46 | Raghav Kapoor, Disrupting Investment Research with Smartkarma

My guest today is Raghav Kapoor (@Ragkap), CEO & Co-Founder at Smartkarma.

As Smartkarma CEO, Raghav drives product strategy, oversees technology development, and maintains a hands-on approach with the company’s day-to-day operations. With Smartkarma, Raghav set out to reinvent how investment research is sourced, priced, and distributed.

In today’s conversation, we cover the startup story of Smartkarma, the challenges of being an investment research platform, and the future.

I hope you enjoy my conversation with Raghav Kapoor. https://www.youtube.com/watch?v=OpSky3aNfJ8&feature=youtu.be

Show Notes:

[00:00:31] – [First question] – Raghav’s background and Smartkarma today
[00:08:41] – Difference’s in starting Smartkarma compared to Raghav’s first startup
[00:10:36] – Early days of Smartkarma and idea prototyping
[00:12:38] – Attracting and retaining insight providers
[00:17:52] – How to ensure merit-based compensation doesn’t fall prey to engagement bait
[00:22:42] – Why does Smartkarma not require exclusivity of content?
[00:25:05] – The challenges of operating in a field with large legacy players
[00:27:11] – How to balance investors, insight providers, and corporate stakeholders
[00:31:03] – Why is Smartkarma based in Singapore?
[00:33:13] – Lessons from expansion into other markets
[00:36:22] – Plans for Smartkarma going forward?
[00:39:31] – Anything else about Smartkarma we haven’t covered?

Connect with Raghav:

Listen to this episode on Apple PodcastsSpotifyStitcherCastboxGoogle Podcasts, or on your favourite podcast platform.


[0:00:31] Kalani Scarrott: Okay, how are you? My guest today is Raghav Kapoor, CEO and co-founder of Smartkarma. As CEO, Raghav drives product strategy overseas tech development and maintains a hands-on approach in the company’s day to day operations with Smartkarma. Overall, the plan is to set out to reinvent how investment research is sourced, priced and distributed For today’s conversation, we cover the startup story of Smartkarma, the challenges of being an investment research platform and what the future may look like for them. So I learned a tonne. You’re going to learn a tonne. This episode is a banger, please enjoy my conversation with Raghav Kapoor. So thank you so much for coming on today. And maybe just for guests who might be new to you and your work and for some clarification before we go deep into the weeds. Could you explain a bit about both your background and then where Smartkarma is today because I think hopefully during the conversation will fill in the middle there. So yeah,

