Pivoting To Customer Success With Randy Cass of Nest Wealth
Randy Cass is the Founder and CEO of Nest Wealth, Canada's largest independent digital wealth management platform, offering direct-to-investor and advanced business-to-business solutions. He is an experienced executive and entrepreneur with a demonstrated history of working in the financial services industry.
Randy has started and successfully exited several VC-backed companies, including a hedge fund and a technology company. He is skilled in entrepreneurship, fintech, securities, and asset management.
Here’s a glimpse of what you’ll learn:
Randy Cass talks about his career background in wealth management
Why Randy became a Robo-advisor
Nest Wealth and why it grew so quickly
How to overcome the challenges of running a company
Starting a new company and winning the first customer
Success stories of customers that Nest Wealth has helped
The KPIs that shows Nest Wealth is serving its customers well
Lessons Randy has learned as a leader
In this episode…
Do you wish to have a better financial future? Where can you get sophisticated wealth management advice to help you succeed?
According to Randy Cass, most companies fail because they lack professional wealth management input. For this reason, he started Nest Wealth to empower investors by providing them with sophisticated and personalized wealth advice for their unique objectives. He now shares how he offers direct-to-investor wealth management solutions that make it easier for thousands of Canadians to reach their financial goals.
In this episode of The Customer Wins, Richard Walker sits down with Randy Cass, Founder and CEO of Nest Wealth, to discuss the impact of wealth management on the success of a business. Randy talks about his career background in wealth management, the reasons for Nest Wealth's rapid growth, their clients’ success stories, and the KPIs that demonstrate their impact.
Resources mentioned in this episode:
Randy Cass Email: firstname.lastname@example.org
Sponsor for this episode...
This is brought to you by Quik!
At Quik!, we provide forms automation and management solutions for companies seeking to maximize their potential productivity.
Our vision is to become the leading forms automation company by making paperwork the easiest part of every transaction.
Meanwhile, our mission is to help the top firms in the financial industry raise their bottom line by streamlining the customer experience with automated, convenient solutions.
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Welcome to The Customer Wins podcast where business leaders discuss their secrets and techniques for helping their customers succeed and in turn grow their business.
Richard Walker 0:16
Hi, Rich Walker here host of The Customer Wins where I feature business leaders who describe how their company thrives when their customers win. Today I'm speaking with Randy Cass founder and CEO of Nest Wealth. Today's episode is brought to you by Quik!. At Quik!, we provide forms automation solutions for companies looking to maximize efficiency and productivity. Our vision is to become the most compelling forms automation company by making paperwork the easiest part of every transaction. Go to quikforums.com to learn more. If you haven't heard this podcast before, I talked with business leaders about their customer experience, how they attract the ideal customer, how they grow their company and how they help their customers win. I want to introduce you to Randy Cass. He's an experienced executive and entrepreneur with a couple decades in wealth management, having worked at one of the largest portfolio managers in the country. And he has started and successfully exited several VC-backed companies, including a hedge fund and a technology company. His company Nest Wealth is one of the fastest-growing companies in Canada serving financial services and wealth management. I'm really excited to have Randy on here today. Randy, I want to take our audience on your journey. So in a few sentences, let's get started by you telling me about the role you have the day, how long you've been in this role, and what you spend most of your time focused on.
Randy Cass 1:32
Yeah, it's great to be here, Richard, and congratulations on the podcast. I love what you're doing with this. Today, I spend my day as the CEO of Nest Wealth. And this is a company that was founded about seven or eight years ago. And we've scaled to around 100 people over the last little while. And as you'd imagine, and you probably feel this with your company, too, with people comes two things that comes complexity and expertise. And so my job is really to kind of reduce the complexity and focus on letting people implement their expertise, I try and hire the right person get out of their way so they can run that part of the business. And when they run into challenges, whether it's with other people within the organization or with solving problems that they have a mandate to kind of carry forward and solve. I try and be there to give them the resources that they need or help them think through the solution that they can put in place or be a sounding board. But at this stage, it really is about hiring the right people for the right spots, and then giving them what they need to get the jobs done.
