Beacon Flash: The Data Problem is an Octopus – A Conversation with Sid Yenamandra, Surge Ventures’ CEO and Founder

Chip:

Sid, welcome to the Beacon Flash Podcast. I’m so happy to have you on the show, and to dig into a few things. Welcome.

Sid:

Super excited to be here. Chip. Thank you for inviting me.

Chip:

Well, you’ve had quite a week this week, this first week of October. You have a new venture so congratulations.

Sid:

Thank you. Thank you. Super excited.

Chip:

Tell us a little bit about new venture. And what’s next for Sid?

Sid:

I’m launching a new firm called surge ventures. So first off, I’m super excited to be here to be talking about it. This would be the first time I would be saying something about this. So it’s an interesting feeling, to say the least. It feels like we’re giving life to something new. That’s been that was bottled up for so long. But anyhow, so you know surge Ventures is the is the name of the firm that I’m launching. It’s a new kind of venture platform built specifically for kind of the industry that we are now that is a hyper dynamic industry. Lots of new movement in the way the markets are moving. Lots of tech innovation. And companies need to be launching developing product, getting to market faster, you know, sort of testing ideas a lot quicker, being able to you know, solve real problems or not doing that really at an accelerated pace, where investors are rowing in the same direction as the entrepreneur and really helping get these companies off the ground to this sort of, you know, to escape velocity. And that’s really what Serge Ventures is all about. And so sort of taking a little, you know, inspiration from the Silicon Valley venture model, but then adding some additional hands on entrepreneurial capability and focusing it on specific markets. And so pulling together an industry advisory board, strong operations teams and funding and some kick ass entrepreneurs. That’s really what we’re doing with search mentors.

Chip:

That’s awesome. You know, one things we find a lot over the years is there’s so many, many or there is so many great, good technology firms out there, good product companies, and they just need runway to grow, as well as a little bit of leadership to help them hit the next level. So kudos to you. Kudos to you. Now. You’ve kind of left your baby. Right. So you left and trade a Smarsh that’s got to feel a little bit. You know, that’s got to tug on the heartstrings a little bit.

Sid:

Yeah, it was a weird Monday. I gotta tell you chip, like you know, you’ve come in and you’re no longer part of the equation as it were, you and this was a company that you built right and you were the fabric of it. You stitched so many pieces of it and now you know the company you know, the baby has grown it’s now gone off to college and you probably know this better than I do. Right and and it’s just a weird feeling. It’s a weird feeling. Because, you know, you sort of walk into that room and you have these memories and you go wow, yeah, we did that. We did this but but you know, I’m actively trying to sort of move on from that and sort of embrace the new venture and sort of focus on what’s forward. I’m super excited. It’s a you’re right. It is an ambivalent feeling. You know, I launched in trader What about 10 years ago? paper napkin phase very similar to kind of where I’m at with Serge today. Actually, we were I mean, we hadn’t even raised capital. It was literally an idea and passion. That’s really where we were within trader. And so I you know, I feel like I’ve left the company at a good a good place Marsh is a is a brand in the wealth management space. They’ve been in the space for a while they econ e comm archive is the is the business that they’ve been focused on E communications archive. And now cybersecurity is a integral part of smartwatches product portfolio. And they have a new CEO, there’s sort of new oomph in the company as far as where they want to go next. And they were sort of driving towards that DECA corn status as a company and so I feel like the company is on the right path, and it’s sort of the right time for me to kind of hand over the reins to the core team. I’m still gonna be involved in an advisory capacity where needed, but I think the company is on the right trajectory. And so it’s as good a time as ever to sort of move on to my next chapter.

Chip:

That’s terrific. So I think I want to transition right now and start looking out forward. Right, what’s what’s ahead and one of the things that, you know, I want to get your feedback on right now, because you’re an entrepreneur. You figured out that cyber was a big was an important thread 10 years ago or so I remember meeting you for the first time was seven years ago in DC at one of our roundtables and so what are you thinking about professionally, in terms of things that are interesting, interesting, out in the wealth industry today?