[0:01:27] Raghav Kapoor: so my background is very confused. I grew up in India until I was 15, 16 years old, when I was in boarding school in Singapore, went to university in the UK grad school in the U. S, worked in Europe for a while, and then around 2006, I sort of came back to Asia in between Singapore and Hong Kong and sort of started building most of my career here in Asia. More in terms of sort of my education. I’m a math and computer science major. I enjoyed all the non-CS-ey stuff I was into numerical analysis optimisation, Uh, I did my dissertation on option pricing, so I was very much on the applied math, but sort of more theoretical side of things. I started off my career as a management consultant with a firm called Oliver Wyman in London, So I did the usual two-year track with them, and I was starting to miss home in Asia and friends and so forth. And I wanted to move back here and around the same time as I was making these applications while sitting in London, you know, this was the booming mid-2000s. Hedge funds were high during the markets were strong. So I sent in my CVS to a few hedge funds in Asia just through their website contact us links, which, of course, resulted in nothing. But my CVS also went through to a few investment banks, and I ended up with a job with city, uh, covering pan Asian equities and also their global hedge fund clients. So that was my real sort of kick-off in finance at a large bank. Did that for a few years. And then when GFC came, you know, City suddenly became a very, very different place. A lot of the entrepreneurial minds left. There was sort of a civil service mentality to a certain extent. And, you know, I knew there was time for me to depart and, you know, start something now. I did my grad school at Stanford, and if you don’t do a start-up, you know you’ve not started at Stanford, basically. So I left in early on nine. And with a few other partners, we started a boutique brokerage firm, uh, covering fund managers who were interested in really solid research-driven input and making money in Asian markets. Basically, that was a phenomenal experience. We grew extremely quickly. Markets recovered all of that. And two years later, we actually exit the business. And for me, I think I joined that film when I was 25 26 kind of saw it scale very rapidly, saw the exit kind of was part of the DD team and discussions. All of that was really interesting for me. Along the way, we even Aqua hired another team so brilliant experience at a good, you know, fairly relatively young stage in my career. And then, I had to work with the new owners of the business, you know, growing it for they bolted on certain businesses. I also saw how emanate transactions don’t always deliver the results that they are set out to deliver. So that side and around 2014, you know, when my own out obligations were well done and dusted. I started thinking about what’s the next chapter for me? The first thought was to start a family office, Um, for myself and my parents in Singapore. Singapore, you know, as you would have read, is becoming sort of the destination for family offices now. But, you know, about a month into it, I realised that I’m going to be brought out of my mind running a family office because, you know, you don’t do much most of the time, So I kind of, you know, went back to my roots, which was technology. Um, you know, the multiplier effect that technology brings to finance and also thinking about some of the structural issues that we’re facing the sell side by side business models. And we felt that, you know, this was sort of right around the time of Anthony Jenkins and Barclays, and there was talks about the death of the universal banking model. Basically, what that meant was banks have become very large, very bloated. They were trying to do everything, and that was just not gonna work. You know, there’s all sorts of stewardship risk when you’re running a very complex business and the idea was that more and more banks will need to figure out what they want to really specialise in and focus on those services, and other players will focus on other services. And I thought that, you know, around that time we had a very strong belief that no one institution can have a Germany on all the talent, all the expertise. You know, you can’t confine all the expertise to the glass walls of an investment bank as we’re calling it. So we felt that there would be a very special place for a decentralised research network, which is institutional quality, extremely compliant with, you know, all the regulatory needs. But at the same time, you know, brought a shared services platform to analysts who wanted to build and scale their own research businesses and have the same distribution, if not better distribution, than what the banks offered to the top analysts. And that’s where the area of Smartkarma came about. Uh, and I also had a very selfish motivation here because I felt that there was a fragmentation of assets happening as well, you know, instead of giving money to a fund more and more people wanted to sort of dabble and manage their own money. They were relatively self directed, but they didn’t have good tools available. They didn’t have good sources of information available, and a lot of players were trying to focus on the data layer. You know, how can we build good charting systems? And, you know, everyone talks about disrupting Bloomberg like there was a lot of all of that happening. But the real white space to me was the layer on top, which is the insight layer. What do you do with that data? Uh, because data would get commoditised very quickly. It was obvious. But it’s the insight layer where I think you can add a lot of value. And that’s how Smartkarma started. Sorry, Very long introduction,

[0:07:32] Kalani Scarrott: nah perfect.

[0:07:34] Raghav Kapoor: I think you also wanted to know what Smartkarma is today. So just again, very, very quick. One on this so Smartkarma today, I would say, is sort of, uh, you know, we’ve crossed our teenage years were a young adult as a business. And what that means for us is that we fully built out, um, most of the infrastructure less that we wanted to build from a tech perspective, and we’ve also fully built out the end customer segments that we wanted to build. But of course, we’ve not scaled them at all, you know? So we’re scaling up these segments. And what are these three segments for us? So the three customer segments for us, our institutional investors and individual investors. So we call these investors Corporates. Here’s the second one. And of course, you know, for us, we see research providers also as our partners or our customers. So our network now has a great catchment of research analysts who are using our platform to distribute and monetise across institutional investors, corporate and private wealth.

