The Wall Street Series Part IV: From Wall Street to Main Street - Making the Break

Overview

Some time has passed since my last installment, as I've been wondering: what else is there to say? But then it hit me - likely the hardest thing I've dealt with in my career is the transition from Wall Street to Main Street. And yes, the difficulty extends far beyond money and the knowledge of a sizable year-end bonus. The range of emotions brought to the surface by such a dramatic career shift is hard to describe, and it led to a bunch of interesting behaviors that, in retrospect, make me feel like a BF Skinner experiment. Translation: what seemed like a chaotic ride on an emotional and spiritual roller-coaster was nothing of the sort. It was a predictable, logical and healthy process of mentally pulling up stakes and placing them down somewhere else. From Wall Street to Main Street. And I'd like to share some of what I went through with you, the experience of which might be of some value to someone out there. At least I hope so.

A Little Background

For me it started in 2002. I had been on the Street for 15 years. They had been really, really good years. I had been fortunate to build a great derivatives team at Deutsche, with a mix of skills, personalities and achievements that made coming to work every day a blast. I also had a great partner based in London and people whom I worked for that I respected. Was it all wine and roses? Of course not. But it was pretty damn good. But then a few things happened. Regulation made the business more of a slog. It just wasn't as much fun. I had developed a group of talented people that could really take the reins and run with things and, in my opinion, really didn't need me any more. This led to some soul searching, some open and honest conversations with my senior colleagues, and ultimately led to my writing an expansion plan for and being made CEO of the trading business DB Advisors.

This was a new experience. A very new experience. It was exciting. It was challenging. It was overwhelming. It stretched my skills to their limit - not my deal skills and not my quant skills, but my managerial skills. I had never run such a large, diffuse business (NY, London, HK, LA, with other relationships spanning the globe), and I had never run a trading business before. What was front and center for me was the further "institutionalization" of the business, bolstering its operations, risk management, legal and compliance capabilities. This was prudent given both the scale and complexity of the business and the goal of building a world-class control environment without strangling the ability of the trading teams to do what they do best - trade. This was a good plan. However, a bunch of things upset the apple cart: (1) the desire of some of the top teams to externalize, and set up their own independent shops; (2) the growing discomfort (from a legal and compliance perspective) with running side-by-side proprietary and client portfolios; and (3) the realization that "tail events" happen all the time, and that supporting a platform of this scale requires accepting a level of return volatility that is just not fun unless you are prepared to handle it. So these three factors conspired to make my 2003-2004 period one of great learning, great earning and even greater agita.

For various reasons I found myself at an inflection point in late 2004. My choices: new challenges at Deutsche? New challenges at other Wall Street firms? The opportunity to run a large hedge fund? Or maybe something else. The soul searching had begun.

What Now?

After some discussions with my boss Kevin Parker, who is a great guy, I decided a clean break was best. Take my toys and go home. Take a break and do some deep thinking. Ok, I said to myself. I've got money. I've got time. I've got a wonderful family and great friends. I've got my health. I'm 38 years old. Sounds great, right? I was scared as sh*t.  What the hell do I do now? I've got a big rolodex and even bigger ideas. My awesome wife says "Take it easy. Go to museums. Go to the movies. Go to the gym. Do those things you've long wanted to do. Teach a class. Take a class. Whatever." All good and logical suggestions.

The problem: I'm Type A. My brain is always processing multiple threads, regardless of whether I want it to or not.  It is just part of my DNA. Generally it's people like me that achieve the kinds of things I achieved on Wall Street. And we're not very good at relaxing for extended periods of time. So notwithstanding my wife's loving, caring words, I took almost none of her advice. I began networking. Speaking to people. Looking at deals. Making some investments. Staying busy. Because every time I felt like I wasn't busy I felt like a worthless piece of sh*t. I was grasping. I wasn't at peace.

The Phases of The Decision-Making Process

Phase #1 - Fear Feeds Activity. Feeling rudderless, feeling scared, feeling confused about where I might fit in and what I might do for the next 40 years. My response: frenetic activity that took in the universe of possibilities. Networking, talking, thinking, investing, and contemplating things both within and without my historic sphere of influence. In retrospect, this turned out to be a highly adaptive and functional response. It allowed me to basically collect data, lots of data, on the things that turned me on, turned me off, best leveraged my skills and experiences, and fit with my worldview and goals at that point in my life and career. So while it didn't feel like it at the time, there was a method to my madness. And madness it was.

