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Gene Rachmansky, Entrepreneur

Successful lawyer turned entrepreneur, turned money manager, Gene practiced tax for almost two years at Weil Gotshal & Manges. He is co-founder and Principal of BDS Advisors, LLC, a private registered fund manager specializing in financial and commodity options strategies.

Is this your first venture outside of law?

No, at the height of the internet boom, I started a bricks and mortar and online financial training company that developed into a small quantitative trading team.

How did you know how to start your first business?

I didn’t. It was a unique time. A revolution was occurring in the usage of financial data by the consumer and a leveling of the investment field. The business idea was to build a platform to train people to become self-directed investors. This business did not succeed because of the bubble bursting in the tech space and for some internal reasons. But, I fell in love with money management and trading. So, I took some time off to consider my options. During that time, I met my current business partner. It was a sheer karmic delusion. My partner had traded at Salomon Smith Barney and needed help with starting his own shop. We went out to the market and raised some money while we were trading at the same time. We got traction with a few investors. Now, flash forward to May 2009. We survived the crisis of 2008. Not a small feat.

So, how did you learn about trading?

It was all self education at first. I believe in learning by digging into the work. In the first business, I managed traders and managed the development of trading algorithms. I positioned myself at the very outset of the venture to “Fail Forward.” And I have learned an incredible amount from my current partner.

Fail Forward? Can you please elaborate?

Make sure that whatever you do, every day in the office, you are improving business skills and communication skills and practical subject matter skills so that you have the ability to parlay your experience into something else. But, be 100% focused on doing well in your current job and learning. So, if this thing doesn’t work out, you’re in a position to move out and up.

What were the benefits of your time at Weil Gotshal & Manges, of your legal background?

I learned how to be meticulous, how to make sure all the i’s are dotted and all the t’s are crossed. Big law firm is best place to learn that. You also learn about working at an office. Prior to Weil, my job experience was in the pizza business (as a pizza delivery person.) I would even recommend staying 3 years at a law firm to get the most out of it. When I left, there was just an opportunity in the market that I didn’t want to pass up, but three years is a good amount of training. I believe law is an invaluable background for business and really distinguishes you among your peers. When you leave the law, you have an amazing tool kit for pursuing your passion. And, you feel more in control. I keep our legal fees low because I understand the process. I can manage our legal outsourcing better.

What are the three most important things for a successful transition from law to entrepreneurship?

Reserves, reserves, reserves. This is so important that I will just say it three times. Reserves give you the patience to see a business through the inevitable ups and downs. One thing I’ve learned about business is nothing works out as planned. So, it’s all about the reserves. Because, if your reserves are off, your judgment is off. Money buys you time to make good decisions. And, another tip, really, is a focus on cash flow. This is good advice for all entrepreneurs. When we had our first investors, we didn’t even have office furniture. We had to eat what we killed.

Other lessons from the trenches?

It’s all about hiring the right people. One thing I learned on the first job was that I wasn’t yet well equipped at that time to manage people. I’ve gotten better at that with time, but my partner, he takes the lead on some of the things I prefer not to and vice versa. We also don’t believe in cutting corners when it comes to hiring lawyers, compliance people.

Have you had any mentors in the law?

More like “tormentors.” I’m just joking. My partner, Brian Jasiorkowski, has been a great mentor. He is a person of great intelligence and also humility. At Weil Gotshal because everyone I worked with was the best in their game, it really helped me to improve my analytical skills.

What are your interests/hobbies?

I am very involved in the non-profit world. I sit on the Executive Committee of the UJA, the largest local philanthropy organization. I also have two kids, so I am an assistant coach in baseball, soccer and tae kwon do.

How do you make the time?

We’re blessed here because we run a tight ship – efficiency is very important in business. This is something that I think is better than law – the hours are market hours. So, as long as you are efficient, you can get everything done. My day starts early. At 8 AM this morning, I had a meeting at the UJA. At 9:30, I am in the office. At 7 PM tonight, I’ll be on the field coaching. I don’t watch TV. But, because my job involves looking closely at the macro events of the world to determine market performance, I stay up to date – that’s my responsibility anyway and something I very much enjoy.

So, what other things do you do in your day at work?

I talk to investors, I watch the markets, I watch events transpire in the world and review the portfolio. Truthfully, it doesn’t feel like work to me. If I had $100 million in the bank, I would still do this. Maybe I would get nicer wallpaper.

What books are you reading now?

The Talent Code by Daniel Coyle.

How did 2008 influence your business?

2008 changed everyone’s thinking. Some of these changes are very good – we weren’t humble as a society. Now, this economic fiasco has infused a sense of humility into everything we do. I keep front pages of the magazines proclaiming the end of our world, headlines such as “Street of Broken Dreams.” I want to make sure I remember this time so that I can benefit from the wisdom we all gained. Oh, I also think it’s important to be idealistic about your prospects in business. I knew when I researched money management, which area I could do better in. My feeling was based on some real facts – what I knew about the market and what I knew I could do. And, now, here we are. We survived – so that proves the value of our model.

Last words for our readers wanting to take the leap from law to entrepreneurship?

Maintain a good attitude. Know that failure is a possibility so Fail Forward.