[0:08:41] Kalani Scarrott: One thing I’m just curious about there, so you first start up booming success the second time around. Was there anything you’ve done differently, or how did you approach it the second time around,

[0:08:50] Raghav Kapoor: for sure were very different. And I mean, I guess to use a very thin to it analogy, the first startup was a trade. It was always meant to be a trade. You know, uh, I remember speaking with some of our founding partners At that time. We were staring at the a pack price to book chart. We started the business when Asia Price to book was, like 0.4 below 0.5. And the idea was that we’re gonna sell out once it crosses one times Price to book. There was a mean reversion trade expressed through an operating entity which we own mistaken. Smart. Come on the other side. We’re building this as a capital markets utility, you know, as an infrastructure layer that will always exist, whether or not we are the ultimate owners in a few years’ time. But you will not get rid of this decentralised network of talent, and hence it’s a very, very different gameplay. It is. You know, this is more an investment with a much larger long pay off over time, but also a significant upfront investment in order to capitalise that that sort of tail end of the DCF that don’t nobody. So yeah, in that sense, very, very different. Also, the market conditions, the regulatory environment is extremely different. You know, I don’t think I would want to build a brokerage again, given some of the pressures we’re seeing on trading commission rates, the rise of electronic trading, etcetera. However, we feel that the Southside model will evolve very, very quickly. There’s a lot of unbundling of services happening, and that’s again where we have positioned Smartkarma as somebody that anyone can use. Whether you’re on the south side by side, you know, you can come together and find value in this network to serve customers.

[0:10:36] Kalani Scarrott: Yeah, and like you said with Smartkarma, there was an investment. So it was obviously a lot of work up front I’ve got here, So yeah, you incorporated late 2014, Was it? Sorry? Late. 2014. 2015, you spent the majority of the year idea prototyping proof of concept. And then you launched in 2016. So especially for 2015. What did that look like that whole year there?

[0:10:55] Raghav Kapoor: The honeymoon period. Really. You know, I think I think there were a few profound issues at that time in the market. So when it comes to research, you know, it’s I find it very ironic that we’re in the business of pricing risk. But if you go and see what’s the price of research? Nobody knows. And I think 2015 was a year when we really dug our heels in and said, If we really want to fundamentally change and have a lasting impact, we need to answer this question. How do you price research? And that was not straightforward because I felt the ecosystem is not fully ready to answer that question. And we found the answer eventually in other new media businesses, you know, businesses like Spotify on Netflix. You know what they had figured out that was that the scarcity in the Value Chain is actually the time of your user. You know, Uh, and how that user decides to allocate their time is essentially the answer to the question of you know, what the value of any particular piece of content is to them. And we said, We’re going to apply the same principle to research. Can we come up with a way to defining the value add of a piece of research and using that to allocate subscription dollars and bring huge efficiency? And, you know, as you can, there’s a new concept. The market was sort of not fully on board with it, So 2015 was a year when we had a lot of conversations with top leaders within our ecosystem. and, uh, you know, debating discussing, you know, validating our own assumptions before committing too much to, you know, tech, Capex and so forth.

[0:12:38] Kalani Scarrott: And even when starting out, it was sort of the chicken and egg problem with getting the writers to provide the insight and research, but also getting people to pay up, like, how did you balance that and approach that when you started?

[0:12:49] Raghav Kapoor: you know, that’s what we thought. But then, you know, we were speaking to one of our investors early investors, and they said something which was actually very useful. They said It’s actually never a chicken and egg. Whenever you’re building a network, supply should come first. That’s it. Like you can’t expect anyone to pay for something where there is nothing in there, right? So you need to pump prime. You need supply and so forth, so that at least strategically as well as operationally for us, that sort of brought clarity to what our focus should be. And hence for that period from late 2015, all the way, the next two years was building the supply side of smart.

[0:13:28] Kalani Scarrott: And then how do you approach and even change how you attract writers like is there anything you wish you knew at the start about attracting your insight providers that you know now?

