Springer Harris

From now, I could be that guy in that office there. And that's about as far as I was going to get. And so I called Tucriam and I said, hey, does the offer still stand? They had one fund out at that point. I said, this is really what I want to do. And so I've been doing that now for 14 years. The portfolio manager and chief operating officer at Tucriam now. And it's been a really exciting run for us. Um, but like any ETF issuer out there, uh, if you've been in the game for a little while, you've definitely had someone come to you and ask you, how did you do that? How did you launch your ETF? How would I do it myself?

And Tucriam, we've always had an open door policy. We've always talked to asset managers to make sure that we were being as helpful as we possibly could. And that sort of organically developed into providing sub-advisory services. And support services for other funds. And what I noticed though, is that more and more people were coming to me, especially back in like 2022, um, wanting to know basically the same, they had the same questions. Everyone had the same questions. How do I start this ETF? What do I do? What are the different paths? How long does it take? How much does it cost? Right. And I found myself just spending hours answering the same questions for folks, which struck me as an opportunity.

And so I was invited onto a podcast back then to talk about how to start an alt ETF. And I spent a lot of time framing out how I was going to talk about that, how I was going to present it. And I thought like, great, this is this awesome piece of evergreen content that I'm going to be able to make and help people start ETFs, right? This wasn't about having a business or making money or doing anything. I really just wanted to find a way to make my mark on the ETF industry, a way to, raise the tide for everyone. And the way that we do that is to empower entrepreneurs to push the limits of what the ETF wrapper is capable of, right?

That's where we're going to find it. So I wanted to make sure that that basic information was out there. And so it was on the podcast. It was really great. Um, and literally the next day we're driving and we're actually, we're in the jungle. We're coming back from Panama. It's just me and my wife. And I look at my wife and I say, I'm going to write a book. And she laughs. she laughs at me like belly laugh, like couldn't believe it. Like there is no way, Springer, like you can barely get through an email. You're not going to write a book. We got home that night and I literally just put hands to keyboard and started writing and just pretty much poured my soul and everything I could think of about ETFs into this book.

For about nine months and went through the whole process and we can talk about that. But it really was just a, me wanting to put out there and speak to the entrepreneur about what it means to be an ETF issuer.

But let's be honest, right? That was pretty self-serving education. We did that so that more people would adopt the ETF as an investor and we would all have more investors in our funds, right? That we needed to do it. And there's still a lot of education left to do, which is why you still see ETF issuers hosting regularly about how does an ETF work? What's a creation or redemption, right? There's still a lot more of that to do, but the audience that was neglected during this was the asset manager who could bring out more ETFs, right? When we all started to form, build our ETF businesses, white labels didn't exist. Multiseries trust didn't exist. You had to come out, you had to build the entire infrastructure yourself.

And that created a barrier to entry. But then the other thing that we did is we put barriers to entry up about how you do it. So that's where we lost educating the public was how they work from the inside, what the folks like us have to do when we're running those funds. And I think that once we've started to lower the barriers to entry, we've started to flatten the learning curve for how they work. But asset managers are starting to realize this is a fantastic way to put my strategy because it makes my job a little bit easier. I'm not managing maybe a bunch of SMAs, whatever those types of things that you're packaging up into the ETF makes your like sort of operational life easier.

But now all of a sudden, the ecosystem for your customer is anybody with a brokerage account, right? As long as you can get your fund on the platform, as long as a person can sign into their brokerage account, type in your ticker and click buy, they're a potential customer. And so it changes the landscape of who you can market to. let's be honest, right? In the ETF space, when we're marketing, you're marketing to everyone all the time. You don't know who's purchasing your fund. And you don't know when you put out a piece of content or education, who that's actually going to trigger. Well, if you take about a small asset manager with, maybe $100 million in SMAs, all of a sudden now their strategy is available for basically the whole world to purchase.

Like that's a huge opportunity, right?

