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(1/n) A short story on fleeting opportunities: back in 1999, I had the opportunity to intern in the trading pits on the floor of the CBOE in Chicago. I was living in southern Illinois at the time, had applied to 20-25 jobs, and got 2 interview offers...
(2/n) Chicago is 5 1/2 hours north and I didn’t have a car, so I actually went to my dads house and “stole” his car to go to the interviews (he threatened to press charges as I was an unruly 19yr old but that dust settled)
(3/n) anyway, got a job offer for $10/hr to be a clerk in the pits. Great opportunity to be in the action and get exposure. I took it, despite knowing $10/hr wasn’t going to allow me to live anywhere
(4/n) I convinced a junior trader who had only been on the job for 9 months to let me sleep on his floor in his studio in Wrigleyville, I was good at math and he was good at “trading instincts”, so we helped each other in that regard
(5/n) at that time, pits like AOL, Microsoft, Intel, Juniper, Cisco, JDS Uniphase, etc we’re insanely active with flows - basically every trader in those pits were taking home $500k+ per year, most under age 30-35
(6/n) our clerk boss’s husband was a trader and actually bought an airplane, assuming those cash flows would last seemingly forever. Back in the day, you had to buy a seat on the exchange to have the right to make markets and trade
(7/n) the price of seats sky rockets to high six figures, as everyone saw the money being made and wanted to pay to be able to participate. But at that same time, technology was automating the role of market makers, and even our traders were migrating to computer-based...
(8/n) trading strategies. Fast forward through the tech crash, and trading flows plummeted at the same time the jobs were being automated. All of a sudden, guys making $750k/yr couldnt eek out $100k. They’d already built their lives around higher cost of living
(9/n) over the next 3-5 years, jobs were moved from the pits to computer-trading in offices, compensation compressed massively. Seat values plummeted. Firms went out of business left and right
(10/n) some guys saw the writing on the wall (ie technological productivity completely displacing the manual market making) and left with cash in the bank to business schools. Others thought it was a blip and the good times would come back
(11/n) the good times did not come back. The guys that stuck around ran out of money and lost access to opportunities. Today (true story), my former coworkers making $500k-$1mm per year waited too long to pivot. Now one is a bartender, one is a locksmith, and one is a dog walker
(12/n) as an aside, the dog walker is actually rolling in the dough now having built a huge business with great brand and trust and recurring business. But the rest, now in their 40s and 50s with kids, are in situations where income ceiling is fixed and resources constrained
(13/n) anyway, I always reflect on this and have concluded that “money” usually derives from one of two things: a) project-based, time limited excess opportunities and b) businesses that can grow (or maintain share indefinitely for various structural reasons)
(14/n) as for me, I’m more intrigued with the latter - what can we do with our time that is always making people’s lives better and more interesting
(15/n) businesses that grow do just that. They provide a better or more enjoyable way of doing something - which is probably pretty fun in the long run
