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Citadel Securities: "We don't make cars, but we do make banknotes"

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The CEO of Citadel defeated ConstitutionDAO with $43.2 million, and ConstitutionDAO and his People were only $200,000 away from leaving their names in Dao world history.

Original title: ""We Produce Banknotes", Citadel Tour"

Original source: Trading Gate

Editor's Note : On January 11, 2022, a blockbuster news swept the Crypto circle, "Citadel Securities, a world-renowned market maker, completed a financing of US$1.15 billion, with Sequoia Capital and Paradigm participating in the investment." The famous market maker has also come to the encryption world.

So far, including Jump Trading, Tower, Hudson River Trading, Citadel, etc. High-frequency trading giants have all entered Crypto. It can be said that Wall Street has completed the division of liquidity in the encrypted world.

Before that, there was another intersection between Citadel and the Web3.0 world, In the iconic U.S. Constitution copy auction on November 20 last year, Citadel CEO Kenneth Griffin defeated ConstitutionDAO for $43.2 million and won the auction. Just shy of $200,000.

Sequoia Capital and Paradigm Invest in Citadel, Citadel Enters Crypto, and Citadel’s Founder Ken Griffin snatched the US Constitution from ConstitutionDAO. This constitutes a rather symbolic story. The title of the story points to the debate that caused a stir in the American technology and Internet circle at the end of last year. Jack Dorsey's question: Who does Web3 belong to?

The following is the original text

In the 1st and 2nd issue of the Citadel tour series, we talked about that although the Citadel Group established in 1990 is young, it is already a god-like existence in the financial world. Its business includes two major blocks: Citadel hedge fund, which provides asset management business, and Citadel Securities, which provides market maker business. In this tour, we will continue to talk about Citadel founder Ken Griffin and the unique cultural genes he brought to Citadel.

“The difference between Griffin and other new billionaires is his ambition. People who know him say that Griffin is not Hoping to be known only as a hedge fund legend, like Tiger Management's Julian Robertson or SAC Capital's Steve Cohen. What he really wants, it seems, is to build something great: a firm like Goldman Sachs or Morgan Stanley. A diversified and large-scale financial empire like Stanley."

01 From a boy prodigy to a Wall Street wizard

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In 1986, the South Florida Sun reported on three high school students in the Boca Raton Community High School Computer Club. One of these teenage prodigies who were regarded as local wunderkinds was Ken Griffin, who would later become the founder of Citadel.

The one on the right is Ken Griffin in his youth

Griffin He loved math and computers since he was a child and was the president of the Boca Raton Community High School Math Club. In this dated photo, 17-year-old Griffin prepares for a computer competition with two other classmates. That same year, Griffin also made up an educational game called Math Shark. He also founded a software distribution company that sold by mail.

In addition to computers, Griffin showed a talent for business as a child. In 1980, at the age of 11, Griffin wrote a school paper on how he planned to study the stock market. He began trading actively as an undergraduate at Harvard University.

The most amazing thing at the time was that Griffin managed to convince the dorm to allow him to install a satellite dish on the roof so he could get the latest stock prices .

The satellite dish was installed, and Griffin just caught up with the 1987 "Black Monday" plunge in US stocks. Griffin was already managing $265,000 at the time. Fortunately, he was betting on the stock to fall and made a fortune. Griffin's stellar performance caught the attention of American hedge fund pioneer Frank Meyer. After graduating from Harvard in 1989, Griffin tried to raise money for his hedge fund. Mayer suggested that Griffin move to Chicago, where his company is located, and said he would support him. Griffin agreed.

Not long after its establishment, Citadel quickly surprised Wall Street. Returns of 43% and 40% were achieved in 1991 and 1992, respectively. In just eight years since its founding, Citadel has grown to over $2 billion in assets. In 2003, at age 34, with a net worth of $650 million, Griffin became the youngest self-made person on the Forbes400 list of America's Richest 400.

< blockquote style="text-align: center;">Griffin buys islands like ordinary people buy cabbage

By mid-2008, Citadel's assets under management The scale has reached 20 billion US dollars. This caused the US hedge fund industry publication "Institutional Investor" to praise him, declaring Griffin a "miracle" boy in the hedge fund industry, describing him as "a god, a bookworm, and a self-taught financial all-rounder".

Griffin’s ambitions also caught the attention of Fortune magazine. In a feature story, Fortune wrote, “Griffin and other new billionaires The difference is the scale of his ambitions. People who know him say Griffin doesn't want to be just a hedge fund legend like Tiger Management's Julian Robertson or SAC Capital's Steve Cohen. What he really wanted seemed to be to build something great: a diversified, massive financial institution like Goldman Sachs or Morgan Stanley."

The Citadel hedge fund lost a staggering $8 billion in the 2008 financial crisis and was forced to freeze investor redemptions. But inconceivably, Griffin did not recover from this slump, but resurrected Citadel with full blood, becoming one of the undisputed giants in the hedge fund industry. As of February 2022, Citadel's fund management scale is 46 billion US dollars. Griffin also spun off its high-frequency trading unit into Citadel Securities, building it into a separate and powerful firm. Griffin rebuilt his empire like a magician. (Specifically, you can review Citadel Tour 2)

After the financial crisis, Citadel Phoenix Nirvana, in a series of interviews with the Wall Street Journal, Griffin said, " Business is still going on, Citadel doesn't make cars, but we do make money." ("Business is business," Mr. Griffin said in one of a series of interviews with The Wall Street Journal. "I don』t manufacture cars, but we do manufacture money.")

