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ZEPHYR COVE, Nev. — Working from a modest office building near the shores of Lake Tahoe, Zephyr Associates has carved itself a good niche as a developer of sophisticated analytical software used by investment management companies.
The company's new chief executive officer now looks to lead the company headquartered at Zephyr Cove into a larger presence in international markets and boost its online product offerings.
And he's doing it at a time when regulators and members of Congress are considering wide-ranging changes in financial regulation that could require equally wide-ranging changes in the company's software.
“How do we deal with the aftermath of the crisis?” asks Will Clemens, who took the reins of Zephyr Associates early this year.
It's not an easy question, because the company's 40-person staff often is working on products that won't be completed for as much as two years — an eternity when some of the basic underpinnings of the financial services industry are being questioned.
And Clemens isn't one to rush things just to get a product to market and worrying about software fixes later.
“I don't think failure is OK,” he says. “Our customers expect this stuff to work.”
Zephyr Associates has a long history with many of those customers.
Founded in 1994, by Steve Hardy, a one-time investment manager, Zephyr Associates was the first commercially available software to implement what is known as “style analysis,” a concept developed by Noble Prize winner William Sharpe of Stanford.
The software allows investment managers — pension funds, say, or fee-based investment advisors — to dig deep into the performance and risk of investments including mutual funds, exchange-traded funds, stocks and hedge funds.
“We give investors a tool so they can determine if their managers are skillful,” Clemens says.
And they can use the software to create what-if scenarios involving different types of assets. Some users have dubbed the software “a consultant in a box.”
The company's customers range from global financial firms to boutique investment advisor shops.
“It's a fairly simple product, and it's a very powerful product,” says Clemens, who worked as vice president and general manager of the STP business unit of Advent Software, a San Francisco developer of investment management tools, before he joined Zephyr Associates.
The company also has succeeded because it's more willing than some of its competitors to provide a flexible solution to meet a customer's need, Clemens says.
And he believes that keeping current customers happy is the most important step toward growth for Zephyr Associates.
“If we are making our existing customers successful, our growth and our financial future will follow from that,” says Clemens. “We need to be asking: What do our customers need? Are we actively listening to them?” Some of that growth is likely to come from international markets.
Zephyr Associates just opened a sales office in London that joins offices in New York City and Memphis. Global expansion was established as a priority for the company when it was acquired in mid-2007 by Kemmons Wilson Companies of Memphis.
“We're putting a lot of effort into that this year,” Clemens says.
At the same time, the company looks to build its presence online.
This spring, for instance, it rolled out Zephyr OnDEMAND. That's a Web-based platform that investment professionals can use when they're on the go to generate updated and customized reports that stay within the standards established by regulators.
The company thinks Web-based solutions will help open doors at some smaller customers.
And Zephyr Associates also sees substantial opportunities in the investment companies that have been its bread and butter since its founding.
Clemens ticks them off: Fee-based investment firms. Pension funds. Institutional investors. Hedge funds. All told, Zephyr Associates counts about 20,000 potential customers.
And then there are current customers who use Zephyr Associates products only in a small way and might be up-sold.
But Clemens isn't looking to make major changes or march the company off into entirely new directions.
“This is a good success story,” he says. “They don't grow on trees.”
The company's new chief executive officer now looks to lead the company headquartered at Zephyr Cove into a larger presence in international markets and boost its online product offerings.
And he's doing it at a time when regulators and members of Congress are considering wide-ranging changes in financial regulation that could require equally wide-ranging changes in the company's software.
“How do we deal with the aftermath of the crisis?” asks Will Clemens, who took the reins of Zephyr Associates early this year.
It's not an easy question, because the company's 40-person staff often is working on products that won't be completed for as much as two years — an eternity when some of the basic underpinnings of the financial services industry are being questioned.
And Clemens isn't one to rush things just to get a product to market and worrying about software fixes later.
“I don't think failure is OK,” he says. “Our customers expect this stuff to work.”
Zephyr Associates has a long history with many of those customers.
Founded in 1994, by Steve Hardy, a one-time investment manager, Zephyr Associates was the first commercially available software to implement what is known as “style analysis,” a concept developed by Noble Prize winner William Sharpe of Stanford.
The software allows investment managers — pension funds, say, or fee-based investment advisors — to dig deep into the performance and risk of investments including mutual funds, exchange-traded funds, stocks and hedge funds.
“We give investors a tool so they can determine if their managers are skillful,” Clemens says.
And they can use the software to create what-if scenarios involving different types of assets. Some users have dubbed the software “a consultant in a box.”
The company's customers range from global financial firms to boutique investment advisor shops.
“It's a fairly simple product, and it's a very powerful product,” says Clemens, who worked as vice president and general manager of the STP business unit of Advent Software, a San Francisco developer of investment management tools, before he joined Zephyr Associates.
The company also has succeeded because it's more willing than some of its competitors to provide a flexible solution to meet a customer's need, Clemens says.
And he believes that keeping current customers happy is the most important step toward growth for Zephyr Associates.
“If we are making our existing customers successful, our growth and our financial future will follow from that,” says Clemens. “We need to be asking: What do our customers need? Are we actively listening to them?” Some of that growth is likely to come from international markets.
Zephyr Associates just opened a sales office in London that joins offices in New York City and Memphis. Global expansion was established as a priority for the company when it was acquired in mid-2007 by Kemmons Wilson Companies of Memphis.
“We're putting a lot of effort into that this year,” Clemens says.
At the same time, the company looks to build its presence online.
This spring, for instance, it rolled out Zephyr OnDEMAND. That's a Web-based platform that investment professionals can use when they're on the go to generate updated and customized reports that stay within the standards established by regulators.
The company thinks Web-based solutions will help open doors at some smaller customers.
And Zephyr Associates also sees substantial opportunities in the investment companies that have been its bread and butter since its founding.
Clemens ticks them off: Fee-based investment firms. Pension funds. Institutional investors. Hedge funds. All told, Zephyr Associates counts about 20,000 potential customers.
And then there are current customers who use Zephyr Associates products only in a small way and might be up-sold.
But Clemens isn't looking to make major changes or march the company off into entirely new directions.
“This is a good success story,” he says. “They don't grow on trees.”
