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Open Atmosphere, Passion for Product Help Cedar Falls' Banno Grow

As the tall, slender CEO walks through the sliding doors in his light blue company T-shirt, the buzz in the room of about 25 of his employees settles down.

Wade Arnold, the boss at Cedar Falls’ technology firm Banno, has just entered a conference room on the northern edge of the company’s 10,000-square-foot office. Already, employees have the beer flowing, and Arnold, 34, will soon take his place, with a mug full of Stella Artois waiting.

It’s called “Beer-spectives,” a no-holds-barred chat that lets employees compliment co-workers, praise Banno or, most critical to Arnold, tell him what he has done wrong.

“It’s not about the product, it’s about the company,” Arnold said of the forum. “What did we do good? Who do you want to give a shout out to? What did we do bad? The people who show up have something to talk about.”

The open atmosphere has helped the company become one of the most highly regarded, fastest-growing technology companies in Cedar Falls, as well as a firm some national financial technology experts say has a bright future.

Banno builds mobile products for more than 325 banks and financial institutions across the country, from Hawaii to New York, including large institutions such as SunTrust and smaller regional banks such as First National Bank of Allendale in Illinois.

Arnold admits he is the underdog against some big competitors, which include financial giants such as Intuit Financial Services and Fidelity Information Services.

“They spend on landscaping what we spend on our company,” he said.

Banno sits in an industry ripe for growth. As consumers come to expect slick-looking mobile sites and applications, financial institutions must play catch-up.

“There is still a lot of need in this space for financial institutions to outsource digital technology,” said Jim Bruene, founder of the financial technology conference Finovate. He said Banno’s products “fill a huge need in the banking industry. It has a very bright future ahead.”

This year, national industry magazine American Banker placed Banno on a list of the top 10 financial technology companies to watch in 2013.

In late January, Charles Potts, one of the country’s foremost “FinTech,” or financial technology, gurus, became the company’s first president. Along the way, Arnold’s vision of the company, which began as T8 Webware in March 2008, has won over investors in the region and industry leaders across the state.

Lockard Cos., a retail development firm that has projects in 28 states, provided a small loan early on, its first foray into financial technology. Today, officials from that company sit on Banno’s board of directors.

State industry experts consider Arnold a visionary who has not slowed after national media exposure and state financial support. In September, the company received a $1 million loan through the state’s Iowa Innovation Fund, a number that was then matched by private investors.

Arnold has immersed himself in Cedar Falls’ growing technology scene, supporting networking events in the area and speaking to University of Northern Iowa business classes. But not long ago, he envisioned a future in Austin, Texas.

A change of heart

When Arnold talks candidly about his company, the personality he exudes fluctuates.

At times, the former BMX trick rider from Davenport speaks a mile a minute, confidently describing the future of the company. At other times, the longtime self-described “computer nerd” lays out insecurities common to a first-time entrepreneur, noting with nervous laughter that “We’re supposed to be a $1 billion company by now.”

The company has grown to 63 people, spread between the Cedar Falls office and a 2,000-square-foot space in Des Moines. Arnold would not discuss the company’s revenues.

Two years ago, those insecurities made him consider a move to Austin. But a talk at Cedar Rapids Country Club’s back patio with Clark McLeod, a former Cedar Rapids telecommunications mogul, put him at ease.

McLeod’s legacy might be tainted by 2002 accusations of illegal stock trading by New York authorities, a charge he has denied. He settled out of court and paid a $4.4 million fine that included no admission of guilt, according to Register reports.

But for Arnold, McLeod served as a proven entity in business, someone who had hired about 2,000 people in two years in Cedar Rapids. In addition, McLeod sold Arnold on the virtue of staying in Iowa, hiring Iowans.

“He talked about people going where the opportunity is,” Arnold said. “He said, ‘What’s better: Someone with their Harvard degree or someone who grew up on a farm and knows how to work?’ ”

The intervention convinced Arnold to stay and expand the company in his home state. He took McLeod’s advice and immersed himself in the state’s technology community, giving him access to a deeper pool of talent.

A good break leads to computers

As an 8-year-old, Arnold broke his femur in a skiing accident at Chestnut Mountain in Galena, Ill.

Although that break meant spending three months in a body cast, it also meant three months laid up in bed. To help pass the time, Wade’s father bought him a used Sun Microsystems computer from his uncle, a math professor.

Arnold was never really interested in the gaming side of computers and gadgets. Instead, he wanted to know what made them work. He quickly discovered how to program in the most basic of computer languages.

Not long thereafter, the principal at Jefferson Elementary School in Bettendorf introduced the young programmer to devices that were the precursor to Lego Mindstorm products. The devices were, essentially, Legos with built-in sensors that behaved a certain way once programmed.

