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still loves high-end real estate, but today he’s fo- Insider Info ergy Partners. Assuming a conservative $45 per 49 cused on what he calls “the single biggest oppor- barrel, Contango is on track to generate in the tunity of my business career”—oil. TEXAS TREATS neighborhood of $75 million in earnings (after CONTRARIAN • MONEY & INVESTING capital spending and interest payments) in 2021, DON RIDDLE (TOP) It’s a contrarian move, all right. Watch the fi- John Goff has pumping roughly 25,000 barrels per day. So far, nancial headlines and you’d think the end of oil been a Dallas/ Wall Street hasn’t credited Goff’s bargain buying. was nigh. Last April, oil prices went to less than Fort Worth fixture Over the last 12 months Contango’s stock is down zero for a day as crude in storage reached “tank since he started 34%, while the S&P oil-and-gas index is off only tops.” America’s frackers have mothballed 60% of working with Rich- 20% and the broader market has surged 20%. their drilling rigs in the past 18 months, while ard Rainwater 34 more than 100,000 have lost their jobs amid the years ago. Here’s Goff intends for Contango to keep growing. bankruptcies of 46 producing companies—in- a quartet of his But unlike during the heyday of the shale boom a cluding the one-time shale champion of them all, Metroplex meal- decade ago, when companies seemed to be drill- Oklahoma City–based Chesapeake Energy. The time favorites. ing and fracking nearly every cow pasture in oil plight of the American oil patch, Goff says, “is country, this growth will come from continuing like real estate in the early ’90s. They had over- FEARING’S to buy already developed cash-producing assets built, doubled the office space and were woefully RESTAURANT at what he calls “very, very attractive” prices. overleveraged.” (Dallas) Indeed, Shale 2.0 has gotten religion about Back in 2008, when oil hit a record high of needing to “live within cash flow,” says Ben Dell, $147 a barrel (and Big Oil made up 15% of the Located in the managing director at New York–based private S&P 500), all the talk was of Peak Oil supply. Ritz-Carlton (which equity outfit Kimmeridge Energy. He shares Today oil trades at $53 and makes up just 2% of Goff owns) and run Goff ’s enthusiasm for restrained growth. A Brit the index—and market watchers are pushing the by Dean Fearing, and former oil analyst at AllianceBernstein, Dell idea that we’ve already passed Peak Oil demand. sees a “path to relevance” for America’s belea- Goff, 65, laughs at such forecasts. perhaps Dallas’ guered shale frackers if they would just act more most notable chef, like the tobacco giants did a decade ago: Accept “Before the world does not need any more oil, this is Goff’s go-to: life in a declining industry, slash costs and ramp we will suffer a shortage,” he predicts. The world “Hard to beat the up returns of capital to shareholders. His favorite may be burning nearly 10% less oil than the pre- tortilla soup and example is Altria Group, owner of the Marlboro pandemic 101 million barrels per day, but, he brand, which despite cigarette smoking’s global says, “don’t mistake Covid-related weakness for a lobster tacos.” peak in 2012, returned 250%, double that of the secular shift.” Goff reasons that electric vehicles S&P 500, between 2010 and 2017. Key to Altria’s are still just a blip. “I think there’s tremendous CAFÉ PACIFIC stock performance during that period was the pent-up [consumer] demand. People are really return of more than $50 billion to sharehold- tired,” he says, adding that workers want to get (Dallas) ers via dividends and buybacks—an amount that back to their offices. “Oil and gas is going to come exceeded the company’s entire enterprise value back with a vengeance.” Already, in Brazil, petro- A high-end in 2010. “It was not a high-growth strategy that leum demand is above pre-coronavirus levels. seafood joint for drove the outperformance,” Dell says. “Rather, it was the dramatic return of capital that forced in- So this vulture has been circling, fully con- four decades, vestors to pay attention.” vinced that with the right assets, capital struc- adjacent to the tures and incentive plans, oil companies can Dallas Country Which publicly traded frackers have the poten- thrive. “We’re buying reserves in the ground at a Club. “Good power tial to follow suit? Valuation is important. The big discount,” Goff boasts. His primary platform lunch, and fun on preferred metric in the oil patch is EV/Ebitda—a is publicly traded Contango Oil & Gas, of which company’s enterprise value, consisting of market he owns 24%. Goff oversees the holding company weekends.” cap plus net debt, divided by earnings from op- as chairman; acolyte Wilkie Colyer Jr., 36, serves erations before interest, taxes and non-cash ex- as CEO. In October 2019 they snapped up 160,000 SAINT EMILION penses (such as ExxonMobil’s $20 billion write- acres of prime fracking land in Oklahoma and the down of reserve values in 2020). But no fracking Texas Panhandle for $23 million. About the same (Fort Worth) operation is worth buying these days if it doesn’t time, on the steps of an Oklahoma courthouse, own prime assets that can generate profits even they grabbed 315,000 acres from bankrupt White A “cozy French at $45 a barrel. Among the best places to find Star Petroleum (founded by the late wildcatter bistro” in an ivy- such operations has been the Permian Basin of billionaire Aubrey McClendon) for $130 million. festooned A-frame west Texas and southeastern New Mexico, where, In November, they paid $58 million for 180,000 house south of the thanks to the one-two combo of directional drill- acres in Wyoming, Montana and Texas. Goff fol- famed Fort Worth ing and hydraulic fracturing, oil production ex- lowed that up by merging Contango with another ploded from 1 million barrels per day a decade small oil company he controlled, Mid-Con En- Stockyards. HATSUYUKI HANDROLL BAR (Fort Worth) A lesser-known spot not far from Trinity Park. “Some of the best sushi in DFW.” FEBRUARY/MARCH 2021 FORBES.COM

Oil Vulture Cont. ago to about 4 million today—more than that ofCONTRARIAN • MONEY & INVESTING they can do wrong. In 2018 Altria abandoned its most OPEC countries. focus on returning capital and spent $12.8 bil- lion to acquire a third of vaping giant Juul Labs. Goff’s current Permian favorites include Chev- Over the next two years, Altria wrote down that ron, which sits on some 2 million prime acres stake by two-thirds as federal investigations in the region and has a sterling balance sheet. into Juul’s marketing to children ramped up. 50 The next best Permian portfolio, he says, is the Meanwhile, Juul’s founders awarded a $2 bil- newly merged powerhouse of ConocoPhillips and lion special dividend to themselves and other Concho Resources. He has also been a buyer in pre-Altria employees. (Juul’s founders deny any recent years of Texas Pacific Land Trust, which wrongdoing.) collects royalty payments from oil and gas pro- duced from under its 900,000 Permian acres. Goff cautions that Big Oil could easily make Outside the Permian, Goff is an admirer of Ca- a similar mistake. He points to BP, whose stock nadian Natural Resources, a low-cost oil sands has declined by 35% since last February, when it How to Play It OIL AIN’T OVER These frackers will have staying power, and payout potential, even as the world goes green. Name EV/Ebidta1 Dividend Yield Recent Price Canadian Natural Resources (CNQ) 9.6 5.4 $25 Chevron (CVX) 13 5.4 $92 ConocoPhillips (COP) 10.9 3.7 $43 PDC Energy (PDCE) 6.2 0 $24 Pioneer Natural Resources (PXD) 12.3 1.7 $130 Source: FactSet. 1Total enterprise value (market cap plus net debt) divided by earnings before interest, taxes, depreciation and amortization. producer. And both he and Dell are fans of PDC declared its intention to reinvest into renewables Energy, which holds a dominant low-cost posi- rather than oil. Want to invest in renewable ener- tion in Colorado’s Wattenberg basin. gy? Goff suggests Florida-based NextEra Energy, which operates America’s largest fleet of wind Although Goff likes buying private deals via turbines and solar panels. Contango, he insists that “the best opportunity is in the public market” (see table, above). He Lest you think this real estate maven turned learned that lesson early from his years work- oilman is an old fogey, Goff marvels that his most ing with Rainwater, who, starting in the 1970s, successful investments in the past year (by per- helped Fort Worth’s Bass brothers turn a modest centage gain) have been in cryptocurrencies, es- oil inheritance into a multibillion-dollar portfo- pecially bitcoin (see story, page 96). lio that at one point included 10% of Texaco, 5% of Marathon Oil and a controlling stake in the But he can’t shake his preference for storing Walt Disney Company. wealth in the ground and thinks the geology two miles under the Permian tumbleweeds is so rich Goff joined Rainwater Inc. in 1987 at age 31, with frackable layers of oil-bearing rock that fresh from a public accounting job with Peat owning acreage there (as well as in prime parts Marwick. He describes the Fort Worth invest- of Oklahoma and Wyoming) will be a solid hedge ment firm as a dealmaking hothouse where against the increasing likelihood of inflation, Rainwater would spend half the day with phones prompted by the Fed’s 72% expansion of the U.S. in each hand negotiating with multiple counter- money supply over the past year. parties simultaneously. Soon Goff was building Rainwater’s real estate business and looking on “This can go on for a prolonged period—print- as he bought T. Boone Pickens out of Mesa Petro- ing money at a breakneck pace,” he says. “It’s leum in 1996, recapitalizing it as Pioneer Natural frightening to me.” Resources. At the time, no one imagined that Pio- neer, with 800,000 acres in the Permian, would FINAL THOUGHT become a champion of American frackers. “SMART INVESTING DOESN’T Big Tobacco not only serves as a template CONSIST OF BUYING GOOD ASSETS for what oil companies can do right, but what BUT OF BUYING ASSETS WELL.” —Howard Marks FORBES.COM FEBRUARY/MARCH 2021

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CONTRARIAN FORBESLIFE By Will Yakowicz Photograph by Jamel Toppin for Forbes A Higher Calling 52 CONTRARIAN • FORBESLIFE Billionaire BEAU WRIGLEY is building his cannabis company, PARALLEL, to be bigger than his family’s chewing gum business—and he’s not banking on getting consumers stoned. I In 2017, when bil- lionaire William “Beau” Wrigley Jr. was FEBRUARY/MARCH 2021 pitched cannabis as a new investment opportunity by his family office’s man- aging director, Jay Holmes, he shut it down immediately. “Are you kidding me?” he said. “I’m not excited about wearing orange and possibly ending up in prison.” Still, Wrigley, heir to the all-Ameri- can chewing gum fortune, couldn’t deny that the burgeoning legal mari- juana industry checked off all his in- vestment criteria: a trend in changing consumer behavior, a transforming regulatory environment and multiple applications in health care. So Wrigley rethought the proposi- tion. He told Holmes to find a target company, and he eventually located one at home in Florida: Surterra Well- ness. Wrigley and his team flew down to its 180,000-square-foot operation outside Tampa, the company’s big- gest facility where cannabis flower is Beau Knows Part of Wrigley’s business motivation is to find replacements for Big Pharma drugs. He believes innovative cannabis products can “change the face of health care.” FORBES.COM

grown. After inspecting the cultivation site—it 53 was the first time the 57-year-old Wrigley, who says he has smoked pot only once in his life, had CONTRARIAN • FORBESLIFE seen a room full of cannabis—the group boarded the plane home with the flowers’ sweet, pungent Parallel Lines best-known corporations in the world—including smell permeating their clothing. Coca-Cola, Walgreens and Patrón Spirits. Wrigley Among Wrigley’s believes his cannabis concern could one day rival “No one had known where we were, and I think cannabis brands is his family’s chewing gum business, which he sold they thought we were out getting high,” Wrigley Jimmy Buffett’s Coral to Mars, Inc. for $23 billion in 2008. recalls on a sunny afternoon while sitting on the Reefer, which includes patio of his North Palm Beach estate on Lake vapes, balms and “I think this can be bigger than the Wrigley Worth lagoon. gummies—but no gum. company,” he says. “At Wrigley, we brought joy to people’s lives. This is much bigger than that.” Soon after that excursion, he led a $65 mil- lion investment round in Surterra, and in No- Parallel is not the largest cannabis firm in vember 2018, he replaced the company’s co- America—Massachusetts-based Curaleaf is—or founder as CEO. Renamed Parallel, Wrigley’s even the largest in Florida (that’s Trulieve), but company now has 42 dispensaries across three it has slowly and methodically built up its op- states, with 39 in Florida and the rest in Mas- erations. Its strategy is markedly different from sachusetts and Nevada, with new ones slated that of Curaleaf, which pulled off an aggressive to open in Pennsylvania and Texas. To date, it national rollup strategy headed by its billionaire has raised a total of $400 million largely from chairman, Boris Jordan. Instead of a national Wrigley and other high-net-worth individu- land grab, Wrigley has mostly focused on Florida, als. The latest funding round, which closed in which he calls “New York South” and where medi- 2020, valued the $250 million company (2020 cal marijuana is legal. sales) at an estimated $2 billion. Florida has a growing population of 21 million In 2019, Parallel spent more than $100 million and more than 100 million visitors every year, on a Boston-based startup, Molecular Infusions, and Wrigley expects that when it legalizes canna- which is working on a THC-infused seltzer. Par- bis for recreational use, his company will grow by allel is also in talks for a roughly $150 million a factor of ten. “The potential is huge in Florida acquisition of a three-store dispensary chain in alone,” he says. Chicago, which would bring the company to the city synonymous with the Wrigley name. The hidden value in Parallel lies in its invest- ments in medical and recreational R&D. The It’s also exploring going public in Canada via a company inked an exclusive partnership with SPAC deal, according to two people with knowl- biopharma company Eleszto Genetika in Buda- edge of the discussions. Wrigley denies that the pest, Hungary, in 2019. Through a yeast-based mi- company will go public. crobial process, Eleszto Genetika can genetically sequence rare cannabinoids and engineer specific In just three years, Wrigley has transformed effects at commercial scale. One future product Parallel into a new kind of cannabis company. On a mission to build the first mainstream marijuana brand, he has stacked his management with exec- utives and advisors from some of the largest and The Vault P.K. WRIGLEY CHEWS IT OVER Under his dad, he had a long and wonderful training. He was thirteen years old when [his father] came home one night and told of an opportunity to sell out to a chewing- gum trust at a figure that would make them both rich for life. “Do you think you’ll ever want to go into the business, Phil?” his dad asked. “I’ll sell.” “This was one critical time when Phil said, “No!” But he meant “Yes!” He said, “Don’t sell.” —“Young Wrigley Spends Money to Make It” (November 1, 1934) FEBRUARY/MARCH 2021 FORBES.COM

A Higher Calling Cont. Wrigley is excited about is CBN, a cannabinoid he’s concerned about how expensive the R&D that helps improve sleep. process could be—as well as the risk of appealing “Call it an ‘Ambien killer,’ ” he says. to children. Still: “Never say never,” he says. Parallel is also looking at THCV, which has the Much like Wrigley Co., Parallel has global am- same euphoric effects as THC, the main psycho- bitions. According to an investment document 54 active compound in cannabis, but is an appetite obtained by Forbes, Parallel is exploring cannabis CONTRARIAN • FORBESLIFE suppressant—meaning no more “munchies,” he HOW TO PLAY IT and hemp cultivation licenses in Southeast Asia. says. The idea is to create a noncaloric alcohol (Wrigley admits he has spoken to government HOW TO PLAY IT BY JON PONCIANO; PATRICK WELSH FOR FORBESreplacement that “makes you feel better, is not According to officials in the region but says talks have slowed more addictive than a cup of coffee, has no side during the pandemic.) effects,” he adds. “And, oh, by the way, it suppress- Dan Ahrens es your appetite.” “In comparison to Wrigley, this is also a cross- Don’t be tempted cultural product,” he says. “Just like we sold in 180 He goes on, his Italian water dog, Rio, sitting at by Canadian countries, cannabis plays everywhere.” his feet: “One of these products is bigger than the entire company.” cannbis stocks, When asked what his ancestors would think says Dan Ahrens, about his foray into the industry, Wrigley takes Wrigley, who uses his company’s THC drops in manager of Ad- his time to answer. Standing on a wooden walk- lime LaCroix to unwind, says cannabinoids have visorShares’ Pure way leading to the main entrance of his estate, he the potential to improve “quality of life,” whether Cannabis ETF: The is flanked by two ponds filled with koi. Flags on by easing one’s pain, reducing anxiety or helping best pot stocks are a small putting green nearby wave in the breeze promote a good night’s rest. homegrown in the off Lake Worth. USA. His top pick Parallel also has something no other cannabis is Massachusetts- “Gosh, at first blush they would roll over in company has: the Wrigley name. based Curaleaf, their graves,” he says with a smile. Morgan Paxhia, cofounder of a San Francisco– whose 90-plus Although pot is still illegal under federal law, based $150 million cannabis investment firm, dispensaries in 23 43 states have created their own legal markets of believes Wrigley is primed to build a successful, states make it the one kind or another, and with Democrats now in mainstream cannabis company. “It’s ingrained largest in a grow- control of Congress, national legalization seems in their DNA,” Paxhia says. “Multigeneration, ing crop of multi- closer than ever. “I don’t consider our business family-driven—this is how we build big, durable state marijuana illegal,” he says. “It’s caught up in a political quag- legacy brands.” operators. Ahrens, mire for the moment.” whose fund is up Wrigley was born into one of America’s great Wrigley, who has a net worth of $3.1 billion, business dynasties. His namesake great-grand- 47% in the last says he feels lucky to be a part of helping an in- father, William Wrigley Jr., started William Wrig- 12 months, points dustry transform from black-market to legal. The ley Co. in 1891 as a manufacturer of soap but piv- last generation of entrepreneurs who made that oted in 1893 to produce Wrigley’s chewing gum out that Cura- claim turned the desert town of Las Vegas into instead. The company was handed down through leaf is still legally a city home to multibillion-dollar public corpo- the generations, and Beau’s father ran it until the prohibited from rations. Wrigley compares the cannabis industry day he died, in March 1999. Beau, who started listing its shares today to Vegas in the post-Mafia period before working at the company over his summer break on U.S. exchanges luxury hotels dominated the Strip. when he was 13, was 35 years old when he be- like Nasdaq and came CEO and chairman the day after his father NYSE, so it trades “I see us [as] in the era before Steve Wynn came passed away. over the counter and made it a destination experience,” he says. and is less popular “Anyone can put up a table with green felt and He is credited with breathing life into a with investors than gamble. But he created this whole experiential 100-year-old family business by helping replace Canadian canna- thing with the art, the Bellagio, the fountains, and its natural-gum formula with a more cost-effec- bis merchants like it became a destination.” Wrigley believes Parallel tive synthetic base and expanding its reach by ac- Nasdaq-listed Til- can become the world’s first gold-standard can- quiring Life Savers and Altoids. In October 2008, ray. In 2021, Cura- nabis company by changing how Americans view Wrigley closed the deal of his lifetime—he took leaf is expected to marijuana, much like Wynn made over Sin City’s Wrigley Co. private by selling to Mars, Inc., an- break even after image. “It isn’t about getting high,” he says. “It’s other company owned by a family of billionaires. losing $52 million about quality of life.” on revenue of $472 Understandably, many assume Wrigley will million over the FINAL THOUGHT produce a cannabis gum one day. After launch- past 12 months. By ing into a three-minute explanation of the sci- contrast, Tilray is “MR. WRIGLEY BELIEVED IN THIS: ence and molecular biology behind ensuring the burning through its PUT ALL YOUR EGGS IN ONE BASKET release of the right flavors for the appropriate stash, losing $487 amount of time from chewing gum base, he says AND WATCH THE BASKET.” million on $201 million in revenue. —Ernie Banks Ahrens expects Curaleaf to be a big winner as more states legalize recreational cannabis. Dan Ahrens is chief operating officer of AdvisorShares and portfolio manager of Pure Cannabis ETF. FORBES.COM FEBRUARY/MARCH 2021

