We had an engaging conversation with Todd Billings from USDV Capital about how innovation and technology drive change in private markets.
In the second part of our conversation, we discussed USDV’s approach to investor experience and the factors that went into their tech stack.
Don’t forget to watch part one, where we talked about how USDV Capital uses technology to combine loans from several different service providers.
Katipult: How much of your decision-making is focused on the end investor?
Todd Billings: A lot of it comes back to the path that someone is coming from. I was a service provider giving advice and helping clients make better decisions that had deal flow because they were extremely wealthy and connected.
Because of that, I had the investors' trust, which allowed me to not only have the opportunity but also to work through mistakes and learn together.
I had a very transparent, fluid relationship where I was a trusted advisor and where I treated their money as if it were my own capital. That differs from a traditional private equity or hedge fund that may get money from institutional relationships.
So when I sit down and report to them about how the performance is going, I don’t just focus on the numbers on a chart but also have a very personal conversation about the investments that I have made, including being honest about those that have worked out, and those that haven’t.
There's a real emotional connection to that. And so my focus has been on providing value to investors, and then deals have been secondary to that business model for us.
Katipult: You mentioned how your tech is stacking up. Do you have any thoughts about the efficiency this provides outside of the changing human capital requirements that you have?
Todd Billings: When I look at technology in our space, it comes back to databases and reporting tools and being able to glean information from data. But the key to any technology or tool comes back to the source of the information.
You only get good outputs if you put good data into a system. And so, as much as I'm a massive fan of technology, many times as entrepreneurs, we're sold the shiny new box. It's very easy to get enamoured by some beautiful-looking tool or software, but it's only meaningful if the data going in is good and the data coming out of it is good.
At one point, we were trying to improve our database systems and spent a quarter of a million dollars trying to build out Salesforce.
Ultimately we didn't have adoption from our employees, so not only was there this issue of data quality, but because of the behaviours of our staff and our vendors, we couldn’t utilize that data because the efficiencies come from the collaboration that happens within a network of systems and tools and people.
If we can't get user adoption, it doesn't matter how good the system is; if there is only one user in the network, it will fail. So being mindful of the team and what we can adopt is critical.
Katipult: That is right and fits into something you mentioned in part 1 about the importance of leadership. One of the ways that we encourage our customers to think about our product is to identify the problems we could be solving in the real world and, from there, understand the best solution.
What are the current kind of problems that you tend to face?
Todd Billings: The main problems usually come from new products, investments, or vendors. The biggest challenges were, in the beginning, building systems that allow you to improve specific areas.
For example, we built our own database using a Software-as-a-Service system which was an intensive project. But then, if we wanted to change an application form or a new servicer, those were easy to add because we had a strong foundation.
I think you have to be a little mindful of what tech you will bring in-house versus building more of an open architecture system that allows you to change out vendors.
We must be very thoughtful about being tied to a tech platform, and what do I want to have a little flexibility in?
It is time-consuming to build a payment gateway, so it is best to tie into Stripe or another tech solution which makes it easy for me to get the data I need and provides convenience for the end-user on the other side.
I've taken an approach of focusing on investors and other stakeholders in our business. We have people borrowing money, and I need to consider their experience. What's their experience going to be? And what is a critical element?
That's where the architecture part comes in. One thing I've learned is that you must be willing to adapt. And the more you give yourself that flexibility, the more it allows you to be nimble.
Katipult: How much do you focus on the user experience and how do you combine different services and products?
Todd Billings: I think the thing that we fail to do as entrepreneurs is test the market more. We tend to go with our thoughts of what people want versus what they do or need, so having a platform that allows change quickly means we can adapt to what is required.
When I first was thinking about investor reporting, I thought we needed these great systems to give our investors a portal to log into and see their investments, payouts or distributions.
While that could be extremely important, in my particular example, I had three investors, and one was a hundred-million-dollar investor. The other two were billionaire investors who would never log into a system. Instead, they wanted to call me on the phone and update them about what was going on with their portfolio or for me to send them a custom report that showed them precisely what they cared about.
So for our investor group, which was three investors, this tech solution would have wasted time, effort, and energy.
Although I started down that path, it was good that we caught that early and pivoted. We ended up spending a lot more time realizing we have over 9,300 loans and we should focus on having much more control over the borrowers using the system because they owe us money.
Now, we still want it to be user-friendly, and we want them to be able to pay online with a credit card or checking account. But those people were different stakeholders that we could encourage adoption more than our three investors who fund the business.
Watch part three of our conversation when we discuss future technology trends.