[0:13:38] Raghav Kapoor: again, you know, the struggle for us was that, at least in Asia, the independent research community just did not exist. Um, there was no reason for it to exist historically because, you know, investment banks were doing well if you were a top analyst, you know, you graduated. You found your job there. You got paid very well. You stayed there till you retired. That was it. In us and Europe, of course. The IRP, which is the independent research provider market, had been growing for many years. Um, but so the challenge for us in the early years and I don’t think we could have done it any differently was How do you How do you accept that ecosystem? Uh, both in terms of accepting the idea in people’s minds, but also very tangibly in terms of economics. And we didn’t want to do what you know, the Ubers or, you know, those large beauty SEA, businesses did, which is crazy amount of subsidies which were not really sustainable. So we wanted to take a slightly so slow apart attract those people who had self-selected an entrepreneurial pursuit that was also very important. It’s very, very easy to give a large guarantee payout and attract anybody. But they may or may not be entrepreneurs. So, you know, a lot of this was just coming to terms with what is the right tradeoff that we’re happy with between a sustainable growth and, you know, unit economics, I guess. And, uh, that’s what we did now sort of fast tracking to where we are now. The main thing that we have now which we did not have at the beginning of data. You know, we’ve got an incredible amount of data that guides our decision making on what sort of analysts or our recent films are going to do well on the platform and that helps us make better. Arli calls on how we onboard new talent and grow it. Uh, and I think I think the the end customer base benefits immensely from it as well, because the density of quality on the platform is maintained, Um, you know, or keep growing as a result of that as well,

[0:15:45] Kalani Scarrott: So curious. If you’re allowed to answer this. What insight? Providers do do well on the platform. Like, what are the [indicators of success] Yeah,

[0:15:50] Raghav Kapoor: Yeah, you know, it comes down to, uh I guess three vectors. The first is what we call, uh, dollar density. What we mean by that is analysts who are focusing on areas of the market where there’s a large amount of dollar value focused on them, you know, So there’s enough eyeballs and attention, right? That’s obvious. But the other two are sort of counter by acting. The second one is differentiation by differentiation. We have a definition of differentiation, which is don’t try and do something that Wall Street can do better than you or can do it at all. So people who are trying to do stuff that banks inherently can’t do is great. From a research perspective, it seems quite obvious. But you know, they are the biggest competitor out there in the world of research. So if you want to make a way into research budgets of larger institutions, at least doing something that is additive makes sense, and the last part is data driven. This is this is really interesting. You see, when you’re a smaller research firm. The real scarcity again is your time. You want to do things that are scalable, and we feel that a data driven, framework based approach to research allows you to scale your product. And it also allows you to create differentiated segments and layers in your product. I e your Upsell curve, you know, without having that up sales curve. I do not think you build a strong business, and I think that’s the problem that a lot of newsletter writers are facing at the moment. You know, what are you upsetting to? Whereas if you think about, let’s say, investment bank research, they’re up selling their ECM transactions, right? Uh, so in the same way, I think data helps unlock those layers and that scale. So again, differentiation being data driven and focusing on dollar dance niches in the market makes a lot of sense. That’s that’s our framework.

[0:17:52] Kalani Scarrott:. Also, I appreciate you sharing that and for insight providers as well, so feel free to correct me if I’m wrong, but it’s based on merit based compensation, so they get paid on overall engagement collaboration. How do you orientate Smartkarma to not be race to the bottom where engagement bait winds like how delicate is that to manage? And what’s the approach?

