Pabrai/Buffett partnership fee structure

[returnonmycapital]

Edward, you might look into registration wherever you reside. And be careful how you distribute your investment company shares. In the US/Canada/UK, and probably the rest of the developed world, an investment company is considered a fund, much like any group investment structure (or "scheme" in the UK). By distributing your investment company's shares to others, you are likely seen by regulators as advising. From a regulatory point of view, it also matters where those owners reside. If you solicit or are seen to be soliciting in any country that requires adviser registration, you could be forced to register in that country or face penalties.

Correct.

 

When setting up such a structure as we have, you can't widely distribute shares. You're limited to around 50 shareholders and can't go on soliciting widely - you have to limit the offer to select private investors. Otherwise, you definitely need to set up a full fund structure with all the bells and whistles to appease local regulators.

 

The way to deal with this limit is to list the company on a stock exchange at some point when assets reach 5-10M$. This way you can widely distribute shares, gain permanent capital and shareholders retain liquidity. But until then you have to abide by certain limitations.

 

Repeat - this is not a traditional structure. Use with caution :)

 

I like that idea. Do you know what the expenses of listing and staying listed on a stock exchange are? I have heard of some listing in Ireland but don't know the costs involved.

[merkhet]

I had a similar start to Tim.

 

I began in 2010 with a bit less than $400K in AUM using a different structure. After a year of showing that I could perform well, I distributed the capital back to my investors and started a hedge fund structure with a little less than $1 million in AUM. Now we have a little over $3 million in AUM two years later.

[returnonmycapital]

Started a fund in 2007 with own money. Now bumping up against $30m. Performance fee only.

[Edward]

Edward, you might look into registration wherever you reside. And be careful how you distribute your investment company shares. In the US/Canada/UK, and probably the rest of the developed world, an investment company is considered a fund, much like any group investment structure (or "scheme" in the UK). By distributing your investment company's shares to others, you are likely seen by regulators as advising. From a regulatory point of view, it also matters where those owners reside. If you solicit or are seen to be soliciting in any country that requires adviser registration, you could be forced to register in that country or face penalties.

Correct.

 

When setting up such a structure as we have, you can't widely distribute shares. You're limited to around 50 shareholders and can't go on soliciting widely - you have to limit the offer to select private investors. Otherwise, you definitely need to set up a full fund structure with all the bells and whistles to appease local regulators.

 

The way to deal with this limit is to list the company on a stock exchange at some point when assets reach 5-10M$. This way you can widely distribute shares, gain permanent capital and shareholders retain liquidity. But until then you have to abide by certain limitations.

 

Repeat - this is not a traditional structure. Use with caution :)

I like that idea. Do you know what the expenses of listing and staying listed on a stock exchange are? I have heard of some listing in Ireland but don't know the costs involved.

 

I did a preliminary check on listing at the AIM in London. Supposedly, it costs around 20-30K$ for the initial listing and then around 10K$ every year after. This includes only the fees related to the exchange, I suppose that there could be some additional expenses but haven't figured out what those might be. I'm thinking this may actually be not a lot more as there are very little regulatory requirements at the AIM.

 

To be continued I suppose...  ::)

[rohitc99]

this is a very useful discussion. I thought I was crazy trying to bootstrap a fund. the media does not help as it glorifies the 20 somethings who went from 0 to a billion in AUM in no time and are now masters of the universe.

 

considering the amount of experience, can someone give pointers on how to start a fund on a shoestring budget ...or put it another way ...what is the minimum AUM one needs (assuming a 1-10% kind of structure) to break even (on running the fund and not to sustain yourself)

 

[oddballstocks]

this is a very useful discussion. I thought I was crazy trying to bootstrap a fund. the media does not help as it glorifies the 20 somethings who went from 0 to a billion in AUM in no time and are now masters of the universe.

 

considering the amount of experience, can someone give pointers on how to start a fund on a shoestring budget ...or put it another way ...what is the minimum AUM one needs (assuming a 1-10% kind of structure) to break even (on running the fund and not to sustain yourself)

 

I'm interested in the response to both this, and a related question, what's the AUM point where the fund will pay the bills as well, say a $100k salary?

