How did you do it? Financial Success Thread

[Howard Treesong]

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Thanks Howard.

Everytime I have an interaction with my fine lawyer friends I usually vomit in my mouth a little. The utterly absurd "lottery mentality" that most Americans have these days with regard to any type of liability is sickening-- some times sh*t just happens and that's life.

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I generally agree with that principle, and it likewise seems to me that America has lost some sight of that.

[TheWorstPlayer]

If I don't win the lottery someone else will. The problem is with the legislature, not the American people.

[renodoc]

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If I don't win the lottery someone else will. The problem is with the legislature, not the American people.

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I call [censored]. If you order coffee at Micky D's, you should expect that its going to be served hot. If you smoke, you should expect to have a higher cancer risk. If you have a bad medical outcome it might be your disease that killed you, not your doctor. If you are at a department store and slip on the floor, its not necessarily wal-mart's fault.

The same mentality that demands social security and medicare entitlements is what drives the lawsuit industry. Its a huge detriment to our society and it starts with the individual who thinks everything that happens is someone else's fault.

[El Diablo]

reno (and others),

Let's end this hijack. Feel free to start a thread on liability lawsuits and related issues.

[calmB4storm]

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Wow, your catalog of mistakes looks a LOT like mine. I'll post some of them in this thread soon.

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El D,

Here's a good way to get this thread back on track [img]/images/graemlins/wink.gif[/img]

[Scorpion Man]

I wasn't gonna post, but what the heck, its almost halftime at the Warriors game.

I will try to tie it all together with some advice at the end.

In a nutshell, I made sure I excelled at everything that was important...grades, extracurriculars, relationships with potential referral sources early on (this was not Machiavellian...I cultivated these naturally).

So, top of high school class, not that far from a 4.0 at a West Coast Ivy (got into Harvard ugrad, did not go, was the start of a habit of avoiding the biggest brand names and the safest routes except for bschool--i couldnt help it), entrepreneurial summer job my sophomore year selling advertisements on freely distributed phone book covers, led to a great $2600 per month (all the money in the world as far as I was concerned in 1988) gig at a litigation consulting firm (very competitive and learned a lot about the professional environment and computers and programming, etc).

Graduated early (parents went bankrupt my senior year and I was so focused on business by that point that I wanted to get it start it - I see in retrospect that this sounds lame, but its how I felt at the time).

Conventional wisdom - NYC for an I Banking job. My solution - NYC sucks. I don't like big orgs and slowly working my way up. I found a couple year old investment bank in SF that focused on entrepreneurial firms. Perfect. A start up focusing on startups. Two small problems... (1) 1990 was a terrible year in the markets and very little happened (other than some of you finally getting off of your pacifiers). (2) The founder was an a-hole and there was significant turnover and I hated many of the professionals. In addition, I banking is great training but an absolutely horrible career.

Next...got lucky and good...my third cousin in law (how is that for removed) introduced me to a top 15 or so venture cpaital firm who was looking for their first ever associate...this was before VC was on anyone's screen. I had an interview from the junior partner (only 5 guys in the firm) on the West Coast. Passed that. Senior partner calls and says "I am on Cape Cod (I am in SF...) and would be happy to interview tomorrow at my vacation house here if you would like to come out...but we won't pay for it." This was like 4pm SF time. I catch a redeye on my own expense (I am 21 years old, online poker does not exist, this seems like a lot of $). I stay overnight...most notable aspect of the interview is that it happens on a 20 mile bike ride that I am not in shape to take...my average answer sounds like "I...heave, heave...and intersted in venture capital...heave, heave...because, etc". My family lives in Massachusetts and he is family oriented...I make the mistake of calling my parents when he is around and he invites them up to the Cape for dinner...and they accept. INteresting all around. Got the job. Best thing that could have ever happened to me. Salary - $30k. No layers between me and the partners, no other associates. Participate in most partnership meetings and have the balls/naivete to speak up often with me opinions (must have been comical to them). Got an incredibly important exposure to (1) broad swath of industries at (2) high levels, i.e. ceo's pitching to raise money - paved a path for me in later life as a generalist and a person who grills CEOs for a living, comfortably.

