WSO Podcast| E231: DE Shaw, Jump Trading, Citadel and Making Over $1m per year
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WSO Podcast Episode 231 Transcript:
Patrick (CEO of WSO): [00:00:06] Hello and welcome. I'm Patrick Curtis, your host and chief Monkey. And this is the Wall Street Oasis podcast. Join me as I talk to some of the community's most successful and inspirational members to gain valuable insight into different career paths.
Patrick (CEO of WSO): [00:00:20] And life in general. Let's get to it.
Patrick (CEO of WSO): [00:00:25] In this episode, Pat takes us through his long and winding career as a quant and systems architect from almost 20 years at the Livermore Research Lab to reinventing himself and joining D.E. Shaw in 2006, we learn about how being curious and having a unique skill set can earn you outsized pay packages. Find out why he was heavily recruited to jump trading and why his jump to Citadel was a mistake and how everything panned out now that he is retired. Hey, Pat. Welcome to the Wall Street Oasis podcast.
Pat: [00:01:01] Happy to be here. This will be fun. I've been, you know, on the site for a long time was active for a while and sort of in the background, but decided to come back in with my screw it, I'm retiring note and here we are.
Patrick (CEO of WSO): [00:01:14] It Has it been over a decade since you've been on?
Pat: [00:01:16] I think so, yeah. That was way back. That was like seven jobs ago, so it might be a while.
Patrick (CEO of WSO): [00:01:22] Yeah. So Pat's been a long-time member of the community. If you're on video, you'd be able to see we have matching t-shirts to prove it. We have the OG, so shirts, so really old school. I actually think there might even be an older version than this, but this is a pretty old version. So Pat, thank you for joining again. And so Pat has a long and winding road, but I'm going to let him kind of give you the short summary bio of his… his background, which kind of slants a little more engineering. But I think it's pretty interesting. So go ahead.
Pat: [00:01:52] Yeah, it's engineering, but lots of swings through sort of the quant space in finance. Started out, got out of high school, top student, went to an engineering college, blew up, dropped out of complete meltdown, which is interesting in the long run. Now I have students that are doing the same thing because I'm teaching but joined the Air Force because I wanted structure and discipline in my life. After four years, that was too much structure and too much discipline. So while I was in, I finished up undergrad, Nebraska, Omaha. I was stationed out in Nebraska and decided to go to grad school because I was used to being broke and didn't have anything better to do and still didn't quite know what to do with my life. Did a double-time masters at Cal Poly, San Luis Obispo.
Patrick (CEO of WSO): [00:02:41] This is in the eighties… this is in the eighties for people wondering.
Pat: [00:02:42] Oh yeah, this goes back. We're talking old-school stuff here. So I applied to a lot of Ph.D. programs, go on to Ph.D. I figured, you know, go to school. Why not? It's more fun when they pay you. I got to say that part. Yeah. I ended up doing my Ph.D. work at UC Davis, which has a satellite campus at Lawrence Livermore National Lab, which is a nuclear weapons design lab. And so they did high energy physics and computing. So Ph.D. there I was going to teach, but the economy was in the toilet, so I decided to stay and work there 20 years included about seven years in nuclear weapon design. Thought I was never going to leave and just retire right out of there. But I got a call one day to recruit me out to New York City to work for Shaw, but not the finance side. He had sort of like a hobby project to build a supercomputer in the top of a skyscraper in Times Square. So I had a corner office overlooking the ball in Times Square, which was really kind of surreal. My interview with him was... was beyond surreal. It's just being friendly with billionaires. It's just weird, Sure. But I was I hadn't offered it. It's only a little weird. I had offered to teach at Columbia part-time because I've been teaching a lot. I since I didn't teach full-time, I ended up at like teaching at Davis and some other Bay Area colleges and Stanford for about four years as a consulting professor there.
Pat: [00:04:11] So I was going to do the same thing at Columbia. They told me, no, that made me mad. I happen to have a conversation going with JP Morgan. So I said, screw it. And to... to tech and things. I said, Let's try finance world. People thought I was in finance because I was at De Shaw. So I got finance offers all the time. But it's like, No, no, I'm not. I don't do finance. I do... I do tech and development. And so I ended up JP Morgan, the hiring process that ended up being really funny. Lots of fun things about that. Then left a friend with a friend who was at jump trading. So high frequency trading. Then after about a little over a year, Citadel, who was an arch-rival of theirs, tempted me away with increasingly large piles of money. So I said yes. Eventually, that crashed and burned. I was not a good fit for Citadel. We both found that out and ended up at another finance trading in Hewlett because I wanted to stay in the space. Is there for almost three years? That crashed number. The company was just having problems and I just needed to get out and they had a long creek. So I went back to tech and did self-driving cars and then I did Instagram working on the Instagram back end, and then I did a year at a crypto analytics startup. Cool. And then I said, It's time to retire. And so I wrote the article in which is how we got here.
Patrick (CEO of WSO): [00:05:31] So very it's almost like you reinvented yourself. It's like you were like, okay, let me go into this quant finance career after 20 years, how.
Pat: [00:05:39] Hard can it be anyway, right?
Patrick (CEO of WSO): [00:05:40] How hard can it be? But I mean, it looks like you had a lot of great successes. It wasn't like these were like two months stints. Your a couple of years at Jump, you were a couple of years at almost four years with DSA in the research. Yeah, research sort of.
Pat: [00:05:52] You know, when it's you sort of learned everything you're going to learn at that place and then... then lets you try something else. I do a lot of mentoring work and so it's funny, I tell people, if you don't walk in day one with a plan of what you're going to leave with, you're doing it wrong. Yeah.
Patrick (CEO of WSO): [00:06:09] Before we get into, like, the whole finance realm, I want to. You spent so long. It's Livermore, right?
Pat: [00:06:15] So more labs. Yeah.
Patrick (CEO of WSO): [00:06:16] Yeah. So not too far from here. So you were there for almost 20 years. What was it? I mean, obviously, it was mostly computer science research. Some... some of the stuff, like you said, some of the nuclear weapon stuff like obviously very like sciencey high-level stuff where it.
Pat: [00:06:33] Was high-performance computing. And it turns out that lots of people want high-performance computing, which is why I've been able to sort of workplaces. And one of the things I say I was a co-lead on… on… on a physics project actually, it was the project that just did the fusion that got more energy out from the National Ignition Facility that was running codes I worked on 20 years ago with this guy.
Patrick (CEO of WSO): Wow. Wow.
Pat: And I used to joke with him that I could work anywhere I wanted on the planet, but he was sort of like a nuclear physicist. And I said, Well, there's only like five places in the world that you can work, and that's it. And so I learned a lot about physics there. People used to think I was a physicist. I learned so much physics.
Patrick (CEO of WSO): [00:07:16] Yeah…yeah, for sure. And so you were basically there and I guess what was the career like there? Obviously, there's not a lot of research scientists listening, but I think it helps kind of maybe open their eyes in terms of like, what's a career look like? You're just in the lab while you're playing. Is it hard when you say computer science high, high performance? Are you working? Are you playing with hardware or software at the Nano?
Pat: [00:07:37] Mostly… mostly software. I mean, there's some hardware research there too. Part of it you work directly with manufacturers of new computers, which is really fun. I have a collection of, like, interesting computer t-shirts from manufacturers like Thinking Machines, which was a big, big manufacturer or big computer manufacturer in the eighties. We're just trying anything to make things happen faster. But it's interesting in science and finance both that you have this desire to do something at a slightly higher resolution than somebody else so you can get an answer faster than somebody else. In science, you're trying to get a scientific breakthrough. You're trying to get a paper out of other people in trading. You're trying to get an answer on what the market going to look like in a few microseconds. It's the same thing.
Patrick (CEO of WSO): [00:08:26] How do you feel like? I mean, it's very strange nowadays to see someone right out of school. I mean, you went you were an academic, you came out of your Ph.D. and then you went and worked at this lab.
Pat: [00:08:36] Yeah.
Patrick (CEO of WSO): [00:08:36] I still think it's probably pretty rare to stay somewhere 19 years, right out of… right out of school.
Pat: [00:08:41] It really is. It's funny because my mom told me because I said I'm going to stay here forever. Don't ever believe that.
Patrick (CEO of WSO): Yeah.
Pat: It doesn't matter how good it is. You'll change. They'll change. You'll want something new. And you know, the move to New York was I was after something new, and that I didn't even know it until I interviewed because I've been there 20 years.
Patrick (CEO of WSO): [00:09:03] You never interviewed anywhere else. You just said, Are they paying you really crazy? Well, or what was going on?
Pat: [00:09:09] Pay me pretty well. I mean, it was good, it was solid. And, you know, it's like when we went through the boom and bust, the government is still there paying you, which is good.
