Jim Simons, every mention
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every year anyone David Rosenthal 120Ben Gilbert 22Michael Lewis 1
Verbatim, from the transcripts: the passages where Jim Simons comes up
10 Years of Acquired (with Michael Lewis) · Acquired
- ▶ 1:44:41 Michael Lewis Oh, I, so Jim Simon's son had a kid in my oldest child's class in high school, and I tried, I approached, I said, look,
Microsoft Volume I: The Complete History and Strategy of founding through Windows 95 (Audio) · Acquired
- ▶ 33:32 David Rosenthal It's funny, at Harvard, you know, kind of like Jim Simons that we talked about at MIT on the Rentech episode.
Renaissance Technologies (Audio) · Acquired
- ▶ 2:07 Ben Gilbert Their founder, Jim Simons, worked for the U.S. government in the Cold War as a codebreaker before starting Renaissance.
- ▶ 3:26 Ben Gilbert And while the resources are out there are scarce, because, for one, employees sign a lifetime nondisclosure agreement, David and I are going to take you through everything we've learned about the firm from our research, dating all the way…
- ▶ 5:20 David Rosenthal Ah, well, we start in 1938 in Newton, Massachusetts, which is a fairly wealthy suburb just outside of Boston, where one James Simons is born.
- ▶ 5:33 David Rosenthal And both of Jim's parents were
- ▶ 5:49 David Rosenthal By the way, we knew all this because we have to thank Greg Zuckerman, author of The Man Who Solved the Market, which is the only book out there that is solely dedicated to Rentech and Jim Simons, and we actually got to talk to Greg in our…
- ▶ 6:08 David Rosenthal So, that was Jim's parents, but really a major influence on him growing up was his grandfather, Marsha's dad.
- ▶ 6:17 David Rosenthal There's already kind of echoes of the Bezos story here with the grandfather, the mother's father, and spending a bunch of time with him and rubbing off on young Jeff or young Jim in this case.
- ▶ 6:36 David Rosenthal But, back to Jim here in the, uh, 19 forties.
- ▶ 6:45 David Rosenthal Jim spends a ton of time there growing up at the factory.
- ▶ 6:49 David Rosenthal So Jim's grandfather, Peter, was, uh, quite the character.
- ▶ 7:01 David Rosenthal Peter reveled in telling Jim and his cousins stories of the motherland involving wolves, women, caviar, and vodka, and he teaches young Jim when he's a child here in the factory to say Russian phrases like, give me a cigarette and kiss my…
- ▶ 7:22 David Rosenthal If you watch interviews with Jim, his hands are always twitching because he has chain smoked his entire life, probably going back to, like,
- ▶ 7:40 David Rosenthal I mean, these famous stories of the conference rooms at Rentech and the war rooms when the market is going through like a crazy gyration and it's just filled with cigarette smoke and it's all Jim.
- ▶ 7:53 David Rosenthal So, back to Jim's childhood, though, here in the
- ▶ 8:12 David Rosenthal And Jim, you know, he gets to rub shoulders in the Boston area with people who are really rich.
- ▶ 8:40 David Rosenthal So the legend has it when Jim is four years old, he stumbles into one of Zeno's famous paradoxes from ancient Greek times.
- ▶ 9:04 Ben Gilbert And so, Jim, as a four-year-old, when he observes they need to go to the gas station to fill up the tank, he throws out the idea, well, let's just use only half the gas in the tank, because then we'll still be able to, after that, only use…
- ▶ 9:25 David Rosenthal So, Jim's dream is to go to MIT down the street in Cambridge and study math.
- ▶ 9:31 David Rosenthal He graduates high school in three years, and during the second semester of Jim's freshman year there, he enrolls in a graduate math seminar on abstract algebra.
- ▶ 9:43 Ben Gilbert Yeah, and Jim would go on to finish his undergrad at MIT in three years and get a master's in one year.
- ▶ 10:02 David Rosenthal And Jim's pretty self-aware here.
- ▶ 10:32 David Rosenthal Yes, so Jim's own words on this are, I was a good mathematician.
- ▶ 11:29 David Rosenthal And Jim ends up being a Hall of Famer mathematician, but he's not Tom Brady.
- ▶ 11:37 David Rosenthal That goes on to become a foundation of string theory in physics, which isn't even Jim's field.
- ▶ 11:42 David Rosenthal So this realization that Jim has about himself, though, both that he's not the smartest person in the room at a place like MIT, but he can hang with them, and that he has this taste concept, I think becomes one of the most important keys…
- ▶ 12:48 David Rosenthal We're now in the late fifties when Jim's at MIT, you know, this is kind of James D and rebel without a cause era.
- ▶ 12:55 David Rosenthal So after graduation, Jim leads his buddies on a road trip with motor scooters.
- ▶ 13:31 David Rosenthal Jim heads out to Berkeley in California so that he could do his PhD with the professor Xing-Shen Churn, and much later in life, Jim would collaborate with Churn for the Churn-Simons theory that we talked about earlier that becomes one of…
- ▶ 13:49 David Rosenthal But before Jim leaves for the West Coast, he meets a girl in Boston, and they decide to get engaged in four days.
