Episode 18: $4.5B Boutique CEO, Steve Rogers of Shelton Capital Management on Why Business is Personal | The Future for Boutiques and the Role of M&A

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Crossing the billion-dollar mark in the entrepreneurial rollercoaster is no joke, but today, we've got Steve Rogers, CEO of Shelton Capital Management, who not only did it but skyrocketed to $4 billion. 

So, what's his secret sauce for boutique founders and CEOs eyeing the same success?

You’ll get Steve’s success playbook today on the pod. 

Plus, you’ll hear about: 

• His backstory – What it was like coming from a family of entrepreneurs

• His journey to hitting the billion-dollar mark 

• Positioning advice for startups 

• The nitty-gritty on compliance challenges for startups More About Steve Rogers: 

Steve Rogers is the Chief Executive Officer and Portfolio Manager at Shelton Capital Management. Steve has over 30 years of experience and joined Shelton Capital in 1993. He earned an MBA from the University of California, Berkeley and a B.A. from the University of Iowa.

Want More Help With Storytelling?

 +  Subscribe to my newsletter to get a weekly email that helps you use your words to power your growth: https://www.stacyhavener.com/subscribe

Resources mentioned in this episode:

Books: Vicksburg: Grant's Campaign That Broke the Confederacy, The Journals of Lewis and Clark, Traction: Get a Grip on Your Business

Song: Smashmouth - Allstar

TRANSCRIPT

Below is an AI-generated transcript and therefore it may contain errors.

Stacy Havener: [00:00:00] You've done it. You've crossed the billion dollar threshold. You're at four and a half billion. I know that the entrepreneurial journey is a rollercoaster. What advice would you have for the next generation of founders of boutiques or CEOs who are running a boutique right now? What could you tell them?

Steve Rogers: Gosh, look, I think anybody that does that is already going to be good at running money. So that's table stakes. It's the other things that you do around positioning your firm, making sure you've got the right target market for your products. We're not trying to sell to a advisor at J. P. Morgan because they can't buy our products.

Steve Rogers: You know, when you're starting up, you're talking to the wealth manager that might have 25 to 100 million under management, has a natural proclivity to talking to boutiques. They're naturally going to be hard workers because it's hard evaluating investment products and it's time consuming, you know, somebody that's just buying models from the home office, you know, [00:01:00] identify them and move on because they're just not your prospect until you're at 20 or 30 billion under management and you're getting your funds or products added into the model.

Stacy Havener: Hey, my name is Stacey Havener. I'm obsessed with startups, stories, and sales. Storytelling has fueled my success as a female founder in the toughest boys club, Wall Street. I've raised over 8 billion that has led to 30 billion in follow on assets for investment boutiques. You could say against the odds.

Stacy Havener: Yeah. Understatement. I share stories of the people behind the portfolios while teaching you how to use story to shape outcomes. It's real talk here. Money, authenticity, growth, setbacks, sales, and marketing are all topics we discuss. Think of this as the capital raising class you wish you had in college mixed with happy hour.

Stacy Havener: Pull up a seat, grab your notebook and get ready to be [00:02:00] inspired and challenged while you learn. This is the billion dollar

Steve Rogers: backstory podcast.

Stacy Havener: Xerox has a legendary sales training program. Who knew it could also create a successful asset management CEO? Today's guest is Steve Rogers, who joined his father in law's small muni bond shop for a brief sales stint. and never left. Eventually, Steve took the reins as CEO of Shelton Capital Management en route to building a four and a half billion dollar boutique investment platform.

Stacy Havener: This is the story of Steve's career journey, but also the evolution of Shelton. At first blush, Shelton might look like many asset management firms, but I assure you there's more to this team and this firm. then meets the eye. Steve and his team challenged the status quo in an authentic, committed, professional, and personal way.

Stacy Havener: Their [00:03:00] client experience is full of positive surprises that I've been lucky to see firsthand and that we'll share with you today. It's a reminder that growth is about what makes you special and that magic is often found. In the details, you know, I imagine it's pretty hard to differentiate in the copier biz.

Stacy Havener: And if I think about it, I see a lot of similarities to asset management. It's easy to prioritize features and benefits and price. My conversation today with Steve reminds us all. that people matter most. Without further ado, meet my friend, Steve Rogers. Steve, thank you so much for being here today. I had the pleasure of having a lovely lunch with you last year, and I'm excited to invite people into that conversation because I'm going to make you retell some of those stories today, if that's okay with you.

Stacy Havener: They [00:04:00] were just too good. So thank you for being here. Oh, Stacy,

Steve Rogers: thank you for having me. It's an honor to be here on your podcast. I really

Stacy Havener: appreciate it. Awesome. Okay. So we're going to start with, of course, my favorite question. It was probably the first question I asked you when we sat down to have lunch together.

Stacy Havener: What's your story? How did you get here? Here you, here you sit as the CEO of a four and a half billion dollar boutique asset manager. I mean, did you know from the get when you were a kid, like this is what you wanted to do? Absolutely

Steve Rogers: not. You know, I tell people I got dragged into this kicking and screaming.

Steve Rogers: What your listeners should know is this is a family business. I went to work for my father in law, a guy by the name of Richard Shelton. And on a six month, I'll work for you for six months. I'll spend a little time. I'll do what I can. And then had. Prearranged my last day. Uh, and that was the extent that I'd planned to spend in the financial services industry.

Steve Rogers: So what were you doing before that? I was in sales. [00:05:00] I got out of undergrad and I spent time at 3m and then I spent time in a manufacturer's rep business. And then at that time, when I took this job, I was at Xerox and I was essentially between territories. I was getting promoted from a position in century city up to one and to cover federal team in Northern California.

Steve Rogers: That's amazing. Yeah, there's about a seven month gap between the end of the year where your territory rep budget ends effectively your Uh, and then when somebody was retiring that had been in the federal territory for, you know, something like 20 years. So that was the gap that I went to work for Dick.

