From the Top: How Ownership Influences Vestmark’s Success

I just passed my three-year anniversary as CEO of Vestmark, which always is a good opportunity for reflection. I am proud of the progress we have made in strengthening and broadening Vestmark’s products and services, and I continue to be excited about our evolving culture and brand. Vestmark has a fantastic team and a clear path to growth that we execute on every day. 

There is one other factor present in Vestmark that has a real but perhaps underrecognized effect on our success: Our ownership and the ownership structure Vestmark has in place. As a closely held, privately owned business, Vestmark is in some ways an outlier among software-as-a-service wealthtech firms. Many of our peers are much younger than Vestmark, and many are backed by private equity groups, and many are working towards (or have already executed) an ‘exit plan,’ either going public or being acquired by another firm. 

That certainly is not a criticism – the tech industry uses this model because it works. It attracts capital to support aggressive growth and generates profits for investors and outstanding opportunities for employees. E*TRADE, where I was previously CEO, also followed the founder-owned/PE/IPO/acquisition sequence, albeit over a period of decades. But I also now have an appreciation for steady private ownership and how it can enable our business strategy. 

Here are five ways I believe private ownership is an advantage to Vestmark – and our customers: 

1. No shot clock of private equity: Private equity investors have a timeline in which to turn a profit on an investment. While not the rule, sometimes a firm aims to drive up valuation to meet a timeline for a sale or transaction, which in turn can become the driving force behind product introductions, marketing strategies, and pricing. In extreme cases, investors may withdraw support for a firm. Private ownership means Vestmark is driven to put out the best possible product at the right time for our clients.
2. Shared vision of ownership and leadership: This is especially true for Vestmark, which has been around for more than two decades. Our ownership understands the company and its journey. We continue to refine and find markets for products and innovations that our ownership has held for decades. We get to interact regularly and ensure our vision is aligned. Public ownership and even private equity firms are not as close – and in extreme cases, ownership and company leadership can be in conflict.
3. More leash to innovate: “Fail fast” is a cliched saying in tech, but I sometimes think the challenges of a fail-fast culture are underappreciated. It’s one thing to say in a media interview, but when those failures are documented and reviewed by investors, it can lead to knee-jerk reactions by ownership, even for failures that result in important learnings. At a private firm, there is more leash to work out kinks within a safe environment and introduce products that have already been through substantial trial and revision.
4. Our independence lets us work with everyone: Because we have no investments from industry partners, we have more latitude in our partnerships. We don’t have to include an investor’s products on our platform or give preferential treatment to certain customers who also own a stake in us. We consider ourselves Switzerland – neutral and able to make deals on an even playing field, and always with our customers in mind.
5. Reputation for stability: Stable ownership also translates into a stable company, and that’s a good thing when you are working with customers who want long-term business relationships. We also have been fortunate to build up a strong balance sheet and a diverse but high-retention customer base over time. Customers appreciate our steadiness and the knowledge that we won’t change owners or strategies every few years. When we make headlines, it’s for product innovations and customer deals, not an ownership transition. 

All of this gives Vestmark the opportunity to focus on one thing – serving our customers and attracting promising prospects. Our customers, current and future, ultimately benefit from Vestmark’s freedom to innovate and experiment. They also enjoy reduced risk because of the high-level reassurance that Vestmark is less likely to go away or be sold to a competitor because of the loss of a client or a lack of external funding or an investor’s need to move on. 

In my three years here, I’ve been fortunate to be able to lean on the experience, insights, support and trust of our ownership and our employees. I believe this has helped make Vestmark a stronger, more flexible, and more innovative company than ever before, and lays the foundation for even more success to come.