Fellowship Spotlight: Bay Street Capital Holdings

While some folks set out building businesses to fulfill dreams they’ve held since childhood, others find the entrepreneur inside of them when life circumstances insist on it. William Huston, founder of Bay Street Capital Holdings, is in the latter group. 

Driven to Succeed

“When I was in college, my father got sick and became disabled,” he shares, “and the government denied his disability.” With his father unable to generate income, Huston had to figure out how he’d cover the cost of school. He encountered the book, The 4-Hour Workweek, and kick-started his business journey with what seemed to be a promising and profitable endeavor: a call center. 

The path from this out-of-necessity entrepreneurial move at the young age of 19 to Huston’s current career running a registered investment advisor (RIA) is defined by organic growth. He describes his initial strategy as simply walking up to local insurance brokers in Atlanta and offering to schedule their appointments for them. 

He hired one staff person in the Philippines to make the calls. “Once the local offices saw that it worked,” he explains, “they didn’t want to pay for it out of their budgets, so they’d introduce us to their regional offices.” But the regional offices didn’t want to pay either, which landed Huston in front of national offices. “And that’s how we ended up going from making a phone call for the State Farm guy to New York Life saying, ‘We want you to call nationally for all our offices.’” By the time he was 20, having found a sweet spot in the retirement space, Huston was flying to the Philippines to secure an office space to hold the growth of his newfound call center team.

Getting Into Investing

Bay Street is a RIA, an investment firm that’s registered with the SEC to manage the wealth of all kinds of entities—from individuals to 401(k)s and nonprofit organizations. Huston cites his exposure to federal benefits—and particularly the Thrift Savings Plan (TSP)—through his call center work as sparking his interest in investing. 

But it was anything but a straight line from point a to point b. “We had a lot of time to iterate,” he says, explaining the several business ideas he pursued that didn’t quite take off, but did provide valuable insights for moving forward with more success. “We had 14 years to figure out how to segment out audiences and put information in front of our buyer at each point of the search funnel in order to influence purchase behavior.”

With the lessons learned from trial and error, Huston was able to shift to a more efficient way of working. “We shifted from call, call, call to market, market, market and then got them to call into us.” And eventually, all of the learning and refining led him to Bay Street, a vehicle that would allow him to advise large pools of institutional capital.

Diversifying the Field

While the primary focus of his work is risk management, Huston is set out to accomplish a parallel goal while investing on behalf of his approximately 500 clients: diversifying the field. Huston cites that he became concerned by the lack of advocacy in the industry after learning that 98.3% of the money being managed in the U.S. is managed by White men. 

But with the option to turn to Bay Street, some of those White male money managers can now identify promising investments that exist outside of their immediate network, which, in many cases, can also lead to more diverse solutions from a more diverse group of people. “Bay Street was formed to advocate for diverse and emerging managers,” he shares. “We’re hired as trusted advisors. We recommend, based on merit, top-quartile fund manager. Our investor base isn’t all Black; it’s not all White; it’s not all men or women. It’s people who share the same worldview that we hold at Bay Street: opportunity and investment should be based on merit.” 

He draws a clear line between systemic racism and the ways in which people of color’s merit is often overlooked. “People of color are not often given the opportunity to fail,” he reflects. “The majority of VC firms actually don’t work out because most of their investments don’t work out. But diverse fund managers are expected to be outstanding 100 percent of the time with no margin of error.” Huston explains that Bay Street exists, “so that people who are unsuccessful on their first and second attempt don’t have to go into the corner.”

“I’m looking to build a portfolio of diverse investors with decades of experience who have been underallocated to despite their performance..” 

Bay Street has served as an investment advisor for a roster of outstanding organizations including, Paul Allen’s Allen Institute of AI, Sheryl Sandberg’s LeanIn.org, Low Income Investment Fund, Waymo, and Confluent. As far as individuals, Ernest Greer, co-president of Greenberg Traurig law firm, Chappie Jones, former vice mayor of San Jose, and several Bay Area families work with Bay Street to build and preserve their wealth, Huston and his team are in the position to make truly impactful introductions. “Our goal is to help more institutional partners confidently allocate to emerging managers like the folks in the VC Include Fellowship.”

