The Pirate Pose
by Tom Wolfe
from Condé Nast Portfolio, May 2007
Twenty years after The Bonfire of the Vanities, the author checks in on the new masters of the universe and finds them even coarser and ruder than their predecessors could have ever imagined being.
Not bam, bam, bam, bam, bam, bam, but bama bampa barama bam bammity bam bam bammity barampa FIRE! was the first thing she thought of because nobody ever banged on your apartment door in a building like this nobody would be so impolite as to even rap on your door with his knuckles unannounced in a building like this much less bang on it with both fists for this was not one fist pounding on the door but both fists bama barampa bam bam bammity barampa bam bam—
FIRE! she rose from the 18th-century burled-wood secretary, her grand-mother’s, where she always wrote her thank-you notes and hurried out of the study and across the living room toward the entry gallery absolutely by herself in all these rooms not one soul to look to for help because it was Sunday and her husband was still down in Palm Beach and none of the help, not even the Filipino, came in on Sundays—BAMMITY BAM BARAMPA terribly loud now that she was approaching the door, and an entirely new fear stopped her in her tracks.
Whoever was on the other side of that door was not yelling “Fire!” or anything else. A PUSH-IN ROBBER! She could feel her heart start hammering away in her rib cage. In all their years in this building, nothing even close to a push-in robbery had ever occurred. She had never heard of any such thing at any other co-op on Park Avenue, either. Push-in robberies happened out on Long Island in places like Hempstead and Roslyn or was it North Babylon, the last one she read about? in the Times? more likely the Post.
Now she was in the entry gallery no more than two feet from the door. In what she meant to be a loud, strong voice, she said, “Who is it?”
The banging stopped. With that slow syllable-by-syllable pronunciation most people would save for a cabdriver or some other servitor for whom English was not his first language, he said his name.
She let out her breath and immediately felt her runaway heart get hold of itself. It was merely the new tenant, the man who had the hedge fund with the whimsical name and “more money than God,” as her husband had put it, but why on earth was he creating such a ruckus?
Ever so gingerly, she opened the door. He was a meat-fed man wearing a rather shiny—silk?—and rather too vividly striped open shirt that paunched out slightly over his waistband. The waistband was down at hip-hugger level because the lower half of his fortyish body was squeezed into a pair of twentyish jeans—prefaded? distressed?—were those the right terms?—gloriously frayed at the bottoms of the pant legs, from which protruded a pair of long, shiny pointed alligator shoes. They looked like weapons.
“Oh,” she said. She started to add, “Please come in,” but the look on his face made her worry that he might do just that.
Without any preamble, no “Excuse me” or even “Hello,” much less “How do you do?”—and they had never had any communication other than a nod once on the elevator—he said, “I need to speak to your husband.” It was the sort of commanding voice that makes it clear that I need what I want—now.
Meekly: “He’s not here.”
Accusingly: “Where is he?”
It was none of his business, but he was so overbearing she heard herself confessing, “Palm Beach.”
The big man in the ridiculously tight jeans looked at her with his mouth open and his eyebrows squeezed together as if she had just told him something not only astonishing but implausible, beyond the boundaries of reason.
“I’ll probably be talking to him later on. If you’d like, I could tell him—”
“Ahhh … no,” he said in a lower, calmer voice. He suddenly turned his head away from her. Something had caught his eye. “Nice voz. Tiffany, right?”
It took her a moment to realize he meant “vase,” the vase on a little table in the entry gallery. Why he had pronounced it the French way she couldn’t imagine. She answered in a toneless voice, “No, I don’t think so.” In fact, it was older and considerably more precious than a Tiffany, but she hadn’t the faintest desire to prolong the conversation with any discussion of the higher ceramics.
“Looks like a Tiffany,” he said. He turned as if to leave but then swung back. “Maybe you could pass along one thing—for when he comes back from Palm Beach.” He gave the Palm Beach a certain edge, as if her husband’s being in Palm Beach were a pretentious or perhaps slothful and decadent act on his part. “Tell him I hope he’s having a good time. What’s the name of that club they have there, the Everest or something?”
“The Everglades”—and as soon as the words passed her lips, she knew she should have feigned ignorance.
“Well, tell him I hope he’s having a nice time at his club in Palm Beach, because my wife and I are having a lousy time in our apartment in New York.”
“My goodness. What’s happened?” She immediately regretted asking that too.
He took a deep breath … and then … a red storm blew.
“What’s happened? What’s happened is, I just spent $200,000 on a state-of-the-art positive-pressure HVAC system in our apartment, and I’ve gotta put in new windows to make it work right, and I gotta put four vents, four lousy little vents, through the walls of this building, which nobody’s ever gonna notice—and I’ve gotta do it now—AND THE BOARD IN ALL ITS AUGUST WISDOM IS BREAKING MY—OBSTRUCTING ME EVERY INCH OF THE WAY!” He paused. “Nawwww … don’t tell him that. Just let him enjoy himself in Palm Beach … at the club.”