Patrick (CEO of WSO): [00:09:18] But low variance but high six, mid-six-figure like hundreds… hundred.
Pat: [00:09:23] It was like in the low to mid hundreds at the end which okay, I mean it was there were times when you could have jumped out. There was a time when I was very tempted to go interview at Google when Google had like 304 hundred employees at it.
Patrick (CEO of WSO): Right.
Pat: Because they were looking for people that did C++ and Python, which is my which was like my sweet spot.
Patrick (CEO of WSO): Right.
Pat: And I decided because I didn't live in the bay area… bay area, I lived in the East Bay, at the east edge of the East Bay. Because you talked about interviewing. The last place I'd interviewed was when I finish up my Ph.D., which had been maybe 15 years prior to me leaving, and I interviewed on Labor Day weekend Friday, and I got caught in Labor Day weekend traffic and it took me two and one-half hours to get home.
Patrick (CEO of WSO): [00:10:11] Like, never commuting there?
Pat: [00:10:11] I will never, ever do this, ever. I will never be in the Bay Area, which turns out to be wrong. So I just I just said no to lots of things. But I got a call one day and I just said, Oh, this sounds cool. It was a blind cold call from a headhunter.
Patrick (CEO of WSO): Yeah
Pat: But they're looking for interesting and unusual people. And then I realized I'm an interesting, unusual person. And I also realized I hadn't interviewed. I didn't know if I could.
Patrick (CEO of WSO): [00:10:36] What do you mean?
Pat: [00:10:37] I had no…I had no practice.
Patrick (CEO of WSO): [00:10:40] If you were like, if you were rusty or, like, you just. If you could even survive.
Pat: [00:10:43] Could I get a job outside? Because the national labs are sort of like banks, which are super incestuous. That if you go if you go to JP, everyone's coming from Goldman or Bank of America or…or they just make they make the circuit right. And it's like every interview is, Oh, I haven't seen you since we work together.
Patrick (CEO of WSO): Yeah.
Pat: And so breaking into finance, which led to a very interesting story with one of the MDS.
Patrick (CEO of WSO): [00:11:09] So let's talk a little bit of that. So it's 2006. Everything's booming.
Pat: [00:11:14] Yeah.
Patrick (CEO of WSO): [00:11:15] Maybe some cracks initially, but so you're at the labs, and then what? How do you get in touch with DE Shaw or how does DE Shaw get in touch with you?
Pat: [00:11:22] It was they…they hired a specialty recruiter to find people that were quote unquote, interesting. And so that was people that. So their philosophy is you hire somebody who excels at anything and they'll probably excel at the thing that you want them to do. So I worked with this guy who was one of the top ten one-day winners on Jeopardy. There was a concert trumpet player. Does it say somebody else had… had… had his administrative secretary had graduated cum laude with physics from Princeton but was trying to break into a music career so was not pursuing graduate school in physics. It was a weird collection of people. So this guy was out finding weird people and he called me. I had some footprint because when I was at University of San Francisco, I built a world's largest one-day supercomputer in the college gym, which put me on the front page of the New York Times, which was weird. Um, I was also on the front page of Time magazine.
Patrick (CEO of WSO): [00:12:33] Because…because you…because you built the largest computer in a day or what do you mean?
Pat: [00:12:37] The day we took laptops, we build a ginormous network. We're trying to see if we can build something that was fast enough to be in the top 100, 500 fastest computers because there's a list every year.
Patrick (CEO of WSO): Got it!
Pat: About 500. And it was sort of like the last year where it might possibly be possible because it sort of moves at a pretty consistent rate. And I knew six months when they do it every six months, that even six months later would be too late. And so somebody told The New York Times, So I got a call from their tech editor and he interviewed me over an hour or so. And then it went and no one at the lab knew until late they saw it because I have new scrapes, scrapers, service. So I got a call like 8:00 in the morning and people said, What the hell is this?
Patrick (CEO of WSO): [00:13:21] And what year? What year is this?
Pat: [00:13:22] This is four or it's like, oh, four or something like that. Right before… right before, I moved to Stanford. But he was scraping through national labs because it was a good profile fit. We're building a supercomputing… supercomputer for protein folding. And so, yeah, tooling and stuff. And I was breaking the Python community very early. So that was the other piece of it.
Patrick (CEO of WSO): [00:13:44] Yeah, and so DE Shaw had that recruiter. They what was the interview like? Tell me about that, because you mentioned that, right? You said.
Pat: [00:13:50] Well, the interview is was… was.
Patrick (CEO of WSO): [00:13:52] A fly out to New York.
Pat: [00:13:53] The fly out to New York. I get there. I call my wife. It was like January 2nd, which is a very sad time to be in New York because, well, I just remember driving through it was gray and horrible and gray slush everywhere. I said, No way, I'm taking this job, period. My mom was from New York, so I thought I'd do it. I go back to see what happens. Then I went to the interview and talked with people. It was puzzle problems. One guy asked me, What's the square root of 1.2? And that turned into like a 30-minute discussion about analog computing and Newton's method and numerical stability. And this was this crazy, deep, amazing dive from a very simple question and went on and on. And at the end of the day, I called my wife, said, I totally want this job. Yeah. And then even though I walked back to the hotel and these gutters were filled with dead confetti and the smell of vomit from New Year's Eve in Times Square. But I didn't care because it just seemed like a chance to work with amazing, smart people all around me because everyone was like top of field and it's like, I want to work here. It was a no-ego kind of place, which was great because everyone was so good. You didn't need to prove yourself. So there was not any political drama and scrambling. It's really nice for a long time until I sort of got finished on. But the funny part was so at that time David was personally approving every hire. So I got called back a few weeks later. After having gallbladder surgery.
Patrick (CEO of WSO): [00:15:27] Oh, no.
Pat: [00:15:27] And so they tried to schedule it. The same day I was having the surgery. I said, Well, I'm busy that day. We'll have to do something else. So call me back for a second round of interviews. I'm wearing a white shirt and a tie because I felt it was I should be more formal. I have a bandage underneath and I'm afraid it's going to burst and I'll just read. The blood would come out of the shirt. And at the end of the day, at 4:00 o’clock. So they were just stringing me along because David wanted to talk with me.
Patrick (CEO of WSO): [00:15:54] When you say David, you're talking about.
Pat: [00:15:55] David Shaw.
Patrick (CEO of WSO): [00:15:56] The founder.
Pat: [00:15:57] The founder. Yes. Dr. Shaw. And so I go up and interview him in his office, which is on the top floor penthouse office. The sun is setting over Times Square in the background. It's blinding me. I can barely see. We talk about sort of stuff just generally. He was interested because I had that career bump, shall we say, a rare academic bump when I was a dropout. We talked about that and sort of what philosophy was on things. And it was really funny because some great advice actually came out of that because he was talking about you can't solve every problem with money, but there are problems that you can if you're willing to pay the price to do it. And said, Yeah. And being able to understand the distinction between problems you can solve with money and problems you can't solve has been a really good sort of philosophical, philosophical tidbit to take away from that. But here it is. You know, the sun's going down behind his head. You get this glow around his head like a feeling, and you can see the lights coming on in Times Square. It was just one of the most surreal days of my entire existence on this plane.
Patrick (CEO of WSO): [00:17:01] I'll never forget that day for sure.
Pat: [00:17:02] And so then I got an offer and it was actually less money than I was making at the lab. When you factor in housing and everything else.
Patrick (CEO of WSO): [00:17:14] Yeah. But it was a double pay. But still less money.
Pat: [00:17:17] Is more cash in, but much more cash out. Yeah, but I felt like I wasn't going to go anywhere and do anything new with the lab. Yeah. And so it felt tapped out and which is a sure sign to move on. And so I did. And it was great for four and one-half years, but I sort of.
Patrick (CEO of WSO): [00:17:34] Possibly the first day you walk in or what that's like or did it, you know what.
Pat: [00:17:39] Was super weird because they sent out because everyone came in together from the finance side and this weird research hobby, it was essentially David's hobby business, which he spends more money than I'll see in a lifetime on a hobby business. But everyone was coming in from Princeton and Yale and Stanford and Harvard, and I had a Google address and gmail address and it's like, okay, I'm just glad it wasn't like AOL or Hotmail because that would have been. But everybody was coming from all these really prestigious backgrounds and, you know, mine is Nebraska, Omaha. I didn't even have a major. It was general studies. I have a Bachelor of General studies.
Patrick (CEO of WSO): [00:18:23] Yeah. But I feel honored to be in that group. Right?
