Change Management: CIFC's Enrique Smith on IT and Finding God

You wonder, if CIFC had known about Enrique Smith’s life outside the office, whether the small New York asset manager would have hired him. Smith ran a startup, Lucas Smith, with primary operations in Africa. He’s a black belt in one martial art, Shotokan, and a student of three others. He was already planning to start a family when he got hired, and now has two young children screaming for his attention at home.

Complicating matters further, Smith spends an inordinate amount of time searching for God—and finding him/her/3.1415926 in unusual places. So that’s got to eat up a good chunk of his weekends.

CIFC, a collateralized loan obligation (CLO) specialist with $12.4 billion in assets under management, was starving for technologists in April of 2011. It was coming off two mergers—with Cypress Tree Investment Management in December 2010, and Deerfield Capital Management in April 2011—and its IT head left more than a month prior, leaving the publicly traded company with exactly zero technologists on staff in New York, and four Deerfield hacks working out of Deerfield headquarters in Chicago. CIFC needed help, fast. It needed a CIO who could throw himself into the work of systems integration on day one, without many hands at his disposal.

Smith took the job, with predictable results. Within a few days, he was sleeping at the office. Hundred-hour weeks became the norm.

“It was messy,” he says. “I can’t give you any analogies you can print.”

“All of the executives have a voracious appetite for technology. The challenge has been keeping the beast fed and happy, not convincing them that we need change.”

CIFC was operating three different loan administration systems from the three merged entities. Aggregate reporting and views of enterprise exposure were beyond strained. Microsoft Excel usage was rampant. The four Deerfield technologists didn’t have remote access to any of the systems in New York. The entire Chicago operation was being transferred to New York, and the New York operation was moving to another floor in the same Park Avenue building.

“Getting the back-end data from three disparate systems to produce the portfolio management metrics needed to run the business was a challenge,” he says. “And it wasn’t a sustainable challenge.”

Then-COO Dan Hattori had pushed for Smith’s appointment, because, at 36, he was young and energetic and could handle the rigors of those first six months. There was no time to explain the business implications of technology decisions; Smith had worked as a broker and in operations in previous roles, and already understood their nuances. Even so, he was overwhelmed. With a to-do list longer than Santa’s naughty-or-nice scroll, paralysis by analysis was a real threat.

Step one was to give presentations to the heads of the business units showing how the firm’s trading volumes would quickly exceed its system capabilities if a major overhaul was not engaged. Smith needed each of them to define their requirements and otherwise take ownership of their part of the process. He then created a steering committee that put out an 18-month plan. Within that timeframe, he planned to rebuild or buy the general ledger, loan administration, trading, portfolio management, and compliance systems, and bridge them all with straight-through processing (STP).

The first six months was spent putting out fires and making build-versus-buy decisions. His desk became his home; his home became his second home. He brought clothes to work. He won’t talk about what substituted for bathing. Lucas Smith occupied the dawn hours; CIFC filled the rest. His first son was born on a Friday—the slacker took the day off and was back at work on Monday.

Implementing new systems while the firm continued to trade full speed ahead, while keeping user interfaces close to what they had been, was “a heck of a dance.” Fortunately, his early presentations had been effective, and there was no resistance from the business side. Quite the opposite.

“All of the executives have a voracious appetite for technology,” he says. “The challenge has been keeping the beast fed and happy, not convincing them that we need change.”

Finding Himself
Smith started programming at age eight, just after his family moved to east Brooklyn from Panama. His parents, a seamstress and a retired US Army soldier, had a relatively hardscrabble life in their dangerous Brownsville neighborhood. Smith found guidance in his first US martial arts sensei, Louis Brown, one of those tough-but-fair father figures who teaches life lessons but makes students do knuckle pushups if they’re late to class.

He also found religion. Rather, he found a new religion. The things he was hearing in Catholic Church didn’t jive with what he saw on the ground. “When you’re poor and reading about God’s plan, you start to wonder what the hell you did wrong. It didn’t make a lot of sense to me,” he says.

