The Wall Street Fast Lane
No matter what you read or saw in movies about Wall Street in the '80s and '90s it was much wilder than that. Weed and cocaine were everywhere, and like alcohol it was often part of the business day, business deals, or after work entertainment. But it was also a period of transformational innovation and market disruption. Fortunes were made, some were lost, and an entire ecosystem of products, services, and businesses fed off the financial largesse of Wall Street fueled by digital transformation of trading systems, market data, and exchanges. Exclusive and expensive clubs, bars, restaurants, and luxury real estate, jewelry, clothing, and car retailers spent all year cultivating relationships with superstar traders and financial industry executives.
Like hungry western bears eagerly awaiting the all-you-can-eat buffet of the annual salmon migration, everybody on and around Wall Street counted down the days to awards of six, seven, and eight figure bonuses at big investment banks and funds. Financial beneficiaries extended well beyond traders and top executives to include IT and software professionals developing the advanced technology, applications, and algorithms that made everything possible. It included operations staff that kept ever larger and more complex trades flowing smoothly and maintained real-time trading positions, risk exposure, P&L summaries, and appeased the regulators.
There were plenty of trading and investment management profits to go around on Wall Street during these years, and the often life changing year-end bonuses were expected by professionals at all levels. For many the annual bonus was larger than their guaranteed yearly salary, the amount correlated to measurable performance excellence in someone’s given role. Artificial preferences regardless of justification were unheard of, and excuses didn’t work on Wall Street or at the vendors and big consulting firms serving the financial services industry.
Sometimes bonuses were expected by employees who thought they were better than they were, but they usually weren’t around very long. Wall Street ran on numbers, and tangible performance results were what mattered for compensation and promotion decisions. Performance might mean trading profits for a trader, returns for an investment manager, or trade processing speed and efficiency in the middle and back office.
Getting a smaller than expected bonus was disappointing, but most people accepted the need to improve performance relative to peers. If someone received no bonus in a given year it was a message to get better fast or call your favorite headhunter. It was usually a precursor to termination as part of the yearly culling of the bottom 10+% of performers.
Wall Street high performance culture was survival of the most deserving, and the transparent, preference-free pursuit of excellence produced superior business outcomes and happier, more productive employees. If you performed well on Wall Street your job was secure and you made a lot of money. Nobody cared about race, color, nationality, sex, gender, academic credentials, politics, or who somebody slept with. Wall Street was a transparent meritocracy free of artificial preferences giving unearned advantages to some while disadvantaging others. Nobody on Wall Street back then wanted to push preferences because it would require answering questions of why, for how long, to what degree, and for what groups in what proportions. There were no logical arguments for any of it.
Wall Street employees at all levels were well compensated, but so were the hardware, software, application, data, and services vendors. They created, developed, sold, and delivered the capital markets innovation that made lucrative Wall Street profits possible. My first systems company moved market data and applications from multiple stand-alone terminals into integrated “video switching” systems. Those were then made obsolete when we introduced digital trading systems with real-time datafeeds and applications running sophisticated trading algorithms over high-speed networks. Digital disruption was worldwide, and it changed the capital markets industry landscape and reset the definition of global winners and losers.
As a young trader I held 2 different telephone handsets while “squawk boxes” streamed live trade talk from market makers and I obsessed over stacks of computer screens. The cacophony of noise on a big trading floor with thousands of traders was overwhelming to outsiders. Special acoustic treatments made sure shouting on the trading floor could be heard by traders across the room, specialized lighting minimized screen glare, and customized HVAC systems dissipated heat from thousands of traders and computer screens.
Paper trade tickets were written by hand, manually entered into a trade processing system off the trading floor. As I learned more about technology I realized those manual processes wouldn’t last much longer on Wall Street. I thought about how trading would change until I had a chance to change it myself as an entrepreneur. High-speed computers, real-time data and networks, software and algorithms, and new alternative electronic markets were all enablers and results of the transformation.
