Hiten Patel
Hey, thanks for joining us today. It's Hiten Patel, Head of the Financial Infrastructure, Technology, and Services at Oliver Wyman and I'm delighted to have with me today Anand Sambasivan from PrimaryBid, co-founder and CEO. Thanks for joining us, Anand.
Anand Sambasivan
Hey Hiten, nice to see you again.
Hiten
Now, we first met back in December 2016, Anand. I don’t know if you can recall those early days when you popped up on the scene and you won our FintechNow competition. So, talk to us a little bit about what PrimaryBid does and these last seven years since we first met?
Anand
Yeah, well, I remember that, there are still photos of it, by the way. It was a great moment to be validated by Oliver Wyman. Look, as you say, look, I am Anand, I am the CEO and co-founder of PrimaryBid, and our company has a pretty simple, singular mission, and that is to deliver fair inclusion to capital markets, to public markets.
Now, you might think, hey, aren't the public markets already pretty well democratized? Can’t I just go in and buy the same share in the stock market as everyone else and you can. But my favorite way of explaining what we do is, is through an analogy and it goes like this. So imagine the stock market is exactly like your local grocery store. Okay, so it's open from 9 a.m. to 5 p.m. every day. And in that time anyone from Bill Gates to a college graduate can enter that grocery store and buy the same groceries, the same exact thing. Except in this grocery store there's one key difference, right? There's a specific aisle that's guarded by this massive bouncer, you know, which carries the same groceries, the exact same tomatoes from the same farmer, the same expiry date, etc., only it's being sold at a fraction of the price.
And the catch is to enter this aisle, you need to show this bouncer your checking account live. And if there's more than $1 billion in your checking account, you can go into this aisle and buy these groceries for free. Now to make matters worse, these billionaires are not going in and buying these tomatoes so that they can cook at home and share with their family, they are buying it to get out of that aisle to sell it to you and me one second later at full price.
And that's basically how the public market works. Those aisles are called investment banks. The super rich get to shop at them. They get to buy things like IPOs and blocks and bond issuance and gilt issuance and so on. And the only reason individuals like us cannot do the same thing is that the market infrastructure is not set up to work in parallel with these banks to facilitate it.
You know, the banks are there to facilitate wholesale product institutions, but no one is really looking after the individual. So, you know, our mantra coming into PrimaryBid was quite simple. We said, look, the markets are either public or they're not, and you can't have it both ways. So when you are a publicly listed company and you're doing a follow on or you're going to go public through an initial public offering which is meant to do a very specific thing, then let's form a way to include the public alongside the investment banking process. And that's what we do.
Hiten
I love it. I love the mantra. I also love the shop keeping analogy, having grown 20 years of life, living in a grocery store, it resonates deeply. It's such a simple and compelling vision statement and cause. What challenges did you have to overcome to shift that balance along the way?
Anand
I had people coming to me saying “Oh, what an innovative idea, right?”. And I said, well it is, it may be or may not be because, you know, as I said, the IPO stands for initial public offering. It doesn't stand for important people only. Right. So what we're trying to do is to sort of bring it back to what this thing is supposed to do.
You know, one of the biggest problems that we have is the fact that the institutional space has just become so sophisticated. You know, when a bank does a deal and they're able to sort of get demand from an institution, it's almost always oversubscribed. And the bank is able to build a ton of data and information and transparency around their order book, which they can then pass on to the company and advise them and help them curate this book.
And the reason that individuals get left behind is, and nothing Machiavellian going on here, it's just basically that the line item that comes in, if it ever comes in, that's retail only has that one word retail, unlike the institutional space, you don't know who these individuals are or how they're connected to the stock, what are they going to do afterwards, etc., etc..
And as a result, they're just getting left behind and they're not getting allocated. So the biggest challenge we had was how to really deliver fair inclusion. You know, we need to actually bring the retail part of the equation up and potentially beyond what's happening in the institutional side, deliver a level of data clarity deliver it at scale with pace, back to the investment bank, back to the company so that, you know, they're able to allocate this demand and becomes allocable demand.
