Hit with a painful chronic medical condition that required three brain surgeries and unsure if big firm life was for her, Tiffany Smith ’09 did what anyone would do: She became her own boss.
Working at a prominent law firm had been a personal goal for Smith. Get through law school, join a firm as an associate and work her way up the ladder — that was the path she planned to take. However, during her time at law school, Smith encountered a road block that she could never have anticipated. She was diagnosed with trigeminal neuralgia, a chronic pain condition that sends pain signals from a nerve in the face to the brain, ultimately forcing her to rethink her entire law career.
After undergoing two sinus surgeries during her time at The Ohio State University Moritz College of Law, Smith took a job working for Akin Gump Strauss Hauer & Feld LLP in Washington, D.C. as an associate. While working for Akin Gump was a dream-come-true for Smith, her medical condition required two neurosurgeries and three intense brain surgeries — all within her first two years as an associate. The treatments forced her to take extended time off from work and made it difficult for her to serve clients to the best of her ability.
“After a few years, I realized that my particular situation wasn’t really practical for a large-firm career path,” she said. “I decided it was time to figure out what I
could do instead, given the unpredictable nature of my medical condition.”
That’s when Smith met her business partner and co-founder of Alekto, Walter H. Pinson III. Alekto is a credit error prevention service located in Durham, N.C.
The idea for the company started when Pinson, who was refinancing his mortgage, found a small debt on his credit report that he didn’t believe was accurate. To avoid a point on his mortgage rate and thousands of dollars in interest, he paid the debt and assumed the problem would be solved. Unfortunately, that was not the case.
“A couple of years later mortgage rates went down and he went back to refinance and, lo and behold, what’s on his credit report but the same exact debt he had already paid,” Smith explained.
Many consumers pay their bills and assume the creditors will update their credit reports to reflect those payments, however, that is not always the case, she said. Some research shows that as many as 25 percent of credit reports have errors that would materially affect the credit that consumer is extended, said Smith.
Alekto has developed a patent-pending technology that will allow consumers to pay important bills to creditors while using Alekto’s system to ensure their credit report’s accurately updated, thus avoiding problems like Pinson’s.
“Our innovative method and technology will really help consumers by solving a serious pain point, and that’s something that’s always been important to me — to give back and help other people,” she said. “Especially given the current economy, it’s more important than ever for consumers to be empowered. Consumers deserve accurate credit reports and credit scores, and shouldn’t have to settle for the status quo — which involves lengthy and often futile dispute processes as a result of improper reporting by creditors.”
Alekto officially launched in Maryland in April, but after being given the opportunity to participate in a summer “incubator program” in Durham, Smith and Pinson decided to give the South a shot. “We thought going down to Durham for a limited time would be a great opportunity to see if we liked it enough to relocate and fully launch the business from North Carolina,” Smith said. The incubator program proved to be an extremely rewarding experience for Alekto. “When we came down (to Durham) we just really enjoyed the startup and technology community here. Durham is really trying to build a thriving startup scene here in the Southeast. The people are genuinely interested in what you’re doing and helping you succeed,” Smith said.
During their time in the incubator program, Smith and Pinson applied for admission to a venture-backed startup accelerator called Triangle Startup Factory. After multiple rounds of callbacks, Alekto was ultimately one of only six companies to be selected to participate in the accelerator’s fall program. The accelerator gives each portfolio company a small amount of equity funding, provides access to successful entrepreneurs and feedback, and culminates with a Pitch Day in November during which Alekto will pitch its business to angel investors and venture capital funds in hopes of raising a full seed round of funding.
“We were ecstatic about our acceptance into TSF and that made the decision to move to North Carolina an easy one,” Smith said.
While Smith assumed starting a business would be easier than working at a large firm, she soon discovered that it’s no easy feat.
“Founding a startup business is extremely intense and very time-consuming, but the difference (between a startup and law firm life) is that in a startup you’re the boss, you get a say in what’s going on, you’re making critical decisions, and you get to determine the overall strategy behind what you’re working on every day,” Smith said.
Despite the intensity, Smith has come to find that being an entrepreneur is the right path for her unique background and interests.
“I don’t think many people realize how much legal work there is involved in starting a business. Especially because Alekto provides a financial service, there are many relevant legal issues. I’ve been learning so much since I’ve been doing this,” she said.
Smith has been told by Pinson that having an attorney on staff as a co-founder has made the startup process run more smoothly and saved them a lot of money.
“Attorneys are expensive, and although we use external counsel for certain projects, having an in-house attorney as one of the co-founders has been exceptionally useful in helping us both understand the strategic and legal implications of our decisions, and determining what’s best for both the business and what we’re trying to accomplish for consumers,” she said.
Smith understands that her situation is unique, but she credits her time at The Ohio State University Moritz College of Law to helping her find a career path that was right for her.
She explained that Moritz helped her to be open-minded about different occupations possible with a law degree and broadened her idea of what type of job an attorney “should be” doing. In fact, Moritz is still helping Smith. Last spring, Alekto became one of the first clients of the College’s new Entrepreneurial Business Law Clinic.
“If you would have asked me a year ago, ‘Would you ever start your own business?’ I would have said, ‘Absolutely not.’ But luckily, my education from Moritz prepared me such that I’ve been able to adapt to my personal circumstances and use my legal training to become an entrepreneur,” said Smith. “I don’t think that would have been possible without the excellent law school education I received at Moritz.”Tags: Tiffany Smith