On the other side of that spectrum, you have a bunch of new entrants, me included, that have white label businesses where you can basically just bring your strategy to the table, bring enough capital to launch it. It's much cheaper to do it that way because the economy is a scale. And you have an established business basically just present you with a turnkey operations, regulatory, everything you need. You can be out in 75 days off to the races, right? And then in the middle, there's this, a lot of different ways that you can build a hybrid business where you can use a multi-series trust. You can have more control over your business. You can be the advisor and you kind of can create the best of both worlds depending on

What you want the outcome of your business plan to look like. And so oftentimes when I talk with aspiring ETF sponsors and issuers, I always try to get everyone to take a step back and really look at their business plan and say, where do you want to go? What are the different ways that this might evolve? Don't just look at this as asset management. You have to look at this as any entrepreneur would in their business. And when you start to look at it like that and you think about your own goals and your plans, what makes you excited to come to work in the morning, you can figure out really what the best path for you.

You have to pay for it. If you mow your own lawn, you get to keep that money. Right. That's basic. At the simplest level, that's what it is. And so if you want to if you're a really go getter entrepreneur and you want to build an enterprise, something with, significant value that you may want to exit from and you want to sell, if you want to manage a team of people, if you want to, get the brain calluses to go through this business and figure out who are the best partners to work with, constantly making changes and bring out, most importantly, an entire suite of product. If you want to build a brand and a whole suite of products, then, do it yourself

Is the way to go. There's a lot of empowerment, a lot of pride that comes with building a whole ETF business. But it's hard and it's expensive. And so you really have to be committed to the ETF game for the long term in your business plan versus, just wanting to build strategies.

And so in the ETF industry, we're no different. And so the first thing I do is I teach the aspiring ETF sponsor the vocabulary that they can use when they enter into a conversation with someone like you or me or service writer. Because if you don't have that, all of a sudden, you don't have the confidence to be a part of the conversation. And you don't feel like you're an insider. And so you got to have that confidence to just step up to the table and actually have the conversation. But then, okay, I'm confident. I'm ready to go. I'm ready to do that. But now who do I have the conversation with? I don't even know what I need. And so I build out in the chapters, basically internal teams versus external teams.

No ETF business can operate 100% internal. It's not possible. You have external partners in different parts of that ecosystem. It's a requirement. And I lay out basically how you can build the smallest team or the biggest team internally, right? And minimally, you can be a one man shop. But if you're going to build your own ETF business, you need to be at least three people. that's you have to be. And then you look at if you're going to outsource everything, who do you need? And what are the major roles that need to be played, right? So I go down and I list who the not who they are, but what the roles are, right? I don't mention any businesses in my book at all.

I did that on purpose, right? And you go through that. Then when you start to dive into it and you start to Google, okay, who's a fund administrator? Who's a distributor? Who does this? Who does that? Now you're just left with a ton of choices. And so if you're going to enter and start to build your own business, it's probably worthwhile to find a consultant. A consultant is a really good way to do that. I do that for people. Or just start to make friends with inside the industry who can basically give you referrals of who I've chosen and why. And that's kind of how the ETF industry works, right? There's a few different centers of influence that basically get everybody the business. The attorneys usually start, right?

You hire an attorney and the attorney knows different people and they say, talk to this person, talk to that person. Or you pick one of your first service providers, your administrator, your distributor, and they start to give you a web, right? And now you've gotten introductions to these firms. But how do you choose? They're essentially providing the same service, but they're going to do it differently and they're going to charge differently. And so one piece is definitely price. You have to keep price in mind. We always do any decision we make in life and business. You'd keep price in mind. But the thing that I really instill in people in the book and in my conversations is that when you're choosing a partner, choose them the same way that you would hire inside your

Business. The same level of diligence that you would do before you allowed someone to show up physically in your office and work for you every day. Do that with your service providers because they will be working for you, your funds, your investors every single day. These need to be people that are easy to communicate with, you enjoy communicating with, that you want to celebrate your successes with, but that you can also give feedback to when it's time. Because this is a challenging business and we all have to give each other negative feedback sometimes about the way things are going. And you need to have a group of people who are going to work with you in that and they want to see your success.

And so the biggest piece of advice that I can give there is really choose your business partners, your service providers as if you were choosing business partners and employees. But also don't be afraid to let them go either. You're not stuck. You're never stuck with any of your service providers. Um, so it's a, it's very difficult to change. It can be painful. Uh, it can be time consuming, but I've changed almost every service provider we've had over the years and it's a healthy thing to do. Uh, and you, you really, uh, you have to be open to it.

The people that you work with as is critical.

And so we'll help each other to succeed while also being, extraordinarily competitive, but that's the difference between competition and being cutthroat, right? I don't see the ETF industry as cutthroat. And that's why I love being a part of it.

