The Definers Episode 2: Mike Trinkaus and Co-Sourcing

Mike Trinkaus and his team have defined what “co-sourcing” means in fund services. Category creators and those on their way to being one are joining us March 26th to find out what makes 4Pines Fund Services so successful in what they do. We’ll ask Mike why other fund administrators are reluctant to take up co-sourcing in the same way his team does, why it’s a winning formula for 4Pines, and what the innovation stack they’re building looks like to better serve their clients.

Chris Gale  00:02

This is the second episode of our series here at Gale Strategies, the Definers. I’m super excited to have Mike Trinkaus here, our client at 4Pines Fund Services. We call the series the Definers because we love to work for companies and individuals that are actively defining the future of their particular industry or an aspect of their industry. What we mean by that is: pursuing a business model – disruption is an old and maybe tired word – that’s changing the industry. Then, because we’re marketing and communications folks, leading the industry actively in the thought leadership of not just doing the thing, but also helping to articulate and explain it and bring together a movement.

Mike here is an embodiment of what we get excited about. We find ourselves often talking to folks in our network or other clients and saying, “You should look at this guy, Mike Trinkaus, and the team at 4Pines. They’re doing something particularly interesting.” We’re going to ask Mike about that. And we’re going to zero in on one thing in particular that folks in our network have been excited about and asked us about. We’ve pointed to Mike so many times that we thought he might come on in person and explain himself instead of us being the filter.

Talking about something that your competition is unwilling to say or can’t say – fans of Hamilton Helmer may be familiar with counter positioning – there are elements of that.

Mike, I just realized. Can you do a quick intro about 4Pines?

Mike Trinkaus  02:04

Thanks for having me. I appreciate the opportunity to speak to you. I’ll first say that I’ve never thought of, certainly myself and us at 4Pines as definers or anything along those lines. But it has been a really interesting journey to watch what we’ve been able to do with you guys around certain aspects of the message that we want to get out there, and how that’s currently making its way through the market. So that is pretty exciting and I can’t wait to dig into that a little bit.

But who we are: we’re a fund administrator. We do back, middle, and front office work for venture capital firms, buyout firms in the private equity space, and secondary shops-funded funds. We do a little bit of credit in real estate, and real estate space as well. But we’re essentially a managed services firm with a little bit of a hint of a technology angle as well because we’re very, very big on and using technology in efficient and effective ways. Very big picture, that’s kind of who we are. We care about people first and foremost. And we couple that with the technology piece.

Chris Gale  03:20

Before 4Pines, you are a former CFO, and one of your cofounders, Celeste Barone, is a former CFO of portfolio advisors. Celeste, I think, came from Commonfund.

Mike Trinkaus  03:35

That’s exactly right. Essentially, we’re a group of executives who came together through a variety of different careers. Celeste and I both came from the PE industry. We both spent a number of years as CFOs in the space. Our CFO has an engineering background, did a lot of contract manufacturing, and ran global teams in his career. Our CTO is an expert in automation who came from IBM. Our head of product is a longtime fintech guy. We brought together those collective experiences to end up where we are today with this philosophy, vision, and strategy that we have at 4Pines.

Chris Gale  04:25

You are a fund administrator with a CTO, which is fascinating. Maybe I’ll come back to that in a second. The thing that you talk about that other fund administrators sometimes talk about, but not with the clarity and with the sort of bravery that 4Pines does, that’s co-sourcing. Can you explain what is co-sourcing?

Mike Trinkaus  04:55

Absolutely. Happy to do so. I do get asked that question a lot – exactly what co-sourcing means. You know, over time, I’ve started to parse this into two places. There’s this holistic definition, which is a bigger picture, a broader concept that I’ll talk about in a second. And then there’s the everyday operational piece. So let me start with the bigger picture, the holistic piece. Co-sourcing is part of a broader vision that we have around the industry in and of itself, and where we think the industry needs to go and shift towards as the market changes and as the industry changes. As you start focusing on partnering with your clients – truly collaborating with your clients and doing things that incentivizes each other to work together in the same direction – as opposed to what we’ve historically done in this space, which is, “I go behind the curtain on this side. I do the stuff I’m supposed to do. You sit on this side. You hope that I’m doing the stuff that I’m supposed to be doing. You hope that it’s right. And you hope that I meet the deadlines, without any visibility into what we’re doing at all.” We want to redefine what all of that means. As part of the redefining, of what we think the fund advisor business should be doing going forward, we’ve landed on co-sourcing.

On the operational level, the definition of co-sourcing is quite simple. We want to partner with our clients. We want to collaborate with our clients. So, one of the best ways that we think to do that is to jump into the software, the tech stack of our clients, and, in particular, their accounting technology platform. That opens up the power dynamic a bit in the relationship. Historically, firms would outsource. We would have all of their data, and it put them in a tough spot if we weren’t delivering. One of the things I said when I first got into this space was “My background is as a CFO and as an operator. How do I protect myself against that?” If you go back 10 or 11 years, we were only 30 to 35 percent outsourced as in industry. One of the things that I used to hear a lot was, “You have my data. I don’t want to do a data migration.” My initial thought was, “Okay, let’s take that off the table. Let’s talk about what co-sourcing is, and how co-sourcing can address your biggest concern that you’re giving me for not wanting to outsource.” That really started the journey of what co-sourcing means and how you define it. Very simply put, we operate on our clients’ platforms.

