YouSaid · the spoken record

Peter Brown

lines on the record: 50
first: 2023-09-11
most recent: 2023-09-11
sittings or episodes: 1
sources: podcast

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“I then went on to point out that two years later we crushed him. Now, I'm not sure that's how things will evolve, but whether it's in 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.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Into deep blue. In the first match, the IBM machine was a very weak machine, weak physically. You know, I think only one special purpose chip in it, and we lost. The final match, however, was a different story. IBM had a much, much stronger machine with hundreds of special purpose chess chips. IBM won that match, and IBM stock jumped $2 billion afterwards. Of course, it fell back down later. Now, a few years ago, I was asked to speak at the Harvard Business School. And when I arrived outside the auditorium, I could see all these protesters. And I thought, oh no, why are they protesting? What have we done? Is this something I'm not aware of? I really didn't want to do that. But as I got closer, I could see they're all holding signs about investing in Puerto Rico. And I thought, what is this all about? I was totally confused because I didn't think we had.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Wow. Okay. I had been at IBM for a year or two and I was standing in the men's room one day when the vice president of computer science, a man named Abe Pellet, walked up next to me. I thought to myself, now's my chance. I turned to him and said, Dr. Pellett, do you realize that for a million dollars we could build a chess machine that would defeat the world champion? Think of the advertising value to IBM. He turned to me looking kind of annoyed and said, what's your name? So I told him, and then he said, could you please let me finish up here? And so I thought, wow, I had made a big mistake. So I apologized and I high-tailed it out of there as fast as I could, hoping he'd forget my name even faster. But a half hour later, 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. I told him that I was occupied with speech recognition. I have three friends from graduate school who could build it. He said, okay, hire them. So we did. They built the machine.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Where did you get all these questions from? Yes, it's true, although I don't ride a unicycle anymore because at one point I crashed and the unicycle broke.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“I think probably the same way other firms do. First, we get resumes, those that look promising, we give them phone interviews, and we ask them for references, if those pen out, then we invite the promising applicants to give research talks, talks like if you're applying for a job at university or something like that. And then we put them through a grueling day of solving problems in math, physics, statistics, computer science, and so forth at a Blackboard.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Mathability, programming ability, love for data, work ethic, and most importantly, the ability and desire to work well in a collegial environment.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Yes, we find it much easier to teach mathematicians about the markets than it is to teach mathematics and programming to people know about the markets. Also, everything we do, we figured out for ourselves, and I really like it that way. So unlike some of our competitors, we try to avoid hiring people who have been at other financial firms.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Sort of. I was working late with a colleague named Jim, not Jim Simon as another gym. At any rate, Jim and I were working away and we did an answer to some question, which some other guy knew the answer to. So it was around one o'clock in the morning, and I picked up the phone to call him. And Jim said 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 more question. And so that's what we did.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Yes, I guess every question you have asked so far has a yes answer. Yes, I'm just one of those types who can't sleep not by choice. I just can't sleep. So I often am on the computer by around 2 a.m. And it's true at tend to send a lot of emails out in the middle of the night.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Well, for me, 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 nonstop 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.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Yes, my wife works in Washington, D.C., and my experience has been that when a husband and a wife work in two different towns, the husband commutes. Psychologically, if I'm going to be away from my family, I have to work. I sleep in my office when I'm in Long Island”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Yes, I think that was a 1993, but IBM Corporate had absolutely no interest. So instead, we went to Renaissance. We did the same thing we had in mind for IBM, but instead with money, Jim Simons had raised.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Yes, my father and his partner. I was a rebellious kid who wanted nothing to do with my father's business. So I went into computer science and machine learning.