Pat: [00:18:24] Well, damn straight, I work for it. But which is the thing. And it's funny because when I look through people at the site, a lot of people are looking for like, Tell me the target school to go to the classes, to take the clubs to join, and then I'll get this job and then I'll make this much money and there's no formula. You have to do what you're get good at and what makes you happy and follow the things that you want to learn. So I did that. But you know, it led me to the finance thing. As I said, know, part of it was I had just been told I couldn't take the Columbia job. It was a part-time night teaching job wasn't going to be distracting. But they felt that the last person who had taken a job from the from the shop at Columbia had left to go to Georgia Tech. So they were afraid. I guess if people taught too much, they'd like it too much and leave. So they told me, though, when I was mad and I was just going on a two week vacation, so I was mad for two weeks. Just do it. And that's why I told JP Morgan, I said, Oh, look, and had JP Morgan and Gold and Goldman Sachs both bidding against me and ended up at JP Morgan. This was a better fit.
Patrick (CEO of WSO): [00:19:28] Yeah. Yeah. So this was, this was. Are you talking about. I was saying you couldn't do Columbia.
Pat: [00:19:32] Couldn't take the Columbia job.
Patrick (CEO of WSO): [00:19:33] Yeah. Because you're afraid you would love to be faculty too much or some faculty.
Pat: [00:19:38] Now I'm back to being faculty. I can totally understand it. Because you know what? I really like it a lot. Because… because teaching is fun. But so I went to JP Morgan, which was weird because I didn't have any suits to go because this was still like a suit and tie kind of thing. Yeah, I went to Brooks Brothers and told them that I was interviewing at Goldman Sachs and JP Morgan and I was wearing sort of my tech, you know. Jean shorts and and like a short-sleeved button-up shirt or something like that. And the salesperson said that will never do. And got me a nice suit. So I had a nice interview suit. Did the interviews kind of it kind of dragged on for a while? Sort of. My first case of playing hardball because JP didn't want to Goldman to get me. So they gave me a exploding offer for like a day and a half at 4:00 o’clock. So like 2 hours prior, I just mailed them and said, I'm sorry, I'm going to keep pursuing this. I understand the offer is off the table and they just instantly backtracked. So I understood, you know, leverage. And they said, well, they were super interested. Ended up there.
Pat: [00:20:47] The most the coolest interview part, though, was I went into this managing director's office and as I said, finding super incestuous banks go to bank, go to banks or from target schools and all these other things. And so he said, Well, you've been doing math and science. What makes you think you can do finance? And so I was a little assaulted by that. And I said, you know, I do math, scientific programming, we've got differential equations, you've got differential equations, we use Monte Carlo use you use Monte Carlo to solve problems. And I said, There's just one difference. And I kind of leaned in over the desk, got a little quiet and said it again. There's just one difference. And he leaned in and he said, What is it? And I pointed at him and said, You keep score with money. And he stood up and he slammed his fist on the table and said, Damn right, we keep score with money. So I stood up and I slammed my fist on the thing. Yeah, you keep score with money. And he thought that was just the funniest thing. And so I got an offer. It was a good offer. I took it.
Patrick (CEO of WSO): [00:21:45] So it pay raise? Pay raise coming out of the shop.
Pat: [00:21:46] This big coming out. Do you still pay pretty well? It's funny because I've had.
Patrick (CEO of WSO): [00:21:52] Are you talking 200 at this point? 250 at this point, 300.
Pat: [00:21:57] Because you're all... all in It was a lot actually is like four 400 something which is really good for the time.
Patrick (CEO of WSO): [00:22:05] Yeah, for sure. Oh, six to ten to ten and,
Pat: [00:22:10] Executive director title which I didn't realize at the time, was really useful because that's, that's a hard jump to make.
Patrick (CEO of WSO): [00:22:16] Oh, so that's what you're getting paid at JP. You're saying when you jumped the jump.
Pat: [00:22:20] Yeah. So…so I was in the mid-threes or something at all, which paid pretty well. Which was interesting because I had an offer from Google coming in. And I just talked with them and they put an offer on the table. And that afternoon DE Shaw just jumped everyone's pay like 30%. And it's like, well, you know, I'm going to make more doing the things I'd really like here. I'm going to stay. So I didn't take it to Google, though. So the Google job would have worked out great in the long run, but you know, whatever. I think… I think I made the right choice at the time.
Patrick (CEO of WSO): [00:22:47] You still got there. You still did it well.
Pat: [00:22:50] I did just fine and had fun. That's got to be the end of the story. But… but the big bank was interesting. I was used to bureaucracies. I did the…
Patrick (CEO of WSO): [00:22:59] This was 2010 when you jumped, right?
Pat: [00:23:01] 2010 after about four and a half years at DE Shaw. it's funny because I had sort of they were working on this new computer and the first computer was done and the chemists were really happy because they had a computer to play with and I had built out tooling that was good enough for this machine and one that was ten times faster that was in development. So the architecture guys were building something, they were having fun, the chemists were having fun. I said, I'm going to be bored for the next few years because I've sort of done everything that needs to be done for now. It's one of the things that made it easier to say it was time to go do something else and learn a different discipline. So I learned about big ass banks and how they work and how their bureaucracies are really horrible and stultifying that it's hard to get things done. And so for all the drama that makes things go at the banks and how it's about headcount and projects and political subterfuge.
Patrick (CEO of WSO): [00:23:50] Giggling and weird stuff going on.
Pat: [00:23:52] And weird stuff, but it was a good time. I learned a lot there. I mean, that's sort of the point is now I sort of moved out.
Patrick (CEO of WSO): [00:24:00] You have a team of developers under you or how is it like your executive director? But like how did it work? Were you managing or were you more like on the front lines?
Pat: [00:24:06] Actually more front lines. Jp was a big mix. You even had managing directors who were still slinging code. The first day I met one of the managing directors. Another one not…not…not the slam his fist guy, but another one. And all he said was, I heard you're the guy who makes code go fast. And I said, okay, I've been I've been at Jp Morgan for 30 minutes. I'm walking…walking around the floor and he said, I hear you're the guy that makes code go fast. I said, Yeah. So I point a code on the screen, Let's make this go fast. And as it changed, two lines will go 15% faster because you've got to be a baller, right? You can't just go, Oh, well, you know, just pointed the screen to changes 15%. I didn't know he'd been working on it for like three days. So it's in pretty good shape, but it wasn't there and he ran it. He already had all the timing framework around it and it ran 14.7% faster. I said, sorry, I was off a bit. And he's like, and he's just…he just says. Fuck! this is just. And you type in the message that was broadcast to the entirety when this guy talks. Listen to him. So it's a baller move.
Patrick (CEO of WSO): [00:25:16] Awesome First impression, right?
Pat: [00:25:18] Yeah. Well, it was based it was based on something. It wasn't a complete wild-ass guess. I mean, I knew it would be pretty close because he committed a minor, but very unprofitable error in terms of coding. So that helped. And I had a team. I worked a lot on things like code quality and teaching quants, how to actually program because they're smart, but sometimes they just do stupid things because they just don't know, because they haven't spent the same focus on doing it. Yeah.
Patrick (CEO of WSO): [00:25:42] Yeah. So your whole thing was really about fine-tuning the code to be absolutely streamlined. So like instead of the spaghetti code of like 400 lines, you'd be like, no, do it in this one way.
Pat: [00:25:51] Do it this way. I mean, there's one guy who used to fix this code by shouting over my shoulder, and this is broken. I said You did that. He said, No, I did. And said, Yes, you did. He did. It says, Oh, yeah, you're right. Is making people be more efficient. So it's people need to be efficient. The code needs to be efficient. You're trying to solve a problem. It's helping you solve a problem.
Patrick (CEO of WSO): [00:26:11] So what was your code being applied to do high-frequency trading, what was?
Pat: [00:26:16] This was… this was risk management for the investment bank. So lots of lots of modeling, lots of Monte Carlo, lots of what-if scenarios. So it was. So this is sort of like the code.
Patrick (CEO of WSO): [00:26:27] That interesting time to be there 2010. They're very still investing heavily.
Pat: [00:26:31] I was in the Bear Stearns building. They had just bought it and moved a lot of the team there. I think they bought Bear for the building. I don't think they bought it for any of the people or any of the assets other than the building they wanted. The building, which was really cool to go up to the big fancy boardroom on top of the old Bear Stearns boardroom. We had meetings up there sometimes. It was really cool. But again, I learned a lot and... and I was doing well, got, you know, got big bonuses and even sort of above-promised bonuses. And that was going well. Could have had a great career there. But, you know, a buddy just said, Come. Move over to the buy side and do high-frequency trading. It was a buddy that I had given a hint to about how to do some file transfer stuff faster in the past because, oh, I use that. And it made the firm like ten or $15 Million when I switched to using it. And they said, Well, I hope you got part of it. Yeah. And he did. So he said, Come work with it and you can get part of it too. I said, Okay. So that's how I ended up at jump trading. Part of it was I want to stay in New York City because we were living north of the City in Westchester and didn't want to move the kids in high school because the kids were in high school. It's just a bad time to move teenagers.