Through his school’s Gifted and Talented program he made a number of Jewish friends, who took him to synagogue. He found in the Torah a subtle kind of order, highlighted by the fact that some Hebrew characters represent both a letter and a number. Eventually, a rabbi asked if he’d be interested in converting. Six months later, at age 11, he took the ritual immersion known as a mikvah.

At 14, he was sent north to boarding school, where it’s a safe bet he was the only Jamaican–Barbadian–Panamanian Jew in New Hampshire. There, he joined the wrestling team and took a bevy of computer classes. Administrators commissioned him to help with the school’s own IT projects. Like so many math whizzes, having defined control over a Boolean universe felt right.

At Columbia University, Smith majored in economics with a philosophy minor before dropping out in 1994 to found Smith Computer Systems. The five-man startup first assembled PCs for college students before being contracted to write software for small brokerage houses in Long Island that, among other things, allowed data to be pulled from order-entry systems.

The company closed in 1997 and he took a job as a broker at TD Waterhouse. It didn’t suit him. Brokers have to hear “no” a lot. C++ never told him no. He moved to the IT group at TD, building customer management and order management systems (OMSs).

From there it was on to a business analysis role at Goldman Sachs. His team, a new one, was technology-focused but sat under the research department umbrella, not the IT department, which turned out to be a bad idea for support reasons. At Goldman, he was asked to participate in industry-wide working groups for FIX and XBRL, and was named technical co-chair of the RIXML group, where he delivered the first version of the spec for tagging and sorting financial research.

At one meeting he met Bob Bonomo, the soon-to-be CIO at OppenheimerFunds, who hired him to lead a small software development team there. The team proved its analytical model and started to grow enterprise-wide, from five to 80, adding project management along the way. It began taking ownership of low-performing divisions, restructuring their processes, and sending them back out into the world. Smith became the youngest vice president at the company at 27.

Meanwhile, he was again questioning his religious precepts. The order he’d found in Judaism, he was finding more of in math and physics.

“Einstein was able to bridge electricity and magnetism, which manifest themselves incredibly differently in the third dimension,” he says. “But he understood that they share a formula when abstracted in the theoretical fourth spatial dimension. Even string theory posits that the beauty of coalescing a number of these theories created an understanding that things are connected. Even though things aren’t visibly connected in the experience we have in three spatial dimensions, it doesn’t mean they aren’t connected. My belief is that everything, effectively, is God. And everything is connected. If you were able to see into the 10th or 12th spatial dimension we would see what would be, effectively, vibrations of the same thing that manifest differently in three-dimensional space.”

For many people, finding God in numbers and nature would be a cue to leave organized religion altogether. Instead, he and his then-wife together converted to Islam. The formal affiliation is as much to give his children a spiritual foundation as anything, though he’s already prepared for their inevitable crises of faith.

CIFC Comes Calling
After eight years at Oppenheimer, Smith jumped out of the financial industry to be COO of Rividium, a contractor for the Department of Defense, based in northern Virginia. It was a decision he quickly regretted. Progress, thanks to government bureaucracy, oozed like jelly. Projects that should have taken weeks took months. But more than that, he found their upscale Alexandria, Virginia, neighborhood to be an unwelcome place for a black couple. The day they moved in, someone called the police. Racist comments dogged them on the street. They fled back to New York the minute his two-year contract was up. 

The position, and sleepless nights, at CIFC were waiting for him. Nearly two years later, this past August, the book finally closed on the platform overhaul. Redoing the trading system turned out to be harder than anticipated. Because many loans still trade over the phone, electronification often consisted of simply committing the trade information to a database that emailed the operations team, who would then rekey it into the loan administration system.

