Generating Alpha Podcast
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?
00:22:19 · Michael Anders
[00:22:19] S1: Yeah, so it is true that a handful of people, some of them were friends of ours and intermediaries and some clients, did continue to say, You got to meet this guy, Divesh. And my first impulse was, Thanks, but no thanks. I'm done with anyone who's a wealth manager at a wealth management firm. And the pushback was always, No, this guy's different. This guy's special. So, given we both worked with similar types of clients but did two very different things for them, we agreed we should go for a coffee. And within a very quick moment, he understood that I had a pretty interesting background. I had spent half of my career either in investing, investment banking, or in and around capital markets, or advising very affluent individuals on their philanthropy and had an understanding of trust and estate and tax and philanthropy and some of the softer issues, which are really important to ultra high net worth individuals. And so, he quickly sort of said, what are you doing at Fidelity Charitable Services? Why don't you come join me at Goldman? And I was immediately torn because in my mind, was no way I was going to go into the wealth management industry and certainly at one of these firms that I saw as challenged. And on the other hand, there was this wildly intelligent, charismatic, entrepreneurial mind that was already thinking about building the business differently than most people would do. And so, that conversation did go on for a long time. I would continue to show up skeptical and leave inspired. And after some period of time, I agreed to join Divesh because he really was a force of nature, very, very talented, very smart. And he had a real love for his clients that was unique and real and something that I shared with him in terms of how I really admire people and wanted to serve people.
00:24:59 · Amir Fischer, Michael Anders
[00:24:59] S0: And I want to talk a little bit about what Iconiq is now. But before we get there, what do you think is necessary for me and my listeners to understand about the building of Iconiq all the way from when you started it to today to kind of just get a sense of what it is, what the core principles are, what the tenants are? Yeah. [00:25:14] S1: So I think the core tenants of Iconiq are listen more than you talk, even though I'm doing a lot of talking right now, build genuine, lasting relationships, not with some transaction in mind, but because you genuinely care about the human and you want to help them in any way you can. Create goodwill, not for the sake of it, but because you genuinely want people to live a happier, healthier life, and you want to create this goodwill, and always be learning. I think generally speaking, a lot of industries, certainly wealth management can be a mile wide but an inch deep. And one of the things that was a tenant for us was go deep and go wide. If you're not learning, you should quit. And being an inch deep is you become a commodity and you become transactional. And so those are the sort of the tenants of building Iconiq, and it wasn't something we wrote down, It just was who we were. And I think in the end of this long party, I think it will go down that while Divesh and I have many strengths and weaknesses and differences, I think those core tenets are foundational in our DNA. That was sort of an unwritten thing. It just was. And I think that's very core to who Iconiq is.