“Well. I don’t—”
“Of course you don’t. Why should you? Right? He’s the one who’s president of the board, and so why should—” He stopped abruptly.
“Well, in any event—”
He trampled the any event too.
“When we moved into this building, we were told this was a first-class building. We were told this building was ‘prewar.’ That’s all we kept hearing, ‘prewar,’ and they don’t build them like this anymore. Okay? But they didn’t tell us it also has a bunch of obsolete rules that are prewar too. Prehistoric is more like it, if you want my candid opinion.”
“I’m afraid that’s not—”
The that’s not got flattened. “The board of this building is like quicksand. You put one toe in”—he lifted one of his weapons and pointed the toe down with a mock prissiness—“and it SUCKS YOU ALL THE WAY IN UP TO YOUR ARMPITS, AND YOU CAN’T MOVE! AND I’LL TELL YOU ANOTHER THING: IT’S NO USE TRYING TO BE NICE AND ACCOMMODATING AND REASONABLE IN THIS BUILDING! WE TRIED THAT, AND YOU CAN SEE HOW FAR IT GOT US! NEW WINDOWS, WHICH WOULD IMPROVE THE FREAKING BUILDING, AND FOUR LOUSY LITTLE DUCTS IS ALL WE’RE TALKING ABOUT. LOOK, WHETHER ANY OF YOU PEOPLE LIKE IT OR NOT, WE LIVE HERE. I PAID A FREAKING FORTUNE FOR THAT APARTMENT! OKAY? THAT’S WHERE WE LIVE, AND YOU PEOPLE ARE RUINING IT FOR US! TELL HIM THAT! Okay?”
She shut the door in his face. She was indignant, but that wasn’t the reason she shut the door. She shut the door because she was afraid. The man was beginning to sizzle like a fuse, and she didn’t want his face to be in hers when he exploded.
A few days later, she happened to be sitting in her study recounting this story to an acquaintance. She asked him, “What do you suppose he meant by all this ‘you people’ business? It’s like they all have a big chip on their shoulder. What is it that makes these people so angry and nasty?”
These people are hedge fund managers such as the bratwurst in blue jeans we just met, private equity fund managers (who have become increasingly indistinguishable from hedge fund managers), stock and bond traders (but nobody else in the investment banking firms they work for—especially not that pathetic creature the C.E.O.), and various lone-wolf entrepreneurs such as real estate developers. Everybody who cares at all knows their occupations, but what’s their problem?
There are some heavy-hitting Medicare-qualified hedge fund managers, notably Carl Icahn, 71, and the home run king, T. Boone Pickens, 78, who made $1.5 billion—personally—in a single year, 2005. But most of these people are in their late thirties and early to mid forties. For men making, in many cases, tens of millions and up per year, they qualify as young. They talk about business in young-warrior metaphors: “pulling the trigger” (making huge risky bets on the market); “mowing them all down” (overpowering companies that try to block your strategies); “This is war!” (get out of my way—or else I’ll make you suffer); “Surrender your booty!” (I’m a corporate raider poised to take over your company); “We don’t eat what we don’t kill” (if you, the investor, don’t make a profit, then we in the hedge fund’s management don’t take a profit ourselves, something oddly true in spirit although, as we shall soon see, not in fact). These people tend to be bright and well-educated, many at Harvard, Princeton, and other top-ranked colleges. They come from well-educated families. They still enjoy the virgin animal health of youth. They are flush with optimism and confidence, as well as money. With all that going for them, what inna nameagod is their problem?
THE BAFFLEMENT REACHES ITS PEAK IN New York City’s Connecticut commuter towns, Stamford, Norwalk, Westport, and especially Greenwich. With its manicured-bucolic wildernessless-woodsy rolling hills and arboreal dells, all ornamented by mansions and irrigated by cash flow, Greenwich is now headquarters for more than 100 hedge funds handling just about $100 billion, nearly one-tenth of all hedge fund money in the world. This town of 62,000 has become the Wall Street of hedge funds.
The collision of new money and old money or, to be more accurate in our American context, slightly older money, has been a recurring drama. At the turn of the 20th century, Edith Wharton established herself as perhaps America’s greatest female novelist by focusing on precisely that. But the current new breed stands apart from all the rest for two reasons.
First, they have more money, infinitely more, than any of the various waves of new money that preceded them, with the possible exception of robber barons on the order of John D. Rockefeller, who, incidentally, was regarded as a rude Pocantico hillbilly Baptist by society in New York a hundred years ago. Hedge funds have what investment managers call “the greatest business plan of all time,” known as “2 and 20.” Each year the typical fund takes 20 percent of the return plus 2 percent of the total investments. Some of the hottest managers, such as Icahn and Stevie Cohen, reportedly take 50 percent of the profits.