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57 AMERICA’S TOP WEALTH ADVISORS OUR 2021 BEST-IN-STATE WEALTH ADVISORS LIST SPOTLIGHTS MORE THAN 5,000 ADVISORS, NOMINATED BY THEIR FIRMS—THEN RESEARCHED, INTERVIEWED AND ASSIGNED A RANKING BY SHOOK RESEARCH. WHILE 500 ADVISORS ARE FEATURED HERE, THE FULL LIST CAN BE FOUND AT F O R B E S . C O M / B E S T- I N - S TAT E - W E A LT H - A D V I S O R S . GUTTER CREDIT BY JASON BISNOFF AND SHOOK RESEARCH FEBRUARY/MARCH 2021 FORBES.COM

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Melissa $15.3B $114B Management 10. Inna Kelly $1.3B Corrado Harrison 4. Tom Vacheron 4. Glenn Pahnke SAN FRANCISCO Morgan Stanley UBS Private Merrill Private RBC Wealth 3. Rebecca Rothstein 2. Greg Vaughan $736M Wealth Management 4. William Wheatley Wealth Management Wealth Management Management Merrill Private Morgan Stanley SAN FRANCISCO Merrill Lynch DENVER FAIRFIELD SCOTTSDALE Wealth Management Private Wealth 3. Ian Rosenfield $1.3B Wealth Management $929M $1.8B $761M BEVERLY HILLS Management Elevon Wealth COSTA MESA $3.3B MENLO PARK Management/ CALIFORNIA $1B 6. Brent Hablutzel 5. Harold Trischman 5. Jeffry Korte $26.7B Raymond James Merrill Lynch Morgan Stanley Merrill Lynch 4. Drew Freides SAN FRANCISCO SAN FRANCISCO 5. Larry Smith Wealth Management Wealth Management Wealth Management UBS Private 3. Andy Chase $615M PRIVATE WEALTH UBS Wealth GREENWOOD GREENWICH SCOTTSDALE Wealth Management Morgan Stanley Management VILLAGE $2B $682M LOS ANGELES Private Wealth 4. Steven Minkoff 1. Troy Griepp BREA $522M $5.1B Management Ameriprise Morgan Stanley $1B DELAWARE 6. Stephen Harnden MENLO PARK Financial Services Private Wealth 7. Michael Caplan Ameriprise 5. David Hou $27B SAN FRANCISCO Management 6. Kerry Bubb UBS Wealth 1. Kimberlee Orth Financial Services Evoke Wealth $520M SAN FRANCISCO KWB Wealth Management Ameriprise PEORIA LOS ANGELES 4. Robert Skinner II $13.2B REDLANDS DENVER Financial Services $584M $6.2B IEQ Capital 5. Thomas $746M $586M WILMINGTON FOSTER CITY Connaghan 2. Elaine Meyers $1B 7. Joe Di Vito 6. Drew Zager $9.1B Kayne Anderson J.P. Morgan CALIFORNIA 8. Carl Hoover RBC Wealth Morgan Stanley Rudnick Wealth Management Merrill Private 2. Thomas Management Private Wealth 5. Mark Douglass SAN FRANCISCO SAN FRANCISCO SOUTHERN HIGH NET WORTH Wealth Management Weisenfels PHOENIX Management Morgan Stanley $5B $3.2B DENVER Merrill Lynch $280M LOS ANGELES Private Wealth 1. David Bahnsen $1.2B Wealth Management $10.2B Management The Bahnsen Group WILMINGTON ARKANSAS* MENLO PARK NEWPORT BEACH 9. Scott Thisted $478M 7. Craig Chiate $25.8B $2.1B Merrill Private 1. Hardy Winburn UBS Private Wealth Management 3. Thomas Rice UBS Wealth Wealth Management 6. Jon Goldstein 2. David Molnar DENVER Merrill Lynch Management LOS ANGELES First Republic Crest Capital $1.2B Wealth Management LITTLE ROCK $3.6B Investment Advisors WILMINGTON $539M Management SAN DIEGO 10. Mark Brown $1.3B 8. Sean Yu MENLO PARK $1B Brown and Company 2. Don McDonald Morgan Stanley $4.4B DENVER 4. Mike Koppenhaver Merrill Lynch Private Wealth 3. Peter Huffman $474M Merrill Lynch Wealth Management Management 7. Rich Petit Merrill Lynch Wealth Management FORT SMITH PASADENA Morgan Stanley Wealth Management 11. Ali Phillips DOVER $3.5B $1.3B Private Wealth LA JOLLA Obermeyer Wood $726M Management $655M Investment Counsel CALIFORNIA 9. Eric Gray MENLO PARK ASPEN 5. David Plaza Merrill Private $7.2B 4. Bob Inbody $1.7B Merrill Lynch LOS ANGELES Wealth Management Morgan Stanley Wealth Management HIGH NET WORTH LOS ANGELES 8. Alan Zafran Wealth Management 12. Donna Di Ianni WILMINGTON $13.4B IEQ Capital LA JOLLA Merrill Lynch $417M 1. Randy C. Conner FOSTER CITY $2.6B Wealth Management Churchill 10. Michael Kanigher $9.1B ASPEN 6. Michael Porter Management Group UBS Private 5. Dan Horgan $1.3B Janney LOS ANGELES Wealth Management 9. Eric Harrison Raymond James Montgomery Scott $6B LOS ANGELES IEQ Capital & Associates GREENVILLE $5.1B FOSTER CITY NEWPORT BEACH $458M $9.1B $510M *W. Allen Homra of Edward Jones in Stuttgart, Arkansas, would have appeared on this ranking but died in January of causes related to Covid-19. FEBRUARY/MARCH 2021

Advice for what matters most, when you need it most Congratulations to all our Merrill advisors on the Speak with one of our Forbes 2021 “Best-In-State Wealth Advisors” list. dedicated advisors today. ML.com As your life evolves, Merrill can provide personalized 888.339.9417 advice and guidance to help you stay on track to pursue your goals. @MerrillLynch Investing involves risk including possible loss of principal. Source: The Forbes “Best-in-State Wealth Advisors” list, February 11, 2021. Data provided by SHOOKTM Research, LLC. Data as of June 30, 2020. The Forbes “Best-in-State Wealth Advisors” ranking was developed by SHOOK Research and is based on in-person and telephone due diligence meetings to evaluate each advisor qualitatively, a major component of a ranking algorithm that includes: client retention, industry experience, review of compliance records, firm nominations; and quantitative criteria, including: assets under management and revenue generated for their firms. Investment performance is not a criterion because client objectives and risk tolerances vary, and advisors rarely have audited performance reports. Rankings are based on the opinions of SHOOK Research, LLC and not indicative of future performance or representative of any one client’s experience. Rankings and recognition from Forbes are no guarantee of future investment success and do not ensure that a current or prospective client will experience a higher level of performance results, and such rankings should not be construed as an endorsement of the advisor. Neither Forbes nor SHOOK Research receives compensation in exchange for placement on the ranking. Forbes is a trademark of Forbes Media LLC. All rights reserved. Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”) makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation (“BofA Corp.”). MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value © 2021 Bank of America Corporation. All rights reserved. | MAP3336150 | AD-11-20-0348 | 01/2021

DISTRICT OF COLUMBIA 2. Scott Barkow 2. Bob Doyle 2. Daniel Fries 4. Martin Gregor 3. James Spiro 1. Marvin McIntyre Barkow Ginsburg Doyle Wealth Merrill Lynch Merrill Private Morgan Stanley Morgan Stanley Wealth Management Management Wealth Management Wealth Management Wealth Management Private Wealth Group of Raymond ST. PETERSBURG CHICAGO INDIANAPOLIS NEW ORLEANS Management James $1B $1.1B $998M $2B WASHINGTON CORAL GABLES 3. Dominic 3. Jim Moriarity 5. Ron Mencias 4. Kevin Murphy Casanueva Morgan Stanley Merrill Lynch Ameriprise $3.8B $402M 2. Keith Apton 3. Benjamin Roberts Merrill Lynch Private Wealth Wealth Management Financial Services UBS Wealth Ironview Capital Wealth Management Management Management Management SARASOTA CHICAGO INDIANAPOLIS SHREVEPORT MIAMI $3.9B $2.5B $2.2B $684M WASHINGTON $1.3B 4. Aimee Cogan 4. Christian Habitz IOWA 5. Scott Hardie $2.1B Merrill Lynch Morgan Stanley J.P. Morgan Wealth 1. Timothy Finucan 60 3. William Finnerty FLORIDA Wealth Management Management Edward Jones Wealth Management UBS Private SARASOTA CHICAGO WEBSTER CITY NEW ORLEANS Wealth Management MIAMI PRIVATE WEALTH $508M $605M $1.2B $1B WASHINGTON 1. Louis Chiavacci 5. Matthew Dillig 2. Matt Fryar MAINE Merrill Private $699M Wealth Management 5. Jeff Hausinger Wells Fargo Advisors 1. Gibson Wilkes 4. Jim Wohlgemuth CORAL GABLES All Seasons Wealth/ The Dillig Bowen DES MOINES White Pine Wealth Morgan Stanley $3.1B Raymond James Group $821M Management AMERICA’S TOP WEALTH ADVISORS Private Wealth 2. Adam Carlin TAMPA CHICAGO Management Morgan Stanley WASHINGTON Private Wealth $452M NADINE WONG $1.1B 3. Jerry Ask FALMOUTH $821M Management Jerry K. Ask $551M GEORGIA 6. David Mabie Investment Services/ 5. J.C. McKnight CORAL GABLES Chicago Capital Raymond James 2. Chris Rogers Merrill Lynch ATLANTA HIGH NET WORTH CHICAGO Raymond James $2.7B 1. Andy Berg $2.1B CEDAR RAPIDS & Associates Homrich Berg PORTLAND $432M Wealth Management 3. Ghislain Gouraige ATLANTA 7. John Cultra WASHINGTON UBS Private $7B MORGAN STANLEY PRIVATE William Blair 4. Bryan Boesen $813M $1.5B Wealth Management WEALTH MANAGEMENT CHICAGO Morgan Stanley 2. Wes Moss $4.1B Wealth Management 3. Todd Doolan 6. Michael O’Neill CORAL GABLES Capital Investment New York, New York Morgan Stanley Morgan Stanley Advisors ILLINOIS DES MOINES Wealth Management $1.6B (No. 97 in NYC Private Wealth) $734M PORTLAND Private Wealth 4. Andrew Schultz ATLANTA “We’re in a new economic 1. Steve Hefter KANSAS $394M Management Morgan Stanley $2.7B cycle. We had a V-shaped HLM Capital WASHINGTON Private Wealth HIGHLAND PARK 1. Rick Homuth MARYLAND $2.9B Management 3. Mike Hines recovery give way to a $2.8B Merrill Lynch MIAMI BEACH Consolidated secular bull market, which Wealth Management BALTIMORE AREA 7. Barry Haffner $830M Planning typically lasts years. We’re 2. Scott Magnesen LEAWOOD UBS Wealth Corporation/ recommending rotating toward Morgan Stanley $832M 1. Barry Garber Management 5. Peter Bermont Raymond James cyclical value with equities, Wealth Management Alex. Brown/ WASHINGTON The Bermont ATLANTA small-cap, internationals, OAK BROOK 2. Tim L. Werth Raymond James $840M Advisory Group of $783M developing markets, Asia $3.9B Werth Wealth BALTIMORE Raymond James equities; staying short-duration Management/ $2.5B 8. William Slater III CORAL GABLES 4. Andy Zager for fixed income; and, due 3. Kyle Chudom Raymond James Merrill Private $2.5B UBS Wealth to volatility, recommending Morgan Stanley Financial Services 2. Edward W. Smith Wealth Management Management active management versus Wealth Management HAYS UBS Private WASHINGTON FLORIDA ATLANTA passive management for this OAK BROOK $717M Wealth Management $1.3B $584M $958M BALTIMORE NORTHERN 3. Scott Ferguson $1.3B 9. Michael Freiman 5. David Skid 4. Rob Siracusano Morgan Stanley Morgan Stanley 1. Clarke Lemons Morgan Stanley Wells Fargo FiNet Wealth Management 3. Beth Rosenwald Wealth Management Eaton Vance Wealth Management NAPERVILLE LEAWOOD RBC Wealth WASHINGTON WaterOak Advisors ATLANTA $750M $1.1B Management $1.6B WINTER PARK $1.2B BALTIMORE $2B $496M 10. Hammond Han 2. Manish Mehta 6. Saul M. Levy new business cycle.” 5. Ron Stenger 4. Greg Harvey 4. Gregory Hurlbrink UBS Wealth UBS Private Wealth Morgan Stanley Morgan Stanley Integrated Morgan Stanley Management Management Wealth Management Wealth Management Wealth Solutions Wealth Management WASHINGTON ORLANDO ATLANTA OAK BROOK OVERLAND PARK BALTIMORE $2.4B $975M $1.6B $857M $402M $900M 11. Ronya Corey 3. Ken Burke 7. Travis Propst 2. Andrew Sullivan 2. Brian King 6. Benjamin Klein 5. Dianna L. Smith 5. Richard Keetley Merrill Lynch Merrill Lynch Wealth UBS Wealth Sullivan & Schlieman RBC Wealth Merrill Lynch Morgan Stanley Janney Wealth Management Management Management Wealth Management Management Wealth Management Wealth Management Montgomery Scott WASHINGTON HEATHROW ATLANTA NORTHBROOK LEAWOOD BALTIMORE $745M $1.4B $744M $914M $1.1B $707M 12. Greg Marcus 4. Lucas Haber GEORGIA ALPHARETTA EAGLE 7. JR Gondeck 6. Jake Kern MARYLAND UBS Private Merrill Lynch Wealth $593M $624M The Lerner Group Mariner Wealth Management Management ATLANTA PRIVATE WEALTH DEERFIELD Wealth Advisors 1. Kent Pearce WASHINGTON DAYTONA BEACH 3. R. Scott Howard 3. Sandra Dalton $1.2B OVERLAND PARK Merrill Lynch $757M $542M 1. Rod Westmoreland Merrill Lynch UBS Wealth $1.7B Wealth Management Merrill Private Wealth Management Management 8. Tom Kilborn TOWSON 13. Sheila Shaffer FLORIDA Wealth Management SAVANNAH BOISE Merrill Lynch KENTUCKY $1.8B Janney ATLANTA $653M $689M Wealth Management Montgomery Scott SOUTHERN $5.6B NORTHBROOK 1. Barry Barlow 2. Joseph Jacques WASHINGTON HAWAII ILLINOIS $1B Merrill Lynch Jacques Financial $599M 1. Thomas Moran 2. James Hansberger Wealth Management ROCKVILLE Moran Wealth Morgan Stanley 1. Eric Fujimoto CHICAGO HIGH NET WORTH 9. Dave Sheppard LOUISVILLE $1.2B FLORIDA Management Private Wealth Ameriprise Merrill Lynch $967M NAPLES Management Financial Services 1. Sharon Oberlander Wealth Management 3. Jeff Leventhal JACKSONVILLE AREA $3.1B ATLANTA HONOLULU Merrill Lynch DEER PARK 2. Travis Musgrave Hightower Bethesda $2.4B $751M Wealth Management $884M Merrill Lynch BETHESDA 1. Christopher Aitken 2. Kevin Peters CHICAGO Wealth Management $1B UBS Private Morgan Stanley 3. Brian Frank 2. Peter Backus $1.5B 10. Wesley Tate LEXINGTON Wealth Management Wealth Management Morgan Stanley Morgan Stanley UBS Wealth $711M 4. Robert Collins PONTE VEDRA BEACH PALM BEACH Private Wealth Graystone 2. Mark Thorndyke Management Collins Investment $732M $1.8B Management HONOLULU Merrill Lynch OAKBROOK TERRACE 3. Phil McCauley Group ATLANTA $1.2B Wealth Management $573M Morgan Stanley BETHESDA 2. William Merriam 3. Sal Tiano $2.2B CHICAGO Wealth Management $846M Merrill Lynch First Republic 3. Jimmy Bennett $1.2B 11. Michael Schaffer LOUISVILLE Wealth Management Investment 4. Hank McLarty Morgan Stanley Wells Fargo Advisors $1.1B 5. Jonathan Murray JACKSONVILLE Management Gratus Capital Private Wealth 3. Ted Davis DEERFIELD UBS Wealth $1B JUPITER ATLANTA Management Morgan Stanley $1.6B 4. Dean Donohue Management $2.2B $1.9B HONOLULU Wealth Management Ameriprise HUNT VALLEY 3. Adam Meinrod $1.3B CHICAGO INDIANA Financial Services $1.5B Raymond James 4. Don d’Adesky 5. Ron Hughes $727M LOUISVILLE & Associates The Americas Group Merrill Private 4. Grant Kubota 1. Brian Cooke $459M 6. Larry Boggs JACKSONVILLE of Raymond James Wealth Management Morgan Stanley 4. Brian Marshall Cooke Financial Wells Fargo Advisors $951M BOCA RATON ATLANTA Wealth Management William Blair Private Group at Noyes LOUISIANA CUMBERLAND $3.6B $1.1B HONOLULU Wealth Management INDIANAPOLIS $1B 4. Lee Bledsoe $136M CHICAGO $1.8B 1. Curtis Eustis Merrill Lynch 5. Jason Stephens 6. Buck Wiley III $716M Merrill Lynch 7. E. Geoffrey Sella Wealth Management UBS Private Merrill Private 5. Funling Tang 2. J. Chris Cooke Wealth Management SPC Financial/ JACKSONVILLE Wealth Management Wealth Management Ameriprise 5. Mike Cohen Cooke Financial NEW ORLEANS Raymond James $953M NAPLES ATLANTA Financial Services Morgan Stanley Group at Noyes $957M ROCKVILLE $1.3B $2.1B HONOLULU Wealth Management INDIANAPOLIS $908M FLORIDA $238M CHICAGO $1.8B 2. Rick Frayard FLORIDA GEORGIA $1.5B UBS Private 8. Brad Hill MIAMI HIGH NET WORTH IDAHO 3. Eric Payne Wealth Management Morgan Stanley TAMPA AREA 1. Donna Joyner ILLINOIS Merrill Lynch LAFAYETTE Wealth Management 1. Margaret Starner Merrill Lynch 1. Justin T. Samples Wealth Management $1.6B EASTON The Starner Group 1. Michael Valdes Wealth Management Ameriprise CHICAGO PRIVATE WEALTH INDIANAPOLIS $1.3B of Raymond James Merrill Private ALPHARETTA Financial Services $2.2B CORAL GABLES Wealth Management $933M BOISE 1. Raj Bhatia $1.1B TAMPA $619M Merrill Private $6.2B Wealth Management CHICAGO $1.7B FORBES.COM FEBRUARY/MARCH 2021