Patrick (CEO of WSO): [00:27:40] Yeah. Yeah, enough crap.
Pat: [00:27:42] Well, let me talk to you. They're not generally very happy with you.
Patrick (CEO of WSO): [00:27:46] You have girl, boy.
Pat: [00:27:47] Boy one Each.
Patrick (CEO of WSO): [00:27:48] One of each. Which one is older?
Pat: [00:27:51] Older boy. So he was going through that. Don't want to talk to my parents?
Patrick (CEO of WSO): [00:27:56] Yeah. Yeah, I get it. I get it.
Pat: [00:27:58] But I don't get.
Patrick (CEO of WSO): [00:28:00] I don't really get it, yet. My…my oldest is seven right now, so I've said.
Pat: [00:28:02] Oh you'll get there, you'll know. Yeah. But that's also when I learned how to fly when my kids weren't talking to me. So I figured they wouldn't miss me too much. But..but so anyway, the jump head was opening an office in New York City. So I ended up it got done.
Patrick (CEO of WSO): [00:28:17] By the way, you know, there's Chicago initially, right? Jump Tree.
Pat: [00:28:20] Primary. Chicago is actually a pretty good New York office. Cool. So I worked in New York but started six months in Chicago. I lived in Chicago for six months. Families stayed behind because it was temporary while they got the New York office running, which, of course, New York City. Things just take longer than you expect to build. Did that and then Citadel just piled money because I wanted to build the same sort of engineering development group. So I've done. How did how did jump?
Patrick (CEO of WSO): [00:28:48] What does it even look like? Like, how does jump? So I realized recruiters, they realize, oh, hey, this is the guy. He's really amazing at Python efficiency, setting up systems, whatever. So they find you. Yeah, but then is it just like the conversations go like, Hey, we wanted you to chat. There's an interesting.
Pat: [00:29:04] Well, I had this.
Patrick (CEO of WSO): [00:29:05] Architect-type role where we think you'd be great. And by the way, we'll double your pay. Like, what's the what was it.
Pat: [00:29:12] Actually was sort of like that. Yeah. My first contact was one of the two owner principals of Jump. Yeah. So it's like, Oh, would you like to have a chat? Just chat about stuff. So we chatted about stuff and said, Oh, wouldn't you love to come out to Chicago?
Patrick (CEO of WSO): [00:29:26] Does that even look like. But what does it even look like? Like, Hey, let's go for lunch. I'm flying in. Like, what is it?
Pat: [00:29:30] No, sorry. It's a phone conversation. Says, Why don't you come out to the city and catch a Cubs game? Because I'm from Chicago. Yeah. And why don't you come to the city and catch a Cubs game, right? And said, Well, that sounds casual. I know it's an interview, right? It's like not... not an interview. And you can meet some people and see... see if it kind of gels. And this is the point of the career that people are making jobs for me and say you're interesting and you enhance people around you, which is essentially been my core function has been like code guru for a long time. Yeah, that and I sat down with quants, particularly a place like JMP, which is more of a bucket shop where groups trade their own portfolios and using the firm's money and they take a share of profits and return to the firm. So the firm wants everyone to make more and faster and use less resources because it enhances profits. And so I would sit with teams. I was wandering Gypsy and I would just sit with the team, see what they're doing and say, Well, if you do this or this or this, it'll be better. So while building new infrastructure for like the next round of trading to make things better, mostly on modeling side, because that's where most of my experiences.
Patrick (CEO of WSO): [00:30:42] And this is kind of when you started writing for us a little bit here and there as.
Pat: [00:30:45] Well. Yeah, I think, I think I said JP, when I first, I don't even remember who approached me or something. I don't remember either. It's been a while.
Patrick (CEO of WSO): [00:30:55] Almost a decade ago.
Pat: [00:30:56] But so originally I was trying to write like an article every two weeks and I just. I was running a little dry on interesting topics. And so I just said, I've got to stop for a while, and then.
Patrick (CEO of WSO): [00:31:08] You were you were teaching at Jeb as well, like you were doing in-house like Python.
Pat: [00:31:12] Did a lot of in-house teaching. I like to teach. I mean, it was originally the plan with the PhD was to teach to go to a research institute, but with a big teaching component. I like working with people, I like them, I like knowledge sharing. There's a lot of people in finance where. Secretive. Being secretive is important to them, right? I know something you don't. So that means I can get a lock on my job because nobody else can know this. And I think that's terrible. It's bad. It's bad for the business and it's bad for you and everyone around you. It's better to share it, but know you can still be better than everybody else. And when you teach things, you get better than everybody else and everyone looks to you for answers. So you enhance your position by teaching. But I ran lots of in-house shops in London, New York City for JP, ran lots and lots of shops at in-shop training for how to wrest the most out of what you've got that just even some small things of how to do this and do modeling because people just don't understand where all the sort of all the performance goes and performance really is. King Across the whole spectrum, from modeling side to... to execution side.
Patrick (CEO of WSO): [00:32:28] And speed optimization is the utmost. It's basically the difference between second place and losing millions upon millions of dollars.
Pat: [00:32:35] First loser kind of thing. And it really is. There's so many winner take most trades that you just want to be there. And modeling is hard. And you start with something. I remember when I was in the Air Force, even I did weather satellites when I was a programmer in the Air Force. Us Weather Central had just bought their first Cray computer and it took them only a week to predict tomorrow's weather, which was which was an amazing thing said. But the codes will get better and the computers will get better, and soon enough we'll be able to do tomorrow's weather today. And you know, maybe it'll only take us 12 hours. And now, of course, we have continuous predictions for what the weather is going to be like. That updated every 10 minutes because computers there. But finance is like that, too. I remember seeing so many places where we need this every, you know, for tomorrow's trading and it takes us 36 hours to compute it.
Patrick (CEO of WSO): Right.
Pat: It's like we know how to do it. We just don't know how to do it well, and there's a lot so much a quant finance is just that is big building tools to dig in the dirt to get a signal and turn that signal into money.
Patrick (CEO of WSO): [00:33:40] Yeah, throw away everything else is knowing what to throw away. Right?
Pat: [00:33:42] Knowing what to throw away, knowing how to deal with the large data, how to just do smart stuff. And it gets built up sort of over time. One of the places the original trading code was built on an IBM PC, a PT that would put print instructions on trading instructions on the screen for them to call their broker. It's awesome. And that code kind of persisted and got bigger and bigger and faster and faster, but it was still larded down with sort of mistakes for if you were doing it now. But it got carried forward and it worked and people trusted it. So it wasn't like you could throw it away and start from scratch easily. Yeah. So making... making it work, what needed to do is a large part of what.
Patrick (CEO of WSO): [00:34:23] The technical debt was real. You had almost build it from scratch, build up from scratch, and…
Pat: [00:34:28] It felt that way. And but you couldn't just like, deliver it. You had to build that trust along with the code. Yes. And you couldn't outsource it…it was all really tightly either tightly held stuff. I remember getting papers that were sometimes people would write it out as if it were an academic paper and then put it in a vault somewhere in the company and they'd crack it out to show you so you could understand the mathematical underpinnings of it. Because I've always been good at math and I've liked math. I might have been a mathematician if there weren't computers around, but that's helped me deal with physicists and quants who are mostly physicists and signal-processing guys anyway. And so it just keeps coming up. You know, understanding math is good. Math may be hard sometimes, but understanding it is good. So that worked out.
Patrick (CEO of WSO): [00:35:16] So you're at jump, but you're not to jump for too long.
Pat: [00:35:19] No, that was really short. That really was Citadel piling money on the table. I told them no a lot. Yeah. And every time I told them no, just pile more money until I said okay.
Patrick (CEO of WSO): [00:35:28] And so Citadel eventually was just like throwing, what, $1,000,000 at you to come close.
Pat: [00:35:34] Close.
Patrick (CEO of WSO): [00:35:35] And that was just a base or how, how was it?
Pat: [00:35:38] Oh, all these places are pretty solid base, plus a pretty good bonus.
Patrick (CEO of WSO): [00:35:42] Bonus depending on what you're contributing on your level or how the firm does that.
Pat: [00:35:46] Overall, it's typically a mix of the firm and sort of individual contribution, which is always hard for people like me because I'm not trading correctly.
Patrick (CEO of WSO): [00:35:54] Yeah, exactly. That's what I was. That's why I'm asking them like, how do they actually know?
