Can Yodlee become Plaid?

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Now that Envestnet was taken private, will Bain spinoff Yodlee? Yodlee was a public company on its own before it was acquired by Envestnet. Yodlee was originally acquired for $660 million in 2015. Visa previously made an offer to buy Plaid for $5B.

Can Yodlee get to a $5B valuation? Is it worth half that? Or even $1B? Sometimes I think Yodlee spinning out of Envestnet could be like Paypal spinning out of eBay. Envestnet would still be a client and could hold on to a little equity, but for Yodlee to really hit its stride, it needs its own space. It needs a brand refresh. It needs technology upgrades, innovation, a massive hiring of top-notch engineers and it needs an AI story/focus.

I have always been a Yodlee fan. I was a Yodlee user and I have used numerous products that are built on top of Yodlee. Most hedge funds are users of consumer transaction data and many have used a product that is built on the backs of Yodlee.

What’s the problem with Yodlee?

• They have always been hard to work with. The sales team has never been a favorite of the hedge fund industry and the customer service/support hasn’t been top notch which is expected if you are asking for high 6-figure or 7-figure contracts.

• When people talk about Plaid, they always say developer first, top-notch APIs. When people think of Yodlee, they always think old school, and I have yet to hear someone say they have best-in-class technology. Though I think this is mainly just a branding and marketing issue, in the end, it’s an issue.

• Data quality. I think and have heard it’s actually strong. But they need to better position this vs. competitors.

• Product offerings. Innovate, Innovate, Innovate. The product opportunities are endless not just in capital markets/hedge funds, but across financial institutions and beyond.

Yodlee as a stand-alone I think could be worth more than Envestnet, at least in the short term. Everyone wants to see Envestnet become a successful turnaround and eventual IPO so that we have a strong market comp for wealthtech. If I was a betting man, a spinout of Yodlee, can move quicker and be a quicker success story with the right management and investment.

Spin out Yodlee. Put in place new management. Put in place a strong board (I have a few people in mind) with data, technology, analytics, and AI experience. Raise cash as part of a strong vision. Increase sales into the core areas. Rebrand or refresh the brand image. Refresh and spend on marketing/positioning. Upgrade the technology. Wealth management is just one vertical for Yodlee, but the big opportunity to be a pure-play data company is huge and would command strong multiples if the company can complete a proper turnaround story. Within Envestnet, Yodlee gets lost and is slowed down by other priorities.

Many of us are rooting for Yodlee and the playbook, opportunity, and upside are clear as day.