Stacy Havener: And so you thought, I'm just going to come here and just like, kind of do this little stint. And so what

Steve Rogers: happened? So I didn't know the forces I was up against. We were newly married, Dick Shelton. He just wanted his daughter in San Francisco. We were living in Manhattan beach at the time down in the LA area.

Steve Rogers: So he just said, yep, come up, get an apartment, work for me for six months. It'll be great. Over the course of that period of time, I really hit it [00:06:00] off with my father in law. And, you know, over the course of a number of years, he became one of my best friends. So when the six months came up, I really enjoyed what I was doing.

Steve Rogers: Yeah. We're raising a lot of money, you know, it was back in the days where you're dialing phone numbers, looking for individual investors, it was all checking out business, loved it. And, um, so I didn't take the job, the promotion at Xerox and just stayed on board. So that was the transition happened very fast.

Steve Rogers: Were you

Stacy Havener: actually just like dialing for dollars?

Steve Rogers: Yeah, so we were running advertisements on the radio. Oh my gosh. Yeah. Way back in the day, Bob Brinker had a show and there was a Northern California radio personality guy by the name of Jim Jorgensen and we were advertising our municipal bond fund, which was our lead product at that point.

Steve Rogers: And municipal yields were up around nine, 10 percent double tax free in the state of California. So we'd collect ads on Sundays and then we'd, you know, do all the return callbacks Monday, Tuesday, Wednesday, you know, pick up the initial [00:07:00] calls the following Monday and then do all the callbacks for the week before.

Steve Rogers: And, you know, we're collecting money. We had great performance. We had a great product, still have a great product. It was dialing for dollars, old

Stacy Havener: school. That is crazy. A lot of people, I'm sure, that are listening are nodding their head because that's how it was, right? I mean, that's how it was then. So, what was it like, because one of the things that, again, I sort of have, I have insights here, but what was it like being part of a family business?

Stacy Havener: I, myself, am part of a family business. My entire family is a family of entrepreneurs. What was that

Steve Rogers: like? It's a lot of pressure because You know, it's not just a job if you don't come into work every day and then go home and set it aside, you know, and this gets back to some of our approach to investing.

Steve Rogers: It becomes very personal. That's a big challenge because, you know, from a career standpoint, you really have to be all in and they're, you know, family dynamics are always complicated. Some are easy. Some are difficult. Being involved in the business is the only family [00:08:00] member in that role. And a lot of extended family, that's, there are just lots of challenges in that life experience.

Steve Rogers: So in any event, I think it was very easy while Dick was around and he got sick, was diagnosed and passed away in under 30 days. So, you know, that was a big transition. After that, you know, we got through it. It was really hard, but I guess the biggest piece of it is there's a difference between having a career where you're not connected to a family.

Steve Rogers: And being embedded in that where you're at least for me personally, I felt like I was carrying a pretty substantial load for a lot of years.

Stacy Havener: We'll be back in a moment after a word from our premier brand partner, Ultimis Fund Solutions.

Steve Rogers: Since our founding in 1989, we believe that alternative investments are integral part of client portfolios. Unfortunately, delivering high quality hedge funds and private market exposures has always been a challenge for the wealth [00:09:00] management industry. These type of alternative investments introduce unique challenges related to taxes, qualifications, paperwork, and reporting.

Steve Rogers: As a result, high net worth investors tend to be significantly under allocated to both hedge funds and private markets relative to institutional investors.

Stacy Havener: That's Stephanie Lang, Chief Investment Officer from Homeric Berg, an 11 2,

Stacy Havener: 700 clients in 46 states. You can tell they believe in helping high net worth clients access hedge funds and other alternative investments. They are equally as passionate about broadening that access. For all their clients, not just qualified purchasers or a select group of accredited investors. Meet Nick Darsh from Ultimis with some backstory.

Stacy Havener: Paul

Steve Rogers: McBurgh created a 3C1 fund in January, 1999 to [00:10:00] provide their high net worth. And institutional investors with ready access to a diversified portfolio of hedge funds. As interest in the fund grew and the constraint of the a hundred investor rule loomed, HB began exploring ways to continue expanding the investor pool without negatively affecting existing shareholders.

Stacy Havener: We'll hear more about the creative fund conversion work that made it possible later in the show. Now, back to the program.

Stacy Havener: I want to talk about this later, but you said something, it's my favorite line on your website. Your website's really great, but there's this one line there where you say, and I have to read it because it's just so good. Well, maybe we'll have to talk about it now because I'm reading it. You say, to us, our job is personal and important.

Stacy Havener: And I get that. Like, you know, to me, It is personal. Business is personal, and I think you have so many people that [00:11:00] would say don't do business with family. Business isn't personal, and I just wonder how you respond to that, because that does not seem to be your vibe at all as a person, but also as a firm.

Stacy Havener: I

Steve Rogers: think we try to embed a family like perspective into our culture, and we're very specific about how we identify our culture and communicate that through the organization. So, look, I think it plays out being personally invested in our employees success, ties back to our core value of commitment. Being very personally invested in how we perform as a manager, there are people that work for big shops that can leave on at least on the West Coast at 115 and go out and play 18 holes and be home and back to work the next day.

Steve Rogers: The hours are tough, but a quarter till six in the morning is usually when you get going and it's very much a job for us for the many years that I worked in San Francisco, I walked through a lot of dark streets in downtown San Francisco in very early, ran the portfolios until the one o'clock close [00:12:00] and then tried to run the business from one o'clock until, you know, whatever time.

Steve Rogers: So, you know, that's personal. And then the last element of that that I want to speak to is that. Whether it's somebody that finds us online and buys a fund directly for their IRA or for the regular account or through an advisor, that's their business and it's very personal to them. So we don't want to lose track of what we do and how important it is to the underlying investors in our funds and separate accounts.

Stacy Havener: Yeah, and I think that's actually a good dovetail kind of back to how you built the business. If we can go to that story for a few minutes, because you mentioned that, you know, in the early days when you first joined Shelton, it was radio shows and individual investors and a muni bond flagship. Now, obviously you've expanded.