Chris Gale  07:58

On one hand, it’s a simple concept. But the impact of it once you go down that road – it opens up a lot of different possibilities of what you could be doing, which I want to get to further on.

To recap, the traditional model would be outsourcing. If I was the front administrator, and you were a private equity CFO, I would have the general ledger on my side. Then you have a deadline coming up, you wonder where the work is. It’s coming. But you can’t really see it. If you aren’t happy with my work because my team is changing or I’m missing deadlines, you’ve got to extract all that data. You might actually have a set of books on your side that you’re checking against the GL that’s on my side. What you’re saying is, “Now I’m going to be honest.” With co-sourcing, I’m going to be doing the work on your side. All of the value that I’m creating, all the workflow, is going to be visible to you. You know exactly where I am.

Mike Trinkaus  09:29

In a nutshell, that’s it exactly. We’re opening up what used to be a black box to our clients, the GPs, and we are saying, “Hey, the model has to change. We want to partner. We want to collaborate. We want to provide transparency to our clients because the market is changing. The needs are changing. The strategies around information and access to that information are changing the tech analogy is changing.” Ten years ago, you couldn’t do a lot of these things efficiently and effectively. Today, a lot of GPs are resetting their internal operating model around data, how they’re using it, and how they’re connecting across different platforms. In our view, we don’t want to be a problem in that process. We want to facilitate that process. We want to help move data if we need to so that you can get it to the places without downloading and uploading and using a manual process to get to where you need to be. I think you described it quite well.

Chris Gale  10:45

Why are you virtually the only one of the fund administrators talking about co-sourcing so enthusiastically? I’ve seen others quoted where it’s like, “If clients want to do it, we can do it.” But you’re an evangelizer.

Mike Trinkaus  11:01

Yes – 100 percent. One, we’ve spent a lot of time thinking about the operating model, and what it means to be a co-sourcer. I can talk about some of the challenges around it because it’s a trade-off with everything we do. Our operating model has been built and designed with the vision of this from the beginning. When we started in January 2020, what we put in place lends itself a lot more easily to a co-sourcing model. There are reasons for that. That’s why we’re so gung-ho about it.

There are two things. One, because we focused on it from day one, we can put forward an operating model that allows us to not succumb to some of the challenges of co-sourcing like the incumbents because of how their operating model is built. You know, they’re challenged on the legacy side because they’re not built for this. They are built for the old model that is closed off, that isn’t collaborative, that isn’t integrated. It doesn’t mean everybody is against co-sourcing. Some folks are reluctantly talking about it because it does make a lot of business sense and creates some business opportunities because there is a lot of interest and enthusiasm in the market for it. So, you are seeing some folks ignore their operating model to take advantage of certain business situations. But the reality is that many firms in the market – whether their legacy tech or their legacy operating model isn’t built for a co-sourcing model that is scalable – have zero incentive to push this model. Again, we’re just the opposite. We’re trying to build something from the beginning. That allows us to scale this in a meaningful way. Because that’s what our strategy has been from day one. We can do it because that’s what we’re building to do.

Chris Gale  13:13

About this idea of saying something your competition is unwilling or can’t say – if you were to say, “We’re transparent,” if Gale Strategies was working for the competition, we could say “No, we’re more transparent.” We might cough up some numbers to show that if I were working for your competition. Why would the competition say “No, we’re not talking about co-sourcing?” Can you share a little bit more about why the marketing and sales team of the competition is going to be held back? Why would they be reluctant to say something like you’re saying? Can you share more from their perspective? I realize I’m asking you to speak in your competition’s voice.

Mike Trinkaus  14:11

If I were them, I would push the conversation away from co-sourcing. They’re not built for it. Everything they’ve done – if they’ve created efficiencies, if they’ve created automation on their side – it all goes out the window in a co-sourcing relationship. That’s one of the challenges with it.

I’ll give you a perfect example. If we have an accounting platform that we’re using, we invite our clients in. We’ve created some integration with some other platforms that we’re using – LP portals, waterfall tools, etcetera, etcetera. It’s really easy to put 20 clients on that platform, and then push that data out to those different platforms that we’re using for each one of those 20 clients in a co-sourcing relationship. If I have 20 clients and they’re all co-sourcing, I now need to figure out the most efficient way to connect to those same systems through 20 different instances of that platform. The teams, in most cases with many folks in the industry, just are built and prepared for that level of work and sophistication. Concerning automation and integration, we’re constantly thinking about the best way to do that and integrate. It’s not easy, but we can do it. So that is one example of why somebody who’s an incumbent will push their marketing firms to not go all in on this co-sourcing. Again, it’s disruptive to the operating model of many folks in the industry, given they’ve been around for 10, 20, 30 years. There are legacy people. There’s legacy technology. It is turning that operating model upside down when going into a co-sourcing relationship.

Chris Gale  16:09

So, there’s a cost to be paid to do my work on your side if I’m the fund administrator. I’m more exposed. There’s a lot of systems investment, workflow investment, which like I said, I think we’ll get into. If I’ve got all this existing business that’s easier and doesn’t expose me to those things, then I’d rather try to compete against Mike on something else.