Pat: [00:35:58] I guess. They ask people, are they happy? Did you make more money? Sometimes it's very clear and direct. I can point it. I make this change. And this got better, and, or, so…so my pitch is always. Before you were doing this many simulations per year, and now you're doing this many simulations. Jp, I made a change with how some processes were launched, and I did back the envelope that said it saves the company probably $3 million a year. And then you showed that to your director and say. Here. What do you think about this? And then they say, Huh, maybe we should give you a bonus so you can keep doing this. Let me.
Patrick (CEO of WSO): [00:36:36] Yeah. Talk to me about that process, because I think it's not natural for maybe people who are more academically oriented or are quants maybe aren't as like as at least from what I've seen some of my friends at MIT PhDs or they're not. They call me when they were like, I have this job offer. What should I do? Or like? Because they don't have that kind of mentality of like they just love doing work that they love. And it's less about the money or eking out every last profit where sometimes the front office banking guys are a little more like sharks going after it.
Pat: [00:37:08] It's like, how can we do more of this?
Patrick (CEO of WSO): [00:37:10] Yeah. So how…how did you. Is that is that what you would do? You would just kind of prepare a packet and just say, you know, I did this, this and this and go get a meeting around bonus time or what would you do normally.
Pat: [00:37:21] So it was a long process. It was one of those things. At JP in particular, magic things always happened in October because that was right in front of bonus time, so people would stash away really good stuff and try and make it all hit in October, which I thought was terrible, right? Yeah. So in one of my articles I actually wrote about how I would enlist people that I helped, particularly because I was doing so much working with others that I could get them to write my MD and their MD and say this really helped. And then I wanted that constant barrage coming in that, oh, he helped.
Patrick (CEO of WSO): [00:37:56] October.
Pat: [00:37:59] And not in October especially, but but even in January, even even his bonuses already been written.You want to keep that constant beat of I'm providing because I'm service oriented. Right? Or cost center in sort of the less polite way to talk about it. I'm a cost center and I know that I don't make money directly. I make others make money. Yeah, but in finance, you want to be as close to that river of money flowing by so you can get your bucket in and pull it out, and so I wanted to stay close to that, but remind everybody sort of continuously that their buckets of money are bigger and more full because I'm helping.
Patrick (CEO of WSO): [00:38:34] Okay, I just made you an extra 10 million a year. Can you tell them that?
Patrick (CEO of WSO): [00:38:37] Can you.
Patrick (CEO of WSO): [00:38:38] Can you let them know?
Pat: [00:38:39] Yeah. And you know, when people could put numbers on. I wanted numbers because I wanted to be able to say to my managing director. Hey, look, I saved the firm this much money. You know, the quants I helped made more money than the other quantitative.
Patrick (CEO of WSO): [00:38:50] An example of like, a type of things that you would do or you'd be able to actually quantify it. Is it like speed of this? Or it's always like, Oh, you need less resources? Or was it more sometimes?
Pat: [00:39:01] Sometimes it's pretty easy. Like it's the resource thing, right? So it was just funny because the same thing happened at Instagram, but I did. I sped up a process where it took a while for processes to start up because they were doing something stupid and night was not. It was naive, right? They just didn't know. They didn't know they were doing it. And I knew they were doing it and I knew they could stop it. And so I did, a… I sort of poked around to find out how much computing costs per year to get sort of a per hour cost. And I said, all right, I'm saving 5 minutes per launch because these programs were taking 5 minutes to launch where it was doing no real work and it was being launched all the time and added it all up. And it said divided by the per hour was $3 million. And I told my MD, I just saved the company $3 million. You're welcome. And you could be just as blunt as that. Yeah, right. And same thing. A funny thing was Instagram. There was this stupid little mistake deep inside of the Instagram back end, and it was easy enough to do. And actually some other guy was poking around and noticed something that looked a little off, so he asked me about it. Then we dug in hard on it and found it and it was like 10% of the cost. So it's like.
Patrick (CEO of WSO): [00:40:11] It adds up at that scale. It matters.
Pat: [00:40:13] Yeah, with billions of users, it adds up fast. And Instagram is actually really big on that. It says it doesn't matter how good your fix is, it's what does it do that you can come up with something that was just brilliant beyond all belief that has zero impact on the bottom line. They didn't care. You can come up with a stupid fix. If it saves Zuckerberg $1,000,000,000, he cares and it will be reflected on you. And banks are sort of the same way. It's, you know, show me the money. And I learned that a jump to and because sort of the guy that recruited me out there was really good at that he would quantify everything he did. And he can tell you exactly how much money he made the firm every year.
Patrick (CEO of WSO): [00:40:58] Yeah. And so he was kind of like, if you want this to keep happening, things like, give me the bonus.
Pat: [00:41:04] And once you have enough bonuses and he doesn't have to do it anymore, it's like, Andy must keep me happy and interested. I will not leave and go to a rival. Just I'll just leave because I don't need to work or want to work anymore. It had to be interesting to him too.
Patrick (CEO of WSO): [00:41:19] So tell me. Yeah. So tell me, how did your pay scale? Because you were your you're getting paid pretty well for hundreds by the end. And the JP…PJ's giving you up to.
Pat: [00:41:28] Sort of like I think at the end ended up about 500 at JP.
Patrick (CEO of WSO): [00:41:32] JP then jumps like we can do better.
Pat: [00:41:34] We did better. So it was like a 25% raise there and maybe a bit better than that.
Patrick (CEO of WSO): [00:41:39] And they're making like you're making over half a million dollars at this point.
Pat: [00:41:43] I'm making like 700 or so, something like that.
Patrick (CEO of WSO): [00:41:46] That's a big jump and then that's a.
Pat: [00:41:47] Big jump and it's.
Patrick (CEO of WSO): [00:41:48] Like, Hey, we can get you even closer to.
Pat: [00:41:50] Getting closer to the Citadel. All In was... was a seven-figure thing and it's like that was pretty good. There's bonus and sign-on bonus and everything but so that.
Patrick (CEO of WSO): [00:42:01] That obviously didn't last very long.
Pat: [00:42:03] No, it only lasted a year and I didn't actually get to see all of it. I had to give some of it back.
Patrick (CEO of WSO): [00:42:08] What happened? So let's talk about that because I think that's a really good learning.
Pat: [00:42:11] It is a learning thing and sometimes it doesn't work out. So partially.
Patrick (CEO of WSO): [00:42:16] It sounds like you're doing great at Jump, like.
Pat: [00:42:18] I was doing great a jump in. Sort of, the only regret I have in my entire career is that I didn't say.
Patrick (CEO of WSO): [00:42:24] Didn't say.
Pat: [00:42:24] Didn't say jump. Yeah, yeah. That I was tempted by the big piles of money but has also tempted because the offer sort of had three parts to it. They wanted me to work on like internal training, which I really like to do. They wanted me to stand up a development group. And which is sort of what I was in at jump. So they want to recreate that sort of experience. And I have free rein to hire, hire my team. And it turns out that didn't happen. Sort of like none of it none of it happened in partially because their CTO was in an internal political battle that he lost and he was fired and I was fired.
Patrick (CEO of WSO): [00:43:03] I get it. So you were like there was an internal battle. All his recruits were like, You were in that.
Pat: [00:43:08] We were no longer needed. And but frankly, the fit wasn't good. I was already looking because I felt the fit wasn't good. I produced good work. I ended up working on the research cluster, making that really great. In fact, one of my friends interviewed at Citadel afterwards said, Look at this great research cluster we just built, and it's like, I built it for you. You're welcome. But yeah.
Patrick (CEO of WSO): [00:43:31] That's hilarious. Okay, so you're kind of nearing the end there. You got fired or whatever the whole group gets. Whatever the CTO plus is kind of told, Hey, you're done.
Pat: [00:43:40] You and his project groups, Citadel also hires people and sees what works out. They are kind of a spaghetti-at-the-wall thing. And I knew that and I knew this was a possibility. So it was not it was not devastating. I called it. My wife said, Yeah, sort of like good news. What's the good news is that I got fired today. I'm coming home.
Patrick (CEO of WSO): [00:43:57] I have some free time now.
Pat: [00:43:58] Got a little time. Like, okay.
Patrick (CEO of WSO): [00:44:00] So you were you were in Chicago, did you? So you went from New York?
Pat: [00:44:03] I was moving to Chicago. In fact, we were we were literally selling the house. So one of the reasons I called what you said, good news.
Patrick (CEO of WSO): [00:44:09] Stop selling the house. Don't sell the house.
Pat: [00:44:10] Basically. I said take the house off the market, please, before we end up homeless. If we got an offer and accepted it, we would have been without a house, and still living in New York would have been bad. But, you know, so I was in the process of moving from New York to Chicago.