Phase #2 - Analyzing the Data. After spending several months meeting with people, evaluating opportunities directly related to and unrelated to my previous work experiences and just seeing how it all felt, I determined that, at this time, I wanted to do something completely different than what I had done previously. Not that the Street and hedge fund management isn't great. It is. And who knows what the future holds. Maybe someday I will return to my ancestral home on the Street or at a hedge fund in some capacity. But at this time I had another goal - namely, pursuing the dream of building a business, and not a business inside a Wall Street firm but a new business where I could bring every bit of my skills and experiences to bear. I wanted to feel the rush of passion, intensity, and comraderie that comes along with building a company, and building a team of great people sharing a common set of goals and a common vision. Ok. Good realization. But what now? See deals. Lots of deals. Invest in some, but be in search of the Holy Grail.

Phase #3 - The Power of Networks. I found that my networks were great for seeing deals and meeting people. I seeded a quant-based asset management firm called Clear Asset Management, and invested in a few other comapanies as well that came to me through my networks. During this time a former colleague of mine at Deutsche, Jonathan Miller, synched me up with one of his old work colleagues from the early 1990s named Jeff Stewart. Jeff was a successful technology entrepreneur (his most recent company prior to our partnership being Mimeo.com, a truly disruptive online printing company) and was looking for "strategic" angel investors for his latest business idea, Monitor110. I loved the idea (duh!). It seemed like the Holy Grail to me. It also seemed that Jeff and I had very complementary skill sets. And over a period of weeks and months we explored the idea of partnering not just on Monitor110, but on other investing ideas where we had shared interests, which were many. Jeff and I shared the same passion, the same vision, and the same intensity in quest of greatness. And we felt our common ground initially was in our belief in Monitor110.

Phase #4 - Making a Decision. Around this time I had offers to do other things more in line with my hedge fund management/derivatives management experience. These were big money deals. Working with good people. Problem was, I really didn't have the spark at that time to give it my all, which is the only way I do things. So money and prestige notwithstanding, my heart just wasn't in it. And one of the reasons was my excitement with Jeff and the goal of making the vision of Monitor110 real. But of course, this decision meant walking away from big, big dollars in exchange for years of basically earning nothing while trying to build a company. And it was a decision I just had to make. Was it uncomfortable? Yes. I am a pretty risk-averse person who just decided to do something so seemingly off my internal "efficient frontier" that I could hardly recognize myself. But I had gone through a process, a thoughtful, rigorous process, to get to this point. And when I plotted my own internal utility function, this decision sat right on the curve. So I did it, discomfort and all.

Phase #5 - Living with the Decision. Fast forward two years. So how has it been? I gotta say, Main Street is pretty cool. I've built an entirely new set of networks and skills. I've immersed myself in the NY Technology, Venture Capital and Entrepreneur communities, met tons of amazing people, and tapped into a part of myself I didn't know existed - the tech geek. While I am not a tech geek like the people I work with, I am about 1000x more tech literate than I ever was during my tenure on the Street. And it is fun. I have also become a part of a culture - the entrepreneurial culture - that is markedly different from Wall Street culture. Much more open. Much greater sharing. Much more helping your fellow entrepreneur who is trying to change the world. This just doesn't happen on the Street. I must say, I am enjoying this new-found spirit of openness and collaboration - it took me a while to get used to it, but I reall dig it. I actually discussed this concept in a post I had written in the wake of the Web 2.0 Summit:

Wall Streeters are from Mars, Entrepreneurs are from Venus

But before that, I feel compelled to share one particularly interesting observation: the difference between competing on Wall Street and competing on Start-up Street is night and day. It took me a while to figure this out, as the cultural shift was abrupt and dissonant at first. While I generally had a cordial relationship with my competitors during my time on the Street, there certainly wasn't any collaboration, any material idea sharing, or any "Hey, you might want to interview this person. They'd be really great for you." Pretty much, Wall Street is a zero-sum game. I win; therefore you lose. Cooperation is (generally) not rewarded (unless you are discussing "club deals" in private equity and the like, which may or may not be anti-competitive, but anyway...), because in most cases in transactional/trading businesses the outcomes are digital - there is no gray. As a result, I was acculturated to be a royal hard-ass. Protective of my teams, my territory and my IP. This, as I've come to learn, is not exactly the case with start-ups in general and entrepreneurs in particular.

