In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that
have shaped their business philosophy.



Co-founder and CEO, Fundrise


Background:  

Widely recognized as a pioneer in the crowdfunding industry, Fundrise lets individuals invest directly in commercial real estate online, whether or not they are accredited by the U.S. Securities and Exchange Commission. The minimum investment is $1,000.

The Mistake:

Generally, every time we hire an outside expert, they either fail or under-perform.

When my brother and I started Fundrise … we kept going to different lawyers. Over the course of a couple of months, we either interviewed or hired about eight law firms, trying to find a way to raise money for real estate on the internet.

Finally, we went to the top securities law firm in the country, which is in New York. Their office is on the top floor of the Conde Nast building, this epic building in the middle of Times Square. 

We’re thinking, these guys are the pinnacle of real estate and financial and security success; they’re going to know how to do this. And they may be really expensive, but we’ll finally get an answer.

At the end of it, there is dead silence … And then they proceeded to tell me, “Horrible idea, totally the worst thing ever.”

I remember me and my brother getting on the elevator and just being deflated. We spent nine months trying to figure this out. We’re thinking, “Now what are we going to do? This obviously doesn’t work. These guys know everything, and they told us it doesn’t work.”

We’d basically given up on this idea—after a year and about nine law firms—when I was talking to a friend of mine, and she said, “You know, my brother in law just retired from the SEC.” … Her brother-in-law told me how to get to this guru [at the SEC].

I went to have lunch with this expert, and he said, “That sounds fun. Let’s figure it out … I wrote this regulation in 1992 that maybe we could use.”

That opened the way for this idea to come back to life.

If you know how to do it, you’re not a consultant. If you know how to do it, you’re doing it.

The Lesson:

A lot of people pretend to be experts, and there’s very few people who really know. The whole consulting industry is built on that concept. Usually, if you know how to do it, you’re not a consultant. If you know how to do it, you’re doing it.

The SEC guy charged us three billable hours in a year. He really thought like a principal in the process … whereas the law firm almost didn’t take us on as a client, because their clients are billion-dollar companies, not nobodies.

The people who ended up helping us most, they always did it because they were really excited about the idea; they were passionate about it. They thought it would be fun and also interesting and maybe even change something. … Everybody who ended up really helping us did it as a passion project.

[Today,] we hire for passion. … Doing what you want and doing what you love is in and of itself valuable. Above a certain level of subsistence, the most important thing is a job that’s fulfilling and self-actualizing.  

Follow Ben Miller on Twitter at @BenMillerise​.

Photo courtesy of Fundrise. 

Do you have a good story you’d like to share, or know someone we should feature? Email jfisher@crain.com.

And be sure to sign up for your local newsletter from Crain’s.