“The key finding of the survey is that these managers can be profitable at a small size. One third of managers surveyed said they were profitable with less than USD50 million. We therefore dispute the claim that you need USD200 million or more to break even. We think there is tight evidence that you can do it at a lower AUM number,” asserts Capstick.
Breaking it down by strategy, the survey found that global macro funds need the most assets to break even: USD132 million, followed by event-driven (USD108 million) and multi-strategy funds (USD98 million).
I'm very doubtful that a majority of these smaller funds survive very long but really no great way of knowing. Macro funds until this year have just been sucking. Let's say you're getting 1/15 on 132mm and returned 10% (10 is generous given how a lot of these funds have performed) for the year. That's 1.32mm management fee and 1.98mm in incentive for 3.3mm total. That's really not a lot of money to go around to get startup hedge fund talent.
A bit like the problem dating apps have, the more successful you are, the more churn you create.
Once a group of friends come together they'll get a house share of their own instead of sharing with strangers. Probably be cheaper too. Have they modeled for high churn rates in their already thin margins?
A premium service leaves your very vulnerable to the tide going out on disposable income. The co-living space will be left with higher long term leases they can no longer service. I really want to figure out a way to short services like WeWork at a 16b valuation.
Speaking of dating apps, the worst part about dorm life was hearing people have sex or making sure your roommate knows not to walk in when they see a sock on the door.
If I were single and working 80 hours a week so my boss's boss can make billions on an IPO while I end up with barely enough to afford a Bay Area house, then maybe I would consider these arrangements for a little while. But instead I have a girlfriend and we value certain things more than money.
> Speaking of dating apps, the worst part about dorm life was hearing people have sex or making sure your roommate knows not to walk in when they see a sock on the door.
Wait, what? I always thought the sock on the door was the signal to join in.
This is a great partnership and I can't wait to see what comes next.
I've watched and enjoyed reading the Buffer story since the early days. In fact it probably played a small part in my path towards quitting work last summer and starting my own thing.
I'm considering doing an 'Open blog' for our enterprise start-up http://www.fundrecs.com like the guys did with Buffer.
Trying to weigh up whether it would limit us or enable us to do more. My gut is saying go for it but my co-founders aren't convinced.
