We have the pleasure of interviewing Graham McConnell.
Graham is the CEO of Nth Round, which provides a suite of tools designed to manage the equity of a private business, whether it be an early-stage startup or a more mature enterprise.
In this interview, Graham details some of his challenges with growing his business, the ups and downs, how he managed through some staffing issues during the earlier part of the year, where he plans to take his business, and his overall views of money.
It’s always interesting to see how different entrepreneurs deal with challenges, which are inevitable as the business grows, and Graham’s story is a testament to that.
Graham McConnell – The Backstory
I’m the middle child of 5 kids, born in the suburbs of Philadelphia, and lucky enough to have two incredibly hard-working parents. My dad, who’s also the co-founder of my company, has been helping build companies his entire life. He was always tinkering with all kinds of gadgets and toys, so I often found myself standing over his shoulder. Early on, I was generally holding a flashlight or running to the breaker box to flip a switch, anxiously hoping that I wouldn’t end up electrocuting someone.
As I got older, the roles reversed. I started playing with and modifying a gas-powered, RC mini monster truck that I had. My neighbors weren’t thrilled with the amount of noise it made. On a few occasions, the remote controller died, leaving the toy hurtling uncontrollably through their yards. I ended up moving on to less obnoxious hobbies, like assembling the fastest gaming PC I could. I would stay up all night playing games like Diablo or Red Alert, and end up falling asleep during class.
Regarding one of your business ventures, either current or past:
What is that business, and what does that business do?
Nth Round is a suite of tools designed to manage the equity of a private business, whether it be an early-stage startup or a more mature enterprise. There are all kinds of overhead costs involved in keeping track of who owns what, vesting schedules, and cash distributions. Generally, company owners rely on lawyers and accountants to help with what inevitably becomes a forensic nightmare of stock certificates and shareholder agreements stuffed into desk drawers, never to be found again. Our platform brings the process into the digital age, creating a more robust and trustworthy source of information for the executive team, investors, and employees.
How many years have you run (or did you run) the business, and when did you feel comfortable in the role?
It’s been almost 3 years since we started Nth Round, and it did take some time for the reality to sink in. Early on, we shared space with a private equity fund, which sometimes made it hard to feel a sense of independence. When we moved into our own space a few months later, albeit at a WeWork, it was much easier to begin building our own culture.
Personally, it wasn’t until almost a year in that I really started to feel comfortable. We hosted a launch party with about a hundred of our closest friends and colleagues where I was able to share our vision for the company. Up until that point, we had been quietly writing code, and many of my former coworkers would ask exactly what we were working on. Being able to stand up in front of that crowd and share our dreams and aspirations made it all feel real to me.
How many employees did the business grow to, or if you’re still running the business, how many employees does the business have now, and at what point(s) did you decide to grow this number?
We’re still quite lean, with only eight full time employees and a handful of contractors. After our launch party, we started bringing on clients, along with a great sense of responsibility to add value and impress. Creating success stories was our top priority, knowing how powerful word-of-mouth can be for early-stage companies.
We knew that we would need at least one person dedicated to what we saw as our highest priorities: product development, sales, marketing, and customer success. Since my dad and I would have our hands in each of those, it didn’t take long for us to realize that we would have to have a minimum of six team members.
Business Challenge and Success
Describe the biggest challenge you’ve had to overcome, how it impacted your business, and how it impacted you personally.
When we first launched Nth Round, the core feature of our offering was a liquidity platform. It’s a private, secondary trading environment for the owners, investors, employees and shareholders of the business to use as a means of realizing a return on their investment. Generally, only later-stage companies found it useful, since there had to be a known participant on the other end to buy the equity, and with smaller, earlier-stage companies, there’s often not enough people to create any real liquidity. Unlike a public company with thousands of shareholders, small businesses tend to have only a handful of participants to trade amongst.
The liquidity platform was what differentiated us most, since it was unheard of, at least in the low-cost way that we presented. However, our customers weren’t using it nearly as much as we had hoped. They had bought the trading platform because they wanted to delight their shareholders, but there still seemed to be a bit of a hurdle. For the largest private companies, liquidity is a real problem, but as a young startup it was nearly impossible to gain the kind of trust we would need to close orders of that magnitude.