In 2005—the figures for 2006 are not yet available—Cohen’s SAC Capital Advisors, of Stamford (he himself lives in Greenwich), made an 18 percent profit on its investors’ $8.5 billion, meaning that Cohen’s income for that one year was in the neighborhood of a billion dollars. This and the figures that follow are the calculations of Trader Monthly and Alpha magazine, a niche publication created for the hedge fund industry. No magazine was ever named with greater psychological accuracy, as we are about to see.
Neck and neck with Cohen were James Simons of East Setauket, New York (between $900 million and $1 billion), and Paul Tudor Jones II of Greenwich (between $800 million and $900 million). Further back in the field, nose to nose at $500 million to $600 million each, were Eddie Lampert of Greenwich and Stephen A. Feinberg and Bruce Kovner of New York City. But all six were far, far behind the old man, T. Boone Pickens, who you’ll recall made $1.5 billion in 2005.
Second, hedge fund managers are possessed by a previously unheard-of status fixation. The bellowing door-banger had that status fixation and then some. In Greenwich such characters are not shoehorned into the same buildings as ordinary rich people, which is to say, those with older and far less money. Given Greenwich’s zoning, these people are not likely to express that status fixation neighbor to neighbor. It comes out in other ways.
While fathers all over America tend to become overzealous, even violent, these days in trying to turn their children into little sports superstars, in Greenwich a father who is one of these people will try to take control of every element in a game: his child’s teammates, their coach, the opposing team’s coach, its players, and most definitely the referees. In a famous instance, one of these people came to watch his teenage daughter play in an ice hockey game against a team from neighboring Port Chester, New York, a town known in Greenwich as the place where one’s plumbers, electricians, computer swamis, roofers, glaziers, air-conditioning mechanics, wall-to-wall-carpet humpers, and household servants live. The man began bellowing so loudly, nobody at the rink could shut out the sound. He upbraided the referees for their poor eyesight and worse judgment. He told his daughter’s coach how to play her and all her teammates and kept him abreast of his mistakes in strategy. He scolded the Port Chester coach and the players for their incessant cheating and malicious roughness. Finally a Port Chester player, a big girl, an Amazon on ice, skated to the stands, charged up the stairs on her skates, and accosted the Mouth, putting her gloved fist six inches from his face and saying, “If you don’t shut the fuck up, I’m gonna come back and beat the shit outta you!” He shut up.
The tales are endless: the hedge fund founder desperate to get his son into one of Greenwich’s socially swell private schools who clips a six-figure check to the first page of the application, witlessly forcing the school to reject both his son and his check or lose all credibility—
The lone-wolf entrepreneur who keeps an old-money matron and charity fundraiser waiting outside his office in Greenwich for an hour, remains reared back in his chair with his feet propped up on top of his desk as she comes in, listens to her pitch with his feet on top of his desk, utters a sum total of two words, “Not interested,” with his feet up on top of his desk, and offers no farewell, not even a Godspeed tap-tap of the shoes on his feet up on top of the desk—
The many of these people who spend entire meetings with eyes cast down at their BlackBerrys, thumbing out text messages to God-knows-what-people elsewhere—
The hedge fund manager who, during a 40-minute meeting, takes four telephone calls from his wife on the subject of a dinner party they’re planning, down to the level of who should sit next to whom, whether to serve the champagne in the new flutes or the art deco bowl-and-stem glasses, whether or not endive works as an hors d’oeuvre or is it a little too bitter?—
The hedge fund managers who hold meetings with their shirttails hanging outside their jeans, like college boys—
The former manager of Tremont Capital Group who came to meetings with the fund’s investors barefoot—
The twinkie wives of these people who arrive at real estate offices seeking to-die-for houses and apartments wearing jeans and stiletto-heel boots, with gotta-be-blond hair streaming down to their shoulder blades, holding a baby on a cocked hip with one hand and a cell phone to the ear with the other while a limousine waits outside, motor running—
The twinkies who have their eggs fertilized by their husbands’ sperm in a laboratory, creating embryos for implantation in the wombs of surrogate mothers who are paid to manufacture children for delivery in nine months, since why on earth should any wife whose husband is worth a billion or even $500 million have to endure the distended belly, bilious mornings, back cramps, not to mention a cramped social life, to end up with her perfect personal-trainer-sculpted boy-with-breasts body she has spent thousands of sweaty hours attaining, ruined … tempting her husband to survey all the little man-eaters out there, including those former wives who used to meet regularly at the Boxing Cat Grill until it burned down, whereas the current wives leave their husbands catatonic before the plasma TV and meet three or four times a week at one local bar or another and drive home in their Hummers and bobtail Mercedes S.U.V.’s, bombed out of their minds, while waiting for the baby to come from the factory—
Whenever such rich gossip is repeated, somebody invariably says, “Who are these people?”
