription process. So we’re heavily focused on real estate and real estate securities today. But we do think there’s actually a much bigger market out there for us as our platform and our capabilities grow.

John Keeling: Very interesting. So no securitization of fine art, or luxury cars, or anything in the near future on the Altigo platform?

Bill Robbins: We don’t have anything like that today. But you never know what the future will hold.

John Keeling: The platform will support it, right?

Bill Robbins: Yeah. 

John Keeling: Looking out at the industry right now, we see a lot of solutions. There are the crowdfunding marketplace, similar to Altigo in some ways, where you’re matching investors with investment opportunities and the platform’s facilitating that. We see all kinds of point solutions around accredited investor verification, various escrow and payment technologies, we see broker-dealer services. Position WealthForge for our audience in that environment and kind of what sets you apart.

Bill Robbins: Yeah, sure. So in the crowdfunding space, which is interesting, you have technology companies in many cases that are setting up portals. That’s what you described where they’re matching investors to investments. We’ve seen a little bit of that market early in our history, and one of the issues there in the dynamics in that market is it’s definitely a buyer-beware market. Many of those are non-regulated technology companies, very entrepreneurial, and they’re doing some very interesting things. The promise of democratizing that investing process is really exciting. But you do have to be careful. They are not regulated, and so investors are not afforded the same protections that they would receive if they were working with a registered and a regulated entity like a broker-dealer, or a registered investment advisor. You have to be aware of the adverse selection risks. Is there a reason that those investment opportunities are positioned on those portals, knowing that they may encounter less sophisticated investors and are certainly operating in a less-regulated environment?

John Keeling: So that’s a key, right? So you’re not creating a platform where just anybody could come on board. You’re working, again, getting back to the sponsors, with sponsors of investment opportunities that they are bringing to their audience. They’re bringing that audience to the platform to make the investment. So it sort of gets to that caveat emptor situation where these investment opportunities are vetted by a trusted source.

Bill Robbins: That’s right. So for those reasons, we don’t really operate in the crowdfunding space. Our market is really defined by the alternative investment securities, that the financial professionals who we work with are using it when they make an allocation … with their retail clients. Those sponsors are traditionally, as we’ve discussed, real estate sponsors. So we work with a large firm out of New York called Cantor Fitzgerald. They’re a bit of a household name. Many folks will recognize the Cantor name, and those products are non-traded REITs as an example of the type of product. They have several tax-advantaged real estate strategies. The recently created qualified opportunities owned funds, the 1031 exchange DST market.

Bill Robbins: So where we are positioned is in that advisor-sold alternative investment security market. Then really how we distinguish ourselves from other players in that market is we are really a true Fintech company. We operate both a registered broker-dealer, which does vetting and diligence on offerings that engage us for broker-dealer services, as well as the Altigo technology platform. So many of the other companies that are in the space are either just a pure SaaS technology company or in many cases, they’re operating as an asset manager, creating feeder funds and earning asset management-based fees, which creates different incentives for those companies.

John Keeling: Got it. So secure, easy to use, and quality investments, at least that’s the goal? Excellent. So let’s take a step back for a second and talk about the evolution of WealthForge. We know the road to success is typically more crooked than straight. So tell us a little bit about how the vision has evolved and the product strategy has evolved over the years.

Bill Robbins: Yeah, sure. Maybe I’ll start off, John, with what’s remained the same. When Mat and Fred founded the company, our co-founders, when they founded the company in 2009, really the vision was marrying technology and broker-dealer services to bring automation and compliance expertise to private capital markets. Today, we are still focused a frictionless path to ownership for these alternative investments. When Mat and Fred first started the business, the actual first iteration was a portal website that was actually connecting investors to investments. As part of that, we actually built a first iteration of our transaction processing technology.

Bill Robbins: That was actually all before the JOBS Act. When the JOBS Act passed and became effective in 2012 and 2013, we started working with actually many of the early crowdfunding portals. They were licensing our transaction processing technology as well as engaging us for broker-dealer services on those offerings. That’s actually how we got to really understand some of the advantages, and some of the challenges, and risks in that market. Over time, we pivoted really away from crowdfunding market and we started working actually directly with the issuers, the folks that were raising capital and offering those investments, who would also engage us for our transaction processing technology as well as the appropriate dealer services to manage the offering.

Bill Robbins: Then, over the last several years, when I joined the firm at the end of 2015, we’ve basically steadily moved upmarket among those to where we are today. So working with more institutional sponsors, firms like Cantor that I mentioned and others like them, and the financial professionals that use those products when they’re making allocations to alternative investments in their client portfolios. So what stayed the same is processing infrastructure, transaction processing technology and automation, broker-dealer services, bringing regulatory compliance. But we basically started kind of on the lower, underserved market and steadily moved upstream and upmarket to more sophisticated and more institutional sponsors. As I say, down the road, I think we’ll continue that progression and won’t be surprised if in the next several years we’re working with even some of the largest private equity funds and other alternative investment sponsors as well.

