00:12:54 · Solenne Niedercorn
[00:12:54] S1: Okay, interesting. Thank you very much. So now if we focus more particularly on Chronograph, I would be interested that you describe to us the way you launched the business. So now it's been years that you launched it, you already have great investors. And we'll talk a little bit about your investors. So what was the starting point? A blank page? A team? How did you start this business?
00:13:17 · Charlie Tafoya
[00:13:17] S2: Well, you already mentioned some of the original context, was to say sitting there and looking up one day and seeing a bunch of high cost investment professionals manually typing numbers into Excel, which I'm sure many of your listeners will identify with. And that just struck me as a fundamental disconnect. And so in short, started to do some diligence on, well, how have others solved this problem? What is available? And again, you can ultimately, I suppose, call it nerdy arrogance. But we felt that there, in short, no one was really addressing the problem in the right way. So around that time, I actually was introduced to my co founder Michael Bridge. Our wives actually worked together at Bain as consultants. And they've been encouraging us as tech nerds and private equity guys to get together. And we deferred and demurred a bit, but ultimately did get together in Brooklyn, which we're still headquartered today. We had a coffee, which over the course of the day turned into an evening whiskey. And we just saw a lot of the same fundamental problems from the perspective of both an LP and a GP. So both Bridge and I, as he's known, are developers by background. And in short, we were able to ultimately shake hands and sit down and start coding together. And that's basically what we did. So to tell you the story quickly, we originally sat in a windowless closet basically above a beer hall and specifically above the kitchen. And I know that because the smell of bratwurst would become quite pungent around 3PM when they started cooking. But we really built the initial LP platform even as it exists today in a handful of months just sitting there together and again really coding. And at that time, we felt confident we had built something that was sufficiently sophisticated to actually bring to market. So we decided to formally incorporate and put it online. And sadly, when we launched it officially, we had fewer visits to the website than there are even immediate members of my family. So not even my... All my brothers and sisters deemed it important enough to visit. And that was when we realized, okay, scaling a SaaS company takes a heck of a lot more, namely actually going out and selling it. And that was an important early lesson.
00:15:24 · Charlie Tafoya, Solenne Niedercorn
But from there, I would just say in short, we put our heads down and really started grinding for candidly a number of years to really build up the trust in the market and build up against sales motion and everything else that goes into selling software in this space. I'm gonna have to send them this episode because hopefully they'll love the shout out. But our first client was Pacific Life. And I think what's notable is that they were the first client of Investran back in the day, became the main accounting system actually in the private equity space for many years. So yeah, doing something right out there in Newport Beach. But we're very grateful to their early trust. In fact, they gave us some of our really great early feedback that still informs our product to this day. And they've been one of many great partners and clients that we've managed to build over time, noting that today we actually manage over $20,000,000,000,000 in gross assets on the platforms in very significant scale and candidly a bit of a who's who on the LP and GP side around clients and quality clients at that. [00:16:26] S1: I guess you went to bigger and bigger clients, correct? So what was your strategy in the beginning and how it happened in real life?
00:16:34 · Charlie Tafoya
[00:16:34] S2: Well, I think Pacific Life certainly has a decently sized program. I mean, to the point that they're very large insurer, right? And so regardless of the size of the program, there was a lot of realities that we certainly encountered, which were to say things like information security reviews, vendor and contracting processes, stakeholder buy in, again, all the things that actually go into the sale of software. And so being able to navigate that really set a high bar from the outset around overall process competency. And so as a result, actually our second client was APG, the public scheme of The Netherlands, which is the largest public pension plan in Europe. Again, very sophisticated and candidly complicated process to get that sale done. But that really, I would say, set the tone for how we approach the market. So we had the benefit of really starting at the most sophisticated end ultimately. Can go through a number of names in due course here. But in short, yeah, would say we really benefited from securing many of the very largest LPs as clients and then have worked since that time to expand across the AUM spectrum. I think what's important to note is that we actually started exclusively as a provider to LPs. That was really where we saw the biggest and most immediate disconnect in available technology. But it was in late twenty eighteen heading into 2019 where we saw the opportunity to naturally extend into the GP space. As previously mentioned, very different problem set in that, again, it's more workflow and data collection oriented. But we had already solved for a number of technology complexities around things like the data model itself, as mentioned. We need something that can address basically all forms of investment. The fundamental infrastructure, noting that again in the case of an LP, you're probably talking about tens of thousands of underlying companies, hundreds if not thousands of funds, etcetera. In short, we had to have highly performant tech. And so for us, it was really an opportunity to take in effect the back end, if you will, and build a new front end that was serving a different a different use case, but again, with the same sort of concept in place and again, the same infrastructure in place. But that was that was the approach that we took and, again, had a lot of success out of the gate.
00:18:43 · Charlie Tafoya, Solenne Niedercorn
You know, one of our first clients on the GP side was actually the SoftBank Vision Fund, which was, you know, it's obviously a huge huge program and and highly voluminous program. Again, sort of demonstrating our competency, if you will, at the enterprise end of the market. And then obviously in 2019, the Carlyle Group invested in Chronograph and became a client as well, which which is something that we're very, very excited by Carlyle in addition to Nasdaq. So happy to provide more background, but that was sort of how we came to market as you noted. [00:19:13] S1: Perfect. So you mentioned already several times that you were serving, you were initially serving LPs and then you expanded the model to GPs. Could you take typical use cases? So I have in mind Carlyle. Carlyle is one of your clients and Montana Capital, maybe you can select others and explain to us what problem you're solving concretely for them.
00:19:32 · Charlie Tafoya
[00:19:32] S2: Certainly. So at the highest level, it's really about realizing and enforcing your data rights as a general partner. If you look at the solutions that existed prior to Chronograph coming to market, they were largely template based, meaning that, you know, you would have, in effect, a middle office team that would distribute a template to an underlying portfolio company. They would fill that in and send it back, and then you could, in effect, consume that information and report out as needed. You know, I'd be candid in saying that at Chronograph, we're pretty skeptical of templates on both the LP and GP sides. I think templates are very limiting in the degree of fidelity that they provide. Right? I mean, because they're predefined, it actually reduces flexibility to provide more information that you might otherwise might receive in things like a quarterly report, etcetera. But they're also not the source material that often the investment teams themselves are looking to. Meaning that, you know, if you sit on a board as an investment professional, you're looking at board decks, you know, audited financials, you know, memos and emails and so forth, ensure unstructured information that actually provides the richest context. So what we've delivered at Chronograph is a tool set that can take advantage of all the type of information. So, you know, taking in, again, any form of unstructured information. You have templates, sure, great. You know, we'll take those in as well. But then we can extend that further into qualitative information, meaning things to your point, like ESG surveys, like regulatory and compliance surveys, etcetera. But in short, giving general partners in this case the ability to query their portfolio companies in any way they see fit and in any way they see appropriate for the nature of the relationship, meaning control or non control, take that information in, again, structure in a way that makes it now useful for things like evaluation or things like your LP reports or other internal monitoring with other constituencies, etcetera, and having a single... Truly a single source of truth that you can look to to understand at any given point in time how does this company perform both quantitatively and qualitatively.