I shifted my career from trading to designing and selling trading technology and services before traders were made obsolete by algorithms and software applications. I used my trading experience to develop game-changing innovations in real-time trading systems, high-speed datafeeds, applications, and professional services that turned art of the possible into cost-effective reality. Digital disruption and the proliferation of new electronic markets spread worldwide, transforming 200 years of financial market history that rendered large trading floors unnecessary.
Two of my companies designed and built the trading and market data distribution systems that changed Wall Street to make it more automated and real-time. Previously stereotyped and neglected mathematicians and software engineers became highly compensated “quants", “data scientists", and new members of the cool crowd. They used highly advanced mathematics along with real-time and historical data to develop trading strategies they turned into applications and algorithms run by ultra high-speed computers and networks.
Wall Street that was pursuing the last microsecond of speed advantage, so a close partnership formed with the computer and networking companies leading the global performance race. Wall Street embraced any innovation that created competitive advantages, implementing and often investing in the companies delivering those innovations. My companies integrated the most advanced hardware, software, data, and networks into trading and data distribution systems we installed on trading floors worldwide. In a few more years I was selling long-term outsourcing ocontracts to run and continuously improve them.
By the 1990s every high-performance IT vendor had dedicated sales teams focused on Wall Street and financial services. They wanted the revenue but also the drug-like high from winning on Wall Street which they leveraged in national and international marketing campaigns. In those days real drugs could also play a role in how those Wall Street sales were won given pervasiveness in the financial industry. It was all part of the game in the '80s and '90s, and I used those hardware and software vendors to further my own objectives.
I developed close relationships with senior trading and IT executives on Wall Street and in Silicon Valley, and they helped me especially at my smaller entrepreneurial companies. They introduced me to influential people I didn’t know when pursuing a big sale, and I reciprocated with great dinners, shows, concerts, and took them to the hottest clubs and bars they could handle. I became more visible in the media than anyone else working in capital markets, and TV and print interviews heightened my credibility with clients and important strategic partners.
Wall Street digital innovations and real-time data eventually spread to other industries when the enabling technologies matured and prices decreased. Vivek Ranadive, one of my early trading system competitors, went on to evangelize the “real-time enterprise” and promote “the power of now” after founding TIBCO. Later in my career I also moved beyond financial services to introduce AI-enabled software process automation across industries, but the origins all traced back to the real-time data and algorithms developed during the digital transformation of Wall Street.
Trading and the trading floor were always an adrenaline rush dating to my first exposure as a recent college graduate. I wouldn’t have lasted long as an office worker, but I almost went into music full time. I began performing professionally when I was 15, making enough money to help pay for my Duke University tuition when my family couldn’t have afforded it otherwise. I was still considering a performing and recording career at Duke, but my demo record was stagnating. Disco was becoming the hot new genre, and I had moved to rock after starting out in jazz. So after graduation I accepted a management trainee job at a big bank, but I was unhappy there until I discovered trading.
Recruiters did a lot of devious and ethically questionable stuff trying to poach talent. Wall Street paid top dollar to compensate for the mental and physical stress and constant pressure, but retaining good people was difficult because other firms were always hiring and headhunters circled like sharks. Most everybody working on Wall Street regardless of role or level had scarce industry skills, giving them strong cards to play for compensation and promotion decisions.
I was part of many Wall Street innovations like new electronic markets that made trading and investing cheaper and more accessible for everyone while eliminating most trading commissions for the first time. Digital trading systems and exchanges were spurred on by new regulations that made trading and investing easier and cheaper for everybody. Markets where trades could be executed proliferated and all became more transparent, liquid, and anonymous. Market structure innovations resulted in better prices and lower trading costs, benefitting both retail and institutional investors.
Wall Street money sponsored charitable events that raised millions for worthy causes, characterized by donors as “giving back” for their good fortune. But it often seemed the charitable cause was secondary to occasions for rich and successful people to party. I went to dozens of “charity galas” and award ceremonies “honoring” whoever donated the most money to the cause that year. I spent thousands of dollars for a table but used them for business purposes. Charities were another beneficiary of the broader Wall Street and capital markets ecosystem of money and wealth.
