InvestorForce Inc. President and CEO Jim Morrissey's career as a marketer has taken him to several household-name employers including Procter & Gamble Co., Coca-Cola Co. and Morgan Stanley Investment Management. He received an MBA from the Wharton School at the University of Pennsylvania, then was one of the founders of The Baker Street Bread Co. in the early 1990s. The Philadelphia company was once rated by Bon Appetit magazine as one of the country's top bread shops.
In 1999, following his time at Morgan Stanley, Mr. Morrissey and several partners started InvestorForce. The goal was providing consultants and money managers with a database and other products to assist them with such tasks such as manager searches. He spoke with Mike Kennedy about the company's first few years.
Q What in your career led you to where you are now?
A What's reflected in all the things I've done is an entrepreneurial spirit and the desire to create positive change. When I came into the institutional asset management business through Morgan Stanley, I realized there was a tremendous opportunity to create greater efficiency in the industry. I think what I will always remember is when I first came to the firm, someone said, "Oh, I'm in marketing," and I said, "OK, tell me what you do?" And they really described a sales function. They said, `I work a lot with clients and raise assets for the firm,' and I said, "That sounds an awful lot like sales."
Marketing is all about building the brand, building the product, driving market share, doing all the competitive analysis of those products so that you can drive the business. When I looked at the asset management business, there was little in the way of that classic marketing function within the institutional business. So, I brought that thinking to Morgan Stanley and, ultimately, in that same spirit was very intrigued with the Internet and technology and how technology could create much greater efficiency for the stakeholders in this industry.
Q In the beginning, didn't many people in the industry think of InvestorForce as a consultant?
A In '99, we had dialogue going with a majority of the large consulting firms. We ultimately bought a consulting firm (Asset Strategy Group) primarily for their web-enabled database and the intellectual capital of the consultants. But what we really leveraged through that acquisition was the ability to sit side-by-side with senior consultants to build a technology that has created much greater automation and efficiency in the day-to-day job of a consultant. It was never our intention to acquire a consulting firm to enter the consulting business.
Q What is the most common misperception about your company?
A I think there are two. One, we are competing with a consultant. We are a technology company that is focusing all of its energies on working with consultants in any way that they want to leverage our technology. I think the second is (whether) InvestorForce is still going to be around. I think we have demonstrated that we are going to be here and we are making great progress in the marketplace and great penetration. We have a strong group of investors and a very strong balance sheet.
Q What's so special about Altvest, the hedge fund database InvestorForce acquired in 2000?
A I think the unique thing about Altvest is that we have on one platform world-class integrated analytics and data. I think there are other players out there that just have the data or the analytics and therefore you need to deal with two vendors. But we combine the data and analytics all on one platform. It fits front and center with the traditional and long-only managers as well. So off one platform you have access to all the traditional money managers and hedge fund managers with integrated analytics across both.
Q Have the number of hedge fund searches through InvestorForce increased?
A We're starting to see a pickup. We've closed three hedge fund-of-funds searches on our platform in the last two months. We see search activity going on right now. Having said that, I feel the industry is using our platform for the data and analytics piece as they are listening more to their clients and developing their own strategies in terms of how to invest in this class. It is a situation where they are still in the strategy mode.
Q How are you positioned against potential competitors?
A I think there are a number of things that have created an environment that makes it unique, (including) the acquisition of Asset Strategy so that we could have that proprietary web-enabled database serve as the hub, and the technology that we've built around that database. Also, the acquisition of Altvest enabled us to cut across the traditional and hedge fund arena in data and to wrap the technology solutions around both. In conjunction with that ability, we raised a significant amount of capital and have very good strategic partners that have enabled us to build something that's going to be really difficult to replicate.
Q We know what InvestorForce can do now. What features will we see in 2004? 2007? 2012?
A I think that staying more focused in terms of our product offering, but going deeper in terms of the robustness of what we are providing, is really our strategy going forward. We are not looking to be all things to all people. One of the lessons I've learned over the past several years is to really stay focused and to build depth of your products such that you really become a partner with your clients and the engine that drives their business more efficiently. Over the next several years, (the focus) is going to be, `What do we need to do to round out our product offering from a technology perspective that will really meet the needs of this consultant channel from a complete workflow perspective?'
Q In April 2001, InvestorForce had close to 140 employees. Now, you're at 70. What's going on?
A We went through a reduction primarily because we had spent the prior two years building the technology and the platform. We had, at our peak, 65 engineers that were coding and building the technology you see today. When we looked at it at that point, we had built out a good piece of this platform. We needed to really shift our energies on getting the message out and focus more on distribution.
We made a management decision in April last year to say we need to make sure the marketplace catches up to what we've built and created from a technology perspective. In some ways I felt that we'd built a Cadillac and the marketplace was still riding a bike, as it related to leveraging the entire benefits of what we'd created. At that time, we scaled back. We still have a deep technology team, but we did not want to continue to build so far in front of where the marketplace was in adopting our product.
Jim Morrissey, chief executive officer, president, InvestorForce Inc.
Number of searches (Year to date): 147
dollar value of searches: $8.4 billion
% of searches conducted by consultants and/or advisers: 81%
no. of managers in if's traditional manager database: 808
no. of hedge funds and hedge funds of funds in altvest database: 1,211
no. of registered users: 18,000+