02 People who can run both 100 meters and marathons

The hedge fund industry is highly opaque. But even by industry standards, Citadel's secrecy is extreme. Citadel employees were required to sign a strict non-disclosure agreement. A former executive once told a media reporter: "I am not even allowed to say the word Citadel to reporters." Therefore, the internal operation of Citadel, except for a small number of insiders, everyone Little is known. We can only get a glimpse of it from media reports and observations from Griffin's friends.

Lloyd Blankfein, the former CEO of Goldman Sachs and a friend of Griffin, is one of the few people who has publicly commented on Griffin. He compared Griffin's talent to sports legend Michael Jordan.

“Michael Jordan was Michael Jordan not just because he jumped higher and ran faster, he was in a class of his own. Ken Similar to Jordan in his field. Ken is a great trader, but he's also a great businessman, and those things don't often exist in one person at the same time. It's like a 100 meter dash and a marathon A runner who wins every race.”

In the Citadel Group, Griffin is more respected than loved. The company culture is brutal even by Wall Street standards. “You can’t expect a lot of empathy within a company,” a former employee told the Financial Times last year. “It can be an advantage for the company when it’s stressful and crazy at work.” The former employee also said he thought Griffin felt the pressure differently than other people. "He wants to be the best at everything, and it's up to everyone at Citadel to help him achieve that."

Griffin himself does not hide such a competitive environment. "If you're the type of person who enjoys competition, you love working at Citadel very much," he said.

For a long time, employees saw Griffin as a "strict and impatient" boss. Jamil Nazarali, principal of Citadel Execution Services, recalled asking Mr. Griffin for his opinion on how much to buy a competitor. Griffin replied, "This is your fucking business, how much do you want to pay for it?" ("It's your f—ing business—how much do you want to pay for it?")

In 2013, Griffin was extremely dissatisfied with the short-term losses of a stock selection department of the company. He asked employees to report quarterly on more than 1,700 companies that the company paid attention to. He conducts spot checks on these reports. Citadel's high employee turnover rate was once the focus of attention in the industry. Lloyd Blankfein, the former CEO of Goldman Sachs, once revealed that for a long time, Griffin would participate in the minute details of the company's decision-making. He said that even among people with a very "intense" (focused, high-intensity work) personality, Ken would rank in the top ten.

Another Wall Street mogul, Daniel Loeb, was less kind to Griffin. In an email to Griffin, he called Griffin a "gerbil" and said Griffin's Citadel was "the Gulag." (You are surrounded by sycophants, but even you must know that the people who work for you despise and resent you. I assume you know this because I have read the employment agreements that you make people sign. He said, you are surrounded by sycophants, The people who work for you hate and despise you. I can see that from the agreements you make the people who work for you sign)

Of course Griffin As a big boss, naturally he is constantly evolving his skills. As his financial empire continues to expand, he has also learned to spend most of his time on the investment process rather than on individual position decisions. "I'm constantly trying to find a balance between pushing people too hard and not pushing them hard enough," he said.

However We must admit that as the founder of the company, his personality genes have a profound impact on Citadel's culture. Zhao Peng, CEO of Citadel Securities, said that he respects Griffin very much. He said that most of the way he handles and evaluates things is learned from Ken. Even if Ken isn't as involved in the finer details of day-to-day operations as he was before, his cultural impact on Citadel is profound.

03 Broken Fairy Tale

In 2012, Griffin and his ex-wife (his first Second wife) divorce case has been widely concerned by the media. His ex-wife is a beautiful Frenchman and also a Wall Street fund manager. The two held their wedding celebration at the Palace of Versailles in France, and its extravagant grandeur shocked the world's wealthy circles.

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Beautiful ex-wife Dias gave birth to 3 children for Griffin, which can be regarded as trying her best to inherit excellent genes. Later, the two were also very affectionate. It is generally believed that in this marriage, Dias injected culture and temperament into Griffin. Griffin later became rich and began to collect a large number of modern art.

However, even such an eye-catching golden boy and jade girl made a mess when they broke up. Ex-wife Dias said Griffin had an argument with her and grabbed a bedside lamp and threw it at her. The ex-wife also asked Griffin for $1 million a month in living expenses, saying that she hoped to move to New York with her three children, thinking that Chicago was too dirty. Under the exposure of the media, Griffin seemed to give in, and the two finally reached a settlement.

How Griffin himself spent hundreds of millions of dollars to buy luxury houses, and how he invited singers to sing for his employees, is often the focus of media attention. In 2019, he bought a penthouse at 220 Central Park South in New York for $238 million, setting a record for the most expensive residential purchase in the United States.

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In 2021, Griffin also spent $43.2 million and defeated bidders to buy a copy of the 1787 version of the U.S. Constitution. Griffin set a world record for the highest bid for any print, book and historical material, Sotheby said.

"My son called me and asked me to buy it. I just told myself, I must have this constitution." He later told the media. Losing out to Griffin in the bidding was an organization called ConstitutionDAO, a group of 1,700 virtual currency players who collectively raised $40 million through social media. Griffin later told the press that he would loan the Constitution to the museum for free.

After all, $43.2 million is just a few days of profits for Citadel Securities.