Local Wall St. prime real estate
Goldman Sachs takes majority stake in Boulder firm
By Matt Branaugh, Camera Business Writer
June 11, 2006
James Tanner, co-founder, president and chief executive officer of Wall Street on Demand, stands Tuesday in the
company's operations room at its Boulder headquarters. Goldman Sachs recently became the company's majority
James Tanner was sitting with his wife Catherine Allegra, enjoying a coffee just outside the Boulder Book
Store on the Pearl Street Mall.
It was 1996. The couple was here for a quick, three-day vacation.
Just west of their location, a taxi driver pulled up, aiming to throw a sack of trash into a nearby bin on the
mall. He missed.
Tanner, who was running a small but blossoming financial information services business in Manhattan at the
time, turned to his wife and said, "If he gets out and picks it up, we'll move here."
The taxi driver did.
And Tanner's off-the-cuff prediction turned into reality. The company, Wall Street on Demand, moved here
later that year.
The anecdote stands out in his mind, a telling sign of the kind of place Boulder is, although the move
occurred for many more reasons than just that, Tanner says.
Regardless of the motivating factor, it's been a good thing for Boulder. The company has grown sales and
added employees, managing even to survive some tumultuous times along the way in the 10 years since the
Now the business is primed for its biggest phase yet, thanks to a deal that closed three months ago.
Goldman Sachs, arguably Wall Street's premier investment banking firm, bid through a private auction to
become the majority shareholder in the business.
Wall Street on Demand's management also joined Goldman in buying out the company's private investors,
which included Boulder Ventures and Sequel Venture Partners in Boulder as well as Charles Schwab & Co.
and Mellon Ventures.
Terms of the transaction haven't been disclosed.
But the absence of dollar figures doesn't diminish the significance of the deal, says Tanner, Wall Street on
Demand's co-founder, president and chief executive officer.
The company remains an independent operation, with on-site management calling the shots while benefiting
from the credibility of Goldman's name and financial backing.
By the end of this year, the 175-person Wall Street on Demand might add up to 50 more local employees,
"Over time, in getting to know management, we thought it was a good investment," says Ed Canaday, a
Goldman spokesman. The firm has no plans to run Wall Street on Demand, he adds, saying Goldman views
the deal as a "stand-alone investment."
On a broader level, Goldman's investment reinforces Wall Street on Demand's business model — building
and hosting online services for brokerage firms, including Goldman, among others, says Kyle Lefkoff, a
founder of Boulder Ventures.
It also highlights Boulder's rising prominence this year — both in quality and reputation — in the global
marketplace, with Goldman's investment coming at roughly the same time Google Inc. acquired Boulder-
based 3-D software company @Last Software and Microsoft Corp. snapped up Boulder-based remote-
sensing business Vexcel Corp.
"Microsoft, Google and Goldman Sachs, three of the iconic best companies in the world, have bought
companies in Boulder," Lefkoff says. "Wall Street on Demand is emblematic of that trend."
Facts by fax
In 1991, Tanner, John Leslie and Jeff Stewart were working as investment bankers in midtown Manhattan. A
recession was underway. Times were slow.
"If you didn't keep busy, you'd lose your staff to Solitaire," Tanner recalls, noting the electronic version of the
card game found on most computers.
As if that wasn't enough of a challenge, trying to win and maintain clients required the creation of valuation
books, which involved stock price charts laden with market data about clients and their peers.
After stock exchanges closed at 4 p.m. EST, downloading the charts would begin, some taking up to an
hour. Late nights for investment bankers — not unusual then or now — often were filled with wading through
that cumbersome process.
But that same year, Intel Corp. developed a technology enabling personal computers to send faxes at a
standard that provided print quality of 200 dots-per-inch, or dpi — only 100 dpi less than the laser jet printers
of that time.
Suddenly, the creation of good-looking valuation books became immensely faster. Price charts could be
created and sent in minutes. Investment bankers now could make better use of their time.
To keep their staff busy, Tanner, Leslie and Stewart assigned them the task of using the technology to
create such reports.
Soon after, brokers were approaching the firm, asking if they could have reports created, built and sent out
on their behalf. A system was created where brokers simply dialed a toll-free number and punched in the
stock ticker information on a touch-tone phone.
Wall Street by Fax was born.
"They were loving it. It really solved their workload problem," Tanner says. "After a while, we realized there
might be a business there."
Four years later, and 20 employees strong, the company tackled a new dimension at the request of its then-
largest client: putting up interactive research information on a Web site.