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“My primary goal is to keep improving our existing systems. That is to do more of the same, but do it better. And we have a strong track record, and that's good, of course. But all it really means is that we know how to do one thing well, or at least have known how to do one thing well. I think it's important that we not get overconfident and we stick to our knitting. Of course, if other opportunities in our wheelhouse come along, we'll explore them, but not at the expense of our primary responsibility was to keep our eye on the mothership.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Well, I hope, and I assume the markets will become more automated with time. I'm pleased to see the plan to go to one day settlement. I wish they'd move to continuous settlement. I'd love to see round-the-clock trading and all kinds of instruments. I'd like to see more securitization, tokenization, more digital contracts. Although there I feel the FTX myth will set those processes back for a while.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“I said, Bill Gates was making like $400 million per year, not 400,000. Anyway, they just didn't get it. We don't make that mistake. We pay our programmers a ton in accordance with the value we place on the infrastructure they produce. Okay, our fourth principle is no interference. We don't impose our own judgment on how the markets behave. Now, there's a danger that comes along with success. To avoid this, 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. Yes, of course, there are few occasions when something's going on in the world, and so we'll cut back because we think the model isn't appropriately appreciate the risk of what's going on. But those occasions are pretty rare.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Get more programmers, but I knew that some programmers were like 10 times or more productive than others. I kept pushing IBM management to recognize this fact, but it did not. I remember being in an IBM managers meeting and some guy from corporate headquarters was explaining how they created something called their headlights program. The goal of which was to identify the best programmers in the company and pay them 20% more of than the other programmers. Now, I figured this guy from corporate was making like $300,000 a year. So I raised my hand and suggested they increase the pay of their best programs to $400,000 a year. And he was stunned. He said, what, more than me? You got to be kidding me. Well, maybe the guy is Bill Gates.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“We employ scientists. Guess what? We take a scientific approach to investing and treat the entire problem as a giant problem in mathematics. Second, collaboration. Science is best done through collaboration. If you go to a physics department, it would be absurd to imagine that the scientists in one office doesn't speak to the scientists in the office next door about what he or she is working on. So we strongly encourage collaboration between our scientists. For example, we encourage people to work in teams. We constantly change those teams up so that people get to know others within the firm. We pay everyone from the same pot instead of paying different groups in accordance with how much money they've made for us and so forth. Third infrastructure. We want our scientists to be as productive as possible, and that means providing them with the best infrastructure money can buy. I remember when I was at IBM, there was this attitude that programmers were like plumbers. If you need a big project done, just”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Okay, Rush, I really don't know how successful you probably do better than I do. I really don't know how successful we've been in comparison to other firms because don't pay attention what others are doing. I guess there are some firms that make it their business to learn how others make money and try to learn their secrets. That's not our style. We just hire mathematicians, physicists, computer scientists with no background in finance and no connections with Wall Street. So we really don't have any insight into how others stack up compared to us. 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 spent decades and billions of dollars creating. But what time? I worry we don't have enough time for that. Well, instead, I propose that I'll just mention a few principles we follow. So let's see. First, science. The company was founded by scientists. It's owned by scientists. It's run by scientists.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Like everybody else, we sent everyone home during COVID and with just the skeleton crew left in Stonybrook to keep the computer running and to man the trading desk. I suppose you guys did the same thing. For about two years then, we were working larger remotely. But unlike other firms, I don't know how you guys did it. I had no interest in seeing my colleagues faces while we're at home. And I wasn't sure I trusted the security of Zoom or other video call services. So we built our own conference call system that enabled us to hold meetings in which people could make presentations, post comments, raise their hands, to speak, and so forth. That really worked out well, so well that we continue to use it even when we're back in the office. So we got a lot done during COVID, probably because there wasn't much else to do. People couldn't leave their homes and stuff. But I felt we weren't as creative working at home as we were when we're together. I also felt that the esprit decor was better in person. So spring, we all came back to.