2023: A Yearly Review

Hello Dear Readers, as I type this, it is currently December 2023. This will be released in early Jan '24. So, hello dear readers from the future.

2023 was a very interesting year. For those of you who follow my journey closely, it was quite a challenging one for me personally. Two lay-offs in the space of 10 months would be enough to quell any person's spirit, not this one though.

The year in the industry was just as rocky, lots of headwinds with lay-offs, interest rates, down rounds, the list goes on. HOWEVER! You learn a lot more when you struggle, than you do when you're clean sailing. I'm thankful for a year of tough lessons and hard truths.

As always, thank you for tuning in (logging in?) to this newsletter. I hope you find value from it; I appreciate you all.

Without further ado, off to review we go!

The Major Industry Recruitment Trends

There's nothing like the promise of a New Year. You rouse up on a foggy January 2nd ready to take on the world, this year is the year! This is the year you lose that belly, get that promotion, meet the love of your life.

It's all to play for. How exciting!

Unfortunately, you could tell pretty early on in '23 that this may not be the year to achieve what we thought we would.

The FinTech recruitment sector being no different.

So, with that, we begin the breakdown of trends we noticed in H1'23 and the indicators it gave for the year to come.

Trends: The Bad Stuff

1. A Culture of Indecision: The main trend that popped up throughout this part of the year, was a hiring culture rife with indecision. On both sides. Processes that should have been wrapped up in 3 weeks took 3 months. Decisions on offers that should have been made within a day were taking a week. Clients were scared to pull the trigger and offer; candidates were scared to take the offer and move jobs. This remained a trend for the first half of the year, a major reason the market felt flat. Processes were arduous and everyone was being incredibly hesitant. The 18 months leading up to this year were absolutely bonkers, everyone making decisions in real-time, money flying everywhere. This apex made the gap all the more noticeable.
2. Money Isn't Free: Following Covid, there was insane amounts of cash in the economy. You had the JPow stimulus, 0% interest rates, an absolute face-ripper of a market. Everything was All-time highs. Random Chinese ADR's were trading at 1000x times earnings, every tech company was trading at a minimum 80x earnings. Firms were raising people 20-40%, since they just hired someone and had to pay them that much. Life was good. As good as life was, it led to a fundamental misunderstanding on the relationship between money and value. A lesson many had to re-learn in 2023, when firms began to be more diligent on expenditure. A major reason for the culture of indecision, was down to candidates having misaligned expectations on the market. They were no longer in the driver's seat.
3. Value Driven: A big trend during the bull cycle in the FinTech market was the "Hire at all costs" mentality. This was prevalent for a while. You had candidates with 3-4 years' experience getting $200k+ salaries. Well, it was fun while it lasted but this isn't the case anymore. Firms are no longer looking to hire potential. They want to hire the people who bring the most value, and quickly. This is much the same for candidate/leaders looking to join a new firm. They're not being tempted by big equity pay-outs, and potential earnings anymore. They want actual tangible income. They want tangible products with tangible strategies.

Trends: The Good Stuff

1. Back to Reality: Over the last few years, a lot of thinking and planning was pie in the sky. You see this from the multiples in the market, how much firms were paying people, and how high quotas were set. Which is a nice way of saying, people's expectations were absolutely absurd. I commented on it many times, the ridiculousness of the recruitment markets in the bull run. Salary inflation in particular. A famous example is one of my clients being forced to raise their bandings 3 times in one year in order to keep up. It was never sustainable. The current spending, planning, and targets are though. Pragmatism is healthy. It avoids bubbles and volatility. Volatility is not a good thing in the recruitment market. It ultimately means people lose their jobs. Which is just not a fun time for anyone involved.
2. Hiring with Purpose: When firms are being more pragmatic, they (the good ones at least) make moves and decisions with purpose. When they're interviewing, or they're approving budget, there's an actual and thoughtful reason behind it. This is a good thing. All the money being thrown around years' prior was fun in the short term, but it derails firms and careers in the long term. Look at all the firms that blew-up due to silly spending, and all the people who took high paying jobs, moved themselves up a rank in lifestyle, and now they're priced out of new opportunities due to their new expenses. No bueno. Long-term these things no longer being the case is a net positive. It means that the actors in the market, on both sides, are being more diligent. More diligence leads to the actors in the space who operate morally and in good faith, winning the war for talent. Which is what we want to happen.

How I see '24 unfolding:

It's always hard to say how things will pan out in recruitment. There are so many factors always at play from a Macro and Micro perspective. However, I don't think for a second things will be as poor as they were last year.

This year I'm seeing lots of tailwinds on the horizon. The consolidation phases of the sector seem to be slowing down, looking at the number of lay-offs happening this time last year, to now, there's no comparison. There's decent fundraising happening, and overall firms had better years last year than they would have expected. Which leads me to believe this year will be strong.

