Editor's Note: “Memoirs of a Minyan” is a first-person account that follows Minyanville founder Todd Harrison as he weaves his way through Wall Street and beyond. This e-Book will publish each Wednesday over 18 weeks. Click here to read previous Memoirs chapters.
Chapter 15: The Abyss
My grandfather Ruby once told me that time is the most precious commodity; I never understood what he meant until 2002.
I worked furious 20-hour days, trying to create profits by day and Minyanville at nights and during weekends. I wasn’t motivated by conventional measures of success; it was an internal need to channel energy in a positive way.
I knew 9/11 affected me. Subconscious seeds were planted that day, and they remained buried for years. At the time, I thought that if I could just burrow through, I would eventually arrive at a better place.
I reflected on losing Ruby, on finding out my father and business partner were both bipolar and on being at the epicenter of a massive terrorist attack. I thought to myself that nothing would ever stop me if I could just power though that period. If I could just power through...
My soul and spirit were damaged goods, an unavoidable fact that pounded home with each beat of my heavy heart. I didn’t go out much, a rapid departure from the life I once lived.
My friends reached out, but who had time for that? There was too much to do, or that was my internal rationalization for stealing a few hours of sleep when I wasn’t working. Eventually my phone stopped ringing and social invitations dried up. I barely noticed.
I couldn’t continue at that pace and didn’t want to. I remember looking into the mirror one morning and not recognizing the drawn, empty face that returned my stare. The events of Sept. 11 rocked the world and the reverberating energy was the genesis of a massive personal introspection and evolution.
I founded The Ruby Peck Foundation for Children’s Education as a tribute to my grandfather, who continued to guide me with his learned wisdom. It was a tangible manifestation of an intense love, a vehicle to channel benevolence in a suddenly unfamiliar world.
Benevolence. It glimmered briefly in the days following the attack but disappeared just as quickly when agendas took root. It was an opportunity for the world to pull together and affect positive change but instead, decisions were made that planted seeds of societal acrimony and social unrest.
I wanted to do more. I didn’t want this written on my headstone: “He had a good feel for the market.”
Someone told me to write about what I know and love, and I wanted to extend that to my life. I knew financial markets and I loved my grandfather. Minyanville and the Ruby Peck Foundation were the only solutions that made any sense.
I spent countless hours birthing both. It was an expensive reality, ultimately costing millions and absorbing every ounce of my energy.
The hours turned to days, days into weeks and weeks into months. Before I knew it, I was staring at the final stretch of 2002.
It was almost time to reset the clocks.
Houston, We Have Liftoff...
We launched Minyanville.com in October 2002 as a “financial infotainment and education” platform.
TheStreet.com chose that exact day to open their site for free as we pulled back our curtain. I knew they were watching but I underestimated their agenda.
I reached out to them before launch, offering my content for free as long as it was branded to Minyanville.
Their response essentially was: Go screw yourself -- you’re the enemy now. They were ruthless but they weren’t dummies. The last thing they were going to do was lead readers directly to me.
I searched TheStreet.com and realized they deleted most of my content from the archives. Countless travails from the inner elasticity of the bubble, personal reflections about my grandfather, the tribute I wrote to Bill Meehan, steadying words to investors on how to position for the new world -- all were gone.
Founder Jim Cramer took some of his money out of the Cramer Berkowitz fund where I worked and I could tell he was leaning on my partner, Jeff Berkowitz. It was a tough spot for my good friend and the stress was evident. Imagine working with someone you genuinely love, a person who chose you to facilitate his success only to become a source of stress instead.
It was the middle of December; we were fried after yet another year of battle. Our 2002 results mirrored those of a year earlier, positive gains but well below what we were capable of doing.
And we were miserable, an unpleasant dynamic in any environment but an absolute barrier when battling for performance in the fierce world of finance. If you’re not on the same wavelength as the guy next to you in the trenches, you won’t shoot straight when performance is in your sights.
