Celebratio Mathematica

James Simons

“World’s Smartest Billionaire”:
James Simons is Cal Alumnus of the Year for 2016

by Sean Elder

© 2016 Ellen McDermott. All rights reserved. Used with permission.

As a teen­ager in New­ton, Mas­sachu­setts, James Si­mons had a short-lived job in the base­ment stock­room of a garden sup­ply store. “I was ter­rible at it; couldn’t re­mem­ber where any­thing went,” he told an audi­ence at Mas­sachu­setts In­sti­tute of Tech­no­logy (MIT) in 2013. He was quickly de­moted to floor sweep­er, “Which I loved: It was easy, took no brain work.” When his after-school job was over, the own­ers asked him what his plans for the fu­ture were, and he told them he wanted to study math at MIT. “They thought that was the fun­ni­est thing they ever heard. The guy who couldn’t re­mem­ber where to put the sheep ma­nure, he’s go­ing to be a math­em­atician at MIT.”

This is not your av­er­age last-laugh story. Si­mons not only entered the pres­ti­gi­ous uni­versity at the age of 17, in 1955, he fin­ished the four-year pro­gram in three years be­fore head­ing for UC Berke­ley where he re­ceived his Ph.D. in math­em­at­ics in 1962 at the age of 23. A few years later, he was hired and then fired as a code crack­er for the Pentagon’s se­cret­ive In­sti­tute for De­fense Ana­lys­is (IDA) at Prin­ceton. By 1968 he was chair of the math de­part­ment at Stony Brook Uni­versity, where he cre­ated one of the top geo­metry cen­ters in the world. While there, he and Shi­ing-Shen Chern, who was at Berke­ley, pub­lished what is now known as the Chern–Si­mons In­vari­ant, which later had a huge in­flu­ence on the­or­et­ic­al phys­ics.

Si­mons left aca­demia in 1978 to start what be­came Renais­sance Tech­no­lo­gies, an early pi­on­eer in quant­it­at­ive, or mod­el-based, trad­ing, primar­ily in com­mod­it­ies and cur­ren­cies; the Medal­lion Fund he man­aged there is one of the world’s most suc­cess­ful hedge funds. For­bes has lis­ted him among the top 100 richest people in the world, and he has been called “the world’s smartest bil­lion­aire.”

For the last sev­en years he has os­tens­ibly been re­tired and now over­sees the Si­mons Found­a­tion, which has in­ves­ted mil­lions in math and sci­ence re­search and edu­ca­tion, in­clud­ing ground­break­ing work in the study of aut­ism, and spe­cial pro­jects such as Berke­ley’s \$60 mil­lion Si­mons In­sti­tute for the The­ory of Com­put­ing.

Not bad for a guy who got bumped down to floor sweep­er.

I met with Si­mons at his top-floor of­fice in New York’s Flatiron Dis­trict on a freez­ing day in Feb­ru­ary. He was in a collared shirt, no tie; loafers, no socks. At 77 he is white-haired and bearded and a bit stooped in his stance, but it would be a mis­take to un­der­es­tim­ate his acu­ity.

In Wall Street Journ­al re­port­er Scott Pat­ter­son’s book Dark Pools: High-Speed Traders, AI Ban­dits and the Threat to the Glob­al Fin­an­cial Sys­tem, Pat­ter­son re­called a meet­ing Matt An­dresen took with Si­mons in 2000. An­dresen was in the middle of a well-re­hearsed pitch for Is­land, a com­pu­ter­ized trad­ing hub, when it oc­curred to him that Si­mons didn’t seem to be listen­ing. “In fact,” Pat­ter­son wrote, “it seemed as if Si­mons had dozed off in the middle of An­dresen’s present­a­tion… his Mer­it ci­gar­ette burn­ing to a cinder in an ash­tray be­fore him.” When An­dresen fin­ished, Si­mons opened his eyes, lit an­oth­er ci­gar­ette, and “pro­ceeded to reel off every single one of Is­land’s ma­jor weak­nesses.”