Sid:

Yeah, so you know, if you look at it from purely my lens, you know, having spent, you know, a decade and trader working on the problem of how do you help advisors and broker dealers, tame the lion that is cybersecurity, in a, you know, and it’s the Wild Wild West, as we all know, particularly in broker dealer environments where you’ve got distributed offices and this is even pre pandemic, right, you’ve got, you know, you’ve got a home office and you’ve got advisors out in all 50 states, with their own devices, their own infrastructure. And yet, the broker dealer or the home office is responsible for the cybersecurity posture of all these folks. And there’s this natural tension on you know, I’m not going to listen to what you’re going to tell me, but I still have to do these things. And that was the world that I lived in. Right. And so we always talked about tech, you know, technology, but more about psychology than it was technology and, and all of that. So, as I look forward, I mean, I think we were just sort of scratching the surface. I mean, there’s just a lot of areas that that I see the sort of the industry grappling with. One of the big areas that I’m looking at is data. The amount of data that organizations are amassing is growing at a nonlinear rate, exponential rate people are using data and data enabled businesses is the new normal. Now, people talk about how do I take all the data that I have that sits in nine different systems and how do I bring it together? How do I use that data to to learn more and develop business insights and in turn, use those insights to manage my business, helped the advisor help the advisor grow their business? And so I think there’s various stakeholders of that data. But with all of that data, that folks are aggregating one of the areas that I’m starting to see, and cybersecurity sort of on the periphery of this is, what are you really doing to organize that data governance, make sure you’re staying compliant, making sure that the access rights to that data, meet your meet your organization and really answering the simple question of who wants the data. And how do I dole out the ownership and manage the ownership of that data and the rights to that data in an effective way? And how do I do that continuously as I’m growing data at an exponential rate. And then now in a post pandemic world where organizations are more distributed than ever you’re starting to form data lakes in various locations. How do you attain that line? How do you make sure that you still maintain a level of decentralization, but a level of organization at the same time and so data organization data governance data privacy data compliance is an area that I’m super passionate about. And I have been and this was something that didn’t just happen in the last, you know, month or two months. This has been brewing for me because I was talking to a lot of firms, and we were sort of working on the cybersecurity problem and securing the perimeter keeping the bad guys out. You know, we started to realize that really what we were protecting were the crown jewels of the company, which was the data and, but the data itself has its own journey, and there’s a lot of stuff that that goes to actually securing the data governing it compliant staying compliant, being organized. And with the, you know, the influx of cloud and SaaS, and, you know, the data problem is an octopus, in my opinion. And so I believe that the various facets of it that are very, very interesting to sort of look at and so that’s one of the initial areas of focus for the fund is to, you know, actively seek out problems in this area that we think we can solve. And, and not to sort of have technology looking for a market but really sort of understand what what what our clients are facing in their deployments and actually try to right size, the technology and the solution to the problem that they’re seeing.

Chip:

So I think, you know, it’s an interesting subject line, it’s one that I’ve dealt my whole career with. And, you know, when I look back a lot of years, you know, it kind of started with advisors wanted to be able to do performance right for their customers, and then it moved to, hey, we can use this for compliance and their bits of pieces of data. And those platforms of yesteryear, that may still be in existence, would leave more on the cutting room floor. That’s where they actually utilized right and now we are weaving in soft data, customer data, best interest data interests by the customer. I think your your concept on on data is spot on. That’s because, hey, all these CEOs can go out and buy really pretty shiny metal fishing lures. But guess what, if the data is not good, you don’t have anything. Really Yeah. The other thing is with the machine learning artificial intelligence, it’s amazing what what you’re going to be able to do with a good data plant, Lake, whatever you want to call it.