His passion for the hobby would grow in high school, with Arnold’s home becoming the go-to place for students who wanted to fiddle around with computers, which at the time were still rare in homes.

“It was similar to high school kids who got together to work on cars,” Arnold said. “This was something we were trying to figure out.”

Today, he has pursued his hobby, leading to banking clients in every state.

'I'm a horrible friend'

On a recent day in Cedar Falls, Arnold sat in his office, dressed in jeans and a black short-sleeved T-shirt with a BMX logo on it, talking about what it means to be an entrepreneur.

It means sacrifice, building a good team, and having an understanding spouse.

“I have an incredible wife,” he said. “To lead something like this, you have to be all in. You have to think, ‘Of course, this is going to work. Of course, this is a good idea.’ ”

But once the week ends, it’s family time, Arnold said.

“Wade doesn’t get to go play golf,” he said. “When I get home, it’s daddy day from Friday through Monday morning. Where things have suffered is, I’m a horrible friend. I am not the guy you want to be your guy.”

Although Arnold does get back on his BMX bike and take it to the skate park occasionally, it’s no longer the norm. But he said he is OK with that.

“This is who I am,” he said. “This is what I do. For fun, I read about FinTech.”

Praised as inventor, businessman

After taking McLeod’s advice and immersing himself in the state’s technology scene, Arnold has quickly become one of its leaders.

When Banno, then T8 Webware, won the Technology Association of Iowa’s 2012 Prometheus Award for small/medium software company of the year, Arnold took the chance to heap praise on the entire technology community.

“T8 represents something that is growing in Iowa, and that is a bunch of people that really care about changing technology and getting involved here,” he said during his acceptance speech in April.

Some technology industry leaders say he is one of the reasons for the scene’s growth.

“Wade is showing Iowa and the world that you can grow a company in Cedar Falls that plays with the big boys,” TAI President Leann Jacobsen said. “He’s providing that role model and inspiration to others in Iowa, and he has gained national recognition for how he is building his company in Cedar Falls.”

The award was not the only honor Arnold’s company earned in 2012. In an employee-driven survey, the company finished second in the Des Moines Register’s 2012 Iowa’s Top Workplaces in the small company category.

Despite Arnold’s constant praise of his staff, Jacobsen said the CEO’s leadership is what continues to move the company forward.

“Wade is the entire package,” she said. “He is a technology geek genius of national prominence. He’s a strategic business leader, a quality human being, and super-fun guy. The leadership is a top reason why Banno is where it is.”

Bruene said Arnold stood out among a crowd of presenters at FinovateFall in New York.

“There was no one who brought more energy to FinovateFall last year than Wade,” he said. “After his demo, I recall a long line of people in the networking hall waiting to talk to him at his booth. He exudes passion for his product.”

Ken Lockard first met Arnold through a loan officer.

The young, bright-eyed entrepreneur had been having trouble securing a loan in the company’s infancy. But when Lockard heard about Arnold’s new company, the angel investor said he had no problem giving Arnold a boost.

“He is one of the most interesting young men I’ve ever come across,” said Lockard, who has invested in many companies during a 30-year investment career and now sits on Banno’s board. “Normally, you can’t find someone who is an inventor but that can also run a business. Wade has both of those characteristics.”

'Beer-spectives' leads to dialogue

When the company first started in 2008, Arnold wanted to create an open environment, one that fostered creativity but also allowed for honest feedback from employees. The intent was to build a more effective place to air grievances than a Friday night at the bar.

So he brought the bar to the office.

Every Friday, employees gather in a conference room to give shout-outs and offer praise. But Arnold and his go-to guy, lead product engineer Ben Metz, also list grievances on a white board and meet the following Monday to see how to fix the problems.

On a recent Friday, the head of Banno’s Apple development team and the top Android guy squared off over how to provide feedback without offending anybody. Apparently, there had been changes made to lines of programming without notifying the original coder.

This meant the programmer did not know that it had been changed and therefore did not learn how to improve it. For the most part, Arnold stayed out of the fray and let the two developers, one of whom chimed in remotely using Google Hangout from Des Moines, talk things through.

By the end of the 45-minute forum, there was an agreement to be more upfront and improve communication. Also by the end, Arnold was showing off his best impersonation of one of his employees and the whole staff was ready for the weekend.

“What we hope we have is a culture in which no one is afraid when Wade is in the room,” Arnold said. “It’s about getting that stuff out there before we get with our friends on the weekend. I’m not the best manager ever, but as long as we have transparency, and this ... doesn’t have to flow through an HR office, I can fix most things.”

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