That dormouse routine may be more com­mon in aca­demia than in the chest-beat­ing world of high fin­ance, and Si­mons may be un­usu­al in an­oth­er way: He is self-de­prec­at­ing about most of his achieve­ments. He’ll tell you that many of his suc­cesses — turn­ing the math de­part­ment at Stony Brook around, mak­ing Medal­lion in­to a power­house fund — came from smart hires and stick­ing to his guns. Al­though oth­er hedge funds now use the same kinds of com­puter mod­els pi­on­eered by Renais­sance, they’re not con­sist­ent, he says. “You either slav­ishly fol­low the mod­el, or it isn’t go­ing to work very well,” he says. “We nev­er over­rode the mod­el.”

In his per­son­al life, Si­mons has not al­ways stayed the course. Between de­grees at MIT and Berke­ley, Si­mons and some Colom­bi­an friends he had made at school un­der­took a mo­tor scoot­er trip from Bo­ston to Bogotá — his first trip out of the coun­try. “It’s amaz­ing that I re­turned in­tact, but I did,” he says. They rode through Mex­ico and Guatem­ala and Costa Rica on their Lam­bret­tas, some­times sleep­ing on the ground or even in the loc­al jails of the little vil­lages they passed through. “Every­one wanted to see the grin­gos who had done this crazy thing, so we were in­vited to all kinds of people’s houses,” he re­calls. Some time after that scoot­er trip, the coun­try be­came a cata­lyst for Si­mons’s busi­ness ca­reer when his friends there star­ted man­u­fac­tur­ing vinyl tile and plumb­ing, and he be­came an in­vestor. Their com­pany dove­tailed with the con­struc­tion boom in Colom­bia, and Si­mons profited from the as­so­ci­ation for many years to come.

He ar­rived in Berke­ley in 1959, os­tens­ibly to work with Chern, who, he learned upon ar­rival, had cel­eb­rated his first year at the Uni­versity by tak­ing a sab­bat­ic­al. Si­mons’s fiancée, Bar­bara, had trans­ferred from Welles­ley to be with him, and the couple mar­ried and ren­ted an apart­ment on Park­er Street.

“Berke­ley was still kind of a reg­u­lar col­lege town,” he re­calls. “There were no drugs that I was ever offered. There was a lot of polit­ic­al activ­ity al­ways on cam­pus; someone was al­ways giv­ing a speech about something, some hor­ror that was oc­cur­ring some­place that we should be aware of and do something about.”

Us­ing \$5,000 the couple had re­ceived as wed­ding gifts, Si­mons set out to in­vest in the stock mar­ket. After see­ing some fairly ho-hum re­turns on his ini­tial in­vest­ment, he went to vis­it his Mer­rill Lynch broker in San Fran­cisco and asked him where he could make some real money. “He said, ‘Yeah, soy­bean fu­tures.’ I think I knew what soy­beans were in prin­ciple, though I’d nev­er seen one. He ex­plained to me the mys­ter­ies of the fu­tures mar­ket and said soy­beans, which were then \$2.50 a bushel, were go­ing to shoot up to \$3 or \$3.50.”

Si­mons ig­nored the ad­vice of a friend to sell im­me­di­ately when soy­beans spiked, and lost on the ven­ture be­fore go­ing back in and re­coup­ing. “So I made that money back and a little bit [more], but I was run­ning back and forth between Berke­ley and San Fran­cisco to watch the mar­ket open,” he says. “It was 7 o’clock in the morn­ing, which seemed like the middle of the night to me. I thought, I’m either go­ing to write a thes­is or trade soy­beans. I can’t do both.”

He fin­ished and pub­lished his Ph.D.thes­is in a pres­ti­gi­ous journ­al be­fore re­turn­ing to the East Coast to do some teach­ing at MIT.

Si­mons began work­ing at the Pentagon’s In­sti­tute for De­fense Ana­lys­is in part be­cause they paid and al­lowed math­em­aticians and sci­ent­ists to work on their own pro­jects in their spare time. Al­though not overtly polit­ic­al, Si­mons was ap­palled when his uber-boss, Gen­er­al Max­well Taylor, wrote a story for The New York Times Magazine in 1967 talk­ing about how great things were go­ing in Vi­et­nam.

“I thought it was a really stu­pid art­icle, so I wrote The New York Times a let­ter say­ing not every­one who works for Gen­er­al Taylor agrees with his views, and I gave my views, which were dif­fer­ent from those of Gen­er­al Taylor,” Si­mons says. “Nobody [at the IDA] said any­thing, but I was clearly on their watch list.”