Stop, you know? And it's, so it's this misconception that everything can be an ETF. That's one. Um, and then two is that, um, if I build it, they will come right. If I put it into an ETF wrapper, I'm going to make a whole bunch of AUM and therefore I'm going to make a bunch of management fee. And that couldn't be further from the truth, right? We all know that, um, you can build the best ETF, um, and they're not going to come. Um, and so when I talk with, uh, different entrepreneurs, the thing that I, I wouldn't say it's a misconception. I think the thing that surprises them the most is when I say they need to have a three year business plan. And I wrote that in the book and I make that, uh, basically a requirement for

Folks that I work with is that if you're going to come into the ETF space, you need to have cashflow to support your ETF for three years. Uh, because far too often I talk to entrepreneurs who say I've saved up enough money. We've got enough cashflow. Um, but this has to work in 12 months, 12 months. I need to be above break even. I'm not bringing any assets to the table, right? So we're going to start at seed two and a half million and I need to be up at 50 million in 12 months or I'm out. We're closing. And I, you can't do that. It is, is way too risky. the capital that you're going to put on the table to start that ETF, um, and say

That you a hundred percent have to be at break even and in 12 months or you're out of the game, it's too risky. So you have to look at it and you have to say, this is a three year business plan. I'm going to support this ETF through tough times for three years, plus or minus. if you hit it at two and a half, this isn't like an exact science, but you need to have a longterm view of success in your ETF. And I think that is the sobering reality and conversation, uh, that I find where people really then step back and start to evaluate their business plan.

Once you get to that three year mark, how would you approach continuing to kind of get momentum and continue to grow?

The next morning, that's when like the real work begins, right? You just spent, six months bringing this to this point and now you're actually at the starting line. And at the starting line, you've got two things you have to do. One, you have to operate this thing day in and day out. Um, on the other side, you also have to grow it day in and day out. And in the ETF industry, there isn't a single person here who has the ideal formula worked out for how you market an ETF. Because if you did, you wouldn't be working in the ETF industry. You'd be owning your own island. You'd be sitting out there and you'd be sipping margaritas because you'd be worth tens of billions

Of dollars because that's what we're all looking for is what works in marketing in this industry. And my colleague says it best, Jake Hanley, he's our head of marketing here. Everything works and nothing works. And that's the most frustrating part about ETS is you have to do everything and none of it's ever going to feel like it's working because no single thing that you do is the golden ticket. You're not going to be able to look at one single action and say, that made me 5 million. That made me 10 million. It doesn't work like that. It's an entire strategy for marketing that you run month to month, year to year. And you build. You build not only your track record in terms of performance, but you build your brand.

You build trust. You build relationships. That is really where a lot of this is. And then also, it's time in market. you and I have both seen really great ETFs close right before their time would have been. They close down and then whatever market that they were invested in just explodes. And it's like, oh, you missed it because you just didn't stay in the game long enough. And then we've also seen ETFs that are timed perfectly, right? They come out. They had no intent of being a unicorn. And it's just timed as a miraculous miracle. And they're one of the unicorns that go down in ETF history, right? But that's not what most of us are going to experience. And so at the early stages, it's about setting your brand, establishing who you are, being

Honest about who you are, being authentic, and getting that education out there that not only your fund exists, but what it does. And you have to recognize that when you're doing that, you're fighting for not assets. You're fighting for tension, right? Every one of us, our attention is being pulled by our phones all day long, by every consumer product, whatever it might be. And so you're fighting for that attention to be known. And then once you start to actually get some momentum, then you can start to go and have a lot more one-on-one conversations with advisors and investors and so forth. But if anybody tries to sell you the golden ticket, they don't have it. I'm not going to say that I am a marketer, right?

I'm an ops guy. I love ETFs. I love building. I had to market my own book. That's been a lot of fun, right? Building my own brand. And so that's really one of the things that I can speak to, right? Is having to build a brand for myself as an individual, build a brand for my book and my business to get ETF'd. That was a lot of fun. And then on the individual side in ETFs, right? There's a lot of really great teams out there that can help folks come up with brands. If you don't want to do it yourself. And then oftentimes, with the older established businesses, we've kind of evolved over time, right? When I think about branding, you're not the sign you put on the door.

