My story continues, the first segment of which can be read HERE……..
One day, a young man came into the office to inquire about buying some data. This was pretty unusual, since we weren’t selling packs of gum or bottles of Coke. We were a very “niche” business whose customers were typically hundreds or thousands of miles away. Walk-in business was almost unheard of.
I wanted to help him, though, so I gave him a catalog. “How much for everything?”, he asked.
“Everything. I want to buy everything you’ve got.”
Obviously I had never been presented this question before. Most of our sales were for $50 or $100 dollars, with maybe an occasional $200 or $300 sale for traders eager to do a lot of back-testing. But I had never been asked by anyone to price out every single thing we had, from daily futures data to tick-by-tick stock quotes.
I went through the catalog, and I came up with a sum of about $4,000. He handed me the onyx American Express card of his employer, and he said to go ahead and ring up the sale. I glanced at the card’s imprint: Andreas von Bechtolsheim.
Had this happened in the modern age, I would have Googled the name, since I had no idea who he was. In 1991, however, one needed to rely on cruder methods of research. It didn’t take me too long to find out who this mystery shopper was: Andy had, in 1982, been one of the four co-founders of Sun Microsystems. He had made his fortune after Sun’s public offering and now, having left the firm, he was looking for new ventures.
One of the side projects he had decided to embark upon was hiring a couple of software engineers whose task it was to create an automated trading system to beat the market. Someone with Andy’s capital resources and intellectual curiosity was naturally drawn to such a project, and they needed a lot of data as a starting point.
I offered to hand-deliver the box of disks to their office, which was a one-room rental in downtown Palo Alto. Over the course of the weeks and months after dropping off the data, I stayed in touch with Andy’s programming minions, swapping stories, checking on Andy’s progress, and finding out – surprisingly – that Andy himself lived just a couple of blocks away. I at least got the glow of knowing I lived in the same neighborhood of a relatively big luminary in the Silicon Valley.
One day in the office, I was mildly alarmed to see someone in a police officer’s uniform show up. Chris saw him, seemed to recognize him, and beckoned him to come into his office. The officer shut the door behind him, and they spoke for a while. I was a little curious what was happening, so when Rick headed outside to the porch to have one of his many cigarettes of the day, I followed him outside and asked what was going on with the police officer.
“You mean, you don’t know?”
“That’s Chris’ parole officer. He comes here on a regular basis. You really didn’t know?”
It turns out that Chris was an ex-convict. When he was at CalTech (a college for geniuses which makes getting into MIT seem relatively easy), it occurred to him that he could apply his knowledge of chemistry to make high-quality methamphetamines with a huge profit margin. Chris wasn’t a drug user himself, but he was a natural entrepreneur. He didn’t see it as a moral issue, but he did see a business opportunity. Thus, he began making, and selling, speed.
This enterprise flourished for him, but perhaps out of inexperience as a small-time drug lord, it didn’t occur to him to remain discrete. On a regular basis, he would go into his local bank branch with very large sums of money, often exceeding $10,000 in cash, to deposit into his account.
A teller at the bank, naturally, found these regular visits to be suspicious, so she alerted the authorities. Soon thereafter, Chris’ apartment was raided, drug-making equipment and all, and he awaited trial on drug charges.
In the end, Chris was convicted, and he wound up spending four years of his young life in prisons surrounded by rapists, armed robbers, and murderers. Chris, with his tremendous intellect and peaceful nature, was a fish out of water, but he also a large man with a keen sense for survival, so he managed to endure his incarceration.
One aspect of being an ex-illegal drug maker is that not only is all your cash seized, but the government wastes no time in calculating your tax bill for all that unreported revenue. In other words, all monies received from selling illegal drugs is taxable (with interest and penalties), even though the revenue itself is confiscated. Thus, still as a relatively young adult, Chris emerged from prison with no job, no money, and an enormous tax bill.
Around 1988, when Chris got out of prison, he realized that any regular job he got (which would be challenging enough to attain with his prison record) would have the lion’s share of its wages garnished by the government. It was a depressing prospect. Chris decided, instead, to start his own business, and give himself the opportunity to grow his way out of this very bad situation – thus, Technical Tools was born, and in turn, four years later – a parole officer was making regular visits to Chris, checking up on his life as an ex-con.
A Stranger Stranger
That summer, another mysterious visitor appeared, this one energetically speaking with Chris. It sounded like he was one of our customers – – a fairly serious trader, from what I could gather – – and he was being escorted around the office. Chris excused himself, and this visitor was left standing near me.
I was curious, so I said, “Hi, my name’s Tim Knight. What’s your name?”
“X .” (note for my slower readers: this is not his real name)
“And what do you do?”
He gave me a quizzical stare, as if I had asked him a deeply personal question. Cocking his head slightly, he responded, “Do? What do I do? I eat. I breathe. I don’t know what you mean.”
Since my query was one of the basic in what I figured what a widely-accepted social more, I wasn’t prepared to explain myself, but he interjected with the answer I was seeking in the first place: “I’m a trader of some note.”
This unusual interaction was just the beginning of many more that would come in the future. What I didn’t know at the time was that Chris wasn’t just escorting a customer around as a courtesy. He was showing X around as a prospective buyer of the company. Chris had been hard at work building Technical Tools for a few years, and since X has expressed an interest in acquiring the business, Chris decided to strike while the iron was hot. X was checking out the merchandise in what surely must have been one of the most casual due diligence examinations in recent memory.
Chris and X swiftly agreed on a price – I believe it was a little more than a million dollars, in two equal installments. Chris then brought all of us together to introduce X and explain that he would soon be departing the firm to do other things with his life.
This was a surprise and disappointment to us, since we all liked Chris’ thoughtful, easygoing manner. To suddenly find ourselves in the employ of someone we knew almost nothing about was disturbing, and those feelings would get amplified as we got acquainted with our new overseer.
“I’m not really into this for the money”, X explained. “I make or lose a million dollars in a single day. This is more of a….social experiment, really.” Although I couldn’t speak for the others, I wasn’t especially enthusiastic about my job being relegated to a component of some kind of personal experiment, but I was even less interested in seeking out another job. I decided to stay put and make the best of it.