[oddballstocks]

I briefly had to work in late 2008 and early 2009.  In 2009 we rented our house and agreed to manage a storage facility with on site housing.  This eliminated housing costs and the "pay" covered utilities.  Did that for a year and a half until the seed deal was completed.  My wife had to work full time to provide income and medical benefits since 2008.  We have four kids so expenses are somewhat high.  She still works since the base income is not sufficient to cover our expenses.   

 

The 150k was the initial AUM in 2006.  It is almost $5 million now.  I did not think it wise to go with the Buffett/Pabrai fee structure and initially went with 2 and 20 with a 10% hurdle, calculated and assessed quarterly.  Later changed to 1.25 and 20 with no hurdle assessed at year end. While a bit more expensive at first glance it was combined with contributions into the fund by the seed investors which lowered overall overhead costs on a percentage basis by spreading it across a larger base.  So it was beneficial to existing investors.   

 

Tim,

 

Thanks for the answer and the transparency.  I have a lot of respect for someone trying to do this with kids, let alone four!  It's cool how you pieced different things together to continue to pursue the dream, very innovative with the storage facility and housing.

 

Nate

[racemize]

this is a very useful discussion. I thought I was crazy trying to bootstrap a fund. the media does not help as it glorifies the 20 somethings who went from 0 to a billion in AUM in no time and are now masters of the universe.

 

considering the amount of experience, can someone give pointers on how to start a fund on a shoestring budget ...or put it another way ...what is the minimum AUM one needs (assuming a 1-10% kind of structure) to break even (on running the fund and not to sustain yourself)

 

I'm interested in the response to both this, and a related question, what's the AUM point where the fund will pay the bills as well, say a $100k salary?

 

Well, this is mostly just a mathematical relationship.  A good estimate of start up costs (in the US) is ~25k.  Run-rate for very cheap fund (including Audit, Administrator, and whatnot) is 15-20k.  So then multiply expected returns after those costs by fee structure and AUM and get your result!

[rohitc99]

this is a very useful discussion. I thought I was crazy trying to bootstrap a fund. the media does not help as it glorifies the 20 somethings who went from 0 to a billion in AUM in no time and are now masters of the universe.

 

considering the amount of experience, can someone give pointers on how to start a fund on a shoestring budget ...or put it another way ...what is the minimum AUM one needs (assuming a 1-10% kind of structure) to break even (on running the fund and not to sustain yourself)

 

I'm interested in the response to both this, and a related question, what's the AUM point where the fund will pay the bills as well, say a $100k salary?

 

Well, this is mostly just a mathematical relationship.  A good estimate of start up costs (in the US) is ~25k.  Run-rate for very cheap fund (including Audit, Administrator, and whatnot) is 15-20k.  So then multiply expected returns after those costs by fee structure and AUM and get your result!

 

thanks racemize. I think it comes to around 1-2 Mn AUM to break even (With several assumptions ofcourse). So to give up your day time job , I think we are talking of 5Mn AUM or higher if you have to support your family and feed them something beyond ramen :)

 

[Edward]

thanks racemize. I think it comes to around 1-2 Mn AUM to break even (With several assumptions ofcourse). So to give up your day time job , I think we are talking of 5Mn AUM or higher if you have to support your family and feed them something beyond ramen :)

5M$ AUM is consistent with my own calculations for a full fund structure to break even after a reasonable salary/incentive for the investment manager.

 

The quotes I received for setting up a full fund structure in the BVI are similar - 20-30K$ initially, and around 15K$ annually. Needless to say with such costs you might have a few rough years in the beginning and I would advise to start with at least 300-500K$ AUM. However, 90% of success is showing up - so don't be discouraged.

[ageofsocrates]

Started a fund in 2007 with own money. Now bumping up against $30m. Performance fee only.

 

Hi returnonmycapital,

 

Just curious. how's your track record? Where do u normally find your ideas (i.e gurufocus)?

[watsa_is_a_randian_hero]

I currently manage money in separate accounts, almost 2mm right now.  I've thought in order to do that full-time, I would need 10mm of outside money, or 3mm of my own money, or some combination thereof.  My hurdle for personal assets may be larger than others as I am very risk-adverse and fear of failure drives me to want a large nest egg before doing this full-time with a family to support.

 

Something I thought I would add to this thread, as I don't believe it has been mentioned.  Expenses such as auditor, admin, legal etc are typically considered "fund expenses" and paid out of the fund.  They would not reduce your fees.  That said, many small managers voluntarily pay for these expenses out of the management company so as to avoid burdening their fund with expenses, reducing their performance track record.  That said, if the expense is a legitimate fund expenses, it can be paid out of the fund, and larger funds do this all the time. 