Career success wasn’t expected to be equal but earned through measurable performance excellence. Performing in bands helped me develop skills and confidence to interact with senior executives and traders at a young age. I developed business relationships in ways my competitors couldn’t match by taking them to cool and exclusive restaurants and clubs in New York, Chicago, London, Tokyo, Sydney, Shanghai, Seoul, and Hong Kong. A great dinner and drinks were a given, but for many of my clients the night was just beginning after dinner.
I took clients to places few knew about and even fewer could get into, all part of client entertainment in the Wall Street fast lane. I took them to Broadway shows, museum openings, and private suites at concerts and sporting events. I played any cards I had and played hard to win deals, but always by the rules without stepping over admittedly gray lines. During the '80s and '90s there were few if any red lines other than overt bribes or money changing hands, and as rules and policies changed I changed too but everybody had less fun.
Today’s highly restrictive rules for business entertainment contribute to inferior business outcomes, losing the strategic alignment and new ideas that came from more relaxed out-of-office dialogue. Going out after work with clients could make business more productive, and we had some fun but I never saw any corruption. Now extreme restrictions on permissible client entertainment and cost caps can make going to Chick-fil-A and getting a Cookies & Cream milkshake look like a decent option.
I pioneered different product, data, and service innovations few others ever get to do even once, sometimes with my own ideas and sometimes making the ideas of others real. Selling to Wall Street meant winning a very tough cost-benefit debate in a risk/reward culture. Cost was less important because ROI could be realized in a single lucrative trade or by avoiding a big downside risk. My trading experience helped me identify business inefficiencies and problems in financial services, and I was able to learn enough about advanced IT to understand what was technically and functionally possible. That convergence of capital markets and IT knowledge led me to impactful and innovative new product and service ideas that kept changing the market.
After the digital transformation of Wall Street that began with Triarch the marginally controlled trading floor chaos I loved was replaced by computers, networks, datafeeds, and real-time algorithms and applications that ran in an equipment room. There were many fewer traders, shrinking trading floors, and legacy exchanges were fighting for survival against new market entrants introducing new electronic trading methods.
Now the action was in the flashing lights and perpetual hum of high-speed computers and specialized cooling systems in high-tech equipment rooms. Computers were faster, mostly smarter, could analyze infinitely more prices and markets simultaneously, and made fewer mistakes than human traders. The computers also didn't drink or do drugs, complain, screw the employees, succumb to stress requiring drugs or therapy, or get paid millions in salary and bonus only to still want more.
Wall Street and global capital markets operated at a pace and with pressures few people could conceive of or endure, but some people thrived in the adrenaline-fueled lifestyle if you avoided too many crutches. Weed and alcohol had long been part of the Wall Street scene, but the surge of cocaine usage in the 1980s was different and ruined lives. The financial and personal rewards of working on Wall Street were diverse and many, but it came at a cost. I was lucky the era ended because the constant travel, stress and pressure, drugs and alcohol, and too many late nights were taking a physical and mental toll on me too.
By the mid-1990s Wall Street life was settling down somewhat and regulatory changes spurred new innovation. There were new alternatives to traditional exchanges like crossing and matching systems and investment bank “dark pools" that internalized orders. Most alternative markets provided better prices, greater anonymity, and more transparent liquidity which let sophisticated algorithms get better execution prices. Better trade execution was most impactful on large trades like those of big institutional investors and funds.
High-frequency and algorithmic trading expanded from stocks into bonds, derivatives, commodities, and foreign exchange. Trades were now executed by “smart algorithms” accessing and comparing fast, liquid electronic markets to get “best execution.” It was an unlimited budget IT speed race for high frequency arbitrage traders and market makers, where milliseconds of speed difference in data delivery meant market insights and low risk trading profits.
Highly specialized hardware, software, data, network, and services vendors sold financial institutions the means to compete and win in the markets. Everybody profited, some more than others. Digital transformation and algorithmic trading meant tighter spreads, better trade executions, and improved risk management and investor reporting. Both institutional and retail investors benefitted from liquid, transparent markets and better execution prices, and brokerage commissions became a thing of the past.
