The CEO of a hedge fund that averaged a 66% return for 3 decades spoke about investing, hiring, and sleeping 2,000 nights in his office. Here are the 11 best quotes.

  • Renaissance Technologies CEO Peter Brown discussed the hedge fund's investing and hiring approach.

  • Brown had the idea for IBM's "Deep Blue," and has spent over 2,000 nights sleeping in his office.

  • RenTech was founded by Jim Simons, a former MIT math professor and Cold War codebreaker.

The boss of one of the most successful hedge funds in history discussed his firm's approach to investing and hiring during a recent episode of the "Goldman Sachs Exchanges: Great Investors" podcast.

Peter Brown is the CEO of Renaissance Technologies, a quant fund founded by former Cold War codebreaker and MIT math professor Jim Simons. The firm's flagship Medallion fund delivered a gross annualized return of 66% between 1988 and 2018.

Brown disclosed that IBM's "Deep Blue" supercomputer was his idea, he's spent more than 2,000 nights sleeping in his office, and he once gave someone a raise in the middle of the night to justify calling them so late.

Here are Brown's 11 best quotes, lightly edited for length and clarity:

1. "I just fell in love with the idea that through mathematics, it might be possible to build machines that do what humans do. Whether it's speech recognition, machine translation, or building large language models, or chess, or making investment decisions, I continue to love the process of showing that human intelligence, intuition, creativity, and finesse are nothing more than computation."

2. "He called me in my office and told me that if I wanted to build a chess machine, he'd put up the million dollars. So, we did. Three friends from graduate school built the machine. I named it Deep Blue." (Brown was recalling his role in creating IBM's famous supercomputer.)

3. "I took one look at our newborn daughter and realized I had no choice in the matter. The decision to leave computational linguistics for a small hedge fund that no one had ever heard of was made purely for financial reasons."

4. "Unbeknownst to my wife, I put our life savings into the company's funds as a way of motivating me, and set to work."

5. "I went into Jim's office and told him that I'd screwed up in not appreciating the risk we were taking, and said that if he wanted me to resign, I would resign. But he responded, 'Peter, quite the opposite. Now that you've been through such a stressful losing period, you're far more valuable to me and to the firm than you were before.' Now, that response really tells you something about Jim Simons." (Brown was recalling the fallout from the dot-com crash.)

6. "Productivity-wise, it's really fantastic being able to spend nearly 80 straight hours each week, with no interruptions except sleep, thinking about work, before spending three more normal days at home. Of course, I really miss my family. But the freedom to concentrate non-stop on work while surrounded by my colleagues is hugely valuable. And the job is so demanding, I really don't see how I could do it otherwise."

7. "It was around 1 o'clock in the morning, and I picked up the phone to call him. And a colleague says to me, 'Wait. You can't call this guy in the middle of the night. He doesn't make enough money.' So, I said, 'Fine. How about this? I'll call him. I'll tell him we're going to give him a raise. And then ask him our question.' And so, that's what we did."

8. "We find it much easier to teach mathematicians about the markets than it is to teach mathematics and programming to people who know about the markets."

9. "Our Stony Brook office is chock-a-block full of highly accomplished physicists, mathematicians, and computer scientists. And our New York office is staffed with accountants and lawyers who make it clear to me every single day that scientists don't have a monopoly on brain power."

10. "We don't impose our own judgment on how the markets behave. We try to remember that we know how to build large mathematical models, and that's all we know. We don't know any economics. We don't have any insights in the markets. We just don't interfere with our trading systems." (Brown noted that occasionally his team will intervene if something is going on in the world that the computers aren't factoring into their calculations.)

11. "Now, as for our secret sauce, of course there's nothing I'd rather do than disclose in great detail all the intellectual property that we've spent decades and billions of dollars creating. But I worry we don't have enough time for that."

Read the original article on Business Insider