Stacy Havener: You're an institutional asset manager. You have more than muni bonds. Like what was that evolution? Like, I mean, can you get back to those early days? This is billion dollar backstory. So do you remember what it was like building [00:13:00] towards that first

Steve Rogers: billion? Well, it was slow.

Stacy Havener: Best advice ever right there, Steve.

Steve Rogers: It takes so much more time than you think to get to the billion. Yeah. So if you think about the way that I described the business, initially the firm was founded as almost a direct retail family office type of firm. So our original partners were high net worth individuals around the San Francisco Bay area, friends and family that helped fund the initial seed capital for the initial mutual funds.

Steve Rogers: And when, when I took over the business, when Dick passed away, We had a lot of accounts that were between 10 and 30 million, but they're just, you know, huge investors in what we did. And then in addition to that, we had a lot of, you know, 25, 50, 200, 000 accounts as well, which, you know, obviously. A function of the check and app business.

Steve Rogers: So we provided what feels like a private client office where when people call Shelton Capital [00:14:00] Management, a live person answers the phone. They're talking to somebody today here in Colorado, back in the nineties, it was somebody in San Francisco who can, you know, provide a very high level of customer service to an individual that you really can't get anywhere else in the industry.

Steve Rogers: Back to the, you know, but the transition of the business was The families were very supportive through this, you know, what I'll call tragedy when Dick passed away. So they stuck with us, but the redemptions that came, somebody would be sick. I'd get a call and say, Hey, I got some bad news. I'm dying. I got to pull my 25 million out and we're going to consolidate it for the estate attorneys.

Steve Rogers: You know, we lost a lot of capital over the course of, you know, eight or nine years. In very large chunks, all the while we're trying to open 25 and 50, 000 accounts and direct app. So the big transition in the business happened actually through, you know, an effort around an acquisition. It was much more focused on the advisor channel than the traditional channel.

Steve Rogers: So in the sit down strategy discussions. [00:15:00] It was clear we needed to expand our product line. We needed to pivot away from the direct retail end of the advisor channels and really invest our outreach into those categories. And we've continued to service all the shareholders and a lot, you know, even today, I think we have 22, 000 direct shareholder accounts.

Steve Rogers: But our focus really is on the advisor channel. If you think about the very high net worth people, you know, in those accounts evolving and leaving ultimately, because mostly state issues and duck kicking underwater, trying to open up enough accounts to keep up with it. Eight or nine years later, we're essentially in the same place.

Steve Rogers: Wow. So this is 2009. We're about 430 million in total AUM. With some fairly low margin products and just starting to expand that reach. So friend of mine and a mentor, Julie Lacta from Paul Hastings put me together with Dennis Clark, who ran what became Schwab Institutional's amazing human being. [00:16:00] He came in with a world of connections and, you know, just.

Steve Rogers: Took off and ran with it and has built an incredible sales distribution force and has been a wonderful partner all the way along. So when we navigated that direction, we never left the shareholder servicing. You can still call our 800 number, at least during business hours and get a live person, you know, to help you out.

Steve Rogers: Now we take those calls from advisors as well, and then we build a sales and marketing organization underneath that advisor channel. So, you know, that transition with the products and the people really kind of sprung Shelton Capital Management forward. I love that. And

Stacy Havener: Dennis is such a great human.

Stacy Havener: That's a perfect description of him. Just forget all the business high fives you could give him. He's just a great guy. And you do have a really special partnership, so I want to go back to something you said, just for people who are thinking about that slow build and how difficult it is. Well, 1st question I have is, was, [00:17:00] was acquisition a strategy that you you've employed throughout?

Stacy Havener: Shelton's growth, were you always kind of acquisitive and grabbing and bringing firms in that had a good cultural fit, but also a good product fit? I think that's my question. Like, how important was that? How big were you when you did that first acquisition?

Steve Rogers: It was 2009. So the first acquisition we did.

Stacy Havener: Okay. So it was there around

Steve Rogers: 400 million. Yeah. And we acquired five mutual funds from a firm called Securities Management Research. Which was a broker dealer owned by an insurance company. And the person that ran their mutual fund group wanted to retire. And his last to do was to sell off these products.

Steve Rogers: So, you know, at that point in time, I was a lead portfolio manager on the Shelton core value fund, the equity income fund. And, you know, it was about 35 million, five stars. We had really good performance, worked very hard on that, but just couldn't get a lot of traction because of the size of the fund. So we [00:18:00] consolidated three equity funds into that portfolio and that got us up over a hundred million.

Steve Rogers: And again, all their shareholders were very happy with the portfolio management and the strategy of the fund. It's back in the day where you could go out and sell a value portfolio as a standalone product. That was the very first one was that SM& R. And we've done a handful of those since. But Stacy, you know, we, we, we look at our organic distribution, which is sales and marketing and our inorganic, which is acquisition.

Steve Rogers: So, and then I've always managed the inorganic portion. And some of that's culture fit. A lot of it is, you know, people that are stepping out of the industry, they're retiring, they've been around forever. They're looking for somebody to take over the business. So usually the conversations I'm having are whether or not Shelton and the platform is a good fit for the last, you know, 24, 36 or 48 months, somebody spends doing what they're doing.

Steve Rogers: So we're very focused. We have to [00:19:00] be focused on both. Yeah,

Stacy Havener: and I think, you know, it's super interesting because when you think about boutiques, and I want to talk about the future of boutiques with you, but when you think about boutiques, Wow, the future is a little bit hazy, and I'm probably being Pollyannic when I say hazy.

Stacy Havener: I mean, some people might say it's bleak because here you are, like you described, if you're the founder, you're a specialist in something, and you've built a really great business. If you don't have a clear succession plan, what are you going to do? And it reminds me a lot of what advisors and, and, you know, have to go through as well because they're building a great business and then what?

