Invent.us begins life with big accounts, big revenues, dozens of all-star staff and a convincing pitch about how to fix the fatal flaws of ‘open API’
Oleg Tishkevich burst onto the RIA scene, earlier this year, with a new startup possessed with rare, out-of-the-gate commercial viability, but the entrepreneur is beset with a decidedly Oleg Tishkevich problem.
Trout cautions that — early success aside — Tishkevich certainly runs the risk of thinking too big.
“[For] broker-dealers and big RIAs with lousy technology, to be honest, I think [Tishkevich’s dream] is too visionary.”
“This could be the greatest platform no one will ever use,” he adds.
That concern is overblown, Tishkevich counters.
“If the problem we’re solving wasn’t as acute, I doubt we’d [have been] able to get an adoption of about 16% of our addressable market in just 12 [or so] months,” he adds. “…Broker-dealers that leverage our tools now have ‘special powers’ and ‘secret weapons.'”
Invent.us announced its launched this past January. The firm solves complex systems architecture problems for financial institutions supporting financial advisors and vendors creating wealth tech software, according to a release.
In six months, he’s already made Envestnet a big client — evoking an unforeseen emotion in Tishkevich 1.0.
“I’m totally jealous,” Tishkevich says of his self-funded, bootstrap company.
It’s breaking even and has already surpassed, in six months, revenues, accounts and staffing achieved only after 16 years by his old software start-up, FinanceLogix (sold to Envestnet in 2015).
What got Tishkevich 1.0 green with envy over his Invest.us persona doesn’t come out of the blue.
He is first to introduce Cloud Native, the next mega-iteration of cloud computing, to the wealth management world. Cloud Native only came into being during the past two years and was immediately leveraged by firms like Uber, which needs great cloud cover to keep all those independent drivers on time.
Tishkevich’s move bears resemblance to becoming the first reseller of Salesforce CRM — but nobody owns Cloud Native, and its promise is far more immense.
“We have 1.000 companies with 1,000 APIs. We’re trying to solve that,” he says.
In crude terms, Cloud Native can be equipped with Google Translate — a computer systems language. Such a software United Nations makes the sky the limit, says Trout.
“If he can create this virtual space where all the software [can] talk, then the upside is unlimited … [it’s] the next stage of innovation.”
Tiskevich got takers for what he allows is — for now — more of a Cloud Native consultancy than a plug-and-play software subscription — a model that may evolve as the “tools” he builds grow in power and sophistication.
Right now — like Google Translate itself — translations can still have clunky syntax and grammar. It’s just a big head start.
The idea is that new software can be built at least three times faster and that new systems, once built, are achieving about 19% efficiency gains.
Six broker-dealers, including $93 billion Fairfield, Iowa-based IBD Cambridge Investment Group, have signed contracts with Invent. It also has an undisclosed contract with “another major provider of software”, says Tishkevich.
They make up a user-base of about 14,000, not counting Envestnet and provide recurring revenue that “fully supports” its now 40-strong headcount. It has hired 10 engineers since January, with more hires to come, according to the firm.
The contract announced this week with Envestnet is for core software and not acquired software like MoneyGuidePro, Tishkevich says.
Invent’s software is already up and running at some of the six broker dealers it serves. Cambridge is the first to announce Invent-developed upgrades.
As of Feb. 21, the BD’s systems are hooked up to the cloud, and beginning to fulfill the promise of eliminating the need to numbingly re-enter data into its legacy software, according to a release.
In a sense, Invent is leapfrogging open-API to harmonize legacy systems and software applications that speak tribal software dialects.
Open APIs fail because there are just so many of them and because companies that expose code tend to expose only the marginally helpful portion. “It doesn’t even represent everything in the software,” he says..
Though Tishkevich is still living under a strict non-compete with Envestnet, he was able to walk out the Chicago outsourcer’s front door with a blueprint for his own business, he says.