Richard Walker 2:46
I love that Randy, great leadership right there. Because to me, that's the fun part about running a business is helping people get what they need done, right. And I'm sure with all those people on your team, you have to figure out how do you serve your customers best? Let's talk about you in the early days, what were the early days of your career or your company like?
Randy Cass 3:07
Look, I've held a lot of different roles over the past few decades. I mean, I went to law school and decided that I didn't want to be a lawyer, I came out of law school and went to do an MBA and the CFA and I got called to the bar all in the same year and then started trading currency derivatives at one of the big banks in Canada, went and started managing portfolios in the quant group of one of the largest pension plans in Canada. And then, as you mentioned, started a hedge fund and really thought that was going to be the focus of my career for the next two, three decades. But one day, we came up with the idea for a piece of technology. It's a small industry up in Canada for the wealth management industry. Other people started hearing what we were thinking of building. They asked if we built it that they could use it. And sure enough, like most origin stories, that idea sprung into its own company. We got customers, we raised money for it. And from 2005 to 2012 I ran a company called First Coverage and then inevitably sold it to a UK company that was in a similar space. It was FinTech back before FinTech was kind of cool or something that had a phrase even. I took a couple years and hosted a TV show up here on what would be equivalent to your CNBC, I guess. I was a gentler, kinder, Jim Cramer and kind of stayed away from talking about individual stocks, but did that and then started up Nest Wealth in 2013 14 with really a desire to provide a better way for individuals in Canada to invest and it was only a couple of years into it. I mean, if you had to put a name on us in the early days, it would have been one of the traditional Robo-advisors like Wealthfront, or Betterment down in the States. But by 2016, we had really become aware that that's a hard way to make money. And it's a hard way to grow business going out and getting retail investors one by one, and trying to compete on the lower cost solution. Canada's very different ecosystem when it comes to financially to the States, we have six banks up here, we have three insurance companies, and that's about it. So it's very much of a concentrated industry that Canadians have this ridiculous love-hate relationship with the banks, they don't like some of the things they do, but they don't want other people to talk bad about them, and then sanely loyal to them. So we realized that it was going to be really, really hard to build a positive cash flow, organic business, even though the need for a lower cost investment solution was there, this was not the way to go about it. But by 2016, with the same focus on the customer being how do we open this industry up so that as many investors as possible have access to financial advice, we kind of pivoted to the notion that if we could provide our technology that automated a lot of the things that the wealth industry had been doing historically and efficiently, that they had been doing with a lot of labor and resources and costs, if we can reduce the cost on those and make those efficient for the firms that had the clients, they could probably be in a position to open their doors to more clients and the advisors would be better served because they would have more time to focus on clients, the clients will be better served because they can get access at lower asset balances the industry. In September 2016 on we pivoted and we said we're no longer going after individual investors, we're going to rebuild the technology from the ground up. And we're going to try to provide this technology to firms that want to do a better job of managing their wealth businesses. And that's where Nest Wealth has really settled for the last five or six years to the point where half the large banks in Canada use our technology, the fastest growing wealth management firms and broker-dealers use our technology and we're in the core of the single largest custodian in Canada that services 85% of the market, when it comes to opening accounts, onboarding new clients, doing the things that used to cost a lot used to be painful, but now can be done in a much more efficient manner. Can't remember the question you're asked, but did that answer it all?
Richard Walker 7:41
This is great. I want to go back to something you said because this is so typical of entrepreneurs, myself included, by the way, that your first business idea is not always your best business idea. It's just the one that got you excited to start the company, right? You said you wanted to be a Robo-advisor. So I want to ask about that. Why did you want to become a Robo advisor? What was the pain that you personally felt that made you say, I got to do this?