9. Gregory Baker 5. Devin Condron MICHIGAN 5. Thomas Foley 3. Dan Schwartz 6. Corby May 61 Merrill Lynch Morgan Stanley Hightower Omaha UBS Private Merrill Lynch Wealth Wealth Management Private Wealth PRIVATE WEALTH PHILIPPE HARTL OMAHA Wealth Management Management AMERICA’S TOP WEALTH ADVISORS BETHESDA Management $515M PARAMUS GARDEN CITY $1B BOSTON 1. Jeffrey MERRILL PRIVATE WEALTH $2B $1.2B $1.5B Fratarcangeli MANAGEMENT NEVADA 10. William Orr Fratarcangeli 4. Joseph Matina 7. Chris Sebastian Merrill Private 6. Victor Livingstone Wealth Management Los Angeles, California 1. Mark Binder UBS Private Wealth Merrill Lynch Wealth Wealth Management Morgan Stanley BIRMINGHAM (No. 15 in Los Angeles Private Wealth) UBS Private Management Management FREDERICK Private Wealth $1.8B Wealth Management SHORT HILLS BUFFALO $1.1B Management “I went quickly from being a LAS VEGAS $1.3B $1.1B BOSTON 2. Dana Locniskar scientist to an advisor. Getting $3.6B 11. Tom Hill $1.4B Merrill Private 5. Michael Ricca 8. Tony Maddalena Morgan Stanley Wealth Management a rigorous Ph.D. in the hard 2. Randy Garcia Morgan Stanley Morgan Stanley Wealth Management MASSACHUSETTS TROY sciences is about learning The Investment Wealth Management Wealth Management EASTON $2.9B how to think, how to problem- Counsel Company FLORHAM PARK PURCHASE $1.3B 1. Susan Kaplan solve and how to approach a LAS VEGAS $4.7B $1.2B Kaplan Financial 3. Timothy Long circumstance. . . . What keeps $1.3B MASSACHUSETTS Services Merrill Lynch me up at night is if we continue 6. David Weinerman 9. Barry Mitchell Jr. NEWTON Wealth Management down this path of becoming 3. Geoff Lee Morgan Stanley UBS Wealth BOSTON HIGH NET WORTH $2.1B GRAND RAPIDS more and more dependent on Ameriprise Wealth Management Management $5.9B science and technology, that Financial Services FLORHAM PARK WHITE PLAINS 1. Mary Mullin 2. Chuck Bean less and less of the population HENDERSON $4.7B $621M Merrill Lynch Heritage Financial 4. Frank Migliazzo is educated in science and $429M Wealth Management Services Merrill Private NEW JERSEY 10. Keefe Gorman BOSTON WESTWOOD Wealth Management math, or at least has an 4. Deborah Merrill Lynch Wealth $2B $1.5B TROY appreciation for how it affects Danielson SOUTHERN Management $1.5B Danielson ITHACA 2. Max Peckler 3. Greg Miller life—and that will lead to Financial Group 1. Ira Walker $664M UBS Wealth Wellesley Asset 5. Abe Post decisions that are not optimal LAS VEGAS UBS Private Wealth Management Management Merrill Lynch for the species or the country.” $523M Management 11. Lee DeLorenzo BOSTON WELLESLEY Wealth Management RED BANK United Asset $708M $2.2B TROY MISSOURI 8. Donald Swanson 5. Michael Chudd $974M Strategies $944M Edward Jones UBS Wealth GARDEN CITY 3. Raj Pathak 4. Debra Brede 1. Bud King JOPLIN Management 2. Mark Fendrick $1B Morgan Stanley D.K. Brede MINNESOTA UBS Private $513M LAS VEGAS UBS Wealth Wealth Management Investment Wealth Management $3.2B Management 12. Bill Schoff BOSTON Management HIGH NET WORTH ST. LOUIS MONTANA MOUNT LAUREL UBS Wealth $993M Company $1.4B 6. Jim Small $1B Management NEEDHAM 1. Christina Boyd 1. James Stack UBS Wealth ROCHESTER 4. Domenic Marinelli $1B Merrill Lynch 2. Mike Moeller Stack Financial Management 3. Rick Udine $1.8B Morgan Stanley Wealth Management Moeller Investment Management LAS VEGAS Morgan Stanley Wealth Management 5. Thomas WAYZATA Group WHITEFISH $1B Wealth Management NEW YORK BOSTON Bartholomew $1B CHESTERFIELD $1.3B MOUNT LAUREL $700M Bartholomew $1.8B 7. Lisa A. Petrie $1B PRIVATE WEALTH & Company 2. Richard S. Brown 2. William Royer Wells Fargo Advisors 5. Mark Winthrop WORCESTER JNBA Financial 3. Diane Compardo UBS Wealth INCLINE VILLAGE 4. Anthony Valente 1. Rob Clarfeld Winthrop Wealth $2.6B Advisors Moneta Management $252M Morgan Stanley Clarfeld Management/LPL MINNEAPOLIS ST. LOUIS BILLINGS Wealth Management Financial Advisors BOSTON 6. Dan Wilson $1B $1.5B $1B NEW HAMPSHIRE SHREWSBURY TARRYTOWN $1.3B Ameriprise $2B $8B Financial Services 3. Ben Marks 4. Kathleen 3. Todd Vralsted 1. Nichole 6. John Spooner AUBURNDALE Marks Group Youngerman UBS Wealth Raftopoulos 5. Steve Rothman 2. Lori Van Dusen Morgan Stanley $2B Wealth Management Morgan Stanley Management Nvest Financial UBS Wealth LVW Advisors Wealth Management MINNETONKA Private Wealth BILLINGS Group Management PITTSFORD BOSTON MICHIGAN $1.1B Management $1B PORTSMOUTH RED BANK $1.8B $1.1B CHESTERFIELD $248M $476M HIGH NET WORTH 4. Brad Wheelock $410M NEBRASKA 3. Frank Marzano 7. Bill Graham RBC Wealth 2. Bob Bonfiglio 6. Christine GM Advisory Group First Republic 1. Charles Zhang Management 5. Mark Wilkins 1. Jason Dworak Ameriprise McGinley MELVILLE Investment Zhang Financial ST. CLOUD UBS Private UBS Private Financial Services UBS Wealth $1B Management PORTAGE $1.2B Wealth Management Wealth Management BEDFORD Management BOSTON $3.2B CLAYTON LINCOLN $389M MOUNT LAUREL 4. Michael Paris $558M 5. Bryan Sweet $879M $1.1B $858M Paris International 2. David Kudla Sweet Financial 3. John Habig Corporation 8. Tom Wood Mainstay Capital Services/ 6. Gordon 2. Todd Feltz Morgan Stanley NEW MEXICO GREAT NECK UBS Wealth Management Raymond James Hamilton III Feltz WealthPLAN Wealth Management $1.5B Management GRAND BLANC FAIRMONT Morgan Stanley OMAHA PORTSMOUTH 1. Michael Stevens BOSTON $2.8B $546M Wealth Management $2.2B $377M Merrill Lynch NEW YORK $1.2B KANSAS CITY Wealth Management 3. Leo Stevenson 6. Bobby Swiller $1.3B 3. Stephen Ethen NEW JERSEY ALBUQUERQUE NYC HIGH NET WORTH 9. Jeff Swett Merrill Lynch UBS Wealth Merrill Lynch $888M UBS Wealth Wealth Management Management 7. Dennis Williams Wealth Management NORTHERN HIGH NET WORTH 1. Scott Siegel Management WYANDOTTE MINNEAPOLIS Morgan Stanley OMAHA 2. Michael Blackwell Morgan Stanley BOSTON $790M $751M Private Wealth $409M 1. Elliott Kugel Morgan Stanley Wealth Management $877M Management Merrill Lynch Wealth Management NEW YORK 4. Philip Appel MINNESOTA KANSAS CITY 4. Justin Gibson Wealth Management ALBUQUERQUE $4.6B 10. Mark Alibrandi Merrill Lynch $445M Silverleaf Wealth BRIDGEWATER $788M First Republic Wealth Management PRIVATE WEALTH Management $1.6B 2. Jason Katz Investment BLOOMFIELD HILLS OMAHA 3. Brian Cochran UBS Wealth Management $2.4B 1. Rob Metcalf $673M 2. Christopher Cook John Moore Management BOSTON UBS Private Merrill Lynch Associates NEW YORK $925M 5. Melissa Spickler Wealth Management Wealth Management ALBUQUERQUE $3B Merrill Lynch MINNEAPOLIS FLORHAM PARK $582M 11. Michele O’Connor Wealth Management $1.9B $1.9B 3. Gerard Klingman Morgan Stanley BLOOMFIELD HILLS NEW YORK Klingman & Wealth Management $1.2B 2. Judy Fredrickson 3. Mark Cortazzo Associates BOSTON UBS Private MACRO HIGH NET WORTH NEW YORK $263M 6. Nicole Christians Wealth Management Consulting Group $2.2B Merrill Lynch MINNEAPOLIS PARSIPPANY 1. Thomas Sullivan MASSACHUSETTS Wealth Management $1.9B $433M Merrill Lynch 4. John Olson FARMINGTON HILLS Wealth Management Merrill Lynch Wealth BOSTON PRIVATE WEALTH $2.2B 3. Louis Close 4. Andy Schwartz GARDEN CITY Management UBS Private Bleakley $2.3B NEW YORK 1. Raj Sharma 7. Aaron Romain Wealth Management Financial Group $1.9B Merrill Private Merrill Lynch MINNEAPOLIS FAIRFIELD 2. Daniel O’Connell Wealth Management Wealth Management $2.1B $1.1B Merrill Lynch 5. Brian Bennett BOSTON FARMINGTON HILLS Wealth Management UBS Wealth $7.2B $2.2B 4. Theresa Ward 5. Gary Tantleff GARDEN CITY Management Merrill Private UBS Wealth $1.3B NEW YORK 2. Peter Princi 8. Jay McGill Wealth Management Management $907M Morgan Stanley Merrill Lynch MINNEAPOLIS WARREN 3. Todd Silaika Graystone Wealth Management $648M $5.5B Merrill Lynch 6. John Barrett BOSTON AUBURN HILLS Wealth Management Merrill Lynch Wealth $4.1B $930M MISSISSIPPI NEW JERSEY CLIFTON PARK Management $1.3B NEW YORK 3. Brian Strachan 9. Jim Kruzan 1. Rush Mosby NORTHERN PRIVATE WEALTH $1.7B Morgan Stanley Kaydan Wealth UBS Wealth 4. Bruce Burrows Private Wealth Management Management 1. Frank Seminara Morgan Stanley 7. Richard Pluta Management FENTON JACKSON Morgan Stanley Wealth Management Merrill Lynch Wealth BOSTON $512M $1.1B Private Wealth GARDEN CITY Management $1.1B Management $13.5B NEW YORK 10. David Brazen 2. Lynn FLORHAM PARK $1.1B 4. Sean Dillon Ameriprise Phillips-Gaines $1.6B 5. Jonathan Kuttin UBS Wealth Financial Services Phillips Financial/ Ameriprise 8. Louise Gunderson Management TROY Raymond James 2. Mary Deatherage Financial Services UBS Private Wealth BOSTON $895M STARKVILLE Morgan Stanley HAUPPAUGE Management $1.6B $188M Private Wealth $2B NEW YORK Management $929M 3. Arthur Finkelberg LITTLE FALLS Raymond James $2.9B & Associates RIDGELAND $509M FEBRUARY/MARCH 2021 FORBES.COM

