Mac Bartine is CEO of Knoxville-based Smart RIA, which markets its secure, cloud-based compliance platform to registered investment advisor firms. A startup veteran, Bartine didn’t found the company, but he’s largely been responsible for where it is today. When he started in October 2015, the company was still pre-revenue with about 40 trial users of an minimally viable product. Today, the company boasts 820 paying users, and by the end of 2018, Bartine projects the company will have $2 million in recurring revenue. Smart RIA was part of Village 36 at the 36/86 entrepreneurship and technology conference held in Nashville in June. And more recently, Smart RIA was awarded the Judge’s Choice award at the Knoxville Startup Day pitch competition, part of the Innov865 Week. The company left with a $10,000 prize. We talked to Bartine about the growth of his startup and asked him to offer a few tips to our readers. Here’s what he had to say.
What’s the origin story of Smart RIA?
In 2010, our founder Roger Kiger was getting sick of using five different software programs to manage his Registered Investment Advisor (RIA) firm, all of which used the same data, and none of which helped him to manage compliance. Roger decided to hire a team of software architects to help him solve his problem.
Several months later, he had a completed solution for his firm, and started using it. Fast forward several months: Roger was notified he was going to be audited by the state of Tennessee. After all was said and done, the auditor called him up to tell him his was one of four zero-deficiency audits she’d ever done, plus it took way less time than she was used to. She concluded that he should consider making his internal solution available to the market, that it was needed by other companies.
Smart RIA was founded in June 2011, and over the next years, Roger made some great headway with a minimum viable product and getting some firms to try it out. But it was difficult for him to manage his growing RIA firm and try to start a software business at the same time, and ultimately, he decided Smart RIA would need someone with a successful startup background to lead the company.
In layman’s terms, what problem does Smart RIA solve for its customers? Can you quantify the ROI, in terms of time or money?
The scariest problem for most RIA professionals isn’t managing their clients’ money. It’s keeping up with the literal mountain of paperwork that federal and state regulators expect them to maintain to be considered in compliance. Smart RIA eases that regulatory burden for our customers by packing in tasks, forms and organization around all the relevant rules and regulations, then condensing that down to simple workflows that can be completed in a short period of time.
RIAs spend over $2 billion a year in employee time on compliance, and our software, when used regularly, can significantly cut back on those time and salary costs, as well as reducing lost opportunity costs when RIAs are doing compliance work instead of growing their business.
Lastly, our customers tell us they’re less stressed because they feel ready for their next audit. It’s hard to put an ROI on that, but it’s a benefit that’s very important to them, and to us.
We think our readers will be interested in the structure of your startup, in which the founder is not the face of the startup. What goes into a decision like this and SmartRIA’s in particular?
Ironically enough, one huge driver of Roger hiring me as CEO, and ultimately selling his majority stake in the company to me, was regulatory compliance. We couldn’t raise money as a startup that’s owned by a wealth manager, because there are possible conflicts of interest that arise. And, as mentioned before, Roger knew what he wanted as a software solution for his company, but translating that into running a software company and doing a product launch weren’t as much in his wheelhouse.
He had a choice of learning how to lead a company like Smart RIA, or hiring someone to do it, and he decided the best chance for the company was to hand the reins over to someone with tech startup experience.
I don’t know all the reasons why other companies would go through something like the leadership change that Roger and I have managed together, but I do know it was a hard decision for Roger to make; Smart RIA was his baby. We had almost two years of conversations, planning, and me proving that I was the right person to fully take over before the full transition was completed.
What does winning the Judge’s Prize mean for Smart RIA, and the investment? Ten-thousand dollars can feel like a drop in the bucket, which makes us think an honor like this really isn’t necessarily about the money, but the tangential benefits?
There are so many great startups in our region, so it was incredibly fun and exciting to win, and a huge honor. I felt like every company participating was deserving of the win that we received.
It’s true, in terms of our cash needs right now, $10,000 is a drop in the bucket, but it’s still a significant amount of money. Our company was very grateful to get it.
When I mention something like winning the StartupDay pitch competition, I try to use it as part of an ongoing story of success and recognition. We were selected for Village 36 as one of the most promising SouthEastern startups at the 2017 36|86 conference; we were selected for inclusion in The Works’ 2017 accelerator in Knoxville; we won the 2017 StartupDay pitch competition; we were one of 12 startups selected for FinTech Venture Day, from a pool of over 1,000 startup applicants from all over the world; etc.
Every new win I can put in that narrative makes the whole stronger, so our StartupDay honors really do have lasting benefits.
What can you say about being a startup in Knoxville? What benefits does the city and the ecosystem offer, and what challenges does it pose?
I’ve been working in and launching startups in Knoxville since I finished grad school in 1996, and a lot has changed over those 20+ years. The entrepreneurial community has flourished, and the Knoxville Entrepreneur Center has played a central role in that.
The cost of living here is much lower than in better-known startup cultures in major cities, but we still have a thriving downtown, a strong arts community and incredible outdoor opportunities. In short, I love living and working in Knoxville.
There is a shortage of local capital for startups, but that’s true in most communities like ours. You have to be willing to go outside your area to find capital. Some startup gurus even recommend not raising money locally at all in a place like Knoxville, viewing it as a waste of time. I don’t agree with that point of view, and we have landed a local investor through our efforts here, but it is definitely harder here than in other places.
There are many more good points and more downsides as well, so I’ll sum up by saying I wouldn’t start a company anywhere else. Knoxville has given a lot to Smart RIA, and we look forward to giving back.
You’re a tech startup veteran, so what is your best piece advice for new entrepreneurs? And what is the best piece of advice anyone ever gave you on your startup journey?
Be prepared for your startup experience to be harder than any job you’ve ever had. Get ready to fail, and accept that you’re going to be stressed out and disappointed. You have to persevere through a lot of difficulties to have a chance to succeed. Related to this piece of advice, do your best to leave your ego at the door when you go to work. You may be smart and talented and have a great or even brilliant idea, but you’re one of millions who fit that description. Be humble, trainable and seek out those who have “been there, done that” to be your mentors.
The best advice I ever received was to never attempt to launch a startup alone. I made that mistake a lot early on in my startup career, and know from experience that it’s incredibly difficult to make a startup work when you’re responsible for everything.
The difficulties aside, there’s no other career path I would choose for myself. Making your own way, providing good jobs to those in your community, solving real problems for others—these are all incredibly rewarding, satisfying and insanely addictive when you get your first taste of success.