Randy Cass 8:03
I mean, Canada had a unique ecosystem in those days. And we still do to a certain amount, but it's definitely gotten better. So if you go back, I sold my first business to a UK competitor, I was running this or hosting this TV show on BNN here, and I would have CFOs of large banks and mutual companies mutual fund companies come in and talk about how business was going. And there had been so many studies done, about how Canada had the highest fees in this industry out of any developed country where our fees were two and a half x the fees down in the States. And you can imagine the impact that has over 10, 20, 30 years. And as the CFOs and CEOs and mutual fund companies come in and talk about the quarterly results and how well things had gone and the rest of it, I would push them on, why aren't we seeing these come down? What's the alternative? Why is the Canadian investment? And obviously, they didn't like that, but it felt like an obvious point to press on. And then eventually I just went well, look, if no one else is gonna go out and provide a better solution to the Canadian investor, let me do it. And that was the origination of Nest Wealth. Now, having an idea and having a business are two very different things. And the idea sometimes is hard to execute, but really, really is a good idea that can make money. And the idea sometimes can be executed on but it's one of those old kind of clichés that we're going to lose money on every client but make it up on scale. And that's what I think everybody has found out about this. We're going to go direct to the client with a challenge or brand whether it's Wealthfront or Betterment or Wealthsimple up here in Canada, it's a really ridiculously hard business to make any money in and your cost of customer acquisition was we saw this very early on it was not coming down to where people anticipated it was going to. To get scale, lifetime value was getting reduced. And so by 2015 16, we saw VCs pouring lots of money into the industry. And we started getting calls from the very same banks that we had kind of approached and wealth management firms and saying, look, we have digital, are you interested in maybe white labeling? And they were like, okay, we get it. Now, we're kind of interested. And I had run a VC back business from 2005 to 2012 that lived and died by the next round, and we had spent money on ridiculous things. And in hindsight, you wake up and you sweat over and you're like, how do we do that and I didn't want to run another business that couldn't make money on its own two feet. And I just didn't see the path to get there by being a retail challenger brand, but we saw a massive opportunity in trying to improve the industry from the inside out, and trying to give these firms the capacity to scale and service their clients better and provide a better experience. And truthfully, the calls we were getting from some of the largest financial institutions in Canada, demonstrated that they really had no idea how to start down this path or the tools to roll it out quickly. And so we said, let's do that. We think that's a better opportunity, much lower cost, customer acquisition, much higher lifetime value. And we're still satisfying our mission of expanding this industry to people that wouldn't have access to advice before by reducing the cost of the firm's where they're going anyway.
Richard Walker 11:37
So you're still achieving the customer experience you want, but you found a business model to support it.
Randy Cass 11:42
Yeah, and look, our customer experience for the end investor, is you ended up in a better financial position than you would have otherwise. And in most cases, the studies demonstrate that if they have access to professional advice, and if they have access to an advisor, they end up better off financially to a multiple of those that don't. You could try and provide them that advice yourself, which we demonstrate different kinds of 2014 2016, really, really tough and costly, and hard to scale. Or you could say, let's go to where they are, provide the tools to the industry that allows them to lower their costs, get better experiences to the advisors in the firms that can then pass on the ability for the end investors who haven't had access to the industry and haven't had access to professional advice and haven't had access to scale, kind of the number of touch points with their advisors. Let's make sure that the technology we provide accomplishes that. And that was when we put those two points together, hey, we can accomplish this by doing this. That's when things begin to take off for us.
Richard Walker 12:50
So you've gone through something that I think a lot of entrepreneurs go through, and that's you called it a pivot. It's figuring out your best product market fit. And I'm wondering, I mean, at this point, 2015, you're an accomplished, experienced and savvy business person, you probably have enough wherewithal within to figure these things out. But did you have a mentor or customer or an advisor that said, hey, you need to wake up and change what you guys are doing, that was a catalyst for this?
