Generating Alpha Podcast
00:10:37 · Michael Anders
[00:10:37] S1: Yeah, I love these questions. So I don't remember the year, I think it was 1993 or 1994. 1994, I went down to Washington, D. C. I had been awarded an opportunity to work for free for then Congressman Jack Reed. I bunked up with a friend of a friend of mine in Foggy Bottom in Washington, DC. And it was a very cheap rent for me. I was unpaid working for the senator or congressman and ended up working for a restaurant called Planet Hollywood at night to pay the bills. And I remember every morning getting up extra early and I would jog from Foggy Bottom around the White House trying to run into Bill Clinton and Al Gore jogging. That was a big thing they used to do is their jogging cadre. And then I would head to Capitol Hill, I would work for the congressman, I was writing position papers, I was supporting the legislative affairs folks. I was so interested in it. I worked pretty hard, sat in hearings, took notes, did whatever was asked of me in the office. And then I would leave after a full day and go work so I could afford the minimal rent that I had in DC. And after the end of the summer, having had very, very little experience with the congressmen, but having been invited to a lot of the congressional staff meet and greets where I met a lot of dignitaries, a lot of other congressmen, senators, cabinet members, I did get this moment with Congressman Reed where he asked, what did I wanna do? And I remember saying to him at the time that I really believe in public service. I want to be him someday. And I remember him telling me that I should strive for it, that I have good energy, that I worked really hard, and that I clearly care about people and the issues. But his advice, if I asked for it, was don't go into politics right away. Go back to your senior year of college, take as many econ classes as you can, as many accounting classes, as many finance planning classes. Go to Wall Street, get a job on Wall Street, do the best I can to absorb and learn as much as I can about the economy, the private sector, investing. His advice, I I don't want to put words in his mouth, but something along the lines of, if I start in politics out of college, I really won't know anything and I'll never get out.
00:13:24 · Michael Anders
But if I go into the private sector and I work in the private sector and I learn about investing in the economy, I'll be a much more valuable public official because I will have worked and learned something of value. So, that was always the plan. And I had really no support in the form of perspective from my parents because they were academics and they didn't understand Wall Street, they didn't understand investment banking, they didn't understand anything about the journey I was about to embark on. And I didn't really have anybody in my orbit that could advise me. So, I kind of went to the alumni network before I graduated from college. And as luck would have it, I ended up getting a job at Fidelity Investments. And I remember after graduation, on graduation day, catching a train, an Amtrak to Penn Station, moving into an apartment that I had found, sharing it with two roommates who I didn't know right behind Lincoln Center. And I think I was starting work the next Monday. And I was what they called an equity analyst. It was sort of a two year program. It was actually much more operational and administrative than I expected or understood or knew. And I really quickly came to realize that, one, this was not a job that played to my strengths. Two, it was a job I was not learning the things I personally wanted to learn. And so I actually immediately began looking up and out. I did a program at Columbia for a year that was part of the School of Public Affairs, but I was also taking business classes that could have applied to a business school if I wanted to get my MBA. And I think the combination of spending the two years in New York City working at Fidelity, learning more from building my own network and learning more about what it meant to quote unquote be on Wall Street and taking some classes at Columbia really continued to push me towards the things I didn't want to do versus the things I wanted to do. Very long story short, I always wanted to live abroad. I always had a affinity to Paris and France because my parents were Francophiles. And I ended up deciding not to go get my MBA or my law degree, two things I had been considering, and instead move to France, see if I could land on my feet there, see if I could even figure out a way to learn the language and get a job.
00:16:17 · Michael Anders
Anyway, I ended up spending two years in France, ended up getting a job in investment banking working for Societe Generale. That was really interesting because that was when they were considering unifying the currencies throughout Europe into one, the Euro. And it was also at a time when there was a lot of turmoil in the market with the collapse of long term capital management, the Russian debt crisis, the Asian currency crisis. There was a lot of things going on, and I ended up being right at the epicenter of it. And it was an incredible chance to learn. I'll spare you lots of details in that, but a few moves later, I ended up starting a company that was building commercial donor advised funds. One of the things I left out, which is actually not insignificant, is while donor advised funds have been around for sixty, seventy years out of community foundations and Jewish federations, Fidelity Investments was actually the first commercial firm to launch a donor advised fund. And actually, to the uproar of traditional community foundation donor advised funds that didn't understand how could Fidelity, a for profit, a very for profitable company, get into the business of donor advised funds. And while I had nothing to do with the launch of Fidelity's charitable gift fund, I was at Fidelity and I was aware of it, and I thought it was very interesting. Fast forward five, six years, I just found myself at a moment when I met a fellow entrepreneur, we shared this idea and we created a company to basically build the Fidelity Charitable Gift Fund, the product at least, but to white label it for all the big private client firms like Morgan Stanley, JPMorgan, Bank of America, Northern Trust, Credit Suisse, back in the day Smith Barney, Morgan Stanley, Dean Witter. And the idea was that these were much more traditional platforms with high net worth individuals, and they should each be having one of these private label donor advised fund solutions for their clients. And so, that's how I ultimately made my road into creating this company, which ultimately took off and then came crashing down. We sold it for Peanuts, And I ended up going to Fidelity and co heading their charitable services group, which was a whole another chapter in my life and led to some amazing other things. But that's the full story of politics and public service to donor advised funds.
00:19:16 · Amir Fischer
[00:19:16] S0: And I want to set the stage for Iconiq here. You've said that before starting Iconiq, you were scarred by the wealth management industry to an extent. What left that impression for you?
00:19:27 · Michael Anders
[00:19:27] S1: So, no surprise. The previous experience really is what created an awareness of some of the problems of the wealth management industry. So, while Fidelity and their charitable gift fund was raising billions and billions and billions of charitable dollars into their charitable fund, most of those dollars were coming from ultra high net worth clients of Goldman Sachs, Morgan Stanley, JPMorgan, etcetera. So the idea for me to create a competitive product and white label it for these big firms that naturally should be marketing this product to their high net worth individuals really made sense. And as we signed up almost every single one of these clients, I thought the business was going to be a huge success. It ultimately failed because while we had all these clients, which I thought would be the hard part, the really hard part was getting the attention of the wealth managers. Their job is to sell stocks and bonds and funds. They understand how to do that, and they get paid a lot of money to do that. And here was this little old charitable product that was cute but didn't really pay them, had the complexity of understanding trust and estate, philanthropy, talking to clients about their emotions and what they cared about. And so sadly, my company failed because the product basically sat on a shelf and collected dust at JPMorgan, Morgan Stanley, Smith Barney, Northern Trust, etcetera. And it was there that I saw the wealth management industry and really the relationship managers on these platforms as more interested in selling hedge funds that pay them lots of money than engaging their clients in a conversation about impact and making the world better. Not true of everybody, but at least back then, true of the industry. And it left a scar. So that was the beginning of my understanding of what felt broken to me.
00:22:01 · Amir Fischer
[00:22:01] S0: And around that time, a lot of your clients were saying you should meet this guy named Divesh Makan, and you eventually go and have a coffee with him and you describe it as love at first sight. What was it about that meeting that convinced you that he was the right person to build with? What was the start to Iconiq? Where did the idea come from?