- ▶ 14:03 David Rosenthal And when they get to California and they get married, Jim takes the 5000 dollar wedding gift that I believe they got from her parents and he decides, I want to multiply this.
- ▶ 14:58 David Rosenthal Futures and commodities that are being traded that Jim gets into.
- ▶ 15:07 David Rosenthal Nonetheless, when he starts out doing this, Jim hits a hot streak, and he goes up 50% in a few days.
- ▶ 15:43 David Rosenthal So Tim's like, okay, okay, I'll stop, I'll focus on academia.
- ▶ 15:55 David Rosenthal So they stay one year in Boston, but Jim, even though he's got a family, even though he's super successful as a young academic here, you know, he's got kids, he's restless.
- ▶ 16:24 Ben Gilbert When I read this, I couldn't believe that this was Jim Simon's first business venture.
- ▶ 16:53 David Rosenthal So Jim takes a year off and goes down to Bogota.
- ▶ 20:38 David Rosenthal Very quickly after Jim arrives at IDA, remember he's in money-making mode at this point in time, he recruits a bunch of his very brilliant colleagues to come work with him in their 50% free time on an idea to apply the same work and…
- ▶ 22:39 David Rosenthal And what Jim and his colleagues here are suggesting is that, but just not really done by humans.
- ▶ 23:17 David Rosenthal When Jim started working on code breaking, I think he just looked right back to his experience trading in the markets and was like, whoa, this is the same thing.
- ▶ 24:05 David Rosenthal And Jim just had this incredibly brilliant insight that you can use these techniques and this technology for making investments.
- ▶ 32:09 David Rosenthal So Jim and Lenny and this whole little crew, they're pretty fired up.
- ▶ 33:59 David Rosenthal Shortly after all of this, though, Jim ends up moving on anyway, because the Vietnam War starts, and he, as you can imagine from his background, is not a supporter of the Vietnam War at this point in time.
- ▶ 34:11 David Rosenthal Jim writes an op-ed in the New York Times denouncing the Vietnam War and saying, like, yeah, he's, you know, sort of part of the Defense Department, but, like, not everybody in the Defense Department is for the war.
- ▶ 34:32 David Rosenthal Even more than that, amazingly, nobody really paid attention to it except a reporter at Newsweek who then comes to interview Jim and ask him some more questions, and he just doubles down on this.
- ▶ 34:51 David Rosenthal So Jim gets fired in 1967.
- ▶ 35:55 David Rosenthal But it did have one very important thing going for it, which is why Jim ended up there, and that is that Nelson Rockefeller, who was then the governor of New York, had launched a campaign, a hundred million dollar campaign, to try and turn…
- ▶ 36:21 David Rosenthal I sort of thought MIT was the Berkeley of the East already, but Rockefeller is waging a campaign that he wants Stony Brook to become a math and sciences powerhouse, and Jim is the key.
- ▶ 36:35 David Rosenthal He wouldn't be able to recruit somebody like Jim otherwise, but because he's now kind of tarnished his career, here's a, like, very talented mathematician that they can convince to come be chair of the department.
- ▶ 36:47 David Rosenthal So, they basically give Jim an unlimited budget and leeway to go try and poach math professors from departments all over the country in the world and bring them there to Long Island.
- ▶ 36:59 David Rosenthal And part of how Jim goes and recruits folks is money, like the old, hey, I'll double your salary line.
- ▶ 37:39 David Rosenthal And amazingly, it works.
- ▶ 37:57 David Rosenthal But in true Jim fashion, after a couple years of this, and also his marriage with Barbara falling apart,
- ▶ 38:15 David Rosenthal And this is where Chern and Simons end up collaborating and developing the Chern-Simons theory that ends up winning the highest award in geometry from the American Mathematical Society and really kind of is Jim's personal mark on…
- ▶ 38:31 David Rosenthal Now also right around the same time, remember the Colombian flooring company, it gets acquired and Jim and his buddies who are partners in it come into a good amount of money.
- ▶ 38:44 David Rosenthal And Jim is newly divorced.
- ▶ 39:38 David Rosenthal Jim was the first one, but the idea that you would leave to do anything commercial, you're doing a disservice to humanity.
- ▶ 40:36 David Rosenthal Here's Jim in a strip mall next to a pizza joint, setting up his trading operation that he decides very cleverly to call monometrics, a combination of money and metrics, or econometrics.
- ▶ 40:51 David Rosenthal And he recruits his old IDA buddy, original partner in crime on the trading idea, Lenny Baum, to come and join him.
- ▶ 41:08 Ben Gilbert And how much did he make on that flooring sale?
- ▶ 41:10 David Rosenthal I think together with Jim, his partners, and whatever money Lenny put in, they had a little less than four million dollars in this initial capital.