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Just disappeared. And then finally, I remember the final one, yes, it was the flash crash. That was May 6th, 2010, if I remember correctly. The Dow dropped a lot. It was 9 or 10% and recovered half an hour later. If you'd gone to lunch, Raj, maybe did go lunch. I don't know. You would have missed the whole thing. For us, it was just another lesson staying calm. We saw trades being executed at absurd prices. We also noticed large delays in the price feeds. So we sat out for a little while waiting for Sanity to return. It did, and then we went back to business. For me, the most important takeaway from the flash crash was that the exchanges needed to increase their capacity to handle spikes and volume. They've done this, and since then, things have been better. I think that historically they're going to be disruptions like this from time to time. And I think the regulars have done a lot to prevent panic selling. But I also don't think they should get carried away because if you try to eliminate volatility, you'll also...”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Right, in the fall of 2008, in October, I think it was, we had more reserves on hand, and so we were secure in our own positions, but others with whom we did business may not have been, at least we feared they may not have been. Remember, in August of 2007, it was only the quants who were affected by the quant quake. In the fall of 2008, the whole financial system was stressed. So we were concerned with the stability of our counterparties. So we spent a lot of time with those counterparties and examined their CDS rates and so forth. I remember at one point two senior executives from some firm we did business with came into our New York City office to meet with us. They assured us that the funds we had in our margin account were safe with them. And I was inclined to believe them. Why not? But after the meeting, Jim said, Peter, they wouldn't have come to our office. They wouldn't have requested the meeting unless they were in real trouble. It's time to get out. So we did. And Jim was right because shortly thereafter that firm”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“And they were all staring through the haze at the computer screens trying to figure out what was going on. And Jim was interpreting every little wiggle in various graphs. He was really scared and he wanted to cut back and hard. Paul also wanted to cut back. Raj, I'm sure you know, the head of risk control always wants to cut back. Because he doesn't get paid to make money, he gets paid to make sure you don't lose money. And Bob, you know, Bob's always very calm, but he wasn't against cutting back. But I looked at the data and saw that the model had these enormous predictions, the likes of which I had never seen before. It was clear to me what was going on. People were dumping positions that were correlated with their own positions, and they were driving.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“I suppose you're talking about the quant quake in 2007, August, and it happened. I was on vacation and I was on a very long flight back to Newark Airport. And the moment the plane landed, my phone went nuts with all kinds of text and missed phone calls. So I called into work to find what was going on. I got Kim, Jim's assistant, and she said, Jim wants you to get back here as soon as you are physically able. So I raced out. I found a taxi leaving my family to fend for themselves at Newark Airport and pushed the driver to drive as fast as he could from Newark to Long Island. I ran into my office and I found Jim, Bob, Paul Broder, who's had risk control, all holed up. And the office was full of cigarettes smoke. I could barely breathe. And then there was this, I remember seeing the 16-ounce cup full of Jim's cigarettes butts. And I'm thinking like, why did they have to do this in my office?”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Thinking, I'm not sure I can get through this, but I really didn't have much choice in the matter. And so we got back to work and eventually we did get through it. A couple of days later, I went into Jim's office and told him that I had screwed up in not appreciating the risk we were taking and said that if you 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.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Think you started with March of 2000 when the dot-com bubble burst. We were doing extremely well back then, and we had large positions in the Internet stocks that were traded on NASDAQ. At one point, the head of risk control came to me and said he was worried about the size of our Nasdaq positions. But I told him not to worry. The computer knew what it was doing. Then we took a big loss one day. The next day, we took another big loss. And I again worked through that night. So now it's the third day. And I hadn't slept for, I don't know, 48 or 50 hours. And I was sitting in a meeting with Jim and a few others when the head of production knocked on the door and asked to speak with me. I walked out of the meeting and he told me we were down again by a large amount. I walked back in the meeting and I must have turned white or something because Jim took one look at me and said it doesn't look good. Now not having slept the previous two nights.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Certainly, we have an incredibly deep bench at Renaissance, and I'm continually astounded by the quality of our employees. Our Stony Brew office is chalkablock 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. So I'm surrounded and supported by an amazing retinue of outstanding colleagues.