Sometimes I wonder how I arrived at the here and now. I’m not the only one. When you’re more or less an urban kind of guy who lives alone on a sailboat in a town with a population sign reflecting a human population of only a little over 6,000, people tend to ask questions. It may not be your goal to live alone on a sailboat in a tiny town. It certainly was never mine. Regardless of what you want to do, I’ll try recount how I got here. You just might be able to pull a valuable tactic or two out of my story. If not… Well… Maybe I’ll read this tomorrow after I’ve again forgotten how I arrived at the here and now.

I often think of my life in two segments. There’s whatever happened before August 27, 2004, and there’s everything else. I seldom talk about my life before that date. I’m going to break protocol for a bit, but don’t get used to it

Pre-August 27, 2004 [Prelude]

This era encapsulates my life through my college days. I started my entrepreneurial addiction with a paper route in the 5th grade. Fast forward through high school and toss in stints studying Computer Science at the University of Oregon, Multimedia & Web Design at the Art Institute of Seattle, and International Business at Linfield College. Don’t get the idea that anything that happened subsequently was because of any sort of credentials. While I have enough credits to choke a dozen donkeys, I have exactly zero college degrees.

During this era I also put in a fair amount of time in regular jobs… sales, customer service, and the like. All I really got out of it was some mild depression, a touch of social anxiety disorder, a few bucks in the bank, and a lot of long nights frantically laying in bed, staring into the darkness and trying to figure out an escape route.

In 2003, I started getting into trading financial instruments on my own account. Along with this came frequent trips to the library in order to absorb every book on the psychology of trading I could get my hands on. This went pretty well. I got pretty good at it. I got good enough that I could convince other people I was good enough at it to trade for them. That was good, because I didn’t have enough money in my own account for proper risk management. My trips to the library started to include mining for every bit of information I could get on hedge funds. This was supplemented by every waking hour researching hedge fund law online. I eventually retained the services of a law firm specializing in hedge fund law.

Ultimately, I became convinced that starting a hedge fund was my out. To launch it, I’d need to slim down my monthly expenses. I’d also need time for complete dedication. I put in a 30 day notice on my Seattle apartment overlooking Lake Union, submitted a 2 week notice to my employer, broke up with my girlfriend, and by August 27, 2004, was detached from most of the comforts I’d grown accustomed to.

August 28, 2004 [Hedge Fund Manager Failure]

My brother had two extra bedrooms at his house in Austin, TX and the rent was cheap. I put a bunch of stuff in storage, loaded whatever I could in my car, and ate up 2,600+ miles of pavement en route to a state I’d never visited.

So then and there was Austin, TX. I had an internet connection, a laptop, and a desktop system with a couple monitors. At the time, that was about 95% of what was required to run a hedge fund. The other 5% was paperwork and an adviser to make sure clients were qualified in order to avoid triggering a bunch more layers of regulation and oversight.

And off I went! Setting up accounts, building a website, working with the attorney on the proper structure. What I wasn’t aware of was a rule proposed by the SEC in July of the same year. At some point between September and December, the recommendation was made into law and went into effect in one stage on January 10, 2005 and another on February 10, 2005. The law essentially made it impossible for me to avoid the aforementioned additional layers of regulation and oversight. If you’re not familiar with the SEC, regulation and oversight within the context of the financial industry means at least one thing… Paying lawyers and accountants thousands and thousands of dollars in fees. The only real question at that point is if the thousands are measured in tens or hundreds. Either way, for the first, and definitely not last time, the government had converted me from legal citizen to criminal with the stroke of a pen. I was out of business.

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