Stacy Havener: And so I love to see firms like Shelton stepping in and saying, Hey, we can have a home for you here. We are a platform for boutiques. And I think that's really empowering for me [00:20:00] as somebody who believes in boutiques. You have another option besides just selling to a big, huge behemoth.

Steve Rogers: Yeah, look, you know, I'm talking my own game, but I absolutely think boutiques are the right space.

Steve Rogers: The future is hazy. You know, there are lots of challenges in the industry. Even at four and a half billion, it's very hard for us to get attention from the major platforms. If you look at the large wires, we're just barely touching on access to those for, you know, one or two of our products. And so, you know, we're focused on.

Steve Rogers: Kind of this middle market platforms. They're great partners are amazing partners, but for any boutique, one of the biggest challenges is distribution and shelf space. And it continues to get tougher. I think

Stacy Havener: that's really well said, you know, there was this article that came out. Not too long ago, and I printed it, but I don't know what I did with it.

Stacy Havener: I probably threw it away because it was basically like, it was like you either have to adopt AI or some, all this, like, [00:21:00] really, I'm using quotes again, innovation kind of like high tech. And of course, I don't agree that that's the only path. I still think that people do business with people and there is a growth trajectory that.

Stacy Havener: Supports that idea. You don't have to just go do crypto and Bitcoin and do a I and do all this crazy tech stuff to grow. And I love to hear you say that you're a home for people who share that that belief as well.

Steve Rogers: Well, look, there are lots of successful strategies in portfolio management, and really, I believe it comes down to the quality of the manager and just how invested they are in their portfolios and their holdings.

Steve Rogers: So if you're a successful portfolio manager at Shelton Capital, um, and I've had these conversations, um, you know, you, you never really go on vacation if you're in Hawaii, you're up at three 30 in the morning for market open and you're living and breathing news feeds, you know, 24 seven. So that, you know, those are, [00:22:00] those are table stakes.

Steve Rogers: AI is revolutionary. Um, you know, we've been. Dabbling in elements of AI and what does this mean for our industry and how can we use it? I went into my chat GPT and had three, I think it was two page articles written on why you should use one of our funds and chat GPT did an amazing job. I sent it off to Dennis and are the, you know, the head of our marketing.

Steve Rogers: And I just said, Hey, this looks pretty good. You know, this is, you know, it saved me two hours. So this is amazing. There's a lot of interesting, amazing applications. Frankly, I'm, I'm afraid of it because of its ability to mimic people and the traditional tools that you use to ensure that you're talking to the right person with their assets.

Steve Rogers: So, you know, like at LexisNexis test, if you try to pretend you are me, you're not going to remember that you grew up on 207 Thomas drive. But chat GPT might figure [00:23:00] that out and be able to respond accurately to that question. So they can trick most of the scenarios where two strangers communicating, trying to develop a bond of trust to wire out 50, 000, you know, that's going to get progressively more complicated.

Stacy Havener: That's a rabbit hole. We could go down pretty deep, but I have to laugh. I have to laugh. I hope you're okay with me doing this. Absolutely. Because you just did exactly what every portfolio manager who's listening to this is now like, Oh my gosh, this is brilliant. I'm going to ask chat GPT if they haven't already done this, by the way, I'm going to ask chat GPT to write this and send it to my head of marketing.

Stacy Havener: And. Every marketing person listening to this is now banging their head on the table saying, please do not empower the portfolio managers to write these emails. That is so great.

Steve Rogers: So by the way, those three letters, they never got sent back revised. They just, they properly went into the right file. [00:24:00] I was amazed at the technology.

Steve Rogers: And of course, you know, we're, you know, in terms of pattern recognition, speech recognition and earnings reports, you know, there's a lot of interesting research around that. And then if you think about chat GPT, that's a very public domain, right? So whatever work you do in a public domain, somebody else owns that, you know, I think most of the expense in this is developing your own technology, kind of within your own walls with your own data.

Steve Rogers: To try and develop competitive edge around that, but, you know, I think back when I see these articles, we were told that if we didn't learn how to program in high school, we're going to get left out of the economy. Nobody anticipated Microsoft word at that point. I mean, it was crazy. Excel invented after learned how to program and basic and whatever 9th grade or whatever.

Steve Rogers: I mean, not to date myself, but the first programs I wrote were on cassette tapes, you know, and they, they said, if you don't figure this out, you're done. And so, look, I think these are going to be new tools. They're, you know, in time, [00:25:00] you know, it'll be a brief trading opportunity probably, and then, you know, people will take for granted that we all have our own knowledge processors, if you will.

Steve Rogers: You

Stacy Havener: AI because I want to go back to the personal element, the authenticity that you talked about. That's. That's, you know, one of your core values at Shelton. So here's what ChatGPT can't do. When I came out to work with your team last year, before I arrived, you sent me a package. I actually did an unboxing.

Stacy Havener: of this package that I received in the mail from Shelton.

Steve Rogers: I love that video. Thank

Stacy Havener: you. Yes, I'll have to put the link of it in the show notes. And here's the thing, I had never done an unboxing video before. I also had no idea what was going to be in this package when I opened it. And It was the most thoughtful.

Stacy Havener: I don't even want to use the word swag because it was [00:26:00] branded Shelton, but the whole experience of what you sent was different than anything that I've seen in asset management. I mean, to give you listeners a teaser, one of the things, you know, I love storytelling. There was a Moleskine book in there that had this great storytelling quote.

Stacy Havener: There were bookmarks with my picture on them. I mean, which was kind of, like, shocking for me to see, but with QR codes to some of the blogs that everyone at Shelton really liked. I mean, it was so special. And ChatGPT and AI cannot do that. It's different. It's personal. It's people. Do you do that? Like, talk to me about that whole thing.

Stacy Havener: Well, full

Steve Rogers: disclosure, not only can chat GPT not do that, but I can't really do that. It was, you know, that was the brilliance of the team here at Shelton. But, um, look, you know, it's like everybody's got a sleeve of golf balls. Everybody's got a moles, you know, whatever it is. We spent a lot of time talking about packaging and look and feel.