Randy Cass 13:15
For me, two things. One, the first catalyst was one of our competitors came out and announced that they had just raised $30 million. And I had been part of that with my first company raising a lot spending a lot. And to me, it was just like, I don't want to do this, I don't want to do a race to the bottom of the pricing. I don't want to be the lowest-cost provider. I don't want to play this game because it just it made me nauseous. Some mornings when I was running my first company, the rate at which we were burning and generating as I don't want to do that. So it was a bit of relying on past experience. And then the second part of that was the ability to recognize the opportunity that knocks on your door. When the firms in the industry started calling us on the back of that raise and they're like, okay, we get it. Digital as a distribution channel is here to stay if the firm's willing to put 30 million into one of these companies are willing to put 100 million in or 150 million. So from our point of view, the firm's were now saying and we didn't have this before this day, we need to now react to the reality of the situation. And it was jumping on that inflection point and recognizing it for what it was that there was a new data point that made all these firms all these banks and wealth management companies and insurance companies that were really challenging to talk to before now needing us in a way they hadn't before. So it wasn't an individual there was no one knocking on our door. In fact, it was the opposite. Everybody was still saying Robo advisors are here to stay in. They're going to demolish the industry. It was tuning that out and saying, ah-ah, what is probably going to win is going to be a combination of the old guard and new technology. And we see the opportunity here. So it was, I have found in being CEO of this company versus first coverage, which was the first one, there's a lot more pattern recognition, there's a lot more oh, yeah, I've seen this before. And it wasn't exactly like this. But it was kind of like this. And you remember, in your first company, everything seems like a silver bullet, like everything, if we get that we're going to succeed overnight.
Richard Walker 15:35
Don't you love that analysis? If this happens, then this will be perfect.
Randy Cass 15:40
And you learn that's never the case, it always leads to the next challenge that you have to overcome. But it's also never the case in your first company, you think, if that happens, we're toast. That's never the case. I mean, there are certain things ethical breaches kind of, there are certain things that can demolish you overnight. But in most cases, you can figure your way out of multiple business problems. So this time around, and you can't really teach it. But the message I'll take is like every experience you go through, whether it's a failure or success, whether it lasts a week, a day or an hour, it's in your head somewhere, that's going to make the next time you see something to look like that easier to adjust to. And just to finish, like, there was a point in first coverage, where and we ran that company, we started in 2005, we ran it 2012 and then sold it. So we went right through that 2007, eight, nine bubble, and the crisis, the financial crisis. And I remember 2006 Seven, we were kind of soaring up to the right, like growth was great clients were great. We were doing the growth that we needed to do to raise the next round, and everything was going great. And then we hit the start of the financial crisis. And we honestly went to quarters without a sale. And what I learned then, is that sometimes really basic facts kind of camouflage themselves, if you don't want to kind of honor the authenticity of it. And we kept thinking we're not selling because of the financial crisis that's going on. And what it really was does that we weren't selling because we had nailed all the early adopters. And now it was a much harder sell to the next stage of buyer. And we didn't recognize the fact because we didn't look hard enough at it. So in 2015 16, when it was, we don't think that this is really going to be the path to success. It was benefiting from knowing that, you got to recognize the authenticity of the data. And you've got to come to grips with it. And you got to say, if we don't think the economics are there to make this now, how long are we going to keep beating our head against a wall to try and change? And so that recognition that the data is there, and you got to stare at it, and you can't try and adjust it to be something it's not that helped us a lot in 2016 as well.
Richard Walker 18:16
That is something I believe about great leadership is transparency with yourself, honesty, being able to look at the facts for what they are not sugarcoating it to yourself not just giving yourself praise because you're still in existence. And this is why I think it's really interesting to talk about the pivot. We go back to that point when you guys said, okay, we're going to switch over to enterprise-style customers. I mean, how did you win your first customer? What was the biggest challenge you faced to get over that hurdle? Switching from one thing to another?
