My Worst Investment Ever Podcast Larry Shumbres – Invest in What You Know and Is Regulated
BIO: As an accomplished entrepreneur and respected leader in the fintech industry, Larry Shumbres’s mission is to continuously enhance the investing experience for both advisers and investors through innovative technology.
STORY: Larry tried to create a hedge fund, 50% tied to digital gold and 50% tied to the top five cryptocurrencies but faced so many setbacks in the process. He spent too much time and money on this venture, which never paid off.
LEARNING: Don’t try to build an investment product around an unregulated industry. Don’t invest in what you don’t know.
“If you don’t know anything about private equity, derivatives, or options, don’t do it. First, learn how it works and then look to invest in it.”
Larry Shumbres
Guest profile
As an accomplished entrepreneur and respected leader in the fintech industry, Larry Shumbres’s mission is to continuously enhance the investing experience for both advisers and investors through innovative technology. He is recognized as an industry expert and has over 20 years of fintech experience with companies such as Charles Schwab, Morningstar, and New York Life Investments.
Most recently, Larry founded, built, and exited Totum Risk, a leading risk tolerance platform for the financial industry, through its acquisition by TIFIN. Before Totum, Larry built SmartVision by eVestment, which was later acquired by Nasdaq. He also led the sales team at eMoney before its acquisition by Fidelity.
Worst investment ever
In 2017, Larry had the idea of building a hedge fund, 50% tied to digital gold and 50% to the top five cryptocurrencies based on market cap. He put a lot of time and money into it. Larry had another business partner that was also putting time and money into it. He even had some friends and family money tied into this venture.
Larry completed the private placement memorandum (PPM) to enable him to sell the product and have investors review it. Larry faced a couple of problems during this whole process. One, he didn’t have a track record. Two, he couldn’t sell the product in the United States. Three, it was impossible to distribute the product in other countries that had their own rules and regulations.
So after spending a lot of money on attorneys, consultants, rules and regulations, and licenses, it got to the point where it wasn’t worth it. So Larry shut it down and lost the money.
Lessons learned
- Don’t try to build an investment product or tool around an unregulated industry.
- Anything that the SEC hasn’t approved is a big risk.
Andrew’s takeaways
- Revenue is everything. As a startup, your number one goal is to get your revenue up as fast as possible.
Actionable advice
Whether you’re an entrepreneur or an investor, investing in what you know and what is regulated is wise.
Larry’s recommendations
To review any investments, Larry recommends going to large financial institutions like Schwab, Fidelity, Vanguard, JPMorgan, Chase, etc. Such institutions have a plethora of information to help you learn about investments. But more importantly, if you don’t have a passion for investments, Larry recommends partnering with a financial advisor to help you invest and plan for any life events and goals.
No.1 goal for the next 12 months
Larry’s number one goal for the next 12 months is profitability. The company is also planning to install its machine learning use cases in AI to widen its moat and be the leader in the industry.
Parting words
“If you’re an advisor, check out Presults.com, and if you’re an investor, do your homework.”
Larry Shumbres
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Connect with Larry Shumbres
Connect with Vincent Deluard
Andrew’s books
- How to Start Building Your Wealth Investing in the Stock Market
- My Worst Investment Ever
- 9 Valuation Mistakes and How to Avoid Them
- Transform Your Business with Dr.Deming’s 14 Points
Andrew’s online programs
- Valuation Master Class
- The Become a Better Investor Community
- How to Start Building Your Wealth Investing in the Stock Market
- Finance Made Ridiculously Simple
- FVMR Investing: Quantamental Investing Across the World
- Become a Great Presenter and Increase Your Influence
- Transform Your Business with Dr. Deming’s 14 Points
- Achieve Your Goals