It was a reality check for me and everyone else on our team. We would have to pivot, or at least change course, in order to start achieving real traction. Luckily for us, our customers were using another feature of ours–the investor portal. What was originally intended to be an entry point for the trading platform ended up being the most valuable feature. We quickly changed our priorities and continued to build out the investor portal, which is now the centerpiece of our platform.
Describe your biggest success and how it impacted you and your business.
For a long time, we’ve offered different tiers of service–Growth, Success, and Enterprise. Even for companies we knew should be in the Enterprise bucket, we would suggest a lower tier, preferring to underpromise and overdeliver. Traction and product engagement was much more important to us than revenue. We were okay with delivering more value than what our customers were paying for.
One day, one of our biggest customers was admiring all of the personalization we’d put into their portal, and asking for a new feature that we didn’t offer. We were thrilled that they wanted to expand on the value they were already seeing and we wanted to deliver. As we began to map out the project, the customer came to us, unprompted, and said, “we’re not paying you enough.” Just like that, we had our first enterprise client. That was an unbelievable recognition of the work we do and the value we provide.
Describe a period that really tested your ability as a leader and how you overcame that challenge.
It seems inevitable that, every once in a while, you bring on an employee that doesn’t end up working out. We had one instance of this early on, and it became clear that expectations weren’t being met. After many conversations, we decided the right thing to do was let the employee go. This was incredibly challenging, especially with such a small team.
Everyone’s confidence was shaken after the news broke. After the dust settled a bit, I brought the team together to explain exactly why the decision was made, and what our plan was to get back on track. Communicating the reasons, and outlining a plan to move forward was key.
I’m sure that as the company grows, turnover will be less of a shock. However, for it to happen with just a handful of employees within our first year made it especially difficult. Looking back, we can luckily all agree that it was the right decision.
Being an entrepreneur and building a business is hard, challenging, and sometimes stressful. As a fellow entrepreneur, it’s helpful to know that you’re not alone in the personal challenges.
How did you manage the work/life balance?
It’s been especially difficult to balance given the pandemic that we’re currently facing and the fact that everyone is spending more time indoors than usual. That being said, I’m incredibly fortunate to have a strong support system around me. My girlfriend is in law school, so she’s often working long hours as well. My parents and siblings all live within driving distance, so I’m able to go visit them on nights and weekends.
If there’s one thing about burnout, it’s that you quickly realize that working longer hours doesn’t always mean more output. Compartmentalizing comes in very handy. That way I can spend time with friends and family, or exercise, without bringing too much of the stress along with me.
How did you manage the work stress?
I’m fortunate enough to have an amazing support system in the form of friends and family. Having four siblings means that I can always call or visit one of them to blow off some steam. Talking things through has unfailingly been therapeutic for me, and I’m fortunate to have people around me that are always willing to listen. The person who has to deal with it most is my girlfriend, and she is unbelievably patient and supportive.
Do you have an exit strategy for your business? If so, what is it? Or if you’ve already exited, what did your exit strategy look like?
Being a venture-backed business means that we’re ultra-focused on becoming a big company. Full stop. If I step back and think about where we want to be as a company, we’re still in our infancy. People often ask about an exit strategy, but it’s just not something that I spend any time thinking about.
Our venture capitalist is very forward-thinking and has so far given us a lot of freedom. Of course, at some point, they’ll need to get a return for their investors, but I’m hopeful that we can achieve that without selling the business outright. I’ve always admired evergreen companies that have no plans to exit, and with our liquidity platform always available, individuals should be able to come and go without some kind of liquidity event.
Money can sometimes be a delicate topic, but many entrepreneurs get into business hoping to hit the financial jackpot. It’s helpful to understand how other successful entrepreneurs deal with money.
Describe your relationship with money. Are you a spender or a saver, and what are your retirement goals (if any)?
I’m a saver for sure. I grew up admiring the late, great Jack Bogle of Vanguard, both because of his proximity to Philadelphia and because we went to the same high school. Before starting Nth Round, I spent three years at a quantitative investment advisor that focused on index investing and minimizing management fees. Even though they were technically active managers, they promoted passive investing internally.
That risk-averse approach to investing is somewhat at odds with the high-risk, high-reward mindset of many entrepreneurs, but when it comes to retirement, you really don’t want to place any big bets.
All that being said, I do aspire towards financial independence, and getting there sooner rather than later is definitely preferable. Being part of a high-growth company seems to me like the best way to get there.