You know, frankly, if I was going public and all I got was one word retail, I would just be wondering what's behind this when I get so much information from the institutional side. And so, you know, our goal at PrimaryBid was to sort of say, look, let's solve this problem, you know, from the ground up using first principles.
Let's build the retail pipes the way they're meant to be built and to give the bank and the issuer that level of clarity to help them allocate. In fact, increasingly at PrimaryBid, I'm starting to stop using the word retail. I think that's kind of part of the problem. There's a lot of stigma associated with that word.
You know, I'd rather use the word, you know, shareholders or customers or, you know, general public or, you know, who are these individuals? Are these students? Deliver the data in a way that's meaningful to provide the sort of best-in-class allocation.
Hiten
So, what are some of those individual, students or people? What are they telling you? What are they saying? What feedback or messages are you getting back as you have been along this journey?
Anand
One of our most famous data tags is shareholder because we do so many follow-on deals, right? So and employees as well on a follow on which is pretty cool and what we see is that you know when we're able to link back to a company and a bank, that this individual is an existing shareholder, which means that, you know, they understand a company they bought into the stock before, you know, they've held a stock before, they're a certain type of investor.
We are getting increasingly better allocations against it. Right. And when we did, you know, deals like for Soho House or Deliveroo, they used us to allocate to members or customers and we were able to give really a lot of data back to the company around what type of customers are coming in and so on. So, I think enabling these stakeholder tags have been hugely helpful when it comes to allocation.
Hiten
Yeah, I can see that being, remarkably powerful. It always feels different when you use an identity or something that you understand who's on the other side, right? It feels a lot more personal.
Anand
Yes, and I think both sides of the equation deserve it. You know, I think no one has a God given right to access a deal, I suppose, right? And the allocation decision on any deal ultimately belongs to the company. And you need to equip them with the right information so that they can make thoughtful allocation decisions, because underlying all of it, is, if you think of the primary markets or, you know, even including blocs, you have something like $5 trillion of issuances globally. But you know, probably has something like 300 trillion in terms of demand. So it's such a skewed equation that, you know, to get allocated, and you need to demonstrate, you know, where you are in relation to this company.
Hiten
Talk to me a little bit more about the company. Like what are the corporates telling you? What are the corporates looking forward from their perspective as they kind of enter into this journey? A lot of the narrative today has been about the retail and the individual. How do the corporates and the companies feel about what you do?
Anand
Well I mean, if you look at what's happening, you know, all around the world, the most exciting opportunity we see in our industry is the sort of global push towards better inclusion in capital markets. And that's being driven by the corporates, right? It is because the corporates have wanted it. That sort of filtered down through governments and regulators.
Now here in the UK, as you know, thanks to the Mark Austin reforms, we're going to see mandated inclusion of retail investors into deals. That's amazing when coupled with the removal of so many frictions that stopped them previously, you know such as the 8 million euro cap and follow on and the six-day rule on IPOs. We're seeing similar changes in the EU in a sweeping capital markets union initiative.
The Middle East is a surging capital market environment right now as you know, and it's systematically including individuals in all of their transactions. And now the US actually the change is being driven directly by the corporates, the issuers themselves. You know, we're looking back at over two years of IPO data and something like 50% of the retail allocation went directly to stakeholders of the company.
The other went to general public. And you know, the genie is out of the bottle Hiten, on this issue globally. You know, financial institutions, governments, regulators, issuers specifically want to see this happen. They really want to include individuals in their deals. And the only thing that can really stop this movement, I think, is a lack of technical infrastructure to enable it.
And that is why for us, PrimaryBid, these are really incredible, exciting waters we are swimming in.
Hiten
Yeah, I can see that. It feels like pretty exciting times. And you talk about some of the global markets there. I know you guys started out here in Europe, in the UK. One thing that struck me on a recent trip to Asia, someone was quoting back to me the global IPO listing volumes by geography. And one of the things that struck me was just the scale and size of the markets in places like in China and India and some of the other Southeast Asian markets where there is just a lot more raw development in the corporate economies.
