GEA: You've had a long successful career in finance and financial services. What are you most proud of accomplishing during your distinguished career?
Certainly “surviving” and persevering through my multiple entrepreneurial experiences is a high point. It would be easy to say I’m most proud of having two successful exits, but I think getting through the hard times is probably more important to me. Facing the prospect of running out of money and needing to adjust our business plan, staring down difficult investors who wanted to take control of our company, and battling with regulators to get the approval we needed to operate – these are some of the many examples of what I had to overcome at IndexIQ. SmartPortfolio.com was “easier” but still challenging in its own right. The private equity firm I started also was difficult. When people talk to me about starting a company, I always say, “If it were easy, everyone would do it.” Being an entrepreneur is tough, but it can be enormously rewarding at the same time.
GEA: After graduating from Georgetown, you started out at a major international law firm before moving on to found SmartPortfolio.com. What was it like taking the entrepreneurial plunge going from the safety of corporate law to a startup?
I didn’t have a grand plan to start a company. I figured I would stay at the law firm for a few more years, then become an investment banker. But opportunity knocks when you least expect it, and deciding when to seize that opportunity (and when not to) is the difficult part. I was fortunate to have a partner whom I knew pretty well and, importantly, really believed in. He was a visionary, a true leader, but he also knew his own shortcomings and that he needed a partner who could help him execute on his vision. Believe me, I was still nervous, and it took me some time to make the final decision to quit my job at a prominent law firm, move from New York City to a small town in Florida, and start a company with no funding and no salary, but these decisions are never easy because the future is so uncertain when starting a company. With 20-20 hindsight my decisions look easy, but at the time that certainly wasn’t the case.
GEA: Smart Portfolio was acquired by The Street, a financial news and services website that's known for taking a tech and entrepreneurial approach to covering finance. Entrepreneurship and financial services are often thought of as divergent. What similarities do you see between the two and what traits are necessary to be successful in both?
I think there are countless examples of entrepreneurs “disrupting” the world of finance. In my lifetime, some of the examples are Lew Ranieri (mortgage-backed securities), Michael Milken (junk bonds), Michael Bloomberg (Bloomberg terminals), John Bogle (index funds), and the PayPal team (e-payment). More recently, ETFs and now robo-advisors are changing the way retail investors participate in the market. So, I do think there is plenty of innovation in the world of finance, but I also agree that finance can be a frustrating area for entrepreneurs, largely due to the intense regulation and overall aversion to change inherent in the industry. Another complication is that financial firms are subject to wild swings driven by forces largely outside of their control, whether it’s the financial markets, political events, or sudden government regulation. Besides simply hard work, I think being even-keeled and trying not to over-react to these positive or negative developments is critical to success in both entrepreneurship and finance.
GEA: The TV personality, Jim Cramer, whom America has come to know as the host of Mad Money, was the co-founder of TheStreet. Want was it like to work with Jim?
I worked closely with Jim at TheStreet because I came up with the idea for what became their flagship product and biggest money maker, Jim Cramer’s Action Alerts PLUS, which is a subscription product centered around Jim’s personal stock picks for his charitable trust. Jim loved it because it had his name on it and his photo on the website landing page! Jim has a big ego and is a difficult person to work with, but he’s also brilliant. Sometimes the smartest people are the most challenging to deal with. Part of being an effective leader is learning how to deal with difficult people and turn them into productive team members for everyone’s benefit. This is particularly important in an entrepreneurial setting where there is simply no room for disruption.
GEA: You are a Georgetown lifer, so to speak, having received your BS, MBA and JD from Georgetown. What about Georgetown is so special to you? Did you ever consider going elsewhere, or was Georgetown always home?
Interestingly, I was a transfer student to SFS after having been wait-listed but not ultimately accepted my freshman year, so if anything, I was even more passionate about attending Georgetown than most because I persisted and applied again, fortunately successfully the second time. Once enrolled, I absolutely loved everything about the school, but primarily the diverse student body and shared vision of academic excellence. This experience stretched across all three schools that I attended, and I am fortunate to have built a foundation of knowledge and critical thinking through my Georgetown education that has served me well throughout my career.
GEA: Which of the schools had the biggest lasting impact on you, and what was your favorite teacher or most memorable class during your time on the various campuses?
The business plan for SmartPortfolio.com grew out of the Small Business Law seminar, taught by Dean Bellamy, that my partner and I took at Georgetown Law Center, so that has special meaning to us. But I would say that all three schools had a profound influence on me in different ways. The Foreign Service School really challenged me and opened my eyes to new opportunities, the Business School provided me with the basics in finance and a great network of friends, and the Law School taught me discipline and problem solving. Professor Reena Aggarwal has been my mentor since she taught me Intro to Finance at McDonough, so I owe a lot to her.
GEA: You're on the board of advisors for the Georgetown Wall Street Alliance. What's the mission and work of the alliance? How can both new graduates and Wall Street vets get involved?
The Alliance serves two primary purposes: First and foremost, it raises millions of dollars in scholarship money to allow diverse and highly-qualified students to attend Georgetown who otherwise could not necessarily afford to go to the school. Clearly, this is a noble cause, but it’s also important for the other students who benefit, like I did, from the richly diverse nature of Georgetown’s student body. Second, it provides a network for students and alums who are interested in finance to tap into, giving them access to successful Georgetown grads who work in finance and are willing to share their knowledge of finance and help with career advice. For more information and to sign up, visit WSA.
GEA: You are currently the co-founder and president of IndexIQ, which was acquired last year by New York Life. What has being under New York Life meant for IndexIQ, and why was it a good fit? On a personal note, what do you attribute to your success in being able to grow multiple companies and successfully exit both?
New York Life is a Fortune 75 company with a Triple A rating and a 170-year history. To put it in context, they were issuing insurance policies before the Civil War broke out. To have the standing and financial resources of New York Life behind our company is a huge benefit. We went from 10 sales people before the transaction to over 150 today, including the New York Life sales team. For me personally, however, it is somewhat bittersweet because I really thrive in a small company and dynamic atmosphere. It is not easy going from a small, nimble company where I could make decisions in an instant to a large, bureaucratic company that is more judicious and generally slower to move. I have been through the post-sale transition process a couple times now and the best response is to just let go, recognize that it’s not your company anymore, embrace the change, and contribute wherever you can.
As for starting, building and selling multiple companies, I think the most important factors for success are finding the right partners with complementary skillsets, being flexible and able to deal with adversity, having a strong business idea, having good timing, and being lucky. Note that I intentionally put “having a strong business idea” third on the list. You can have a revolutionary idea, but if you don’t have the right people to execute on that idea it’s meaningless. Conversely, good entrepreneurs mold the right ideas, the ones that they can make successful, which often differ from their original business plan.
GEA: As someone who studies markets for a living, what predictions or advice on the markets can you give us for the next 6 months?
Amazingly, every business I have been involved with has been centered on the markets and yet I recognize that I’m a lousy market prognosticator. I generally don’t make my own investment decisions; rather, I rely on investment professionals. I really try not to time the market because I know how dangerous it is when you time it incorrectly. And I don’t like to think in six-month intervals because the volatility can drive me crazy – I have enough to worry about with my own business!
GEA: Lastly, what's going on with Georgetown basketball? Are you hopeful for a turnaround next season?
Similar to the markets, I shouldn’t make a prediction, as I don’t want to set myself up for another disappointment. . .