Patrick (CEO of WSO): [00:44:29] And so that didn't happen. So then you're in New York and, you know, it looks like you didn't start anything. You ended up going to another quant.
Pat: [00:44:37] Firm down in Texas. Yeah, Quant lab.
Patrick (CEO of WSO): [00:44:39] And so did you move to Texas or did you?
Pat: [00:44:40] And yeah, we moved to Texas, lived there for three and a half years. Okay. How was that love to actually love Texas? Texas is great. Income taxes, you know, no state income tax. That's pretty awesome. Yeah, I have some family in Texas. It's funny because we moved on back to California, which which was the end goal when we left California to go to New York, my wife said, and we're going to move back to California when we're done. Right, right, right. It took us 15 years, but we got back. Yeah, but my son is living in Texas now. He loves it there. That's awesome. Yeah, my brother is there. My sister's one of my sisters was there. It's just. Yeah, Texas is fun.
Patrick (CEO of WSO): [00:45:16] So how did you end up interviewing for this? This lab? I think it was called.
Pat: [00:45:23] I have almost always answered recruiters' calls is part of it. I learned that lesson from that 15-year stint where I never interviewed anywhere. I pretty much interviewed once a year. Always. It's funny now because I'm not interviewing sort of for the first time in a long time that it's much easier to say no. Well, I say that, but I'm actually sort of going to end up being an advisor for a new hedge fund that's springing up in June. But it's at a much-reduced level and was sort of like a personal connection rather than a headhunter. But it's sort of nice to tell headhunters, no, I'm not really interested looking at awesome jobs that I could do really well at. And sometimes they're sad, but you'd be so good at this job. And I said, Well, yeah, but I don't want to. I don't want to be good at that job. Yeah, but with that, I'm sort of in a lot of people's back pocket when they say, I need somebody who can do this, I need a really high-end senior engineer who can make things happen. Smaller trading firms in particular that want to be bigger, that there's there's this real energy barrier you have to push through to go from small to medium to large. You've got to get.
Patrick (CEO of WSO): [00:46:36] All systems up and running everything.
Pat: [00:46:39] Systems and scale, and people don't scale the way you expect. Yeah. And so they want someone who's that senior engineer who can help move things along as a lot of junior engineers at Quant Lab. Partially because several of their senior engineers all left the firm right after I started and within a month after I started.
Patrick (CEO of WSO): [00:47:00] Why do you think that is? Do you think they're intimidated or do you think it was just like, Oh.
Pat: [00:47:04] No, no, no. Someone had been working on these other things for a long time. Got it. One... one more time with family. So he's just going to take some time off. But it kind of threw me into this. Now I have to really run the modeling side of the shop from... from scratch and advance the code and make it make it better and advise on hardware. The nice part, it was a great learning experience. And that's that's what's nice about smaller firms, is that you can really get.
Patrick (CEO of WSO): [00:47:29] Through everything.
Pat: [00:47:30] You have to do, everything you have to know everything. And so that was good. But the firm had some internal drama lawsuits, and when there's lawyers involved, it takes a lot of the fun out. So I had a heart-to-heart with the CTO and said, I'm going to resign. And he said I understand. He really did, because he resigned like a month later. So it was trying to find his footing. It was a weird time for trading, particularly, particularly for the details of the trade they were making. It was hard for them.
Patrick (CEO of WSO): [00:48:03] So you were you were kind of had a nice learning experience there. It sounds like you did a lot of heavy lifting and you're kind of it's 2018 at that point.
Pat: [00:48:11] And so I decided to go to tech because it keeps me out of the non-compete land.
Patrick (CEO of WSO): [00:48:17] Got it, and compete for like a year or something you can do.
Pat: [00:48:18] Two years.
Patrick (CEO of WSO): Two years?
Pat: Two years. Yeah, it was pretty egregiously bad. I feel bad for them.
Patrick (CEO of WSO): [00:48:26] They probably would have would not have enforced it or know who knows.
Pat: [00:48:30] If push comes to shove, I'm sure it would have dealt with it. And I knew that. But I was also sort of jaded with finance at that point and said, I need to do something different for my head.
Patrick (CEO of WSO): [00:48:40] Yeah. And... and so self-driving cars.
Pat: [00:48:43] Self-driving cars because what is cooler than a robot that drives itself with lasers, It's just. It's pretty awesome. And I've written them. It's pretty awesome. And my sons actually drives in their trucks in Texas every day. Now they are on the roads. They are there. They are among us.
Patrick (CEO of WSO): [00:49:02] Talk about self-driving a little bit. Oh, this is so talk to me about Tesla's FSD versus first off, tell me a little bit about Aurora. I've heard of other people.
Pat: [00:49:10] May not have heard of them. Yeah. So…so Aurora is the big independent self-driver. Most the other ones are associated with somebody. Waymo's got Google's deep pockets started as a Waymo or it started as a Google Moonshot project. The others are associated with the big auto manufacturers like GM. Yep. Yeah.
Patrick (CEO of WSO): [00:49:29] And obviously is Tesla with Tesla.
Pat: [00:49:31] Tesla's got its own internal shop. Yeah, a lot of people thought it was easy that there was literally an engineer who rushed to buy a car because he was afraid he would not be able to buy a muscle car that didn't have a steering that had a steering wheel. The next time we wanted a car, and he was off by probably about 15 to 20 years. Yeah, that which is what I think it will take to bring that. You routinely buy a car without a steering wheel, that cars are just robots that who is great.
Patrick (CEO of WSO): [00:50:00] I agree. I mean, well you see they get to the you know even Tesla FSD. I mean obviously, I want to hear about what you think.
Pat: [00:50:06] Oh yeah. Yeah.
Patrick (CEO of WSO): [00:50:07] Well it's versus leader debate. And then also I'd love to hear your thoughts on specifically like you look at Tesla's FSD, you're getting about 95% of the way there in terms of like but the last.
Pat: [00:50:19] Yeah, but 95 is not 100 not.
Patrick (CEO of WSO): [00:50:21] Exactly in the last 5% probably takes about ten times as long as the first 95%.
Pat: [00:50:26] It's 90% done, 90% to go on. So many of these things that happened on the other side of the shop too, even with things like LiDAR and I understand Musk's decision not to put light on, particularly at the time it was super expensive. Yeah, light has gotten really good and substantially cheaper. Yeah, real cutting-edge light are still expensive. That does all... all the cool stuff that you probably need because it seems simple that you should be able to drive a car. We drive with two eyes and it tells us everything we need to know. Yeah, I have a friend who's blind in one eye. He drives just fine. But really you only need one camera on a swivel and you should be fine. But you're not. The education cases tend to dominate. I think things are weird. I can get fooled. I mean, there's like the Burger King stop sign debacle thing, you know?
Patrick (CEO of WSO): [00:51:17] I've seen I've heard of all these. Yeah, there's so many.
Pat: [00:51:19] It happens. And it's that weird edge that makes it hard to know that it's going to be safe.
Patrick (CEO of WSO): [00:51:25] Enough getting all the data labeled properly, getting it all in like…like.
Pat: [00:51:27] Like, know.
Patrick (CEO of WSO): [00:51:29] Read, even be able to read the sign.
Pat: [00:51:30] It's more than that, though, because we felt that, you know, with like sort of the cat and dog problem with pictures, it was easy. I have lots and lots of pictures. I can figure it out. I can…I can get good balance on my accuracy. And I know that I'm 99.5. I'm telling you, this is a cat or dog, right? And so we took that idea and said, if I just gather enough data and throw it at my AI, the AI will figure it out. So why is it turned out? Because the edge cases are so infrequent.
Patrick (CEO of WSO): [00:52:01] And so varied.
Pat: [00:52:02] There's so many weird ways it goes wrong. I remember teaching my kids how to drive and say, I can't teach you everything because I don't know what will happen. Yeah. And also things like creatively violating laws. My daughter didn't want to cross the yellow line when there was a car broken down in the street in front of her. I said, Well, the option is we wait here for 2 hours while a tow truck comes and tows it so we can go, or we cross the line, which is against the law. It's against the law to cross the line, right?
Patrick (CEO of WSO): [00:52:29] Yeah, the double line.
Pat: [00:52:31] It's also against the law to double and triple park in New York City. Well, that happens a lot, right? So…so, is that creative breaking the law and teaching cars to do that in ways that are sensible and defensible? Right. Turns out to be very hard. Cars don't play as well with others as you might think. Lots of early rear-end crashes because self-driving cars would break in ways when people wouldn't think they would. So they got run into the back of.
Patrick (CEO of WSO): [00:52:59] The shadow braking. It's like, see something that.