[0:18:11] Raghav Kapoor: You know, this is one of those questions which I think will always be a work in progress at, uh, but first of all, when we talk about the services that are providers provide to our end customers, we try and break them down into these layers. So the base layer is what we call, you know, the written research that goes on the platform that is available to any user who signs up to our platform. Right? Uh, the compensation for this is based on what we call quantify value add or QVA. In essence, it is a data driven way for us to measure who’s driving the most engagement on our platform. And the metrics have to be smart enough to, you know, compensate for things like click bait as you mentioned, uh, and we’re dealing with a lot of very smart people in the room. So, you know, we definitely have to keep improving this process, this algorithm to ensure that nobody games anybody else. It’s a safe environment for everyone, but on top of that, some of the other services that we’ve built are very different. So you know, we above this platform layer, we have the premium leg, and the premium layer is meant for specialists. So to give you an example, you know, let’s say you’re an Australian bio tag emerging biotech companies specialist for them. Right now, you might be rioting content that is of occasional use through a lot of people to a long tail of you. Now that’s what the platform layer is for to promote your discovery to everybody who might find it useful once in a while. And for that you get a percentage, a sliver of their total subscription part across a long time. But then there will be a smaller subset of users on the platform who are your super fans because all they do is invest in Aussie small cap emerging biotech. They won’t be happy with just what’s on the platform. They want more. They want to speak to you. They’ll want access to some of the data that goes behind your model, and they want, you know, blah, blah, blah. That’s the premium here. It’s a It’s a subscription that sits on top of the platform subscription So how do you Upsell that in an inbound manner, leveraging platform tech then adjacent to that, especially without corporate network. There might be bespoke research services where Corporates would start recognising you as a thought leader in that Aussie emerging biotech space and say, Hey, guys, could you help us as consultants on a particular project? Or could you provide us if we spoke research service on an ongoing basis? Again, All of that is not linked to QVA because those are dedicated subscriptions sold to your super fans that we have discovered through that platform there at the bottom. And there’s one last piece of Monetisation, which is really fun And this, you know, uh, we were really inspired by the strategic decision that Netflix took to kind of be a little less supply and start producing its own content under the Netflix Originals banner. Right? And we felt very, very hard about it, and we felt that they’re doing something extremely counterintuitive but smart. They were literally, in my opinion, they were playing the monetary cycle, you know, when, uh, interest rates, although they were borrowing money and they were using it to build a great repository of content which had a high shelf life. And for us we started thinking about something similar. So we rolled out Smartkarma originals and we also rolled out under that original programme lots of different things. So the first is sort of must have thematic long shelf life content. Fine. But we also rolled out something called rapid responses. This is quite fun where we use platform discovery and data to figure out content that might be missing on the platform. But it is really important for the platform at that specific period of time. So we issue we issue out our FPs essentially on an intraday basis for such content. Um and you know, again, all of this process is fairly automated, but it’s really high ROI effort on our supply side. And again, we’ve got physical roadshows engagements essentially sort of taking a lot of that corporate and analyst access as well and building it as a way for analyst to monetise. Their service is interesting

[0:22:42] Kalani Scarrott: And one tidbit that caught my interest as well was that Smartkarma does not require exclusivity for content or research published on the platform. Unless otherwise agreed. So the content or research must, however, be not be accessible elsewhere for free. So how did you come to that decision? Because I don’t think it’s that common.

[0:23:01] Raghav Kapoor: Okay. I mean, you know, our initial target market for supply. Where boutique research firms with specialists in specific areas, it would be rare to find one such firm that did not already have a, you know, some anchor customers and we couldn’t go to these guys and says, Sorry, abandon your customers, you know? So by definition, it was hard for us to ask for exclusively when going to existing providers. Right? Uh, the other thing was that we also did not want to create unnecessary friction in terms of that onboarding process. You know, we were already trying to inspire these guys to give up on their own pricing models and rely on our pricing model. And now we didn’t want to create just one more sort of, you know, point of difference of opinion. So we said, Look, you want, you want to have your own clients, you have You already have your own clients. That’s fine. Over time, we prove ourselves to be your most dominant income channel and if we do that, you know it’s all good and actually that’s been the direction of travel. So over the last few years we’ve rolled out other programmes. So I think about 18 months ago we rolled out a programme called one Team, which was meant it was an invite only programme for some research providers where we reverse on boarded their customers on the Smartkarma as well, because it made a lot more sense for their customers to access their content and services through our platform blah, blah, blah. And it made a lot more sense for these providers to, you know, let us handle the whole back end, the operations, everything compliance, barracuda and that’s been a really successful programme. Actually, for these providers, most of them, you know, there’s been one or two exceptions out there, but that’s been great. But it came after some time when enough trust have been built. The other thing is that there is a lot of content now on small camera that is by definition only exclusive to small comma, all the discussions. You know, all the real time communication that’s happening that’s not really transported out so that’s quite unique and native and exclusive. And over time, that’s sort of growing as a percentage of the pie.

[0:25:05] Kalani Scarrott: And given you operate in a field with such large legacy players. And even now you have a partnership with Bloomberg. I saw. So what do people think about Smartkarma when you started it? Like, how has it been navigating that field of Yeah, very large, established players.

[0:25:20] Raghav Kapoor: Okay, well, one question we don’t really have a partnership with Bloomberg.

[0:25:23] Kalani Scarrott: Okay. Sorry.

