Keynote Remarks to the National Veteran Small Business Coalition

It is an honor to meet with you this evening. Thank you to your co-chairs Scott Semple and JD Sullivan for the invitation to speak with your organization and begin the conversation on how our office can support each of you, who have transitioned from active service to active job creation. I am honored to be serving as the first Advocate for Small Business Capital Formation at the U.S. Securities and Exchange Commission (SEC). I want to encourage a candid discussion, which means I need to give the obligatory disclaimer that the views I express today represent my own and not necessarily those of the Commission or staff.[1]

Let me start by saying thank you for all that you have done and all that you continue to do for our country. The flag in front of my agency flies because of each of you.

Veterans are near and dear to my heart, with my entire family cheering (and bombarding with phone calls) my first cousin who just returned this month from his third and final tour of duty with the Navy. Now that he is back with phone reception, there is no shortage of cousins, aunts, and uncles who want to hear his voice again and ask a hundred questions he cannot answer.

Introducing the Office with the Longest Name

I understand other speakers you hear from often bring a different perspective than I will, either discussing their grant budgets or procurement departments. Our new office, as you will soon learn, was created to support you, as small businesses, in making sure that the rules through which you raise capital from investors work well.

One thing that should ring familiar to you in the military: long names and long titles. Our office, the Office of the Advocate for Small Business Capital Formation, bears the longest title of any office in the SEC, which I liken to the importance of our mission.

Taking a few steps back, our office was created by bipartisan legislation that had broad support across the aisle. That broad support stems from the impact small businesses have in creating jobs, fostering innovation, and creating wealth for families across the country. Veteran-owned businesses alone employ over 5 million individuals and generate over $1 trillion in receipts annually.[2] That is an incredible economic impact.

As the regulator of the capital markets, the SEC has a large impact on how and from whom businesses find investment capital. The agency hears a lot from companies who are very sophisticated and have a dedicated government relations staff, but we don’t hear as often from smaller businesses. Our advocacy office was created to be a megaphone for small businesses and their investors, from start-up to small cap, and everyone in between. We amplify small business owners’ voices within the SEC and within the broader regulatory landscape to positively impact policy.

I don’t need to tell you that small businesses and their investors are looking for the most efficient way to raise the capital they need. We also understand one size does not fit all. As veterans and small business owners, you each bring valuable perspective that lawmakers and regulators need to hear.

General George S. Patton has many famous quotes (most of which involve language I will not repeat in front of a microphone). One in particular resonates with the role of our office: “No good decision was ever made in a swivel chair.” General Patton knew that we need field perspective to make the best decisions, and our office seeks to bring small business market place perspective to the securities regulatory world.

Borrowed Lessons from Admiral McRaven

One of my favorite speeches reminds me why veterans often make such successful entrepreneurs.[3] Admiral William H. McRaven’s well-known commencement address given at the University of Texas in 2014 outlined lessons he learned from Basic SEAL training.[4] As I am sure all of you know, McRaven is not only our retired U.S. Navy Admiral who last served as the ninth commander of the U.S. Special Operations Command from 2011-2014;[5] he is also a former “Bull Frog,” which has to be my favorite military title.[6]

The Basic Training lessons described by Admiral McRaven are analogous to many of the challenges entrepreneurs face growing and scaling their businesses and accessing capital. So tonight, I will be borrowing heavily from the wisdom of Admiral McRaven and applying his ten lessons to you as business owners and to our office as your champions.

