Potomac Fund Management with Manish Khatta | E333

Taking control of your own tech development.

In this episode of Fintech Impact, Jason Pereira invites Manish Khatta, CEO of Potomac Fund Management, for an in-depth conversation. Unlike the usual Fintech discussions, this episode sheds light on the unique experience of solving technology challenges from within. Manish shares his journey of developing custom tech solutions, navigating partnerships, and the trade-offs inherent in taking control of one's technological landscape.

Episode Highlights:

  • 00:10: Jason Pereira introduces the show and guest Manish Khatta, CEO of Potomac Fund Management, setting the stage for a discussion about the uncommon path of solving one's own technology challenges in the asset management space. Manish's role at Potomac as a catalyst for technological innovation will be explored, highlighting how it diverges from the standard FinTech discourse.

  • 00:43: Manish and Jason recall a personal anecdote, adding a human touch to the conversation right from the start. This casual exchange not only establishes a rapport between the host and the guest but also previews the episode's blend of professional insight with personal experiences.

  • 00:57: Manish relays his unexpected but ultimately career-defining journey with Potomac Fund Management, from an interim job filling to a lifelong career. His anecdote encapsulates the serendipity often found in career paths while highlighting the evolution of his roles and contributions to the company over more than two decades.

  • 01:39: The conversation pivots to Potomac's multi-faceted business model, exploring its structure as a third-party money manager, an in-house TAMP offering, and a provider of mutual funds. This part illuminates the complexities and challenges inherent in operating across different distribution channels and the strategic nuances of each.

  • 03:30: Manish delves into the technological journey of Potomac, discussing the transition from outsourcing to taking greater control over their tech stack. This segment reveals a crucial turning point where realization struck about the limitations of relying on external partners for tech solutions and the strategic shift towards leveraging open APIs for customization.

  • 05:23: A candid discussion on the lessons learned from initially mistaking development direction and talent. Manish shares the pitfalls of early software development strategies, emphasizing the financial and operational glass ceilings encountered when outsourcing to ostensibly cost-effective development teams overseas.

  • 08:06: The conversation then moves to Guardrails, Potomac's initial venture into custom software development. This part is particularly noteworthy as it sheds light on the iterative approach to technology development, emphasizing the role of feedback and adaptations in refining a tool tailored for financial advisors.

  • 10:03: Manish elaborates on how Potomac built upon existing technology platforms like Orion Advisor, utilizing APIs to develop a unique proposition for investment proposal generation. This marks a pivotal moment in the discussion, underscoring the blend of in-house innovation with external tech infrastructures.

  • 11:58: Observed challenges and successes of fully in-housing software development are examined. Manish reflects on the complexities of managing a tech development process, from conceptualization to iterative releases, revealing the malleable and ongoing nature of tech innovation within the financial advisory space.

  • 15:11: The conversation circles back to the pragmatic aspects of deploying new tech, focusing on the necessity of a minimal viable product (MVP) strategy. This pragmatic approach to software deployment highlights the business acumen required to balance ambition with executable, incrementally valuable deliverables.

  • 22:21: Manish shares the decision to offer Potomac's proprietary technology for free to advisors using their platform, underlining a strategic choice aimed not at entering the FinTech market but rather at enhancing service quality and firm competitiveness.

  • 24:06: The dialogue concludes with Manish expressing hope for greater unity and less divisiveness within the industry. His wish for a more collaborative environment and respect for diverse business models and practices speaks to broader themes of professional respect and sectoral progress.

Key Takeaways:

  • Innovation within financial technology can come from necessity and internal challenges rather than external solutions.

  • The development and refinement of customized tech solutions are iterative processes, requiring feedback, adjustments, and sometimes, a return to the drawing board.

  • Building on existing platforms via APIs can serve as a powerful strategy for businesses seeking customized tools without starting from zero.

  • Offering proprietary technology as an added value to existing services can strengthen business relationships and foster more engaging user experiences.

Tweetable Quotes:

  • "Transforming tech challenges into in-house solutions has set us on a unique path of innovation." - Manish

  • "Learning from the limitations of outsourced solutions propelled us towards taking control of our tech destiny." - Manish

Resources Mentioned:

Fintech ImpactJason PereiraFintech