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Disruptive Companies in Asset Management

We recently hosted an idea dinner on “Disruptive Companies in the Asset Management Industry”.

The most attractive industries to disrupt are highly profitable ones, and asset management is traditionally a highly profitable industry. IMHO, the most successful disrupters in this area to date have been Vanguard (who popularized index funds) and the ETF industry. We thought it would be interesting to brainstorm about what are the next great ideas and companies that will/can disrupt this sector, based on the ideas on Clayton Christensen’s “Innovator’s Dilemma”. The dinner included a cross-section of senior finance executives and experienced tech entrepreneurs. I’ve attached below the notes from the dinner in slideshow format.

Christenson popularized the idea of analyzing ‘what job does the customer want done?” For an investor, the answer includes:

-Returns
-Investment Team Stability
-Relationships with other investors and investment teams
-Visibility
-Capital preservation
-Job security (of the investor)
-Tax minimization
-Social welfare
-Exposure to target sector (e.g. China, commodities)
-Networking

Disruptive companies will typically isolate one of these variables and optimize for it, to the exclusion of others.

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