Steve Rogers: And what is the experience [00:27:00] of receiving a gift? And among other things, I happen to. I was forced to buy a new kind of cell phone by my family because the family text chat. I was like the dark sheep of the family. So I had to switch technologies, but the box that this phone came in was epic. And I brought it in and I said.

Steve Rogers: What if we thought about delivering swag in a packaging experience like this tech company does with a cell phone? And they took that and they converted it into what I thought was an amazing package. Amazing. Your video was shared by everybody at Shelton. We loved it. It was so sweet of you to do. We got.

Steve Rogers: A ridiculous number of responses from that and, you know, including where's where's my box. Where's mine?

Stacy Havener: Right? Well, everyone's going to want one, but here's the thing. I mean, first of all, as somebody who works in the sales and marketing side of asset management to have your CEO say, Hey. Like here's [00:28:00] this amazing packaging.

Stacy Havener: I want to do something like this. Like that's a dream. I mean, your marketing team probably ran before you could change your mind because asset management is not known for that. This is not an industry known for that, you know, consumer products. Sure. Fashion. Yeah. Or like all, you know, but not finance finance.

Stacy Havener: So to me, what you said a second ago where you said, what if that is such an amazing question as an entrepreneur to ask yourself, what if, why not? Don't you think? Because look at what happened from

Steve Rogers: that team did an amazing job. If you ask the right questions to the CEO and you have the right team, yeah, You're going to be way more successful than Shelton Capital Management.

Steve Rogers: I mean, we get lucky every once in a while. It really is about empowering people, bringing in very talented people. You saw their work [00:29:00] and it's, they've done an amazing job on several different, uh, several different levels.

Stacy Havener: And not being afraid to do something that hasn't been done, not being afraid to borrow something from another industry.

Stacy Havener: Right, because you could have said, well, I mean, that's really cool, but like, we don't do that in asset management, but you didn't, you challenged the status quo.

Steve Rogers: Yeah. And we didn't ask how much the box costs, you know, which is what a finance person always asks. Let's just make this great. And by the way, personal, you know, it's a way to communicate what we're doing and why it's important to us and, you know, as an organization.

Stacy Havener: We'll be back in a moment after a word from our premier brand partner, Ultimis Fund Solutions.

Steve Rogers: When we first launched our internal fund to funds as a limited partnership, it was a great option for us to be able to provide a hundred of our accredited and qualified purchaser clients with access to a diversified portfolio of hedge fund strategies. However, fast forward to [00:30:00] 2016, our firm had grown to manage over 4 billion and serve over a thousand clients of various sizes, accreditations, and tax situations.

Steve Rogers: We still firmly believe that high quality hedge fund exposure is important to client portfolios. It provides stability. To client portfolios and generates a return stream that was not available in public and equity and fixed income markets. Unfortunately, the 3C1 structure with its slot limitations, high minimums, and K1 reporting was no longer ideal solution for our growing and complex client base.

Steve Rogers: We looked at various alternative options with third party hedge fund managers, liquid hedge mutual funds, but also discovered that we had an opportunity to register our fund with the SEC, preserve its extensive track record, and solve all of the issues that the 3C1 structure was creating for our business and clients.

Steve Rogers: That's when we teamed up with Ultimis to begin the process of registering [00:31:00] our legacy fund with the SEC and converting it to a tender offer fund.

Stacy Havener: We'll hear more later in the show. Now, back to the program.

Stacy Havener: And I'm curious. Because you said you could still call Shelton and a real person answers the phone, which, again, also ties into this whole idea of business is people doing business with people. How else does that play out for you? I mean, there's a lot of people that would say right now, Oh, like, you don't have to go and meet face to face with your clients anymore.

Stacy Havener: Like, I have a feeling I know where this is going to go. But how has that permeated the culture in other ways, too? From a

Steve Rogers: culture standpoint, we have four core values that we try and manage around that we try and demonstrate every day that we ask people to bring to work with them every day. But it's, we've talked about this a little bit growth.

Steve Rogers: Our scoreboard is growth of AUM and growth of revenue. And it's, you know, it really is our [00:32:00] scoreboard. So we, you know, everybody works hard. Are we doing the right things to accomplish the goals, commitments, We want everybody to be a hundred percent committed to the goals and objectives of the company. If we decide we're going to do something like that package and everybody, you know, rolls up their sleeves and they try and make it perfect, which is a big ask.

Steve Rogers: And that's not a common element of working in corporate America. I found, you know, it requires a quid pro quo from the management team. And we're a hundred percent committed to the goals and objectives of our employees. So somebody works at Shelton because A career and a family combination intersected with a needed Shelton Capital and they landed here for, you know, we hope 30 years, but it might be a couple of years.

Steve Rogers: It might be five years. We don't know if there's ever a time where that family and career goal doesn't match Shelton any longer. That's not a misdemeanor or a felony or a crime against humanity. We say, Hey, hold up your hand and say, I can't be committed. Jump into our LinkedIn. Oh, you're looking for a marketing job and you want [00:33:00] to talk to Stacey.

Steve Rogers: We'll make an introduction. We don't take it personally. We're trying to help people overall with their, with their growth. That's nice of you. You know, anyway, that's the two parts of commitment and people have done an amazing job here under that umbrella. Authentic client service. We're honest about who we are, what we are.

Steve Rogers: What we can do, what we're good at, what we're not good at. We try and refer people in different directions. You know, every once in a while you get stuck in this conversation, like, Hey, maybe we could do this. Nope. That's not what we do, but Stacy's really good at that. Or, you know, pick anybody you should talk to that person.

Steve Rogers: So, and then. You know, authenticity also, you know, people at Shelton genuinely like helping other people. That's one of the things we look for in resumes. You know, there's something about the resume that says I was involved in my community, whatever that community is. We don't care if it's a school or a church.