[bmichaud]

Watsa,

 

That's interesting - I always thought the mgmt fee was to cover audit, admin, legal, custodial etc...? I know hedge funds do not report an "expense ratio" like mutual funds do, but are all of these expenses taken into account in the "expense ratio"? i.e. expense ratio = mgmt fee + fund expenses?

[Edward]

That's interesting - I always thought the mgmt fee was to cover audit, admin, legal, custodial etc...? I know hedge funds do not report an "expense ratio" like mutual funds do, but are all of these expenses taken into account in the "expense ratio"? i.e. expense ratio = mgmt fee + fund expenses?

Indeed,

 

I know of some larger Hedge Funds that in addition to the management and performance fees, saddle partners with all manner of fixed expenses and even salaries for staff.

 

Generally, if the expense structure is not fully disclosed you can assume the worst.

[returnonmycapital]

Started a fund in 2007 with own money. Now bumping up against $30m. Performance fee only.

 

Hi returnonmycapital,

 

Just curious. how's your track record? Where do u normally find your ideas (i.e gurufocus)?

 

15%/yr net (18%/yr gross). For ideas, I like all you folks the best. Otherwise: newspapers, industry studies, other investors, and sometimes just plain old luck. You know, all the regular stuff. I never listen to or read sell-side research. My wife is my retail analyst; she's friggin' sharp with money.

[Guest longinvestor]

With no disrespect to folks' managing OPM, the fee structure, I find that the title of this discussion thread tying Buffett's name with Pabrai (by extension, OPM managers)  and the ensuing discussion on fee structures to be amusing at best.

 

Buffett closed his partnership, what, over 50 years ago? Besides, I don't know if the partnership was only open to "accredited investors" (whatever that meant in the 50's) when it was open.

 

Last I checked, the Pabrai fund is open to folks with net worth over $5,000,000 and a minimum $2,500,000 investment. All you need today is $120 to invest in the Buffett fund called BRK-B and you don't pay a dime in fees to Berkshire. Of course, it comes with no guarantee on performance, or does it?

 

 

[nkp007]

Started a fund in 2011 with $1 million. Currently at $7 million.

 

Startup costs (legal fees) were around $25k (amortized to the fund) and annual costs are approximately $15k.

 

At $1mm it was a bit tight, but really no big deal. At $7mm, the operational costs are unnoticeable.

 

I won't charge any fees until year 5. My investors put a lot of trust in me by writing my checks and giving me free reign. They essentially gave me a free education by allowing me to invest as I see fit when I had no track record so that's the least I can do in return. After year 5, will do 20% performance fee (no asset fee).

 

Most important part is to raise the right type of capital that won't flee when you need it the most. That involves rejecting potential investors.

 

[oddballstocks]

thanks racemize. I think it comes to around 1-2 Mn AUM to break even (With several assumptions ofcourse). So to give up your day time job , I think we are talking of 5Mn AUM or higher if you have to support your family and feed them something beyond ramen :)

5M$ AUM is consistent with my own calculations for a full fund structure to break even after a reasonable salary/incentive for the investment manager.

 

The quotes I received for setting up a full fund structure in the BVI are similar - 20-30K$ initially, and around 15K$ annually. Needless to say with such costs you might have a few rough years in the beginning and I would advise to start with at least 300-500K$ AUM. However, 90% of success is showing up - so don't be discouraged.

 

Can you walk me through your numbers?

 

In terms of expenses this is what I see to hit a $100k salary.  I say $100k because that's a reasonable analyst salary, why take on all this risk with all the work if you are making 50-75% of what an analyst is making?

 

$100k salary

$20k health benefits (for a family, maybe $10k for an individual)

$15k SSN/Medicare

$15k ongoing fund expenses

 

$150k in fees to provide the same $100k income.  On a $5m fund that's a 3% expense ratio.

 

The issue I have is you can bend the numbers to make this work if you hit the hurdle, and if the fund is clearing the hurdle every year everything seems to work fine.  It's what happens in a lean year, or a 2008 when it might be 2-3 years before the hurdle is met again.

 

So say you have $5m and hit 2008 and lose 40%, you're down to $3m in AUM, and 1% on that is barely enough to cover ongoing expenses and health care, looks like it's food stamp time.