Just as Jeff and I communicated without words while trading, we had a similar connection away from the tape. He also endured the pressure of another tough year and was equally aware our relationship was strained. He had Jim on one side, our investors on the other and a staff that relied on us both to put food on their table.
He, like me, wore his heart on his sleeve and I could see it beating a mile away.Exit Strategy
Our conversation started as any other, with me asking him if we could get off the desk and chat. When we shut the door to his office, there was a silence that spoke volumes about what needed to be said. I don’t know how the conversation would have gone if I didn’t start it but I imagine the outcome would have been much the same. It was one of the most honest and heartfelt discussions we ever shared.
“This isn’t working,” I began as we looked into each other’s eyes. “I agree,” he responded, quicker than I anticipated. As partners, we knew what needed to be done but as friends, we were saddened that it came to that. He knew I was in the throes of building Minyanville and deep down, I knew it wasn’t fair to put him in that position.
Writing while trading was a great idea when your partner owned the company and performance was pristine. It was a different dynamic when you’re viewed as competition and profits are elusive.
Twenty minutes later, I tendered my resignation. Twenty minutes. After fifteen years of friendship and three years of blood, sweat, tears and laughter, we were going our separate ways.
It was the middle of December -- almost three years to the day after we uncorked bottles at Gramercy Tavern -- and I suddenly had no idea where I was going to hang my hat. That’s a problem when you’ve already spent a million dollars on a Web site predicated on the financial markets. For the first time, the reality of the situation hit home. I had three weeks to relocate and two of them were booked on vacation. I took my traders to dinner that night and over several rounds of drinks, assured them they would be taken care of. They were family but in a few short weeks, I needed a new home.
I hadn’t a clue where that would be.Blink and You’re in Business
It didn’t take long for word to spread. Wall Street is a small place when it comes to news. Our trading coverage -- from Goldman to Morgan to Bear Stearns to Lehman Brothers -- lined their pockets with commissions generated by Cramer Berkowitz. That number totaled between $70 million and $90 million per year during my tenure running the desk.
They weren’t happy their gatekeeper was relinquishing the keys to the castle, particularly when the castle did business the right way. As I assured them that our desk would be in strong hands, I was less certain about my next move.
Minyanville launched, I was the only writer and the Ruby Peck Foundation proved costlier than I anticipated. I needed a home that allowed me to stay in the flow and make some dough. After 12 years of trading, I had peers who had a vested interest where I landed. I listened to a few offers, unsure of which direction to pursue.
A former colleague called and asked me to meet with him before I made any decision. He worked with a reputable money manager at a fund located on Park Avenue. As part of their business model, they operated a “hedge fund hotel,” providing space, trading systems and human capital in exchange for order flow and trading commissions.
I walked to their offices and was impressed with the large marble lobby that housed some of the world’s largest financial institutions. I made rounds, sat with the principal players and listened to possible collaborations. “You should think about starting your own fund,” they said, “We’ll set you up here and help with the process and paperwork.”
It wasn’t something I had seriously considered but I needed a home and they were friendly faces with a solid structure.
And they believed in me, which was not something I overlooked. Minyanville was costing more than $50,000 per month and I had other obligations. Further, the effort required and costs to start a not-for-profit foundation after Sept. 11 were substantial.
I needed a revenue generator, something that could utilize my skills and underwrite a symbiotic ecosystem. I had honed my skills at Morgan, sharpened them at Galleon and demonstrated them at Cramer Berkowitz, building one of the finest desks on Wall Street. As I listened to the potential hedge fund structures, my mind began to calculate the windfall.
A typical structure charges 1% of total assets as a management fee and 20% profits as a performance fee. But they floated something different, a structure with no management fee and 50% of the profits. It was a deal reserved for the best traders on the Street, a back-end loaded payday based purely on performance.
They offered to seed me and as I had full faith in my abilities, I plowed most of my money into the fund as well. Others followed and before I knew it, I moved my personal items and sports memorabilia to my new Park Avenue home.
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