During second year pointed out to VC firm that they had a public stock portfolio they had suckered their LP into giving them that was going totally unmanaged. Told them it was malpractice (literally) and offered to assist (they knew I had a longstanding interest in stocks). They were too uninterested/lazy to do it, so told me to do it myself. It was $7m (that was not bad back then). I ask "how will I be paid for this". They say "if you make money for us, you will make money, trust us". These are very distinguished, top of the line smart, rich, guys. I accept. I spend halftime my second year going up 50% in the fund (no fault of my own...it was lucky, I had no idea what I was doing. I am not a modest person, this is just how it was). I also source and complete 2 VC investments (very difficult for someone my age and lack of experience) through sheer drive and willpower. Both are successful - 5x and 3x (pretty good back then, before the bubble).

I apply only to HBS, because its the only place I wanna go. If I dont get in, I will stay. I get in. My 50% year generates $750k for the partnership (forgetting the VC deals). Comp comes up. They give me $15k. I say WTF? They say "we don't like to pay for unrealized gains (I had a couple large gains I had not taken; this perspective is about not wanting a large public position in an illiquid copmany that then tanks and the supposedly successful VC investment never actually liquidates". I say, ok, you have a telephone? I can fix that immediately.

lesson: having trustworthy partners who share your compensation philosophy is crucial in the investment busienss. They screwed me, and I don't think they even realized it.

HBS. I expected to return to the VC firm (they kept me on as a consultant during HBS to help defer my expenses). They offered me $60k when I was graduating. I was pissed because they had offered someone a couple years earlier without my now 4 years of history with them, etc. the same amount. I asked for $65k. They pulled the offer (they thought I was ungrateful i think)! I cried. Literally. In a meeting. Well, I hope they did not notice, I tried as hard as I could not to let it happen, but my eyes were
watering for sure. That said, I had great concern because they were asking me to specialize in an industry (that was clearly where VC was going) and I had no freaking clue. I was 25 years old and I had never worked for an actual company in an actual industry and I was terrified about picking a speciality I knew nothing about. I felt very much an outsider when I was an associate (there was no one my age in the industry at that time...no one at all)..and the feeling lingered. So that was that. Very traumatic.

I had a very long standing interest in stocks - had invested in them since I was 10 years old...read the Investors Biz Daily at summer camp,etc. (no family background in this, i was just very intersted, it is just a personality thing). I read books and newspapers about the finance world all the time...and I had noticed the emergence of hedge funds. At the time they were really a sideshow at business school. Everyone else was focused on IBanking and Consulting - it was all about Goldman and McKinsey. I literally never even interviewed for those jobs. I wanted something unusual, different, where I could make an immediate impact and be measured by that impact. One of the reasons I was willing to blow the VC deal was that I did not like the 5 year partner track they were talking about. I had delivered and if I continued to deliver I wanted to be paid.

A firm my classmates and I had never heard of came to interview on campus. The 31 year old interviewer had made $11m the previous year. Whaaaat? OK, sign me up. Incredibly competitive process for two slots, and I got it. beauty of it was that it was in Santa Monica, and I drove a moped to work in jeans. Sweeeet. Small problem. I realized within a month that 'there was no there there'. The firm had been up 170% in 1993 and it turns out they were just leveraged trading nuts. Add to that that pretty much everyone except the top guy was a total moron that had ridden his coattails and that being smart and pedigreed was a negative...I started looking for a job immediately.

Through lots of networking (I wont go into it, but lets say that some positive impressions that I had made on some people at HBS when I was interviewing ended up being crucial) I was introduced to a young guy out of Fidelity starting a hedge fund. We met, we hit it off, and after 9 mos of looking I moved to SF and was there day 1 for investing.