MANY PROMINENT HEDGE FUND MANAGERS are Jewish, and on Round Hill Road and Pecksland Road in Greenwich, as well as on Park and Fifth in Manhattan, there has arisen, like a breeze after dark, the sibilant sound of people with social cachet whispering to one another, behind the hand, variations on the theme “Some of my best friends are Jewish, but … ”
Mercifully, such statistical breakdowns don’t exist, but it would appear that no extraordinary fraction of hedge fund managers are Jewish. There are some 9,200 hedge funds spread all over the world. New York and Greenwich are the two great centers, but the top 100 as rated by Institutional Investor include funds strung out from Paris to London to Boston to East Setauket to Dallas to Los Angeles.
The common denominator is something else entirely: that status fixation. Virtually every hedge fund manager has it, but many hedge fund managers are perfect gentlemen, so well do they restrain the fixation. Paul Tudor Jones II and Stephen Mandel, for example, are two of Greenwich’s universally respected citizens. Mandel is well known for his often anonymous gifts to charities and his support of the Children’s School in Stamford. Paul Tudor Jones II founded the Robin Hood (as in take from the rich and give to the poor) Foundation for poor boys and girls, which is one of the most widely admired and heavy-heavy-heavily supported new charities. Paul Tudor Jones II being one of them himself, all these people feel wanted at his lavish Robin Hood fundraisers.
For its black-tie fundraising auction last June at the Javits Center in New York, the foundation booked Beyoncé, Jon Stewart, and Jay-Z as celebrity lures. They lured well. Four thousand hedge fund souls showed up, so many that each bidder had to use a glow-in-the-dark wand in order not to be lost in the crowd. But the real draw was Paul Tudor Jones II himself, who has turned this annual fundraiser into the party of the year in the hedge fund fraternity.
The auction began and the glow-glow wands went up in the air like swarms of fireflies. There were only seven auction items—and none of them was anything you could take home or possess in any fashion. You could only consume them. The prospect of 10 “power meals,” each with a different financial superstar, among them Steve Cohen, Henry Kravis, Barry Diller, and Paul Tudor Jones II himself, went for $650,000. A five-day “Surf and Sun” trip featuring surfing, sailing, fishing for sailfish and marlin, windsurfing, snorkeling, and golf plus pampering at an “ultra-exclusive boutique” resort in Anguilla brought $420,000.
The other five auction items, two of them trips by private plane to exciting and/or glamorous places and the others exclusive private visits with “living legends” of pop music and the art world, for example, went for a total of $1.42 million. In other words, the Robin Hood Foundation bulked up by $2.49 million for seven ephemeral “experiences.” Quite aside from the auction itself, 528 individual and corporate donors, most of them Paul Tudor Jones II’s fellow hedge fund managers, gave millions more.
Paul Tudor Jones II’s status fixation showed up only in the way he literally stole the show that evening—no small feat considering the wattage of the show’s auction celebrities: master of ceremonies Jon Stewart of The Daily Show, and the most prominent auctioneer in the business, Jamie Niven of Sotheby’s.
Midway through the auction, in an intermezzo, out comes Jay-Z, the rapper. A bunch of poor children come up on stage, and Jay-Z leads them in what is meant as an inoculation against gangsta rap, namely scholar rap, featuring a number called “Read, Baby, Read.” Jay-Z departs without rapping himself, leaving that to this evening’s Big Rapper: Paul Tudor Jones II.
As soon as the auction is over, Paul Tudor Jones II comes fairly bouncing out upon the stage in his black-tie outfit, thanking one and all for the auction’s success—but adding that he knows a crowd like this one can give more.
With that, he goes into a hedge fund hip-hop dance routine and raps out lyrics that begin, “If you wanna get, then you gotta give … ”
The Paul Tudor Jones II Show so excites one man, he stands up in the audience, wand aloft and all but blazing, and cries out, “I pledge $1 million!”
A spotlight beam turns him into a luminous figure in a herd of black-tie people. In short order, 11 more wands shoot up in the air. The Big Rapper has scored $12 million, just like that.
He cries out, “Who’ll give enough to provide more classrooms for these kids?” meaning the charter school the foundation wants to build for needy children such as the “Read, Baby, Read” rappers.
Now Day-Glo wand wavers start popping up from seats all over the place. In no time, he has 30 pledges to underwrite classrooms, which, it so happens, cost $250,000 apiece, and Paul Tudor Jones II is not through yet.
“Joel Klein!” booms Paul Tudor Jones II. “Where are you?”
The spotlight beams upon a glistening pate rising from a seat.
“Chancellor Klein!” Paul Tudor Jones II cries out. “Thirty new classrooms! Will the city promise to match that?”
Under the gun, looking very small compared with the Big Rapper up on the stage, what else can he say? The New York City chancellor of education emits an unsteady “Yes.”