Your brand is who you are and the experience that people have with you and what they think about you. And so, think about a grocery store, right? You've got a logo on the door. That's not your brand. The brand is what the grocery store looks like, what it feels like to shop there, how happy you are when you walk out the door, how you were treated. Those are the things that an ETF company should focus on, right? You can spend a ton of money getting a really cute logo and super high-tech website and all this other kind of stuff that is important on the surface. But if it's not backed up with culture, it's worth nothing. And so for me, when I think about what builds an ETF business, it's when an investor calls

You, answer the phone. When somebody sends you an email through your email and says, I'm interested in this, email them back immediately. That's the level of service that people are not accustomed to. I don't even think in the ETF industry. And so if you can do something like that to set yourself apart, you're everything. And that's something that, at Tukri, we work a lot on that. If you call us and you leave a voicemail, you're going to get a call back from somebody in 30 minutes. And it's going to be the person who can answer your question. It's not going to be a call center. If you shoot us a note on email or you send us something through social media, you're going

To get the person who has the answer and they're going to get back to you immediately. Those are really important things to do. And so when you're coming out and you establish yourself, be authentic, set your brand. lucky enough, we're in ETFs. Like, we're not stuffy, we all are who we are. We've got lives and we bring those lives to the office and we work hard. Just be a real human being and treat your customers and your investors the same way. Meet them where they're at. Help them. Educate them. But, just be available. And all too often, you just don't find people that are. We've just got a culture where we ignore emails. We don't answer phones. And frankly, it's just not okay.

So let's talk about.

Yeah, I would agree with that.

Might it take twice as long, three times as long to produce that piece of content? Absolutely. But you can do it. Luckily, a lot of people who are thinking about starting an ETF, they're not Wild West sort of culture because they're probably coming from a background in finance anyway. The people who kind of think about that is the person who's still quite far away from launch. They've got a backtest idea on their Excel sheet and they've never managed any money before. And they've got a long road to go before that ETF actually comes out to market. And they'll learn that. But any of us that have been in finance for any period of time, we recognize how difficult it is. But as the environment evolves, especially with online advertising, there's a lot of ways that

You can get your message across. And I'm really excited about these suite of products that are coming out that are geared towards finance from the compliance side that are basically like compliance chat GPT, right? Where you can spend less time, less of your own time trying to make sure that something is written just perfectly. We can move a lot faster. you could even do like, voice to type, get a piece of content out there, throw it through some of these tools, and it gives it back to you 100% fully compliant. The SEC is going to be good with it. FINRA is going to be good with it, right? And so time to market and content is really important. And I think that's one of the biggest challenges we face.

None of us want to go out there and make false promises about what we produce, right? No one, some people do that and they get in trouble for it. But nobody that's really in this game is doing anything like that. Your reputation is way too important. But time in producing compliant material is difficult. And so I think as some of these different firms that are producing AI tools to solve that problem for us, I think you're going to see a lot more content getting produced. And it'll lower the learning curve for newer entrants on how to produce compliant material.

Um, it's okay in the ETF industry because it doesn't mean you failed as an ETF issuer. It means that strategy didn't work. And simply by coming to market, running it, doing everything that you could, um, you've, you learn from it and you apply that to your next strategy. And so it's, it's really no different than any other business, right? The people who have been the most successful in this industry are the ones that stay at it. They find a way to stay in business, cut their losses when they have to, and keep focusing on the next step forward. And it is an entrepreneurial journey. And that's why I look at the ETF industry in two different lights, right?

I call it the 60 and the 40, right? You've got the 40% of issuers at the top, the major banks, the large institutions. They're running ETFs in a totally different way, right? They will call ETFs like it is nothing. They don't care. They have, they can afford, to throw the spaghetti at the wall, as we all say, and see what sticks, let the other ones go. The entrepreneur, we don't have that. We don't have that luxury, right? When we choose something, we chose it and we put a lot behind it in order to do that. And that's where I like to focus my effort. My time is on the bottom 60. It's a different ETF industry for me, right? The entrepreneurs and the large corporations, I cut the line and I say, we're not even operating

In the same industry, even though we operate the same wrapper, right? And yeah, I've closed plenty of ETFs for clients. I've closed ETFs for our own firm. You just, you have to know when to do it. And sometimes you can take it too far. And then when you just have a zombie ETF that just exists out in the marketplace, it's pretty hard to come back from that after you've gone too long with no assets or poor performance. Yeah.