 

A lot of people have clearly done well managing money, it's great to make money with other people's money, and I congratulate all of those who have started small and persevered.  The route just seems tough, and everything looks great with ideal numbers.  Personally I would rather have the numbers work on the worst case scenario and in the best of times cut the management fee or rebate it to clients.  But I'd hate to set up a business that works if everything works in a perfect scenario, and in the worst case I'd be better off making minimum wage at McDonalds.

 

[returnonmycapital]

Started a fund in 2011 with $1 million. Currently at $7 million.

 

Startup costs (legal fees) were around $25k (amortized to the fund) and annual costs are approximately $15k.

 

At $1mm it was a bit tight, but really no big deal. At $7mm, the operational costs are unnoticeable.

 

I won't charge any fees until year 5. My investors put a lot of trust in me by writing my checks and giving me free reign. They essentially gave me a free education by allowing me to invest as I see fit when I had no track record so that's the least I can do in return. After year 5, will do 20% performance fee (no asset fee).

 

Most important part is to raise the right type of capital that won't flee when you need it the most. That involves rejecting potential investors.

 

Communication is important. Like Fisher said, your menu will attract a certain customer. If it changes, your customer base will get confused and it will change. Your menu (your letters to investors) should be consistent. Imagine your perfect investor and write your letter to him/her. You'll get the customers you want and avoid those you don't want. I think that my letters actually rub some people the wrong way, but that is not a bad thing.

[Kraven]

Started a fund in 2011 with $1 million. Currently at $7 million.

 

Startup costs (legal fees) were around $25k (amortized to the fund) and annual costs are approximately $15k.

 

At $1mm it was a bit tight, but really no big deal. At $7mm, the operational costs are unnoticeable.

 

I won't charge any fees until year 5. My investors put a lot of trust in me by writing my checks and giving me free reign. They essentially gave me a free education by allowing me to invest as I see fit when I had no track record so that's the least I can do in return. After year 5, will do 20% performance fee (no asset fee).

 

Most important part is to raise the right type of capital that won't flee when you need it the most. That involves rejecting potential investors.

 

I am not sure I understand.  So you are making no money from your fund?  In 2016 you'll start making money ideally.  You are viewing this as getting the opportunity to build a track record?  I can see why you would do this and commend you for it, but seems as if there is a lot of risk involved.  Say you had started this not in 2011, but in 2007.  You would be making nothing and have walked into a shit storm.  There is a lot of risk involved in managing money that I think this thread has not adequately illustrated.  Lose money for clients and those good souls may not be so good.  That's when the lawsuits start to fly.  Hell hath no fury like an investor scorned.

[returnonmycapital]

thanks racemize. I think it comes to around 1-2 Mn AUM to break even (With several assumptions ofcourse). So to give up your day time job , I think we are talking of 5Mn AUM or higher if you have to support your family and feed them something beyond ramen :)

5M$ AUM is consistent with my own calculations for a full fund structure to break even after a reasonable salary/incentive for the investment manager.

 

The quotes I received for setting up a full fund structure in the BVI are similar - 20-30K$ initially, and around 15K$ annually. Needless to say with such costs you might have a few rough years in the beginning and I would advise to start with at least 300-500K$ AUM. However, 90% of success is showing up - so don't be discouraged.

 

Can you walk me through your numbers?

 

In terms of expenses this is what I see to hit a $100k salary.  I say $100k because that's a reasonable analyst salary, why take on all this risk with all the work if you are making 50-75% of what an analyst is making?

 

$100k salary

$20k health benefits (for a family, maybe $10k for an individual)

$15k SSN/Medicare

$15k ongoing fund expenses

 

$150k in fees to provide the same $100k income.  On a $5m fund that's a 3% expense ratio.

 

The issue I have is you can bend the numbers to make this work if you hit the hurdle, and if the fund is clearing the hurdle every year everything seems to work fine.  It's what happens in a lean year, or a 2008 when it might be 2-3 years before the hurdle is met again.

 

So say you have $5m and hit 2008 and lose 40%, you're down to $3m in AUM, and 1% on that is barely enough to cover ongoing expenses and health care, looks like it's food stamp time.