Steve Rogers: Or a nonprofit or whatever it is, but something that shows that they care enough about the uh, world around them that they've reached out of their inner [00:34:00] circle to help. And again, that and commitment combined, if you've got everybody firing on the same rhythm and same, you know, all the cylinders going, it creates for much better workspace.

Steve Rogers: I think professionalism and compliance is the last one. And that sounds like two different things, but in our industry, you really can never be considered a professional unless you're fully bought into the kind of the world of compliance, but the spirit of the rule and the rules themselves. So we don't, we just don't operate outside of the middle.

Steve Rogers: And those are the four things, commitment, authentic client service, growth, professionalism, compliance. And when I take new employees out to lunch, which I try and take every new employee out to lunch on their first or second day, I say, Hey, your job is to decide what kind of work environment you want to be in.

Steve Rogers: And walk through the door without every morning and we'll have good days and bad days, but you're the person that gets to make this place what you want it to be. And if it doesn't become that it's your responsibility to ask why. So anyway, those are our four core values. I

Stacy Havener: love them, [00:35:00] of course, and I think sometimes, too, you hit on something really interesting, which is each of those core values is powerful on its own, but there's also a certain level of magic when you sort of cross them with each other, right?

Stacy Havener: Because you said something that comes up a lot. in our industry, which is authenticity and compliance. And if you say authenticity, cross it with compliance, people are like, doesn't work. They cancel each other. Can't compute for like bad gateway or whatever those error messages are. But can you talk about that?

Stacy Havener: Because here's the thing, like, I disagree. I disagree that. The culture of compliance that you spoke to or that our industry upholds as a profession, I disagree that that means you can't be a real person and you can't be authentic. And I wonder how you would respond to that.

Steve Rogers: Look, I think you have to be authentic compliance as it gets filtered through marketing messages complicated [00:36:00] because.

Steve Rogers: You know, everybody that works for regulators trying to fit whatever you're doing inside of a box, and it's either okay and inside of the box or not. Okay. And outside of the box. So I think as long as if you're authentic in what you're bringing to the market, you don't need to stretch any compliance rules.

Steve Rogers: I don't see any conflict. I think you absolutely should do what you do and then remember that a lot of compliance processes are rules that are intended to do something and nobody really ever thinks about the externality. So you've got to find ways to skate around those. So as a startup, as a boutique, you know, the compliance world is the other, you know, the other piece that's really hard to manage.

Steve Rogers: And frankly, they're generally designed to help organizations and multiple layers of people exist. You know, human frailties, people make mistakes. And when the, when you've got a big firm that, you know, might be 10 layers deep, the mistake in the middle can really be dramatic. And compliance rules are set up to manage that [00:37:00] disconnection, whereas in a handful of people sitting around a table doing the best they can.

Steve Rogers: You know, wrestling with something that was really designed to deal with an organization like J. P. Morgan or Bank of America or, you know, any other mega financial. So it's just part of the ecosystem that the current and the river we have to swim against, but like it comes naturally. If you're an honest, good person, you're committed to your community, you're authentic and you care about growth.

Steve Rogers: It really is a natural fit. Overall, we don't have compliance challenges.

Stacy Havener: No, and the other piece of it, too, that I would add to what you said, I'm a yes and on this, which is you can share parts of your culture, your philosophy, all the things we're talking about here, that's not really, like, compliance land, right?

Stacy Havener: That's just entrepreneur land. That's philosophy. That's values. That's team dynamics. That's what you stand for, what you believe, what [00:38:00] you believe that's different than what someone else believes, who you are as a human being. All of those things make compliance a lot. Easier where it gets dicey and where you have to be more careful, in my opinion, is when you start getting into the markets and the portfolios and certainly around performance.

Stacy Havener: But that's not the only thing that we should be talking about as professionals. So I'm going to totally blow up your spot. When we were in the green room, you shared with me that you've taken up climbing. Uh, yes, right. So, and I said, me too, with my six year old, you can imagine the level of expertise required for that.

Stacy Havener: But needless to say, like, if you wanted to share how climbing, you know, inspires you or how it's similar to your journey as an entrepreneur, all of that is authentic. It also probably speaks to people who maybe have also taken up climbing or love climbing themselves. I guess what I'm saying is, like, [00:39:00] there's a whole area of content and conversation that you can have that is safe from the compliance kind of, you know, minefields that we all worry about.

Steve Rogers: Yeah, I mean, when you start talking about the performance, kind of the speeds and feeds of what you're doing, anything promissory into the future, what you believe might happen next, anything that seems to Lead to what a performance outcome might be. That's obviously you can't, you just can't do that, but you can really talk about who you are and what you're trying to accomplish and what kind of community you're trying to build inside of your firm and why that's personal or important.

Steve Rogers: To the person you're talking to in helping them do the same for, for their clients. So it's a free pass. It absolutely is an area which there's no box that somebody is trying to fit you inside of that floor.

Stacy Havener: No, it's a great open lane. And I loved what you said as well, which about being brave enough to [00:40:00] say what you don't do and who you're not for and being brave enough to say, we don't do that.

Stacy Havener: But so and so over here does. And they're a great firm and you should give them a call. And in fact, let me make an introduction. All of these things that we're talking about today again to me, and you're going to laugh, feel very rebel. Oh, In an industry that doesn't do this stuff. Right. And I love that. I just love the way you lean into some of those parts of just being a real, you know, a group of real people showing up for real clients.

Stacy Havener: So thank you for sharing all of that. I have 1 question that I want to end with before we do like a little speed round here. But the question I have. I mean, it's not groundbreaking or anything. It's a common question on a podcast, but I think it's super important for other boutiques. You've done it.

Stacy Havener: You've crossed the billion dollar threshold. You're at four and a half billion. I know that the entrepreneurial journey is a roller coaster. What [00:41:00] advice would you have for the next generation of founders of boutiques or CEOs who are running a boutique right now? What could you tell

Steve Rogers: them? Gosh, look, I think anybody that does that is already going to be good at running money.

