by Ken Staut, CEO of GrowthFountain
My entrepreneurial story, as I suspect is true of most, is one of tenacity. Let’s just say I didn’t end up with a pretty girl because of my looks. It was because of my tenacious personality and my inability to give up or give in. I draw a parallel with this phrase to my success as an entrepreneur. For some strange reason, I’ve always been motivated by a challenge. Something just isn’t interesting to me unless I’m told no, or that it’s impossible. I’m not trying to brag; I would probably be much more successful and had a much easier life if I neatly fit into the employment culture within a large organization. But alas, I’m just not wired that way.
Tenacity is a necessary ingredient – but I don’t want to understate the importance of ignorance. It’s the piece de resistance for success.
My journey as an entrepreneur really began in 2009, when I co-founded an event-driven hedge fund called Tiburon Capital Management. Only the poster-child for ignorance could have thought it would be easy to raise money and start a hedge fund in the wake of the biggest global financial collapse since the Great Depression. But that’s just the point – if my partners and I had any idea how difficult the road would be, we never would have embarked on that path in the first place. In terms of building our business from scratch, I loved everything about it – except for the fact that we had no money to pay ourselves for the first year and a half. The challenge was fun but the path was laid out for us. What I mean is, there are roughly 10,000 hedge funds in the world, with a defined pathway and recipe for success. There is very little room for creativity, and it all comes down to building the templated pipes, and then seeing how good and lucky you are in a short period of time. To use a Howard Marxism, “of all the alternative histories that could have occurred, our path to success was the least likely, but somehow, we accomplished it.”
After selling Tiburon, I immediately set my sights on the next big idea. When my friend and co-founder Leon Stiel and I read the JOBS Act, we knew building an equity crowdfunding platform was our destiny. Our mission became abundantly clear: build a platform to level the playing field for America’s small businesses and entrepreneurs. This groundbreaking legislation allowed for two things: 1) it enabled entrepreneurs to publicly advertise their offering; and 2) investors no longer had to meet wealth or income thresholds. Coupling these two things together, everybody in the world could now invest in America’s innovators. Three reasons struck us immediately as to why we had to pursue this opportunity: First, we thought our experience enabled us to immediately make a difference in helping level the playing field for small business owners. Second, we thought the warm, fuzzy feel-good altruistic nature of our business would help us attract team members and partners to help pursue our cause. And lastly, the opportunity would be enormous.
“Creating a company from nothing was the single most difficult thing I have ever done in my entire life.”
Leon and I immediately assembled a team, began familiarizing ourselves with the law and wireframing our platform. Little did we know, the SEC would take four years to finalize the rules around the JOBS Act. On the bright side, though, we had time to refine our product and make it perfect. Still, with seemingly all the time in the world to prepare for launch, we missed our target start date by seven months. I always tell people that the reason we were so delayed is because our industry is so heavily regulated that the platform had to be perfect before we could launch. Traditional startups launch with a minimal viable product (MVP), solicit customer feedback, pivot and rebuild the airplane as its heading down. Unfortunately, we had no such luxury. But then again, maybe I was only justifying our delay by seeking confirmation bias.
What I did learn through the process is that creating a company from nothing was the single most difficult thing I have ever done in my entire life. New companies are not for the faint of heart, but a startup – which I define as a new company in a greenfield environment, man, that takes real guts! Not only do you have to invent your product – with nobody to copy or look to for inspiration – but you have to educate your user base on what the opportunity is and why they should care. On top of it all, we’re a tech company, but I, of course, had no knowledge of or experience with technology. Learning how to even communicate with our developers – and even to find and qualify developers, which seem to be as rare as unicorns – was an overly complicated experience. Like I said, ignorance truly is the piece de resistance.
Nonetheless, if you’re in a position to really take a risk, I couldn’t recommend this experience highly enough. It’s not for everyone – in fact, it’s hardly for anyone. You’ve got to really enjoy instability and extraordinary risk taking, sleepless nights, panic attacks and the feeling of being all alone in this world. But if you’re ok with those minor things, I urge you to take the entrepreneurial path, because any modicum of success makes it all worthwhile.
Ken Staut is the CEO of GrowthFountain and one of America’s leading authorities in equity crowdfunding. Ken has extensive experience in capital markets and asset allocation, having co-founded, scaled and sold event-driven hedge fund manager Tiburon Capital Management. He has earned the right to use the Chartered Financial Analyst designation and earned his MBA from Columbia Business School.