Mike Trinkaus  16:37

The reality is that there are a lot of downsides to co-sourcing when you initially look at it. But to me, that’s a short-term view of how to look at what co-sourcing can do for you and your clients. We don’t want just clients. We’re looking to form partnerships, with real collaboration. with our clients. The way we do that is, we expose ourselves a little bit. We have to say, “Hey, if we’re not doing the job we’re supposed to do if we’re not transparent about what we’re doing, how we’re doing it, and who’s doing it, isn’t that a bit unfair to our clients?” We need to stand up a little bit and sit up a little bit straighter in our chair. The reality is, if we do the job that we’re supposed to do, whether we’re co-sourcing or not co-sourcing, we’re going to have a great client. When we’re in a co-sourcing relationship, it just opens up the possibility for a stronger partnership to be strategic with how we help our clients out. It’s really up to them in many ways to drive it. But it puts us in a position to help them achieve what they’re trying to achieve. Because the finance departments continue to become more important for the GP, they need some partners on the operation side that can help them be more strategic, help them execute a better plan around data on their side. It’s really what we’re trying to do. If we do that, we’re going to end up okay, and I think we’re going to execute on our vision and our strategy of what this industry should look like.


Chris Gale  18:26

On that basis, maybe there’s a pre-agreed set of questions that I’m working through. I want to take the last question and move it next in the sequence because I think we’ve kind of danced around the workflows and the investment and all the stuff that has to be in place to make this work. That’s important, which is to say, we’re talking about it at a theoretical level.

What have you done and what needs to be done to make co-sourcing work? It sounds like the alternative could be, again, if I’m the fund manager, I could be working on your side on your software. All I can do is screw it up. It sounds like I need to have some workflows and some familiarity that I’m not going to be able to do on day one.

Mike Trinkaus  19:23

It’s certainly a journey because, in many, many instances with co-sourcing, we’ll jump into existing systems. The first thing you have to do is go in and understand what’s there to begin with. Then you need to assess what you need to fix because, oftentimes, what we see is a process that’s been developed over time for a specific firm. Yes, it works for that specific firm. But what you see is you may not have broader expertise because you do the same things over and over. We like to come in with a much more well-rounded experience within the platform. We usually can find some easy fixes in areas that can make our job easier, help the clients in the long run, create some reporting, and different ways of doing things. In terms of workflows, yes, we really like to outline the relationship, and document all of what that looks like – building some workflows, some controls, build other tools that we have at our disposal, that work alongside or on top of many of the different software technologies that we have to use. It becomes an operating infrastructure that we leverage that integrates and incorporates into all the different aspects of the relationship that we have with our clients. That takes time. It’s not a one-quarter or two-quarter process. It’s a continuous process that you go through because the business changes. We need to understand what you’re doing, what are some of the gaps that we’re seeing, then we have to address the gaps, and then it’s, “Okay, here’s our operating model today, but your business is evolving. You’ve raised another fund. Maybe you’ve added another investment vehicle.” Whatever the case may be. All of that information, that process, that cadence, over time, becomes a living and breathing document. How do you change that on a go-forward basis? How do you implement it, integrate it, etcetera? That’s part of what we do regularly with clients.


Chris Gale  21:48

Are you talking about doing that on a one-off basis? Or is working with 4Pines different because you are implementing it across all clients? You have a CTO. Is it all people processes? Are you also looking at automation on the 4Pines side?

Mike Trinkaus  22:06

Oh, absolutely. Automation is a big part of it. We’ve talked a lot over the last couple of years about the shortage of accountants. They’re not studying at the same rate in college. We’ve focused a lot on automation, being able to do things in an automated way that historically we’ve used people for. We spend a lot of time on automation. That’s not a one-off. That is across our clients. That’s a process that is core to our operating model. I think that’s probably a bit different than what you see in the industry, our commitment to continuous improvement, project management, etcetera, etcetera. We are committed. We meet every quarter, every month, to talk about a variety of these topics.

Chris Gale  22:59

I know the value you place in great people and disciplined execution, quality. I’m going to come back to the CTO. Let me explain why I’m coming back to the CTO. When we talk to companies about not just making a claim and then trying to provide evidence and why you do it better than your competition, and you get into this he-said-she said, finding something that you can say that others can’t, and it sounds like sometimes it can involve something where you give something up. You give more transparency to your clients because it’s really hard for your competition to do that.

But that also seems to mean that it can’t just be marketing. Traffic can’t just be something that you can say to someone else, “You have to build a product that underlies that.” What I’m wondering is, in this world of software, do people need to think through not just the people processes, but the project management and the workflows, how to do this with the kind of regularity that software offers? Is there more secret sauce under the 4Pines’ hood, in addition to the excellent people?

Mike Trinkaus  24:29

I’ll first say, you know too much about 4Pines. We’ve built some of our technology to do exactly many of these things that I’ve talked about related to collaboration, integration, and transparency. We have a platform that our entire tech team has built alongside the input from really almost everybody at the firm because we take input on a pretty regular basis. We use technology to help us with many of those pieces of the vision around the operating model in the industry focused, again, on three areas –  collaboration, integration, and transparency. You can do that both at a people level as well as a technology level. The people, internal, external, etcetera, we think, again, are a nice overlay to the co-sourcing model because it achieves and addresses the same things that we’re trying to address in co-sourcing in a different aspect of the relationship. I could sit here and talk all day about it. Once you see it, it then makes sense. Because technology is one of those things where, until you see it, you only have a sense as to what exactly it’s doing. You could talk on an app, but you start to lose people after a while. So have a platform.