John Keeling: Sounds exciting.

Bill Robbins: Yeah.

John Keeling: Let’s now talk a little bit about the growth of WealthForge moving forward in 2020. Back when I used to work at AOL, there was a sort of historical moment where we were under threat from Microsoft, Microsoft using their operating system advantage to sort of take market share away from AOL as an internet portal and prevent it from growing. There was an all-hands meeting where Ted Leonsis, who was president of the AOL at the time, brought this giant cardboard dinosaur up on stage and he got everybody worked up into a lather about Microsoft was the dinosaur and our challenge was to slay the dinosaur. He brought everybody up on stage to sign the dinosaur as this sort of symbolic of our commitment to defeating Microsoft. So the question for you with that long wind up is what are the dinosaurs that you are trying to slay, and how are you going to be successful?

Bill Robbins: Yeah, I love that. So we have a dinosaur as well. Our dinosaur is not a large incumbent like Microsoft, AOL, but our dinosaur is the way we’ve always done it. When we talk to a financial professional, a wealth manager, we ask them, “Think about the last time you were working with one of your clients and investing in an alternative investment. What was that experience like for your client? What was it like for you? Was it more like checking out on amazon.com, or did it feel a little more like you’re standing in line at the DMV?” Unfortunately, the way we’ve always done it, this sort of old-school, antiquated, paper-based process is really an anchor that the entire alternative investment industry is dragging.

Bill Robbins: Good news is that dinosaur is about to become extinct. When change happens in a market like ours, you wake up one day and you just can’t imagine doing business the old-fashioned way. Uber is a classic example. Would you rather be hailing your Uber as you’re paying your check and getting ready to leave the restaurant, or do you prefer standing outside in the cold and rain, trying to fight the 100 other people to hail a taxicab? So you wake up one day, and you just can’t imagine doing it the old-fashioned way. Our dinosaur is really getting rid of the way we’ve always done it, and we are super excited about what that opportunity looks like as change happens.

John Keeling: As you know, at The Motley Fool, both in the public equity and private equity space, we have a real interest in corporate culture and how culture helps with strategy execution and makes a company successful. How have you instilled within your culture a focus on slaying that dinosaur and providing the innovation and keeping everyone focused on that goal, and how do you identify any sort of bottlenecks in the company that’s sort of preventing you from executing optimally?

Bill Robbins: Yeah, that’s a great question. We do a lot around that. Starting with we get together as a team. We’re 32 people, and so we’re not so big yet that we can’t get literally everybody in the company all hands in one deck and talk about it. We talk about what are our strategy? What’s the vision for the firm? Where are we going, and what does it look like when we get there? Annually, we set our annual goals and we create milestones that really let us know if we are on track. We use a system called OKR, which are objectives and key results, that we set quarterly to try to really create stretch goals and figure out what are we capable of? What can we actually accomplish if we really go for it?

Bill Robbins: The other thing, John, that we do is we talk about leadership. I’m the CEO of the company, and so leadership is actually a big part of my job. When we get the whole team together, we talk about the fact that leadership is everybody’s responsibility, up and down, and at every level of the organization. That’s important because when we set stretch goals, and we talk about where we’re going, and the team really understands what we want to do and why it’s important, and we have this sense of mission that is shared, people can understand why it’s important and believe in it, then when we run into the inevitable the blockers, the obstacles, the bottlenecks, the things that will slow us down or slow down on our progress, they are empowered at that point to take ownership and demonstrate leadership at every level of the organization to figure out what we need to do to get over that obstacle, to solve that problem, and move us forward.

Bill Robbins: The last thing I’ll say, I guess, is that we also try to make sure that we have fun along the way. On a weekly basis, part of our [culture] is we get together every Friday afternoon as a team and we celebrate our successes for the week. We try to make sure that once a month or so, we’re getting together off-site to do something after hours and just make sure that we’re celebrating the successes that we do have along the way. So those are some of the things that we do to try to stay on track and moving forward.

John Keeling: Well, that all sounds great and I have to say, it sounds like you have a Foolish company, which makes us very proud to be a part of it in some small way. Okay. Last questions for you, Bill, it’s kind of a two-part question. One, you mentioned that there were two co-founders of WealthForge. You came on after the initial founding. We’d love to learn a little bit more about your entrepreneurial journey, particularly since you started your company with some more established firms like First Clearing and BB&T. So first question is what made you decide to take the leap to leave that career path and jump into a startup like WealthForge? And then second but related, can you identify some entrepreneurs that you admire and kind of what you hope to learn from them and how you are trying to bring those lessons back to WealthForge?

