Rob Major, I’m sorry. I apologize for underestimating you. You know a lot more about portfolio management software than I thought you did, and your new portfolio accounting system for RIAs–AssetBook–is likely to be a success.
Who is Rob Major and why am I apologizing to him? Major was a cofounder of Techfi, a portfolio management software (PMS) company. Back in December 1998, he asked me to review his new PMS program, Portfolio 2000. I did, and said it was a breakthrough product. Portfolio 2000, which was purchased by Advent Software in June 2002 for $23 million, went on to become a great story with an inglorious if controversial end. However, I always attributed the company’s success to Matt Abar, the maverick programmer of the product, and I never gave much credit to Major, who was in charge of sales and marketing and owned 15% of the company.
I now realize that I misjudged Major because he has once again built a PMS product that could become a good solution for RIAs. This time, it’s a Web-based system, but more important, he vows he won’t make the same mistakes he made with Portfolio 2000. He promises he won’t take more clients than he can handle, won’t release new products or upgrades until they’ve been carefully tested, and won’t chase after enterprise deals with B/Ds if they endanger his focus on RIAs.
Please understand that Major Technology Resources’ (MTR) new PMS system, AssetBook, is not a breakthrough product like Portfolio 2000. AssetBook is a good product, but it is one more in a growing field of PMS applications targeting RIAs. In the last couple of years, several new RIA PMS products have emerged, including PowerAdvisor, Investigo, and Interactive Advisory Services, breaking the lock held by Schwab and Advent on the small-RIA PMS market. What’s interesting about Major’s new product, however, is that having lived through the startup of Portfolio 2000, he is building a small business with modest goals in mind.
“This is going to be an RIA product,” says Major. “My goal is not to create a company that puts its software on the desktop of every broker out there. I want to build a product for RIAs.” Major says he plans to add three to six RIA clients a month over the next 12 months and five to 10 a month during the following 12 months. He sees no more than a few hundred advisors on his system after five years.
While the allure of enterprise deals with B/Ds tempts almost all small technology vendors serving the independent advisor market, Major promises his main focus will always be RIAs. He will license his Web-based application to B/Ds, but they must run it on their own servers and service reps themselves. Major says he will not spread his meager resources too thin by trying to host the application for B/Ds and do all of the rep downloads and reconciling.
“This company belongs to me and the product belongs to me,” says the 36-year-old Major. “I’ve already sold out and my goal now is to build a company that I’m proud of and have clients that want to write a check to us. It’s not a short-term deal for me.”
Major’s Big Adventure
Major wants to create another PMS program, but to do it his way this time. While Techfi was a great payday–$2 million after taxes–Major says he differed with Matt Abar on the direction of the company when it began to grow rapidly. In the months leading up to Techfi’s acquisition, Major’s and Abar’s relationship became strained.
Major and Abar had become friends in 1993 while working at Financial Computer Support Inc., which makes the dbCAMS PMS system. Abar left for a programming job at Denver-based Investment Advisory Network, a separate account manager platform, and Major followed him about a year later. Then Major left IAN to work for an advisory firm in Texas.
In the summer of 1998, Abar quit his job at IAN, locked himself in a room for three months, and emerged with the skeleton of a PMS program he called Portfolio 2000. He called Major, whose easy going style and country-boy face made a stark contrast to Abar, who wore thick glasses, was overweight, and possessed an intensity matching his intelligence. Major accepted Abar’s offer to be “Mr. Outside” and become a partner in Techfi, which was running out of Abar’s townhouse.
Not long after, Major called me and I started covering little upstart Techfi’s challenge to Advent and Schwab. I met Abar and was impressed, and he was great copy. Here was this 28-year-old kid who was a great programmer and understood portfolio accounting. He had dropped out of college because it was boring to him. Now he was CEO of a tiny startup that could disrupt plans by industry giants to control advisor desktops. Portfolio 2000 ran on SQL server software, an open database, which would free advisors to access their portfolio data and use it in their contact management software, analytics programs, and other applications, and it posed a direct challenge to the closed database systems offered by Advent Axys and Schwab Centerpiece (now called PortfolioCenter). I loved this story
In the three years that followed, the story got better, as Portfolio 2000 turned the PMS software business on its head. Techfi created an affordable Web-based application, called AdvisorMart, launched a simple contact management add-on module for its desktop version, and was also developing a financial planning module. It attracted 500 advisor clients and its Web-based version was gaining traction with independent broker/dealers before StatementOne had established dominance.
All the while, I credited Abar. I’m not sorry about that. Abar was indeed a visionary and could implement his ideas. What I did not see was that Rob Major also had a vision, and I never did give him credit for it, or see his passion for creating a business that serves RIAs.
A Roller Coaster Ride
Major says he does not blame Abar for wanting to sell the company to Advent. Techfi was struggling with client service issues because it grew so fast and Advent promised to pour money into TechFi’s products. Of course, it has not turned out that way. In June, Advent stopped supporting the desktop version of Techfi’s Portfolio 2000, Web-based AdvisorMart is operating with a skeleton crew, and Advent’s continued support is in doubt. As it turned out, Advent bought Techfi to put the company out of business and keep a fast-growing challenger from gaining further traction, which has left Major wounded.
“The demise of the software is like a stab to my gut,” says Major. He says his plan is to leverage his experience in Techfi to create a niche company that downloads and reconciles advisor account data for small RIAs.
“What I went through at Techfi was a roller coaster ride,” says Major. “I don’t want to relive all of it, but I still really enjoy working with RIAs.”
Major says he thought about going into the horse breeding business with his wife, but was drawn back to the PMS software business because he enjoys it. “Almost every day, I get to implement a solution or make technology work in firms,” he says. “We can take a process like rebalancing, which takes a lot of RIAs a week or so to do, and we can make that into a 90-minute process. I get huge satisfaction from that.”
Mixed Reviews, but Impressive