Off Topic: On Starting a Company

I was looking through the blog today for an old post, and I was surprised to realize that my last original blog post was March 14th, 2013. I've tried my damnedest to put some unique content ever few weeks and promise you I will do a better job in the future. I truly apologize for the lack of content.

March 14th, despite being a little over only 150 days ago seems like an absolute eternity. Since then, my wife has given birth to our second child (healthy baby boy), my mom has had brain surgery (battling breast cancer), and I've worked harder than I've ever worked starting a company. I've debated for some time in writing post below and decided to finally pull the trigger.

As many of you know, Reorg Research spawned from a problem that has plagued distressed debt investors, restructuring bankers, and lawyers for a long time. Principally, there was an incredible amount of time wasted navigating archaic tools to get information on bankruptcy proceedings. Whether it be claims agent sites or PACER, following multiple dockets was an inefficient process in which time could be better used actually analyzing information versus finding information. I believe, and our customers will attest, that Reorg Research is by far the easiest way to stay up on many cases at any one time on a near real time basis. I haven't logged in PACER in 7 months and couldn't imagine having to go back to the old fashioned way of tracking cases whether they be bankruptcy, adversary proceedings, patent litigation, anti-trust, etc.

Since then, Reorg Research has grown and matured our news, reporting, and research into something that I am EXTREMELY proud. We constantly hear how great our content is relative to our competitors and we strive to constantly improve our offering. I like to tell people one of my favorite things to do is read disclosure statements. When friends / family outside the distressed world ask me what our company does, I respond by saying "We are the world experts on corporate bankruptcies and distressed debt." I stand by that.

Reorg Research is not what this post is about. This post is about 3 lessons I've learned starting a company. I could probably expand this list into many many many more things I've learning via mistakes, failures, etc, but I think this list of three are paramount to building a successful organization.

Lesson #1: Hire well. Hire meticulous.

While this is really two lessons, I think it is amazingly important to starting a company. As an example, let's say you are a new organization with 5 employees. If just ONE of them is bad, productivity decreases by 20%. Further, the founder and the remaining 3 employees need to pick up the slack and therefore their core roles are compromised.

Hiring is by far my most important job. It's not even close. People argue raising capital is an important aspect of building a company. My retort is capital is plentiful while talented, excellent, tenacious, and loyal people are rare and seemingly impossible to find.

We interview LOTS of people for each job that we are hiring. The combination mentioned above (talented, excellent, tenacious, loyal) is hard to find but finding that person that can fit with your team takes a meticulous process that is rigorous but at the same time fulfilling.

My staff is EXCELLENT. I would put my team up against any out there.

Lesson #2: You have to be obsessed with what you do. 

I'm sure everyone has heard this one in the past. You have to like what you do to be successful at it. I take that a step further. You have to be obsessed with it.

Starting a company is hard. The amount of small things to do to get a company off the ground is comical. Did you know you need to keep I-9s in a different folder than other employee files? It never ends and only builds up as your company grows.

I love distressed. I love bankruptcy. As some of you have seen, my first slide whenever I teach a class on distressed starts with a slide that reads: In 20 years, what's most likely to be around? Google, Facebook, or bankruptcy.

I am the guy that gets jazzed up by marshaling issues in OSG, or deficiency claims in Cenage, or litigation value in TCEH. I'll read a filing and send off emails at ungodly hours and then people look at me strangely the next time they see me. "Are you ok?" they ask. Of course I am - Wasn't that filing I sent you AMAZING?

The days are long and to get through them you can't just love what you do. Not just that (adding a rider to Lesson #1), the people around you have to also love what they do. These are people you will bounce ideas off of and spend long long hours with and that rapport by relishing in a common topic / theme / subject / task makes the days go by easier.

Lesson #3: The reason why so many start ups fail is that they can't get to or don't know their customer

We are a B2B start up. Our customer are hedge funds, investment banks, asset managers, law firms, restructuring advisors etc. The blog, DDIC, and the network they provided and I built since 2009 was invaluable to getting momentum for Reorg Research's offering which in turn increases word of mouth effects which in turn gives you more momentum.

People often ask me if I started the blog knowing Reorg Research was an ultimate goal. The answer is no. I started the blog because I love bankruptcy and distressed debt and a friend sent one of my early stories to a WSJ editor who linked to the blog and the rest is history. But the network that was built by the connection with other like minded people that love what we all do on a daily basis was priceless.

If you are thinking about starting a company, do whatever you can right now to start getting in front of customers. Start a Twitter feed, start a blog, optimize your LinkedIn profile, go to networking events, etc. It doesn't matter.

The reason this is so important, outside of the revenue / growth aspects, is that if on Day 0 (not even Day 1), you can't get solid and critical feedback from a handful of potential users, you are going to have a heavy uphill battle. The alpha for Reorg Research was ready for testing in 4Q 2012 where 10-20 close friends and readers of the blog got to test drive the system and crush me with their feedback . The site looks and functions infinitely better because of that feedback.

If you are considering starting a company (or fund for that matter), I would suggest you read this book: http://www.amazon.com/The-Four-Steps-Epiphany-Successful/dp/0976470705/ref=pd_sim_b_9. It's one of the few books I can say really changed the way I view successes and failures of the business / start up world.


One of my employees has been tasked with yelling at me if I am not writing blog content on a more regular basis. While I can't promise I will be penning as many pieces I did in the past, I will do a better job of getting emerging manager interviews, legal pieces, and conference notes up on the site. Now back to that Cengage DS!


Anonymous,  8/19/2013  

Great post and good luck with everything going on.

For some easy content, how about posting notes on the TMA Shipping event? I know I'd be interested in reading them...

Anonymous,  8/22/2013  

#2 cannot be overstated enough. Hockey sticks only exist in powerpoint slides, not reality. If you don't love your idea/company, walk away. Best thing I learned from starting/selling my med device startup.


hunter [at] distressed-debt-investing [dot] com

About Me

I have spent the majority of my career as a value investor. For the past 8 years, I have worked on the buy side as a distressed debt and high yield investor.