Randy Cass 18:48
Well, we did a couple things. One, we were fortunate we had a tailwind at our back. When you're starting out the difference between having a tailwind and a headwind is night and day, right? It is so much easier to get that first customer when they are eager and anxious to adopt change versus you having to educate and convince and you're always going to have to educate and convince beyond the early adopters. But if you can identify, ah, they are feeling like the pressure is on them to find a solution right now. That headwind versus tailwind, it can make all the difference. And so we had a tailwind because there was a lot of VC money going into the space firms were nervous, firms were trying to figure this out. And so that was the context we were up against. We also made a couple of really smart decisions that we knew were probably going to differentiate ourselves from others that were trying to get into the space. One is we had seen a lot of companies in the states already start to make this transition they had started off as B to C sigfig. That there were so many of them at the time, but sigfig is the one that sticks to my head for a reason, and others that had tried to make this transition. And they tried to bring a retail tech stack to an enterprise solution. And it was so challenging. And even if it wasn't challenging to close a deal, it was challenging to actually implement something because of security gaps or things that enterprises needed that retail investors definitely wouldn't need. And so we made the decision, we're going to go back, and we're going to rebuild everything. So all the source code was new. And so we're building an enterprise-grade, enterprise-grade product here. And we need to be able to talk about it. And we need to be able to think about it in that way. So we really didn't try, we use the retail part of the business to generate revenue, and to keep us on the front pages of the business sections and to be invited to conferences and talk about it. But that was funding the pivot. So we didn't go dark, or cut off our nose to spite our face and saying we want nothing to do with that part of the business, we kept it out there because it kept us on the front pages of all the articles that were going on. And the reason all those institutions called us was because back in 2015, we were the only other name that they knew of besides a company that raises money. And so they were calling the next person on their Rolodex under digital wealth. And it was us. So we kept ourselves front and center, we spoke at every conference we could get to, we reached out to everybody that had indicated any interest. And we put a pretty compelling case of you guys need to address this somehow, let's just come in and talk right. No pressure, no kind of, we'll tell you what we're seeing. Let's just come in and talk. And between those three things, you also do some things that are not scalable. You reach a client that's like, look, we want to use you, at the time we were 13 or 14 people, we want to use you, we want you to build the technology for this core part of our financial institution. But we also want to own a piece of you. And to me, that was you can't keep repeating that. But if that's the difference between getting your first point and not, you got to be open to stuff like that. And we had turned down VC money, we had turned down big rounds, we had more or less bootstrapped ourselves up to this point. And then we have our first large financial institution come in and say, we choose you. But we also want to choose you from A, we think you've got something here. And as you scale with us and others, we want to be able to participate in the economics of that. That is how you kind of nail your first client, right. And so we had that. And we had a couple other institutions that we just gave decent first deals to deals that I would never do today. But decent first deals too, because it's so much more important to actually have users at that stage, than to have the margins you think you're going to need down the road.
Richard Walker 23:07
So true. I think you guys did something that a lot of companies don't do and they pivot, they have to reinvent themselves. You said it so well. When you take a retail product to enterprise and try to make it fit, that's not necessarily the same customer experience that you need. And you can't satisfy that customer that way. And I've seen so many companies go down that road. I want to ask you about a customer. Because you have obviously you're solving problems, you've won customers. Is there a customer that stands out to you don't have to name names, per se, if unless you want to, that you help them win. And what was their outcome that was such a big win for them?
Randy Cass 23:44
Look, I mean, yes, there are some great stories that we have been fortunate to help customers achieve and be a part of. I'll tell you one in a second. But one of the ways that we know we're doing our job besides the KPI and the metrics of usage and assets on the platform, the rest of it is we sign long-term deals, four or five-year deals, and at the end of those four or five-year deals, you kind of think things are going well. But when they resigned for another five-year deal at a higher price point, you're like alright, clearly we're adding significant value here. And so we had one client in the early days, it was actually the very first contract we signed it was signed before the bank invested in, so this was kind of a data point that the bank turned to and said, oh, you guys are really onto something here. And they were a firm that manages the wealth for a particular demographic across the country, mainly an occupation that they service with a great degree of specialty. They own the market at like 80 90% of his professions, well 10s of billions of dollars if not more in AUM. And the problem they had was that in their mandate, they also had the commitment to service, the partners of this profession and the kids in this profession. And those were obviously much lower balanced accounts when it came to how much money they had to invest. And they were not being able to kind of economically service them in the way that they wanted to, without losing a lot of money. And so when they looked at the digitization of the entire wealth management process that our solutions were providing from, how do you onboard someone? How do you do a KYC? How do you open an account? How do you open additional account? How do you transfer money, all these pain points? They said, can you help solve this problem for us? And when we were deployed, and they did a study, they went from knowing that they needed 250,000, in an account to break even when it came to servicing that account over the course of the year to needing 35,000 in the account to break even, which opened up the whole bottom end of the market they were looking for. Now they can take on young adults and partners of the people that they were servicing within the profession and grow them and service them and not be impacted or penalized from an economic point of view of doing that. And that was what they wanted, they wanted to expand the services to more people that they were offering. But they wanted to do it in a way that was scalable and reproducible, that wouldn't harm the business. So that for us, was just a huge win for them and a huge win for our technology as well.