 

A lot of people have clearly done well managing money, it's great to make money with other people's money, and I congratulate all of those who have started small and persevered.  The route just seems tough, and everything looks great with ideal numbers.  Personally I would rather have the numbers work on the worst case scenario and in the best of times cut the management fee or rebate it to clients.  But I'd hate to set up a business that works if everything works in a perfect scenario, and in the worst case I'd be better off making minimum wage at McDonalds.

 

I was talking to my fund's administrators last night. They said that the independent fund management business is just like any other: 80% fail within 5 years. I would imagine that those 20% that succeed studied the potential pitfalls closely. But more than that, they are probably people who, like Sam Walton said: "Get at it and stay at it." The future is unknown, it will always be so. There is only one time to start your dream and that is yesterday.

 

Mind you, 3 years of annual living expenses in savings will likely get you over the bumps. Also important to remember, without your spouse/life partner on board, you may end up single.

[nkp007]

Started a fund in 2011 with $1 million. Currently at $7 million.

 

Startup costs (legal fees) were around $25k (amortized to the fund) and annual costs are approximately $15k.

 

At $1mm it was a bit tight, but really no big deal. At $7mm, the operational costs are unnoticeable.

 

I won't charge any fees until year 5. My investors put a lot of trust in me by writing my checks and giving me free reign. They essentially gave me a free education by allowing me to invest as I see fit when I had no track record so that's the least I can do in return. After year 5, will do 20% performance fee (no asset fee).

 

Most important part is to raise the right type of capital that won't flee when you need it the most. That involves rejecting potential investors.

 

I am not sure I understand.  So you are making no money from your fund?  In 2016 you'll start making money ideally.  You are viewing this as getting the opportunity to build a track record?  I can see why you would do this and commend you for it, but seems as if there is a lot of risk involved.  Say you had started this not in 2011, but in 2007.  You would be making nothing and have walked into a shit storm.  There is a lot of risk involved in managing money that I think this thread has not adequately illustrated.  Lose money for clients and those good souls may not be so good.  That's when the lawsuits start to fly.  Hell hath no fury like an investor scorned.

 

I treat it like any new business; the first few years are rarely cash flowing. I gave myself five years and saved enough (and cut spending enough) to give myself the best possible chance to make this work. Luck will always play a role.

 

This business isn't guaranteed in any way. You need to love bathing in the seas of uncertainty.

[premfan]

Started a fund in 2011 with $1 million. Currently at $7 million.

 

Startup costs (legal fees) were around $25k (amortized to the fund) and annual costs are approximately $15k.

 

At $1mm it was a bit tight, but really no big deal. At $7mm, the operational costs are unnoticeable.

 

I won't charge any fees until year 5. My investors put a lot of trust in me by writing my checks and giving me free reign. They essentially gave me a free education by allowing me to invest as I see fit when I had no track record so that's the least I can do in return. After year 5, will do 20% performance fee (no asset fee).

 

Most important part is to raise the right type of capital that won't flee when you need it the most. That involves rejecting potential investors.

 

I am not sure I understand.  So you are making no money from your fund?  In 2016 you'll start making money ideally.  You are viewing this as getting the opportunity to build a track record?  I can see why you would do this and commend you for it, but seems as if there is a lot of risk involved.  Say you had started this not in 2011, but in 2007.  You would be making nothing and have walked into a shit storm.  There is a lot of risk involved in managing money that I think this thread has not adequately illustrated.  Lose money for clients and those good souls may not be so good.  That's when the lawsuits start to fly.  Hell hath no fury like an investor scorned.

 

I treat it like any new business; the first few years are rarely cash flowing. I gave myself five years and saved enough (and cut spending enough) to give myself the best possible chance to make this work. Luck will always play a role.

 

This business isn't guaranteed in any way. You need to love bathing in the seas of uncertainty.

 

Most people don't have the opportunity to attract 7 million with no track record so I commend you on that. Are most of your investors friends and family? I'm asking this because if not you have some serious marketing skills!

[oddballstocks]

thanks racemize. I think it comes to around 1-2 Mn AUM to break even (With several assumptions ofcourse). So to give up your day time job , I think we are talking of 5Mn AUM or higher if you have to support your family and feed them something beyond ramen :)

5M$ AUM is consistent with my own calculations for a full fund structure to break even after a reasonable salary/incentive for the investment manager.

