'Only the Strongest Are Going to Survive'

Brian Lee cofounded companies like LegalZoom and ShoeDazzle-and he believes a lot of conventional business wisdom is backward. Sure, it's harder to raise capital. But it's actually cheaper than ever to start a company.

- JASON FEIFER

Want to think big? Think like Brian Lee. He's the co-founder of LegalZoom, ShoeDazzle, and The Honest Company - each of which were transformative inside of crowded spaces. And here's how he spotted his most recent opportunity. He looked at the trading - card industry, which he says is "relatively small" at just a couple billion dollars. The secondary market for trading and selling those cards is more interesting to him, at maybe $25 billion. There are a lot of players in this space - manufacturers, auction houses, grading companies, and so on. So where would he fit in?

"The reason I'm so excited," he says, "is because that secondary market doesn't really have a brand name. So there's some very large players in the industry, but none of them are household names." Now he's building what he hopes will become that household name; it's called Arena Club, which helps people grade, collect, invest in, sell, and trade cards.

Lee now also invests in startups through his early-stage fund, BAM Ventures. Most startups he sees aren't built for success, he says but the reasons may surprise you. He explains in this conversation.

You're no stranger to business problems. In fact, LegalZoom came close to insolvency a few times. What did that teach you?

LegalZoom started as a direct-to-consumer (DTC) legal services company. However, a few years in, we noticed this gentleman in Florida ordering a divorce package probably every week. So after about 12 or 13 divorce orders, we were like, "Wow, this guy's getting married and divorced a lot!"

So I decided to reach out and just make sure he's OK. Then I found out that he was a divorce attorney, and he was just using us almost as a back-end paralegal to create his documents. And of course, the light bulbs went off for us at LegalZoom. We were like, "My goodness, we're not just DTC. We could be a B2B business too!"