I see a busy year in Sales, Integration, and Data (obviously). Lots of sales work last year, which leads to lots of delivery work this year. Sales is always important for any tech firm, and Data is self-explanatory as we continue to come to grips with AI and its applications.

Product is still a bit bloated and a lot of people in that stripe are being overpaid for the impact they've been making. I also feel that firms are still not as forward looking like big Product orgs require them to be in order to hire. Product ultimately (whether right or wrong) is seen as a luxury in a lot of firms. Since it typically takes a while for tangible bottom line impact to be shown.

Overall, I think this year will be the most akin to pre-covid times. Nothing major in either direction. Solid firms hiring solid people, smartly, and other firms consolidating a bit. I don't see nearly as much hesitation being apparent in this years market, I think the year of being overly cautious is behind us.

My 2023 Top 5:

Powering the World's Alternative Investment Marketplace - iCapital

I've been a long-time follower, vendor, and supporter of iCapital. With their acquisition of SIMON Markets, their hiring spree of technical talent for their Greenwich Office, and the launch of their iDirect Fund product last year, they had a hell of a year.

A true example of buying and building while others are scrambling/cutting, showing strength in a choppy market.

KX: Vector Database, Time Series And Real Time Analytics

Kx is a firm that has been powering the best technology driven firms in trading for the guts of 2 decades. The original creator's of KDB+, they have been the gold standard for Real-time series trading infrastructure for as long as it's been a thing. More recently, they took their talents into Vector DB infrastructure, the core technology behind LLM's and new age AI strategy.

With market entry outside of FS looming, investment in AI infrastructure, a partnership with AWS, and an increasingly robust moat in their core business. It was a very strong year for KX across many key business areas, which is why they're here.

The Data Automation Software for financial markets | Xceptor

Xceptor have been a player in the space for a decent amount of time, with their initial use case being more-so focused on Middle to Back-Office automation infrastructure. Now though, following a buy-out by Astorg, they have restructured their core offering, their executive team, and their approach to business.

A lot of tail winds for a firm that solves an incredibly annoying problem, automating operational data that typically a business wouldn't spent money to automate. Burning thousands of hours a year on.

Boosted.ai - AI Built For Investment Management

Boosted was a couple of years ahead of the AI boom, enjoying nearly 100% headcount growth over the last two years, putting themselves in pole position to capitalize on the recent AI gold rush.

With a year spent growing headcount, continuing to poach top talent from competitors, and also bringing a new CFO. They have made all the moves to build off of their base created. A very strong year of growth and strength.

The Industry Cloud Platform for Investment Management | Ridgeline

Front to back Investment platforms is an incredibly tough market to break into, due to myriad of factors. Very expensive to build, deep-routed competition, very expensive and annoying to migrate out competitors etc etc.

Ridgeline has been building silently for the last number of years and in 2023 started going live to clients, with incredibly strong feedback coming out of their first tranche of clientele. Marquee year for them, congratulations are in order.

Firms to look out for in 2024:

About us | Opto Investments

Access to institutional grade alternative assets, and private market products, is something that has long been exclusive to ultra-high net worth clientele. Private Credit, PE, Real Estate, and VC investing specifically.

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The TAM of alternatives is such a massive market, with a $22bn secondaries fund being closed last week by Lexington Partners. The space is only going to get busier and get more eyes on it.

FINBOURNE Technology | Financial Data Management Software

Finbourne is a bit of an outlier. A firm that has enjoyed consistent growth, not laying people off, and not raising absurd amounts of money via PE and VC.

It's how a company should be run really. Build a killer product, recruit a killer team, build something clients will pay you for, and attack the market.

They have been expanding massively in EU/APAC over the last few years and launched properly in the US last year. With more expansion to come as they attack the North American market. Big year ahead for a great company.

Moment | The Leading Fixed Income Trading and Data Firm for Wealth

The Fixed Income markets has long been in need of some revamping. There's new innovative trading systems launching for Equities and FX every quarter it seems, but FI has long been left behind.

Founded by two former Citadel quants, and Harvard grads, Moment aims to modernize the archaic infrastructure of the Fixed Income industry. With $17mn recently raised, led by a16z, they may just be the ones to do it.

Keeping my eyes peeled on their future.

Conclusion

In conclusion, 2023 was a very difficult consolidation year where a lot of firms got flushed out, across every industry. The firms who are still around and kicking, have tightened their operations, made better products, and provide better services. This is a good thing.

Firms are smarter, leaner, and better capitalized. There's also less general pressure around since VC firms aren't throwing money around anymore and putting absurd targets on everyone. Stability is good after the last few years. What goes up, must come down.

So, alas, a new year awaits to unfold. If you're still reading this, I hope your career and personal goals are met in haste this year. Be brave and be kind, it will take you far.

Godspeed.

James