Pat: [00:53:02] And it's just like, I don't know what it is. We have an early piece of video at Aurora of a squirrel running across the street in the car, did an emergency stop because I couldn't identify it. The squirrel lived.
Patrick (CEO of WSO): [00:53:14] But everyone else died behind the car.
Pat: [00:53:16] But the car did an emergency stop. It was moving very fast. But, you know, I'm not giving away any proprietary information there other than somewhere there probably still exists a video of the squirrel with big eyes getting about to get run over. But it turns out the cases are really, really hard. And so it takes it takes more than just throwing lots of data at it. And so you have to be able to guess all the things that might happen because otherwise, you have 99% of your...your footage is nothing happens, nothing happens. But I would buy a Tesla if I was if I was in like rush-hour traffic because the rules are pretty simple, right? Stay between the lines. Don't hit the car in front of you. I totally trust Ellen to do that for me. Traveling down I-5 with nothing but nothing but empty between you and where you're going. Stay on the line. I'm good with that rainy day when all the old lines reappear and your camera's going down. Because at night and you've got glare problems and resolution problems. And I'll have my hands on the steering wheel. Thank you. Yeah, it's just not ready for that. And so you're seeing things like driving in places where the weather is good like Phoenix is big for Waymo. Weather is better. So it solves a lot of problems.
Patrick (CEO of WSO): [00:54:36] Super interesting. Yeah, I think so. You were there for a couple of years, had some fun working on self-driving cars.
Pat: [00:54:43] The intention was to retire actually from most of these last jobs as well. All I have to do is work at this many years and then I can retire.
Patrick (CEO of WSO): [00:54:53] So first off, wait, did you make at Citadel they were paying you? So I, Sorry to keep going back to the paper.
Pat: [00:54:55] Yeah, they're paying about that.
Patrick (CEO of WSO): [00:54:57] They're paying you really well.
Pat: [00:54:59] Not quite as well. It's still really well. So it was.
Patrick (CEO of WSO): [00:55:02] Actually Houston because you kept all your money.
Pat: [00:55:04] And so…so the real the real bottom dollar line was good there. So it was like around 700 something like that. Going to a startup is weird because it's hard to value.
Patrick (CEO of WSO): [00:55:16] Options, lots of options.
Pat: [00:55:18] So it got a lot of options and solid base. I mean, that was okay. Yeah, the options at their peak ended up being worth about $3 million a year. The stock has crashed before I could sell them at that, which is sad. Yes. So I was brief. My network briefly went through the roof, which was awesome. Which is funny because I got some snarky comments. When I talk about retirement, people ask for my number and I said, I don't really know what my number is. I don't even know how much money I have. Yeah, really? Because... because of these options and things.
Patrick (CEO of WSO): [00:55:49] Because you now have probably better options.
Pat: [00:55:52] Right? You know, I sold all my Facebook stock. I sold it before it crashed, so. Yay me.
Patrick (CEO of WSO): [00:55:57] Hey, good, Good for you.
Pat: [00:56:00] Right now.
Patrick (CEO of WSO): [00:56:01] My sister-in-law did the same thing because she was working there as a recruiter and like, they had almost like half there. What are you doing? I'm like, You sell all this stuff? Like, what happens if it goes south? Six months later, she's fired.
Pat: [00:56:12] Yeah. Yeah, it could be worse. I have a friend. She got signed up right at the peak, and she can't even sell her shares for a loss because of what's trading rules. Because they open a window up around when they do earnings announcements.
Patrick (CEO of WSO): [00:56:32] Yeah.
Pat: [00:56:33] So you can only you can only trade it for 30 days, but at the same time you're being given shares which look like…like…like a purchase. And if you purchase and sell at a loss, it's a wash trade, so you can't even get it. So they're really screwed. I'm glad I'm out of that part of it. But right now I went to a pure startup, pure basically a crypto startup. So I'm holding some shares that are worth somewhere between zero and some small number of millions of dollars. And I don't know. So if it comes in, it will be my best year ever. If they don't come in, it'll be still not a bad year. And learned a lot. Which is also good. Which was the whole point.
Patrick (CEO of WSO): [00:57:12] At this point, you've been outside of research and.
Pat: [00:57:15] For a long time? It's a decent, decent run.
Patrick (CEO of WSO): [00:57:18] Right? What is that? 15.
Pat: [00:57:20] So about 15 years? But now I'm back in academia, which is fun. So, which also tells you about sort of the value of networking. Turns out the chair of the department of the university that is 15 minutes from my house, UC Riverside was a buddy from grad school. So I just called him up and just drop an email. Like I said, haven't talked with you in 35 years, but yeah, you wouldn't happen to have some teaching jobs. I have like 27 slots I can't fill right now. Oh, my God. So at work, because somebody else can. How hard is it to go from, like, finance to academia? And the answer is just ask. You'd be surprised. A lot of a lot of universities actually value real-world experience. When I was a consulting professor at Stanford, that came about because I had real-world experience and they wanted people to solve real problems, which are always cross-disciplinary. And that's sort of the key in why someone like who's really a developer type.
Patrick (CEO of WSO): [00:58:20] Ourselves, because I think we're I think we could definitely do some cool courses with your background around either Python. I mean, we have Python and machine learning thing, but I'm sure you could add a really cool element to that.
Pat: [00:58:32] Of some just like how to do it. And that was the first course I taught at Stanford, which is how to do interesting stuff with Python to solve really big problems. It was audited by four full professors at Stanford, which is like super daunting. It's like you're like, okay, I guess… I guess we're going to do this now. I better not screw it up. But yes, because the answer we live in a cross-disciplinary world. You learn one pure thing. It doesn't teach you how to solve really big problems. Working at the lab taught me to solve really big problems. And…and turns out those kinds of problems exist elsewhere, which is really what I sowed my whole career out of. Right is just find places with big problems and convince somebody that I can solve them. I turned into a really great advocate for myself. It was really.
Patrick (CEO of WSO): [00:59:26] The second half of your career. The last seven?
Pat: [00:59:28] Yeah, the first 20. I just saved it up. And then the last 20 years I've just been letting it all go. I went to Catholic school when I was a kid and the nuns would tell us, you know, do good work, sit quietly, and God will reward you. And the answer is yes, But you have to ask people, too. It turns out.
Patrick (CEO of WSO): [00:59:47] There's a little caveat there.
Pat: [00:59:48] A little... little caveat, the nuns and add-on. There was no little asterisk at the bottom saying this. And it took me a long time to figure that out, that if you can't be, you have to be your best advocate. And a lot of my career is like, as I mentioned, hooking other people in to help advocate for you really works. And it got me there. And so I also had the best times when I picked jobs that were interesting and fun and the worst times when I pick jobs for money, I will…I will say I ended up with a sort of career because people ask, how do you even know what to ask for? I said, You know, I will do good work and I'll make your company productive. The money will come and I'm always convinced the money will come from doing the work. Maybe the nuns got that part into the brain, right? But yeah, and but it's true. You have to help and you do have to help it along. You have to show where the money comes from, and then the money will come to you. Yeah. That's great.
Patrick (CEO of WSO): [01:00:51] So some life lessons. There are some good, great career lessons there. I think that the listeners can take away a lot of super interesting twists and turns to your career. I think especially at the end. I mean, you're kind of hopping around there.
Pat: [01:01:05] I was looking for that last glorious ride into the sunset. Yeah, and it didn't quite happen. I just decided everything I wanted to do took time I didn't have. And the one thing money cannot buy you is time.
Patrick (CEO of WSO): [01:01:18] Yeah, but you know, you did well enough over the years. Where? Yeah.
Pat: [01:01:21] Oh, yeah. It's easier to say that when you have money in the bank.
Patrick (CEO of WSO): [01:01:23] You have. But you have two kids and you were living in New York so you weren't living in a super. And then Houston obviously lived for a while, but you weren't. You were living in a pretty high-cost-of-living area. Did you feel like? Were you living below your means for the…for the most part.
Pat: [01:01:38] For the most part. It's funny because my dad, he was a Ph.D. chemist. He founded a chemical company that eventually got bought out by somebody who was then bought out by Warren Buffet. So, you know, it's a good, solid company. He lived like a hick. Yeah, he did. Because money was not important to him. He felt that he could retire as soon as he had $1 million because he could live off 40,000 a year and do everything he wanted to do. And he lived out in the country. And that made part of that easier. Yeah. And I think if we'd not decided to retire in Southern California, we could have retired five years ago. But my wife didn't want to live in South Carolina or Utah or even Texas. She liked being in Texas for a bit. But there's big bugs and mosquitoes and things, and she hates that.
