Clare Flynn Levy Entrepreneur of The Month
Our January Entrepreneur of the Month is Clare Flynn Levy, founder and CEO of Essentia Analytics. After ten years spent working as a fund manager, Clare founded Essentia which uses cutting edge technology and data analytics to help investors skilfully apply insights from their past trading behaviour to improve decision making in the future. In this interview, Clare talks to us about her background, her plans for the future, and provided some advice for young aspiring entrepreneurs.
+ For anyone who hasn’t heard of Essentia Analytics, can you give a brief overview of the company and what it aims to achieve. Where did the idea come from initially, and what were your first steps towards getting the project off the ground?
Essentia’s behavioural analytics service shows professional investors where their skills really lie, then uses proactive “nudges” to help them make fewer biased decisions, to continuously improve performance, and to prove their value-add. It’s the first data-driven feedback loop designed to enhance investment decision-making - for organisations and individuals that want to win at Survival of the Fittest. We've already proved it works, delivering over 50bps of alpha, on average (and sometimes far more), to our clients in their first year working with us.
The idea came from my experience as a fund manager - in an industry where performance is typically used as the measure of skill (when it’s really a measure of outcome), it’s very difficult to glean what you could be doing to continuously improve. It’s a bit like being an athlete before the invention of game tapes.
I thought about it and bounced the idea off of a lot of different people in the fund management industry before I committed to pursuing it. Then I asked the potential client who had shown the most interest whether, if I built a prototype they liked, they would buy it, and they said yes.
+ Can you give us a quick overview of your background - education, interests, experience in the entrepreneurial/investing world? Is Essentia Analytics your first venture?
I’m an American who came to London 20 years ago, first as a student at the LSE, and then as a trainee fund manager, straight out of university. I’ve always been a tech enthusiast - I’m the first generation of American to have grown up with a computer at home, and was early into using the internet. But I’m not an engineer - I read economics, and my dream, from a relatively young age, was to be a fund manager.
I managed money for the first 10 years of my career, both in a traditional long-only setting, and in a technology hedge fund that I launched in 2001. That was really my first entrepreneurial venture. I slogged away at it for several years before deciding that, without a data-driven feedback loop, I was wasting my energy.
My next move was to become President of a company that made portfolio management software for hedge funds. In that context, I had a competitive advantage because I understood the customer at a level that is only possible if you’ve been there and done that. We sold that company to a larger fintech vendor, and I went on to found Essentia.
+ For the students reading this, was there anything you did during college which helped prepare you for setting up your own company?
I can tell you one thing I wish I’d done: pay more attention in Accounting class. I learned to build financial models after university, but my understanding of debits, credits and cash flows still needed work - understanding those things is very important when you run a start-up.
One of the best things I did at university, in retrospect, was working part-time jobs throughout, both on campus and on Wall Street. I paid my dues at the very bottom of the ladder, which taught me to role up my sleeves and get on with things. And I experienced working within organisations of different sizes, which has served me well as an entrepreneur, not only when it comes to growing my own business, but in helping me anticipate how my customers will behave and why.
+ Essentia Analytics has already revolutionized the trading world with the idea of “analytics of analysts” to allow them to perform at their very best. What are your plans for the company, given that it is already a world leader in its field?
We’re pleased to be leading the way, but our field is still very nascent - there’s plenty of scope for us to grow by working with more and more investors around the world. That’s especially because we started with equity investors - our intention is to expand into other asset classes, and start to work with other types of investors.
+ How do you manage to maintain a work life balance given the demanding nature of setting up your own business?
It’s not easy - that’s for sure. I have two young children and a husband who has his own demanding job. I focus on prioritising ruthlessly and allocating my time deliberately. And I allow myself (and my team) a lot of flexibility to work whenever and wherever I think I can get the job done best. When I’m with my kids, I do my best to be present. And I try to make sure I get 8 hours of sleep per night.
+ In your opinion, what is the best and worst thing about working for yourself?
The best thing is the opportunity to bring your own vision to life. I always wanted to work for an organisation that had certain values and attitudes that are not necessarily that common in the finance industry. It wasn’t until I started my own business that I could do that - and I’ve found that those values are attractive to others, too.
The worst thing is, of course, that the buck stops with you. You have a team of people whose livelihood and happiness are dependent, if indirectly, on you and how well you run your company. There are times of extreme stress where the prospect of losing your job is the least of your worries.
+ If you were to give one piece of advice to aspiring entrepreneurs, what would it be?
I would recommend getting some experience within two types of organisation: a large company and a start-up, first. Consider it a post-grad degree. That experience, of how business works and how professionals interact, is extremely valuable - and it can’t really be learned from books.