$70 million was a lot of money for me at the time. And I couldn¡¯t sleep at night until I gave back every dollar to the people who gave it to me.
I was running the sort of fund where people gave me money and then I invested it in other funds. The only problem was, I couldn¡¯t figure out what funds were total scams and what funds were legit. In retrospect, I think about 9 or 10 of the 12 funds I was invested in were total scams.
For instance, and this is all in the SEC filings, one fund manager stole $10 million from his fund that I was invested in. He then paid a $50,000 fine when he was caught.
Now he¡¯s nowhere. I mean, he¡¯s somewhere but I can¡¯t find him. We¡¯re Facebook friends but the last update was him sitting on a beach and it was updated about five years ago.
My investors were furious. They had been making money every month with me. They didn¡¯t want their money back.
When I told them I was going to give them their money back, with profits, they were so upset many of them didn¡¯t want me to take a fee.
In every business I had ever started, even ones that had totally failed, I had kept good relations with the investors.
Except for this one. Not a single relationship survived even though I had made money for everyone.
When you can¡¯t figure out how you are making money. It¡¯s time to change.
In 1998 when kids in high school were learning how to make websites, I sold my website design business for $15 million.
Two years later almost all website design businesses were out of business.
And now in 2006, when no matter how hard I tried to figure it out it seemed like the world economy had gone crazy and I didn¡¯t understand how these funds were making money.
I pulled out all the money.
But I needed something to do or I would quickly go broke. I don¡¯t want to act here like I was totally altruistic. I was so miserable all the time.
I felt like I had failed and I was also having problems in my marriage.
The sort of problems where you¡¯d get in an argument and get kicked out of a car in the middle of nowhere.
I decided to do the only thing I knew how to do and the only thing that has ever made me money ever.
I took one thing I loved and married it to another thing I loved. And, thus, created a new thing. I loved Internet businesses, having built and sold one. And I loved the financial business, despite the fact that it was almost all a scam.
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