Richard Walker 26:45
So you essentially help them open up an entire new customer base and market because your product made them so much more efficient, and effective with the services they're providing.
Randy Cass 26:56
Yeah, 100%. Yeah, it really is, if you go back to our mission, our mission is to give access to as many people as possible to better financial futures. And to do that, you got to get them into this industry where advice is being provided. That is exactly the reality and the realization of what we're trying to do, if you can take everybody now that has an asset balance, look, it's not zero. But if you can take everybody now that has an asset balance between 35,000 to 250,000, and you couldn't do that before and you can do it with the same resource count and the same bodies and the same understanding of, we need to provide them with this level of value, that is a win for us. As a company, we feel like we're living true to our mission. And for the firm that using our technology.
Richard Walker 27:45
Outstanding, man. So you mentioned KPIs and metrics. Real quickly, do you just have a couple that you pay attention to that help you know you're serving your customers well?
Randy Cass 27:55
Look, I mean, it's pretty simple for us. If they're continuing to pay us and renew the contract, we feel like that's the baseline, that's a great metric. We know they're there. Beyond that, we pay a lot of attention to usage, if they are continuing to use us, and we're seeing our usage expand within the organization. And they're putting on more accounts on a daily basis. Like right now, as we record this, I don't know when it's going to be released. But it's early January, in Canada, that something called RSP season, which is you have two months to make your tax-deductible donations to your retirement funds. And so this is where it's like, Christmas shopping season for the banks and financial and wealth management institutions. And we don't see usage go up every day until kind of February 28 or March 1, that means we're probably not doing what we need to be doing. So we'll pay a lot of attention to usage, we'll pay a lot of attention to obviously quality. So we monitor kind of are there bugs, where are they? How quickly are we dealing with them? And our stage like, yes. Like I said, we're 100 people and we've got kind of eight figures in recurring revenue, to the left of the decimal point. So we're in the kind of the 10s of millions of recurring revenue, but it's still very basic, it's are they using it? Are they paying us to use it, which means that they're getting the value that exceeds what we're charging them? And are we seeing the quality of our solutions increase over time with them? That's kind of as basic as it gets.
Richard Walker 29:42
That's really good. We look at usage ourselves, are people generating forms. I mean, that's what matters. If they're not generating forms, they're not getting value from our products. It's pretty straightforward. You've mentioned through this conversation, a lot of different lessons, and maybe even secrets that you've learned along the way. If you were to summarize one of them or give us a new one, what is one key lesson you've learned that you could share with others, other business leaders to help them win more customers?
Randy Cass 30:07
And I think everybody is kind of impressed at the altar of visionaries like Steve Jobs, who kind of it's like, don't ask people what they need, because they don't know they wouldn't said faster horses. We've all heard those Henry Ford stories and the other things. But the truth is, in most cases, they do know what they need. And I have discovered that the odds of getting it right, without engaging in detailed, multiple conversations with your user base, or potential user base is so small, and I constantly try to make sure that we're not trying to ivory tower solutions and hearing guests. What's the next thing we think they're going to need? And why do we think, I asked our people this all the time? Why do we think we're going to come up with a better solution internally, than the one that talking to people and having them tell us their pai