Yet greater applause. Assuming the city actually comes through, the Big Rapper has raised $27 million in a matter of minutes, bringing the total for the evening to an astounding $48 million.
Paul Tudor Jones II says, “Jay-Z, where are you? Stand up, Jay-Z, stand up!”
The spotlight picks up Jay-Z as he rises from a seat in the rear, reduced to doing the bidding of this overpowering white hambone looming above him.
“God bless you, Jay-Z,” says Paul Tudor Jones II, “God bless you!”
Applause, applause … Jay-Z stands there in the spotlight beam, diminished, obedient, looking like a 14-year-old boy who has just won the Latin prize.
With that, Paul Tudor Jones II had pulled back the covers, revealing a few fascinating inches of these people’s status fixation. Everything about his performance as much as said, “I’m a lone lean wolf and a one-man show. You can’t really delegate even the entertainment for an important evening like this to show-business professionals. In the end, as is the case with my five hedge funds, only I, the lone lean wolf, can pull it off.”
So the No. 1 requirement of these people’s status fixation is total control—by me.
The 41-year-old hedge fund founder Tom Hudson dramatized a second. He struck a Blackbeard pose right out in the open—Blackbeard, the pirate who took what he wanted and was accountable to no one. When Hudson launched his company in Norwalk in 2002, he named it Pirate Capital and called its hedge fund the Jolly Roger. Outside the door to his office he installed a life-size wooden figure of a storybook pirate, in full color, wearing all the pirate’s rig: the patch over one eye, the golden hoop earring through one earlobe, the tricornered hat, Captain Hook’s hook instead of a hand on one arm, the pantaloons, the peg leg, and the cutlass. He handed out baseball caps and T-shirts emblazoned SURRENDER YOUR BOOTY!, which was funny but no joke.
He sent that very message in all seriousness to the C.E.O.’s of corporations against which he conducted pirate raids, for he was the archetype of the hippest, coolest, most daring, take-no-prisoners hero of the hedge fund fraternity, the “activist shareholder,” also known as the guerrilla investor. The pirate, the activist, the guerrilla uses his fund to buy 5 percent or more of the shares of a public company. At this point he is required to “file a D,” which means make a public filing of that fact with the Securities and Exchange Commission under regulation 13D of the Securities Exchange Act of 1934. The true pirate will include a letter—which also becomes public—attacking the corporation’s C.E.O.
Hudson was the greatest pirate showman, but the pirate poet laureate, the Dante of the 13D, was Daniel Loeb, manager of a fund called Third Point. In his most famous 13D, he began his raid on energy company Star Gas by saying he had known the company’s C.E.O., Irik Sevin, “personally for many years” and had found him to be a “craven” blundering hulk of “ineptitude” who had used the company as his personal “honeypot,” putting his “elderly 78-year-old mom” on the board and the payroll at $226,000 per year while costing the shareholders $570 million in “value destruction,” making him “one of the most dangerous and incompetent executives in America.” He pitied any Cornell University student granted an Irik Sevin scholarship and thereby suffering “the indignity of attaching your name to his academic record.” After this sort of shot over the bow, the pirate demands a seat on the board, the sacking of the greedy fool, and the sale of the company in order to maximize the shareholders’ investment.
Or as Loeb put it, “It is time for you to step down as C.E.O. and director so that you can do what you do best: retreat to your waterfront mansion in the Hamptons where you can play tennis and hobnob with your fellow socialites.” Loeb seemed to presume that every C.E.O. he went after was a “socialite” belonging to some exclusive “club” and engaging in such “aristocratic” pastimes as grouse shoots on the weekends. Throughout his poetic pirate prose, which had eager fans online all over the industry, Loeb seemed to especially resent these nobs who hobnobbed with other snobs and looked down on the mob from the eminence of their clubs.
And it works! It is amazing how often the pirates have had their way! Sevin resigned three weeks later.
So requirement No. 2 is aggressiveness—and the willingness to engage in outright personal hostility and open aggression.
Practically all of these people love the pirate pose, not because they’re out for ill-gotten booty—although many of their detractors would dispute that—but because they love the image of the pirate as freebooter. The freebooter’s success does not depend on that machine for work known as bureaucracy. His success is all his. Some huge funds operate with fewer than 20 people.
That is why we could choose leafy, green-and-gold Greenwich for our headquarters. Greenwich doesn’t have a single tall building. We don’t need tall buildings. We don’t need Manhattan’s 40-, 50-, 60-story human silos filled with piles of employees. We don’t need Merrill Lynch’s 41-story building in the World Financial Center. We are mean, lean (psychologically, in any event), stripped down for action.
So requirement No. 3 is complete, freebooting independence.