Sid:

Yeah, and you know, and I think you and I have chatted a lot about this chip, right is it all begins with having a good data architecture for any organization. And it’s easy to do that when you’re starting the company fresh because you’re now laying the foundations. You’re You’re you’ve got your systems and you sort of know what the ingestion mechanism is, is, you know, the inflows and the outflows and you can start to kind of build out a structure that makes sense. It’s quite challenging when you’ve got to consider, you know, an organization that that has been doing this for years, and they’ve got legacy data. And now they’ve got new providers of data. And now you sort of live in this hybrid world of how do you could you can’t have systems go down and you still gotta maintain, you know, the current situation. So there’s a lot that goes into this. And so, we think it’s a big problem, and we’re not going to be able to solve all aspects of it. But the one area that I have found to be a target Richmond moment, if you might, if we might call it that is just the permissioning data ownership, data rights and data rights management and the compliance of that piece. That’s a problem in its own. Right. That that we think has some interesting facets to it.

Chip:

You know, it’s interesting, you know, some of our customers, we’ve had this discussion, right. And we’ve talked about who owns the data over the years, especially when you’re in the independent model, right and the RIA model, there’s really that sense we own the data, and we’re working with a BD are working with a custodian that hey, you know, it’s our data. And we need to it needs to be portable. It I think we’re looking at a different world going forward and how you know, today, you look at all of these large companies, how they’re looking at data that are serving advisors. Well, the advisors traditionally haven’t been thinking about how those large companies are looking at their businesses. That’s another area that’s pretty interesting. Going That’s right.

Sid:

Thats right. I mean, you know, if you’re looking at in our industry, right in the wild space, you brought up a great point. I mean, you’ve got you’ve got multiple stakeholders, you’ve got the advisors, you’ve got, you know, you’ve got the broker dealer themselves. You’ve got the custodians, you’ve got all of the vendors that are doing various aspects that own pieces of this. How do you visualize So quite simply, you got to CRM companies. Exactly. How do you visualize just the amount of data that your organization has? It all begins right there. Just even first taking stock a data inventory of how do I know where my data lives and having a living dashboard that actually provides you access? And you know, it was it was interesting this this actually came out of a situation that I faced you know, when I was in a post the acquisition, we had a situation where, you know, we have AWS data, we have data sitting in snowflake, we have data sitting in another vendor, we have data sitting on, on on prem colo type environments. And, you know, somebody asked us, they said, Hey, we noticed that you have pre production claim data sitting in this environment. Did you know that you had that? And I remember talking to my engineering team, and I was asking him I was like, Hey guys, how do you guys manage? You know, because I don’t really know is that even true? Do we actually have pre production find data sitting in this AWS server that we never use? The answer was Well, suit I need a week to find out. And and we had to literally and we’re a cloud enabled tech company. Right? And yeah, it was very clear. And this problem exists with multiple organizations and bigger the organization bigger the problem, and then you acquire companies. They’ve got data spread all across the place. And so I think we’re living in an age where you live and die by the data you own and you’re responsible for. And so better now than ever, to essentially start to put the rigor and the process around inventorying data making sure and that has various use cases. It’s not just cyber, it’s not just protecting the data, but it’s just good hygiene of making sure and so ESG I know that’s another hot topic for you. Okay, one of the questions on an ESG maturity model. Question is, hey, what are the policies and procedures around how you’re managing your data? Most organizations will say, yeah, it’s great. We have all our data centralized, or all our data is in CRM, or all our data is over here. But do you actually know for a fact can you say that you have a way of basically managing your data in all different places? I think this is it’s a, it’s a problem that I think has so many layers to it that it’s going to take some time to sort of unpack various pieces of it and I’m a big believer as you know, chip of starting small looking at very sort of focused problems and sort of building on that. And so I think over the next, you’re gonna, you’re gonna see a lot of new sort of innovation coming out of surge ventures in the area of trying to identify specific problems within the Uber issue and working on those. Well, I think the challenge of the changing consumer expectation as well is going to cause some you know, there’s going to be some deep soul searching on how do we safeguard that the end investors data correctly advisors data, etc. And as you talked about hygiene, you know, I had Aaron on Aaron’s Bradley on last week, talking about a culture of compliance. Those are all are emerging, and other totally coming together. Absolutely.

Chip:

And so let’s, uh, let me ask you this question. What do you see as a trend at some of the trends that you’re seeing within the wealth management space?