Chris Gale  26:12

We’re a marketing and PR firm. Oftentimes we come to an existing product. We’re asked to amplify what you have started. From the beginning, it seems 4Pines was built to do something that other folks didn’t want to talk about or did not want to propagate. This is going to be a horrible analogy. But I used to work in state government. We got a lot of great media attention for this analysis we were doing on a fish species. Another state agency said, “Hey, we’d like to do one of those. You got so much media attention.” It was like, “Well, the reason why we did that is because we had this antenna; it took a lot of work.” What I’m getting at is, it’s not just messaging. It’s the messaging and the product development that are intertwined.


My last question: we spoke to Richard Chang, who is a founder of his company. We’re speaking to you. You’re a founder. Some folks are going to watch this who maybe don’t want to be founders. Maybe they want to enable it because they are operating partners or they are marketers on behalf of business units, or maybe they don’t necessarily want something on their own. Can you talk about how you can build something that’s defining the industry and talk about things that others are unwilling to say regarding a portfolio that somebody else owns or within a large company? Can it be done? Or what would you recommend the folks who start modeling to become founders themselves?

Mike Trinkaus  28:12

You have to look in the mirror and ask yourself and see what you’re comfortable with. I’ve been around the industry a long time. I think we have a vision and strategy that will work. Now, taking that strategy and executing is hard. You have to be a little courageous to do that. Or stupid. Maybe a little bit of both. I’ve been accused of both. And I’m okay with that. Can you do it as part of a larger organization? I suppose you could do it. To me, it wouldn’t be the same. I think there are lots of guardrails that you run up against, but maybe a version of it. If you’re a bit less risk-averse, that might be the spot for you. But I think, for us, we are completely committed to this vision that we have because we think it’s the vision for the future. Some version of this is what our industry is going to look like. We’re very good at what we do. We have a strong belief in our ability to deliver. Because of that, maybe rightly justified, maybe foolishly justified, I don’t know. Time will tell over the next five to 10 years to see how we do, but I think we’re off to a pretty good start. We have something we’re committed to. We’re going to continue to build it regardless of what people say, regardless of whether or not the industry agrees with us. What I do know is, our clients see the vision. Our clients are responding to the vision in a way that we expected, in a way that we anticipated, and whether or not we win a particular prospect or not doesn’t always tell the full story. You can’t be deterred, whether you are successful all of the time, because there are lots of reasons why folks make the decisions they do. It’s the feedback loop that we get regularly, that makes us incredibly excited about what’s in front of us. It validates our strategy, and our vision, every single day. I wouldn’t want it any other way than to do it the way we’re doing it as a bootstrap company with a vision, a vision, and a scrappy scrappiness needed to build something that could profoundly impact the industry. That’s really what we’re trying to do.

Chris Gale  31:01

That is excellent. It’s also, I think, a challenge, maybe to others who want to enable or empower innovation within their organizations. You have to enable commitment and be willing to, if I hear you correctly, admit that this is not going be the right solution necessarily for everyone immediately, but it may be the right solution for everyone eventually. But you adhere to it because the results are going to speak for themselves, which they do seem to be doing, and we’re talking to you because 4Pines has done tremendously well.

We are at time. Thank you very much, Mike. Thanks to everybody who joined us.

Mike Trinkaus  31:58

Right. Appreciate it. Thank you.


Fostering more interactions between individuals, creating transformative success

How we helped propel PFA Solutions to the forefront of GP solutions for private capital 

Private capital firms tightened their belts in 2023 as the number of deals plunged, interest rates rose, and uncertainty grew. In the same year, however, PFA Solutions welcomed a growing number of private equity and other investment firms, also known as General Partner entities (GPs), to their SaaS platform, FirmView, to manage carried interest and compensation plans. 

 Total assets managed by PFA Solution’s customers passed $1 trillion last year. This success helped make FirmView’s automation and transparency the new gold standard for carried interest and compensation management in the industry. 

 We worked hand in hand with PFA Solutions to develop a plan that moved their marketing program to a new level by studying and listening to their customers with a focus on far-sighted firms whose leaders wanted to retain the best talent; combining PFA Solutions’ multifaceted appeal into a streamlined marketing plan; and building a corpus of thought leadership through multiple channels to showcase how PFA Solutions solved pressing challenges in private capital today. 

The heart of private capital 

Carried interest and compensation plans are at the heart of aligning private capital talent with overarching firm goals and investment objectives. They are the primary reward when a firm’s partners have invested and managed investor capital wisely.  However, they are also notoriously complicated. Allocating rewards, managing vesting schedules for joiners and leavers, publishing documents timely, delivering participant-friendly data, generating distributions, and other related tasks absorb valuable resources and can be prone to “key person” risk and placing responsibility for vital functions in the hands of too few professionals. FirmView simplifies these tasks, delivering transparent management for the myriad carried interest and compensation plans offered at different firms and funds. 