The freebooters have only contempt for other types of money managers, who always play it safe. They reserve a special scorn for mutual fund managers, a breed they call “pure vanilla.” Corporate C.E.O.’s don’t come off much better, not even “superstars” such as Lee Iacocca and Jack Welch. (What’s the big deal about Iacocca? His Chrysler “turnaround” depended on a government bailout. And Welch—you would have to be a pretty dim bulb, in a manner of speaking, not to be successful with General Electric, which is part of the business world’s wholly rock-solid trinity, along with Otis Elevator and the Federal Reserve.) C.E.O.’s are people who expend their energies in binges of insincerity, holding the hands of shareholders and board members, constantly “negotiating” with government, with labor, and with God knows who else, constantly temporizing, compromising—resorting to flattery and “charm,” both of which are unmanly—striving to look dignified, clad in the obligatory dark suit, white shirt, and red or Arctic-blue necktie. That goes for C.E.O.’s and everybody else who works in investment banking, for the Merrill Lynches and Morgan Stanleys, with one exception: the traders.
THE TRADERS ARE ON THE FRONT LINES moment by moment, pulling the trigger with only seconds to think about it. They are our kind! They are aggressive—real men! Their plain vanilla C.E.O.’s know it too. They will pay a daring, battle-hardened trader $50 million and up per year to keep him from defecting to our pirate fleet. They pay them more than they pay themselves, because they are worth more, because they are real men, because they are willing to fight.
What idiot thought up “boards of directors” anyway? My board of directors consists of me, myself, and I. My investors don’t have to love me. I don’t have to charm them. I have to do one thing and one thing only, make them money. That and only that will make them happy. Few souls have the nerve to ride the risks I ride, to make pirate raids and insult pompous fools wherever I find them. My employees don’t have to love me either. Barton Biggs, a hedge fund manager himself, writes in his book Hedgehogging that hedge fund managers tend to be screamers. Okay, so I’m a screamer, but I WANT EVERYBODY ON MY SHIP TO KNOW THAT WHEN THEY MAKE A MISTAKE OR WASTE TIME, THEY ARE NOT LETTING DOWN SOME FACELESS, INCORPOREAL “CORPORATION,” THEY ARE INSULTING ME—PERSONALLY—AND I’M NOT GONNA STAND FOR THAT!
Look at me. Look at what I wear: the frayed jeans, counterpoint to my $1,250 custom-made silk shirts with French cuffs and gold cuff links, monogrammed, and no necktie, needless to say. The frayed jeans and the rakish open shirt thumb my nose at the rule-bound, convention-bound, bureaucracy-bound, socially ambitious, propriety-crippled lives of the “great” corporate leaders.
Look at their bewattled, plain vanilla faces—then look at my perpetual tan. Perpetual! I have my own plane and crew, and I can pursue the sun to wherever in the world it shines upon the earth at an early-June-like angle at any given moment, below the equator or above. It’s my money, my airplane … and it’s my face that is golden-tan perfection 365 days a year, while the C.E.O.’s skulk off to the good life in company planes with the name painted over, lest they be accused of soaking up the shareholders’ dividends along with the sun. Look at the big monogrammed buckle on the belt of my jeans, solid gold, from Tiffany, with my monogram, my $6,000 jacket custom made on Savile Row, my $5,500 pair of bespoke alligator shoes by G.J. Cleverley of Old Bond Street. I strike the pose of the bohemian, the freebooter, and yet they know that I am pure gold, a golden creature who can buy them and sell them or snuff out their livelihoods anytime I like. And I am more than willing to do it … those soft, lazy hooples hanging like sloths inside their “clubs.”
Which of them would have the nerve, the coolness, the … big stones I have, stones big enough to pull the trigger and bet billions—billions—on some esoteric derivative such as a weather future or a knockdown? None of them, or they would be doing it themselves. Which of them would be willing to buy—or borrow—a billion dollars’ worth of a company’s stock simply to jimmy his way onto the board and (quite legally) force it to sell itself for my benefit, whether I intend to cash in on its rise in value or its decline if I’m selling short?
Many of us have pulled off the big coups. Many of us have had the nerve, the aggressiveness, the independence, the heart and stones that being the stones-out Delta commandos of capitalism requires—and have made our billions, our multibillions. So what is our social payoff? How is our stature to be known publicly and celebrated in the form of social prominence, eye-popping reputations, honors, medals, appointments as ambassadors with The Hon. before our names forever after?
ON JANUARY 27, IN THE GRAND BALLROOM of the Pierre hotel in New York, at his stepdaughter’s wedding reception, the pirate raider of all pirate raiders, Carl Icahn, went up on a bandstand looking out over the dance floor, an island of hardwood in a sea of guests at tables with breathtaking centerpieces—huge glass bowls of candles intertwined with flowers. In the course of a toast to the bride and groom and his wife, who had arranged everything, he also included the guests, according to one of them, and merrily pointed out a fascinating detail: “You have no idea of the logistical problems that had to be solved before we could hold this happy event. I mean, when you have nine billionaires in the room, how do you provide the best seats in the house for all nine? How do you treat them all equally?”