Sid:

Look, I mean, I think that that’s an excellent question. I mean, we as the wealth management space, this is probably one of the most exciting times to be in this space. In my opinion, I think we’re seeing kind of a confluence of events between sort of changing advisor and client expectations that the whole client advisor relationship, we’re starting to see that evolve with a much more of a technology driven, data driven view. And that’s been long in the making when we started seeing this three, four years ago, but I think he’s really starting to see that advisor client relationship really, really morph. I think the way clients want to be served, especially with the new demographic of clients that’s coming into the industry and some of the millennials now you know, you know, of course, the market crash hasn’t helped, but, but the point being, you know, them wanting to have this round the clock, now, you know, advice all the time, always on hyperconnected sort of methodology and the way that they want they want to be served and the way they want to be treated. I think the client advisor relationship has dramatically changed. So I think there’s a lot of new innovation going in that space.

Chip:

So it’s interesting that you bring that up, because I look at it right. And, you know, we could go back seven, eight years, 10 years and robos right, rovers are gonna change the world. Guess what they didn’t. But the tech that we’re seeing today, and I think a lot of that was frankly driven by COVID. Go right And sure there was the momentum going, but you know, the basics of being able to have data at your fingertips as you just said, I want instant gratification right? When I go out and start doing research on folks on firms, and they say, oh, yeah, we use a batch file. I’m like, really? Seriously. And so what we’re looking at though, is yes, I want that instant gratification, but I also wanted needed me right I want to be able to talk to my advisor and I might want to do this. I might want to zoom I might want to talk this way or I might want to go see them. That’s right. There’s still that balance of Yeah, no, it’s not all too personal with tech.

Sid:

That’s right. I think I think what it is I agree with you 100% On that I don’t think it was the role model that was going to make it because this is a highly personalized industry. Yes. And so you definitely have to have human interaction and that’s not going away. And I think technology sort of enabled that made it easier to sort of drive the human interaction factor by but I definitely think that that’s a big part of that. And I think technology has kind of made it easier. But what I’m seeing now though, on the advisor client side, is if you look at what’s happened with Robin Hood again, bad example of you know, what Robinhood is facing as a company, but if you look at the technology and the user base, I mean, it was made things easier, you could actually get, you can file you can trade you can you can bring different kinds of asset classes. Including, you know, crypto in some of the alternative asset classes, which a lot of folks now want to be involved in. And so you’re starting to see kind of just a change in how clients are going to be served. And again, it’s highly demographic, right? I mean, so, you know, depending on the age group of the client, depending on you know where they are in their life. It’s a different sort of dynamic, but the advisor client experience has definitely changed. If I were to look at it four years ago versus today, expectations have changed, and even the delivery has changed. Another big area that I’m seeing in the industry is just mass consolidation. I mean you’re starting to see companies go from single function offerings to platforms. You’re having companies offer, not just one siloed offering but actually offer the whole gamut. People being more flexible in their business models, you got broker dealers, embracing the RA model, you got RAS embracing some of what the BDS we’re offering in terms of shared services. By building aggregation networks. You’re you’re you’re starting to see kind of like this commingling of models. And I think a lot of that is coming through, you know, sort of cross pollination of ideas as these companies kind of come together and they integrate and really when they’re servicing their clients, flexibilities, what seems to be the the word of the hour, which is

Chip:

I agree with that. I think regulatory is in there. too. You know,

SId: I was gonna get to compliance. Yeah.

Chip:

What when you get to the demands of of the regulators in balancing those demands, it changes changes, kind of the whole landscape. Oh, so I want I want to change gears and ask you a question. I love to ask those that we have on the show. You know, as you look at FinTech today, and more specifically, wealth tech, you know, what are who are some of the firms that you see out there that you think you’re doing a pretty good job?