- ▶ 41:23 David Rosenthal Now Jim also has another advantage at this point in time, which is he's right down the street from Stony Brook, and he's just recruited all of these superstar mathematicians.
- ▶ 41:36 David Rosenthal Yes, and those folks are more loyal to Jim than they are to Stony Brook.
- ▶ 41:44 Ben Gilbert This is not a paved pathway until Jim paves this pathway.
- ▶ 41:49 David Rosenthal But some of them, and in particular, the superstar James Axe, Jim convinces to come join him in his trading operations.
- ▶ 41:59 Ben Gilbert So having Baum and Axe and Simons, it's like suddenly this extremely credible team in the math world.
- ▶ 42:18 David Rosenthal And it's led by Jim, who's somebody that they respect as an academic, but even more important is somebody they want to work for, and they look up to, and they think is cool.
- ▶ 44:01 David Rosenthal Yeah, they're just suggesting patterns and ideas, and Jim and Lenny and James, they have to then decide, hey, are we gonna do this or not?
- ▶ 46:03 David Rosenthal And so much so that even Jim is ringleader here.
- ▶ 47:26 David Rosenthal And Jim gets excited about investing together with Howard.
- ▶ 47:34 David Rosenthal And in 1982, Jim actually winds down monometrics and he and Howard co-found a new firm together.
- ▶ 47:48 David Rosenthal Jim and his group are gonna bring in the quantitative trading thing.
- ▶ 48:53 David Rosenthal This is Jim and his buddies and Lenny and James and Howard.
- ▶ 49:42 David Rosenthal That ends up triggering a clause in Lenny's agreement with Jim,
- ▶ 50:07 Ben Gilbert Simon's going to Lenny and saying, hey, maybe we should cut some of our losses, and it's okay to trade out of these positions.
- ▶ 50:46 David Rosenthal That one investment is half of Jim's net worth.
- ▶ 50:56 David Rosenthal Yeah, so in the book, Greg talks about, oh, Jim was focused on venture capital, and that's kind of the story out there.
- ▶ 51:03 David Rosenthal It's like, well, he was focused on venture capital because that was the only thing working and making money.
- ▶ 51:23 David Rosenthal And he tells Jim that he wants to move out to California with Sandor Strauss, who started working with them at this point.
- ▶ 51:38 David Rosenthal Jim says, sir, fine.
- ▶ 51:59 Ben Gilbert So it's this interesting arm's length thing where Jim strikes a deal where he's gonna own a part of Axcom in exchange for
- ▶ 52:23 Ben Gilbert And I think Jim owned a quarter of it.
- ▶ 54:10 David Rosenthal The other thing is, Jim says, oh, you're going out to California, let me hook you up with my buddy who's a Berkeley professor out there, Elwyn Berlekamp.
- ▶ 56:08 David Rosenthal Are really good, and Jim and Berlecamp especially are very encouraged by this.
- ▶ 56:15 David Rosenthal So in 1988, Jim and Howard Morgan decide to spin out the venture investments, and Howard goes to manage those with basically their own money.
- ▶ 56:25 David Rosenthal Fun coda on this, when Howard starts first round a number of years later with Josh Koppelman, Jim of course is
- ▶ 56:56 David Rosenthal I think Jim made as much money from his investments in first round as
- ▶ 57:08 Ben Gilbert Wow, that is a untold story about Jim Simons.
- ▶ 57:11 Ben Gilbert I think I read basically every primary source thing on Jim or Renaissance on the whole internet, but I assume you got that from Howard.
- ▶ 57:43 David Rosenthal So, when Howard spins out the venture activities, Jim then decides to set up a new fund as a joint venture between Rentech and Axcom.
- ▶ 57:55 David Rosenthal And they decide to name it after all of the collective mathematical awards that Jim and James and Berlekamp and all these prestigious mathematicians have won in their careers.
- ▶ 1:10:35 David Rosenthal So, at the end of 1990, Simons is so jazzed about what's going on that he tells Berlichamp, hey, you should move here to Long Island.
- ▶ 1:11:04 David Rosenthal And B, I couldn't tell how much of this is just, he's a little more conservative than Jim, or how much of this actually might be his, hey, whole poker bet sizing thing.
- ▶ 1:11:15 David Rosenthal He turns to Jim and he says, well, if you're so optimistic, why don't you buy me out?
- ▶ 1:11:20 David Rosenthal So Jim does.
- ▶ 1:12:30 David Rosenthal So, Jim buys out Berlekamp.
- ▶ 1:12:44 Ben Gilbert So it's now the Jim Simons show in New York with Strauss building the engineering systems, and Axe, I think, still had a small stake.
- ▶ 1:12:54 David Rosenthal So once Jim takes control and moves everything back, he basically decides that he's going to turn Rentech into an even better, even more idealized version of IDA and the math department at Stony Brook.
- ▶ 1:14:42 David Rosenthal This is a quarter century from the time that Baum and Simons write the paper at IDA until Medallion really starts to work.
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