The logistical problem seemed to have been that guests originally assigned seats by the dance floor had to be reassigned to the rear to make way for the billionaires. Not that many knew or cared, of course, for this was a remarkable phenomenon: nine billionaires ringing a dance floor. A virtual summit of the richest men on earth! Remarkable … but what did it represent socially? On the face of it, it was hard to say.
Where’s the status symbolism? The memberships in the Knickerbocker, the Brook, and the Union Club? The guaranteed admission of our children to Chapin, Brearley, Trinity, Collegiate, Greenwich Country Day, Brunswick, Harvard, Yale, and Princeton?
Are we not bona fide swashbucklers, freebooters, and buccaneers who have triumphed in great adventures? Have we not demonstrated our aloofness from the rules that constrain C.E.O.’s and other timid people? Have we not been aggressive fighters who have done things no one ever dared before? Have we not demonstrated the strength to make the unwilling withdraw in fear and do things our way? Do we not have proven, tested nerves of steel? Have we not shown the world how big our swinging dicks and swaying stones are? Yes, yes, yes, yes, yes, and yes.
In sum, are we not the very embodiment of the “animal spirits” John Maynard Keynes was referring to when he said that only the instinctive “naive optimism” of men endowed with “animal spirits” could generate the sort of confidence that is crucial for economic prosperity? In these rare but essential souls “the thought of ultimate loss which often overtakes pioneers … is put aside as a healthy man puts aside the expectation of death.”
Keynes had no idea where these animal spirits came from. Too bad he didn’t live into the 21st century! He could have studied us and solved the mystery and died a happy man! Animal spirits, ils sont nous!
All right, granted, sometimes the animal spirits in us, so essential for economic prosperity, may burst out in forms that people with less-powerful spirits may interpret as “brusque,” “rude,” “loud,” “vulgar,” “impolite,” and “thoughtless,” but many more of us know how to control them and are considered genteel. Unfortunately, none of us can wear a sign around his neck saying NOTICE: I AM ENDOWED WITH THE ANIMAL SPIRITS NECESSARY FOR THE PROSPERITY OF OUR NATION AND DESERVE LATITUDE IN MINOR EVERYDAY MATTERS.
True, all too true. Somehow the members of the Knickerbocker, the Brook, the Union, and the Leash, for that matter, do not seem too keen on recruiting people infinitely richer than they are who pride themselves on their aggressive nature and will happily see to it you enjoy doing things their way; even less so, the three clubs that count, socially, in Greenwich, the Round Hill Club, the Field Club, and the Greenwich Country Club. The country club is bigger and doesn’t seem as picky as the others, but it is not eager to welcome these people.
So what? We will build our own clubs! Our own sports emporia! Our own resorts! We will outdo the wobbly too-tall old elite with their scrubbed-wood aesthetic left over from the early days of the 20th century. Have you ever actually been inside that Round Hill Club they’re so proud of? The worn wood, the rickety sashes, the tired paint, the failing fabrics, the cracked leather—the place is falling apart, the way we see it. (We’re capital-M Modern.) Imagine how it would look if it were set beside Stevie Cohen’s own 32,000-square-foot clubhouse and 14 acres of grounds! Next to Stevie’s art collection—which is nothing less than a world-class museum!—Stevie’s indoor basketball court, year-round swimming pool under glass, his gym, his spa facility, his theater for movies and every other electronic medium, his hair salon, two putting greens complete with sand traps and a fairway in between, and, as the pièce de résistance, an ice rink the size of Rockefeller Center’s with a 30-by-24-foot rink house for the Zamboni! Clubhouses? We’ll show you clubhouses!
The only thing missing is an entire 18-hole golf course. There is always the Burning Tree Country Club, whose membership is largely Jewish, nearby, but who has to bother with “nearby”? When we want to play golf, we just go over to the Westchester County Airport, where our Gulfstreams, Falcons, and full crews fly us anywhere in the world to play on courses that make the Greenwich Country Club look like miniature golf. Every weekend? Anytime we want!
As for the co-op buildings in New York, their residents having felt already burned by the fabulous new money, some are now considering new screening devices. The “good buildings” have traditionally required full financial-disclosure statements, certified by C.P.A.’s, to make sure applicants have enough money. The board of a building on Park Avenue is now considering rejecting applicants who have too much money. These days, when a personal net worth punches a hole in the earth’s atmosphere, it invariably signals one of these people.
In Greenwich, the two charities with old-money cachet, namely the Boys and Girls Club and Greenwich Hospital, will gladly accept these people’s money but don’t seem to have them on their boards. So these people’s money goes mainly to the Bruce Museum, which has no such scruples. The Bruce Museum’s Renaissance Ball is perhaps the most lavish party of the year in Greenwich.
