From CEO to pizza delivery driver

While I dont blame the guy for taking a risk, using all of your own savings to do it is foolish..

Statistics show the failure for any new venture is high, especially trading related (as we all know.) HE should have lowered his risk by getting other peoples money to invest, so if things went belly up, he wasnt in the poor house....

very poor planning.

 

Right you are.

Connecticut’s ‘Rodeo Drive’ Abandoned as Hedge Funds Collapse

http://www.bloomberg.com/apps/news?pid=20601109&sid=arOzIUvhbr1o&refer=home

By Allison Abell Schwartz and Matt Townsend

March 20 (Bloomberg) -- Finding a parking spot for your Mercedes or BMW on Greenwich Avenue, the main shopping strip of the U.S. hedge-fund capital, used to be a challenge. Not anymore.

With the recession hammering retail sales, empty curbside spaces abound along the suburban Connecticut thoroughfare, known as the Rodeo Drive of the northeast, and “For Rent” signs decorate vacant storefronts. Ann Taylor, Banana Republic and Borders have all closed their Greenwich Avenue locations.



As banks and hedge funds cut jobs or close down in the worst financial crisis since the 1930s, Greenwich merchants are suffering sales declines. Some stores are simply packing it in. Many are renegotiating rents, cutting inventory or offering cheaper products.

“We never used to have one day with no sales,” said May Lai Ku, the manager of Cochni, a woman’s clothing store on the avenue. “Now that happens three to four times a month.”

Ku, 46, said her store had about $40,000 in sales in January 2008. This year, it will take about three months to make the same amount, with almost everything in the store discounted as much as 80 percent, she said.

Hedge funds may cut 20,000 workers worldwide this year, a record 14 percent of the industry’s jobs, as investment losses and client withdrawals erode fees, according to estimates by New York-based Options Group, an executive-search firm.

Greenwich, a town of about 62,000 located around an hour’s drive northeast of Manhattan, is home to more than 100 hedge funds.

Real Estate Slump

Home sales in Greenwich dropped 77 percent in February, the most on record, as Wall Street firms cut jobs and buyers retreated from multimillion-dollar purchases, according to Prudential Connecticut Realty. The town, which relies on income from conveyance taxes and building permits, has seen revenue decline $10 million since September, according to Peter Tesei, a Greenwich official.

Median household income in the town of Greenwich is $117,857, more than twice the U.S. average, according to Census Bureau data from 2005-2007. Thirty-six percent of households make more than $200,000. Those affluent shoppers are reducing spending on discretionary items like jewelry, clothing, shoes and art.

“It’s going on across the board in all luxury areas,” said Ivan Friedman, chief executive officer of RCS Real Estate Advisors, a Manhattan firm that works with U.S. retailers. “The luxury retailers are now going to get hit because everything that we buy from them is really not a necessity. It’s a want.”

Sales are down 50 percent from a year ago at Petit Patapon, a children’s clothing store on Greenwich Avenue, according to manager Nancy Harper, 58. At 3:30 p.m. on a Friday, the store hadn’t yet made a sale. It may close when its lease expires in October because the landlord is asking double the rent, Harper said.

Shoe Sales

Plaza Too, a women’s shoe boutique with nine locations including one in Greenwich, experienced a 35 percent decline in sales in the fourth quarter. The chain may struggle to keep revenue from dropping more than the 30 percent it’s projecting for this year.

“It’s horrible,” Tom Mendes, the founder and owner, said in an interview. “It’s been rough since October.”

Mendes said he has renegotiated eight of nine leases and that most landlords have agreed to a minimum 25 percent decrease in terms. Still, some vendors won’t ship him new shoes because the chain owes them money.

‘Mom-and-Pop’ Town

Increasing rents drove out the local grocery stores, pharmacies and five-and-dimes that once lined the street, making way for national chains.

“Some of them are not necessarily here to make money,” said Greenwich resident Gail Wilson, 70. “They’re here for a presence on Greenwich Avenue.”

Jill duPont, owner of Greenwich Avenue clothing boutique Out of the Box, agrees.

“It used to be a mom-and-pop kind of town,” duPont said. “That has gone and been replaced by the nationals. At these prices, I’m not sure it’s going to come back.”

National brands aren’t immune. The Athlete’s Foot sneaker store on the avenue had been a bright spot last year for co- owner Brian Maciel, outperforming the other locations in his 16- store partnership and turning a profit. Then Sept. 16 brought the bankruptcy of Lehman Brothers Holdings Inc. and his customers vanished.

“It was like a light switch: It just turned off,” Maciel said. When shoppers returned, many had become cost-conscious, he said. The $170 Asics weren’t a standard choice anymore.

