The Power of Positive Destruction

Chapter 3 Create an Unfair Competitive Advantage

After six months in Israel, working as a cook on a kibbutz and keeping up with financial news through the editions of the Wall Street Journal my father Fed Ex-ed me, I returned to Wall Street. But it wasn’t the same place I left. Although I thought I’d be diving right back into the risk arbitrage department, I found that everything at Oppenheimer was different. The firm had been sold and risk arbitrage spun off to be its own entity, now called Junction Partners.

For me, the upshot of the change was that I was the recipient of a promotion. I became an assistant trader at 22 years old. I continued to be driven by my passion to make the operations more efficient, and this time, in this new firm, my ideas were well received.

Management was interested in improving efficiency with new technologies, and I started working with computer consultants to automate the calculation of the spreads for every deal, which would give us an unfair competitive advantage. I built spreadsheets and put in data such as “probability of completion and date of close” so we could get probability-based annualized returns and sort the best opportunities. These things were just common sense to me. And although this introduced new methods and practices that required changes, everyone was open to adopting them because they gave us such an edge.

The following year was marked by a bigger transformation—technology was now viewed as invaluable, and adopting it was ...