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Guest: Steve Lockshin, serial FinTech entrepreneur
Episode in a Tweet: Serial entrepreneur, venture investor, and industry agitator has an uncanny ability to see what’s coming around the bend in the FinTech space.
Quick Background: Steve founded several FinTech companies including a multi-billion dollar registered investment advisory firm, a wealth management reporting solutions company, and his newest company, AdvicePeriod, which is redefining what it means to be a wealth management firm in the age of FinTech. Along the way he was named the #1 independent financial advisor in the United States by Barron’s Magazine in 2011, and he became an investor in several hot startups. In today’s podcast, Steve shares some of the key lessons and insights he learned on the road to becoming a top entrepreneur.
Transcript: Download the full transcript here.
Key Insights
Steve Lockshin: I’m a huge fan of failure budgets.
1. Hire people who can execute over people who are highly skilled.
Steve said, “I’d hire an A-person with B-skills over a B-person with A-skills. A lot of it is effort. It’s 1% idea, 99% execution.” He hires a lot of athletes because they tend to be hard-chargers and have the determination to get things done. You can train people to improve their skill but it’s harder to turn someone into a “doer” who isn’t naturally inclined that way. That’s why it makes sense to hire people of action and then train them for the skills they need.
2. Scrap the periodic employee reviews and fixed vacation policies.
Doing periodic employee reviews to discuss their performance and compensation “feels a little old-school to me,” said Steve. Instead, his newest firm has frequent informal and formal communication to ensure there’s immediate feedback instead of waiting for a pre-determined review period. The open work space environment encourages this frequent contact as does the “really cool little app and gadget that lights up and lets you know whether people are available to talk or not talk.” Steve’s latest company also offers unlimited vacation as a way to show respect to its employees. “If you want someone to act like a responsible adult, treat them like a responsible adult,” said Steve. They also encourage people to work from home.
3. Keep doing small tests on key aspects of your business to improve your results.
It’s tempting to come up with a big idea and then put huge resources behind it. But what happens if you’re wrong? Steve is a big believer in doing small tests on new ideas and hypotheses to determine what works and what doesn’t. “We’ll test some ideas and see what kind of response we get, and then modify that idea or scrap it based on that response,” he said.
4. Establish a failure budget to encourage your team to try new things.
To succeed, you have to keep innovating. A failure budget allows your team to try new things without fear of getting slapped down if it doesn’t work. “By allocating part of your budget each year to projects that the team wants to start, you’re encouraging them to test and try new things that will work. I believe letting your team try to do things in a more effective, efficient, contemporary way is a way to advance the company, and that means not punishing them for not succeeding,” said Steve. Only a small percentage of these projects need to succeed in order for the failure budget to generate a large ROI. And there are tremendous benefits to the company culture with this idea, too.
5. Be humble.
Steve says “humility” is a core word for him. Being humble causes him to challenge himself all the time and makes him realize he doesn’t have all the answers. “You’ll never get to perfection, but you’ll always get closer, and closer, and closer I think with humility,” he said.
Coaching Takeaways
1. Get progressive with your employee policies. Old school policies such as fixed employee review periods and rigid vacation policies will not attract top talent. Scrap your outdated policies and treat people like responsible adults.
2. Do small tests to avoid large mistakes. Got a great idea? Test it first. If the test is positive, move forward but then keep testing and iterating.
3. Establish a failure budget and expect to fail. Your team has great ideas and by establishing a budget that allows them to explore the ideas without fear if they fail, you’ll become more innovative and, ultimately, generate a solid ROI on that budget item.
Transcript: Download the full transcript here.