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Thank goodness he didn't take their advice and become a forest ranger. At any rate, because Bob tends to be relatively quiet, I've always done most of the management. And as a result, what I did on a day-to-day basis really didn't change all that much. But still, it was a huge change not to have Bob as co-CEO. When it was the two of us, we consult with one another and there was enormous comfort in knowing that we both took responsibility for what was going on. And that disappeared the day Bob stepped down. And since then, knowing that if something goes wrong, it's all me is quite stressful in a way that it wasn't when Bob and I were in it together.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“So Bob is an incredibly intelligent person, but he's a bit of a loner. In fact, I think when he was in high school, they asked him to take some tests to see what he should be when he grows up. And it came back recommending that he become a forest ranger so he could sit alone in a tower all day overlooking a forest”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Yes, it's true. Bob and I began working together at IBM 40 years ago, and for most of the time we've had offices right next to one another. So we've done a lot together. And we're still really close. In general, I find no better way of building friendships than through the collective, creative process of building something together. And I see no reason why politics should interfere with friendship.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Instead of humans. My point of view was this Stony Brook produces a huge list of transactions, and New York City produces monthly statements, K1s, and government filings. And IDAS didn't see why humans need to be involved in the process of translating trades to monthly statements. Now, 13 years later, we're not done yet, and I'm embarrassed to admit that we still even have a few people who use Excel, but we're getting there. In fact, I was told recently that we've eliminated 97% of the spreadsheets that had originally been used in the company. So that was the main area in which things changed when Jim retired.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Well, when Jim stepped down, Bob and I had been running the money making side of the business for seven years, and we'd been running the equities area for 16 years. Not much really changed on that side of the firm. But when he stepped down, we got control of the New York office. And the first thing I did was to walk around that office to find out what everyone was doing. And what I found was that many people were doing jobs that could be automated. So we set out on a massive campaign to automate our back office operations. We moved from checks and wires to Swift and ACH. We replicated counterparties' margin calculations. We built a large legal database that could be accessed by computers to fill out regulatory forms. We brought in AI systems to automatically read and pay invoices. We automated the Treasury Department so that cash and margin needs could be managed by computers.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“But I answered the question. I said no. He asked why not. And I explained, Jim, you know the SP is not a great investment from the point of view of Muir Sigma in risk-adjusted terms. He said exactly and then said, okay.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Our investment strategy across all of our funds is to maximize return, which we call mu, at an acceptable level of risk which we call sigma. I remember early on there was a guy at Renaissance named Andrew Mohopt who taught Bob and me about investing. He told us a story about a trader at some large firm who had evidently done a fantastic job at finding opportunities to make money, but he ended up blowing up. As Andrew put it, this guy was great at finding Mew, but he had a problem with Sigma. That story really resonated with me, so we put a huge amount of effort into controlling risk. Then at some point, I think it was in 2000, Jim came back from a meeting of the investment committee at MIT. He walked over to my office and asked me to imagine that I had married a Rockefeller. I said, okay, thinking about that. And he said, what would you tell her to invest in? In particular, would you suggest that she put her money into the...”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so that was the plan. The schedule was for Jim to retire at the end of 2003. But then tragedy struck. Jim's son Nick drowned while diving off of Indonesia. A few years earlier, another one of Jim's sons, Paul, had been killed when he was hit while riding his bicycle by a car. It was really tragic. This is an understatement. It was a tragedy of immeasurable proportion. And it came shortly before Jim was about to retire. Everything was put on hold. Given what had taken place, Jim felt that he needed to continue working. So he put off his retirement plans and focused instead on raising money for institutional funds. He did this for another seven years and then retired at the end of 2009. At that point, Bob and I became co-CEOs.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“But we recognized that it would not be so great for morale to tell, say, one of the future's researchers, you know all that code you spent the last decade of your life developing, guess what? We're going to throw it out. So we had to spend quite a bit of time getting everyone to buy into our plan. To do this, we used an approach that I learned from a biography I'd recently read of Abe Lincoln, which was to get them to come up with our plan themselves. Now that took some time, but eventually it all worked out.