Steve Rogers: So that's table stakes. It's the other things that you do around positioning your firm, making sure you've got the right target market for your products. We're not trying to sell to a advisor, JP Morgan. Because they can't buy our products, you know, when you're starting up, you're talking to the wealth manager that might have 25 to 100 million under management has a natural proclivity to talking to boutiques.

Steve Rogers: They're naturally going to be hard workers because it's hard evaluating investment products and it's time consuming. You know, somebody that's just buying models from the home office, you know, identify them and move on because They're just not your prospect until you're at 20 or 30 billion under management, and you're getting your funds or products added into the model.

Steve Rogers: So [00:42:00] that would be, you know, part of it. And I guess the other thing, and really any success I've had is all been driven by the decisions about the people that I've brought around me. Those are the decisions that matter. And taking advantage of the brilliance of the people that you find along the way, you know, is a difference maker.

Steve Rogers: It's a hard voice to hear. You gotta listen.

Stacy Havener: This is me. Or I'm gonna throw my mic down. Sometimes, like, my guests say something so amazing, I drop my own mic just in solidarity of how awesome it was. And what I love about that, you know, we talk all the time about finding your true fans. And so, again, it takes it right back to the people.

Stacy Havener: Which we've started this podcast with, and now we're ending with it. I love that. And it also reminds us that our true fans, yes, they are our clients. And you talked about that, right? Focusing on the right target market of clients for you, where you are in your evolution. But your true fans, in fact, your Biggest, most valuable true [00:43:00] fans are your team.

Stacy Havener: They're the people who show up every day and they give you not their assets to manage, but their time and their attention and their commitment, all of that like I love that Steve. That was a great place to end

Steve Rogers: their best ideas.

Stacy Havener: Absolutely. Yeah. Okay. So now we're going to do something fun. Not that the whole podcast hasn't been fun, but this is a little, a little something different here.

Stacy Havener: So this is my version of Proust's questionnaire inspired by James Lipton on Inside the Actors Studio. I always wanted to have that show for fund managers. And so they're not rapid fire, but you know, it's just kind of a quick run through of some questions here designed to help us get to know you a little better.

Stacy Havener: Okay, start with a little bit of a an easy one. What book inspires you? That's the easy one. Yeah, I was hopeful it was gonna be easy

Steve Rogers: Okay. Well when I read for pleasure mostly history, so I would say [00:44:00] Vicksburg comes to mind which is the story of grants siege on Vicksburg, which was a Town on the Mississippi River that would was fortified by slave labor and considered impenetrable and the bravery of the men that, you know, kind of broke the spine of the South in terms of their logistics effort is almost impossible to describe, you know, so that's crazy.

Steve Rogers: The anecdotes and stories inside of that book make you wonder. How people lived in the 19th century and just how strongly they felt for the cause they were fighting and undaunted courage, which is Meriwether Lewis's Thomas Jefferson, the Lewis and Clark adventure. Those guys paddled up the Missouri, you know, in the hopes of, you know, because nobody knew what was up there and that we're negotiating with Canada over what was going to be the United States and what was going to be Canada.

Steve Rogers: And all the crazy things those people did, they carried boats over the Rocky Mountains, [00:45:00] unbelievable fortitude. So inside of history, I think that that, um, those are the two books that come to mind right away. And then from a business standpoint, this is really boring, but just Traction by Gina Wickman. Oh,

Stacy Havener: you mean this?

Steve Rogers: Yeah, it's a cute visual. She reached to her bookcase behind her and grabbed the Traction book. A

Stacy Havener: fabulous framework, isn't it?

Steve Rogers: Yeah, so like there are probably a lot of business books out there that do something similar, but this has helped organize a lot of time consuming activities that suck up the energy in the room.

Steve Rogers: You know, everybody's got a different idea on how to do a performance view. We're going to go to this page and we're going to do this performance review. And by the way, it's very effective. And then we're going to move on. So it's just a how to for somebody to run a business. Not perfectly applicable for our industry because the structure that they talk about kind of assumes operations, manufacturing, finance, and sales, where we don't really, you know, manufacture widgets, [00:46:00] but we use that in our organization, our team leadership and have for seven or eight years, huge contributor to our success.

Steve Rogers: I love

Stacy Havener: that we're 2 years in on the EOS journey, and I second that motion for all entrepreneurs to take a hard look at it because I think you said something. Well, you said a lot of great things, Steve. But 1 of the things you said is performance is table stakes. It's all the other things that kind of contribute.

Stacy Havener: Or detract from your success as an entrepreneur in the boutique asset management industry. And traction helps you with those other things. Absolutely. Right. That EOS framework. So that's awesome. We're gonna have to talk EOS one of these days. Okay. Next question. What place inspires you?

Steve Rogers: This is a moving place.

Steve Rogers: I've got two answers that type of question. First, like we like being outdoors, by the way, I'm climbing indoors, not outdoors. And I give my wife all the actually my daughter and my wife get all the credit for that. But we used to do some back country skiing [00:47:00] anywhere in the mountains in the winter, especially in the afternoon with the Alpen glow.

Steve Rogers: I've always done my best thinking. In the outdoors, we do a lot of hikes around Denver. There's a loop around red rocks, which I think is super inspiring. And halfway through is up on a plateau that overlooks the city of Denver. Great place to contemplate what you're going to accomplish, you know, that week and that month.

Steve Rogers: And then the second way I would answer that I'm a parent of older children. So my youngest is, well, they're all mid to late twenties, but. Any place where I have my whole family under the same roof is my happy place. So it becomes very rare over time. You know, that's, I guess, you know, we do a lot of verbose and try and reel them in for a long weekend and that's just so much fun.

Stacy Havener: Yes. Oh, how special. I love that. Great answers. Okay, now a little bit of a twist here. So let's pretend you're walking out at Red Rocks. Let's just say that, you know, Red Rocks, it's the Steve Rogers night, and you're gonna [00:48:00] walk out into that wonderful, what do you even call that, amphitheater? What do you call Red Rocks?

