For this installment of our CCO Spotlight series, we spoke with Matt Jones, CCO and Managing Director for K1 Investment Management.
Founded in 2011, K1 Investment Management’s strategy has been to invest exclusively in enterprise software organizations with less than $100 million in Annual Recurring Revenue (ARR) – a tactic which has proven successful, garnering K1 over 10,000 portfolio employees across 190 enterprise software companies and a portfolio revenue of $2 billion.
Can you tell us a little about K1?
At K1, we are focused on organizations that provide mission critical solutions – the types of software that are truly make-or-break in an organization’s everyday life, examples being accounting, legal, compliance technology that is essential to a firm or organization’s success.
Additionally, we really want to invest our time and money in organizations that are invested in their customers. We look for records of high retention and a strong, diversified customer base. That combined with the mission critical nature of the systems, signals to us that we are making a solid choice in our strategic investments.
Walk us through your career path that led you to become the CCO of K1.
I try not to mention this too often, but my background is in public accounting and I’m actually a registered CPA. Please no tax questions!
I began work in a large, multifamily office where we really helped individuals and families make smart, strategic investments that set up their entire financial life. Because of this work, I was registered with the SEC and went through the typical annual surprise examination.
This was really my first foray into compliance.
I joined K1 as a Director of Finance, but with my background and experience, I quickly became the CCO given our recent registration with the SEC.
What would you say are the three most important skills for a CCO to master?
So much of what it takes to be successful really comes down to consistency and communication. To break it down a little more, I would say the three most important skills are:
- Communicating in a way that mirrors the seriousness of the subject matter – you have to ride the line of fair but stern. Additionally, you really need to convey the context of what you’re communicating, so when you do set boundaries or send that same reminder email over and over again, the employees have the awareness of not just what they are doing but why they are doing it. I think technology plays a huge role in providing the right context for employees, which makes this aspect of a CCO’s life that much easier.
- You have to be steadfast. This area of business isn’t one with a ton of wiggle room, and as the CCO you are the ultimate embodiment of compliance for your firm, so you need to be able to represent that. You have to make sure people are following through with what they should be doing, ensuring the organizational goals are aligned from the top down.
- Consistency, consistency, consistency. And this will only become more important as your organization grows and scales. Every employee needs to have the same experience from onboarding onward, which requires consistency across the board.
Do you think compliance is more offensive or defensive maneuvers?
It’s really a combination of both. You need to be offensive in terms of being up to date on the latest guidelines from SEC, FINRA, and third parties, but even the best offense can’t make up for no defense. Things will inevitably come up and as the CCO you need to react and adapt accordingly.
How do you keep your compliance program more proactive than reactive?
I like to look outside my organization – reading the latest industry journals, working with third party consultants, talking with other CCOs, going to conferences, attending webinars, referencing my network. I do my best to stay in the loop on everything and anything that is happening in the world of compliance outside my own bubble.
Being a CCO can be challenging at times. What makes your life easier?
Technology, plain and simple. Compliance and archiving solutions, like Smarsh, or RegTech solutions, like ComplySci, help to alleviate the sometimes-daunting task of being a CCO. Something that is especially important for SMB CCOs, who often wear more than one hat within the organization. In that sense, having the tools available to help automate programs and processes makes your life a lot easier and provides a repeatable process with fewer exceptions that need to be manually managed.
It’s also incredibly helpful to have a CEO at K1 who has been in my role as CCO and knows what it takes. He really sets the tone and helps to drive alignment throughout the organization, so to have him in my corner helps increase buy-in from everyone else.
What does the term culture of compliance mean to you?
I think a culture of compliance is made up of a few different factors:
- Tone at the top
- Alignment throughout the organization
- Consistency as the organization grows – making sure people have the same experience and context in their onboarding
What do you think are the biggest trends in compliance today?
There are a couple of trends that have recently caught my eye. The biggest ones being:
- Cryptocurrency – the reporting, what’s disclosed vs not disclosed, individual security vs ETF. There remains a fair level of uncertainty around what type of security it is, but I think as an industry we are all trending towards more disclosure is better than less.
- Scalability – Questions as it relates to scaling an organization and how automation can help with that process. From a practical standpoint, it’s important to understand how you automate your compliance programs to help ensure less/no human error.
What do you read/listen to/watch to stay up to date on the latest happenings in the compliance world?
Kirkland & Ellis is a great resource, they send out insightful content on a regular basis. I also rely heavily on providers like ComplySci. I think as we have all adapted to the remote world, organizations have taken it upon themselves to publish and air more and more educational material that the entire industry can benefit from.
What’s your recent Netflix binge-watch?
Well, I don’t have a ton of time to binge watch any Netflix series, but my four-year-old son and I have gotten really into TurboToyTime on YouTube.
Editorial Note: At ComplySci, we understand the tremendous value compliance professionals can gain from networking and learning directly from their peers. For the CCO Spotlight blog series, we are sitting down for candid conversations with Chief Compliance Officers from some of the firms we work with. This blog series will share those CCOs’ thoughts, ideas, and best practices for compliance programs with our readers. The views expressed in this blog post are the CCO’s own views and do not necessarily reflect the views of their firms.