NEW YORK 2. Bill Oliver OREGON 5. Stanton J. Jacobs UTAH 2. Erin Scannell Wells Fargo Advisors UBS Wealth Ameriprise NYC PRIVATE WEALTH CHARLOTTE 1. Judith McGee Management 1. Dane Runia Financial Services $1.4B McGee Wealth Merrill Private 1. Brian C. Pfeifler Management/ OAK RIDGE Wealth Management MERCER ISLAND Morgan Stanley 3. John McCardell Raymond James PROVO Private Wealth $455M $1.8B Management Merrill Lynch Wealth PORTLAND TEXAS $2.8B 3. Paul Ried NEW YORK Management $698M Paul R. Ried $5B CHARLOTTE HOUSTON HIGH NET WORTH 2. Nick Bapis Financial Group $4.6B 2. Keith Sheppard Rockefeller Capital 2. Christopher Errico UBS Wealth 1. Scott Tiras Management BELLEVUE UBS Private Wealth 4. R. Neil Management Ameriprise SALT LAKE CITY Financial Services $773M Management Stikeleather PORTLAND HOUSTON $1.2B 4. Jeff Eulberg AMERICA’S TOP WEALTH ADVISORSNEW YORK Merrill Lynch Wealth $778M UBS WEALTH MANAGEMENT $2B 3. Glen Mintz Evergreen Gavekal $2.4B Management Lake Oswego, Oregon UBS Wealth BELLEVUE CHARLOTTE PENNSYLVANIA (No. 19 in Oregon) 2. Bonner Barnes Management $2.5B 3. Lyon Polk $490M Corda Investment PARK CITY Morgan Stanley EASTERN HIGH NET WORTH “There was a turning point Management $1.1B 5. Wayne Hampson 5. Kelly Graves when I stopped pretending HOUSTON Merrill Lynch Wealth 62 Private Wealth Carroll Financial 1. Johanna Walters to be somebody who, in my $1B VERMONT Management Associates Merrill Lynch Wealth SEATTLE Management CHARLOTTE Management head, the person across 3. Darrell Pennington 1. Tim Stotz $1.9B NEW YORK $725M BLUE BELL the table wanted me to be Ameriprise Morgan Stanley $12.4B $4.8B and started being myself. It Financial Services Wealth Management 6. Corina Davis NORTH DAKOTA changed me as an individual, HOUSTON COLCHESTER Merrill Lynch Wealth 4. Richard 2. Patti Brennan $872M $1.1B Management Saperstein 1. Troy Nelson Key Financial as an advisor and in my SEATTLE Treasury Partners Edward Jones WEST CHESTER client relationships. I realized TEXAS 2. Joshua Parker $696M NEW YORK BISMARCK $1.1B Merrill Lynch $16.4B $632M that I’m different and it’s HOUSTON PRIVATE WEALTH Wealth Management WASHINGTON 3. Michael Henley okay to be different. In fact, BURLINGTON ALI PANAHPOUR5. Martin Halbfinger 2. Dave Schlafman Brandywine Oak it’s beautiful to be different.” 1. Nestor Vicknair $282M PRIVATE WEALTH Ameriprise Private Wealth Merrill Lynch Wealth UBS Wealth Financial Services KENNETT SQUARE PUERTO RICO 3. E. Robertson Management 3. CJ Charlebois 1. Michael Matthews Management BISMARCK $911M Kibler HOUSTON Melendy UBS Private Wealth NEW YORK $2.7B 1. Franco Merrill Private Wealth $5.2B Ameriprise Management $3.5B 4. George Estrada-Velasco Management Financial Services BELLEVUE 3. Joel Bird Mastrogiorgos UBS Wealth COLUMBIA 2. Langston Turner WILLISTON $1.4B 6. Michael Poppo Ameriprise Ameriprise Management $6.6B UBS Private Wealth $282M UBS Wealth Financial Services Financial Services SAN JUAN Management 2. Bruce Munster Management BISMARCK EXTON $475M SOUTH DAKOTA HOUSTON VIRGINIA Merrill Private NEW YORK $2.7B $749M $2B Wealth Management $1.3B 2. Federico Cardona 1. David Hillard NORTHERN BELLEVUE OHIO 5. Virgil Kahl Merrill Lynch Wealth RBC Wealth 3. Christopher Black $2.1B 7. Ron Basu Spring Ridge Management Management UBS Private Wealth 1. Paul Pagnato Morgan Stanley 1. David Singer Financial Group GUAYNABO RAPID CITY Management PagnatoKarp 3. Terry Cook Private Wealth Merrill Private Wealth WYOMISSING $234M $1B HOUSTON RESTON Parcion Management Management $822M $1.1B $2.3B Private Wealth NEW YORK CINCINNATI RHODE ISLAND 2. Gordon Wollman BELLEVUE $7.7B $3.1B 6. Peter Sargent Cornerstone TEXAS 2. Jeff Grinspoon $1.5B Janney 1. Malcolm Makin Financial Solutions/ VWG Wealth 8. Ron Vinder 2. 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Tim Pagliara $1.5B $2.2B UBS Private Wealth Merrill Lynch Wealth CapWealth 3. Kelly Castleberry 10. Scott Stackman Management 1. Peter Rohr Management FRANKLIN 3. Charles McKinney 5. Ryan Sprowls Morgan Stanley UBS Private Wealth CINCINNATI Merrill Private PROVIDENCE $1B Morgan Stanley Wells Fargo Advisors Graystone Management $1.8B Wealth Management $1B Private Wealth ALEXANDRIA CHARLESTON NEW YORK PHILADELPHIA 2. Jeffrey Bates Management $1.1B $2.1B $4.2B 5. Randy Carver $4.8B 4. Denise Roberts Kings Point Capital DALLAS Carver Financial Morgan Stanley Management $1.4B VIRGINIA WISCONSIN 11. Jordan Waxman Services/ 2. David Lees Wealth Management BRENTWOOD Nucleus Advisors Raymond James myCIO Wealth NEWPORT $1.1B 4. Dwight SOUTHERN 1. Andy Burish NEW YORK MENTOR Partners $575M Emanuelson Jr. UBS Wealth $2.2B $1.5B PHILADELPHIA 3. Kent Kirby Merrill Private 1. Joe Montgomery Management $8.8B SOUTH CAROLINA UBS Private Wealth Wealth Management Wells Fargo Advisors MADISON 12. Shawn Rubin 6. Rip Hale Management DALLAS WILLIAMSBURG $3.4B Morgan Stanley Morgan Stanley 3. Grant Rawdin 1. Richard Migliore NASHVILLE $3B $1.2B Private Wealth Wealth Management Wescott Financial Merrill Lynch Wealth $2.6B 2. Michael Klein Management BEAVERCREEK Advisory Group Management 5. Rob Bertino 2. Jamie Cox Baird NEW YORK $818M PHILADELPHIA COLUMBIA 4. Tim Roberson UBS Private Wealth Harris Financial MILWAUKEE $1.5B $2.1B $4.6B Merrill Lynch Wealth Management Group/LPL $4.7B OKLAHOMA Management DALLAS RICHMOND NORTH CAROLINA PENNSYLVANIA 2. Robert Vingi Jr. BRENTWOOD $942M $585M 3. Bryan Sadoff 1. Don Jackson Wells Fargo Advisors $2.4B Sadoff Investment EASTERN UBS Wealth WESTERN CHARLESTON TEXAS 3. Brett Hayes Management Management $1.6B Hayes Nystrom MILWAUKEE 1. Patrick Rush TULSA 1. Samuel Spanos SOUTHERN Sarrett Wealth $1.3B Triad Financial $408M Spanos Group of Management Group Advisors Raymond James 1. Jennifer RICHMOND 4. Michael Sadoff GREENSBORO 2. James Johnson BEAVER Marcontell $560M Sadoff Investment $706M Morgan Stanley $660M Edward Jones Management Private Wealth BAYTOWN 4. Scott Garnett MILWAUKEE 2. Mike Absher Management 2. Jim Rimmel $1.2B UBS Wealth $1.3B Absher Wealth OKLAHOMA CITY UBS Wealth Management Management $771M Management 2. Brian Tramontano RICHMOND WYOMING CHAPEL HILL PITTSBURGH Merrill Lynch Wealth $437M $491M 3. Matt Monger $1.8B Management 1. Jeff Vincent Merrill Lynch Wealth SAN ANTONIO 5. Aashish Matani Vincent Financial 3. Kim Hoffman Management 3. Pete Strope $694M Merrill Lynch Wealth Services Edward Jones TULSA UBS Wealth Management RIVERTON WILSON $742M Management 3. Fred De Groot NORFOLK $290M $468M CANONSBURG Merrill Lynch Wealth $1.2B 4. Jeff Blumenthal $1B Management 2. Lester Brunker 4. Rick Fisher Wells Fargo Advisors THE WOODLANDS 6. Mark Mellon UBS Private Wealth Fisher Wealth OKLAHOMA CITY 4. Michael $1.8B Edward Jones Management Management $1B Duckworth MIDLOTHIAN TETON VILLAGE BURLINGTON Merrill Private 4. Charles Johansen $302M $357M $660M 5. Steve Jelley Wealth Management Merrill Lynch Wealth Merrill Lynch Wealth PITTSBURGH Management WASHINGTON 3. Christopher 5. Bill Smith Management $1.5B THE WOODLANDS Van Slyke UBS Wealth TULSA $1.4B HIGH NET WORTH WorthPointe Management $906M 5. Rob Thomas JACKSON RALEIGH Mariner Wealth 5. Ralph Schroeder 1. Steve Hollomon $582M $1.2B 6. John Cary Advisors Ameriprise Merrill Lynch Wealth Morgan Stanley STATE COLLEGE Financial Services Management NORTH CAROLINA Wealth Management $1.8B THE WOODLANDS SEATTLE TULSA $627M $2.2B WESTERN $602M 6. Glenn Kolod Edward Jones 1. Larry Carroll MONROEVILLE Carroll Financial $531M Associates CHARLOTTE $1B FORBES.COM FEBRUARY/MARCH 2021 For the full list of more than 5,000 best-in-state advisors, please visit forbes.com/best-in-state-wealth-advisors

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THE PROFILE 64 THE By ALEX KONRAD Photograph by CHRISTIE HEMM KLOK for Forbes FORBES.COM

65 F R A N K SLOOTMAN DOESN’T START COMPANIES. BUT NO ONE IN BUSINESS HISTORY HAS A BETTER TRACK RECORD OF TURNING THE IDEAS OF OTHERS INTO JACKPOTS. WITH $80 BILLION SNOWFLAKE, THE BIGGEST SOFTWARE IPO EVER, HE’S REWRITTEN THE PLAYBOOK. AND NOW HE’S SHARING IT.

THE PROFILE66 BY LABOR DAY, IT HAD BECOME CLEAR THAT FRANK SLOOTMAN’S THIRD INITIAL PUBLIC OFFERING WOULD NOT BE LIKE THE OTHER TWO. After a slight summer lull, Covid-19 was resur- rest of the process. Just six months in, he had gent, which meant that rather than a global tour lined up his anchor investors, including Drag- of get-to-know-you lunches and PowerPoints in oneer Investments and Marc Benioff ’s Sales- hotel meeting rooms, his roadshow for data ware- force. Around the same time, he began meet- housing company Snowflake was going virtual. ing with research analysts who would wind up setting bullish prices for the IPO. And when Slootman, 62, took over a nondescript confer- Slootman and his team virtually rang the bell ence room on the second floor of Snowflake’s Dub- of the New York Stock Exchange, a process that lin, California, office, embarking on a series of looked as awkward as it sounds, raising some meetings that now rank with Mark Zuckerberg’s $3.4 billion in the process, Salesforce and oth- Harvard dorm coding sessions in terms of value per ers were there to support the floor. “These are hour. For seven days in mid-September, packing in people we knew from previous rodeos,” Sloot- everything from a series of one-on-one meetings to man says with a shrug. large presentations, the naturally gruff Slootman met over Zoom with more than 1,000 people, in- Snowflake, valued at $4 billion when Slootman cluding fund managers and investment bankers, took over, more than doubled that first day and is who were on hand to win a piece of his IPO. up significantly since. It currently boasts a mar- ket capitalization of $81 billion on trailing sales of Rather than the usual grilling, Slootman was roughly $580 million. His personal net worth, an toasted instead. “The issue was not ‘Do I like the estimated $2.2 billion, is an extraordinary figure company?’ The issue was ‘How many shares do I for someone who has never been part of a compa- get?’ ” he recalls in his Dutch accent. Of the virtual ny in its earliest days. IPO, he says, “I absolutely loved it.” Slootman likes to say that he doesn’t have a for- Slootman, who took over Snowflake in April mula, even after having pulled off similar mag- 2019, had been as ruthlessly efficient with the FEBRUARY/MARCH 2021 FORBES.COM

67 THE PROFILE ic at both Data Domain and ServiceNow. Talk to Steady Hand to do. And the reason is, CEOs are only there for him at length, though, and watch the patterns, one reason, and that is they need to win. When and you can see that’s not true. The former sailor During his short-lived you win, nobody can hurt you. And when you lose, runs pre-IPO companies like a tightly rigged high- retirement, Slootman nobody can help you.” performance watercraft, a captain with extreme confidence who will throw overboard anyone who raced aboard his shows the mildest mutinous inclination. Pac52 Class 52-foot yacht, Invisible Hand. “When I was a younger man, I was more tol- erant; I always thought I could coach people to a “The thing I liked place where they would be great,” Slootman says. about sailing was “And 99 times out of 100, you’re wrong on that, that if you make a which is the reason I [now] pull triggers much mistake, it’s obvious faster. I still don’t think I’ve ever taken anybody within minutes.” out of a job too soon. It’s [always] been too late. F rank Slootman’s path to the Ameri- “I exercise executive prerogative,” he adds. “I can Dream, via IPO billions, start- don’t have to justify it, I don’t have to convince ed with his making Naugahyde seats you. I just have to know that this is what I want for the automotive and boating in- dustries. Born in the Netherlands to a military veteran and a portrait artist, Sloot- man had a childhood regimented by high aca- demic achievement and racing sailing dinghies. FEBRUARY/MARCH 2021

A standout economics student at Erasmus Uni- Prioritizing the development of raw talent versity Rotterdam, Slootman finished school with high upside, Slootman was able to stabilize a year early to pursue internships in the Uni- Compuware. Rather than return to Michigan, he ted States. His dream employer: IBM. In 1982, jumped to Borland Software, a database darling after a number of rejections from Big Blue, he of the 1980s by then in dire straits. After success- “crawled ashore with $100 in my pocket” (a phrase he repeats so often his employees know it by heart) in South Bend, Indiana, with a job “ T H E J O B O F T H E B O A R D I S T O H I R E A N D 68 as an intern in the seemingly dead-end fake- F I R E T H E C E O . I F I ’ M D O I N G A B A D J O B , leather industry. YOU SHOULD GO AHEAD AND FIRE ME. THE PROFILE “I learned from that experience that I don’t want to be in an elevator that’s going down,” he says. “It O T H E R W I S E , I ’ M G O I N G T O G O A H E A D A N D R U N T H E C O M P A N Y .” doesn’t matter how good you are or how bad you are—in the wrong elevator, you’re going to get hosed.” Eventually, he was able to shift to the up ele- vator—computers—first in Detroit, then in Ann Ar- fully building out its Java development and test- bor, Michigan, where he moved customers off main- ing business, Slootman received his first CEO job frames to more modern server products. When ex- offer in 2003, when investors in a data-storage ecutives at a later company, Compuware, realized in startup tapped him for another rescue. Data Do- 1995 that an acquisition in Amsterdam was going main was running out of money; its technology, sideways, its young staffer, a native Dutch speaker, Core Four while theoretically more powerful than the exist- was given a chance to clean up the mess. Cofounders Benoit ing alternatives, ran prohibitively slowly. By 1998 Slootman was running Compuware’s Dageville (left) and Slootman began to hone his skills: He put more Thierry Cruanes (third California office amid the dot-com boom. The as- from left) are counting energy into short-term sales, worked to improve signment itself was another challenge: Compu- on Slootman and his the product and raised cash to keep the business ware was bleeding employees to Silicon Val- trusted lieutenant, afloat. Data Domain’s revenue more than doubled ley’s emerging powers. “My whole career was do- each year for the next four years. The day he took ing jobs that other people didn’t want to take,” he CFO Michael the company public on Nasdaq in 2007, shares says. “So after a while I’m like, ‘Instead of bitch- Scarpelli (right), to jumped 66%; two years later, EMC outbid rival ing about it, I’ll just stick to these train wrecks and NetApp to acquire the business for $2.4 billion. show you what I can do with them.’ ” steer Snowflake through the stock With an exit in his back pocket, Slootman had market’s gyrations. Says Dageville: “We have a lot of pressure to deliver on this valuation.” his pick of companies for his next act, in 2011. He settled on a fast-growing but under-the- radar software startup based in Santa Clara called ServiceNow. Founded by billionaire Fred Luddy, ServiceNow was cash-flow-positive and doubling revenue, but understaffed—“anemic,” as Slootman now says. Investor Sequoia want- ed an executive with more experience building a sales team to target the world’s biggest corpora- tions. The board, including Doug Leone—an in- vestor on Forbes’ Midas List and Sequoia’s co- leader at the time—tasked Slootman with doing for ServiceNow what he had just done for Data Domain. “Frank took us from a very large start- up and made us into a very large, well-oiled ma- chine,” Luddy told Forbes in 2018. Slootman once again led with sales as a bridge to a better product. To win over large customers like Johnson & Johnson, he repositioned Service- Now from a help-desk IT solution—not exactly something to excite a fellow CEO in a meeting— to an all-you-can-eat buffet of tools that could help a needy CIO solve any challenge. About a year af- ter he came aboard, Slootman took ServiceNow public on the New York Stock Exchange. Along the way, investors witnessed his brusque leader- ship style firsthand when Leone made the mistake FORBES.COM FEBRUARY/MARCH 2021

OUTSIZED OFFERINGS geville and Cruanes, two French-born database ex- 69 perts from Oracle, and was backed by Sutter Hill, SOFTWARE’S LARGEST-EVER IPO, SNOWFLAKE whose venture capitalist Mike Speiser served as its STANDS AS THE FIFTH-LARGEST OF ALL first CEO. The company promised to do for data U.S.-BASED TECH LISTINGS. warehouses, which then lived on customers’ own servers, what Amazon Web Services had done for Facebook $18 billion* data storage. Harnessing the cloud’s flexible com- THE PROFILE May 2012 puting output as if it were one giant supercompu- $8.2 billion ter, Snowflake’s software could locate and organize Uber customers’ increasingly large amounts of data— May 2019 $6.1 billion consumer information, product sales, employee overhead—then help make sense of it all quickly Agere Systems $4.1 billion and cheaply enough to make it truly useful. March 2001 $3.9 billion In 2014, after two years under the radar focus- Snap ing on shipping the software, Speiser tapped Mug- March 2017 $3.5 billion lia to replace him as CEO. Muglia was no slouch: an engineer who was one of Microsoft’s four pres- Snowflake $3.4 billion idents before Steve Ballmer replaced him with Sep 2020 Satya Nadella. At Snowflake, Muglia moved fast $2.9 billion to get the company into the market, pricing it to Airbnb match Amazon Web Services’ by-the-second con- Dec 2020 $2.6 billion sumption model, which offered a pay-as-you-go alternative to a subscription, then targeting cus- DoorDash $2.3 billion tomers of Amazon’s own rival product, Redshift. Dec 2020 Billboard ads with corny messages like “Happy Holidata” soon lined Silicon Valley’s main high- Genuity way, U.S. Route 101. In early 2018, just over a year June 2000 before his dismissal, Muglia met Forbes for break- fast at a New York hotel. A Gartner analyst on va- Lyft cation spotted the executive and crashed the meet- March 2019 ing to go full fanboy. Twitter But behind the scenes, months before WeWork’s Nov 2013 epic IPO-attempt flameout helped make profit- ability cool again, Snowflake was shaping up to *All proceeds have been adjusted for inflation become the tech industry’s next great cautionary Source: FactSet tale. Buying up cloud storage credits from Amazon and its rivals and reselling them, all while keep- of interrupting Slootman with unprompted ad- ing Snowflake’s own software running, was cost- vice in a board meeting. “Doug, thank you for that ly, especially as Snowflake expanded to new mar- comment,” Slootman replied. “Have I told you my kets such as Australia. Its technology—quicker to point of view on boards? The job of the board is to offer cloud data warehousing than Oracle, Terada- hire and fire the CEO. If I’m doing a bad job, you ta and other database companies but challenged should go ahead and fire me. Otherwise, I’m going at every turn by Redshift, Google’s Big Query and to go ahead and run the company.” Microsoft’s Azure Synapse products—required a large and continuous amount of R&D spending. S lootman’s my-way-or-the-highway at- After needing just over $5 million in investment in titude caused a stir when he arrived at its first two low-profile years, by early 2018, when Snowflake on April 26, 2019, hours af- Snowflake reached a valuation of $1.8 billion, it ter cofounders Benoit Dageville and had raised almost a half-billion. It took on anoth- er $450 million, this time at a $4 billion valuation, Thierry Cruanes informed well-liked about nine months later. CEO Bob Muglia, a Microsoft veteran, that his ser- Concerned about Snowflake’s appetite for capi- tal, Speiser approached Slootman, whom he knew vices were no longer required. One major cause for through the board of another investment, Pure Storage, to see if he could tempt him to join the the shock: By all appearances, Snowflake wasn’t company’s board. Having built ServiceNow to a market cap of $14 billion by 2017 (it’s valued at struggling—and it already had a high-profile CEO. seven times that today), Slootman was focused on Snowflake was founded in August 2012 by Da- FEBRUARY/MARCH 2021