[0:25:24] Raghav Kapoor: But you know, we work very closely with a lot of these films. And, yes, a lot of large funds are our partners. I think I think the answer is really simple. You know, we try and help everybody. We are trying and helping the whole ecosystem graduate to a much better business model. So if you look at banks, the problem with the bank research departments today is that it’s an enormous amount of fixed costs, enormous one of our customers, which is a large sell side institution. Their fixed costs of research in Asia alone is about $90 million. So on the first of Jan that down 90 and they have to you know they have to plough their way back against that negative 90. You know, smart. Come on the other hand, is a variable cost model. Hence, we know that over time, value will migrate to a model like us. So can we bring that capability to such players? Yes, easily. A lot of these players, over time are whittling down their own internal research costs in specific areas. You know, for example, Japan is really expensive markets, so they might say, Hey, let’s shut down our team in Japan and plug in small comma as a third party research platform that our customers can enjoy in that market, you know, hypothetical example. But again, so long as values migrating towards us and our positioning against the incumbents is very friendly. We are. We’re trying to add value to everybody. It makes it very, very easy for them to start using us rather than, you know, feeling threatened by us. And I genuinely believe that’s the way for a lot of firms like ours to grow, just be a utility that everyone can benefit from.

[0:27:11] Kalani Scarrott: So, given that Smartkarma isn’t network that connects three core audiences in capital markets, investors insight providers and Corporates. How do you balance the needs of all three? Is there one that requires more attention than others?

[0:27:23] Raghav Kapoor: Actually, I think the first thing is that the main thing that glues everybody together is insight. You know, everyone is it sounds funny. You know what? Content rich insight poor. So as long as we can not compromise on the sort of the quality of insight, you’re fundamentally adding value to everybody. You might not be making everybody happy with that insight, but yeah, you’re still adding knowledge so that, you know, that’s our number one focus. The second big focus for us is reducing friction through technology. All these three constituents, you know, investors are investing, incorporates research providers are writing research on corporate Corporates. Want to speak to both research providers and investors. You know, this is this is not an ecosystem. We’ve created its own ecosystem that already exists. But the communication amongst the constituents of this ecosystem has had a lot of friction. And there’s been too many intermediaries with, you know, really convoluted, complex business relationships and compliance processes can often make it even more difficult. So that’s a great tech problem. That’s a great platform problem. How do you reduce the friction? So I’ll give you a really simple example. Do you know that 90% of investor relation teams do not have their contact details on their own websites

[0:28:50] Kalani Scarrott: Unreal, no.

[0:28:51] Raghav Kapoor: So we did a survey in our early days before we were building out the corporate side of the business. Now investors are meant to reach out to companies with questions and, you know, But how do you contact them? Simple issue. And let’s say the email address was there or a phone number was there. How long would it take for you to get those answers back, if at all, And also on the other side for investor relations teams wasn’t easy to answer. You know, hundreds of questions from, you know, small retail shareholders, for instance. Great. Great little problem, right? So, you know, using our platform. First of all, all investor relations teams that are on board are directly connected by a chat to our users, at least our premium users. We also build chatbots for them to put on their own websites, which can answer all the basic you know, f a Q type stuff. Real time. So that’s just a really simple example, right? How you can bring Corporates and investors closer together. But I think that fundamentally changes how these interactions happened. Uh, you no longer require a broker to set up a road show you no longer require. So, yeah, wrote the roadshow product can be sort of self can be a D i Y product on spot karma. You’ve got an events engine. You can set up your event. You can share it. Zoom enable sort of extension to our platform. But you can host your own online roadshow whenever you want to. So removing a lot of those layers of friction, I think, keeps everybody happy at the same time. And I think the third and final part here and this is a really important part, and it’s part of our mode is trying to level best to do everything in a compliant way. You know when when you start building compliance letters on top of your products, it slows growth down, but it creates an ecosystem that is hopefully more durable and safer. You know, we’ve seen things go horribly wrong in other ecosystems just in the last month because this part was a little bit deficient. But I think if you build it in a compliant way, you’re constantly trying to remove friction and you’re trying to add value through insight. I think that’s what we can do as a platform to keep everybody happy.