Learning Through Experience

Huston’s call center work supporting other investment firms with branding and marketing showed him what might be possible. “In 2017,” he shares, “one of our clients went from zero to $500M in assets with eight of our telemarketers.” As compared to seeing their bigger companies—like New York Life, MetLife, and MassMutual—succeed, watching this startup explode from the ground floor felt much more remarkable. 

“That really shocked me,” Huston says, citing this as the moment he knew he was onto something. “I decided at that point that we should build our own brand because it became clear that we were successful because of our effective approach to marketing spend, not just the brands we were supporting.” 

As Huston describes it, Bay Street is his team’s second time at bat. “Bay Street now has $510M in assets. We didn’t just do it one time for a startup. It’s our second time reaching that $500M mark, and this time, it was for our own brand.” 

Setting Up Funds

“We set up two private funds to be able to allocate capital and have our team manage those projects,” There are 58,000 hotels in the U.S. and fewer than 500 are Black-owned. Black people spend $109B annually on leisure hospitality and less than $1B of that goes to Black-owned properties. “So that was the stat,” Huston says, “that made us say, ‘The decision making process that goes into selecting a hotel can be a lot like selecting a financial advisor, let’s go build a hotel brand.’” He adds, “We knew that we thrived in these sorts of environments with low barriers to entry and lots of options to choose from, where the only differentiator is marketing. So we went for it.”

In 2022, they launched Resthaven, which now boasts a property in Los Angeles, the only Black-owned hotel in Tahoe, and will soon be not only the first Black-owned hotel in Portugal, but the first four Black-owned hotels in Portugal, as they open an entire group of properties, each with a minimum $12M build. Huston shares that their strategy focused on targeted, municipal-specific government incentives. The team combed through all of the available options and submitted proposals that ultimately received 45-55% tax rebates.

Closing a Gap in Private Lending

Bay Street’s other fund is a private credit fund that provides capital to VC firms, allowing Huston and his team to also diversify representation among the powerful role of private lending. The criteria and terms for private lending have historically disadvantaged Black people, other people of color, and women. “We want to be the preferred choice of these funds that are in need of private capital who were rejected by the bank or given some kind of ridiculous collateral request.” 

Huston points out how expensive it is to break into VC. He elevates the racial wealth gap as a clear barrier for Black people in particular, given the fact that very few Black people are independently wealthy by the time they’re looking to launch a fund. And the barriers extend beyond unstated criteria around personal wealth. “If you can’t raise money, you can’t charge fees; if you can’t charge fees, you can’t pay your staff; if you can’t pay your staff, institutions will say they can’t prudently deploy capital,” Huston says. “So you’re in a vicious cycle of investors who are playing a game of ‘wait and see’ that never ends.” 

By positioning themselves to lend private capital, Bay Street is able to stand in an existing gap and lend support to deserving founders. As Huston puts it, the funds are then able to lift off in this industry that’s extremely expensive and otherwise difficult to break into. 

Participating in the VC Include Fellowship: Getting Proximate to Target Market

“I’m in the VCI fellowship in order to stay close to emerging managers,” Huston shares. And he’s gained the proximity he was seeking by participating in this cohort experience. “I want to make sure that when institutional capital is ready to allocate capital to emerging managers that present a different set of risk profiles, that they have someone who they have an existing relationship with that they trust as an advisor who has historically made money for them over time.”

He also cites what he’s gained from VC Include staff as a valuable takeaway from the fellowship. “Bahiyah and Rendel are folks I look up to,” he says. “I knew both of them before the program, but having that focused 1-on-1 time has been awesome.” 

It’s our pleasure to create opportunities for Huston to connect with the folks who are the intended beneficiaries of his work, and we look forward to seeing all the ways Bay Street continues to create impact.