The frustrations of regulation and why it’s not stopping us
Back in July, I spent a day in Austin, Texas with our compliance consultants learning about all the different things we will have to do to stay compliant as a Registered Investment Advisor (RIA). It’s a pretty jaw-dropping list: keep track of every change we ever make to the product; record every single interaction with a customer; have every marketing communication reviewed. The list goes on for pages.
It was a pretty disheartening conversation. I always knew that regulation and compliance were going to be a burden for us as we tried to shake things up in personal finance, but now I was starting to see just how much of this iceberg exists below the surface.
Every startup runs into an issue like this at some point. As startups, we want to focus on the big ideas that get us excited about our business in the first place because really, that’s what makes us tick. But inevitably, we run into issues that are, for lack of a better term, annoying. It doesn’t matter what business you’re in; there’s some part of it that is 100% necessary, yet 100% infuriating. It’s the sausage-making part, if you will, and dealing with financial regulation and compliance is ours. We signed-up for this challenge, and we’re not backing down by any means, but managing this part of the business is not going to be fun.
The true burden of innovating in a regulated industry
When I talk about financial regulation being a burden, what I really mean is that it’s a distraction, and it feels like it’s slowing us down. For one thing, the amount of extra compliance work that we have to do before we can even launch our private beta is astounding. We have so much confidence in what we are building and are so excited about sharing it with the world, but we are not allowed to open the metaphorical doors until we have all the right record-keeping and auditing systems in place. That’s frustrating.
But it doesn’t stop after the launch. The bigger issue is that regulation is always there hanging over our heads. Dave, our Chief Architect, put it well a few days ago when he said something to the tune of, “I just want to be focused on solving these hard problems for our customers, but now I have to be constantly looking over my shoulder, wondering if what I’m doing is compliant based on some archaic piece of regulation that never even contemplated the Internet. It’s ridiculous!”
That’s the problem. Regulation is a black hole that can suck up as much time as we allow it. Not to mention that it can also make us scared of our own shadows and derail truly innovative ideas and solutions before they can ever get off the ground.
“I just want to be focused on solving these hard problems for our customers, but now I have to be constantly looking over my shoulder, wondering if what I’m doing is compliant based on some archaic piece of regulation that never even contemplated the Internet. It’s ridiculous!”
Perspective is everything
As painful as the last few weeks have been on this front, I recently had two realizations that has made bearing the regulatory burden a little bit easier.
First, all this regulation is simply trying to get us to do what we started out to do in the first place: be transparent, provide fair and balanced guidance, and absolutely avoid ripping people off. We are building Gathering according to the same principles on which all of this regulation is (or at least should be) based: treat your customers the way you would like to be treated. The Golden Rule. There’s nothing complicated about that.
Second, and probably more important and slightly more difficult as evidenced above, we have to start thinking about regulation not as a burden, but as an opportunity. It’s often the unsexy problems that become the biggest sources of competitive advantage. Look at a company like Amazon. They have to deal with the logistical burden of getting purchases to customers, and early on, that was a source of constant frustration for them. But now, the ability to get product to customers when and where they want it (sometimes even same day!) is arguably the top reason that those customers keep coming back time and time again. For us, dealing with regulation better than the next guy will allow us to create a better overall experience for our customers which is our reason for being in this industry in the first place. It’s not an unwanted distraction, it’s a core element of the problem we are trying to solve, and the perfect opportunity to take it by the horns.
I don’t expect any of this regulation stuff to be easy moving forward, but I’m starting to come to terms with it, and I’m learning that with each regulation is another opportunity to serve our customers better.
What’s next?
As promised, we’ll release a new post every week and give you look inside Gathering. Next week, we’ll share one of the most important and personal decisions we (or any startup) could make: finding our co-founders.
Gathering empowers young people to meet life’s goals and challenges through smart money decisions. We are on a mission to make money work for all of us.
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About the author
Justin is the Co-Founder and CEO at Gathering.