 PFA Solutions Co-Founder and Managing Partner Richard Change knew that private capital needed cutting-edge tools to better manage carried interest and compensation. While many financial firms were making advances in automated and digitizing fund reporting for their investors, or limited partners (LPs), GP operations weren’t getting the same attention. 

 He and his colleagues wanted to reach prospective customers who relied on in-house financial technology solutions or used generic tools not built for purpose. PFA Solutions approached us in late 2021 after seeing LinkedIn marketing associated with our fund administration clients. Following discussions, PFA decided to amplify their sales team’s efforts through thought leadership that included a more robust LinkedIn presence and a new marketing push that could help forge connections with a wider community of chief financial officers, finance directors, chief operations officers, chief people officers and heads of human resources. 

 A roundtable 

 Together with the PFA team, we planned new LinkedIn content and a series of webcasts that catered to decision-makers at private capital firms who oversee carried interest and compensation. This focused stream of LinkedIn posts articulated the industry problems that needed solving, and how FirmView’s automation steps up to address many of the challenges that these decision-makers face – a playbook our team has refined and followed repeatedly to achieve success across clients. 


The webcasts featuring top-tier professionals like former private capital CFO Kwame Lewis, PKF O’Connor Davies’ Michael Stellwagen, and Drive Capital’s Isabel Walch attracted attentive audiences, including prospects and allies. This content, in turn, led to more grist for LinkedIn as well as bylines like Richard Change’s “A digital transformation is sweeping through compensation and carried interest” in Private Funds CFO, which is essential reading in the industry. 


In January 2023 we helped PFA Solutions organize a roundtable with 40 participants, including private capital CFOs and others, in New York City. The roundtable was an opportunity for networking, intelligence gathering on all sides, and, most importantly, cultivating new relationships. We especially focused on helping forge a key outcome during the event’s discussions: empowering attendees to identify and discuss their challenges with carried interest and compensation while introducing them to new solutions like FirmView that would help them fix these problems. 

Importantly, too, the follow-through didn’t end there. During the roundtable, PFA Solutions surveyed participants to hone their messaging still further. More than 70 percent of survey respondents said that carry and compensation in private capital firms were becoming too complicated for traditional professional services to manage. Almost a third said that their incentive programs frequently added new compensation plan types, too. The climate was perfect for a solution like FirmView, which addressed this pain point through automation and transparency that could scale. 

More customer success 

 In the months after the roundtable, staying on course while other parts of the market foundered, PFA Solutions earned the business of eight private equity firms, two venture capital firms, five real estate investment firms, and two credit firms.   

The survey in part predicted these wins. Pivotally, it informed our LinkedIn campaigns and topics of discussion for webcasts. It gave rise to more bylines, too, like Richard Change’s piece, “Here’s what workflow innovation looks like for private capital fund operations” in Global Custodian and other publications on how automation and transparency can overcome CFO’s challenges in comp and carry. The resulting foundation was a springboard for the Definitive Guide to Carry and Compensation Management, a comprehensive text that encapsulates themes discussed at PFA Solutions’ second roundtable in 2024. 

The new business that grew out of these interactions put PFA Solutions at the forefront of the companies meeting the unmet needs of private capital with new solutions for comprehensive carry and compensation management. New partners and more growth have been the pattern ever since.  

Want to learn more? Are you facing similar challenges in amplifying your message in your industry? We’d love to hear from you. 


The Definers Episode 1: Richard Change and GP Solutions

Richard Change and his team have defined what “GP solutions” mean in the private capital software market. If you’re a category creator, or you aspire to be one, join us March 5th and come armed with the questions you’d like to ask someone who’s been there and is doing that today. For our part, we’ll ask Richard how he uncovered an unmet need no-one else was willing to tackle, how his team are solving the problems holding others back and how PFA Solutions is enabling a movement of and by their customers, for their customers.

Chris Gale  00:02

Richard, it’s fantastic to have you on. I’m personally super excited because we serve a lot of founders and CEOs who basically want to do what you’re doing at PFA Solutions, which is defining an unmet need and then defining how that is going to be addressed together with your clients. We wanted to have this webcast so that you could share what you’re doing with clients of ours and folks in our network across multiple different industries. Can we first give folks an overview of PFA Solutions and your market?

Richard Change  00:55

PFA solutions started back in 2013. We’re focused on general partner solutions, general partners being the investment management arm in private equity. They’re the people who are responsible for doing the investment when it comes to private equity. We focus on solutions that meet their needs. Those solutions evolve around carried interest management. That’s how GPs are compensated. It’s simply the profit of investments that they make, as well as timing and compensation – your basic bonus and salary information, bringing it all together. That’s one-half of our application.

The other half gives GPs a better view of the performance of their portfolio and ties that information into transactional systems plus what they store offline in Excel. That’s the picture that we paint on the performance side. It’s a SaaS-based platform helping general partners manage carry and compensation and performance.

Chris Gale  01:58

To give folks some perspective, what kind of growth have you seen? There was an announcement of $1 trillion in total assets across your clients’ firms. Can you tell us more about the scale of the market you’re serving and the growth that you’ve seen?