Bill Robbins: Yeah, sure. So the first part of that, my journey, I spent 22 years at the companies you mentioned. I wouldn’t trade it for anything. I got to work with a whole bunch of super-smart, really talented, just great people. It was just a fantastic experience. Towards the end of those 22 years, I started to really sort of feel the pull of a more entrepreneurial challenge. There’s all kinds of benefits at working with the great companies that I got the opportunity to work for. One of the challenges though is that when those large companies, just nature of the beast, is that there’s a certain amount of bureaucracy at a company that size. Sometimes, the pace of change can be kind of painfully slow.

Bill Robbins: So towards the end of my time there, I was really, really intrigued and interested by the challenge that a entrepreneurial start-up company like WealthForge represented. I was lucky Mat and Fred, co-founders of the company, had an inspiring vision. They built a solid foundation. When I came on board, I didn’t have to do the hard work of a founder. So to get to maybe the second part of your question, John, about entrepreneurs that I admire and kind of things that we can learn and bring back the WealthForge, I guess I would start off by saying that I think I admire all of them. Just it takes an incredible amount of courage and something else to basically go off and do something that is really so daunting.

Bill Robbins: I think about examples of that. I just look WealthForge. I look at our co-founders, and I’m just amazed at what they were able to accomplish and it’s been great to be a part of this team. Other entrepreneurs, I’ll start close to home. I think my dad, my dad retired as the CEO of a fairly large company, had a successful corporate career. For 20 years now, he’s been doing, well, executive coaching for local business CEOs in and around Jacksonville, Florida where he and mom live. That’s been inspiring to me on a personal level.

Bill Robbins: At WealthForge, one of the things that I’ve learned, so my experience, and I’ve been here a little over four years is I believe that one of the ingredients to being successful in an entrepreneurial company like ours is you just have to be able to learn, be able to learn so that you can grow. You are going to fail, and you just have to get over it and you have to use it as an opportunity [inaudible 00:23:44] and get better. So I’ve come across a handful of entrepreneurs, several of them, I’ve never met, I don’t know personally.

Bill Robbins: There’s a woman named Christina Wodtke. She’s a Silicon Valley product leader. She’s worked with Zynga, and Yahoo!, I believe she worked with LinkedIn. She’s written a couple of books and has a fantastic blog post on online, a website that I’ve really been inspired by. And it’s actually directly impacted the way we recruit, the way we create job descriptions, and prior to creating a job description, [inaudible 00:24:18] actually define what the profile is for the role, and what the characteristics are that are most important to our success. It’s where I first learned about OKRs … and made part of our culture.

Bill Robbins: Another example like that is an entrepreneur named Jason Lemkin. He was the founder of three companies, including EchoSign, an e-signature platform that was sold and bought by Adobe. Jason is now at SaaStr, and he’s written extensively about basically all things growing a way to grow a SaaS business. I went to school in the last several weeks and months on Jason’s content, and it’s just been invaluable. I’ll say one more thing, John, as far as entrepreneurs, I’ll give credit to you, and to [Brendan] and The Motley Fool team who connected me with Autumn [Manning].

Bill Robbins: Autumn’s an executive in business at multiple ventures. Autumn is also a successful founder. She scaled and exited a employee engagement start-up. Autumn and I have had a handful of conversations about go-to-market strategies. One of the things that it has just really helped me understand is that when you’re in your own company and you’re struggling with all the things that entrepreneurial startup businesses struggle with, you think you’re on your own and experienced this. And you have conversations with people like Autumn, and you realize there are people out there who’ve gone through exactly what you’re going through and they are willing to share with you their experience.

Bill Robbins: If you’re just open to hearing what they have to say and then learning and you have a company and a culture that can actually learn, you have the opportunity to grow, and every quarter, you can get better and you can get faster and you can be more successful as a leader, as an organization, as a business. So I really appreciate working with a group like Fool Ventures that has helped make those kind of connections for us. I really think it’s a critical ingredient to any entrepreneurial business’s success.

John Keeling: That’s awesome. I love that. I love the whole through-line of learning and adapting and all the different examples you gave about that and the different approaches. Bill, thank you so much for taking the time to speak with me today. I want to remind everyone that this information is for informational purposes and does not constitute an offer to purchase or sell any security. You can find out more about WealthForge from www.wealthforge.com, and you can always find out more about Motley Fool Ventures at foolventures.com. So thanks for listening and fool on.