Greg Pacholski and the management team of Albridge Solutions (Pacholski emphasizes that he and the team are of one mind) surely scored high on the attributes measured by Inc. Magazine’s TAIS test, attributes like "driving to beat the odds against success." Like most entrepreneurs, Pacholski can tell the "when I dodged a bullet" stories.
For instance, when a handful of founders launched the firm, they kept track of what date they would run out of money. "We marked the day on the calendar," says Pacholski.
Albridge is on firm footing now, scoring 32nd on the list of fastest growing private companies (fourth among financial firms) in the November issue of Inc. Magazine. Known as StatementOne until last year, the company processes nearly $1 trillion worth of data for financial advisors. Albridge’s enterprise data management service helps financial advisors to identify potential customers, and then it provides tools (web-based portfolio accounting and performance reporting solutions) so the financial advisors can serve their customers better.
Albridge signed its first real client, ING, in 2000 and it has added AIG and Pacific Life. Based on gross sales for three years from 2001 to 2004, Albridge grew 1,787 percent and had revenues of $15.8 million in 2004. In 2001 it had 40 employees on Lenox Drive. It had 91 workers in 2004 and now has 110 workers in 20,200 square feet and plans to add 20 percent more people per year.
But Pacholski does not want to lose that "hang on by your fingernails" feeling. "I never want to lose the edge that we had when we were trying to survive day by day," he says.
In addition to being able to perform under pressure ("driving to beat the odds") Pacholski would also score high on "spotting leverage points to create a market niche."
Pacholski compares Albridge’s service, providing organized information on products sold to a particular client, to the supply chain of a manufacturing company. "Banks sell a wide variety of products. You may have bought an insurance policy at a bank, but it is written by an insurance company that awards the bank a fee. The insurance company does all the bookkeeping. All the bank knows is that, every time you send a payment, it gets part of that payment. The bank really has no idea what it sold you."
Albridge shows the bank that it has perfected all the interfaces from hundreds of engines. "We say, ‘We can turn them on for you and show you your book of business. We can deliver this information back to you – the annuities your customers bought, the mutual funds, the insurance policies.’ When the customer comes up on the screen to the seller, the licensed individual who is selling these products will see everything (insurance policies, stocks, mutual funds) that he has sold them." Having this information well organized and readily available makes it easier to offer the right advice (and sell the next product).
The profit potential for having this information available is obvious. But it can also help cut costs. If federal regulators do a compliance check, summoning the required paperwork will be easy.
To put it another way, Albridge’s enterprise data management makes it easy for the right hand to know – not what the left hand is doing – but what the right hand did yesterday. Then it suggests what the right hand should do today, and it predicts what it might be able to do tomorrow.
Early years were a struggle. The firm started in 1993 under the name Fundscape with DOS-based software on an Oracle database. It spent the ’90s in R&D mode, contacting the financial institutions that sell such products as insurance policies, annuities, and mutual funds, and making the rounds of shows and conventions. It set up seamless interfaces with computer systems run by the financial advisors who are licensed to sell these products. It figured out ways to collect, clean, and standardize the transaction and position-level securities data from settlement and clearing firms, data custodians, and product companies.
Albridge could have strayed from its focus, but Pacholski tells how it focused on its original strategy and then used business results to fine tune the strategy. For instance, some clients asked for a financial planning software, so they could plug in a client’s age and financial goals and come up with an investment plan. "We said others are doing that. Our roots are in enterprise data management. We will perfect the interfaces from trust accounting systems and position the data to be used strategically by institutions." On staff are 30 full-time-equivalents to provide 24/7 coverage for client services and support.
"In our view of the world, we would rather work on methods to allow any financial planning system to be populated with good clean data, so the planner doesn’t have to load that information," says Pacholski. To prevent error, automate everything. "You don’t want the ability to change data."
Albridge’s biggest competitor: Financial institutions trying to accomplish the same task themselves, to build the solution rather than buy it. Pacholski declines to reveal what percentage of the market he thinks Albridge has. Institutions that build their own solutions this year will have to rebuild them when the situation changes next year, he points out, whereas Albridge is already doing research on the next year and the year after that. Says Pacholski: "You can’t just build it once," says Pacholski.
Among Albridge’s newest products is a tool for supervisors to rate their subordinates. These ratings compare advisors with their peers in such categories as performance, activity, diversification, and growth.
Pacholski (pronounced Pa-hol-ski) was the fourth employee of this firm. He grew up in Chicago, where his late father had been a carpenter, and the work ethic was paramount. He and his wife have two school-aged children. His mantra: "To be very honest and have a very clear communication style."