The stately marble environs of the NYSE or the amphitheater “trading pits" of the Chicago commodity and options exchanges became expensive liabilities. The cost to maintain and enhance them was significant, but they no longer served any real purpose. Exchange trading floors were good TV sets for shows like CNBC’s Squawk on the Street where I did interviews, but nothing significant happened on them any longer after trading and market making became electronic and automated.
The cost diverted investment needed for innovation and growth, and new alternative exchanges took more and more market share from traditional exchanges. The innovators expanded into new geographies, traded more asset classes electronically for more hours, and prospered. Legacy exchanges that didn’t adapt either faded into oblivion or were acquired by the winners.
My former client NYSE was ultimately acquired by the Intercontinental Exchange (ICE). one of my new startup clients our project team brought into existence. NYSE dismissed my warnings about competitive threats for too long, were too slow transforming their IT infrastructure, and never executed a serious growth strategy. They stayed a private members-only club for too long while the members had become dinosaurs. Public exchanges and especially European exchanges were using investment capital and the markets to make acquisitions and to fund global expansion and alliances.
As the '90s came to a close I had a front row seat to the separation of Andersen Consulting (AC) from Arthur Andersen (AA) and the global re-branding as Accenture preceding the blockbuster IPO. I’ll share the inside story of how we won the right to separate from AA and some previously untold stories of intrigue and political maneuvering along the way. Billions of dollars were at stake, and the way we won in arbitration, executed a global re-branding, and launched an IPO in little more than a year will stay on business school curriculums for many years.
It was one of the fastest, most complex, and highest value global business transformations ever undertaken, and the IPO was only 2 months before the 9/11 terrorist attacks. You’ll hear about the Andersen Worldwide global partners meeting in Paris where our future was decided and internal strategies to prevail in the International Chamber of Commerce arbitration. I was the long-time global client partner for our lead investment banker Goldman Sachs, and I represented capital markets as the industry managing partner on the roadshow marketing Accenture IPO shares to big institutional investors
I was in New York City on 9/11 and survived through a highly improbable twist of fate that involved a scheduled and then postponed London trip and an unplanned stop at my office before going to a big market data conference at Windows on the World. I survived while over a hundred colleagues, clients, and friends at the conference and working in the towers didn’t. Windows on the World was on the 106th floor of One World Trade Center, and nobody escaped from up there, all victims of senseless ideological terrorism.
In the weeks after 9/11 Accenture helped clients and the city of New York recover even as we dealt with our own personal and professional losses. The region’s telecommunications and network infrastructure in lower Manhattan was destroyed, and the global financial industry would break down without those communication links between New York and the rest of the world reestablished. Nothing was ever the same afterwards, from flying to going through building security to meet with clients. The events of 9/11 prompted me to leave New York and move to South Carolina in 2003, but I still flew to NY or somewhere else in the world every week for another 15 years.
After resigning as the Accenture capital markets global managing partner in December, 2007 I did independent consulting, held capital markets training seminars, and served on boards for a few years before joining KPMG and leading Intelligent Automation. It gave me a chance to explore my new ideas for using software process automation and AI to create new highly automated managed services that could take operational efficiency and quality far beyond the limitations of global outsourcing. But after going back to work I found business life and norms had changed, and not for the better.
The preference-free meritocracy of Andersen Consulting and Accenture had given way to institutionalized special preferences and “diversity goals.” Goals became de facto became mandates for quotas in hiring, promotions, and compensation. I didn’t like it nor did high performers who lost out to preferred identity group members with inferior qualifications and performance.
Business outcomes suffered, and top leadership was too isolated from employees to see the widespread dissatisfaction. They were ensconced in top floor offices, and they mistakenly believed the empty HR corporate platitudes promoting diversity via preferences were welcomed by employees. The artificial preferences corrupted meritocracy, and new hire talent levels declined and large numbers of existing high performers not in a preferred identity group resigned.
Wall Street in the '80s and '90s was an amazing experience, a period of time that established the foundation for my entire career. It was a life in the fast lane, but it was also an unprecedented period of innovation, market disruption, and the digital transformation of trading, capital markets, exchanges, and professional services. Later in my career I led Intelligent Automation, designing and selling AI-enabled process automation long before public awareness of AI grew after the launch of ChatGPT. Anyway, here’s my story…