There seems to be the concept of both enlightened self-interest and a "karma boomerang" among entrepreneurs. While start-up managers are super competitive and want to win as bad as any Wall Streeter (if not more), there appears to be a tacit code of cooperation and a "we're in this together and trying to change the world" mind-set that permeates the dialogue. I just wasn't used to this kind of collaboration, sharing and communication with my competitors during my Wall Street days. And this also applies to my interactions with VCs. I came to my initial discussions with the following frame of mind: "I am assuming you are trying to screw me. Therefore you need to prove to me that you are trustworthy and that your intentions are totally above board." In short, I seemed like some hostile, alien life form (Martin, to be specific, like the dude on Bugs Bunny with the funny brush hat). After I figured out that yes, they certainly want to do the best deal for themselves, but that there is an inherent balance built into the transaction (because a pissed off entrepreneur does nobody any good) and that they generally possess good intentions, I mellowed out. But I've really had to alter my perspective since entering this world. And I like it - a lot. While I am still a Martian at my core (once a deal guy, always a deal guy), I can now hang with folks from Venus without freaking them out.

Jeff and I have built a really cool company with the best people in the world, partnered financially with some of the best investors in the world, and are about to embark on a whirlwind tour of bringing a new product to market and trying to change the way institutional investors use the internet to make money. This is big, dizzying stuff. But truth be told, notwithstanding our success (raising $17 million from the likes of Draper Fisher Jurvetson and the legendary angel investor Ron Conway to name just a few, building a 50 person global team, bringing a massively complex 2+ year development project to culmination, etc.), I still sometimes get heartburn when I think about how much cash I'd be making if I'd only taken some of those jobs that were there for me. The Street has had a pretty good run since I bailed. But every time I think this I say to myself - think of how happy you've been these last two years, how much you've learned, how much you've grown, how much better you've gotten as a person and as a professional. And then I think - it has been worth it. In spades. What I am doing now is successful and will only become more so, and if I do decide to go back to the world of hedge funds or the Street I am a much better manager, business builder and problem solver having started and built a highly complex, global company than I was before. So net net, I rolled the dice and they came up boxcars. And I can't tell you how proud I am to be able to say that.

Conclusion: Change is Hard - Period

It has been a wild ride. Emotional ups and downs together with periods of uncertainty ("did I do the right thing?") against a backdrop of incredible learning, growing and fun. Thinking back upon the dramatic shift in my work life, all I can say is that it, like everything else, is a process. Go through your own process. Give yourself a break - acknowledge that even in the best of circumstances (and I think mine were about as good as they could get) it will be hard and you will have many moments of fear and self-doubt. But as long as you follow a healthy and rigorous process of self-assessment, analyzing the options, collecting data and making a thoughtful decision, it will work out. And "working out" doesn't necessarily mean that the next thing you do is a home run - only that by doing it you will make yourself a better professional and a better, happier person. And at the end of the day isn't this what really matters?

Comments

[Jing]

Roger,

I totally agree with Yaser. Given your passion for writing/blogging, a book is needed ;p

I really enjoy these personal posts regarding your own experiences. I'm glad you're part of "The Main Street!"

[raj]

Brilliant post Roger. I second Yaseer's suggestion that you should write a book and i will buy it in blink. You have a unique and mature perspective which is very helpful to beginners like me .I will check out Monitor and suggest it to my friends. Kudos to you and all the best with your venture.

[Greg Jeddis]

First time I've ever read a Blog. From one ex Wall Streeter it hit me between the eyes as being the purest of that which is best in business, leadership and desire. 110 is a grandslam for more reasons than convergence of technology and concentration of markets.

[David Jackson]

Terrific post, Roger! Thank you.

What have been the biggest challenges you've faced, and problems that you've had to solve in Monitor 110?

[paik]

good piece.

from korea

[Bart Hacking]

Roger, this is your best post to date! In my opinion, too often short introspective pieces fall flat because they can come across as narcissistic ("I have done all these great things and I always knew what I had to do to get there . . . follow my advice and you can too"), but your brutal honesty keeps it real, makes it very relatable, and as a result a captivating read. Very well done!

[Yaser Anwar]

Two thumbs up to you! A very inspiring and passion-filled story.

Having followed your blog for about 6 months now and interacted with you, I think you should definitely write a book in two-three years.

Since you held such high positions, I'm thinking a future post idea could be a post about all the attempts to poach you away by your competitors and how each time you said no.

Anyhow, keep it up sir!