If there is any truth to the Silicon Valley start-up stereotype that young entrepreneurs work long hours to invent the next big thing in messy, cramped offices, then Benzinga is arguably the closest thing Michigan has to a Silicon Valley-style start-up.
Bingham Farms-based Benzinga specializes in providing financial news with a twist, adding on ideas that day traders and other investors can use to profit from the day’s headlines. The 18-month-old start-up recently closed a nearly $2 million seed capital round led by Lightbank, the Chicago-based VC started by Groupon’s co-founders. Byproduct No. 1 of that cash infusion: a Benzinga hiring spree.
Those new hires, mostly members of Generation X and Y, work feverishly in an office so small that computer screens and empty bags of junk food vastly out-number desks. The company’s soon-to-be new offices in Southfield (three times larger than the current space) promise more elbow room, comfier furniture and even a bar. But no less productivity.
That’s because a key cog of Benzinga’s business model involves giving early employees a stake in the start-up. The result is incentive for staff to work longer, harder and with more creativity. Some even begin to bleed orange and blue (Benzinga’s colors). That usually means a messier desk, but you can’t reinvent the new economy without breaking open a few bags of nachos and bottles of pop.
“You shouldn’t be saying ‘I am going to work,'” CEO and founder Jason Raznick says. “You should be saying ‘I am going to build.'”
Raznick is the lord creator of the carefully oriented chaos that is Benzinga — a name inspired by the nonsense words he created as a child with his entrepreneur grandfather. The 33-year-old married father of two was working as a financial writer for Jim Cramer’s RealMoney.com a few years ago when he decided to go after a hedge fund job. That dream was put on hold when the stock market crashed and took the economy with it. So, Raznick decided to turn one of his many business ideas into a start-up. Thus was born Benzinga.
Today he leverages Silicon Valley ideas and Midwestern work ethic to grow his 20-plus employee start-up, combining a scrappy work ethic with a tendency to collaborate and innovate. It’s messy and spins at a mile a minute, but soon after they step into Benzinga’s offices, visitors can’t help but conclude that Raznick and his casually dressed crew are onto something.
“We’re trying to grow for the greater good,” explains Raznick. “We’re trying to build a Detroit-based company that is a sustainable, long-lasting company. It’s not a get-rich-quick-type thing. Overnight successes, there is no such thing. Those companies took years to build. This isn’t easy work we’re doing.”
Raznick recently invited Metromode’s Jon Zemke into Benzinga’s offices where they spoke about everything from Groupon to venture capital to elevator pitches.
You’ve started an online media company at a time when there isn’t exactly a shortage of these sorts of start-ups. Boil your elevator pitch for Benzinga to a few sentences on why it’s different from the competition.
We’re news that you can use. There are a lot of places that aggregate news and put a pithy headline to make it sexy. That’s not what we do. We’re the guys who say, ‘Here’s the story and here are some ways you can react to the story,’ either bullishly or bearishly.
You recently received a VC investment. What’s a common mistake local entrepreneurs make when pitching VCs and how could they easily correct that?
It’s not just about going to pitch a VC. When I decided I wanted to work for a hedge fund, I had to quit my job and invest full-time into that. I made it a commitment. There is a guy named Dan Loeb who is an active investor who is ruffling feathers at Yahoo right now. He became kind of a friend so I started a Dan Loeb digest where I would email him ideas every week. He would write back. Sometimes when I didn’t hear from him I would write a crazy thing. He would write back, ‘You’re out of your mind.’ I would write back, ‘Just making sure you’re listening.’ He cracked up. I invested time and delivered value to him. It’s about delivering value. When you approach VCs, what’s your value proposition?
A lot of people who are married or have a job can’t make that leap of quitting to become an entrepreneur. How did you know you could do that?
When you have a family and you have bills to pay and do that, the anxiety you face is insane. That’s the hardest part. But I don’t believe in failure. I believe that if we assemble a smart group of people great things will happen, and we have.
You’re a new father of two young children and starting a business that demands a lot of your time. How do you balance this?
It’s tough. Our investors, Brad and Eric (Groupon’s co-founders), get home and turn stuff off. I like to take my 2.5-year-old to swimming lessons, so I go home at 6:30 and come back. There is that balance there. If I had no kids and no wife I could probably do more, but then who do I share that success with?
But family isn’t one of those things that fit neatly into a schedule.
Honestly, family is one of the reasons I started Benzinga. It sounds crazy, but when I was working for someone else I was working from 7 a.m. to 6 p.m. with a 45-minute lunch break, and I felt guilty being gone for those 45 minutes. I spent way less time with my kids then. Now I can structure it differently. Some days I am in early, some days I am not. There is flexibility.
What are the dangers that come with a high-profile investment like the one Benzinga recently received?
(Raznick turns to his left, picks up a random pad of paper and points to a math equation on it.)
What is this? Y scale? X scale? I have no idea. I am hiring these really smart people. If I am leading them the wrong way because I don’t know that… Another danger is with high-profile people is their time is more limited. If you believe in yourself and you don’t need as much hand-holding, then it’s not a bad idea. But if you need that hand holding, then perhaps it’s better to go with people who are not so busy.
Conventional wisdom dictates that Michigan-based VCs are not as aggressive as their counterparts on the coasts. Has that been your experience?
Yes. It’s the culture.
Is a more aggressive VC culture necessarily a better one?
Not necessarily. It depends on what you’re trying to do. You might want somebody who has a long-term road map. Some companies take nine years to build.
What does the recent rise of more early stage VCs in the region, like Detroit Venture Partners, say about the evolution of Metro Detroit’s entrepreneurial ecosystem?
It means it’s stronger. It means it’s exciting and getting more respect. It means there is more interest in entrepreneurship. The more the merrier.
Benzinga is aggressively hiring these days, specifically going after top-shelf young talent. How deep is Michigan’s talent pool for this specific section of the workforce?
It’s difficult. I’m not saying that Michigan doesn’t have the talent, but maybe the talent doesn’t go looking because they work at Ford. If I post an ad in Chicago, it’s about a 15-1 ratio of response compared to here. That’s why we need VCs, and entrepreneurs, and business builders here. We need that entrepreneurial culture to happen. If we don’t, we’re done.
The state and region have been trying a lot of different things to help plug the brain drain. Do any of these efforts stand out to you as something that is being really effective?
None. Maybe I am a little bit ignorant about them, but I haven’t had anyone reach out to me. There is a huge demand for programmers. Why doesn’t the state teach people about PHP? These languages aren’t hard to learn. They just take time and repetitiveness.
Have you seen any efforts that just make you shake your head?
Yes. I don’t want to call out anyone individually, but I see a lot of wasted money. I saw this one group get a $400,000 grant to study how to keep people here. It’s BS. If GE and all of these other companies are hiring engineers, why isn’t the state focused on training more engineers?
As a U-M graduate who has utilized other alumni to further his business, do you think the university or regional leaders maximize the powerful alumni networks for our local universities, U-M and MSU?
No. Not even close.
Is it even possible for them to do it?
Yes. We’re so not connected here. That’s the whole Silicon Valley culture. Everybody is connected and they help each other out. We’re in a silo here.
Jon Zemke is the News Editor for Metromode and the Managing Editor for SEMichiganStartup.com. He conducted and condensed this interview. His last feature was “Better Not Bitter – A Conversation with Moose Scheib”