On Knowing

Next up in my string of lessons well learned: doing what you know is right, even if that means ignoring “seasoned” advice.

I am going to start out by warning that this is a pretty narrow example, and that I still take into consideration what experienced people have to tell me. I guess a better way to explain this is that I had to learn to consider the source when taking advice.

So let’s go back to my former partner again. I did learn a lot of valuable things from him, and not just in an “I’ll never do that again” sort of way (I have one of the good lessons later this week). Anyway, the industry I was in was pretty heavily regulated when I got into it, and then all of the recent Wall Street reforms increased the amount of regulation pretty significantly. I’m not really afraid of regulation from a following-the-rules standpoint, because there is usually nothing magical about the rules. Follow them to the letter and things will be fine. They take the guesswork out of doing the right thing, assuming that you actually read them.

This is where I went wrong with my partner. I read the rules, and although he had been in and around the industry for over a decade, his information was purely sourced from discussions with other people. Some of it was speculation, some it was over-simplification, and some of it was complete fear-mongering or anti-competitiveness. But he trusted the people he got the information from so he passed it on to me. At first, I appreciated the passing on of information about what to expect as I went through the process. This was before I got started, though.

He had made it sound like the initial filing of my company’s existence with the regulatory agency was a huge deal. I would be on their radar, they would start asking questions, etc. They would make an initial decision about whether I could have “pending” status, which at that time was important because a lot of big banks were starting to limit unregistered businesses, like mine. Having the pending status would show the banks that I was going to meet the registration deadline required by the new financial reforms.

So being scared, I read everything in the universe. I spoke to hedge fund attorneys, former regulators, people who had been through the process, and everyone else I could think of. The crazy experience of that initial filing just didn’t seem to be an issue for anyone else. I went back to my partner and asked if I was missing something. Definitely. Those people weren’t going to give it to me straight because they all had an incentive to make it seem like no big deal, so maybe some oversight on my part would either require their services or knock me out of the competition before I could even start.

I finally filed. I literally entered my company name, tax ID number, address, and contact information, and voila. I had pending status. Months were wasted on research and agonizing over whether I wanted to reach out and introduce myself to a federal enforcement agency, when that doesn’t scare me at all, because I follow the fricking rules in the first place.

I was really mad, but at that point I didn’t say anything. I continued through the process, and every extra long delay that came up (something like ten thousand people had to register in a six month period under the new rules, when registrations are usually in the 100 or so range per year), he wanted to have days long conversations about what possible infraction in my past could be holding this up, what information the agency had uncovered, and everything else. I didn’t reach out because he swore it was a no-no: don’t ask for anything and don’t volunteer any information, he said.

I waited a few months and heard nothing, so I called a friendly attorney who worked in this industry a lot for advice. He told me that the people at the agency are actually pretty friendly and are interested in helping people follow the regulations. They aren’t on a mission to trip them up. That seemed more reasonable, so I called. Oh good thing, because my file was in the wrong stack, and basically I would have waited an eternity to get approved.

At that point, I was pretty done with my partner’s superstitions and gut feelings about things. I decided to go about the process using my own judgment, my own way of being organized, and my own research. It has worked for me before, and I suspected it would work again. It did. I was registered just a few months later. Unfortunately, I wasted months of stress (seriously, like losing sleep over this) thinking I was going to go to jail just for applying or something. And I’m not saying it was a totally stress free process once I started doing my own thing, but it was stress properly applied to issues that are actually stressful.

Turned down any well-meaning advice lately?

Tomorrow, a positive lesson for once