SAN DIEGO – With a staff of 11, the financial services firm Reality Shares has made a name for itself in the world of ETFs – exchange traded funds – in the short time it's been operating from its downtown San Diego headquarters.
Reality Shares concentrates on dividend growth and one of the ETFs it offers surpassed $50 million in assets earlier this year.
The company's CEO, 41-year-old Eric Ervin, sat down to talk about leadership and the four traits that Reality Shares executives call the "Mount Rushmore of leadership" – innovation, focus, transparency and integrity.
The interview has been condensed for space and clarity.
Q: The Mount Rushmore of leadership qualities – I've never heard that expression.
A: Our chief marketing officer, Randy Satterburg, uses that term. It just kind of started to weave its way into our speech here.
Q: Which trait is the most important for your company?
A: Innovation, especially in this day and age, is really the opportunity to create something better for people. If you can't innovate, then you're going to get left behind like a dinosaur. It's critical to everything that we do in the investment process to give people better solutions but it's also just more fun. It keeps people engaged.
I was that student that drove the teachers crazy because I always asked why. I used to do that with investment products, breaking them down into the smallest points and often you say, jeez, there's a lot of fat in here – in fees, friction and trading costs. Breaking it all down is the core to innovation. That's in everything we do, ask that question of why.
Q: What lessons can you give to someone who isn't necessarily in the investment industry?
A: First, you have to have a vision. Get people to understand your vision. You have to have that focus and then you've got to deliver it by innovating. Plus, you always have to have integrity. You have to do it for the right reasons, not just because this is a great marketing concept and will sell like hotcakes. Are you making the world a better place? And can you be honest and sleep at night about what you're doing?
If you can get people to think differently about the world, now you're leading and you're creating change instead of just making people do things. So it's really about leading people to be the best they can be versus managing people to get work done.
Q: So where does management end and leadership begin?
A: Management really ends at telling people what to do and leadership begins at bringing the best out in people. Let them do the work and surprise you with the greatness that's within them and help people understand what they can accomplish. Often that's so much more than what they think they can accomplish.
Q: When you say that a person couldn't achieve greatness that was in them that surprised me a little bit because I find that most people have very high opinion of themselves. Are you saying some people can't quite grasp the greatness within them?
A: That's a good distinction. They may already think that they're perfect. If somebody thinks they're perfect, maybe they're never going to try.
Q: You grew up in Montana, went to Montana State. You're in the financial business but you didn't go to Wharton or Harvard. Did that intimidate you in any sense?
A: In a big way, in that regard. Growing up in Montana very poor – food stamps, answering the phone with bill collectors saying, "Listen kid, put your mom on the phone, I know she's there," that kind of thing. I was smart but not super smart. But I could work harder than most people. In high school I was in wrestling. I wasn't a naturally gifted athlete but if I worked my butt off, I could get near the top. I was a bit intimidated, like you say, by the Harvards and the Whartons but I learned, you know what, they're just people. And once you start to do the job, the pedigree becomes less important and people don't even ask because they just see the results.
Q: Does that kind of background help you as a leader?
A: Definitely. I see so much more in a lot of people that maybe they don't see in themselves. Sometimes they say, "Well, so and so went to Wharton and they're just lucky." No, if you work hard, you can do the exact same thing. I convinced someone to hire me at Morgan Stanley before I even graduated from Montana State. I was this young 20-year-old kid telling people who are 60 years old and had 10 times, hundreds of times, my net worth what to do with their money. But it was the humility, the kindness, the honesty, the integrity that allowed them to get comfortable with me.
Q: How does a 20-year-old kid get a job at Morgan Stanley?
A: Literally I cold-called every branch manager in the San Diego area and said I wanted to prove myself and somebody said, "All right, kid, I'll give you a chance. You come in here and you cold-call 300 people a day every single day and get beat up and maybe there will be something for you." I did that week after week, for free. I just wouldn't go away. And he said, "All right, I'll give you a shot." And that was kind of the start of it all. And again, there were other people who were way more persuasive and way more silver-tongued than I could ever even dream of being, but I was the first one in the office every day and the last one to leave every day.
About Eric Ervin
Title: Co-founder, president and CEO of Reality Shares, a financial services firm based in downtown San Diego.
Experience: Launched Reality Shares in 2012, 14 years at Morgan Stanley, where he built the Ervin Miller Group, a wealth management franchise, also worked at Citigroup and Smith Barney.
Education: Computer science and finance at Montana State; business management at the University of Phoenix.