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“I think it was in May of 2002. Jim said he wanted to go out to lunch. Now, this is kind of weird because we always ate lunch in the cafeteria. I thought, I don't know, maybe he wants to get a nice meal or something like that. I didn't know. But he took me to a greasy hamburger place down the road because I guess that's what he liked to eat, but it was weird because I was largely a vegetarian. At any rate, at that lunch, he told me that he was planning to retire soon and he wanted Bob and I to take over the company. His plan was to put us in charge of all the money-making activities at the firm. That is, everything except marketing, legal, HR accounting, and so forth at the end of 2002. And then retire a year later. So at the end of 2002, Bob and I also took over the rest of the technical side of the firm, which included the trading of currencies, bonds, options, and futures. Now, our plan was to use the equities code that we and others had developed to trade these other instruments.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“And they were going to coat it into the trading system. And I asked, how are we going to be sure that the trading system produces the same answers as a simulator? And they said, oh, that's not a problem. We'll just read over the code very carefully. At that point, I realized what the problem was because you can't verify how a computer program gets the right answers simply by reading it over. I relayed this message to Bob, who then joined me on the equities project. And he said to me, Peter, the way to gain control of this company is to take over the code. So that's pretty much what we did. We rewrote the entire equity system. And then just as Bob predicted in, I think, 1996, we were put in charge of equities trading at Renaissance.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so Bob and I did different things. He wanted to work on futures, which was how they were making their money at the time. But I wanted to work on equities. They had just started an equities system, but it had only lost money. But I figured with all those stocks, there had to be some way of making money. Unbeknownst to my wife, I put our life savings into the company's funds as a way of motivating me and set to work. Now, when we arrived, we found a half a dozen mathematicians who were very smart, very creative, but they'd learned to program by reading the computer language models. And as I'm sure you can imagine, Raj, that's no way to learn how to program. They had no idea how to build large systems. So part of what we did was to introduce what was then considered modern computer science to Renaissance. They also had a problem. Their equity simulator made money, but their trading system consistently lost money. At one point, I had an improvement to the simulator.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“So she had to go to the agricultural school at Cornell, which offered scholarships to New York State residents. The second thing that happened is we had a daughter born. And the third thing was that Jim then offered to double my compensation. After that offer, I came home. I took one look at our newborn Dehutter and realized I had no choice in the matter. So the decision to leave computational linguistics for a small hedge fund that no one had ever heard of was made purely for financial reasons.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Bob Mercer and I had each consulted for IDA in Princeton, and Jim Simons used to work at IDA, and he had hired an IDA cryptographer named Nick Patterson. And Nick recommended us to Jim. And so Jim then sent us some letters. I threw mine out because I was very happy with my job at IBM, but Bob decided to go out and check the place out. When he came back, he told me I should go out there too. Now, I had no idea who Jim was, but I learned that his original partner was someone named Lenny Baum who had invented the EM algorithm. And we knew all about the EM algorithm because we used it heavily in our work on machine translation and in speech recognition. So I figured if Lenny was Jim's partner, Jim had to be a serious customer. Then three things happened. First, Bob had a second daughter accepted to Stanford, but he couldn't afford to pay for her to go to Stanford on his IBM salary.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Did not do. They didn't do it because they didn't have language models and they hadn't had the computational power to be able to do it before then. So we took the Canadian House of Parliament date and we built a big language model from the English side of that data. And then we built a little model of keystroke errors and used it to create a spelling corrector and we demonstrated it to IBM management. And what we found was and what they found was no matter what.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“When we got the Canadian parliament data, we found it came in both French and in English. Our thought was to see if we could build a translation system entirely from that data. We did this by imagining that translation was a statistical process and we would estimate the parameters from the data. And I thought the thing worked surprisingly well. It was nothing like translation by today's standards and Google and other firms have taken this to an entirely different level, but still it was a start. I was quite happy with it. We had a contract to do machine translation from the defense advanced research projects agency, but we were always looking around for an application that would convince the IBM brass that we weren't completely wasting our time. At one point, we decided to create a spelling corrector. We thought we could create a fantastic spelling corrector because we could take context into account which current spelling correctors, current at that time.