“Not having come directly from the loans universe, I did underestimate how tough that was going to be to redo,” he says. “We ended up delivering three weeks late, but what we have now is a unified system that tracks deals from the time they’re announced on the market through our credit process: whether or not we approved the deal; straight through to portfolio management, where they determine how much of the deal they want; to pre-trading, where we do pre-trade analytics and pre-trade compliance; to our loan administration system. And it’s all without any rekeying.”

Validation came when a major client saw the result and asked for advice on building its own credit tracking and portfolio management system.

CIFC IT now has six full-time employees and nine consultants that are essentially full-time, none of whom are holdovers from Deerfield’s Chicago operation. They are currently implementing a new data warehouse. Smith also fears that he may have to replace the general ledger, which was one of the easiest implementations during the overhaul but may not be suited for the diversified credit CIFC is looking to expand into.

Other credit-oriented firms, including Ares Management and Blackstone subsidiary GSO Capital Partners, are bigger and arguably better known. Smith points out that CIFC’s fee-earning assets under management from loan-based products rose 23 percent from Q2 of 2012 to Q2 of 2013. A modern technology stack would obviously be a part of any growth plan.

The Things That Will Set His Path
The question is how long Smith will be around to usher in the new era. He gives no indication of looking elsewhere, but in the case of an executive under 40 at a mid-sized company, it’s always a possibility.

“Personally, I think he’s well suited for entrepreneurial-type companies,” says Hattori, the former COO. “He doesn’t like to be put into a box. At smaller entrepreneurial companies he can spread his wings a little better than in a corporate environment, where it’s a more defined role.”

His growing family is a wild card. He also retains a passion for mixed martial arts, including Shotokan, Muay Thai, and Kyokushin. He studies Wing Chun under Tony Wong, once ranked fifth in the sport in China. Whether he puts vendor sales reps in arm bars during contract negotiations is unknown.

It was that hobby that led to his other job today, at Lucas Smith. Jamal Lucas had been an acquaintance in middle school, and the two stayed in touch sporadically through a shared love of martial arts. It provided a foundation for conversation when they were unexpectedly, and tragically, thrown together on Sept. 11, 2001.

Smith’s Oppenheimer office was on the 41st floor of the South Tower of the World Trade Center, the second tower hit on Sept. 11. Following the attack on the North Tower, Oppenheimer evacuated its office, walking everyone down 40 flights of stairs. They’d just reached ground level when Smith felt a sudden flash of heat—the building he’d just walked out of had been hit.

He sprinted north, toward Brooklyn and home, and at some point realized he was running alongside Lucas, with whom he’d fallen out of touch. By the time they reached the span of the Manhattan Bridge, they were gassed. They turned, gasping for breath, in time to watch the South Tower collapse.

It was, literally, a life-changing moment. Their mortality a gossamer’s width away, the technologist and the currency trader found themselves debating, on that bridge, the definition of happiness and the purpose of their lives. The seed of what would become Lucas Smith was planted.

In 2010, the jointly financed company came into operation. Its objective is to form private-public partnerships to build infrastructure in emerging economies, mostly in Africa, to help them transition to more stable middle-class economies. Smith handles the business side while Lucas travels the world building relationships. The company has already been engaged by Namibia, Angola, Somalia, and South Africa, and has a mining operation underway in the Philippines. 

Smith believes it could one day be profitable. If it is, who knows, maybe he would leave finance behind and join it full time like his partner.  At 38, this Caribbean–Panamanian, Catholic–Jew–Muslim martial artist technologist entrepreneur family man has plenty of time to put on new hats.

Fundamental Data

Name: Enrique Smith

Title: CIO

Tenure: Joined CIFC in 2011

Number of Staff: Six, with nine near-full-time consultants

Previous Experience: TD Waterhouse, Goldman Sachs, OppenheimerFunds, Rividium, and founded a startup, Lucas Smith

Education: Studied economics and philosophy at Columbia University in New York

Activities: Mixed martial arts, including Shotokan, Muay Thai, Kyokushin, and Wing Chun