Jay Lee doesn’t have the typical entrepreneurial story. Instead of rags-to-riches, his is a little reversed. Growing up in Greenville, S.C., he has a background in community activism and law. While working as a lawyer on Wall Street in 2008, he was struck with an epiphany.
“I would work until 1 a.m. moving millions of dollars across the world,” he says. “But as the economy was tanking, I was noticing the magnifying affects on small businesses in my community. I wondered why I could move money so easily across the world but not invest in my local community?”
Armed with a breadth of legal and financial knowledge, he set out to start a company that would allow consumers to invest in their local small businesses. In June 2011, Lee left his high-powered job to found Small Knot—much to the chagrin of his family.
“My mother told me not to post anything about it on Facebook because she didn’t want questions,” he says, with a laugh. “It wasn’t ill-intentioned; the Chinese community is just very tight-knit.”
His family is now supportive and Lee is in full startup mode. After successfully completing a TechStars accelerator program this spring, he launched Small Knot in March.
I sat down with him to hear how it was going.
Katie Morell: How do you like being an entrepreneur?
Jay Lee: It is high stress, but I like it a lot. I can’t imagine doing something else now. There are no rules for ways to work, no bosses to impress. It is just you and what you are trying to do and seeing how the world responds.
KM: How does Small Knot work?
JL: Local businesses post project needs (examples include donations to a damaged restaurant for Hurricane Sandy cleanup, rebuilding a hotdog truck in South Florida) and nearby residents can invest to help business owners reach their goals.
We don’t think of the money as a donation. For every dollar received, small businesses give back a return on investment, sometimes in the form of products, sometimes services.
KM: How are you different from sites like Kickstarter?
JL: We map crowdfunding into the real world—into your neighborhood. When you can help a business down the street, it is very concrete. We are all about building relationships between business owners and their customers.
KM: What challenges are you facing right now?
JL: Getting people’s attention is a big challenge. To combat that challenge, we are trying to provide the best customer experience. When a business owner wants to build a campaign and strategize, we are very personal about the way we help them. We never use form e-mails, we chat with people one-to-one.
Scaling is also a challenge. Our business is hyper local; it is really hard to build a big tech company on a local model. We are breaking through that by using an experimental approach and are open to trying our model in any city in the country.
KM: What does the future hold for Small Knot?
JL: We’d like to be in multiple cities within six months.
KM: How much are you sleeping right now?
JL: (Laughing) I’m sleeping a little more than when I was a lawyer—about four hours a night. The big difference is that when I wake up, I can’t get back to sleep. My mind floods immediately with thoughts about the business.
KM: What advice can you give other startup entrepreneurs?
JL: Get out and meet people. I spent the first several months alone in a room planning my company. I learned that when I came out, I would encounter people who’ve done this before and could spot things I didn’t know. It can be painful to get feedback, but it is necessary and incredibly valuable.
photo: Courtesy of Jay Lee