Ilya Tokhner

of Alpha Investing

Give us a brief recap of your entrepreneurial career since you graduated from Owen: 

While I was still at Owen, a fellow classmate, Mahni Ghorashi, convinced me that startup life was for me. He had a vast network in SF/Silicon Valley and plugged me into one of his mentor’s companies. I took the plunge and started as Head of Business Development, employee #1, at a biotech startup called Bina Technologies. I showed up day one of the office opening. I asked the CEO what she wanted me to do, and she replied, “You’re the Head of Business Development, go develop some business!” At that point, I knew I had found my calling. Thriving in very ambiguous situations, I quickly fell into my groove, and fell in love with the startup concept. Bina ended up having a very successful exit to Roche and it was the first time I saw equity turn into cash, and I’ll tell you, that’s addicting.

My second foray into tech/entrepreneurship was right after Owen. I joined a Y-Combinator company as the first employee and Head of Business Development. The company was called AnyPerk and we were in the HR tech space. I opened the SF office, as the founders were living in Tokyo at the time. We grew AnyPerk from a small seed fund in the bank account and a big idea, to over 50 employees, $13.5M raised in funding, and recurring revenue well into the seven figure mark (which was growing at a healthy rate month-over-month). We did all this in less than three years. It was a rocket ship ride, and I learned more during that period than I ever thought possible, not just about startups and the business, but also about myself.

How did you have the idea for Alpha Investing and what does the company do?

The idea came from our solving our own problem without realizing we solved it for others as well. While I was at AnyPerk, I started buying up single family properties in Northern California with my old college roommate, Ross Reagan (now one of my co-founders). We did quite well, but the deals started to dry up. We came to the conclusion that we needed to go upstream, so we did. However, we knew we didn’t have the experience to run multi-million dollar projects, so we went to our mentors that did have the experience, and started investing their projects. Friends and family saw the deals we were involved in, and asked if we could get them in – so we did. Once they started seeing their distribution checks, they came back and wanted to get into more projects. This time around, however, they brought their friends. After another go around, they all came back, and brought more friends. This happened several times over, organically, so we looked at each other and said “There’s clearly a business here, let’s start a company around this.” That’s essentially how Alpha Investing was born. (www.alphai.com)

Since you have been running Alpha Investing what were the challenges and what were the big wins?

I think the best question here is “What weren’t the challenges?” The biggest challenge, in any startup, in my opinion, is the emotional roller coaster. You have to be one stable individual to handle the lows, but also handle the highs. One minute you’re counting the millions, half an hour later, you’re looking for a rock to hide under or thinking about moving to a different country and starting a new life.

Some of the challenges we faced specific to our business were figuring out how the infrastructure/processes were going to work. The first time we ran through a process, it wasn’t a test, we had to do it for real, as there is no “test run” in our business. Well, the processes involved moving hundreds of thousands of dollars, so one major mistake could have ended our business. I don’t think we foresaw exactly how many complex moving pieces there are in our business. We had to make sure we thought everything through to the tee, and didn’t screw anything major up; lucky for us, we didn’t. The tension and stress around this was definitely felt team-wide.

The big wins for us were closing our seed round, and closing every single one of the projects we have to date. Every deal has it’s own trials and tribulations, and once it’s through and closed, you get an awesome feeling of shipping a project and moving on to the next one. As the tally marks of closed deals increase, it’s easier to see the bigger picture. While you’re in the middle of closing a deal, that’s all you see. Once you pick your head up and look around, it’s incredibly rewarding to see how far you can go in such a short period of time by keeping the hustle strong every step of the way.

Is there an example of something that you learned at Owen that you apply in your business?

The finance, management, strategy, accounting, econ, etc. courses definitely helped. However, what I think the best lesson was what we learned in Mod 1. Essentially, Mod 1 was “Here’s a fire hose going full blast, now drink from it!” Startup life is much like Mod 1 – not enough hours in the day, and way more work that is feasible to get through. So, you learn to prioritize and not worry about the work that doesn’t get done, work that isn’t on the top of the list. My to-do list, is always 500+ things long. I’m ok knowing that 450 of those items will likely never, ever, get done. That’s just how the world works. Make sure you know what is a must, do it, and move on to the next must. It’s ok if you don’t read every line in the assigned chapter of managerial accounting; sorry Professor Willis.

What are your goals for Alpha Investing in the future?