Shortly there­after, a stringer from New­s­week paid him a call, look­ing for de­fense de­part­ment em­ploy­ees who were op­posed to the war. Si­mons told him that he was only work­ing on his own stuff un­til the war was over, as a sort of pass­ive protest.

“That was sort of my policy, but I was ex­ag­ger­at­ing a little bit,” he says now. “I was kind of a wise guy.” He then told his boss what he had done, who in turn told Taylor, who in turn fired Si­mons. The 29-year-old math geni­us was stunned.

“My title,” he told his boss, “is Per­man­ent Mem­ber of the In­sti­tute of De­fense Ana­lys­is. How can you fire me?”

He was told, “The dif­fer­ence between a per­man­ent mem­ber and a tem­por­ary mem­ber is that a tem­por­ary mem­ber has a con­tract.”

Though Si­mons says his ob­jec­tions to the war were more ra­tion­al than emo­tion­al, the Dom­ino The­ory “just seemed ab­surd to me, and there were all these kids get­ting killed,” he re­calls. “Be­cause I had a child and I was a little bit older, I wasn’t go­ing to get draf­ted. It just seemed a rot­ten busi­ness, so I spoke out against it.” His daugh­ter, Liz, who along with her broth­er Nat later went to Berke­ley, re­mem­bers be­ing in sum­mer camp where all the oth­er kids got candy from home. “I was 10 and the Vi­et­nam War was hap­pen­ing, and he and my mom sent me a whole bunch of peace neck­laces,” she says.

Fresh from his ouster from IDA, Si­mons ac­cep­ted the of­fer from Stony Brook Uni­versity, which then had what he calls an ex­cel­lent phys­ics de­part­ment but a ter­rible math de­part­ment. “But they had a lot of money in those days and they wanted to build math­em­at­ics, and I thought that would be fun.”

And so Si­mons hired and fired his way to mak­ing a first-class math de­part­ment. “I thought it was bet­ter to be a fire-er than a fire-ee,” he told the audi­ence at MIT. But he quickly got bored and left aca­deme, he says now. “I was also in between wives at that point. I didn’t know I was in between them, but I knew I was on the wrong side of the first one. But I met the wo­man who is now my wife,” Mar­ilyn Si­mons, pres­id­ent of the found­a­tion that bears their name.

Si­mons star­ted an early fund with his Colom­bi­an friends, with whom he’d been in busi­ness, and dis­covered again how he dis­liked the vagar­ies of the stock mar­ket. “When you’re a fun­da­ment­al trader,” he says, “one day you come in­to the of­fice and everything has gone your way overnight — Oh boy, I’m a geni­us! And the next day you come in and everything has gone against you and it’s Oh, boy, I’m a dope. It’s kind of stom­ach-wrench­ing.” So he sys­tem­at­ized his in­vest­ments and turned to the world he had come from for his tal­ent.

“We didn’t hire any­one who had worked on Wall Street be­fore,” he says. “We hired people out of uni­versit­ies, na­tion­al labor­at­or­ies; people who were very good sci­ent­ists but who wanted to try something dif­fer­ent. And make more money if it worked out.”

To say it worked out would be an un­der­state­ment. Work­ing with the late al­geb­ra­ist James Ax, who earned his Ph.D. from Cal in 1961, Si­mons cre­ated the Medal­lion Fund, which was ul­ti­mately run en­tirely by em­ploy­ees. Medal­lion is “famed for hav­ing one of the best re­cords in in­vest­ing his­tory,” ac­cord­ing to a 2014 Bloomberg re­port, “re­turn­ing more than 35% an­nu­al­ized over a 20-year span.” Renais­sance Tech­no­lo­gies, which in­hab­its a sprawl­ing, se­cret­ive cam­pus on Long Is­land, had roughly \$65 bil­lion worth of as­sets un­der man­age­ment in 2015, and the people work­ing there have been called “the best math-phys­ics de­part­ment in the world.”

While the com­pany is “still go­ing great guns,” ac­cord­ing to Si­mons, he is not there any­more. “I’m the chair, and I own shares in the com­pany, but I don’t run it.” In 1994 he and Mar­ilyn star­ted the Si­mons Found­a­tion. Sev­en years ago he re­tired from busi­ness to work with the found­a­tion, “and I’ve nev­er been so busy in my life.”