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Well, back then, the party line was to have a computer do tasks that humans do, you had to feed the computer with a bunch of domain-specific knowledge. So, for example, if you wanted to do French to English translation, you had to tell the computer about French grammar. And we came along and were feeding it nothing but data. And that approach was really frowned upon. In fact, our first paper on translation received a two-sentence review, which I have posted on the wall in my home study. And I remember what that review said. It said, the information theoretic approach to machine translation was indeed first suggested by Warren Weaver in 1949 and was universally rejected by 1950. The paper is simply beyond the scope of Coling. Now, coaling was the name of the conference that we submitted to. Amazingly, despite this rather scathing review,”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, this is an example of text that was generated 35 years ago from a generative pre-trained language model. What do you mean? I don't know, said the man. Is it? he asked, said the man. They are not to be a good idea. The first time I was a good idea, she was a good idea. Certainly, I said. What's the matter? May I be able to get the money? said the man. Scott was a good idea. Mrs. King, Nick said, I don't know what I mean. Take a look at the door. He was a good idea. I don't know what I mean. Didn't you? he said. Nah, I don't know where all this, I don't know what I mean is coming from, and I don't know where this good idea stuff is coming from. Maybe that's the way they talked in these IBM depositions. They constantly talked about good ideas. I don't know. Anyway, you can see there's been a lot of progress in the past 35 years.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“So 35 years ago, we published a paper on one such model, but instead of using the transducer technology that's in neural networks today, we used a somewhat different technology. And whereas ChatGPT was trained from 300 billion words of text, our model was trained from around 10 million words of text. The idea, again, was to take a bunch of text and assign probabilities to what the next word might be. So we could use it to generate text. And I brought along an example because you had asked me about this. Very cool. Let's hear.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Well, sort of, and they were pre trained like ChatGPT is. They're generative like ChatGPT is. And like with ChatGPT, the entire goal was to take a bunch of text and predict the next word of text. But remember back then it was before the internet and before the NVIDIA gaming ships. So we had a lot less data and a lot less computer power. We were constantly scrounging around for data from places like the Canadian parliament, the federal register, the American Reading House for the Blind. We even got data from the depositions in the IBM antitrust lawsuit. We had very little data and very little computer power, just some time allotted to us on an IBM mainframe, which is probably less powerful than your cell phone is today. But yes, like with ChatGPT, the idea was to see if we could build a language model purely from data that would mimic human”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, after four years at this company, I went to graduate school at Carnegie Mellon, where I studied artificial intelligence. And my advisor there was someone named Jeff Hinton, who the New York Times recently labeled as the godfather of AI. In fact, I was his first graduate student. But while I was there, I had a girlfriend in New York. And so I spent my summers working in an IBM research. And then after I got my PhD, I went to work for IBM full-time on speech recognition, machine translation, and the construction of what today are called large language models.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“After class, I raced over to the physics library. That's because this was before the internet, so you had to go to the library. And I looked this guy up, and I found a paper he'd written, and I tracked him down, applied for a job, and he hired me. And when I was there, I just fell in love with the idea that through mathematics, it might be possible to build machines that do what humans do. I just love the idea of exposing human intelligence to be nothing more than robotic computation.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT
“So at one point during high school, I learned about the Fourier transform, and I thought this was about the coolest thing I'd ever seen, probably because I went to an all-boys school and had nothing better to contemplate. Anyway, for some reason, I got into my head that with the Fourier transform, it should be possible to recognize speech. You just take the speech data, transform it into the frequency domain, match it up against patterns for words, and presto magic how would be born. And this idea always stuck around in the back of my mind. Then when I went to college, I majored in math and physics, but in my senior year, I had to fulfill a distribution requirement. So I took a course in linguistics. And one day in the back of that course, I heard a couple students talking about some guy whose name was Steve Mosier who started a company called Dialogue Systems that was doing speech recognition. And I thought, wow, great. And I remember this idea from back in high school.”
2023-09-11 · Goldman Sachs Exchanges · A conversation with Renaissance Technologies CEO Peter Brown · IDENTIFIED FROM THE TRANSCRIPT