“I watched and learned with what Jud [Bergman] and Bill [Crager] are doing, just in terms of delegation of responsibilities and how to think big,” he says. “They know how to think big.”
Tishkecich has more reasons to be grateful to Envestnet.
Although he remained an Envestnet employee until late last year– he was the firm’s chief technology officer (CTO) and managing director for financial planning–the fact that he founded Invent some 15 months before he departed indicates he had long been eyeing greener pastures.
Envestnet was aware that he was effectively working two jobs, and it gave him its blessing out of good will and self-interest, says Tishkevich.
“They’ve [always] had to say ‘this is the system, these are the components, there you go,’ but now they can do a lot more without spending the effort on things that aren’t at the core of their value proposition,” he explains.
Soon every Envestnet installation will be unique in form and function, he adds.
Tishkevich started writing the code underpinning his new venture in late 2017. He’s been aided by what analysts admit is a crack team of cloud gurus, including Mike Perlov, the former head of IT security for the Olympics. Invent’s chief operating officer (COO), Ryan Reineke, the former COO and CTO at Cambridge is also part of the team.
That’s why Invent hit the ground running, says Reineke. “We’ve worked with just about every application in the industry through the years, so we have deep relationships with all of the key decision makers,” he explained in the January release.
Joel Bruckenstein, founder of the T3 conferences, says “it’s a way for firms to integrate in a more uniform manner and a better one. It’s supposed to be cost effective [too],” he adds.
Right now, they’re leaders in a league of one, says Bruckenstein. “[Others] don’t have the domain knowledge about the wealth management space necessary to do it right,” he explains. “If [Tishevich] can do what he says he can, it’s better, faster and more efficient. We’ll see.”
Tishkevich broke-away from Envestnet in Nov. 2018, 45 months after it rolled him up with FinanceLogix. This makes him part of an elite club of software gurus who joined the RIA and IBD outsourcer with a bang, but left to get their tinker back.
Indeed, Envestnet has been shedding software founders of late. Yodlee-founder Anil Anora has also departed.
It’s not easy to stop being the lone-wolf, accustomed to driving fast and changing on a dime, says Tishkevich.
“The last time I had a boss I still had pimples … [but] with all the challenges I faced at Envestnet, I did not slam the door and walk away, because I was given a once in a lifetime opportunity to learn.”
“I learned a lot at Envestnet about how it operates, and Jud and Bill are brilliant people … Becoming a large business, that’s my next challenge, now that I know how they operate,” he adds.
At Envestnet all the baby birds can’t get to the mother, says Aaron Schumm, who founded 401(k) robo Vestwell after leaving Envestnet.
“There’s the allure of being able to run your hard-built startup as a ‘NewCo’ within an established organization… [but] when [roll-ups] happen repeatedly within an established company, friction can be created across the acquirees.”
Alongside Tishkevich and Anora, the Envestnet founders diaspora includes one of its original young-guns, Lori Hardwick, now the founder of an all-in-one RIA software dashboard, AI Labs;
Tom Kimberly, the erstwhile founder of RIA robo-advisor Upside, is, today, a managing director at Fidelity’s research arm, Fidelity Labs
To a lesser extent, Schumm also fits the mold.
But unlike Tishkevich, Anora, or Kimberly, he’d already left FolioDynamix four years before it was acquired by Envestnet in Jan. 2018. He’d sold his stake in the firm to private-equity outlet Actua at the end of 2014.
Second mover advantage
“The RIA tech scene is mostly a bunch of incrementalists, with a few visionaries … [and] there’s also a ‘second mover advantage’ mindset at play … Schwab embodies this thinking more than anybody!” he says.
“It’s easier to follow up on someone’s mistakes than reinvent a process on your own.”
Tishkevich agrees that another firm could take his idea and run with it, but such an outcome would not bother him.
“If Schwab does it better, I see that as a success,” he says. “For me, at this stage in my career, it’s not a financial gig. It’s helping people in fintech.”