lieutenants from Data Domain and ServiceNow: Mike Scarpelli to oversee finances, and Shelly Be- gun to run HR. Out went executives and sales reps who didn’t fit Slootman’s mold or didn’t want to work for new supervisors who did. Just a month later, Snowflake under Slootman had shifted to become a performance-based busi- ness. Chief revenue officer Chris Degnan figured 70 his lack of experience in such a structured sales organization would be enough for Slootman to THE PROFILE show him the door. To his relief, Begun told him a few weeks later that the new CEO valued his hus- tle and loyalty to the product. “He’s like, ‘I’m get- ting [to be an] old man, I don’t have time to wait.’ That’s just how he operates,” Degnan says. Scarpelli got to work on Snowflake’s books. Under the company’s Amazon-style pricing, cus- bringing back professional yacht racing to Califor- Bell Ringer tomers could easily expand their usage over time. nia and running a conservation and animal wel- When Slootman took The flip side: sticker shock as companies’ bills fare foundation from his Montana ranch. In oth- ServiceNow public rapidly grew, and unpredictability as Snowflake er words, he was bored. “I have empathy with a lot in 2012, he rang the struggled to deliver accurate revenue projec- of quarterbacks who don’t know to retire,” he says. NYSE bell in person. tions. To make the company more Wall Street– ready, Snowflake started working with its bigger When Slootman expressed interest in the Snow- Eight years later, with customers to show them where they were wast- flake CEO job, Sequoia and Sutter Hill jumped. In Snowflake, he had ing money running needless reports. Better mod- a rare interview, the press-shy Speiser discussed to do it over Zoom. eling and the focus shift to larger accounts also the difficult decision to fire Muglia: “When you “An IPO is a blip on the radar, a mile marker during the marathon,” he says now. have the potential [to build] one of the game- made it easier to guess how users might expand changing companies of all time, you should take or contract. the chance.” When Covid-19 hit, Snowflake was prepared, Just one problem: No one told Muglia until the having just raised $479 million from investors day the company announced the coup. Speak- including Salesforce in early February. Because ing publicly about his departure for the first time, struggling sectors like the travel industry could Muglia tells Forbes that it took him months to get simply reduce their usage without renegotiating over the shock. “The board was the one telling me contracts—and others, such as those in e-com- to spend money, the board was just as strongly be- merce or food delivery, saw demand quintuple— hind this. But certainly I did it,” says Muglia, not- Snowflake’s sales barely hiccuped. Slootman hit ing that overall spending at Snowflake increased the austerity button all the same, refocusing re- after he left. “I used to call it ‘drunken sailors’ sources toward the “drive train”—product, engi- spending. I would say, ‘We’re spending like drunk- neering, sales and legal—and away from less ur- en sailors,’ and they would say, ‘Yes, keep doing it.’ And it was the right thing to do.” “THEY’VE CLEARLY SHOWN THEY CAN EXECUTE, BUT I CAN’T JUSTIFY THIS VALUATION BY ANY MEANS. THIS STOCK IS BEING COMPLETELY D R I V E N B Y T H E R O B I N H O O D C R O W D .” I n the weeks after the Slootman era kicked off at Snowflake, executives filed into Sloot- gent areas like marketing. “It’s like being on the man’s unadorned office one by one to meet the boss, while Speiser, the one who had America’s Cup boats: Every day is about sailing reached out to Slootman, filled in for him in meetings. Soon Slootman resumed his old tricks. faster,” says Denise Persson, Snowflake’s CMO. His first action: reorganizing the sales arm of the “It’s about getting this entire organization to go in business to separate large customers from small, one direction.” focusing more intently on converting the bigger So far, Snowflake is outrunning its competition. fish. His second: parting ways with anyone who Analysts say it continues to beat Amazon and the seemed fond of palace intrigue or who didn’t de- tech giants’ products head to head; as Snowflake liver precisely on their word. In came two of his top gets bigger, it can negotiate better rates, too, driv- FORBES.COM FEBRUARY/MARCH 2021

ing down its operating costs. of cloud darlings Crowdstrike, Okta and Zoom. 71 Perhaps Slootman’s greatest triumph so far: Should Snowflake stumble on its numbers, or if ex- uberance fades, employees who made their money THE PROFILE selling both outside experts and those within the in the IPO might not want to stick around. “These company on the possibilities of “Snowflake 2.0,” are multiples, frankly, that the world hasn’t seen its shift from being a data warehouse to more since the internet bubble in 1999,” says Brad Zel- of a data hub on which businesses can securely nick, an analyst at Credit Suisse. Adds Srini Nan- (and temporarily) share information with each dury of Summit Insights Group, who has a rare other, develop apps and feed their data into arti- sell rating on Snowflake: “They’ve clearly shown ficial intelligence tools. That push, which Snow- they can execute, but I can’t justify this valuation flake says would increase its addressable mar- by any means. This stock is being completely driv- ket from $14 billion to a recent $81 billion, is en by the Robinhood crowd.” very much a work in progress. Inside Snowflake, Slootman reengaged cofounder Dageville, now The ever-cocky Slootman relishes the idea of a billionaire himself, to spearhead the project; proving the doubters wrong. “You can look at my outside, analysts trust Slootman to figure it out. private companies and see how that turned out,” “Very large enterprises are choosing a vendor to he says. The CEO has plenty of reason to stick go to bed with for five years, minimum,” says Pat- around, too, with billions tied up in unvested rick Colville, an analyst at Deutsche Bank. “So Snowflake shares. it’s showing them a really nice path forward. It’s much easier to select [Snowflake].” After fighting so hard to become a CEO, Sloot- man doesn’t know how to do anything else. So the One unanticipated challenge, however: Snow- day after Snowflake’s public offering, he was back flake’s current stock price, which has exceed- to business as usual, demanding that executives ed even Slootman’s expectations and which, as of present their plans for the next quarter and be- mid-January, was trading at a revenue multiple of yond. “I don’t get that excited,” he explains. “My 140 times its estimated fiscal 2021 revenue, ahead eyes are on the horizon.” IPO MANIA IT TOOK NEARLY A QUARTER-CENTURY, BUT COMPANIES ARE CASHING IN ON PUBLIC OFFERINGS AND A NEW TWIST, THE SPAC, AT A RATE APPROACHING THE DOT-COM BUBBLE’S HIGHS. Number of IPOs 700 664 600 503 480 538 424 500 456 323 319 400 292 300 252 228 237 267 228 270 242 200 198 100 189 165 179 137 0 99 91 90 51 71 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: FactSet FEBRUARY/MARCH 2021

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THE TREND 73 Cheat For By Susan Adams Students HAVE ALWAYS CHEATED, BUT THE COVID-19-DRIVEN SHIFT TO ONLINE LEARNING HAS TURNED A NAGGING PROBLEM INTO AN EPIDEMIC. MEET SUPERSPREADER Chegg, WHICH HAS BECOME THE MOST VALUABLE ED-TECH COMPANY IN AMERICA BY CONNECTING COLLEGE STUDENTS TO TEST ANSWERS ON DEMAND. Illustration by Matt Chase FEBRUARY/MARCH 2021 Profit FORBES.COM

solve math problems and improve writing. But the main revenue driver, and the reason stu- dents subscribe, is Chegg Study. “If I don’t want to learn the material,” says a University of Florida sophomore majoring in 74 finance, “I use Chegg to get the answers.” “I use Chegg to blatantly cheat,” says a senior THE TREND at the University of Portland. Forbes interviewed 52 students who use It’s called “chegging.” Chegg Study. Aside from the half-dozen stu- dents Chegg provided for Forbes to talk to, all College students but four admitted they use the site to cheat. everywhere know They include undergrads and grad students what it means. at 19 colleges, including large and small state “If I run out of time schools and prestigious private universities like or I’m having problems Columbia, Brown, Duke and NYU Abu Dhabi. Subscriptions to Chegg have spiked since nearly every college in the world went virtual. In the third quarter, they grew 69% over the previous year, to 3.7 million. Nine-month reve- on homework or an nue surged 54% to $440 million through Sep- tember and is projected to hit $630 million for online quiz,” says the year. (As of press time, Chegg hadn’t report- ed final 2020 numbers.) Its market cap, mean- Matt, a 19-year-old while, has nearly quadrupled since March 18, when the country began to lock down. Chegg is sophomore at now valued at more than $12 billion. Chegg CEO Dan Rosensweig has profited Arizona State, handsomely. His holdings of Chegg plus after- tax proceeds from stock sales add up to $300 “I can chegg it.” million. Rosensweig, who declined to speak to Forbes, has said that Chegg Study was “not built” for cheating. He describes it instead as the equiv- alent of an asynchronous, always-on tutor, ready to help students with detailed answers to prob- He means he can use Chegg Study, the lems. In a 2019 interview, he said higher educa- $14.95-a-month service he buys from Chegg, a tion needs to adjust to the on-demand economy, tech company whose stock price has more than the way Uber or Amazon have. “I don’t know why tripled during the pandemic. It takes him sec- you can’t binge-watch your education,” he said. onds to look up answers in Chegg’s database “My view is education is going to have to come to of 46 million textbook and exam problems us over the devices we have.” and turn them in as his own. In other words, Two Chegg executives, vice presidents Arnon to cheat. (Matt asked that his real name be Avitzur and Erik Manuevo, support Rosens- withheld because he knows he’s violating his weig’s claims about Chegg’s intent. “It’s there school’s honor code.) to offer students personalized service to help Chegg is based in Santa Clara, California, them get unstuck,” Avitzur says. but the heart of its operation is in India, where In a written statement, a Chegg president, it employs more than 70,000 experts with ad- Nathan Schultz, says: “We are not naive that vanced math, science, technology and engi- [cheating] is a problem. And the mass move to neering degrees. The experts, who work free- remote learning has only increased it. We re- lance, are online 24/7, supplying step-by-step main 100% committed to addressing it, and answers to questions posted by subscribers are investing considerable resources to do so. (sometimes answered in less than 15 minutes). We cannot do it alone and are working with Chegg offers other services students find use- faculty and institutions, and will continue to ful, including tools to create bibliographies, do more, including educating students.” FORBES.COM FEBRUARY/MARCH 2021

Their investments don’t appear to be pay- cy. Test takers have reportedly urinated at their 75 ing off. Undergrads in a finance course at Tex- desks, fearing they will be accused of cheating as A&M last fall used Chegg to cheat on multi- Going Viral if their camera catches them getting up to go to THE TREND ple online exams. Timothy Powers, who heads the bathroom. the university’s honor system office, says hun- Dan Rosensweig dreds of students submitted answers they cop- took over as CEO Although most students Forbes interviewed ied from Chegg more quickly than it would of Chegg in early say remote proctors make them too scared to have taken them to read the questions. 2010, but things have cheat on exams, several note that they chegg really accelerated their online exams regardless of whether “It’s an arms race,” Powers says. “We’re try- during the pandemic. they’re proctored. “As long as you’re not using ing to stop academic misconduct, and students “The growth of the the school’s Wi-Fi, you won’t get caught,” says a are convincing themselves that all their peers company is just sophomore at a large state school. are doing this.” extraordinary right now,” he said in Students have always cheated. In the 12th cen- Throughout the pandemic, schools have tury, Chinese test takers sewed matchbox-sized spent millions on remote proctoring, a con- late October. copies of Confucian texts into their clothes so troversial practice in which colleges pay pri- they could cheat on civil service exams. Hen- vate companies like Honorlock and Examity ry Ford II dropped out of Yale in 1940 after he to surveil students while they take tests. The was exposed paying someone to write his se- proctoring outfits lock students’ web browsers nior thesis. and watch them through their laptop cameras. Critics say the services invade students’ priva- The size of the problem is difficult to mea- sure, says Penn State professor Linda Trevi- GUERIN BLASK/THE NEW YORK TIMES/REDUX ño, coauthor of the 2012 book Cheating in Col- lege. Part of the challenge is defining what con- stitutes cheating. Is it getting an answer to a homework problem from a friend, peeking at a classmate’s paper during an exam, paying someone to take a test for you, plugging in an- swers from Chegg? It’s also tough to get reli- able information. “You’re depending on people who cheat to be honest with you about whether they cheated,” Treviño says. Her book pegs the share of college students who cheat at rough- ly two-thirds. Students cheat for several reasons. To get better grades so they can get into an elite law or medical school. To pass required distribution courses (engineers forced to study Shakespeare and vice-versa) that they don’t care about. To save time so they can play varsity football or work a job that pays for school and supports loved ones. And because they feel that every- one else does it, and they don’t want to be at a disadvantage if they don’t cheat too. They don’t worry about getting caught. Even more troubling, they either don’t think they’re doing anything wrong or they don’t care. A 2020 George Washington University grad- uate who is applying to grad school says she tried to use Chegg the way company execu- tives say it was intended, “more as an instruc- tional tool.” But her mechanical physics course was very tough. “I felt like a moth drawn to a flame,” she says about chegging her physics homework at the last minute. “When it’s nearly FEBRUARY/MARCH 2021 FORBES.COM

midnight, why not use Chegg just to finish theTHE TREND ing up with an ambitious Iowa State MBA stu- assignment?” dent from India, Aayush Phumbhra, he bowed out in 2005. Phumbhra and new partner Os- Chegg Study started life as Cramster, a man Rashid shortened the name to Chegg and Southern California startup founded in 2002 switched their strategy to textbook rentals. by a recent UCLA engineering grad, Aaron 76 Hawkey, then 24. In college, Hawkey wished he Students were happy to pay $30 to rent a had a place to look up answers to tough prob- $250 textbook for a semester. But book pur- lems. His idea: build a website that had care- chases, warehousing and shipping bled cash. fully outlined solutions to math, science and Venture capitalists invested $280 million any- engineering problems. way, and by 2010, lead investor Ted Schlein, a partner at Silicon Valley powerhouse Klein- He and his partner Robert Angarita, then er Perkins, recruited Dan Rosensweig to turn a 23-year-old undergrad at the University of Chegg around. Southern California, knew they needed to gen- erate a lot of high-quality answers. One of An- Rosensweig, now 59, had proven leadership garita’s professors had a cousin in India and chops, first at New York publisher Ziff Davis, encouraged them to recruit well-educated free- where he ran a Ziff spinoff, tech news site ZD- lancers there who would respond to questions Net, in the late 1990s. Japanese billionaire Ma- students uploaded. “It was a question of cost sayoshi Son, a Ziff owner and board member, and quantity,” Hawkey says. was an investor in Yahoo, a hot internet por- tal at the time. He recommended Rosensweig In late 2010 Chegg acquired Cramster for for the No. 2 slot. After serving as Yahoo’s COO an undisclosed sum. It proved to be the strug- from 2002 to 2007, Rosensweig worked brief- gling company’s golden goose. Chegg had ly in private equity and then as CEO of Guitar launched just two years before Cramster, in Hero, a popular video game in which users play 2000, as CheggPost, an online campus flea rock anthems on a miniature plastic guitar. market founded by University of Iowa soph- omore Josh Carlson, who combined “chick- Though none of his pre-Chegg experience en” and “egg” to make the name. After team- touched on education or textbooks, Rosens- Answering to Investors CHEGG SHARES HAVE GROWN BY NEARLY 800% SINCE ITS IPO IN LATE 2013. REVENUE HAS CLIMBED TO A PROJECTED $630 MILLION, INCLUDING A 54% PANDEMIC-INDUCED BUMP IN 2020. $700 $100 Annual Revenue (in millions) $600 $80 Chegg Stock Price $500 $60 $400 $300 $40 $200 $20 $100 $0 $0 FORBES.COM 2013 2014 2015 2016 2017 2018 2019 2020 Source: Chegg FEBRUARY/MARCH 2021

weig likes to say he was attract- “I don’t know Course Hero, is a much small- ed to Chegg because his moth- er operation, valued at $1.1 er taught public school while why you can’t billion, that generates most of he was growing up in Scars- its answers from students. dale, New York, and he had binge-watch 77 two daughters who were get- ting ready for college. As soon your education,” In mid-January Chegg issued THE TREND as he started at Chegg in early says Chegg CEO a press release about a new 2010, he added a tagline to his Dan Rosensweig. program called Honor Shield. email signature that read, “We “My view is that It enables professors and in- put students first.” “I thought structors to pre-submit exam it was a little cheesy,” says Chi- education is or test questions, “preventing Hua Chien, then a Kleiner Per- going to have them from being answered on kins partner, “but Dan had the Chegg platform during a a vision to turn Chegg into a time-specified exam period.” complete end-to-end platform Eleven months after colleg- for learning.” es switched to remote learn- First Rosensweig had to to come to us ing, it quotes Chegg president raise more capital. In No- Schultz as saying that because vember 2013, with a balance over the devices of the “sudden impact” of the sheet in the red and compe- pandemic, “a small number tition from Amazon, which we have.” of students have misused our had started renting textbooks platform in ways it wasn’t de- in 2012, he took the company signed for.” public. The stock sunk from It’s doubtful that Hon- an initial $12.50 to a low of or Shield will dent students’ $4 in early 2016. That was a tough period for chegging. Already many professors and in- Rosensweig. In a 2017 interview, when shares structors have given up the fight. At UCLA, had climbed to $11, he was asked about his ca- physics lecturer Joshua Samani says that he reer frustrations. “You live in Silicon Valley, believes “an astonishingly large portion” of his and everybody is a billionaire and you’re not. students have used Chegg to cheat on his ex- Everybody goes public and at least has the one ams and quizzes. But he doesn’t try to catch moment where their stock goes up—and yours them. “If you’re spending your time attempting didn’t.” It got so bad, he said, “I had a moment to battle Chegg, you’re going to lose,” he says. of sucking my thumb in bed.” At the end of the 2020 spring term, North In early 2015 he found a way to cut Chegg’s Carolina State University lecturer Tyler John- losses from the textbook business. Book dis- son caught 200 students who had used Chegg tributor Ingram agreed to buy and distribute to cheat on the final exam in his intro to statis- Chegg’s inventory while Chegg continued as tics course. Of Chegg Study, Johnson says, “It’s the marketer for textbook rentals under the just unconscionable. Chegg absolutely knows Chegg brand (in 2019 Chegg switched distrib- what students are doing.” utors to FedEx). Building on Chegg’s good rep- It’s unreasonable to lay all the blame for utation with students, he acquired more than a cheating at the feet of Chegg, of course. Hu- dozen companies he thought would fit his plan man nature is at fault, especially when study- to offer services students needed, including In- ing from home makes it much harder to get ternships.com and Study Blue, which helps caught. Constant social media exposure to po- students make online flashcards. But most litical leaders who make a virtue out of dishon- such companies haven’t produced much rev- esty doesn’t help either. But Chegg has wea- enue and some simply failed, including Cam- ponized the temptation and is cashing in on pus Special, a daily deals site for students that students’ worst instincts. Our arsenal of digi- Chegg bought for $17 million in April 2014 and tal tools and global connectivity should be de- shut down the same year. ployed to transform education for the bet- Fortunately for Rosensweig, Chegg Study ter. Instead, Chegg is using them to outsource was enjoying steady growth and little com- cheating to India. That is a tragedy. petition. Its only serious rival, privately held With reporting by Christian Kreznar FEBRUARY/MARCH 2021 FORBES.COM