Pacholski majored in math, minoring in computer science, at Illinois Benedictine College in Lisle, Illinois, Class of 1981. He worked in IT for Northern Trust Bank in Chicago before joining Ernst & Young, where he managed large projects for financial institutions and made partner. One of his clients was Century Business Services (CBiz), an investor in StatementOne, and he analyzed StatementOne on CBiz’s behalf. Then he did some consulting for StatementOne, founded in 1999 by Lou Gerber. Gerber hired him as chief technology officer in 2000.
"Being a partner in the consulting practice of the accounting firm was entrepreneurial," Pacholski explains. "You had profit and loss responsibility, and you were supposed to make something from nothing. You had to recruit people to help deliver the services that we deliver."
Pacholski made good use of his consulting skills but now that he is in the game, not standing on the sidelines, he has to live with the results: "Essentially you are selling your experience."
Inc. Magazine’s test identifies a third characteristic of successful entrepreneurs that Pacholski and his team share: The ability to "recruit the world," to build positive connections between people and groups. They are supportive. Because they are emotionally invested in the business, they can recruit people willing to pass up higher paying jobs at established firms.
But as the test giver notes, CEOs usually fail not due to their weaknesses, but due to an overuse of their strengths. Those with strong loyalty to their cohorts may find it impossible to make the tough decision to sever a relationship that the business may have outgrown.
Pacholski has not fallen into that trap. When he came to the firm in 2000, Lou Gerber was the CEO, and the staff increased to 10 people that year. The company had moved to a web-based solution and changed the name from Fundscape to StatementOne. The dotcom boom was still booming and venture capital money was plentiful; the burn rate was reportedly more than $1 million per month.
A year after Pacholski joined the firm, he had the title of president, and by 2003 Gerber was gone with Pacholski in place as CEO.
Pacholski describes Gerber’s departure as resulting from a schism between the founder and the team in place today. Gerber, he explains, was a visionary when it came to the subject matter but was less experienced with such entrepreneurial skills as managing a budget and revenue. Pacholski, on the other hand, had experience in these matters.
Dave Orban, the company’s former marketing manager, corroborates Pacholski’s report. Orban, a 1978 Brooklyn College alumnus, left in 2003 to join a New York-based firm and is now a consultant.
"At the tail of the dotcom era a lot of companies got real big too quickly," says Orban. "We were staffing up, growing from 20 to 75 people, and not managing expenses as aggressively as we should have. We had an uphill sales climb, and no paying clients. As fast as we ramped up in 2001, we ramped down."
Pacholski explains the ramping down as the necessary transition between a very large IT development organization to building sales, marketing, operations, and support teams. "The overall budget in 2001 was much different in terms of development spending versus sales and marketing dollars," says Pacholski.
StatementOne, which had been flying below the radar, began to show up in the reports of such analyst organizations as Forrester and Gartner, says Orban. "But even though we were getting decent press, we were still a very small vendor," Orban remembers.
Since the major accounts were coming in slowly, StatementOne focused sales on smaller organizations, says Orban. The firm began to chalk up small win after small win to get traction. "We were focused, and we were not spending money on things we didn’t need. We were able to bring in people with relevant experience and getting very strong accounts," says Orban.
One challenge, Orban remembers, was that the company was hard to explain, particularly under the old name: "We never really did statements. We provided technology that imported data over which we overlaid an accounting system supported by the web." The new name corrects that problem.
As for competitors, Pacholski says that they have arisen but failed. The technology was developed years before it was launched, so the ramp-up of investment is a difficult barrier to entry.
Plans for an IPO: "We are self funded and are not currently trying to raise money," says Pacholski. "That could change over time, but our plan today is to continue to grow and strive to be the best." The employees have a stock option plan which he says is typical for early stage companies. The Inc. 500 list has pushed Albridge into the spotlight. "Our clients are very excited," says Pacholski. So are the potential vendors. "This type of article gets a lot of interest from investment banking circles, so people are calling to ask, ‘Do you need more money? Do you want more money? If you would like to liquidate, who would you use?’"
Ian Goldstein and Jonathan Epstein lead Albridge’s attorney team at the College Road office of Drinker Biddle & Reath, and Pacholski has begun to work with Edison-based Fusion Technologies with an eye to doing offshore outsourcing in the future.
Pacholski doesn’t want to forget the early struggles. "Thankfully we are not in that situation any more. But as we look at targeted markets we are trying to sell into, and new software to help people grow their business to use data better – I don’t want to lose the passion. I don’t want to lose that sense of growing by survival."
"We want to stay on a growth curve and continue to innovate," he says, "In a meeting today we discussed that, what we are doing now, we can’t do next year, and now that we are a much larger company, what we would do differently," says Pacholski. "If we don’t think like that, we won’t get there. We’re never coasting. We are always challenging ourselves."
Albridge Solutions/StatementOne, 1009 Lenox Drive, Suite 104, Lawrenceville 08648; 609-620-5800; fax, 609-620-5801. Gregory Pacholski, CEO. Home page: www.albridge.com