The bottom line isn’t always the bottom line. You don’t want to overvalue a unprofitable company, so it’s important to take a careful look at potential for growth and profit. You have to keep one eye on short-term costs and one eye on the future, and somehow not go cross-eyed. It’s an art with some elements of a science, and I’m afraid you have to learn by doing.
Aspart of my series about the “How to Navigate and Succeed in the Modern World of Finance”, I had the pleasure of interviewing Mike Alfred, Co-Founder and CEO of Digital Assets Data.
Mike Alfred is co-founder and CEO of Digital Assets Data, a financial technology platform providing enterprise-grade data for the cryptocurrency industry. Mike received his bachelor’s degree in history from Stanford University. In 2015, he finished a 100-mile race with the 38th-fastest time in the U.S.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
Iwas born and raised in San Diego. Went to Stanford for undergrad in the late 90s and studied history. My freshman year I started trading tech stocks from my dorm room. I made a lot of money on paper quickly and then lost most of it back quickly when the tech bubble burst. That was my first big investing lesson. After college, I was a financial advisor for 5 years before co-founding BrightScope with my brother Ryan. BrightScope grew to become the primary data provider on the US retirement plan market before we sold it in October 2016. In 2018, I co-founded Digital Assets Data to bring higher quality data to the cryptoasset industry.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
I think many first time investors are overconfident. Just because you have an IQ does not mean you will be a great investor. Humility and knowing what you don’t know are very important traits. If you make a lot of money quickly in the beginning, you may have a false sense of your own skill.
Is there a particular book that you read, or podcast you listened to that really helped you in your career? Can you explain?
I really loved the book Good to Great by Jim Collins. Building great companies is hard work and I’ve always believed it’s just as hard to build a small company as it is to build a big one. Similarly, you will work just as hard to build a good company as you will to build a great one. So why not aim for great?
Are you working on any exciting new projects now at Digital Assets Data? How do you think that will help people?
We are building an advanced platform for the leading companies in the crypto ecosystem. The coolest thing about it is that we’ve built an integrated development environment so customers can write their own code, build their own models, and in some cases literally run a quant investing strategy right in the platform. In the short-term, the average person will have no idea what we do. But in the long run,the cryptoasset ecosystem will be a better, safer place due to the proliferation of higher quality information and insights.
Thank you for that. Let’s now shift to the central focus of our discussion. Extensive research suggests that “purpose driven businesses” are more successful in many areas. When you started your company what was your vision, your purpose?
Our vision was to help the world adopt a better, safer financial system by delivering higher quality data and insights to the marketplace. People are attracted to Digital Assets Data because they want to do interesting, important work in a new space that has tremendous promise to change the world for the better.
Do you have a “number one principle” that guides you through the ups and downs of running a business?
Always do the right thing for the customer.
Lead generation is one of the most important aspects of any business. Can you share some of the strategies you use to generate good, qualified leads?
We’re a business-to-business firm, so we’re not doing much in the way of targeted ads. I’ve found many of our most profitable relationships stem from in-person meetings at conferences and summits. We’ve also been able to get some attention through PR: We don’t have a full-time publicity person on staff, but outsourcing that responsibility is a good way to get your name out there.
If a fellow CEO would ask you for advice about whether to bootstrap or to look for VC capital, how would you help them weigh the pros and cons of that decision?
Bootstrapping leaves you with greater control over your business, but it also may hinder your ability to rapidly scale. I’d begin by asking the CEO questions. What is their appetite for risk? How much do they want to scale and how fast? What sort of runway do they need? In my experience, giving good advice begins with asking good questions.
What measure do you use to determine the value of a company? What advice would you give to other leaders about how to get an optimal evaluation of their business?
At the risk of paradox: The bottom line isn’t always the bottom line. You don’t want to overvalue a unprofitable company, so it’s important to take a careful look at potential for growth and profit. You have to keep one eye on short-term costs and one eye on the future, and somehow not go cross-eyed. It’s an art with some elements of a science, and I’m afraid you have to learn by doing.
What would you advise to a founder who initially went through years of successive growth, but has now reached a standstill. From your experience do you have any general advice about how to boost growth and “restart their engines”?
When things stall for too long, it’s usually healthy to consider a sale or change in leadership. That they’re asking how to change is encouraging in itself. Too many executives fall victim to complacency. What was new and different when a company launched may inspire imitation and competition a few years later, and executives should periodically take a look around to see how their industry has changed. They may need to rediscover the appetite for innovation and disruption that they began with. When I sold BrightScope, I worried that I had lost my identity and had already peaked as an entrepreneur. The best thing I did was to jump back in to the game as soon as I had a new idea.
What are the most common finance mistakes you have seen other businesses make? What should one keep in mind to avoid that?
Running out of cash. Running out of cash. Running out of cash. I can’t repeat this one enough. Don’t run out of cash.
Ok, here is the main question of our discussion. Based on your experience and success, what are the five most important things one should know in order to succeed in the modern finance industry? Please share a story or an example for each.
- There’s not just one modern finance industry. The system is so huge that people can work in different corners of finance and speak with completely different vocabularies. I work in digital assets, for example, and that’s a very new field.
- Keep an eye out for those different perspectives. Today’s curio may be tomorrow’s hot investment, and you’re going to miss out if you only pay attention to your little corner. I first heard about digital assets in 2012 (but didn’t jump in until 2017), so I was able to get on board before most people.
- Understand technology. You’d think this is obvious, but if it were, you wouldn’t have so many challenger banks and fintechs winning value from century-old companies. We have new tools for business, and some of the larger finance firms don’t quite know what to do with them.
- Be flexible. Digital Assets Data is actually the second startup I’ve launched; I founded it after selling a previous startup. Sometimes you need — and the market demands — a change of focus and a new start.
- Question. Listen to other people and to their advice, but don’t let it overrule your own insights. What works for me, or for another one of your interviewees, may not work for everyone. The world is wide, and there are many paths to success.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
Spending all day at your desk may not be the best of your time or your company’s resources. I sometimes take a few hours in the middle of the day to go for a run. Burning calories keeps me from burning out, but it’s not just a preventative measure: When I come back to my desk, I find that I’m reinvigorated and full of new ideas.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.
There are far greater changemakers working on advocacy. I’m just an entrepreneur. My focus right now is to build a great company and deliver fantastic results to all my key stakeholders. If I’m lucky enough to achieve a second successful exit, I will begin to think about this question more deeply.
How can our readers follow you online?
I’m on Twitter at @mikealfred.