[0:31:03] Kalani Scarrott: And this could be a very straightforward question, but I was planning to ask at the start. But we just got stuck in. Yes. So why I decided to incorporate SmartKarma in Singapore. Is it the compliance? Easy. Obviously. It’s a financial hub, but yeah, giving you have a history with India. You studied in the UK. Was Singapore the only option ever? Or how did you come to that?

[0:31:20] Raghav Kapoor: No, You know, we we actually sort of started with a blank sheet of paper. You know, we we we were definitely thinking could have been London, you know, should we knew or whatever. And there were a few reasons for Singapore. The first one was, if you think about the corporate and the institutional side of our business, pretty much every large fund manager has some sort of a presence, either in Singapore or in Hong Kong and again I’m scoping this to those that are interested in Asian markets because, you know, we started off as Asia only. So you know, you could definitely tap onto most Asia focused institutional investors by being in either one of those markets. Second, if you look at the private wealth side, you know Singapore has the highest number of millionaires per capita. But but not just that. 50% of the world’s population is within a six hour flying radius I in the same time zone. Now this population is not only, you know, growing the fastest when it comes to wealth, but it’s also the biggest base. So never in the history of the world have you seen so many new millionaires being formed at the rate of which we’re seeing now in this, you know, this addressable market. So it made sense for us to be very close. And then, you know, Singapore is very, very well known for being a hub for professional services in the region, right? That’s that’s been the human, the human resource, although you know that Singapore has tried to add value. So we thought of research as just yet another professional service. You know if Singapore can have great lawyers and you know, great accountants. It can also have great research analyst not just based here, but at least virtualised via Singapore. Yeah, and And that’s why Singapore. And you know, in the case of my last started, we had started in Hong Kong and we had expanded it into Singapore. In this case, we sort of decided well started here

[0:33:13] Kalani Scarrott: Interesting and yeah, given you originally started off focusing on Asia. But there’s been the recent expansion into Europe. What was the approach there and was there any growing or expansion pains you didn’t anticipate?

[0:33:24] Raghav Kapoor: A lot, actually. I mean, we I think we made a few mistakes with sort of our globalisation push. Our our hypothesis was that you need to have a presence on the ground in international markets to speak to some of the customers that were based there. I think we went a little bit wrong with how we prioritise some of the markets we tried to do two or three of them at the same time. In hindsight, we should’ve sort of sequenced it serially, and what that meant was it was a huge drain on management value it’s and also it made our organisation a little bit more complex. We had country managers, but also functional heads. And, you know, the organisation became a little bit more inward focused, spending too much time in internal meetings than outward focused. And we, we that experimented, lasted about 18 months to two years. But I think we had enough evidence by that time that we had to unwind some of those things. So we did that, Uh, you know, we again made the organisation a lot simpler, a lot more focused, and we started thinking differently about our offshore presence in two ways. The first is as I was mentioning, anyone who is serious about Asia as an institutional investor will have some presence on the ground here anyway. So, you know, our hypothesis was a little bit wrong at that time in that sense, the other. The second thing was that we realised that instead of investing into human capital in those markets, we could invest into technology that makes a lot of our revenue more inbound than outbound. And we started doing that and we’re you know, the last 12 months or 18 months has been We’ve reaped enormous dividends of that almost 70% of our revenues coming through inbound channels now. So it was still investment, but it was sort of, you know, let’s invest in that tech stack and S CEO and all of those things, as opposed to putting sales guys on the ground and some of those markets. And and now, given that we’ve done those investments, we still have people who are focusing on those geographies, but they don’t say they don’t necessarily have to be based there. But be the role has changed from being outbound to being somebody who handles that incoming inquiry. That was our learning. And also it’s very, very important that we stick to our roots in Asia from a focus perspective. But we made one slight change. Instead of being Asia only, we became Asia first. So what that means is we will cover Tesla because, you know, China is 100 and 5% of the net profit these days for Tesla. But we will bring the Asian perspective to it, all right. And that still adds value to investors sitting in the U. S. Who have Tesla and the U. S. Mandate but there will be a differentiated angle that we will break. What we will not do is suddenly start covering Wells Fargo, uh, and so forth where it’s a little bit hard for us to prove why we are adding value.