When I ask if there had been some sea change that promp­ted the move, Si­mons laughs and says, “Yes, the sea change was I had some money. You can’t give much char­ity un­less you have some money to give.”

“He likes to put things in that kind of hu­mor­ous way, but he’s al­ways cared deeply about the world and people,” says Liz. “When I was grow­ing up he made sure we all un­der­stood the im­port­ance of think­ing about oth­er people, oth­er people’s ex­per­i­ences.” She re­calls wan­der­ing the streets of Bogotá with him when she was 13. “There was poverty I hadn’t seen be­fore, and he talked to me about it and what it was like to live there, and it made me think about it deeply.”

Today, with her hus­band, Mark Heis­ing, Liz runs the Heis­ing–Si­mons Found­a­tion (the couple met when they were un­der­grads at Cal). She says some of her in­terest in early math edu­ca­tion, which the found­a­tion sup­ports, stems from her child­hood, when math games were what they did on car trips, in­stead of singing “99 Bottles of Beer on the Wall.”

Liz also be­lieves the death of two of her broth­ers had a pro­found ef­fect on her fath­er’s de­cision to de­vote his life to phil­an­thropy. In 1996, his son Paul was killed bi­cyc­ling on Long Is­land, at the age of 34; in 2003, Nich­olas, who had been do­ing vo­lun­teer work in Kat­mandu, drowned at age 24. “It def­in­itely got him in­ter­ested in think­ing through the eyes of his sons: What would they have liked to do in the world,” says Liz.

James and Mar­ilyn star­ted the Nick Si­mons In­sti­tute to train med­ic­al work­ers in Nepal in his name. (“Nick really had his eyes opened work­ing there and said at one point to my par­ents that he felt work­ing in third-world coun­tries was his life,” says Liz.) They also opened the Avalon Park and Pre­serve to the pub­lic on Long Is­land to hon­or Paul’s in­terest in the out­doors.

For all Si­mons’s slightly cur­mudgeonly af­fect, he clearly val­ues com­pas­sion and gen­er­os­ity, but his life and its three acts — math, busi­ness, phil­an­thropy — seem as much guided by curi­os­ity as any­thing. The re­search fun­ded by the Si­mons Found­a­tion is not out­come ori­ented, per se; yes, they would like to find a treat­ment for aut­ism. And they would like to see the math skills of stu­dents across the coun­try im­prove thanks to the found­a­tion’s in­nov­at­ive Math for Amer­ica pro­gram (which has proven very suc­cess­ful in NYC pub­lic schools, in part by aug­ment­ing the salar­ies of teach­ers who qual­i­fy). But he doesn’t fix­ate on the out­come; when your life has taken the kinds of turns his has, why would he?

He points to the framed Chern–Si­mons equa­tion that hangs on his wall — pure Greek to me. (I was re­lieved when I saw him in­ter­viewed at a TED Talk in 2015, and TED cur­at­or Chris An­der­son asked if Si­mons could ex­plain the equa­tion. “No,” he re­spon­ded. “I could ex­plain it to some­body. But not many people!”)

“It’s good math,” he says. “But about ten years after, the phys­i­cists picked it up and it now has a lot of in­flu­ence in phys­ics, in string the­ory and con­densed mat­ter, prac­tic­al phys­ics. I didn’t know any phys­ics; I still don’t know any phys­ics…. So who knew that the math would ap­ply to phys­ics?”

He of­fers the ex­ample of Isidor Rabi, the No­bel laur­eate who dis­covered nuc­le­ar mag­net­ic res­on­ance, the sci­ence be­hind mag­net­ic res­on­ance ima­ging. Sev­er­al oth­er sci­ent­ists built on that dis­cov­ery (win­ning sev­er­al No­bels in the pro­cess) be­fore the the­ory found its use in tech­no­logy.

“All of that took about 50 years,” says Si­mons. “Fi­nally, it turns out Rabi, who was a young man when he dis­covered this first prin­ciple, had an MRI and said he could nev­er have ima­gined that what he did would lead to this med­ic­al ma­chine that would im­age his el­bow or whatever it was that needed an im­age.

“That’s the thing about ba­sic sci­ence: You nev­er know where it’s go­ing to go.”