It was around that time that Tanner and his wife made the three-day trek to Boulder. Part of the allure of
starting a company always had been the ability to move it anywhere they wanted, Tanner says.
The taxi driver anecdote aside, Tanner found Boulder to be the kind of place attractive enough to relocate
the firm's employees. It also presented a time zone accessible to both the east and west coasts. The area's
tech-savvy population helped, given the company's newfound angle with the Internet.
With cramped quarters in pricey Manhattan increasingly an issue, the move was made.
And a name change was made to reflect all of the transformations: Wall Street on Demand.
The employees and executives made the move in 1996, the lone exception Stewart, who remains in New
York to this day, but still serves as the company's chief information officer. Leslie, based in Boulder, still is
Wall Street on Demand's chief technology officer.
The business also took on a decidedly familial tone when it hired Tanner's wife as chief operating officer, a
position she still holds today. "We try to act like a family company," Tanner says.
Business continued to accelerate. Goldman Sachs became a customer in 1997.
Brent Clough, who was with Goldman at the time the two businesses forged their initial relationship, says the
approach Wall Street on Demand took then — and now — has made it stand out.
Companies in the financial services market try to save money by contracting out their online services, which
includes building and maintaining the visual representation of data on their sites. There are a number of
options they can turn to, particularly ones based overseas, but Wall Street on Demand wins much of their
business because it employs software engineers and developers who sit down and work with clients from
the get-go, Clough says.
"Every employee really has a high level of knowledge of financial markets," says Clough, who later left
Goldman, but still uses Wall Street on Demand for Intrinsiq Financial, a Waltham, Mass.-based oncology
data firm he runs. "It's not a sales approach, but a consultative approach."
Even more impressive to Clough: Wall Street on Demand has accomplished its sales growth — about 25
percent annually, according to Tanner — without a commissioned sales force.
"They're long-term greedy," he says. "They're more interested in building an annuity business rather than
building up a bunch of money upfront in terms of project work. They are one of the few firms, at least
domestically, that have figured out the right model that competes against outsourcing."
That reputation enabled the company to grow. And in 1998, Boulder Ventures committed to invest in Wall
Street on Demand with venture capital that would help the company keep up with its expansion.
Ironically, the day the deal was set to close, a company called Bridge Information Systems approached with
an offer to buy Wall Street on Demand.
"I didn't want to sell," Lefkoff says. "But they offered a lot of money ... a bubble-era price."
The venture deal was completed, then the sale to Bridge was executed. Wall Street on Demand remained a
separate operation, but it didn't take long for Bridge's financial woes to weigh it down. Bridge filed for
bankruptcy in 2001. Later that year, Reuters bought Bridge's assets.
Reuters was a content provider, so Wall Street on Demand wasn't a good fit, Lefkoff says. In early 2003,
Wall Street on Demand's management elected to tap their own financial resources and link up with a group
of private investors to buy the business back. Boulder Ventures, along with Sequel, Charles Schwab and
Mellon, became that group.
At the moment, Reuters remains Wall Street on Demand's largest customer.
Lessons and longevity
The absence of a parent company's turmoil enabled Wall Street on Demand to flourish during the next three
years. In 12 quarters of reports to his own investors, Lefkoff says his updates on Wall Street on Demand
consistently detailed the company exceeding its sales and net income projections.
"Tanner, he's just unbelievable," Lefkoff says.
The company's financial performance helped increase its valuation. But the stock market's own recovery
during the past three years made the services of Wall Street on Demand even more valuable, Lefkoff says.
In September, the private investors recruited Denver-based St. Charles Capital to execute an auction. A final
round of bidders was identified in January, with Goldman selected in February and the deal completed in
Goldman presented a best-case scenario, not only by offering the right price, but stating its intentions to
keep Wall Street on Demand an independent operation in Boulder.
"Goldman Sachs is a great buyer for this company," Lefkoff says. "It's not leaving. These people are the best
in the world, and they're not stopping."
Tanner says the lessons from the Bridge deal played heavily in the sale, setting up the company for a
"What saved us when our parent company went bankrupt was we operated as a separate company, and
that always gave us a parachute," Tanner says. "When we were looking for a partner, it became very
important for us to pick a partner that kept us a separate company. You learn your lesson once, right?
"We want to be responsible for our own destiny and the way you do that is by remaining a separate
Boulder Daily Camera June 11, 2006
Contact Camera Business Writer Matt Branaugh at (303) 473-1363 or email@example.com.