Helped build a firm from $75m and 7 people to almost $5B and 70 people...I had a hand in hiring almost everyone and in the important invesmtent decisions. Worked like crazy and though about little else during this decade. Moved my "number" a few times along the way but was clearly there by 2003. During 2004, combo of growing disagreement with the founder over the way the firm was run and the fact that my daughter was diagnosed with a serious disease led me to give notice and quit at yearend.

Have not earned a single external dollar since.


Lessons? Hmmmm...
1) While there are outliers, careers are continual processes of closing off options in my opinion. I did everything in my power to leave all options open to me for as long as possible. This is my main argument with online poker...it starts to close off options

2) If you want the big payoff, you usually need to take a big risk. If you are talented and "hirable" enough, you can afford to take that risk because if it fails you can move on. I am totally convinced that if my second firm did not work, a later one would have.

3) This is key...identify a growing industry and become an expert in it. This is the easiest way to success. You can even be mediocre and successful if you manaage to figure this out (for example cellular in the late 80s/early 90s, internet in the late 90s, hedge funds in the mid 90s)

4) Don't kiss ass. Don't be a yes man. Most of my success I attribute to a willingness to tell the boss he was wrong.

5) Develop your own ideas. Conventional wisdom is often wrong. If you are bright, you will discover where you differ from conventional wisdom and exploit it

6) Be an asskicker...that redeye flight might not translate in this post, but it was a very aggressive move on my part and the key to my getting that job. Careers are often like pyramids...you need the base to get to the top. That was my base.

[Howard Treesong]

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While there are outliers, careers are continual processes of closing off options in my opinion. I did everything in my power to leave all options open to me for as long as possible. This is my main argument with online poker...it starts to close off options

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Bingo. This hits the nail right on the head, along with your described-but-not-quite-stated premise that all too many guys runing VCs are greedy pigs. I had exactly two fights with clients in fifteen years of law practice and both were with VC principals. Both were utter dicks who had zero shame about lying through their teeth.

There are some good guys in that universe but sheesh, 15 is "taking care of you" on a 750 gain in liquid securities? That's an effing joke. I would have shipped the 15 back with a hearty FU, no lie.

[JaBlue]

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There are some good guys in that universe but sheesh, 15 is "taking care of you" on a 750 gain in liquid securities? That's an effing joke. I would have shipped the 15 back with a hearty FU, no lie.

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Seriously. Does stuff like this happen a lot? That is, if I ever find myself in position to make a company a lot of money and I am low-level, should I get some kind of written agreement stating how much of what I make them goes to me? Or is that asking too much?

What do you guys think a standard number for them to have returned Scorpion Man on the 750 would be? I would think... uhh... 100?

Cool story Scorpion Man, thanks for sharing.

[hobbes9324]

Nothing too exciting - had a late start at med school, got a good ER job after residency, and am maxing out my pension each year. 11 yrs out, pretty much debt free and about 550k put away. Bout six more years and I'm done.

The easiest way to financial success is just saving as much as you can every year, putting it in an index mutual and leaving it alone. It's not sexy or exciting. It just works.

MM MD

[Howard Treesong]

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There are some good guys in that universe but sheesh, 15 is "taking care of you" on a 750 gain in liquid securities? That's an effing joke. I would have shipped the 15 back with a hearty FU, no lie.

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Seriously. Does stuff like this happen a lot? That is, if I ever find myself in position to make a company a lot of money and I am low-level, should I get some kind of written agreement stating how much of what I make them goes to me? Or is that asking too much?

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In a small environment like that, asking for a written agreement makes you look like a nit, which is a bad outcome too. Basically, sometimes you just get screwed.

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What do you guys think a standard number for them to have returned Scorpion Man on the 750 would be? I would think... uhh... 100?

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I would have made an argument for 20% of the realized gain and been entirely satisfied with 10%. Had I been on the other side from OP, I probably would have offered 50 and let myself get talked up to 75.

And yes: good story, SM.