Stacy Havener: Amphitheater? Yeah, amphitheater. So you walk out and there's All of these, you know, fans are going to hear you give a wonderful talk about building a boutique asset management company. What's your walkout anthem?

Steve Rogers: Okay, well, I feel like picking a walkout anthem is the same as giving yourself a nickname. If I got to pick, it'd be All Star by Smash Mouth for two reasons.

Steve Rogers: The chorus, at least. Some of those lyrics, I don't know if they apply or not. Maybe they do more than I'd like to think. But, um, that's a great tune. And then the other element is they use that for, uh, Shrek, if you remember that movie. Yes. You can watch the first, like, two minutes of that movie. And it's a reminder not to take yourself too seriously.

Steve Rogers: So anyway, that'd be a fun one. What

Stacy Havener: a good twist. I love that. That's a great one. I, oh, so good, Steve. Okay. What profession other than your own would you like [00:49:00] to attempt?

Steve Rogers: Gosh, I don't want to do anything other than what I do. But when I was in high school, Tony, the pizza guy, I worked in restaurants all the way from the time I lied about my age and got a job.

Steve Rogers: Tony, the pizza guy offered me a pizza restaurant, you know, and he's like, why don't you skip college and I'll, I'll put you in business and you can run your own pizza place. He was a good businessman, a great guy, but I love pizza. I guess that's, you know, you'd have a pizza shop. Yeah, uh, maybe a chain, but yeah, I'd like to make, it's all about the crust.

Steve Rogers: If you nail the crust, this is very true. Everybody does tomatoes and mushrooms and you know, whatever it is. Similarly, if you get the crust right, you're going to make it.

Stacy Havener: It's the basics. It's the foundation of the whole

Steve Rogers: darn thing. The primary difference with that business as well is at the end of the day, when you've delivered your last pizza, you're done.

Steve Rogers: The dough's ready for the next day and you walk home without a list of things to do. Whereas running assets, you're always worried about the next Fed meeting. You're worried about what's going on in Europe. You're worried [00:50:00] about what's going on in Asia trade. There's always the horizon of worry. So it's very different, I think, than serving pizzas.

Stacy Havener: If you had a pizza shop, you'd probably like trading, I don't know, futures on cows and crops. And well, yeah, you'd make it complicated. You'd find something to worry about.

Steve Rogers: You'd have to be selling a lot of pizza to worry about grain futures, so that'd be okay. When you're hedging out your flour risk, you've made it.

Steve Rogers: You've sold a few pizzas.

Stacy Havener: Okay, so opposite of this would be what profession would you not like to do?

Steve Rogers: This is not the current name, and I apologize for not knowing what the name of this job is today, but the worst job in the world is the person we used to call the meter maid. Is that a meter of person now that hands out parking tickets?

Stacy Havener: Oh yeah, like parking. Wow. You're right. Handing

Steve Rogers: out misery all day long? That'd be awful. And love and respect what they do, but I'm in and out of airports all the time. The poor TSA [00:51:00] people. Uh, thankless. Well, certainly, you know, worse than thankless. And, um, You know, they spend most of their day making sure nothing happens, and thank God nothing happens.

Steve Rogers: So, I think giving people parking tickets would be worse than

Stacy Havener: that. Oh my gosh. Okay. That was a great answer. Okay, so the last one, a contemplative one here. What do you want people to say about you after you've retired or left the industry?

Steve Rogers: What I'd like them to say would be about Shelton Capital, and it's that they learned something special, or it gave them a leg up in their career, or helped them balance their life, that they got more out of it than they put in.

Stacy Havener: Oh, I love that. That was a great way to end. I'm sure they're already saying that, Steve. I think you've built an amazing business, but more than that, you've built an amazing culture. And I've been lucky. To see it firsthand, and I'm so thrilled that we're giving people a glimpse of that magic. So thank you so much for [00:52:00] spending time with us today.

Steve Rogers: Oh, it's been great being with you and I really appreciate it. It's great to see you and, uh, spend time. Thank you.

Stacy Havener: Awesome. If you know a fund manager or a founder in the investment world with a great story, drop a note to Stacey at Stacey Havener. com and tell me about it till next time. I'm Stacey Havener.

Stacy Havener: Thanks for listening. And now a final word from our premier brand partner, Ultimis Fund Solutions.

Steve Rogers: The conversion of Omert Berg's LP into an integral fund. Empowered them to grow the fund from 90 million to over 200 million and expand the reach from 100 investors to nearly 700 new investors and continues to grow today.

Steve Rogers: By pursuing the conversion, Homark Berg was able to lower minimums to 25, 000. Welcome accredited investors. In addition to qualified purchasers, the entire conversion process was highly efficient. Because Homer Berg chose to [00:53:00] partner with Ultimis and other partners with a proven track record in this type of structure to structure product transition.

Steve Rogers: The headlines are often too focused on new interval funds from pedigreed providers, this new fund from this cool big firm, etc. Maximizing a fund's potential through a conversion can be a powerful too. As we see in the story of Homer Berg, traditional investment management and alternative investment management are conversion.

Steve Rogers: More retail investors are demanding access to non correlated strategies in a liquid asset classes to compliment or supplement public markets exposure interval and tender offer funds offer managers a flexible wrapper. That combines many of the benefits of both 1940 Act and private fund structures.

Steve Rogers: Interest in these products has increased significantly in the past decade, and we anticipate the volume of both new launches and structure conversions to continue well into the future.[00:54:00]

Stacy Havener: This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. The information is not an offer, solicitation, or recommendation of any of the funds, services, or products or to adopt any investment

Steve Rogers: strategy.

Stacy Havener: Investment values may fluctuate and past performance is not a guide to

Steve Rogers: future performance.

Steve Rogers: All opinions expressed by guests on the show are solely their own opinion and do not necessarily reflect those at their

Stacy Havener: firm. Manager's appearance on the show does not constitute an endorsement by Stacey Havener

Steve Rogers: or Havener Capital Partners.

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