Patrick (CEO of WSO): [01:02:26] So my wife said I was like, ever interested to go to Austin? She's like, No, I heard the bugs are so huge there, and…
Pat: [01:02:33] We were in Houston where the mosquitoes are really big and there are gators in the swamps. And it's just she said, this is fine for now, but we're not staying. And I said, okay.
Patrick (CEO of WSO): [01:02:45] So you're near Irvine, You said.
Pat: [01:02:46] Right. So in Riverside. So I'm loving it. It's in the Inland Empire. My original Zoom background was my plane that was sort of I say I live modestly, except for my airplane.
Patrick (CEO of WSO): [01:03:00] Except for your airplane. So how much airplane?
Pat: [01:03:01] So I have. So I bought I actually bought the airplane for about a quarter million dollars and put about 100 grand into it. That was all Zuckerberg money from my bonus signing on at Facebook. And now it's gone up in value because the price in the airplane markets are just insane. I should have bought some of those investments and just sold them. Yeah, they've gone up by 30%. That's a pretty good return. But so I like I like to fly. I learned to fly late. I was in the Air Force, tried to learn how to fly in. The Air Force didn't finish because I had enough money to finish school or my pilot's license. And it shows probably school was a good choice there. And it has worked out for me. Yeah. So I kept my log books and learned when I was 50 when my kids were old enough not to want to talk to me anymore. And I refinanced the house and saved a little money because I just didn't want to take it out because we were saving aggressively for... for eventual retirement. Yeah. And, you know, it's like it's... it's fun. It's a great way to turn gasoline into fun.
Patrick (CEO of WSO): [01:04:02] Yeah. And so you're flying how often.
Pat: [01:04:05] I've been flying. Well, that was one thing that's only flying like a couple of times a month. Yeah, I want to fly more than that. And so I'm actually. We're going to do a flying vacation. I'm going to fly to Wisconsin, and then we're going to go to visit friends in New York in the plane. And then depending on whether we'll either go to like Kitty Hawk and see First Flight Airport because that'll be fun.
Patrick (CEO of WSO): [01:04:24] How does it work? Private…private travel. Obviously, you have the upfront capital of like, okay, you spent 350,000 in this point. So that's a lot of money to start. But then once you have it, well.
Pat: [01:04:33] You don't have Oh, I have a very nice plane though.
Patrick (CEO of WSO): [01:04:36] Yeah, that's a that's an expense. They can get cheaper planes in that.
Pat: [01:04:40] Oh yeah. This plane, new ones are about a million and a half. They're styled after a Maserati. They have gullwing doors and leather interiors. And it goes. It goes 200 miles an hour. It's brilliant and fast.
Patrick (CEO of WSO): [01:04:52] How many people can?
Pat: [01:04:53] Four…four. And it's got a parachute. So if you want to talk your wife into a ride, let her know the whole thing is parachute. The views in Southern California are really cool and we can fly up to Big Bear, which is beautiful. So I'd like to fly around. I generally invite somebody along and go flying, add somebody up.
Patrick (CEO of WSO): [01:05:10] Fuel the most expensive part of it, or is it like taxi?
Pat: [01:05:13] No, everything's expensive. Everything.
Patrick (CEO of WSO): [01:05:16] How does it cost to fly from where you are up to your Wisconsin trip, for example?
Pat: [01:05:20] There's Wisconsin trip that's about 10 hours of flying, so it's 13 gallons an hour. So that's 130 gallons at about five bucks a gallon. Five. It depends on where you are. So the gas car cost is not the worst of it. It's insurance and a hangar to keep the plane in. So how much breaks and maintenance? Yeah, I go up and train with instructors to make sure I'm safe and don't kill myself every once in a while.
Patrick (CEO of WSO): [01:05:47] You think about 100,000 years in the airplane about with the trips or.
Pat: [01:05:52] Well, no. Well, if you… if you just had a license, we're flying in renting planes, which is sort of another way to think about it. I'm probably spending about 30,000 a year on it. So this is like a dependent.
Patrick (CEO of WSO): [01:06:05] I'm just curious because I don't know. I didn't know. I think it's interesting for people.
Pat: [01:06:09] Once you have a license, you can… you can actually kind of fly if you're if you're joining a club or rent, because it's actually a huge extravagance to have a plane for oneself. But I like it because in my hangar I put my seat belt on. It's in the right spot. No one's moved it, no one's dented my plane because no one else is can fly it. It is an extravagance. It is not practical in any way whatsoever. And I don't care. It is sort of my only outward thing that I'm rich. Really. The rest of I live in a four Southern California. Pretty nice, but not that crazy house. There are nicer houses on my block and that's okay. I don't want that house. I like the house I'm in. I'm going to community college right now with a bunch of 18 and 19 years old learning to be a mechanic. So I think that will be fun. That's awesome. And it's one of the things that I wanted to do but took time. And that's and that's why I retired. I wanted to fly. I wanted to go take these mechanic classes. They'd be fun, my sons and. Gage. And soon I'll have a grandkid in Texas and I want to fly my plane to Texas and my grandkids. All those things are time. I've been mentoring high school kids who want to fly. Because why not? I've got maybe 20 people I'm mentoring that I've picked up over my career still. I mean, some go way, way back.
Patrick (CEO of WSO): [01:07:30] And you're going to be one of our you're going to be in mentors as well, right?
Pat: [01:07:34] I have signed up. I'm on the list. Check me out. I didn't even raise the prices I want to provide so low.
Patrick (CEO of WSO): [01:07:42] He kept it low.
Pat: [01:07:42] I kept it low.
Patrick (CEO of WSO): [01:07:43] You're getting an incredible quant here.
Pat: [01:07:46] It's a bargain. But, you know, I like the mentoring thing because, again, I give people advice, and the advice is what you make of it. But it's not. People like to check that against real things, and I think that's a way to give back. I had great mentors early in my career, really important to me that that gave me the confidence to do some of these wack moves that worked out that you, you have to know and. Predictably smart people think I can do everything myself. But there's things that you can't know upfront, and sometimes you just need to know the guy I was trying to screw in a fitting. I couldn't get it to fit. I went to the hardware store. I said, I can't. I think I have the wrong fitting. It's not working. It says it's left turning, not right turn. And he saw my problem in 3 seconds. Yeah, he did. He said, Don't worry, it happens all the time. And he was happy to tell us and the two other guys who would try to help me. So I have no idea what's wrong. We're all turn, turn, turn, turn. It was like no lefty, tidy, right? He Lucy. And it was as simple as that. Sharing that knowledge, having someone to share that with helps you, accelerates what you can do, and makes you better than other people around you that are just trying to do it on their own.
Pat: [01:08:58] So don't do it on your own. Get some help. It's totally worth it. Your mileage will vary, but it's... it's been great. I'm glad I arrived here. I was. I swore I was never going to retire into a recession. Totally retire into recession. Doesn't matter. Don't care. I said I'm going to go on top of my game in a brilliant blaze of glory. And it just sort of I hit the end. I said I'm done. And I talked to the founder of the of the blockchain startup and said, I'm just done. I just I just don't have the energy and enthusiasm to do what needs to be done here. And he says, That's great, party great. I'm still on Slack. We still… still talk. I mean, everything's great. I'm just not working there anymore. The stress is often I have time. Like today I have an unstructured day. But I've already talked with like five students from my classes because I'm teaching lecture hall size three. I have 300 students. It's like to be a teacher. But I'm energized and have energy I've not had for a long time. So telling me this is the right thing to do is great. And, you know, I had a number, but I threw that number out a long time ago. Once you have enough, it's enough.
Patrick (CEO of WSO): [01:10:03] Well, I think people can do the math and figure out around how much you have.
Pat: [01:10:06] You can make guesses. I actually put up a rather accurate number on one of my blog comments. Comment on one of the blogs that you can guess. And the IRS will not be surprised. They know about all of it, which is important. So I try and work hard to minimize taxes plan ahead. It's very also very important. And, you know, it just it just works out and then do things that are fun. You get one life, do something fun with it. Don't grub for the last dollar. Do something fun. Every job should teach you something for the next job so you can do something that's more fun. Fun leverages just like money does. And but in the end, it's when you know it's time…it's time. Time stop. Do that.
Patrick (CEO of WSO): [01:10:44] Great Pat. Well, I appreciate all the time you spent with us today.
Pat: [01:10:47] Obviously went a little over the 45, but a little over.
Patrick (CEO of WSO): [01:10:49] The 45 minutes. But it's great. I think people enjoy it. So I appreciate your time.
Pat: [01:10:53] I had a great time. Thank you very much. Pleasure.
Patrick (CEO of WSO): [01:10:55] And thanks to you, my listeners at Wall Street Oasis. If you have any suggestions whatsoever, please don't hesitate to send them my way at [email protected]. And till next time.
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