'I even put my mother's pension into one of our funds' - Patrick Ghali, Sussex Partners

HOW I BEAT THE ODDS: The hard work we put in to win the trust of clients paid off, even after the financial crisis hit.

by Adam Gale
Last Updated: 27 Mar 2015

You don't have to own a risky business to be an entrepreneur. When I co-founded hedge fund advisory firm Sussex Partners with seasoned investor Robin Nydes in 2004, I knew it would be a long game. We matched investors with funds only after years of careful research. Getting clients to notice us at first was unsurprisingly tough. From my spare room-turned-office in Maida Vale, I started cold-calling banks in Switzerland. They get 50 calls a day, but if you're tenacious enough people will eventually listen.

It took six months to get our first client. I made 180 flights in 90 days, sometimes getting four hours in my own bed before having to wake up for the next trip, but it was always worth it. Business is based on trust and you can't build that by email. It's the reason we never charged up-front fees or retainers, and why we invested in our own funds. I even put my mother's pension into one. We have always believed completely in the advice we give.

As a result, when I got the call about Bernie Madoff's arrest in 2008, I was unconcerned and went back to sleep. Forty-eight hours later, people started pulling their money. We weren't exposed to Madoff at all, but that didn't matter. If it had the word hedge in it, it was evil. We lost half our business in six months.

This wasn't the first time I'd watched something go wrong with a company I had founded. Seven years earlier, a few of us at New York University started a internet shopping firm, Inshop. We sold it in 2001 to a publicly listed company, 800 America, but the owner, Elie Rabi, turned out to be a fraudster with nine different aliases. He was convicted and died in jail. Our investors all got their money back, but our capital was locked into shares.

I was determined not to get into that position again, which was why Sussex Partners never took any external backing. Robin and I put more of our own money back into the business in 2008, and didn't let anyone go. Everyone had to work three times as hard when the crisis hit. Many in the industry didn't think it was worth it and left. We had some unpleasant conversations with our clients, but we understood they were just taking out their frustrations on us because we were the only ones who weren't hiding. The result was that when the market turned, we got all the business back.

Our clients want to stay rich, not get rich, and remembering that helped us survive when so many went under. We got a lot of credibility for that, but it still took four years to get back to where we were. We're a more mature firm now, literally. Our partners have more than 30 years' experience on average and people I thought I'd never meet ended up being my colleagues. The last person to join ran a 20bn euro fund. I have huge respect for that.

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