THE PROFILE THE PANDEMIC TRANSFORMED APOORVA MEHTA’S GROCERY DELIVERY SERVICE INTO AN ESSENTIAL—AND BOOMING—BUSINESS. NOW THE 34-YEAR-OLD BILLIONAIRE IS UNDER PRESSURE TO OUTDO JEFF BEZOS—ALL WHILE DODGING AN AVALANCHE OF NEW COMPETITORS, REBELLIOUS WORKERS AND RESTLESS PARTNERS. FORBES.COM FEBRUARY/MARCH 2021

BY CHLOE SORVINO PHOTOGRAPHY BY CHRISTIE HEMM KLOK 79 FORBES.COM

tized. We’re excited by what the future looks like.” That future is one in which traditionally tech-THE PROFILE averse supermarkets are transformed into digital ful- fillment outfits that stock, promote and package gro- ceries for pickup or delivery. For customers who or- der $35 or more, Instacart charges as much as $9 per delivery—or free delivery with an annual $99 sub- scription. The grocers pay too, forking over an av- 80 erage 10% per order, a painful proposition in an in- dustry where net margins have historically averaged 2% or less. Mehta says the high fees are necessary to cover the hundreds of Instacart engineers, design- ers and technicians toiling to turn a purely physical transaction into an almost entirely virtual one. So far he has signed on 600 retailers including Costco, Wegmans and Eataly. They can use the help. Years of decreasing profits have fueled a spate of mergers, bankruptcies and con- A solidation. The sector’s wafer-thin margins don’t easily support Instacart’s fees, forcing many grocers to inflate their prices on the app. At the same time, though, no one can ignore the sudden shift feeding Instacart’s rise: Online grocery purchases have jumped to 10% of the $1 trillion industry, more than triple what they were at the end of 2019. Of course, that hypergrowth un- derscores one of the biggest risks of all: that significant chunks of Instacart’s customers will return to picking Apoorva Mehta pauses for a moment to consider the out their own produce once the pandemic passes. past ten months of chaos. A year ago, he was running “We saw five years of growth in a matter of five Instacart as a popular app that was gaining momen- weeks,” says Mehta, a former supply-chain engineer tum. Then last spring came a massive Covid-fueled for Amazon and member of the 2015 Forbes 30 Un- boost. Things quickly morphed into a nightmare: strik- der 30 class. “And the growth has continued. We grew ing shoppers, inventory shortages and the challenge of over 300% year-on-year.” meeting the kind of blistering demand Mehta wasn’t He can blame—and thank—the coronavirus for expecting until at least the next presidential election. that. During the first two months of pandemic pan- As it turns out, the tribulations of March were just ic buying, Instacart was delivering more food than the beginning. As the country’s leading grocery de- Walmart, America’s largest grocer, according to data livery app, Instacart is now besieged by a growing firm Second Measure. At the time, it was second only number of well-funded competitors. Mehta himself is to Amazon. The number of chains Mehta serves in- under pressure to justify a valuation that more than creased by 60%. There are now 500,000 Instacart doubled during those 10 months to $18 billion, a high- shoppers cruising more than 45,000 stores across the ly anticipated public offering and a strategy aimed at U.S. and Canada; revenue has hit $1.5 billion. proving Amazon—when it comes Each purchase is becoming to supermarkets, at least—has more valuable, too. According to it all wrong. Understated and “MOST RETAILERS IN an investor presentation obtained wonky, Mehta deftly sidesteps any THE VERY EARLY DAYS by Forbes, Instacart was grossing hint of urgency. more than $3 per order by mid- “I’m playing a 20-year game,” DIDN’T WANT ANYTHING 2020, up from a loss of more than he says, sporting a T-shirt in his $2 per order at the start of 2019. sun-filled home office north of TO DO WITH US. IT TOOK Since the pandemic started, Meh- San Francisco, when asked about US MANY YEARS OF ta has delivered three consecu- Instacart’s IPO and the CFO he tive quarters of positive cash flow hired away from a 20-year stint JUST SHOWING UP. IT IS as measured by earnings before at Goldman Sachs to help with interest, taxes, depreciation and it. He happily shifts the conver- ENTIRELY ABOUT TRUST.” amortization. That’s a first for sation to the long term. “Grocery the company, which was losing a is the largest retail category in the —Apoorva Mehta whopping $15 per order as recent- world, and yet it’s still not digi- ly as 2015. FORBES.COM FEBRUARY/MARCH 2021

81 THE PROFILE Looking for More FORBES.COM Apoorva Mehta’s next step is advertising: “Facebook and Google have done such a wonderful job landing people on others’ websites. The fact that we have a grocery-focused ad business is something very few companies have ever built.” FEBRUARY/MARCH 2021

Of course, turning a profit is easier when you’ve outsourced the sizable real estate footprint nor- mally required to operate a food business. In- ON THE RISE stacart has no warehouses, no stores, no freez- ers, no delivery trucks—pretty much no physi- SHOPPING FOR GROCERIES IS A $1 TRILLION BUSINESS cal assets at all. What it does have is the intel- IN THE U.S. MOST AMERICANS STILL DO IT WITH A TRIP lectual property that powers its app and the peo- TO THE SUPERMARKET, BUT ONLINE GROCERY SHOPPING ple who maintain it. All that existing (and expen- IS FINALLY STARTING TO PICK UP, DRIVEN IN PART 82 sive) brick-and-mortar infrastructure is paid for BY THE PANDEMIC. by supermarkets, while Instacart’s hourly deliv- THE PROFILE ery people are contract workers who pay for their own transportation and their own health care. Grocery E-commerce Sales 21.5% This setup has helped Mehta raise $2.5 billion in eight years from blue-chip investors that include 19.1% Andreessen Horowitz, Sequoia and Khosla Ven- tures. Mehta holds an estimated 10% stake in the 16.9% firm, making him a billionaire. “Apoorva has cracked the code on one of the 14.6% most operationally complex industries to ever 12.5% come online,” says billionaire Marc Andrees- sen, whose VC firm first bet on him as part of a 10.2% $44 million investment round in 2014. “Where others have failed, he has created a sustainable, successful same-day delivery model that allows customers to shop from the same local grocers that they’ve loved for generations.” That hasn’t gone unnoticed. Amazon, which 2.7% 3.4% stole Instacart’s most valuable partner three years ago when it paid $13.7 billion for Whole Foods, now delivers groceries in 18 cities. In July 2020, Uber spent $2.7 billion to acquire Post- 2018 2019 2020 2021 2022 2023 2024 2025 mates, the restaurant delivery firm that during Source: Mercatus the pandemic started curbside pickup of bottles of wine and bags of groceries. Postmates’ com- petitor DoorDash started delivering groceries for Walmart in 2018 and is now coming hard at In- “I had never seen so many Kit-Kats in my entire life,” stacart, flush with cash and valued at $61 billion fol- Mehta recalls, shaking his head. lowing a blockbuster December IPO. It all has Meh- “That was just a massive culture shock,” he adds. ta defending his early edge with a new effort to build “I would be lying if I were to say that starting Insta- and operate grocer websites and run ads for food cart wasn’t a direct consequence of that.” products, digging deeper into their digital business. After graduating from the University of Water- “They have let the fox into the henhouse,” says Joel loo, he spent four months at BlackBerry before join- Warady, a former Mondelez brand executive. “The ing Amazon in 2008, where he worked in Seattle as a more [grocers] partner with Instacart, the more vul- supply-chain engineer managing warehouse invento- nerable they might become. If I was a retailer, this ry and merging shipments to cut costs. would really scare me.” But he dreamed of having his own company, and spent his evenings reading business books and brain- storming. He quit and moved to San Francisco in T hat Mehta might strike fear into the 2010, determined to become a successful entrepre- hearts of American retailers is surpris- neur. The result was mania. Over a two-year-period ing, given his beginnings. Twenty days Mehta launched 20 startups, including a Groupon after he was born in 1986, his parents for food, a rating app for restaurants and a social net- moved from India to Libya, where his work for lawyers. They all flopped. father was a general manager for an electric transmis- “Reed Hastings had this enterprise company before sion line company under the Muammar Qaddafi re- Netflix. Elon Musk had a classified company before gime. It wasn’t until they moved to Canada in 2000 PayPal,” Mehta says. “To expect that my first compa- when Mehta was 14 that he first saw a Western gro- ny was going to be successful out of the gate was not cery store. Walking into one in Ontario, he was agape. an expectation that I had. The failure was expected.” FORBES.COM FEBRUARY/MARCH 2021

h^dKDWZKDKd/KE^d/KE BOMBO-LUMENE NATIONAL PARK Biology students at the University of Kinshasa ;hE/</E ƐĞĞŐƌĞĂƚƉŽƚĞŶƟĂůŝŶƚŚĞďŝŽĚŝǀĞƌƐĞ ŽŵďŽ >ƵŵĞŶĞEĂƟŽŶĂůWĂƌŬĂŶĚŝƚƐĨƵƌƚŚĞƌ development as an ecotourism destination. dŚĞŝƌĐĂůůƐĨŽƌŝŶǀĞƐƚŵĞŶƚŝŶƚŚĞƉĂƌŬĂůŝŐŶ ǁŝƚŚWƌĞƐŝĚĞŶƚ&Ġůŝdž ŶƚŽŝŶĞdƐŚŝƐĞŬĞĚŝdƐŚŝ ůŽŵďŽ ƐĨŽĐƵƐŽŶĞŶǀŝƌŽŶŵĞŶƚĂůŝƐƐƵĞƐ ĞƐƉĞ ĐŝĂůůLJƌĞĨŽƌĞƐƚĂƟŽŶ dŚĞƉĂƌŬ ďŽƌĚĞƌĞĚďLJƚŚĞŽŵďŽĂŶĚ>ƵŵĞŶĞ /ŶĂŶĂƉƉĞĂůƚŽZĂƵƚŚŽƌŝƟĞƐ ŝŶĐůƵĚŝŶŐƚŚĞ ǁŝƚŚŚŝŬŝŶŐ ŚŽƌƐĞďĂĐŬƌŝĚŝŶŐ ŵŽƵŶƚĂŝŶďŝŬ ƌŝǀĞƌƐ ŝƐĂďŽƵƚϭϯϱŬŝůŽŵĞƚĞƌƐ; ϱŵŝůĞƐ ĨƌŽŵ WƌĞƐŝĚĞŶƚŽĨƚŚĞZĞƉƵďůŝĐĂŶĚƚŚĞDŝŶŝƐƚĞƌ ŝŶŐ ĂŶĚƌŝǀĞƌŬĂLJĂŬŝŶŐ DƉƵŬƵĞdžƉůĂŝŶƐ  ĂĐŚ ƚŚĞĞŵŽĐƌĂƟĐZĞƉƵďůŝĐŽĨŽŶŐŽĐĂƉŝƚĂůĂŶĚ ŽĨƚŚĞŶǀŝƌŽŶŵĞŶƚ ďŝŽůŽŐLJƐƚƵĚĞŶƚdƌĠƐŽƌ ĂĐƟǀŝƚLJƌĞƉƌĞƐĞŶƚƐĂĚŝǀĞƌщƐŝĮĞĚĞŵƉůŽLJŵĞŶƚ ŝƐƚŚĞĐůŽƐĞƐƚŶĂƟŽŶĂůƉĂƌŬƚŽƚŚĞĐŝƚLJ ƌĞĂƚĞĚ ƉŽƐƐŝďŝůŝƚLJĨŽƌƚŚĞƌĞƐŝĚĞŶƚƐŽĨƚŚĞƉĂƌŬ ŵĂŶLJ ŽŶ&ĞďƌƵĂƌLJϭϬ ϭ ϲ ƚŚĞŽŵďŽ >ƵŵĞŶĞ “The biodiverse ŶĞǁũŽďƐĨŽƌƚŚĞƉŽƉƵůĂƚŝŽŶƐŽĨDďĂŶŬĂŶĂ  ƉƌŽƉĞƌ ƚLJ ĞŶĐŽŵƉĂƐƐĞƐ  ĂƌŽƵŶĚ ϯϱϬ ϬϬϬ DƵƟĞŶĞĂŶĚƚŚĞƐƵƌƌŽƵŶĚŝŶŐĂƌĞĂƐ ƐƋƵĂƌĞŵĞƚĞƌƐŽŶƚŚĞĂƚĠŬĠƉůĂƚĞĂƵ ,ŝƐƚŽƌŝ Bombo-Lumene ĐĂůůLJ ŝƚŚĂƐďĞĞŶŚŽŵĞƚŽĂƌŝĐŚĂŶĚǀĂƌŝĞĚ park is ideal for ZWƌĞƐŝĚĞŶƚdƐŚŝƐĞŬĞĚŝƌĞĐŽŐŶŝnjĞƐƚŚĞƐŽĐŝŽ ĨĂƵŶĂĂŶĚŵĂŵŵĂůƐƐƉĞĐŝĮĐƚŽƚŚĞƐĂǀĂŶŶĂƐ  economic and environmental significance ecotourism. ŽĨŶĂƚƵƌĂůůĂŶĚƐ ĨŽƌĞƐƚƐĂŶĚƵƌďĂŶƚƌĞĞƐ ,Ğ ĞĨĂƐƐĂĐŽď ,ĂƌŶĂĐŚĠŐƵŝď 'ƌŝŵŵ ƐĚƵŝŬĞƌ  ĚĞĐůĂƌĞĚĞĐĞŵďĞƌϱ ϮϬϮϬ EĂƚŝŽŶĂůdƌĞĞ ĞůĞƉŚĂŶƚ ďƵĨĨĂůŽ ŚŝƉƉŽƉŽƚĂŵƵƐ ĂŶĚůŝŽŶ  “ ĂLJ ĂŶĚĐĞůĞďƌĂƚĞĚƚŚĞůĂƵŶĐŚŽĨĂƐĐŚŽŽů tŚŝůĞůŝŽŶĂŶĚĞůĞƉŚĂŶƚŚĂǀĞĚŝƐĂƉƉĞĂƌĞĚ  ƉƌŽũĞĐƚƚŽƉůĂŶƚŽŶĞďŝůůŝŽŶƚƌĞĞƐďLJϮϬϮϯ  recent studies report more species of unique DƉƵŬƵdLJŽĂŶĚĐůĂƐƐŵĂƚĞƐĞŶǀŝƐŝŽŶƚŚĞƉĂƌŬ ŵĂŵŵĂůƐƉƌĞƐĞŶƚŝŶƚŚŝƐĂƌĞĂ DŽƌĞƚŚĂŶϮϬϬ as “the engine of the development of the tour &ŽƌƵƐ ƚŚĞƐƚƵĚĞŶƚƐŽĨďŝŽůŽŐLJĂŶĚĨŽƌĂůůƚŚĞ ƐƉĞĐŝĞƐŽĨďŝƌĚƐŚĂǀĞďĞĞŶŽďƐĞƌǀĞĚ ŝƐŵƐĞĐƚŽƌ ŝŶ<ŝŶƐŚĂƐĂ dŚĞLJĐĂůůĨŽƌŽŵďŽ ĨƌŝĞŶĚƐŽĨŶĂƚƵƌĞ ƚŚŝƐŝƐĂǀĞƌLJůĂƵĚĂďůĞŝŶŝƟĂ >ƵŵĞŶĞƚŽďĞ ǁĞůů ƉƌŽƚĞĐƚĞĚ ǁĞůů ĞƋƵŝƉƉĞĚ ƟǀĞǁŚŝĐŚĮƚƐŝŶǁŝƚŚƚŚĞĮŐŚƚĨŽƌƚŚĞĐůŝŵĂƚĞ ĂŶĚǁĞůů ĨƵŶĚĞĚ  ǁŚŝĐŚŝƐǀĞƌLJĚĞĂƌƚŽƵƐ DƉƵŬƵƐƚĂƚĞƐ  WůĂŶƚ ŝŶŐƚƌĞĞƐŚĂƐŽŶůLJďĞŶĞĮĐŝĂůĞīĞĐƚƐĂŶĚƐŚŽƵůĚ dŚŝƐĂƌĞĂĐŽƵůĚŚĂǀĞĂĐĂŵƉƐŝƚĞ ĂůŽĚŐĞ Ă ďĞĞŶĐŽƵƌĂŐĞĚĂƚĂůůůĞǀĞůƐ ĨƌŽŵƚŚĞƉƌĞƐŝ game farm and lots of ecotourism activities ĚĞŶĐLJƚŽŶĂƟŽŶĂůŐŽǀĞƌŶŵĞŶƚ ƚŽƉƌŽǀŝŶщĐŝĂů ŐŽǀĞƌŶŵĞŶƚƐĂŶĚĞǀĞŶƚŽĂůůƐĐŚŽŽůƐ ,ĞĂŶĚ ĨĞůůŽǁƐƚƵĚĞŶƚƐŚŽƉĞƚŽƐĞĞƚŚĞĞīŽƌƚƉƌŽŐƌĞƐƐ ŝŶŽƌĚĞƌƚŽĂůůĞǀŝĂƚĞƉŽůůƵƟŽŶ ƉƌŽǀŝĚĞŚĂďŝƚĂƚ ĨŽƌďŝƌĚƐĂŶĚƉŽůůŝŶĂƚŽƌƐ ĂŶĚƐƵƉƉŽƌƚŐƌĞĂƚĞƌ ďŝŽĚŝǀĞƌƐŝƚLJŽĨƉůĂŶƚĂŶĚĂŶŝŵĂůůŝĨĞ  The push for environmental stewardship in cities and areas adjacent to populous areas ĐŽŵĞƐĂƚĂƚŝŵĞǁŚĞŶZ ƐƉŽƉƵůĂƚŝŽŶŝƐ growing and forests are disappearing. LJϮϬϯϱ <ŝŶƐŚĂƐĂ ƐƉŽƉƵůĂƟŽŶŝƐĞdžƉĞĐƚĞĚƚŽ ƌĞĂĐŚϮϳŵŝůůŝŽŶ ŵĂŬŝŶŐŝƚƚŚĞϳƚŚůĂƌŐĞƐƚĐŝƚLJ ŝŶƚŚĞǁŽƌůĚ WƌŽƚĞĐƚŝŶŐĂŶĚƌĞǀŝƚĂůŝnjŝŶŐƚŚĞ ŽŵďŽ >ƵŵĞŶĞEĂƟŽŶĂůWĂƌŬŝƐĂƉŽƐŝƟǀĞƐƚĞƉ in natural resource management. &ŽƌŵŽƌĞŝŶĨŽƌŵĂƟŽŶ ĐĂůů нϮϰϯ ϱϳ ϳϮϯĂŶĚǀŝƐŝƚ džƉĞĚŝƟŽŶďŽŵďŽůƵŵĞŶĞŽŶ Instagram. 1 Emerging Markets

