Starting a Financial Tools Company
Interview with Alpha Theory Founder Cameron Hight
Alpha Theory, LLC, created a web-based tool for hedge fund and mutual fund managers to maximize their portfolio returns. Meet Cameron Hight, the successful entrepreneur behind this cutting-edge financial tool.
Find out why Cameron Hight of Alpha Theory thinks this financial tool is just like a gym membership!
Where is your business located? We are headquartered in Charlotte, NC with employees around the country
Tell me about your current business. What are you doing exactly?
Alpha Theory is a Fundamental Portfolio Optimization tool designed specifically for hedge and mutual fund managers to help them maximize their portfolio returns. This web-based solution leverages a firm's research and instinct to build a repeatable system for optimally sizing positions based on the concept of expected return. One inefficiently sized position can cost a fund millions of dollars and multiple inefficiently sized positions can put a fund out of business.
When did you start the business?
The company was founded in 2005 and the software was ready for market in the summer of 2007.
What were you doing before this, and is this your first business?
Yes, this is my first business. Prior to starting Alpha Theory, I worked as an equity research analyst in New York for 10 years covering primarily technology companies for firms such as Credit Suisse First Boston and Lehman Brothers. In 2002 I joined a hedge fund in Charlotte, NC which led to the idea behind Alpha Theory.
Where did you get the startup money?
Family and friends as well as my own initial investment got us started. Later we took on outside investors through industry contacts.
Who are your main competitors? How do you compete against them?
Luckily there are no direct competitors to date.
How has your experience in running the business been different from what you expected?
We have a product that almost every potential client we meet with says they should be using but it doesn't mean they sign up. Just like people know they need to work out to be healthy, but it doesn't mean they are willing to put in the effort. Our product (like your gym membership) requires effort, but is critical to being a "healthy" money manager.
Is there anything you wish you had done differently?
I wish we had structured our sales team pay different, skewed towards performance from the beginning. As a start up, you have to find salespeople that are willing to take on the challenge of growing with your firm.
What have you done that has been very effective in helping to grow the business?
I hired people that I have worked with in the past and knew that I could trust. They have proven to be dependable workers and have been key to our success.
What advice would you give to somebody else who wanted to start a similar business?
Everything takes longer than you think it will. Whatever timeline you plan for should automatically be doubled (not to mention generally costs twice as much too). So be very conservative with cash and time.
That is great information, Cameron. Thank you for taking the time to share your story with Gaebler.com.
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