The unraveling of fintech darling Vise
that they expected Vise would soon be managing $1 billion of AUM, and eventually a"significant" portion of $10 billion more they had in the pipeline. Vasavada also assured multiple potential hires that Vise was close to having $1 billion of AUM"in the bag," one former employee said.showed Vise was only managing $4 million.
Cautious RIAs are also often happy to test new tech with an account or two to"look relevant to their clients," Rasheed Hammouda, the founder of Bridge Financial Technology, a fintech targeting RIAs, said. But to convince them to use it for their whole book of assets, a startup has to"prove value" first — and if it doesn't, many advisors are unlikely to formally drop it and"go through the hassle of removing that one account" from the tech platform, he said.
Occasionally, salespeople invited their CEO to sales calls. But Vasavada soon gained a reputation for canceling or showing up late, multiple sources said. One former employee said he witnessed the young CEO more than once looking at his phone during client conversations. "You know, people were doing video calls with 65-year-old RIAs wearing hoodies," one former employee said."The understanding of the client was totally nonexistent."
Then Vise lost its largest client, Manhattan West, which had about $100 million in assets on the platform. Manhattan West left because the product didn't have access to more sophisticated assets like fixed income and alternatives in portfolios, Mehrotra told Insider. The initial product used a statistical technique called"k-means clustering" for choosing investments, which involves grouping stocks based on data such as a company's price-to-earnings ratio, then highlighting the clusters that have the highest returns based on an individual's risk tolerance.
"You could put the same inputs in, run it or build your portfolio, do it again 20 minutes later with the same stuff, and you'd get something totally different," one person said. Additionally, some of the automated features were not yet available, leaving employees to execute those tasks manually, several former employees and one current one said.
As the engineering team toiled to revise the product, members asked to hold pizza-and-coding nights, a hallmark of any scrappy startup. Instead, Vasavada often took them for extravagant team dinners at trendy New York restaurants, ordering thousands of dollars of food on the company card, two former employees said.
Vasavada quietly told an employee that the new target was just a test for the sales team. He claimed to have $700 million in assets lined up as a backup, ready to be onboarded onto the platform with just a phone call. Vise's founders were celebrated in the media after their early fundraising success, including being named to Insider's 2020 list of 10 break-out wealth tech startups. Mehrotra and Vasavada are pictured with the founders of Harness Wealth and Trade Republic.In May, after so much of the sales force was let go, the founders seemed ready for some self-analysis.
In a Zoom interview with Insider, the cofounders sat in an empty white room, Vasavada in his classic all-black shirt and vest, Mehrotra in a sporty, sky-blue button-down. During the call they pondered the Silicon Valley-style temptations they face as young cofounders.
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