He landed on Instacart one day when he openedTHE PROFILE buying the chain—and kicking Instacart out. his fridge in San Francisco and noticed it was empty “Instacart without Whole Foods was like Pizza Hut except for a single bottle of Sriracha. Within months, he had built a prototype app. His first break came without pizza. It was that big,” Mehta says. “But look, when he collected $150,000 after being accepted frankly, this was not going to be a 21st startup for me. to Y Combinator’s 2012 class—he missed the appli- There was absolutely no chance I was gonna allow that.” cation deadline but got in after sending the head of the business-accelerator program a six-pack of beer The good news: Whole Foods agreed to wind down 84 via his app. Through Y Combinator, Mehta met two the partnership over two years. Mehta used that time entrepreneurs whom he brought on as Instacart co- to hit the road and visit every major grocer. It turned founders. Both are still at the company and hold less out that the Amazon deal spooked many of them as than 5% stakes in it: Brandon Leonardo leads an en- much as it rattled Instacart. “Everyone had read the gineering team dedicated to customer growth; Max same books, the story of what happens when Ama- Mullen supports employee experience and culture. zon enters an industry,” says Mehta, who at the time seemed like the far lesser threat. By the time Whole Looking to capture the feel of being inside a well- Foods left, he had added Kroger, Costco, Albertsons, stocked supermarket, Mehta posted photos of avail- Wegmans and Publix. able items on the app for customers to peruse. In the early days, he did most of the shopping himself, mak- “This was incredibly difficult but definitely made us ing deliveries via Uber. What he didn’t do was build stronger,” he says. “Now, as a company, we have the scar tissue that allows us to take on very hard challenges.” Team Meeting Mehta and the entire Instacart staff huddle in 2014, I f ever there were a time to appreci- the year they signed Whole Foods and raised a $220 million ate that scar tissue, it’s now. Instacart’s Series C round that catapulted the business to unicorn status. woes with workers involve both con- tract shoppers, who sign up to shop for warehouses. Or overhire. Using contract workers as and deliver specific orders, and in-store shoppers, he solved the payroll problem that had shoppers, who are stationed in certain supermar- plagued dot-com-era grocery bust Webvan. kets. At the peak of the early pandemic chaos, con- tract shoppers publicly rebelled over the lack of safety Instead, Mehta faced a different problem: He was precautions or extra compensation for the risk of ex- shunned by the industry. “Most retailers in the very posure to the coronavirus. Workers walked out in the early days didn’t want anything to do with us,” he spring, demanding more protective gear and $5-per- says. “It took us many years of just showing up. It is order hazard pay. Instacart, which began distributing entirely about trust.” safety kits in April, relented somewhat by June with expanded paid sick leave and free telemedicine visits His persistence led to a deal in 2014 with Whole for exposed workers. But Mehta didn’t roll over. Foods, which quickly became the biggest piece of Instacart’s business. Three years later, Mehta was Ten part-time in-store workers at a Kroger in subur- scrambling again after Amazon announced it was ban Illinois joined one of the nation’s biggest unions right before the pandemic. In January, Instacart an- FORBES.COM nounced that about 2,000 of its roughly 10,000 in- store shoppers would be terminated by March, which the union called “outrageous.” Instacart insists the move is part of a long-planned transition away from having workers stationed in stores, and that grocers prefer to have their own employees fulfill those or- ders, adding that the cuts total far less than 1% of In- stacart’s total shopping workforce. A second skirmish concerns Cornershop, a start- up of which Uber bought majority control in 2019 for $459 million. Instacart says the company stole thou- sands of its copyrighted food photos, while Corner- shop says it used a third-party vendor and did not knowingly infringe on Instacart’s copyrights. In Sep- tember the startup agreed not to scrape any more data or use images, and the fight is now headed for a public trial. Mehta’s biggest battle, though, is for trust, especially as more grocers grow leery of the control Instacart is gaining over their customers. After all, relationships are his most valuable asset. Stew Leonard Jr., who runs his FEBRUARY/MARCH 2021

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family’s popular six-store Northeast grocery chain, says “Focus is a competitive advantage,” Mehta says. that while Instacart helped grow his business, it also And a matter of survival. One former manager says holds leverage over the chain through its ownership holding that advantage also means holding onto the of the data from the orders it fills. “With our website, I chains with the strongest customer loyalty. “They’re ter- learn about who you are,” says Leonard, who wants to rified of losing Wegmans and Publix,” the manager says. use that information to send more targeted promotions Looking forward, Mehta is building an advertising and ads. “There’s a lot of competitors now, and we’re platform that he says makes Instacart as much of an talking to two of them that will offer everything Insta- alternative to Facebook as it is to Amazon. It was born 86 cart offers, and you own 100% of the data.” Instacart after countless hours at a whiteboard with his former says that Stew Leonard’s and all its partners already CFO Ravi Gupta. Gupta, who left in 2019 for Sequoia, THE PROFILE have access to plenty of data—if the VC shop that invested in both customers agree to share it—and Instacart and DoorDash, recalls that it is launching a new portal the thinking: “We don’t want cus- this spring that will allow retailers “THEY HAVE LET THE FOX tomers to be charged more, but to access even deeper analytics. we want to earn more revenue. We Erewhon, a celebrity-beloved INTO THE HENHOUSE. THE don’t want retailers to be charged organic grocer in Southern Cali- more, and we want to earn more fornia, has taken an even tougher MORE GROCERS PARTNER revenue. How does that happen?” stance. “We used to literally have WITH INSTACART, Early adopters of the platform, Instacart on our homepage. I including big companies like don’t do that anymore,” says Tony THE MORE VULNERABLE Hormel and fast-growing start- Antoci, Erewhon’s owner, who THEY MIGHT BECOME. ups like Utah-based JoJo’s Choc- has six locations in and around IF I WAS A RETAILER, THIS olate, are seeing big returns. “In- Los Angeles. “We’d rather own stacart has become a really impor- our customer, because once they tant source for us to allocate mar- go to that Instacart platform, W O U L D R E A L LY S C A R E M E .” keting spend, because it’s just in- they’re an Instacart customer.” credibly effective at connecting Antoci, who credits Instacart — Former Mondelez executive Joel Warady that dollar to that sale,” says Eat with creating a “tremendous” Just founder and CEO Josh Tet- amount of business for the chain, rick, whose sales of vegan eggs on launched his own delivery service Instacart grew sixfold in 2020. a month into the pandemic after six years of feeling like “We’re always cranking it up on Instacart.” he was competing with Instacart. To do so, he turned Mehta is loving it, too: By the end of 2020, Insta- to ECRS, the North Carolina company that provided cart was booking more revenue every single day than his cash register software. A 31-year industry presence, it did during all of 2019 (though he’s mum on specif- ECRS jumped into the e-commerce game four years ic figures). He now needs to keep grocers convinced ago and signed up 355 grocery chains in 2020. that his ads aren’t just another way to cut into their “We’re not trying to take away their customers,” margins. Food companies have only so many dollars Mehta insists, adding that Instacart has no plans ever to spend on advertising, and some of that cash ends to sell groceries directly—unlike DoorDash, which up in grocers’ pockets to pay for in-store promotions has its own warehouses. It’s also actively hiring dedi- and shelf placement. A portion of that $225 billion cated Instacart analysts who will be embedded in re- annual spending is now being diverted to Instacart. tail partners’ headquarters to support them. It says If some grocers are wary of Mehta, others offer full- it already has data analysts in place at three of North throated support. Among them is Dan Wegman, the America’s 10 largest chains. third-generation family owner and CEO of Wegmans, “One of the main reasons why retailers work with us a chain of more than 100 supermarkets in the east. and not with Amazon is because Amazon has not treated “As a founder of a fast-growing technology compa- retailers as well,” Mehta says. “That is not lost on us at all.” ny, his openness to evolve and seek input and indus- Instacart raised $625 million last year, in part to try knowledge is a true testament to the partner he support a strategy that would make it the ideal tool is,” Wegman says. “After a 500% increase in his busi- for grocers who want to build their own e-commerce ness this year, he is still asking how to get better. That offering—and make it harder for them to justify is a key reason for his success.” walking away. Instacart, Mehta argues, understands True to form, Mehta is looking past present chal- the minutiae of the highly complex industry better lenges and reaching for more, including an expansion than the competition because that has been its fo- beyond supermarkets and deals with Sephora, Best cus from the start. More than 175 retailers, including Buy and 7-Eleven. He says, “I’m on the phone with a Wegmans, Food Lion, Costco Canada and The Fresh retail CEO almost every day.” He adds, “The trajecto- Market, pay Instacart to power these websites. ry of the company has forever changed.” FORBES.COM FEBRUARY/MARCH 2021

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88 THE INVESTIGATION BY CHRIS HELMAN ILLUSTRATIONS BY EMMANUEL POLANCO FORBES.COM FEBRUARY/MARCH 2021

FEBRUARY/MARCH 2021 The inside story of how Bob Brockman, the secretive billionaire who allegedly masterminded America’s biggest tax-evasion scheme, used “Darth Vader” contracts to overcharge auto dealers and finance Robert F. Smith’s private equity empire. FORBES.COM

EVERSINCE cure the thousands of keys at an average dealership. When you have thousands of captive dealers locked into multiyear contracts, those fees turn into $1 billion, with annual in- FORDMOTOR come estimated to be $300 million. And Brockman con- COMPANYBEGAN trols 98% of it through an offshore trust, a stake worth at 90 SELLINGITS least $3 billion. THE INVESTIGATION Brockman’s ability to quietly pile up billions came to a crashing halt in October 2020, when he was charged with masterminding the largest tax-evasion case in American his- tory, accused of hiding some $2 billion in income from the Internal Revenue Service over the last two decades. Brock- man has pleaded not guilty to all charges and is free on a $1 million bond. Neither Brockman nor his attorneys have MODELT IN1908, responded to Forbes’ requests for interviews. Brockman’s alleged scheme helped hide profits gushing from one of the nation’s most successful private equity firms, FEWPIECESOF Austin, Texas–based Vista Equity Partners, founded by the TECHNOLOGYHAVE nation’s richest Black person, Robert F. Smith. Last October, BEENASIMPORTANT Smith signed a nonprosecution agreement with the Depart- ment of Justice and confessed to what would have been a host of tax felonies tied to secret offshore accounts set up at Brock- man’s behest. Starting in 2000, Brockman committed $1 bil- lion in capital to Vista’s first fund and taught Smith the ins and outs of running an enterprise software business. He continues to hold large interests in several of Vista’s $73 billion in private equity funds. Smith has already paid a record $139 million to TOCARDEALER get the IRS off his back and agreed to cooperate with investi- gators in the case against his onetime benefactor and mentor. The saga has all the drama and intrigue of a crime novel, PROFITMARGINS involving a Playboy model, a network of offshore accounts ASTHEDOCUPAD. and an encrypted email system in which Brockman referred to Smith as “Steelhead.” Brockman’s attorney, an Austra- lian named Evatt Tamine, who functioned as the billionaire’s nominal trustee, was known as “Redfish.” The IRS was “the House,” and Brockman, the tip of the pyramid, was “Permit.” A months-long investigation by Forbes reveals that the al- leged tax evasion is not the first, or only, sin Brockman may have committed during his impressive career. On his way to amassing a net worth estimated to be $6 billion, the The 45-by-29-inch flat screen sits atop a salesman’s desk, Houston-based entrepreneur has left a trail of hundreds of giving him the ability to quickly coax customers through arbitrations and lawsuits from auto dealers who are his core what would normally be mountains of paperwork. By en- customers, claiming that his underhanded tactics cheated abling car buyers to check boxes with a stylus and sign them, too, out of hundreds of millions. contracts on the interactive screen, the DocuPad takes the friction out of a car salesman’s stock in trade—the upsell. In a 2019 court deposition, the secretive Robert Brock- B orn during the Second World War to a phys- man, 79, whose enterprise software company, Reynolds and iotherapist and a gas station owner, Robert Reynolds, sells DocuPad, offered a rare peek into the micro- Brockman grew up in St. Petersburg, Flori- economics of car sales. Brockman said the DocuPad enabled da, and graduated summa cum laude from finance managers to upsell by at least $200 per transaction the University of Florida in 1963, a mem- in a business where margins on every car sold or leased are ber of its business honor society. While serving in the U.S. typically razor-thin. “You recover the initial cost of DocuPad Marine Reserves, he worked in marketing at Ford and then very, very quickly,” Brockman said, alluding to the $10,000 joined IBM in 1966, becoming a star selling mainframe startup fee, plus an ongoing $1,000 monthly license. “And computer services to auto dealers. then, from that point on, it is a massive generator of profits.” In 1970 he left IBM, launched Universal Computer Ser- Naturally, a dealer can get the DocuPad only if he’s also vices and taught himself how to program at a time when it a licensee of one of Brockman’s integrated dealer manage- involved feeding decks of punched cards into hulking ma- ment systems—digital platforms for everything from parts chines. Soon he was providing dealers with printed weekly inventory and service scheduling to the machines that se- reports on parts inventory. FORBES.COM FEBRUARY/MARCH 2021

“Brockman was the first provider who could enable an 12-inch-thick contract, it’s somewhere in there.” 91 owner to synthesize the financial statements of his 10 deal- Not even the threat of bankruptcy could free dealers from erships into one. He was doing this in the 1980s,” marvels THE INVESTIGATION Paul Gillrie, a veteran auto-industry consultant. By the late Brockman’s grip. When Orville Beckford, a Black dealer in 1980s Brockman had dozens of computers installed at deal- Florida, was struggling despite a recapitalization by Ford in erships, and he introduced what remains his one of his core 1994, Brockman went after Ford for the money and in a let- software operating systems, called Power. On his person- ter castigated it for backing what he asserted was an inept al website, since taken down, Brockman, who holds 21 pat- manager: “I would like to avoid this—however, short of pay- ents, wrote: “I’m still a programmer at heart. And although ing ‘blackmail’ to this dealer, I see no other answer than to I had to give up hands-on programming many years ago, I fight him legally to the end.” Beckford sued Brockman for still stay very closely involved in all of our product decisions.” defamation and won $250,000 in a jury trial. By the early 1990s, Ford decided it didn’t want to be in the Over the years more than 100 dealers, beaten in arbi- IT business, so it sold Dealer Computer Services to Brock- tration, refused to pay off their contracts with Brockman’s man’s Universal Computer Services for $103 million. The companies and wound up in federal courts. “Unfortunately, deal came with a stipulation: Ford would allow Brockman Ford created this monster,” Gill says. “I know unequivocally to continue using the Ford blue oval, brand, letterhead, ad- that I wouldn’t do business with this guy, even if it was free.” dress and even the same employees for five years, incognito. D ealmaker Robert Smith had no such reser- “When Brockman took over, it was like a frog in boiling wa- vations when he met Brockman in the late ter,” according to a consultant who advised dealers on arbitra- 1990s. Fresh out of Columbia Business School tions. “Ford was so laid-back and easygoing. The dealers trust- and a rising star in Goldman Sachs’ invest- ed them, and Ford took very good care of them.” The dealers ment banking department, Smith was talk- liked the tech upgrades—even the era’s clunky monitor beat the MARTIN SCHOELLER FOR FORBES microfiche and paper volumes they were used to. “Brockman computerized it all, created a superi- or system.” And then, according to a typical case, he leveraged that goodwill by signing dealers to contract extensions “with the intention of lock- ing in dealers beyond the life of their comput- er systems, in order to impose costly system up- grades.” Some dealers were irate when they real- ized that they hadn’t been dealing with Ford at all—and had little recourse against charges like $12,000 for the installation of a 500-megabyte hard drive or $2,400 for a printer. Those who tried to get out of their contracts met the buzzsaw of Brockman’s litigation team. He had created what an industry insider refers to as “the Darth Vader contract” because it enabled his attorneys to destroy rebellious dealers. Many upgrades or new services came with lengthy contract extensions. Says Gill- rie, “When you have a contract that gives you a monopoly on your customer for 30 years, you don’t have to listen to anything they say.” In 2010 Jay Gill, a Fresno, California–based entrepreneur with 10 dealerships, was hit with a $3 million bill when he acquired Livermore Auto Group, which had been paying $35,000 a month to Brockman’s company. They settled for about half that. “Brockman made his mon- ey by screwing people,” Gill says. “Anytime you asked for something or you needed something, he would automatically extend your con- tract without you knowing. When you have a Man-in-the-Mirror Moment FORBES.COM Faced with a billion-dollar take-it-or-leave-it scheme from Bob Brockman, financier Robert F. Smith, a.k.a. “Steelhead,” took the bait. FEBRUARY/MARCH 2021

