We recently hosted FTV’s Strategic Advisory Board meeting, which brings together a group of executives and recognized leaders that are at the heart of our Global Partner Network® and represent some of the world’s foremost financial services firms and Fortune 500 enterprises. This annual spring meeting, hosted in New York and now 20+ years running, is always a welcome opportunity to take stock of critical market trends and exchange ideas on technology innovation. It’s also a chance to nurture relationships with some of FTV’s most important advisors and facilitate tangible business opportunities for their companies given the vast array of enterprise solutions that make up the FTV portfolio.
Kicking off this year’s meeting, we were delighted to have Bob Heller, former governor of the Federal Reserve Board and a longtime FTV strategic advisor, share his insights on current monetary policy and ideas on what’s in store for the global economy. With inflation at its highest level since the early 1980s, a tightening labor market and a war in Europe, Bob’s analysis provoked lots of discussion and food for thought on what we can expect in the next 12 to 24 months.
While it was a sobering look at reality, it reinforces the importance of FTV’s consistent and disciplined strategy, and the critical role of our advisors in helping us identify the biggest pain points across the enterprise and the companies and solutions best poised to address them. Irrespective of periods of dislocation and market contractions – things we’ve lived through in our 24-year history – we continue to focus on investing in the highest-quality companies where our thematic approach to sourcing investment opportunities, our deep sector expertise and our Global Partner Network help us. At the same time, our advisors get direct exposure to FTV domain experts and the chance to network with relevant peers to explore commercial solutions and topical themes.
Our meeting traversed numerous topics affecting the enterprise with varying perspectives to consider, but here are some of the key takeaways:
#1 To prepare for a second wave of supply chain disruption, engage your third parties and understand their financial health.
Since World War II, no event has been as disruptive to global networks as the Covid pandemic. Approximately two-thirds of supply chain executives are constantly responding to impact disruptions. The war in Ukraine and increasing interest rates are having further negative effects. Almost every company believes something material will change in how they do their business.
As James Gellert, CEO of FTV portfolio company RapidRatings, pointed out, over the last four years we’ve seen an increase in smaller companies (<$50 million in revenue) that appear strong given they’re flush with cash but in reality have suffered a degradation of operating performance. These are ticking bombs, regardless of whether or not there’s a recession. As capital dries up these providers will start to default, which will trigger the second wave of supply chain disruption.
To prepare for and combat negative effects, engagement with your suppliers is critical – the more understanding you have of your suppliers’ financial health – i.e., their financial viability, operational efficiency and resilience – the more perspective you will also have into cyber risk, financial risk, R&D trajectory, technology roadmap and more.
#2 As we move closer to a Web 3.0 world, trust and privacy are all about putting consent and control in the hands of individuals.
Blake Hall, founder and CEO of FTV portfolio company ID.me, spoke about the concept of self-sovereign identity – the idea that individuals, not corporations, are in control of their data and should agree to a clear set of rules around how their data is shared and used. He laid out three specific principles to achieve this:
- Give users control of data and access to it
- Ensure criminals cannot steal identity
- Develop equity feedback loops and safety nets to ensure human agents and technology aren’t discriminating
Yang Cheung, chief product officer and co-founder of One Creation shared that while standardizing trust is difficult, it greatly increases the more transparency you have around how and why data is used. If consumers have skin in the game, they naturally feel more empowered to share data in order to protect themselves from things like fraud and identity loss.
Executives from several large financial institutions emphatically agreed that data belongs to the individual. Blake summed it up well when he said: “Trust is really about having aligned expectations in a specific context.”
#3 As the wealth gap in developed economies further widens, the imperative to democratize investing will become increasingly urgent.
Historically, financial advice and investing have only been available to high-income individuals, but technology is democratizing access and increasing efficiency in the wealth management market. We discussed a few things that can aid this development:
- Financial literacy and nudging: Lack of financial education and know-how keeps many people away from investing and saving. Companies that help develop financial acumen and nudge people into investing and saving can increase participation.
- Debt management: 80 percent of Americans are in debt. Student loans, high housing costs and credit card debt are heavy burdens for many. Opportunities to combat the debt burden can be found in loan management platforms and alternative payment options, as well as innovation in BNPL.
- Tools for wealth managers: While only one third of wealth managers in North America are scaling AI across their businesses, technology adoption and innovation will play a critical role in reducing customer acquisition costs and improving marketing spend.
#4 As enterprises of all stripes endure the war for talent and mounting economic pressures, outsourcing to third parties becomes more appealing but needs to be balanced with continuity of culture.
As organizations everywhere struggle to retain and attract talent, it’s becoming more attractive to lean on third parties to help fill gaps. This sentiment was shared by nearly all of our advisors. But they also raised the point that it’s important to think through the types of roles that make sense to outsource versus those that should remain in-house in order to maintain the right leadership and culture within an organization.
For instance, software and infrastructure development roles are easier to outsource and allow an organization to be more agile and nimble; whereas architect roles are better off remaining in-house for continuity of leadership and execution. Similarly, some participants talked about how they’re beginning to work more frequently with specialized third parties versus large consultancies to achieve greater leverage more efficiently. Indeed, we’re witnessing this rush for specialized labor first-hand with our portfolio company Lean Solutions Group, which is a leading nearshore service provider delivering high-quality business solutions in staffing, IT, marketing and sales for U.S.-based companies primarily in the transportation and logistics (T&L) sectors and has been growing more than 100 percent each year.
At the same time, roundtable participants emphatically agreed that – between juggling outsourced labor, remote work and heated competition for talent – it’s important to provide a physical workplace that’s a desirable destination and hub for collaboration and culture-building, while still giving employees flexibility to work remotely. This might mean continuing to offer in-office perks like free meals and elevated office amenities, or offering mental health benefits, such as employee wellness days or reimbursement for various mental health services.
These are just some of the takeaways from our most recent Strategic Advisory Board meeting, and as always, we came away with many new insights and interesting questions to consider. We continue to be incredibly grateful that these forums and our ongoing interactions with our advisors provide fertile ground to discuss innovation trends and uncover new ways of collaborating between large enterprises and startups.
If you’re interested in sharing ideas with us around the latest in financial services and enterprise technology, meeting some of our portfolio companies and/or interacting with other executives in our Global Partner Network, please get in touch – we’d love to hear from you.
