YWR: Shane's mid-career train smash.
A hedge fund holiday story.
“I’m such an idiot! I should never have left Merrill! I hate myself!”
Shane was upset. I wanted to help, but didn’t know what to do either.
It was December and we were both sitting on the trading desk of a hedge fund which was about to shut down.
Shane was lamenting how just 2 years ago he had left his options trading position at Merrill Lynch in London to join a hedge fund in San Francisco. And now that fund was closing. The fact we were in San Francisco was also part of the problem. There weren’t many other hedge funds in SF. We both feared it would be a long and difficult job search.
Shane went on to explain that what made it worse was everyone else in his family was a highly successful doctor, or like his sister, working for a premier biotech company. He saw himself as a failed, unemployed hedge fund trader, and it hurt.
I told Shane it would work out somehow. The ‘how’ just wasn’t obvious at the moment. Shane rolled his eyes.
A week later the office closed, and we went our separate ways.
Two months later..
It was February and I was meeting with Shane for a coffee on Market Street.
As he entered the crowded Starbucks, I was surprised to see he was smiling and in good spirits. Shane told me things were going well. He had started a business.
“What? You started a business? What the heck? Tell me more.”
After the hedge fund closed, Shane had gone to spend Christmas with his parents in Las Vegas. He was in total despair and didn’t know what to do. When Christmas was over, he had no reason to hurry back to San Francisco, so he stuck around Las Vegas with his parents for a while.
As a side investment Shane’s parents owned a large medical building. And it came up during a family dinner conversation that one of the tenants in the building was continually asking for more office space. It was a live-in care business for the elderly.
This peaked Shane’s interest. None of the other practices in the building were asking for more space. What was going on? To his credit Shane decided to visit the business and learn why they were growing so quickly.
It turned out this fast-growing business assisted children in providing live-in medical care for their elderly parents if they lived in another city. Shane learned this was a growing trend. Children were pursuing careers in cities far away from where their parents lived and needed to remotely organize care givers to drop in daily to help with administering shots or pills. This was care for parents who were old enough to need some medical help, but didn’t want to move into a nursing home. This business provided a one stop shop to find and pay caregivers near your parents and manage any medical prescriptions.
Shane was fascinated by this trend. It made perfect sense why this business was growing, and why the trend would strengthen as society aged in the decades ahead.
But Shane saw a gap; a way to make it better.
Why was this business managing everything by phone and email? Get with the times. This should all be on a website or mobile app. And the website or app should have pictures of all the caregivers along with customer reviews, like with Yelp. And you should be able to pay the caregivers online, like with Paypal. And you should be able to manage all the insurance claims and reimbursements online too. His mind was spinning with ideas. He would create a two-sided marketplace of caregivers across the country on the one side, and customers on the other. Like AirBnB, or Uber for in-home elderly medical care.
Shane was excited by the idea and had already raised a small amount of money from friends and family. He had one Ukrainian programmer and was working on the first version of the website. Even though the website wasn’t ready yet, and he had nothing to show, Shane was already speaking to VC’s. The VCs were interested and liked the idea but wanted to see more ‘proof of concept’. Shane was also busy on Facebook building his brand as a thought leader on the topic of elderly live-in care.
I was amazed how much Shane had accomplished in two months and happy for him. It seemed exciting. We finished our coffees, and I wished him well.
The next time I saw Shane a few years had passed. This time I visited him at his company’s offices down in San Bruno, near the airport. He had rented out two rooms in a 1960’s office building. In the first room was the Ukrainian programmer working on two oversized monitors full of code. I had no idea what it meant, but it looked start-uppy. In the other room was Shane’s desk, and the customer service manager, who was the younger sister of a mutual friend of ours. It was an enthusiastic team of three. After the tour and introductions Shane and I left the office to have lunch at Applebee’s across the parking lot.
Once we were settled in our booth with our burgers ordered I told Shane everything looked great. I was happy for him and glad to see the business was growing. He had his first 2 employees and was growing his customer base. OK, there weren’t any bean bags, or a foosball table, but it seemed like Shane was living the start-up dream.
But apparently, that was not the case.
Now that we were out of the office and in private Shane let down his guard. He said things were terrible and he was barely hanging on. The business was consistently losing money. Yes, he was gaining customers and the idea was working, but the VC’s still wanted to see more ‘proof of concept’ and wouldn’t invest. He had sold his San Francisco apartment and small sailboat to keep funding the business.
Ooof the sailboat… he loved that little sailboat. He used to have a picture of it near his phone on the trading desk. He would talk about how he loved it and loved sailing.
Also, the start-up was taking over his life. He had no free time.
The idea was that everything would be managed by the website. In reality, he was having to sort out customer issues all over the country day and night. For example, the previous weekend he had planned a wedding anniversary picnic for his wife. It was an ‘anniversary picnic’, because that was all he could afford. Then in the middle of the picnic a police officer from Baltimore called because one of his caregivers had been struck by a confused elderly man who didn’t want the caregiver in his house, even though the kids had arranged the visit. In the ensuing altercation the police had been called, which led to them calling Shane, as the owner of the caregiver business, to confirm the caregiver was supposed to be visiting the house. Shane said this type of stuff happened all the time and he had no weekends or holidays.
As we started into our burgers Shane went on to praise the support of his wife. He was amazed she put up with these interruptions and the financial stress. He was really stressed out about money, and whether the VCs would invest, but her consistent support made it all bearable.
I told Shane that from the outside it seemed like he was making progress and to just stick with it. Now he had customers, an office, and employees. The idea was great, made total sense. The VCs would come. Easy for me to say. We then went on to talk about other things.
At the end of the meal, I said goodbye to Shane but lingered a bit before getting into my car. I stood watching as he trudged back across the parking lot to the office building.
He was in a tough spot.
I thought a bit about how things can seem great on the outside, and you never know the full story.
Years later I came across a news article on LinkedIn that a large European insurance company was buying Shane’s business. They saw the platform as a great fit for their health insurance product. I was happy for Shane.
I was happy, but also thought about the morals of the story. What were the lessons from Shane’s experience?
1. Stay alert and curious for opportunities even when things seem desperate and there is no hope. It was excellent of Shane to have the curiosity to speak to the business in the medical building and ask why they were growing. That was the spark to everything. Opportunities are all around us.
2. Massive Action. I like how quickly Shane had moved on his idea when I met him in February at the Starbucks. It’s easy to be active when you are excited about an idea.
3. The next thing might be a new thing. I like that Shane was open to doing something completely different. He went from hedge funds to an internet start-up in the healthcare space. It was different, but it made sense.
4. The road will likely take longer and be harder than you expect. Yes, things will ‘work out in the end’, but the road will also take you to the limit. Imagine seeing all the savings you built up for years destroyed in your late 30’s as you fund a start-up which may, or may not work. When I met Shane for burgers at Applebee’s he was at his limit.
5. It helps to have a Tenzing Norgay. Tenzing Norgay was the sherpa who helped Edmund Hillary climb Everest. When we are trying to do impossible things, it helps to have a loyal team member or great wife/husband who gets you through the tough times.
Have a great rest of the Holidays!
Erik