The Road to Industry Standard: How Fintechs Can Get – And Stay – Relevant

As fintech entrepreneurs have often said and many of us have been fortunate to experience, the road from early viability to relevancy and industry leadership is seldom a straight line. 55ip’s path was no different. For us, achieving success required far more than a map and the application of a standard playbook. Looking back, three core tenets emerged that have enabled us, and still do, to navigate unchartered paths, break new ground and grow to a position of strength in the business of personalized tax-management at scale.

First, Build the Core

Every fintech starts with a powerful but sometimes unformed idea. Yet commercial success requires an efficacious, quantifiable improvement to a defined problem. The purpose of the endeavor – what we refer to as our core function – must emerge clearly and hopefully quickly.

Before joining 55ip, I spent several years building a sophisticated large-scale portfolio and trading platform for a quantitative hedge fund. I – along with 55ip’s other founders – knew that there was an opportunity to employ technology in a way that could not only deliver enhanced after-tax investment outcomes for investors but could do it with greater reach, scale, and effectiveness than had previously been done.

Fall in love with the problem, not the solution

Persistent curiosity is essential in defining the problem; creative thinking is imperative to conceiving unprecedented efficacious ideas; while rigor is needed to turn those ideas into reality. These characteristics, however, can create friction.

For us, the problem at hand was the sometimes-significant impact that capital gains taxes can have on investors’ desired outcomes. For very large taxable portfolios, we knew that resources could be thrown at manual tax-loss harvesting processes with little regard for cost and scalability. But to democratize tax-smart investing our collective experience had taught us that we had to be:

• Courageous enough to think in ways unconstrained by industry norms and conventional wisdom.
• Persistent enough to distinguish between “hasn’t been done” and “can’t be done.”
• And experienced enough to believe we could close the gap between the current state and target state. 

While our vision was to deliver an innovation-centric solution for sure; our path to it was most definitely by being people-centric.

The Right People Build the Right Culture

We were fortunate to learn early on that different viewpoints, broad skillsets and diverse industry backgrounds were invaluable. For 55ip to succeed, it was essential that we understood needs, features and interface design at the advisor level; and pricing, scalability and decision-making at an enterprise level. Despite our lack of size, we had the breadth of experience to see from both perspectives. It was the introspection on some of our early ‘wins’ that catalyzed a fundamental change in our most critical endeavor at the time – hiring.

Initially we took a standard checklist approach to interviewing candidates. We asked about the software, platforms and tools they had used and the industry sectors they had worked in (ie. “What can you do based on past experience?”) If that assessment progressed well, we double-clicked into their accomplishments and approach to problem-solving (“What will you do?”). We asked the usual questions in the usual way, and mostly got the usual answers.

But we were travelling a new path.  

The attitude and ability to tread new ground with confidence was both essential yet secondary in our process. We changed the standard “can do, will do” hiring criteria to “will do, can do,” with the emphasis on the first part. That is, how did the candidate articulate problems they were proud to have resolved? And how did they think about the solution design? Only after that, we asked about what tools they used to resolve them. The creativity, intelligence and optimism that our revised process prioritized consequently shaped our culture, drove our progress, and enabled us to think bigger than we were. As a start-up, time and money were scarce and so we prioritized attitude and caliber when hiring.

By 2016 we had gone from just a belief that we could democratize automated, personalized tax-smart investing, to the creation of our core solution: 55ip’s ActiveTax Technology. Although it has application across tax-smart management, transitions and withdrawals, it is designed with a singular purpose – to help investors overcome the barriers of taxes to intended financial outcomes.

Second, Strengthen the Core

For companies that have grown past the startup phase, the challenge evolves from becoming relevant to staying relevant. Even when you’ve accomplished a great deal, there comes a point (and it can arrive surprisingly quickly) where the advice to “Just keep doing what you’re doing” becomes dead wrong.

On the other hand, the success of our platform’s initial adoption gave rise to additional opportunities to serve advisors – from operational sophistication to billing to quantitative signals and beyond. Each had the potential for commercial viability, but each would require resources, time and focus. We had delivered our core functionality and achieved clarity of purpose, so we resisted being distracted by short-term and/or narrow demand outside that core remit. Admittedly, it was difficult at times and the debates were spirited, especially when the pressure came from clients and prospects.

We considered the core mission sacrosanct, yet evolution was essential. However, it’s imperative that it be done with purpose and an understanding of the current phase of the business. As a mentor once told me, “The time to question the blueprints is before the bricks are laid.” Our next phase then was to strengthen the impact and reach of our core, to become invaluable to our clients and partners.

• For advisors: we optimized our tax-smart engine and refined our digital user experience interface; allowing advisors to potentially enhance outcomes for their clients while scaling up their practice.

• For asset managers: it was developing our advisor-facing teams so that they could leverage them as an extension of their business development function.

• For Wealth Management and Broker-Dealer firms: it entailed expanding our product delivery mechanism so that we could do business where their advisors did business. Put differently, we integrated into their existing workflows rather than warrant them to migrate to new systems.

Third, Anticipate and Adapt to External Change 

Maintaining a position of industry leadership requires not just a continuous evaluation of external market environment and changing competitive dynamics but also constant introspection of priorities and capabilities. Across all dimensions, the experience, humility and flexibility of our people working in a culture of collaboration remains essential. We must be capable of analyzing internal strengths and weaknesses and their alignment with external factors with rigor. And we must also be comfortable facing the conclusions of those analyses.

For us, an earlier focus on building for quality and scale, enhancing features and extending capabilities were required. Effective delivery of our services was the area where perhaps the most change was necessary. The industry’s adoption of API-driven solutions and firms’ desire for white labelled tools were more significant than we initially anticipated.

Throughout our journey, our priorities, focus and sometimes teams have had to be reorganized as a result. While it’s naïve to think we could anticipate every industry change, the integration of the right technology with the right people – with the right mindset – and the right culture has enabled us to operate with a high degree of proactivity.

The Integration of People, Technology and Culture

At 55ip we know from firsthand experience that it’s possible to establish a leadership position in the industry without having a first-mover advantage. We did it by focusing quickly on our core technological function and maintaining that focus. We did it by assembling a team of smart optimists with complementary skills in a “will do” culture. And we did it by finding strategic partners and investors that understood our story, shared our values and embraced our approach.

Despite our successes over the last decade, we’ll continue to adapt, innovate and remain true to our core mission – being the industry standard for personalized tax management at scale.

Gautam Sachdev is CEO of 55ip, a fintech built to be the new standard for automated and personalized tax-smart investing at scale. With a career spanning quantitative finance, software engineering and management, he has been with the company since its founding. Gautam was a principal architect of the firm’s early success and a proud leader of the team that drives its continued growth.

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