Richard Change  02:15

We did exceed $1 trillion of assets under management by our clients, which brings us to close to 50 general partners that are using our SaaS platform at this point – internationally, as well. From a growth standpoint, the last three to four years have seen steady growth for us. We continue to focus on making sure we service existing clients and new clients equally. That’s first and foremost for us. Because in this industry, it’s a small, tight-knit community. You know, your reputation goes a long way in gaining new business.

Chris Gale  02:58

You’ve mentioned GP solutions. Until recently, nobody was talking about GP solutions. For audience members who are not as deep into the private capital sphere, LPs are limited partners. They are the investors. The GP is the private capital firm, the private equity, or VC firm. There are software companies that do accounting and operations software for private capital, but everybody focused on the LP experience, primarily.

Richard Change  03:36

That’s the first need that an investment firm has, meaning that you have to collect capital from your investors; you have to have a platform that manages notifications, distribution notices, and tax statements. For most GPs, the first thing they get going, from a technology standpoint, is making sure they’re servicing their investors or their LPs properly. That takes precedence over anything else. Because if you don’t do that, first, the GP portion may not necessarily matter. So, a lot of the technology is focused on the LP side. On the fund accounting side, there are big traditional software vendors in the space that help with the accounting as well as the distribution of information to the investors themselves. We always felt like that was well spoken for. For us, we saw the need on the GP side, the gaps, and the lack of modern technology. Excel still drives so much of what they do. Those were the things that we look to solve for – helping the GP automate and start to scale as they grow bigger.

Chris Gale  04:48

Serving the client base that you just described and the total assets across those clients. How come nobody else has done it or has done it in the focused manner that PFA Solutions has?

Richard Change  05:05

Probably because it’s a bit bespoke. Coming up with a model that fits 80 percent or so was a bit of a challenge. We passed that point, having a software platform that will essentially solve 80 percent of what we would see from a new GP out of the box. It took us a while to get there. We’ve now crested over that path. It’s the outliers and nuances that we may run into but, out of the box, we’re able to set things up, get the data into our platform, and get them operating based off what knowledge and experiences we’ve gained over the years, and push that back into the platform. Long story short, it’s not as easy.

Chris Gale  05:53

There are two things we’ve noticed about our most successful clients, especially in the last year when interest rates went up and companies out struggled. One is a main focus of this conversation: establishing peer-to-peer customer networks. The second is saying something that your competition doesn’t say or even is unwilling to say. That’s what you’re describing about the difficulty of the bespoke solution that’s required.

Are traditional SaaS providers that focus on the LP experience potentially afraid about talking too much about GP solutions, or is it more that they don’t have a solution? They don’t want to talk about it because it’s not an area that they can focus their engineering talent towards, for instance. You’re the only ones talking about GP solutions.

Richard Change  06:55

You’re starting to see some smaller players coming into the market. Thinking about that market, GPs of a certain size start to experience the pain points here. The other driver for us, and a true catalyst, was the pandemic. We addressed essentially everything that a GP operationally thought about – it needs to be electronic, it couldn’t require that face-to-face meeting with someone. To have a digital platform where employees and investment partners of the firm can go in and pull down their carried interest or pull down their compensation statements was another driver for us as well.

Exasperation with the competition for talent within the market. That’s a huge driver. If we think about GPs in general, their focus is always on doing great deals. You need people to help to make those great deals. The competition for talent continuously makes attaining, keeping, and retaining those talented individuals is something that they have to prioritize. There are a lot of GPs and a lot of investment firms out there now that like to keep talent. What better way to make sure that they stay with this firm than explaining their relationship to them exactly from a compensation standpoint? That has been the other driver for us over these last three to four years. It’s really about compensation for the talent. Firms want to digitize their employees’ experience.

Chris Gale  08:40

Excellent, thank you. I want to come back to that point about the pandemic. But before we do, I’m now thinking about the sequence of your biography. If we go back to the origins of PFA, you were in a role inside a large, well-known firm. You could have continued at that firm, potentially, or at a different firm, but instead, you decided to go out on your own. Can you tell us about that decision? What drove you to do that? Because it can be kind of scary.

Richard Change  09:34

Yes. Tons of fear and trepidation for sure. You know, I would say one of the big drivers was just talking to other GPS at other firms and seeing that they suffered from the same sort of situation that my firm did, meaning a lack of technology on the GP side to help automate and systematize a lot of the data and processes that were in place. That was a big driver for us. Here’s a big gap in the industry, from a technology standpoint. There are solutions that we’re familiar with and know how to build, audit, and think about them at scale. Let’s build out a platform where we can help GPs manage this because it does become a bit of a pain for a lot of our GPs as they continue to grow. Complexity continues to grow with the size, quite honestly.

Chris Gale  10:25

Why PFA? Was there not a software company or consultancy out there doing that? Why not try and advance that from within the GP?

