Startup investing: Not only for the wealthy
Wefunder is helping create a world where everyone can invest in startups and share in their success.
This story was produced by Job Portraits and commissioned by Wefunder. For the interview below, Job Portraits spoke with Wefunder’s four full-time team members — CEO Nick Tommarello, President Mike Norman, CTO Greg Belote, and Account Manager Dylan Enright — at their work/live space near Potrero and 15th Street in San Francisco. Photos by Erin Conger and Jackson Solway.
What is Wefunder and how is it making the world a better place?
Nick: We want to help everyone — no matter their income— be able to invest as little as $100 in their favorite startup. Right now only the rich have access to the fastest growing private companies because they’re the only ones legally allowed to invest in them, until those companies go IPO and are publicly traded. That’s usually like 8 years after most of the wealth has already been created for their early investors. I think that’s absurd.
It’s a suckers game. The rich get richer, and the rest of us are shut out because there’s this belief that poor folks like me aren’t smart enough to invest $100 in a company I believe in and love. But of course we can go to Vegas and blow it on craps. Now that the law is changing, we’re going to fix that.
Tell us a little bit about how you guys started the company.
Nick: I always wanted to invest in startups, but it was effectively illegal since I wasn’t an accredited investor. Then when Congress was debating whether or not to pass the JOBS Act, I was like, “Oh wow, it might soon be legal to do something like a Kickstarter for startup investing.” Mike was in the same coworking space with me, and we decided to launch a petition together to lobby for the law, in January 2013. We got five million dollars in pledges in 24 hours. That got the attention of a couple of senators, a congressman, and the President’s office. A week later, we were down in DC talking to all these people.
It was a surreal experience. We’re not professional lobbyists but they were asking us questions and listening to us to figure out how the law would actually work. And the best case scenario actually happened: The law got passed in four months. That’s when Greg, who I’d met at TechStars Boston in 2010, came aboard. But then the SEC got ahold of the law to do the rule making, which they still haven’t finished doing. It should be done in 2015.
What have you been doing while you’re waiting for the SEC to implement the law?
Nick: What we’re doing now is what I call “rich person crowdfunding.” Basically, if you’re an accredited investor, which means you have over a million dollars or make $200,000 a year, you can log into our website and make investments. We’ve got almost $6 million in investments into more than 50 companies, but it’s not what we’re meant to do. We’re still waiting for the law to get fully rolled out, sometime next year, which will let everyone, no matter how wealthy, make investments. That’s what excites us.
Mike: Entrepreneurship is such a core value in this country. If you think about the people we look up to as heroes — Elon Musk, Jack Dorsey, Steve Jobs — they’re all entrepreneurs. They’re seen as the lifeblood of the country, but it’s only a small percentage of Americans that have the opportunity to participate in entrepreneurship in any way.
We believe it should be open to everyone. If you’re a user of a certain product and you see that this early-stage startup has got it exactly right, you shouldn’t be prohibited from investing because you’re not wealthy. It shouldn’t be that the Oculus backers on Kickstarter put all this money into the company to help get it off the ground, and then the VCs who came in a year later, once there was already traction, get to reap all the monetary benefits. If you believe in something enough to put your money behind it, you should be able to — and you should make a profit when it is successful.
The other thing that really gets me pumped is, let’s say several thousand people put in $100 for some early-stage startup they think is really cool. Think of the resources that gives the entrepreneurs. Those people probably aren’t giving advice like Paul Graham would, but they might know someone who could be a good employee or they can help with your social media launch. All of a sudden you have this entire universe of stakeholders that a company can wield. Because, even if someone only invests $100, that creates a stronger bond between the investor and the company — it’s literal ownership.
I know one of the things in your guiding principles is that, as you put it, “Investors come first.” Has there ever been a time where you’ve had to make a decision that helped investors at the expense of a startup?
Greg: One example is how we curate the visibility of company profiles. If you create a company on our platform, you’re not automatically on our homepage. We’re balancing the fact that we can’t give investment advice, but we still don’t want any random company on our homepage. We’ve been very conservative about the companies that get top distribution on the platform. That’s rooted in what’s good for the investor.
Mike: It’s easy to fall into thinking of investor protections versus company protections, but it’s really more nuanced than that. The harder we make things for companies, the less likely we are to get great companies on Wefunder, and that’s the worst case scenario for investors. We need to make sure investors have an excellent experience so they come back and invest more and tell their friends about it. It’s a dance.
What do you most enjoy doing when you’re not at work?
“I am taking a physics class and chemistry class online through EdX.” — Greg
“Traveling. Meeting new people. I’m a junkie for new experiences.” — Nick
“I helped start something called the Junto to help peers learn a subject together. I’m doing a Junto right now on the neuroscience of learning.” — Mike
“Skiing and anything outside that can give you a bit of adrenaline.” — Dylan
How do you communicate and work together?
Nick: This is a pretty independent team. We all have our own schedules and responsibilities. We all have a lot of autonomy in our areas. The main thing is a Monday meeting where we actually scope out what we’re going to do, the next week’s priorities, and then just go and do it. We touch base on HipChat or in person each day but mostly it’s that one meeting each week.
Dylan: One of the nice things about being a small team is that it doesn’t take a whole bunch of structure to be able to know what’s going on. That’s what’s nice about being an early part of the team. Once you get more than 15 or 20 people, all of a sudden that isn’t possible.
How do you deal with difficult decisions or disagreements here?
Greg: We’re all rational people, so pretty quickly we’ll see the sides of each person’s arguments. And within our own roles, we’re the boss. When it comes to user experience, for example, Nick is the one who makes the decision. If it’s a question of how to build something, I make the decision.