Talk to me a little bit, how are you thinking about global plans, where you started, where you're going? What are some of the challenges as you try and roll this out across the different markets?
Anand
Yeah, well, I mean, challenges, I think everyone at any sort of startup scale, CEO will tell you they face challenges every day. But I think one of my favorite challenges is how we think about developing our platforms application to exactly that, to new products, new partners, new geographies. Now, for example, you might be aware here in the UK we expanded our product capability to run secondary blocks.
Now, you know, a couple of years ago we ran the first ever FTSE 100 primary issuance to retail investor. That was a £2 billion deal for Compass Group. Now that we can do blocks we actually ran the very first ever FTSE 100 block. So to retail investors and that was BlackRock's sell down of LSEG we ran the retail piece with all the major investment banks on the institutional side.
Seeing that kind of thing will never get old. And, you know, we've upgraded our platform even still, right? So to enable the government, for example, to sell a gilt issuance directly to the UK public through our platform and we hope to one day run the very first gilt issuance direct to public. And hopefully it's a green gilt issuance. You know, wouldn't that be magical? But you know, and we think about the same kind of things in the rest of the world, right? So in Europe we're plugged in to, you know, three of the biggest stockbrokers in France through an API that we built. So it's both from Boursorama, Bourse Direct and Easy Bourse. We've got about a 100% market share in relevant deals out there where we're actually able to, you know, run straight through processing and you're able to, you know, buy from follow on deals directly from your brokerage account. It goes into our centralized order books with all the relevant data tags and you get allocated right back. You know, again, when we think about other markets like, you know, the US, potentially the Middle East, we don't have the hubris to think that, hey, we can enter these markets by ourselves and you know, become massive and crush the competition and so on.
You know, if you followed our story from the very beginning, we have always been about powerful partnerships. We have already built amazing ones globally. And when we sort of land into new geographies, we will be doing the exact same thing because our technology has a such an incredible degree of application for, you know, financial institutions globally. And it's very built to be highly extensible so, it can sort of solve various different problems for different financial institutions in different geographies. And we are excited to push that forward.
Hiten
Does it get easier? Can you sign up and just point to say, wow, look at this tremendous impact benefit we're having over here? What I am missing in that simplicity that once you crack it, it is not in one place and it's pretty hard to argue with the societal benefits of public market participation?
Does it get easier? What new challenges crop up? What am I missing when you could just try and drive that referenceability to kind of drive your roll out?
Anand
Look, I don't know. If easier is the right word? I mean, I was asking a friend of mine the same question about bringing up a kid, I have a four year old daughter and he was like, you know, different age, different problems. The thing that's exciting is, I feel like the changes you sort of make are, you know, directly related to the size of your company.
Right. So if you're a small company, you know, you're trying to do something, try to do a deal or try and do something that could 2X your size. Right. And if your valuation is 3 million, then you could, you know, do something amazing and you could become a $6 million company.
I think the thing that changes, the thing that remains is that 2X or you know that multiple, you know so when you're a bigger company, the things that you talk about and the things that you can do, you know, the sort of the quantity impact it has on it is huge.
It is so much bigger. But the impact it has to your company in terms of relative growth is the same. I hope that makes sense. And so, you know, we find ourselves having in the middle of these amazing discussions with these amazing partners and we are able to you know, we have earned our seat at the table.
Right? And, you know, we have built something amazing. It is fit for purpose. It is valued by the market, and we are really proud of it. But then, you know, it is still we are sitting there at the table with these amazing companies and companies that we have admired for so long. I have personally admired for so long. And we are having serious discussions on how we can roll forward together. And it's pretty cool.
Hiten
Your point on size resonates massively, right? At the privileged position of working with companies that are, you know, only just double digit million revenue in the millions. And we have the privilege of working with some clients who have billions of dollars in revenue. And I think your point on the relativity of like the opportunity to the scale of who they are is one that that rings loudly.