“They are definitely trading down,” Maciel said.

Bankruptcy, Underperformance

Rachel Ashwell Designs Inc., operator of the Shabby Chic home-furnishings chain, closed its Greenwich Avenue store. The company filed for bankruptcy protection in January.

Borders Group Inc. shut its Borders Express branch on the avenue in January in an effort to close underperforming stores, said Anne Roman, a company spokeswoman. AnnTaylor Stores Inc. left Greenwich Avenue Jan. 24 as part of a program to shutter 117 underperforming locations by 2010, said spokeswoman Beth Warner.

Gap Inc., which closed the Greenwich Avenue Banana Republic last June, shutters stores for reasons including location and performance, according to Louise Callagy, a company spokeswoman. She declined to comment specifically on the Greenwich store.

On the real Rodeo Drive in Beverly Hills, California, about 95 of 100 storefronts are occupied, said Thomas Blumenthal, president of the Rodeo Drive Committee and CEO of Gearys, which owns two high-end tabletop and jewelry stores.

“It’s certainly not as good as last year, but we’re not folding up our tents either,” he said.

Not every shopkeeper is giving up on Greenwich. J. Crew Group Inc. opened a Madewell clothing store on the avenue this month. Roberto Chiappelloni, owner of Manfredi Jewels, said he sold a $224,000 Vacheron Constantin watch two weeks ago to a collector.

“The hedge fund people that lost $200 million still have $200 million,” said Adam Zeiberg, a real estate broker with FirstService Williams who leases retail space on Greenwich Avenue. “They have tremendous amounts of money.”

To contact the reporter on this story: Allison Abell Schwartz in New York at aabell@bloomberg.net.
Last Updated: March 20, 2009 00:01 EDT

 

Why would he be paid $750,000 for simple order execution?

Isn't that kinda excessive? $600,000 was a "total package" with relo to HK deal recently advertised in Economist magazine for a top notch head of quant department and that would mean you got PhD in applied math, physics, statistics, MBA + more..

 

I think the way these stories go is if he made 150k for 9 years and 750k 1 year they will use the 750 to make the story more extreme. On the app. at the pizza place they showed he stated his last income as 750k so maybe he paid himself that at his HF that failed?

 

1st, kudos to the wife. My wife would somehow not understand....

Next... without changing his past decisions what would you suggest he do tomorrow?

The resume is not good. Nobody is hiring that position anymore. Probably no W2 corp job as well as more people with recent experience are available. Wrong age....

Starting a service job? Service companies also under pressure and competing for what is left as a new entrant is high risk....

What is the best leverage of time per hour given little capital?

Instead of being critical - easy to do - what would you tell him to do tomorrow?

 

I'm not sure if any of you started your own business, but it requires basically borrowing heavily and dipping into your own savings. If you wanted to start a friggen McDonald, it would require you to put out $1 million dollars yourself.

And if he had started his hedge fund in 2002-2003, he would have been very successful because he had time to pull in all the necessary pieces for the business to take off...gotten investor's money and hiring the right people to trade it.

And he obviously took a gamble. But he would be worth hundreds of millions if his hedge fund took off. And his back up plan was to go back to a similar job he had before. He didn't know the whole industry was going to collapse.

Burning through $500K and having $100K in debt, is not unheard of in starting your own business. Actually it is typical. Most business costs a lot more than that to even get off the ground.

 

I dont get it, how you make 750k a year, and definitaly a lower 6 figure salary before that, and you don't have:

A. Your house paid off.
B. Not enough savings to live off on for a while.
C. His wife not working? WTF is this ? Send that b1tch to work.


Oh and in my opinion he was just being greedy, he was making 750k a year, waaaaaay more than most of americans make, and that wasn't enough for him, so he wanted to go even bigger and be more greedy by hoping to make , what like 7.5 million a year?

Shiiit, seriously which one of you would leave a job that pays 750k salary ?

Thats what I thought.

 

I don't think judging by this short article that anyone can argue whether or whether not the man took legitimate steps in his endeavors. It must be rather unlikely although of course not impossible for a college educated person with a family to carelessly gamble their life savings away. Pesonally I might be interested in more facts and other possible senarios before I subscribe to that one.

 

Agreed. Only answer is ego..

Only way I would leave a job like that is if I had so much in the bank, assumming the worst, I still had a comfortable nest egg set aside..

I dont blame the guy for giving it a shot, I blame him for taking a huge risk, and not calculating the obvious "what if" scenarios in a highly risky decision.

 

Agree with you about risk takers, but you still need to manage the risk.

$750,000/yr?....the guy should have been set. At the very least, he shouldn't have lost so much that he was reduced to delivering pizza for a living. Doesn't sound like he had a "plan B".