In the early 2000s Maria Baum had the “Nirvana job” of traders, she said. She was a global macro proprietary trader at Lehman Brothers, “which means I could basically trade any instrument, anywhere in the world, really without asking anybody, and with a very generous limit.” She also had three children (she now has four).
One morning as she rushed to work, she had a revelation. “It was like 5 o’clock in the morning, pitch black out, I had on a suit and heels, and a breast pump over my shoulder. I was leaving for work because I ran an international book and had to get in very early. And I thought, ‘Why am I doing this? This isn’t how I want to spend my life now.’”
Odey Discusses Howard Marks’ Astute Observation On Why Hedge Fund Alpha Is Increasingly Rare [January Letter]
According to a copy of the firm's January investor update which ValueWalk has been able to review, the Odey Asset Management Odey Special Situations Fund returned 7.7% in January, outperforming its benchmark, the MSCI World USD Index, by 8.7%. Q4 2020 hedge fund letters, conferences and more The $60 million fund, which Adrian Courtenay manages, Read More
Baum, CEO of fitness and lifestyle brand Tracy Anderson, told her story as the keynote speaker at the recent Wharton Women’s Summit 2016.
It turned out her husband was also thinking about a change. He ran currency trading at another bank, said Baum, and agreed that “life was too short” to live at the pace they were going. The couple decided that although too young to retire, they had enough to live comfortably. They quit their jobs and moved to the Hamptons with their children.
But Baum, who before Lehman Brothers had been a trader for Commerzbank, NWI Management, and Bankers Trust, quickly became bored with what she called the tennis-playing life. She and her husband started looking for new business opportunities, and Baum found she had a passion for entrepreneurship. She said if you have an entrepreneur’s mindset, “opportunities come at you at the speed of light; that’s how your head works… You’re constantly assessing things that you can fix, that you can change.”
“It was 5 a.m., pitch black out, I had on a suit and heels and a breast pump over my shoulder.”
The couple started a recruiting firm for sales trading roles on Wall Street, which Baum’s husband still runs. They also ventured into commercial and residential real estate, the restaurant industry, and importing. “We started several successful businesses, and we were really, really enjoying this life, because… we took the rules we learned on the trading floor and applied them to entrepreneurial management.”
Today Baum is CEO and managing partner of Tracy Anderson Mind & Body, a global fitness and lifestyle brand, and co-founder of Splash Premium Mixers, a beverage industry startup launched last summer.
Learning from Wall Street
Baum shared lessons from the trading floor that she said have served her well as an entrepreneur. One of the most important is to constantly be on the lookout for value, and not to give up if an opportunity seems too good to be true.
“I would get this all the time from people on the trading floor: ‘Well, if that trade exists… why is it there? Someone else should have done that already.” In Baum’s view, one has to have the confidence to assess the situation and think, “‘It’s there because it was waiting for me… and now I’m going to do it.’”
Another lesson is to always assess a startup idea thoroughly — not just once but continually over time, the way successful traders reassess their portfolios almost daily. Why? Because someone might have an idea today for a great product, said Baum. They’ll evaluate all the risks, make a plan, determine that the idea has positive present value (meaning it is predicted to make a profit) and sit back and assume it will be a success.
“But then maybe next week something changes,” she said. “Not in you or your product, but in the world. You always have to make sure you understand where you fit into the world… Maybe somebody bigger and better just did the same thing.”
She gave the example of an idea for an online pet supplies store, which someone pitched to her years ago when ecommerce was just taking off. Baum rejected the concept because, she said, “I knew that the world was going to change tomorrow, and as soon as PetSmart or any other giant who’s got a big box retailer… starts an online store, there you go. They’re going to crush her for many, many reasons, distribution and all that.”
Learning to cut your losses is a big one too, according to Baum. “That’s a huge lesson from Wall Street that I think should apply to everybody.” She emphasized that this means not just bailing when you realize things aren’t working out, but doing advance planning. On Wall Street, she said, “when you put a trade on, you know exactly what you’re looking for, where you’re looking to make profit, and also where you’re looking to stop a loss.”
She referenced a Yogi Berra quote, only partly tongue-in-cheek: “‘If you don’t know where you are going, you’ll end up someplace else.’”
Transforming the “Cocktail Concierge”
Baum also acknowledged some key differences between traders and entrepreneurs. She noted that much of her advice — recognizing value where it really lies, assessing clear-headedly how your product fits into the world, and being ready to cut your losses — is easier on Wall Street where after all, “you’re dealing with someone else’s money.” The financial and emotional investment involved in entrepreneurship can stymie progress.
“This is the toughest thing that [entrepreneurs] get stuck on: They can’t get over sometimes that their great idea isn’t working.” Being flexible is key to success, said Baum. “You can’t say this is it, this is exactly how it’s going to look when I put it on the shelf or introduce it to the public. You have to be able to change and adapt.” She asserted that many of today’s successful products are dramatically different from their inventor’s original concept.
“We took the rules we learned on the trading floor and applied them to entrepreneurial management.”
The story of her co-founded product Splash Mixers illustrates that point. Splash’s website shows a row of slim, elegant white bottles with the description, “A great-tasting, all-natural and low-calorie cocktail mixer that simplifies the art of making the perfect cocktail, anytime, anywhere.” According to Baum, the person who brought her the idea initially had something quite different in mind: “the ‘Cocktail Concierge’… It was a big machine that would sit on your counter and make cocktails.”
“I said, well I like this idea, but can you do this, can you change that. And over two years we tweaked it so much that it was completely different. It doesn’t have the same name, it’s not even the same product. But, it’s going to be a huge hit, because we worked together on this journey.” The Splash launch received coverage in The Wall Street Journal, Glamour, and US Weekly, among other publications.
At the same time, Baum continues to build the Tracy Anderson brand as its CEO, a position she assumed about two years ago. She views herself as an entrepreneur within the company. “We’re launching new products — we have protein bars and shakes on the shelves in Target, which are a huge success that we’re about to roll out everywhere else now.” The company is also working on an apparel line.
Baum noted that the term “lifestyle brand” tends to be over-used, but in this case it applies. “People look to [Tracy Anderson] to know what to eat and what to wear, besides what kind of workout to do.” She is also building new fitness studios and expanding them to include cafes, drawing on her experience with commercial and residential real estate: “I know what to look for, I know what to do, I feel really comfortable in that space.”
One of Baum’s early innovations at Tracy Anderson was to mount a camcorder in Anderson’s master class and broadcast the video to a global audience who subscribed to the streaming service. She did this with an eye toward how the world is changing, citing a trend away from DVDs. “[DVDs] are not going to exist for all that long,” she said. Baum is watching — as always — “what’s next in terms of staying ahead of the curve.”