ing to Brockman about doing a buyout of his growing soft- him their general-partnership control interests at Brock- ware business. man’s price. Brockman controlled Smith with an iron grip Brockman didn’t need financing from Goldman. His UCS the same way he did the car dealers. had oodles of excess cash—which he apparently had no inten- With Brockman’s capital, Vista Fund II acquired the likes of tion of sharing with Uncle Sam. According to the statement of SirsiDynix, Applied Systems, BigMachines, Brainware, Surgi- facts signed by Smith in his nonprosecution deal, Brockman cal Information Systems and SER Solutions. Brockman was agreed to seed Smith with $1 billion in the 2000 creation of intimately involved in directing the Vista team on how to ap- Vista Equity Partners—on the condition that Smith cooperate ply his playbook of operating principles focused on cost reduc- with him in creating what the DOJ’s indictment refers to as a tion and product consolidation. According to someone famil- 92 “conspiracy and scheme and artifice to defraud.” iar with Vista’s early days, the budding private equity firm ap- In 1997, Brockman, via his Bermuda-domiciled A. Eugene plied IBM’s process-oriented approach, learned from Brock- THE INVESTIGATION Brockman Charitable Trust, set up a holding company in man, to acquire and grow software companies: “Everything Nevis called Spanish Steps Holdings. Under Spanish Steps that Vista knows about software came from Bob Brockman.” he created a British Virgin Islands company called Point In- One smart strategy employed by Vista has been software vestments. This firm would act as Brockman’s straw buyer for roll-ups. Take the case of former Vista portfolio company Ven- investments in Vista. According to Smith’s statement, Brock- tyx—an Atlanta firm focused on industrial management soft- man, in a “take it or leave it” proposal, insisted that Smith ware. In 2005 Vista paid $70 million for MDSI, added Indus hold half his carried interest in the initial Vista Fund II via in 2007 for $240 million, then merged them into Ventyx. It a “perfected foreign trust” like his then rolled in Global Energy Deci- own. Presumably, this way Brock- sions and NewEnergy Associates man could take comfort in know- and Tech-Assist in order to add ing they were in it together. When Brockman key applications and market share. “I had one of those in-the- took over, it was Then, in 2010, Vista sold Ventyx to Swiss power and automation giant mirror moments,” Smith, 58, told like a frog in ABB for $1 billion. Vista then dis- Forbes in 2018, in a cover story, tributed $799 million of the pro- before any hint of criminality had emerged. “I looked at myself boiling water. ceeds to an account at Swiss bank and asked, ‘If I don’t do this, how Ford was laid- Mirabaud that was controlled by will I feel about it ten years from Brockman’s Point Investments. now?’ According to his state- back, and the Brockman also appeared to use ment, Smith had a relative of his dealers trusted it. Vista as a straw buyer to help him then-wife, Suzanne McFayden, roll up other dealership software create a Belize-based trust called providers. In 2005, UCS acquired Excelsior, through which Smith call-tracking and measurement funded his offshore investment company Callbright. The next year, company, Flash Holdings. Vista Fund II (all Brockman’s money) acquired Callbright’s It’s legal and normal for corporations to set up subsid- competitor Who’s Calling—which it later sold to Brockman as iaries in tax havens to own patents and other high-margin well. According to Preqin, Smith’s first Vista fund, launched intellectual property—software makers have long parked in 2000, went on to return more than 29% annually. If that IP in Ireland, for instance. Likewise, hedge funds and pri- return is to be believed, it would mean that Brockman and vate equity investors set up offshore trusts in which to direct Smith multiplied the initial $1 billion more than tenfold. proceeds of their carried interest. Such structures’ legality tends to be contingent upon how much control the ultimate beneficiaries have over the assets, and what they do with it. A s Brockman was directing Vista’s growth Brockman could have gotten away with having his busi- from behind the scenes, his business was flourishing. In 2005 his software company nesses held through the A. Eugene Brockman Charitable Trust had he been able to show that he was a passive benefi- reportedly had $530 million in revenue and ciary—rather than the control freak that Smith alleges him $100 million in profits, with 2,600 employ- to have been: “It became apparent to Smith that despite pa- ees. His computerized parts catalog was installed in nearly perwork that indicated to the contrary, Individual A [Brock- 2,500 Ford and Lincoln-Mercury dealerships. man] completely controlled Individual A’s foreign trust and But Brockman was facing a big problem—Ford had de- related foreign companies, and made all substantive deci- veloped its own electronic parts catalog. In 2005 Ford re- sions regarding all of its transactions and investments.” In- fused to renew Brockman’s exclusive license unless he cluding, of course, the decision not to disclose any of it to the agreed to a three-year wind-down of his existing contracts. IRS. As Brockman said of himself in a 2019 deposition, “As Brockman sued, alleging violation of antitrust laws, but you probably can tell, I’m into the details, big time.” eventually dropped the suit. In his statement, Smith explains that he was incentivized His exclusive deal over, Brockman had to do something to deliver returns on Brockman’s $1 billion because Brock- to replace the business. He then enlisted Smith to help with man had the power to replace him by forcing Vista to sell the deal of his career—a leveraged buyout of Ohio’s Reyn- FORBES.COM FEBRUARY/MARCH 2021

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olds and Reynolds in 2006 for $2.4 billion. Brockman put what effect a nasty divorce might have on us. We agreed that up $300 million in equity; Vista added $50 million (of if his business is dissected by her attorney, Point would be an Brockman’s money). Deutsche Bank arranged the loans. initial target.” Indeed, in her divorce petition, Suzanne Mc- The industry was shocked, assuming that much larger Fayden, who met Smith when they both attended Cornell in Reynolds would be buying UCS, not the other way around. the 1980s, demanded full ownership of their homes, compre- Now Brockman had thousands of new clients to transition hensive support for their children, a prohibition against them to his Darth Vader contract. ever associating with Dworaczyk and a “strict accounting of Almost immediately, there was a culture clash. A buttoned- all monies expended” for Smith’s mistress’ benefit. And in up ex-Marine, Brockman was not well-liked at easygoing what was perhaps her toughest ask, McFayden’s lawyers de- 94 Reynolds. He prohibited employees from smoking, even dur- manded that Smith get up to date with his taxes. ing off hours, and reportedly monitored time spent on bath- THE INVESTIGATION room breaks. In a deposition, Brockman described his frus- A s Mr. and Mrs. Smith negotiated a divorce set- tration with the company’s data security: “When I got to tlement, Brockman was looking for the exit. Reynolds, it’s kind of like I had been spending my life, you In late 2012 he came close to striking a know, mopping and polishing the floor. And I inherited this deal to sell Reynolds and Reynolds to KKR house, and it has two inches of water on the floor.” for $5 billion, but backed out. In 2013 In 2008, during the Great Recession, Reynolds debt sold Brockman attempted a dividend recapitalization of Reyn- off in a flight to quality. Seeing his company’s loans trading olds that would have valued the company at $5.3 billion as low as 35 cents on the dollar was too good for Brockman and increased debt from $900 million to $4.3 billion. A to pass up. Even though he had personally signed credit Moody’s report at the time estimated Reynolds’ “free cash agreements barring him from buying any of Reynolds’ sub- flow” that year at $350 million, with 40% margins. Brock- ordinated debt without the approval of first-lien holders, man reportedly planned to take out $2.5 billion in cash. But Brockman secretly bought about $20 million of Reynolds this deal too fell apart. Bizarrely, after loans had already debt in 2009, according to an IRS investigation. To do so, been finalized and allocated to investors, all the trades were Brockman, through his Aussie attorney Tamine, used funds reportedly unwound and the issue withdrawn. Brockman held by Edge Capital Investments (like Point Investments, then canceled a well-publicized pledge of $250 million to Edge was a Caribbean entity set up via a trust controlled Centre College in Danville, Kentucky, which he had attend- by Brockman’s longtime CFO, Don Jones, “as a cover to ed before transferring to the University of Florida. shield Brockman’s ownership,” according to an IRS inves- Vista was likewise feeling pressure. In a 2012 memo, tigation). A year later, when Deutsche arranged a refinanc- Tamine told Brockman that he was beginning to encounter ing of Reynolds debt, Edge redeemed Brockman’s notes at uncomfortable questions. “It is the involvement of Point In- par, netting $72 million on the trade and depositing the vestments, an unknown non-U.S. investor, which general- funds into an offshore account. According to the affidavit ly causes the compliance issues.” When “pressed on Point’s of an IRS investigator, “Tamine, at the direction of Brock- beneficial ownership,” Tamine wrote, “I have walked us man, then laundered approximately $57 million of the pro- through with minimal disclosure.” ceeds” through Brockman’s other accounts and companies, At the end of 2013, Banque Bonhôte notified Smith that “including several of Vista Equity Partners’ funds.” it intended to participate in the DOJ’s Swiss-bank program Some of the untaxed profits from Brockman’s lucrative and would be informing U.S. authorities of his account. Re- trade allegedly went to fund his passions. His Frying Pan alizing the jig was up, Smith hurriedly filed an IRS applica- Canyon Ranch near Aspen, Colorado, was purchased for tion in March 2014, seeking inclusion in its amnesty pro- $15 million. He also directed his attorney to purchase a gram for Americans who had failed to disclose their off- 209-foot luxury yacht named Albula, complete with a heli- shore accounts. A month later, his application was denied. pad, for $33 million. Brockman, an avid fisherman and When Smith and McFayden finalized their divorce later in hunter, was also fond of zipping by private jet to Córdoba, 2014, Brockman loaned Smith $75 million, according to court Argentina, for the hemisphere’s best dove shooting. documents. That same year Vista wound down Brockman’s Smith was enjoying life too. In 2009, he relocated with Fund II and exited its small stake in Reynolds and Reynolds. Suzanne, his wife of 22 years, to Switzerland. The next year Smith celebrated his newfound freedom in July 2015 by he redirected more than $30 million of his own untaxed wedding Dworaczyk in a lavish, star-studded affair at Villa capital gains into an account at Swiss Banque Bonhôte Cimbrone on Italy’s Amalfi Coast. Musicians Seal and John through which he bought two Alpine ski chalets in Megève, Legend performed. France. The family also maintained homes in Texas, Cali- Less than a year later, in June 2016, the alleged co- fornia and Colorado. conspirators went into high gear in anticipation of a federal Enter the 2010 Playboy Playmate of the Year, Hope grand jury investigation. Tamine was dispatched to Oxford, Dworaczyk, with whom, his wife discovered, Smith was hav- Mississippi, to visit Don Jones’ widow, who was in posses- ing an affair. This became an immediate concern for Brock- sion of incriminating evidence including floppy disks and man’s team. In August 2011, according to emails uncovered hard drives. Said Tamine in an encrypted memo, “As you by Department of Justice investigators, Brockman’s CFO know, I even cut short the trip to Argentina to get back to Jones, a.k.a. “King,” wrote to trustee Tamine, a.k.a. “Redfish”: Oxford to destroy more drives that had been discovered.” “Bob called concerned about the Robert Smith situation and By 2017 Tamine could see the writing on the wall. In a FORBES.COM FEBRUARY/MARCH 2021

TYCOON TAX CHEAT memo to Brockman he wrote: “Even if Robert Smith clears 95 HALL OF FAME up his problems, the target is well fixed on me and we need to anticipate that we’ll be audited at some point.” In September THE INVESTIGATION A LONG LINE OF BIG-TIME TAX EVADERS PRECEDES 2018, agents in Bermuda raided Tamine’s home. ROBERT F. SMITH’S ADMISSION LAST YEAR OF As the government closed in, Smith began upping his STOWING $200 MILLION IN FOREIGN ACCOUNTS. charitable giving. Around the time the IRS rejected his am- DEPENDING ON THE OUTCOME OF BOB BROCKMAN’S nesty plea, Smith set up a foundation with hundreds of mil- lions of dollars connected to the profits of Vista’s first fund. TRIAL, HE COULD SOON TRUMP THEM ALL. In 2016 he and his foundation pledged $50 million to Cor- nell University’s engineering school and $20 million to the Walter Anderson National Museum of African American History and Cul- ture. Most famously, Smith delivered a commencement Telecom and spaceflight “astropreneur” speech at Morehouse College in May 2019, announcing that pleaded guilty in 2006 of failing to report he would spend $34 million to pay off the student debt of $365 million in income he diverted off- the entire graduating class of the historically Black college. shore. Recieved a nine-year prison sen- tence and was ordered to pay $23 million Brockman, too, sought to burnish his philanthropic bona in restitution; he was released in 2012. fides, donating $25 million to the Baylor College of Medicine and tens of millions more to erect buildings at Centre College Leona Helmsley and Rice University. Tamine, in a memo to Brockman, wrote of the importance of appearing charitable: “These activities Famously quipped, “We don’t pay taxes; would work as a strong barrier against an attack from the IRS.” only the little people pay taxes.” Sen- tenced to 16 years for writing off millions in On October 15, 2020, U.S. attorneys dropped their bomb- home remodeling as a business expense. shell about Smith and Brockman. In exchange for an agree- Died in 2007; left $12 million to her dog. ment not to prosecute, Smith would pay $56 million in tax- es and penalties on unreported income plus another $82 mil- Igor Olenicoff lion in penalties for concealing offshore accounts. Further, he would abandon his claims for $182 million in refunds derived Russia-born developer behind Califor- from his philanthropic giving and earlier payments to Uncle nia’s Olen Properties pleaded guilty in Sam. “It is never too late to do the right thing,” said U.S. attor- 2007 to hiding $200 million offshore. ney David Anderson in a statement. “Smith committed seri- Escaped with just two years’ probation ous crimes, but he also agreed to cooperate”—against Brock- and a $52 million bill for taxes. Now 78 man—which “has put him on a path away from indictment.” years old, he’s worth $4.3 billion. Smith continues to preside over Vista, and only a handful Ty Warner of investors have shown signs of concern. New Mexico’s Ed- ucational Retirement Board has withdrawn a $100 million Beanie Babies mogul pleaded guilty to commitment, and the Virginia Retirement System, which depositing a secret $80 million in a Swiss has $350 million invested with Vista, says it is monitoring bank in 1996 and failing to report $24 mil- the situation. In late November 2020 Vista’s longtime pres- lion in income. Paid feds $70 million but ident, Brian Sheth, announced he was leaving the compa- avoided jail. Now 76, he’s worth $4 billion. ny, implausibly telling Forbes that his decision had noth- ing to do with Smith’s confessed transgressions: “I know for Sam and Charles Wyly Robert and Vista the best is yet to come.” Vista now boasts $73 billion in assets under management. Brothers behind arts-and-crafts chain Michaels hid profits in offshore trusts. In November, Brockman stepped down as CEO of Reyn- Nabbed by feds in 2010. Sam (left) set- olds to prepare for his trial. So far, Bermudian and Swiss tled for $500 million. Charles died in 2011; authorities have frozen his accounts, and Tamine is coop- Sam, 86, lives in a Dallas old-folks’ home. erating with the authorities. Brockman’s attorneys say he is suffering from early-stage dementia. So far his lawyers have persuaded the court to transfer the case from San Francisco to Houston in recognition of Brockman’s declining health. Federal prosecutors dismiss Brockman’s symptoms as an “amorphous malaise” and point to his lucid deposition tes- timony from 2019, as well as a lengthy memo he sent to Reynolds’ vice chairman in May 2020 foreshadowing an all-too-familiar behind-the-scenes role he was planning: “My intent is to work 4 or 5 more years helping teach the next generation everything I know about how to run the company efficiently.” With reporting by Antoine Gara FEBRUARY/MARCH 2021 FORBES.COM

96 THE LIST • INVESTMENT CORPORATEGUIDE Up 300% in 2020, Bitcoin is suddenly getting respect in the C-suite. Here’s how PayPal, Square and the 48 other big companies on Forbes’ third annual B LO C KC H A I N 5 0 are outpacing their competition using Bitcoin and the underlying blockchain. PHOTOGRAPH BY CHRISTIE HEMM KLOK FOR FORBES FORBES.COM FEBRUARY/MARCH 2021

97 CRYPTOMANIA BY MICHAEL DEL CASTILLO PHOTOGRAPH BY JAMEL TOPPIN FOR FORBES Covid Currency After the pandemic hit, PayPal CEO Dan Schulman (left) seized on digital cash to speed e-commerce transactions. MicroStrategy CEO Michael Saylor filled his company’s treasury with Bitcoin as a bet against devaluation of the dollar. The move made him a billionaire. FORBES.COM

THE LIST • INVESTMENT GUIDE banked, Schulman felt a sense of urgency. “You were seeing the acceleration of trends that would have typically taken maybe three to five years happening in three to five months,” says Schulman, 63. “I thought it was important that PayPal help shape what that future could look like and not react to it.” PayPal’s existing technology, integrated with 98 traditional banks, was clunky and slow, taking as long as ten days to complete a transaction. First, it relied on a Georgia-based startup called Ingo Money to upload and verify the images of stim- ulus checks, and then a bank in Georgia to clear and settle them. Five to ten days later, the cash showed up in an account at PayPal or its Millen- nial-friendly subsidiary Venmo. If the customer is willing to pay a 1% fee, the cash is credited in minutes, but behind the scenes the bank assumes the risk if the check doesn’t clear. Schulman, who was already familiar with blockchain, the technology underlying Bitcoin, knew there was a better way. Blockchain tech- L nology could easily—and much more quickly— Locked down in his Palo Alto, California, home BITCOIN BLASTS OFF last March, as the coronavirus spread across the U.S., PayPal chief executive Dan Schulman knew WHILE THE S&P 500 REBOUNDED STRONGLY AFTER that the pandemic was a once-in-a-lifetime busi- THE PANDEMIC SELLOFF LAST MARCH, STOCKS’ GAINS ness opportunity. WERE MODEST COMPARED WITH BITCOIN’S EXPLOSION. THE CRYPTOCURRENCY HIT A COVID BOTTOM OF The pioneering electronic-payments company $4,803 ON MARCH 14, 2020, BEFORE SHOOTING UP TO he took over in 2014 had been working toward a AN ALL-TIME HIGH OF $41,471 ON JANUARY 8, 2021. world without cash for two decades, but recently its growth had begun to slow. Over the decade af- Bitcoin Price % Change ter eBay acquired the startup in 2002, PayPal’s rev- S&P 500 Level % Change enue grew at an average annual rate of 38%, but today, the company, again independent, is growing Jan 19 2020 at half that rate. Now, as people retreated to their homes, online commerce and digital payments FEBRUARY/MARCH 2021 had suddenly become necessities in everyday life— for grocery shopping, banking and more. Almost immediately, PayPal’s active accounts began increasing—by more than 50 million, to 361 million, by the end of 2020. Its stock took off along with other digital-economy shares, from $86 last March to a recent $247. In April, some $269 bil- lion in stimulus payments needed to be distribut- ed, and PayPal stepped in to help get cash to the 7 million American households without bank ac- counts. As PayPal worked to accommodate the un- FORBES.COM