HIGH/LOW
So you started out in the defense industry?
Yes — at Stanford I got a master’s in electrical engineering. I then got a job at Martin Mari-etta [now part of Lockheed Martin] working on speech recognition and communication signal processing. I worked there for two years before going to Harvard Business School.
You had nothing to do with trading then?
I didn’t know that world existed.preaches by riding his bicycle to work. In ad-dition to locking horns with bureaucrats over bike lanes and congestion pricing, he has ran-kled the music industry with his file-sharing company, LimeWire.In early April, Gorton sat down with
Trader Monthly
on the roof deck of his headquarters to discuss the initiatives that have made him a force to be reckoned with — and find out what comes next on his to-do list.
MORE OFTEN THAN NOT,
the entrance to a Manhattan brokerage firm greets visitors with a dull logo on tall glass doors, separating them from the receptionist in a cold, intimidating manner. Not so the en-trance to Lime Brokerage’s Tribeca office. It’s adorned with peaceful Buddhist statues and lush greenery that transform the industrial loft space into a kind of Shangri-La.Presiding over this trading palace is Mark Gorton, founder and chairman of the 200- employee Lime Group, which comprises a bro-kerage arm and a hedge fund, Tower Research Capital, among other entities. “You spend a lot of time at work. Why not have the nicest work environment you can?” says Gorton, a 41-year-old electrical engineer–turned-trader. He co-founded his $100 million–plus quantitative fund a decade ago after a four-and-a-half-year prop-trading stint at Credit Suisse. That, in turn, led him to Lime. After having trouble finding a broker to cater to Tower’s high-volume stat-arb trading strategy, Gorton and his cofounder, Alistair Brown, a software developer, set out to start their own. In less than a decade, Lime Broker-age has set the bar for speed in block equities execution. Its system can now handle up to 4,000 orders per second. During the first quar-ter of 2008, Lime averaged 372 million shares a day; in one exceptional session, it executed a mind-bending 750 million shares. What Gorton has done outside of trading is equally impressive. In 2000, the wiry serial entrepreneur founded the Open Planning Project, a technology-driven nonprofit orga-nization encouraging civic engagement. He is an outspoken advocate of transportation re-form in New York — and practices what he
Speed Merchant
Presiding over one of the fastest platforms in the business, Lime’s Mark Gorton is taking his quant edge to new limits
BY CHRIS GILLICK
THE ASK
KEY LIME GUY: Lime Group’s Mark Gorton has juice across a number of industries.
P H O T O G R A P H B Y I A N S P A N I E R
JUNE/JULY 2008
ware to enable public participation in the democratic process, increase the transparency of government, the efficiency with which gov-ernments interact with people and bring com-munity groups together. There’s a particular focus on reducing traffic in New York City and making the streets more livable.
Is it safe to say that you’re not pleased that Mike Bloomberg’s congestion-pricing plan for Manhattan didn’t pass at the state level?
Yeah, I’m pretty bummed out about that.
Was the Open Planning Project involved in that effort?
Yes. We have this thing called Streetsblog. When congestion pricing passed the New York City Council,
Crain’s
published three winners and three losers, and Streetsblog was one of the winners.
Shifting gears to another of your interests, what has been the music industry’s reaction to LimeWire?
There are significant parts of the record indus-try that don’t love LimeWire. We’re involved in litigation with some of them. But there are lots problem than a hardware problem. The real limiting factor on Lime Brokerage’s growth is our ability to hire programmers fast enough.
Speaking of hiring, where do you go to find your talent?
The main office for engineering is in our Waltham office, outside of Boston. We tap into that geographic network, particularly from MIT and other tech companies.
What about India?
I’d like to think I have single-handledly accel-erated the wage inflation for IIT [Indian Insti-tutes of Technology] computer-science gradu-ates. When I started going over there, Lime was practically the only Western company recruit-ing. Now you have Deutsche Bank, Goldman, Yahoo, Amazon, Google, McKinsey, etc. It’s unbelievable how competitive it has gotten. That market inefficiency closed very quickly.
Where do you stand among your competi-tors — Instinet, Liquidnet, the banks?
I think we occupy a different niche than those guys. I think for the traders who are very seri-ous about having the fastest connectivity to the
Was business school helpful?
To some extent. I got a job at [Credit Suisse] First Boston, which I’m not sure I was more qualified for after business school, but I wouldn’t have gotten the interview without it.
Did you enjoy your time at CSFB?
Yes, I really did. It was a good place. I worked with a lot of good people there. One of the things I realize now is that [CSFB] was a big corporation, they did a lot of things right, but there was corporate dysfunction. I very much valued the freedom to just sit around and com-plain about the status quo with my peers. But I can’t do that anymore. Now that I have my own place, if anything’s wrong, it’s my fault.
When you started Tower Research Capital, was it all your own money?
We started out with my own money, as well as money from friends and family. We later raised more from the outside.
Has Tower ever had a down year?
No.
Lime Brokerage, then, was founded to cater to funds like Tower.
At Tower we were doing automated equity trading. We were having a very hard time find-ing a brokerage firm that could handle our trading in terms of both volume and costs. I realized that if we were having this problem, then other people in this world were having this problem. So we basically had to build this system ourselves.
Surely there’s a Chinese wall between the two.
Yes. Actually, it’s more of a Scottish wall. My partner, Alistair, is a Scot. Tower and Lime Brokerage are completely separate. Lime Bro-kerage is actually moving to a different build-ing in the next few months.
Have you had to continually reinvest in your infrastructure?
We are now on our third complete rewrite of our core trading server. As message volumes keep going up and up, there is always some part that is getting stressed. It’s more of a software of people who recognize that the Internet is a fact of life that has changed the way the music business works. They see file sharing as an op-portunity to reach music fans. We’re having talks with very senior people at the record com-panies who are really excited about working with LimeWire. It offers oppor tunities that the music industry has never seen before. But [striking a deal] is definitely a slow process.
What’s the next project you’re looking to get involved in?
I have a list of ideas, but the hard part is just doing them. Everything takes work, and somehow I get busy staying on top of the current list of stuff. market, Lime provides things that those guys don’t. But they do things that we don’t do: If you want to send to big block orders through, the banks are better than us. If you want fast computerized execution, we’re better.
Do you even have any competitors, then?
I wouldn’t say that, but when customers find us, I think it’s such a good fit that they just say, “This is it.”
Do Tower and Lime Brokerage fund these other projects of yours?
The one thing I fund with profits from my ven-tures is the Open Planning Project. That does a number of things: build open-source soft-
“WE HAVE A NICHE. FOR TRADERS WHO ARE VERY SERIOUS ABOUT FAST CONNECTIVITY, WE’RE BETTER.”
Reprinted with permission from Trader Monthly, June/July 2008. On the web at www.traderdaily.com. © DOUBLEDOWN MEDIA. All Rights Reserved. FosteReprints: 866-879-9144, www.marketingreprints.com.For more information about jobs at Tower Research Capital, please email jobs@tower-research.comFor more information about Lime Brokerage’s products and services, please email sales@limebrokerage.com
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