 

The quotes I received for setting up a full fund structure in the BVI are similar - 20-30K$ initially, and around 15K$ annually. Needless to say with such costs you might have a few rough years in the beginning and I would advise to start with at least 300-500K$ AUM. However, 90% of success is showing up - so don't be discouraged.

 

Can you walk me through your numbers?

 

In terms of expenses this is what I see to hit a $100k salary.  I say $100k because that's a reasonable analyst salary, why take on all this risk with all the work if you are making 50-75% of what an analyst is making?

 

$100k salary

$20k health benefits (for a family, maybe $10k for an individual)

$15k SSN/Medicare

$15k ongoing fund expenses

 

$150k in fees to provide the same $100k income.  On a $5m fund that's a 3% expense ratio.

 

The issue I have is you can bend the numbers to make this work if you hit the hurdle, and if the fund is clearing the hurdle every year everything seems to work fine.  It's what happens in a lean year, or a 2008 when it might be 2-3 years before the hurdle is met again.

 

So say you have $5m and hit 2008 and lose 40%, you're down to $3m in AUM, and 1% on that is barely enough to cover ongoing expenses and health care, looks like it's food stamp time.

 

A lot of people have clearly done well managing money, it's great to make money with other people's money, and I congratulate all of those who have started small and persevered.  The route just seems tough, and everything looks great with ideal numbers.  Personally I would rather have the numbers work on the worst case scenario and in the best of times cut the management fee or rebate it to clients.  But I'd hate to set up a business that works if everything works in a perfect scenario, and in the worst case I'd be better off making minimum wage at McDonalds.

 

I was talking to my fund's administrators last night. They said that the independent fund management business is just like any other: 80% fail within 5 years. I would imagine that those 20% that succeed studied the potential pitfalls closely. But more than that, they are probably people who, like Sam Walton said: "Get at it and stay at it." The future is unknown, it will always be so. There is only one time to start your dream and that is yesterday.

 

Mind you, 3 years of annual living expenses in savings will likely get you over the bumps. Also important to remember, without your spouse/life partner on board, you may end up single.

 

I agree with you, fundamentally investment management is just another type of business, although few investors view or treat it as a business.  The same care taken when considering opening a coffee shop needs to be taken when considering opening an investment management business.

 

You're absolutely correct that any business faces uncertainty, but it's prudent to plan for uncertainty, in your case you saved three years worth of expenses.

 

I have long considered managing investments, it seems like a nice business, but after cycling through all of these things I decided I'd rather own a traditional business.  We have a product we sell to customers (finance related), the value of the product doesn't reside in the ups and downs of the market.  My upside is possibly more limited, but so is my downside.  I have an alternate upside which is if I can grow the business and decide I want to leave I can.  Investors are investing with a manager, if the manager leaves capital does too, unless one builds a giant team to run the fund with them it's hard to sell a small investment management practice, whereas selling a small business isn't very difficult.

[Kraven]

Started a fund in 2011 with $1 million. Currently at $7 million.

 

Startup costs (legal fees) were around $25k (amortized to the fund) and annual costs are approximately $15k.

 

At $1mm it was a bit tight, but really no big deal. At $7mm, the operational costs are unnoticeable.

 

I won't charge any fees until year 5. My investors put a lot of trust in me by writing my checks and giving me free reign. They essentially gave me a free education by allowing me to invest as I see fit when I had no track record so that's the least I can do in return. After year 5, will do 20% performance fee (no asset fee).

 

Most important part is to raise the right type of capital that won't flee when you need it the most. That involves rejecting potential investors.

 

I am not sure I understand.  So you are making no money from your fund?  In 2016 you'll start making money ideally.  You are viewing this as getting the opportunity to build a track record?  I can see why you would do this and commend you for it, but seems as if there is a lot of risk involved.  Say you had started this not in 2011, but in 2007.  You would be making nothing and have walked into a shit storm.  There is a lot of risk involved in managing money that I think this thread has not adequately illustrated.  Lose money for clients and those good souls may not be so good.  That's when the lawsuits start to fly.  Hell hath no fury like an investor scorned.

 

I treat it like any new business; the first few years are rarely cash flowing. I gave myself five years and saved enough (and cut spending enough) to give myself the best possible chance to make this work. Luck will always play a role.

 

This business isn't guaranteed in any way. You need to love bathing in the seas of uncertainty.

 

Fair enough.  Takes a lot of guts to know you're going to go 5 years before making a dime.