1. If you want to change the world, start off by making your bed. This is perhaps the most famous line from Admiral McRaven’s whole speech. Making your bed to perfection each morning is a reminder that if you do the little things right, it makes the big things possible. It is a lesson I personally have taken to heart. For entrepreneurs, it is a reminder that managing the details of your business with integrity and precision opens doors to new customers and investors. Cutting corners, whether hospital corners or taking shortcuts in your business, often leads to a longer and more arduous path ahead.
2. If you want to change the world, find someone to help you paddle. A synchronized boat working together can manage the surf, including the tall swells off the coast of California during training. Like having a cohesive crew paddling, having investors in your “boat” who share your vision and goals matters. It is important to find investors who are a good match for your company, meaning they understand your business, have the right risk profile, and share your long term interests. With the right team supporting your business, including our office as your advocate, you can paddle through the inevitable difficult waters together.
3. If you want to change the world, measure a person by the size of their heart, not the size of their flippers. Training is referred to often as a “great equalizer” where your will to succeed, not your size, determines your success. As a country, we should value entrepreneurs not be based on their current size or scale, but on their drive, growth and potential.[7] Small businesses create a majority of new jobs—almost two-thirds of net new jobs post-recession.[8] In our office, we recognize that entrepreneurs and the investors that support those entrepreneurs carry the load of our country’s economic growth, and we want you to have the capital tools to be successful.
4. If you want to change the world, get over being a sugar cookie and keep moving forward. Admiral McRaven describes how during training, the instructors would find some flaw with a student’s uniform during inspection and make him get cold, wet, and sandy. His point is that sometimes, no matter how prepared you are, you end up as a “sugar cookie” covered in sand. Every business faces challenges and can learn from this lesson in resiliency. It is about how you move forward that counts. Much attention lately has been fixated on the companies that have grown into “unicorns” (or businesses with billion dollar private valuations). I would love to see just as much coverage of the “phoenixes” who rise from the ashes, or sugar cookie dust, and breathe new life into their companies following trials and challenges. Each of you as veterans are uniquely trained to move past what others may view as a failure, which is key to being a successful entrepreneur. That strength is likely why veteran-owned businesses represent over 9% of all U.S. businesses, greater than the proportion of Americans who serve.[9] Being a sugar cookie does not hold you back.
5. If you want to change the world, don’t be afraid of the circuses. I’ve heard many friends lament the “circus” of training, entailing hours of additional calisthenics if your instructors decide you do not measure up that day. The instructors often use it as a tool to break down the weak. However, for those that stick with training, over time the circuses build up inner strength and physical resiliency. The same exercise is often experienced by businesses. Sometimes investors and the market demand circuses, and other times your advisors demand it. Lean into the circuses and learn from them. Get stronger. That’s what makes our market system the best in the world: we demand the best from our businesses.
6. If you want to change the world, sometimes you have to slide down the obstacle head first. Admiral McRaven recounts how an obstacle record stood for years until a bold trainee decided to go down the rope head first—literally flipping the norm (and himself) on its head. That is innovation in action. Small businesses are often more willing to innovate and change the course to achieve an advantage against larger companies. Records are broken and innovations are created by those with the incentives to do more with fewer resources. Veteran entrepreneurs are using their personal experiences and technical training from military service to start, grow, and scale their businesses—with many of you specifically crediting your experience making decisions in time and resource-constrained environments.[10] Here at the SEC, I’m often asked how we are innovating. Generally your regulators are not sliding down any obstacle courses head first, but we are pushing to create new ways for you to engage and access resources from us. For example, this summer we rolled out short videos telling you how new rulemakings might affect your business in plain English, minimizing the lawyerisms and technical jargon as possible.[11] I am always open to learning of new ways we can more effectively engage and inform, and I would love your feedback on how we are doing.
7. If you want to change the world, do not back down from the sharks. Basic trainees are directed to swim off the San Clemente Island coast, a breeding grounds for great white sharks. In preparation for encountering sharks during the night swims, trainees are taught how to stand their ground and defend themselves. Speaking for my own instincts, there’s zero part of me that would be prepared to challenge a shark darting towards me by punching him in the snout in the absence of significant training and preparation. Running a successful business requires planning for the unexpected moments so that you can stand your ground in the face of the most daunting obstacles, whether that be your own operational challenges or the emergence of competitors ready to claim your market share. Know how you will overcome them. Anticipate them. Many of the best investors in small businesses are successful because they know how to help the businesses in which they invest succeed in the face of the “sharks” of the world. That circles back to the earlier point: ensure you have the right partners in your boat.
8. If you want to change the world, you must be your very best in the darkest moment. As part of training for underwater attacks against enemy ships, trainees practice swimming under the keel in the pitch black dark with no map, where getting disoriented and failing is not an option. Instead of swimming in the dark with your business, our office wants to equip businesses and their investors with a map to be successful and reach your destination. Importantly, before you go swimming—or to make a terrible securities lawyer joke, test the waters[12]—it’s important that you are equipped with the resources you need to navigate successfully. In addition to the SEC’s wonderful resources for investors, such as Investor.gov, we’re working on new educational content that can serve as a compass for those without a deep background in securities to navigate compliance complexities when raising capital.
9. If you want to change the world, start singing when you are up to your neck in mud. Basic trainees spend a day in a swampy patch of freezing cold mud, which engulfs their bodies. Like many elements of training, most recognize it as a weed out event. Admiral McRaven recounts how, on the brink of giving up, one trainee started to sing with enthusiasm, and eventually everyone else started to sing along. One person’s enthusiastic (and off-pitch) singing gave the entire group hope and the will to persist. Small business investors often say that they don’t invest in companies, they invest in founders; specifically, in founders’ vision and will to succeed. I believe that supporting small businesses and entrepreneurs remains a bipartisan and nonpartisan issue because each of you spark hope, and we as a country have hope in the future that you are building.
10. If you want to change the world, do not ever, ever ring the bell. Admiral McRaven’s final point hits home: one ring of the bell, and all of the hardships of training can be over. You can quit with one ring. But the military teaches you to never, ever quit, and training weeds out the quitters. When asked about her success in graduating as the third female to complete U.S. Army Ranger School, Major Lisa Jaster said: “There is no quitting, I can’t have quit in me. There was never an option to stop, there was never an option to quit.”[13] It is no wonder to me why so many veterans go on to found successful companies.[14] Rather than hit a wall, you figure out a way to climb it or tear it down just like you were trained to do. However, on this point my advice on bells differs from McRaven’s. I hope that one day you will consider ringing the bell, albeit a different one: the opening bell. With the right tools and framework for raising capital, you should have every opportunity to take your company to the highest of heights, including ringing the opening bell as a new public company.

Conclusion

General Dwight D. Eisenhower once said “neither a wise nor a brave man lies down on the tracks of history to wait for the train of the future to run over him.” I am grateful for each of your service to our country through our armed forces, as well as for how you have each committed to becoming job creators stoking the engines of tomorrow’s economy. Far from lying on the tracks, each of you are actively conducting the train forward. The best part of my job is learning from thought leaders like each of you and then helping to tell your stories. I look forward to switching into the far more exciting part of the program for me and my team, the Q&A, where we get to hear from you. Again, thank you for your service and for the opportunity to speak with you this evening.