It's just different challenges when you are bigger and most of the big guys are looking at the small guys saying “hey you are smaller, you're agile and nimble. Your founder and your management know everything about the products and the service”. The little guys look at the big guys like “hey, you've got sort of scale the CapEx and distribution. So you're right, different scale, different stage.”
The problems just evolve. So it feels like that. So that's something that to stay. I'm going to pick up on your point, you mentioned being a father. I was going to pick a conversation a little bit, I guess slightly away from PrimaryBid a bit more to you as a founder. One of the things that we wanted to kind of give our listeners a little bit more insight into is kind of what it takes to deliver some of the impacts in the financial services and tech world.
Talk to me a little bit about what do you do outside the professional sphere? What are your interests? How does that help you in landing and nailing what you've done with PrimaryBid?
Anand
Yes, well, if you ask me, before I became a dad, I would be saying so many more things. Well, I mean, look, I have got so many interests, I am a s**t golfer, but I do love playing the game. You know, I used to have a love for my PlayStation, although have not really had a chance to pick up that piece recently.
I love being a dad. I just do. It is such a fulfilling experience. It has its moments and, but I learn a lot from it. I mean, you know, you ask the question and so I was thinking about something just recently, you know, my daughter suddenly got this fascination for dinosaurs, out of nowhere and just like asking me about it.
And I started just doing a little bit of research. I talked to her about it. So I said, you know, and I sort of uncovered something pretty cool, okay? So the modern human being, okay, Modern human has been around the planet Earth and walked planet Earth for roughly, let's say, 50,000 years, give or take 50,000 years.
So let me ask you that. With that, I'll throw it back to you. So with that in mind, okay, how long do you think dinosaurs walked on planet earth? Modern humans are 50,000.
Hiten
I feel like I'm in the middle of an Oliver Wyman case interview, I ought to get this.
Anand
Going right back at you. Go to Google, search it.
Hiten
I'm going to try. I imagine, I think it's in the millions of years, but I reckon I'm still an order of magnitude out. I suspect.
Anand
More. It is 165 million years, right? That is dinosaurs. Okay. So, it just got me thinking, you know, like we use the term dinosaur as some sort of derogatory term or that, you know, that companies is a dinosaur, they are dinosaurs. You know what? I would love to be a dinosaur. You get it is really, you know, standing the test of time. You know, they kill humans in terms of how long they have been around.
Okay. What we've done in our time is pretty mind boggling, landing on the moon and so on. But, you know, taking it back to a business context, we have so much to learn from major companies. And I always kind of I think that the trendy thing to say is, oh, that the young startup is, you know, disrupting and so on. And I have a huge degree of respect for these long-standing institutions, how they’ve sort of done it and continue. You know, that staying power is mind boggling. And I think there's so much we can learn from them. And I sort of draw these analogies randomly when I come across them.
Hiten
I like that. I like that there is something about parenting that really makes you go back and think to first principles. I got asked this morning by my daughter are you an astrophysicist? No, I am not, she said, you know astrophysicist know a lot and they are very clever. She was like what are you? Well, I used to be a mathematician and now I am a management consultant and I do not think I had the conviction to argue and tell her that I had the same knowledge base as the astrophysicist.
Anand
I advise astrophysicists on various occasions, should be your consultant answer.
Hiten
Exactly. Just talking a little bit like giving back sharing from your experience. There are a lot of people I know out there in this community that listen to this who are either in industry today or an investor or a young grad, young in the company who might have an idea or can see something going on in the industry that could be done more efficiently.
What would be your kind of message you would pass on? Like, you know, particularly translating idea to impacts? Yeah, I spend a lot of time with people who have great ideas, can understand great ideas. I put myself in that category that can understand the idea but very few people have translated it to have an actual impact and the kind of impact you've had. What would be the giving back, what would be the message or one of the lessons you would pass on to anyone who's sat there with an inkling of an idea but wants to figure out how to make impacts with it.
Anand
It's difficult. It's difficult because, you know, everyone's journey, particularly in that early bit, it's like you know, it's not there's no real science there. It's like do this, that and the third thing and then you're going to be successful, it's such a concoction of so many things. But you know, see, the biggest lesson for me, effectively, it's more of a reinforcement of an idea is it was to always be authentic and to never give up, because delivering change and enabling an idea is exceptionally hard.