Richard Change  10:38

We didn’t see a software company doing it and addressing GPs. We just looked around high and low. We saw some looking to shoehorn GP operations into what they’re doing for the LP into those systems. It’s not a natural fit. Because, if you think about the users you take care of for a second – I hate to dive into the nuance here – but it’s not the model. Your investor goes and says, ‘Hey, you know, I’m going to commit X amount of dollars to this fund.’ That is the basis of our distributions and contributions that will be called. For that investor, you should show how the math actually works out. It’s pretty simple. It was complicated outside looking in. But, basically, your commitment drives all the downstream calculations for calls and distributions. On the GP side, when we think about carried interest in the profits that are shared, there is no commitment necessarily. It’s arbitrary. It’s all based on my feelings for you as a team player. I’m going to get X amount of percentage points on this particular deal or shares on this particular fund. That’s how those calculations are done. It’s a bit arbitrary on the GP side. And it’s not arbitrary on the LP side. I have a basis for commitment that I’m going to use to calculate and call capital and distribute returns to you. Showing the math is easy on the LP side. It’s much harder on the GP side because it’s all arbitrary.

Chris Gale  12:13

When PSA Solutions started, though, you were not a software company. You were doing consulting and professional services. What exactly was PFA doing at that point?

Richard Change  12:25

We were doing technology consulting back to the industry. Part of what we wanted to do those first couple of years was pay the mortgage and fill the book of business – footprint and foundation. We started doing what we knew best: custom application development, enterprise reporting, and back to the same industry. In the first six to nine months, we thought would be industry agnostic. But you end up sticking to what you know. GPs that we were familiar with reached out and needed help. That really got the ball rolling for us in the industry.

Chris Gale  13:05

Were you always thinking about developing a software solution? Or were you at that point from the very beginning, and the consultancy was in a way, like you said, to pay the mortgage? It sounds like you were scoping out where the most useful problems to solve were exactly. In engineering and software development, you have a very strong background. When did you decide, “Okay, this is it. Let’s start building something.” What triggered that?

Richard Change  13:49

One of the main triggers was working with a GP at the time and realizing that everything that they needed to do by quarter and reporting when it came to carry as well as performance, all started with Excel. It wasn’t a system that they ran through first to grab this information and press a button to click a report. The basis for what they did started in Excel. They reviewed that information in Excel and then put that information in the system to essentially act as a data storage mechanism. It didn’t provide the calculations. Everything’s done offline. It dawned on me that this is still a huge problem within the industry. Excel is still the gatekeeper for data. We also didn’t see a carried interest management solution out there. For a lot of our clients, when they sign on to work with us and to leverage FirmView, we’re pretty much converting every single client from Excel. There’s still a huge gap. Excel still runs the roost when it comes to data within the industry was one driver. The lack of technology products available to GPs was the other. I always felt like this industry was underserved from a general technology standpoint. That underserved group is even higher on the GP side.

Chris Gale  15:36

This is interesting. You see a need, from the GP side, that you don’t see others addressing. You decide then to scope out the needs in the consulting process and develop software because there’s really not a software solution out there. You’re working with your former self from a certain perspective, right? You brought your former selves together to sort of talk to each other.

Why the decision to bring customers to customers together on a peer-to-peer peer basis? You held a roundtable at the beginning of this year and one last year. Tell me about that aspect of it. I’ve noticed that our most successful clients and folks in our network who define a market make peer-to-peer conversations happen that you seem to be quite dexterous at facilitating.

Richard Change  17:10

The private in private capital markets and private equity isn’t a misnomer. Naturally, the industry keeps a lot of what they do close to the vest. A lot of it’s due to just competition for new deals or talent that’s understandable from a competitive edge standpoint, but also creates these islands, right? How do I think about compensating or developing a carried interest plan for this particular fund? Or what are the tax ramifications? We structure up phantom equity this way, or these hours that end up getting created, a lot of times don’t get the benefit of an industry standard, the benefit of hindsight, or lessons learned from other GPs. What we wanted to focus on for our roundtable was not a solution or our platform. It’s first and foremost about connecting GPs to each other. It’s making sure that they’re not alone. The challenges that they’re facing are being felt by others in the industry. They can look around that room. Now they have 40 to 50 other people that they can reach out to and ask questions. Yes, you know, there’s our platform that can help with that process. But there are things that our platform can’t do depending upon the decisions that the GP makes. To me, essentially, that’s knowledge, that’s information that’s just as valuable as a software platform. Thinking about some of the decisions good or bad that have been made, how do you push that back to the same community so someone doesn’t repeat the same mistakes that someone else made? That’s the most valuable thing that we get out of our client roundtables. It’s that information sharing.

So, we started the roundtable. Last year was our first year. It was connecting people with each other. This year, we took it another step further and brought in tech specialists to also help the group think about and answer questions about structuring plans and tax implications that need to be considered because of new changes in tax laws. It’s not just the blocking and tackling of having a system that does X. It’s all the upstream decisions that affect our system that we want to help our clients with. It’s not just about what they do in our system, but the decisions that will eventually affect how they use any system.

Chris Gale  20:01

It’s an area where there is sensitive information, there are islands of expertise developing, and therefore there is an opportunity. Folks are coming to you and saying, “Can we create a connection and another island over here?” But that provides an opportunity for you to bring folks together in a way that is meaningful to them serving a need, not just you pushing out a message. The reason why I’m checking in with you on this is because we have other clients who, for instance, might be in the healthcare space. There are physicians out there and health system leaders out there who may say, “Our stuff is incredibly sensitive.” They may not necessarily be in such a competitive situation, though, unless you have two hospitals in a similar catchment area. They may feel competitive. But I think what you’re saying is, whenever you see islands that are underserved, and whenever you see difficult challenges, that are not being addressed, there stands an opportunity, that’s where the software provider in your case can step up, because, and go beyond just providing software.