In New York there are now, as there have been for 125 years, two cracks in the “walled city,” as Theodore Dreiser called it in Sister Carrie, through which new money can slip: charity and the arts.
But these people keep getting stuck halfway. On the art front, they soon realize they have a problem. New York’s great cultural repositories, the museums, libraries, and performing arts centers, have a social hierarchy. To use an N.C.A.A. analogy, there is Division I, consisting of (1) the Metropolitan Museum of Art, (2) the New York Public Library, (3) the Museum of Modern Art, and (4) the Frick Collection. From that elevation it is a terrifying plunge in status to Division III: the Whitney Museum, the Guggenheim Museum, Lincoln Center, the Museum of Natural History, the Morgan Library, the Museum of the City of New York, and the New-York Historical Society. There is no Division II.
All these institutions are dying to get their hands on the stupendous palletloads of money that socially ambitious hedge fund managers have amassed. The Division III institutions can’t resist. For example, 43-year-old David Ganek of Level Global Investors is not only on the board of the Guggenheim, he is treated as a star. He is touted as having assembled a breathtaking art collection of his own, of the Richard Prince, Jeff Koons hot-now variety. He was co-chairman of the museum’s annual benefit extravaganza in November and appeared onstage with Mayor Michael Bloomberg and celebrity lure Dennis Hopper. The party brought in $4 million, which made the museum’s director ecstatic.
On the other hand, it was anemic compared with the Robin Hood Foundation’s $48 million. That may explain why another Division III board, Lincoln Center’s, has made Bruce Kovner of Caxton Associates vice chairman and featured star. Kovner has donated $20 million (as well as $25 million to Juilliard). He is also head recruiter of other hedge fund managers. Last year, he convened a breakfast meeting in his office with six of them, including Steven Mnuchin of Dune Capital and Eric Mindich of Eton Park, both of whom are also on the Division III Whitney’s board.
Lincoln Center’s gratitude to Kovner knows no boundaries—except possibly for a single tiny leg up he accomplished in all innocence. There were old-money sorts on the board who rolled their eyes in a northerly orbit the time he sat down at a meeting and slung one leg over the arm of his chair.
Only halfway, halfway, halfway … These people have yet to actually make it into the walled city and onto the boards of the Big Four. Steve Cohen has a $3 billion fortune, according to Forbes, and a huge collection of Modern and contemporary art reportedly worth $500 million one day and $750 million the next. That may be so, and the Museum of Modern Art would no doubt like to have some of both, but Cohen has gotten no further at the museum than its paintings-and-sculpture-acquisition committee. Ganek, likewise, has made it to the Metropolitan Museum’s photography committee, and that’s it for him.
Edith Wharton’s New York new money, embodied by Undine Spragg in The Custom of the Country, wanted nothing so much as to replicate the status symbols and customs of old money—the architecture, the art collections, the country estates, the dress, manners, politesse, sophistication, worldly wisdom—in order to achieve certified respectability. But we can assume no such thing about our new hedge fund money. Getting in socially in the Edith Wharton sense may be part of their ambition, but it crashes head-on into their most cherished values, their very status fixation. The animal spirits that have brought them their astounding fortunes and, equally important, honor in the eyes of one another practically guarantee that they will be shut out of places like the Knickerbocker, the Brook, the Union. For that matter, even a much younger, hipper club, such as Soho House, hasn’t welcomed them either—and these people thought they would fit right in.
So in the spring of 2005, they opened their own club, the Core Club, in midtown Manhattan, a club to beat all clubs, a billionaires club. No amenity would be regarded as too over-the-top. Every member working out in the club’s fitness center would have a butler at his elbow. To do what, was not immediately evident. Nevertheless, the prospects of the ultimate club seemed so swell, 100 people ponied up $100,000 each as “elite founding members,” reported a wide-eyed Time magazine. Each of the 400 other members—500 was the limit—agreed to pay an initiation fee of $55,000, staggeringly high for an in-town, indoor club, plus $1,000 a month in dues, meaning the club would take in $6 million a year in dues alone. The membership was a royal assortment of hedge fund managers and suchlike: David Ganek, Richard Perry, Stephen Schwarzman, Barry Rosenstein, Teddy Forstmann, Bruce Wasserstein, plus a few female celebrities such as Patty Smyth and Fergie, Duchess of York, plus—ahhhh, the poetry of status justice!—the bitterest and most poetic mocker of private clubs in our time … Daniel Loeb! Daniel Loeb … club man at last! The club remains flush with cash and Croesuses. Some have been saying, however, that there are reports that the members are not exactly wild about going to the club to beat all clubs anymore.
If so, the reason is not hard to find. At the Soho House, and wherever else the younger smart set convenes, the Core Club is now known as the “club for people who can’t get into clubs.”
Corrections: An earlier version of this story misstated the title of Trader Monthly and gave the wrong location for Merrill Lynch’s headquarters, which are in Manhattan’s World Financial Center.