Nick: We could argue about it for a day, or just do it in a day and see how it goes. We err towards quick experiments and validating — or refuting — beliefs rather then debating things in circles over and over again.
Greg: We all value doing something rather than trying to be perfect in an ambiguous amount of time.
Had you guys all worked at a startup or on a small team before?
Mike: All of us have started stuff before. Nick, Greg and I have had our own companies that we’ve raised money for beforehand. Dylan started a non-profit that he was working on before he joined us full time. It’s just in our DNA, through and through.
Nick: A big thing that running our past companies taught us was the importance of work-life balance. Building a company is a marathon. You can sustain a really intense pace for a while, but eventually you will crash and burn. That’s why we do things like go work in Hawaii for 10 days with a bunch of other startup people, which we did recently.
Dylan, you’re clearly a self-starter but you hadn’t specifically been at a tech startup before, right?
Dylan: No, and being encouraged to learn and expand my skill set is definitely my favorite part of working at Wefunder. I had no coding experience coming to Wefunder and I’m still a noob in every respect, but to these guys it wasn’t important that I didn’t know anything, just that I wanted to know something. They said, “If you want to build something, as long as it helps Wefunder in a measurable way, go for it.”
Nick: I think one of the best ways to get good people and keep them is to help them grow where they want to grow.
Dylan: Another thing I love about what we do is we get exposed to all these amazing companies that are on our platform. As someone who is interested in startups beyond the specific problem we are solving, we get a really interesting overview of what the startup community is doing.
Nick: Yeah, anyone who comes here will learn a ton about startups. We have regular dinners where founders come over. It’s a great opportunity to meet people. I definitely have a preference for founder type people, who are really talented and get shit done, which is why I love Dylan.
Was there anything that surprised you about working with startups?
Dylan: I guess I was surprised about the lack of structure and the trust factor. Working with great people, and them knowing you will do your best, often my friends just coming out of school didn’t experience that in their big corporate jobs. They had to do X, Y, and Z every day and there wasn’t any room for thinking about the big picture.
My favorite part of working here is we’re always solving a problem, and not just our own. Since we put a new company on Wefunder every week, we’re thinking about their problems, too. For example, one of our companies is working to detect cancer with nano diamonds. That sounds like something out of a movie! To be a part of making that happen is amazing. If only I could give them a bit of my money, it would be even better.
What positions are you hiring for?
Nick: We’re hirng a backend engineer and a designer with a little bit of html/css chops. For the engineer, I admire people who really care about the user experience, who are willing to go the extra mile to make things easier for our users.
Greg: Yeah, we care a tremendous amount about the user experience, and that has a lot of consequences on the complexity of our system. As an example, we were really unhappy with the document signing services available, so we decided to build our own. That’s a startup in itself. We’re also building our own payment processor, as well as a news feed that aggregates information from startups.
The consequence is that we have lots of tech that we built, and within each of those pieces we spend a lot of effort to do everything with minimal clicks. That affects complexity because you build it for the user experience, not to make it easy to build. So we’re looking for someone who can handle a lot of complexity, who has a lot of experience architecting and building stuff, and who can operate independently. That’s important to allow us to move quickly.
How would you sell this job if you were pitching it to yourself?
Greg: Someone who comes and works on this platform now has a tremendous amount of influence. There’s just the four of us here. You’re going to be building something that we hope will be a world-changing platform. That’s something that would really appeal to me personally.
Because, let’s say you go to work for a company like Instacart. Their curve is going up and to the right; they’re making tons of money and everyone working there will probably be rich. But you come in there now and you’re going to be a senior developer working on some siloed project. You’re coming in too late to really be the big engineer at that company. The advantage for us is that our team is pretty small. There’s a lot of impact that a single person can have here.
Do you want to talk about the designer position too?
Nick: Sure. Good design is about two things: understanding the user and making the details perfect. I’m decent at design, and have done most of it to date, but our product is now so complex that I can’t spend enough time on any one piece of it to get all the details right.
We need someone with a good enough UX sense that they can own parts of our product immediately. Then, as they understand more about our users, they’ll take over more and more of it. I’ll continue to be involved in design but I’ll be less and less focused on it over time. I would like someone who could eventually take over for me.
What things in a person’s DNA will make them a good fit for working here?
Nick: We’re definitely inclined towards passionate self-starters. People who want to get the ball rolling immediately and have this hunger to go out and do something.
Mike: Curiosity is really important to me. Not just for the company but personally, too. If you’re curious and want to learn things and figure out how the world works, that maps really well for success at a company. But I also just want to be around someone who I’m interested in talking to; like maybe they’re reading an interesting book I can learn from, too.
Greg: You also need to enjoy the challenge of chaos because, as much as we think we understand our product, it’s still a very fresh space. Someone who enjoys the moment of, “Oh, shit, there’s a problem. Now we have to completely shift gears and do this other thing,” they’re going to have a better time than someone who hates change.
Nick: Dealing with ambiguity and roller coasters is part of the job description at any startup. And going along with curiosity, everybody should be learning stuff, which I think Dylan can probably speak the most about.
You’ve mentioned that you’re actively looking for women to join your team. Tell me why that’s important to you.
Nick: Diversity. It’s nice to have different backgrounds, different experiences, different talents, and different ways of looking at problems. We don’t want Wefunder to just be a bunch of white tech dudes, like the VC industry current is.
Greg: Especially since investing is such a male-dominated space. I think 94% of people who are publicly angel investors on the internet are dudes. That’s pretty crazy.
Nick: That’s a good way of putting it. In one way we are taking this Silicon Valley bubble, where it’s 94% rich tech guys investing in startups, and we want to open it up to everybody: women and men, grandmas and college students. So we need to have that DNA in our team, too. We need to be more diverse than four tech guys in San Francisco.