Richard Change  21:21

Right. At the end of the day, something I’ve always strongly believed in was that, yes, we can provide software that does X and could get your dry cleaning, even. But it’s the other things that aren’t software-related that we like to provide as well. It is a relationship that we’re building with that potential client to understand and help them utilize our platform and think about the decisions that they’re making, thinking about the plans or structures, thinking about what’s going on in the market. That’s one of the most helpful things that we provide – backing. Yes, the software is great. It does X, Y, and Z. You’re able to automate push-button imports. That’s fantastic. But can we help someone think through the structure for a new carry plan and their tax implications? That’s the value I think that we also provide back to our clients – helping them think through not only implementing the software but also how they think about their plans. What are some other reasons other firms do this instead of the way you’re doing it? What are some of the pitfalls? That’s our secret sauce, I guess.

Chris Gale  22:36

It’s interesting you say that because there are firms out there that provide consulting on carry and comp and there are accounting firms and fund administration firms. PFA is very careful with talking about who’s at your roundtables. But folks at those roundtables know that it’s an amazing group. You don’t necessarily see consulting firms necessarily able to pull them together. I’ve wondered, is there something about the fact that you’re a software firm that allows you to have conversations that maybe consultants haven’t discussed before? You seem to be able to bring folks together around what is needed in the market, in a way that seems to be relatively unique.

Richard Change  23:45

It’s probably the company that we keep, quite honestly. We have a client that utilizes a platform. That client is going public. They’re interested in how other publicly traded private equity firms on our platform handle this situation. That’s outside of carry. But we served as a conduit between those two firms. They’re looking to see how they should handle this new SEC regulation. “How did you guys think about it?” We were able to connect those two firms. That’s one of the things that we kept seeing. We’re becoming the conduit between a lot of firms. Sometimes it’s just knowledge that we already had based on experiences with all of these different clients of different sizes as well. Other times it’s the company that we keep. Being able to share some of those lessons learned or how we’re going to approach X is one of the things that our clients look to us for a lot.

Chris Gale  24:49

A follow-up question is about your software company. We’ve been to our share of software company user conferences. Are there things that you take from the two roundtables? Are there things that you take from those conversations that you put into the product? Roadmaps? You have my last question. We’ll be coming back to the pandemic. But you have individual one-on-one conversations. Is there anything in the roundtable environment that facilitates the product roadmap process?


Richard Change  25:33

The piece that we pushed into the platform in the previous year was based on feedback we got from the roundtable. They wanted more ad hoc reporting capabilities within the tool. So that’s something that we focused on for the last 18 months. We’re continuously pushing that capability out to all of our clients. It definitely informs where we should go in our roadmap. It also helps us think about potential new modules that we should look at. When we first started FirmView, it was carried interest that we were going to help clients manage. It quickly evolved to compensation. So now I have my carry and my compensation all stitched together. Then clients came back and said, “Well, as you’re managing those pieces, what about our internal core investment that our employees are also investing in within the firm, too?” Taking a step back, this year it dawned upon us that we’re focused on everything that’s GP-related.

So, just based on our client feedback, we’ve rolled out the compensation module, the core investment module, and now, our most recent one is our compensation planning recommendation module where clients can facilitate their year-end process through our application. I would say the majority of our roadmap comes from our clients’ feedback. Each and every year, we do a survey and collect that information. We start to make decisions about where we’re going from a platform standpoint. I will say, this year, though, the demand was less about new features and more about new ways to collaborate with each other. That was one of our biggest takeaways – that wealth of knowledge, how do we tap into that? How do we get to a point where we can, you know, communicate, and talk about how we’re utilizing your platform with others? User groups were the new feature. An enhancement that we’re going to make is allowing others to communicate with each other, how they use the platform, and how they think about their compensation plans in general.

Chris Gale  27:52

Here’s my crazy question building on what you said about the pandemic. For marketing media relations teams during that period, everything had to do with the pandemic and how it was going to change work. That’s definitely been true. Our webcast series was partially an outgrowth of the pandemic. I’m not sure how much this connects with the B2B SaaS space, but we’ve heard stories about companies that had enormous success with the digitizing and virtualizing of work that came out of a tragic event. Then there was a cliff that was gone over. It seems PFA’s trajectory, even through the doldrums of higher interest rates, has continued to be up and to the right in the progression from the pandemic into the current environment. I connect that with what you’re describing about people and wanting a network effect for your customers. Is that a way that you’re sustaining that initial hit of growth? It seems like you’ve built off of this networking effect.

Richard Change  29:33

I think it helped. That provides validation, for one, that you have market fit, and you have a product that’s meeting the needs of specific competitors that they view in the market against themselves. I think that helps. Don’t get me wrong. If you’re able to get over X number of clients, that at least validates to everyone that you have a great product, you have something that they should be utilizing or thinking about utilizing. That’s helped tremendously, I would say. The other thing is that this need hasn’t gone away. Right. I do think that, you know, more and more firms as they continue to scale and grow, this need becomes even more relevant for them.

Chris Gale  30:24

Thank you so much. Thank you, everybody. We’ll let folks know about the next webcast, which will be coming up later in March.

Richard Change  30:36

Thank you.