Probably one of the hardest things ever. It needs a combination. As I said, so many things in your control, but most of things are not in your control, which by definition means you will fail more often than you succeed. So if you don't have this authentic idea behind yourself with this deep conviction, you will get found out. You will not be able to push it forward and it's that thing that should give you a single-minded determination to make it happen.
You know, the data is going to tell you not to do it. People say that you should be data oriented. And if you're always completely data oriented, you never start a business because you will most likely fail, right? I mean, that's just what the data says. So you need something else then, than just that to keep going. And for me, it was, you know, the conviction, the mission, be authentic and then use that as that sort of drive to just make it happen.
Hiten
It makes sense. There's a lot to take away from that. And just shifting a little bit if you were to shine a spotlight on something exciting or interesting. Either an individual or a company you are seeing in and around the space. Is there anyone or anything that you would call out or want people to be paying attention to right now?
Anand
Apart from you and Oliver Wyman? So, you know who I would do, a little off piste, I am going to go with a lawyer. And you probably know him. It is Mark Austin. He is an exceptional guy. I mean, I have the privilege of knowing him and, you know, getting his advice on a bunch of things.
You know, the first time we came across him was during that Compass group deal. I was talking about is our first FTSE 100 deal. And we were trying to break through, you know, with a mission and say, hey, you know, big companies should use our product because it is fair access. But, you know, it was untested at the time.
And we were frustrated because companies kept raising capital. And they didn't sort of use our product to deliver that access to individuals. And then one day we got a call from Mark and, you know, he says, I want to diligence the heck out of your platform. And he took us through the ringer, and it got pretty exciting because it is like this level of diligence from, you know, someone a senior as Mark means that if everything checks out, we're probably about to do a massive deal.
And it was I think because you know he took that step himself. He said I am going to you know, I am going to take some time and figure this out and see if this thing is real. And not many others were able to do that at the time. Or did that at the time.
So, you know, that was the first time he came across. And, you know, since then sort of seen what he has been doing in the UK market. His review is very famous. It has changed so much of the thinking around capital markets. It has got a ton of momentum behind it. It's groundbreaking. It puts the UK not in line but leapfrogs the UK particularly around secondary markets and inclusion in the secondary markets to almost every other country that I know.
And you know it is a brave, bold move and you know lawyers who you know, maybe sometimes maybe wrongfully have reputations of being risk averse. And so on. You know, it was amazing to see, you know, such a high-profile lawyer, take some time and build this out. So, if I were to shine a spotlight on anyone right now, it would be him.
Hiten
Yeah, I think it is a great, story to share and something that hopefully we can emulate a bit more. I always feel it is like something that in the Americas gets done a bit more. You know, the lawyers get stuck in and involved in reshaping things a bit more. But as you said, I think a much-needed shot in the arm to the UK market structure.
So now it is a great story to share. Anand, we have covered a lot of ground right from moving the bouncer out of the grocery aisle to recognizing dinosaurs, the aspirational and the respect for the incumbent to kind of some more of a you know, messages around authenticity and don’t give up. Thank you for sharing that.
I think I've particularly enjoyed just how he's still the same guy from like six years ago, even though you're probably infinitely more famous, dare I say. You may even walk down the street again, stop for an autograph from some of the market infrastructure geeks out there. So it's been a real pleasure to kind of catch up with you.
See what has changed, see what has made you stay the same and look, I really appreciate you taking the time in your business schedule to share your thoughts with us.
Anand
Thank you for those very kind words, but I always have time for you. You know, you spotted us early and you sort of had conviction with us early and we are deeply grateful for that, for that early conviction.
Hiten
No, you’re welcome. We should have been investors rather than offering pro bono consulting advice. But hey, we are living and learning. In my next life!
Anand
Never too late in life, never too late.
Hiten
Thank you so much and take care. Have a great day.
Anand
See you later, chap.