Sid:

Look, I think one of the companies that I’ve always been a big fan of is a company called Plaid. You know, they, you know, they took a problem that was plaguing a lot of organizations, which was how do you interconnect, all this data that you’ve got all these banking assets in different locations, you’ve got everyone’s got a different API, everyone’s got a different way of communicating, right? That when you’re trying to build that, you know, instant gratification culture, you’re trying to serve as the new client and you want to, you want to open your accounts right away and you don’t want to fill out a form you want to. You want the data to just be there. You want you know, you want to be able to because let’s be clear, we all have what a Twitter feed attention span. We all now have. You know, the way we look at things as you know, we want to text people because we don’t want to talk to him. We live in this culture of you know, we just want to get things done fast. Now, let me because I don’t have time I gotta move on to the next thing. I’m already late for nine different things that I’m doing. And so I think I think what plaid did was they took a very simple concept, abstracted it built out this in the US, they use the power of technology and API’s to really interconnect the world and bring that data back to any system virtually with a level of simplicity that I think I think their model is it’s data driven IT services is almost akin to what stripe did with payments. Yes. Right. Absolutely. And so, I mean, I these are companies that continue to sort of excite me and stripe is yet another one is sort of more on the payment side, but just the idea of using API’s as a way and maybe this is my, my tech geek nature of looking at a problem but simplification and the ability to bring, take a very complex problem and distill it down and build it for scale. I think these companies have done it elegantly. And so they you know, as I’m sort of building out Serge and I think about ways in which we can simplify the problem and build out scale and be frictionless. These are the companies that come to mind.

Chip:

That’s great. That’s great. So I always like to ask this question. It’s the last question I asked him the day usually. So what are the things that are keeping you up at night, as you’re thinking forward, about the wealth business and how you’re going to look at it going forward?

Sid:

You know, look, I think there are various aspects of, of welding, you know, that I’ve lived sort of a paranoid lifestyle this past 10 years being you know, being in cybersecurity, you almost, it’s by nature. You’re always up thinking about what the next big vulnerability is, what the next big attack might be, and how are you preparing organizations? Right now, I’ll tell you in this sort of goes back to the earlier point that I made of what we’re looking at it surge going forward. It’s this this growing problem that every organization is now focused on, everyone’s focused on. I mean, just I need to sell a lot of data. I just need all this data, because I need to make these decisions. And I’m going to use these AI and ML algorithms to then mine that data and give me these insights which I’m going to use to better my business and all the folks I do business with. And there’s this mindset of just give me more data. Because the more data I have, the more I can learn. The more I can learn, the deeper the Insight be, would be. But I think as we’re doing that we’re losing sight of how the data is being organized. And we’re losing sight of how we are governing who has rights to that data, who has access to that data, who owns that data. How do I ensure that I don’t mortgage my future for short term gain? Right. And so I’m starting to think about some of the problems and as I’m having these conversations with variety of leaders, CIOs and CTOs of various organizations, we’re so focused on oh, I need to spin up a snowflake instance and have all my data sit there and you’re like, but you have all this other data over here and then you might be ingesting some stuff over here. And what about that acquisition you made? They’re not on snowflake yet. And so I think, I think we’re going to be spending a lot of time chip in the next X amount of you know, next few years sort of talking about how do we how do we how do we build some method to the madness? How do we standardize on a data fabric? And, and what are the best practices? So that keeps me up at night, but I’m also excited partly because I feel like opportunity. It’s opportunity. I feel like Yep, there’s a problem, but there’s an opportunity and I gotta say one last thing, which was, you know, I’ve been to enough of the wealth management sort of events and sat around and I was kind of hoping to hear someone take the baton and go, This is my problem that I want to go solve. And I think there’s various aspects of data that people are working on. But the notion of how do we solve data privacy and how do we manage data ownership and data ownership management for wealth? I think there’s fewer players in that space. And I view that as an opportunity, but also a problem.

Chip:

So I heard it here, right? You said this is what you want to do you want to solve the problem. You want to solve the data management problem. I like it.

Sid:

That’s it.

Chip:

I want to thank you for joining us for the Beacon Flash Podcast here at a had a ball talking to you and I look forward to talking more and good luck was surge ventures. I can’t wait to hear what’s next.

Sid:

Thank you chip. Looking forward to it.