[0:36:22] Kalani Scarrott: What’s the plan now? I guess with Smartkarma. Where you guys heading towards now? Where do you think you’re going? Where do you want to go? Yeah,

[0:36:28] Raghav Kapoor: yeah. So you know, as I mentioned, we’ve got these four paying customer sets. You know, we’ve got institutional investors, We’ve got corporate, we’ve got private wealth, institutional investors is, I guess, our most evolved segment. And we’ve got a great playbook. Uh, and we’re going to continue to keep premium ising the segment, which means more and more extremely differentiated premium subscriptions that sit on top of that platform access. Our corporate segment came second. Uh, it’s grown very, very nicely this year. I think we’ve crossed 2500 corporate, but that number could connect over the next 23 years. So we want to continue to double down on what sort of worked over the last 12 to 18 months and continue to improve that connectivity between corporate and the other two sides of that network. Private wealth is our youngest segment. You know, we kind of only launched in January and and the idea with private wealth for us was How do you now start to democratise the tail? So we’re premium ising the top. How do you democratise that tail? But you do it in a completely inbound 100% automated D i Y funnel and a very robust funnel. And we’re having great success with that funnel and also in B two b two c partnerships around that fund, I think, with private wealth, it’s just about extreme amounts of scale. And as as as you’ve seen, you know, markets were not very conducive to scaling a private wealth product in the first part of the year. But now I think we’re really busy in a lot of conversations around scaling that we’re very excited to see private banks who have been very rigid in their compliance structures and, you know, suddenly sort of changing their approach. I think we’ve de risked the Smartkarma network sufficiently as a brand and a product that these guys wanted to use us as part of day to day business. So really scaling the size of the problem wealth thing. But doing it, you know, in an extremely inbound manner and channel partnership approach is what we’re gonna do So that that’s all about organic growth. Um, at the same time, you know, I think this soft patch in markets has strategically opened up tremendous opportunities for us. You know, a lot of incumbents are reviewing their own business models. There’s a lot of cost pressures. We’re also seeing some very, very interesting adjacent, uh, companies, you know, startups. Smaller films that have built some very unique services. That’s it, right next to Smartkarma, uh, growing conversations with them. So, you know, there might be some very interesting developments over the next 12 months on that inorganic side. Um, as well, as long as we don’t forget, right that we’re trying to build, you know, core capital markets utility. That adds value to everybody. And we’re going to do it in a very sustainable way. You know, we’re not going to get caught up by blue skies and you know those crazy B to C hockey sticks. I think we’re fine.

[0:39:31] Kalani Scarrott: Is there anything else we haven’t covered today That’s consequential about the future of Smartkarma and anything else you want to touch on, we’ll talk about

[0:39:37] Raghav Kapoor: well, you know, we haven’t spoken about your podcast name. It’s a great name, I think, actually, uh, I think compounding is such an important principle, that Smartkarma. We talk about daily compounding in terms of what we do in our processes internally. But I think it’s a curiosity. I think curiosity is at the heart of good investing, So I think I think I think that’s fantastic. I just wanted to sort of comment on that more than anything else. And lastly, I kind of also wanted to say, You know, our private wealth product. If you know if anyone wants to try it out and you don’t want to pay the $50 fee, you want to give it a simply try, reach out to me or reach out to Smartkarma via Twitter accounts will happily oblige in the spirit of the festive season, if nothing else, but But look, at the end of the day, we feel there is a significant amount of money to be made in some of these Asian markets. They are deep, they’re they’re getting broader by the minute. There’s it’s about the market gap that is going to get listed over the next 23 years. So there’s enormous value to be part of the network in whichever way you know you could be an investor. You could be a research provider, you know, do approach us, and we would very much welcome everyone

[0:40:55] Kalani Scarrott: awesome. Thank you so much. I enjoyed every minute and learned a tonne, so thank you so much.

[0:41:01] Raghav Kapoor: Thanks, Kalani and Merry Christmas to you and all the listeners.