By Justin Baer 

Wall Street giant Goldman Sachs Group Inc. is now a software company, too.

The New York investment bank said it is spinning out a collection of mobile-phone software it developed in-house into a new venture. That entity will be managed and majority-owned by Synchronoss Technologies Inc., a publicly traded software firm that is increasingly trying to target business customers, the companies said.

Goldman will take a minority stake in the venture in exchange for its intellectual property on Lagoon, a program that gives employees secure access to business applications on their mobile phones, as well as its collection of Orbit apps that provide email and other services remotely.

Goldman developed Lagoon about four years ago as the firm's employees sought a way to access their work email from their own mobile phones. The "bring-your-own-device" movement has since gained traction at American corporations, with big companies like J.P. Morgan Chase & Co. opting to reduce the number of phones they provide to employees.

The deal marks the latest bid by Goldman to share--and wring more profit from--the software platforms its engineers had developed initially for internal use. It also lends support to Chairman and Chief Executive Lloyd Blankfein's oft-stated contention that the firm is as much a technology company as an investment bank.

R. Martin Chavez, the Goldman chief investment officer who founded a technology startup in between stints at the firm, has sought to foster a more entrepreneurial spirit among his some 9,000 engineers--while trying to burnish its credibility within a Silicon Valley community often underwhelmed by engineers' place in the pecking order on Wall Street.

Under Mr. Chavez's direction, Goldman began to contribute more heavily to open-source software in 2013 and last year turned over code on its messaging software to Symphony Communication Services LLC, a startup backed by Goldman and more than a dozen other financial companies. Goldman is now rolling out a suite of apps that share with clients the firm's risk-management and securities analysis.

Dow Jones & Co., the publisher of The Wall Street Journal, is a member of Symphony Foundation, a group of companies that are using the startup's open-source software to develop applications that can be used on the messaging system.

"We're constantly asking ourselves about all of it," Mr. Chavez said in July of the firm's plans for its internal developments. "Is this software better for clients and the planet if it's inside Goldman? Or is it better if we extend the platform to clients, or in some cases does a spinout into open source or a company make more sense?"

The new venture will enter an already crowded field for mobile-app-management software. Companies such as Citrix Systems Inc., VMware Inc., Mobileiron Inc. and Good Technology Corp. already provide platforms to corporate customers.

Some of those firms have hit obstacles. Mobileiron's shares have tumbled 65% since its June 2014 initial public offering. Good, which had also filed to go public, instead agreed to sell itself to BlackBerry Ltd. for $425 million last month.

Bridgewater, N.J.-based Synchronoss, which created a program that allows employees to share files securely, began looking for a partner that could develop mobile apps since last year, said Stephen Waldis, Synchronoss's founder and chief executive. The company had been in talks with Goldman for about nine months, he said.

Mr. Waldis said his company will contribute its workflow software to the new venture, which he expects will begin sales in early 2016. Synchronoss will hold a majority stake in the new entity, though it would consider bringing in additional investors over time, he said.

Mr. Waldis said Synchronoss was drawn to Goldman's Lagoon because of its security functions and ease of use.

Goldman's willingness to be more open with its internal systems and software is a welcome development, said Steven Shreve, a professor of mathematical sciences at Carnegie Mellon University.

Financial firms have fostered a "culture of secrecy" that has left them behind the curve in vying with the software industry for engineering talent, Mr. Shreve said.

"We're looking at a generation of people who believe that everything should be public," he said.

At Goldman and other firms, engineers have taken a back seat to employees directly responsible for bringing in trading profits and investment-banking and asset-management fees.

"If you're a technologist, you'd rather be at a place that values tech," one former Goldman employee said. "They value traders and bankers."

That may be changing, albeit slowly. Engineers accounted for nearly 12% of most-recent promotions to partner and managing director, Goldman's two most-senior ranks. A decade earlier, they comprised just 5.5% of the lists.

And in early June, Goldman held what was the first global town-hall meeting for its software engineers. Mr. Chavez was there along with Mr. Blankfein.

On stage at the firm's auditorium in its downtown Manhattan headquarters, Mr. Chavez asked Mr. Blankfein what he means when he says Goldman is a technology company.

"I think of the sociology of a technology firm," Mr. Blankfein said. "I'm thinking of the attitude of the lack of limits, the entrepreneurialism of people who know...that one minute something is impossible, and then the next minute it's impossible to imagine a world where it didn't exist."

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(END) Dow Jones Newswires

October 27, 2015 19:43 ET (23:43 GMT)