The honest answer is, all we care about is building long-term, sustainable value, and doing it as quickly and efficiently as possible. That’s it. Everything else will shape itself. It’s really easy to say that you had this grand master plan that you executed on flawlessly after the fact; maybe one day that will be our story. However, in reality, startup life is all about planned luck and calculated risk. Our goal is to do the right thing, take care of our investors, take care of our partners, take care of our clients and continue trying to be better than yesterday, while being smart about all the aforementioned. If you do those things and you stay true to that ideal, genuinely, the only other thing you have to do to be successful is work you butt off. Don’t quit just because it’s hard, but know when to quit if it’s not working, and position yourself to get lucky over and over again. Eventually, something hits. When it does, hammer down on it and replicate it. It’s really quite simple, even though it’s incredibly difficult.

How has the Owen community been helpful in the process?

The Owen community has been more helpful than I could have ever imagined.
Firstly, I met one of my co-founders, Fark Tari, at Owen. He was a double-Dore, and a MACC when I was getting my MBA. We met over beers, stayed friends for years, and now we get to work together. Our 4th co-founder also happens to be a Vanderbilt grad, Daniel Cocca. He graduated from VU Law, and we would have never met, had it not been for a fellow Owen classmate, Daniel Angius, making the introduction well after we all graduated.

Secondly, our first investors and backers were all Vanderbilt alums. In fact, over 50% of the 20+ people affiliated with Alpha Investing are Vanderbilt folks, primarily Owen. The amount of support, guidance, and financing we received from the Vanderbilt community is one of the sole reasons we are here today. Had it not been for Owen and Vanderbilt, and the support structures within, Alpha Investing wouldn’t exist. Thanks for all the free beer on Thursdays too. Now we can all hang with the best of them in any business dinner/function.

One thing I do have to note, is that I feel obligated to credit another academic institution for helping us get here, because they did a tremendous amount for us. The other 50% of our backers, financing and support has come from UCLA and the Anderson School of Management. Our co-founder, Fark, received his MBA from Anderson while we were just getting the company off the ground. (That said, he still has twice the number of degrees from Vandy than UCLA!). Anyway, UCLA and it’s network has been instrumental as well, so we often joke around internally that Vanderbilt and UCLA business schools had a baby, and that baby is Alpha Investing.

Knowing what you know now, what advice do you have for current Owen students that want to start a company?

Don’t… Kidding, of course. I like to equate startups to parenting. Until you’ve done it, you think you know how hard it is, but in reality, you have no idea. It’s really really hard to start a company. Understand that you don’t know and don’t understand, what you don’t know and don’t understand. And that’s ok. Startups are often romanticized, which is great, but I think it gives a false impression to some folks – it’s kind of like looking up at a low hanging cloud and thinking you can jump up and touch it. You can’t. You need to build a plane first. You have to make the company your whole life, every waking moment, especially in the early stages, otherwise, it’s unlikely to make it. The stats of startup failures are what they are for a reason – don’t discount that. If you’ve never been in a startup environment and want to start a company, if you’re not an industry expert in which you are starting your company, go join someone else’s startup and make your mistakes there. Startups move at a pace of 10X+ compared to big corporate, so you’ll learn more than you can possibly imagine, because you’ll have no choice. And if you don’t, you die (figuratively, not literally). After you’ve learned at someone else’s, you’ll have a much better chance of making it on your own. Plus, that gives you a chance to build your support network, which you’ll need to succeed; no one makes it on their own.

The biggest piece of advice I can give to anyone thinking to start their own company is – don’t do it for the money. Again, this will likely be the hardest thing you’ve ever done. If you do it for the money, when the going gets tough, you’ll likely quit. That’s just a result of human nature when it comes to false incentives. Start a company because you’re passionate about the problem you want to solve. Passion is what gets you through the long nights, early mornings, working weekends, not having a social life, eating top ramen, and convincing everyone around you that you’re not crazy. If you’re not truly passionate about what you are doing, you’re likely to fail, because you’re more likely to give up. We can only fool ourselves for so long. If you are passionate, however, that will pull you through the lows (and trust me, it gets really low and lonely in the startup game), and make the highs that much better. You’ll go to bed at night thinking how you can do what you’re doing better, and go to sleep thinking the same thing. That’s what it takes, and you can’t fake that. Build sustainable value that you’re passionate about. If you do that, the money will come. Of course, passion alone won’t do it, make sure the unit economics of your business add up – that’s pretty damn important.