A Billionaire’s Heir Hangs Up His Healing Crystal to Fix Capitalism
A Billionaire’s Heir Hangs Up His Healing Crystal to Fix Capitalism
(Bloomberg Businessweek) -- William Peterffy, the only son of billionaire Thomas Peterffy, has cycled through a lifetime’s worth of occupations in his 32 years. He’s been a ranch hand in Colorado; an organic farm worker in California; a student of yoga, sound therapy, and Chinese medicine; a board member for an environmental advocacy organization; and a post-production associate for a 10-part documentary series on “archetypal astrology.” He served time at two investment firms, for about nine months apiece, but those stints left him “heart-crushed” and pushed him in 2016 to go, with his dog Bowie, from New York to New Mexico in hopes of absorbing the healing powers of the desert.
Boulder, Colo., is his latest adopted home, where he now lives in the mountains with Bowie and a new dog, Raksha, named for the mother wolf in The Jungle Book. In late November he visited friends for dinner at their regenerative farm. A citrine crystal, believed to symbolize positivity and new beginnings, sat nearby as he feasted on braised lamb shoulder, mashed potatoes, arugula, beet sauerkraut, and a punchy fermented hot sauce—a meal his friends prepared using only crops and animals raised on their farm, except for a bit of clarified butter and a few glugs of olive oil.
He was still adjusting to his latest occupation, one he’d been avoiding for, really, his entire life. More than two years earlier he’d joined his father’s company, a giant trading platform called Interactive Brokers Group Inc. Rather than become a sales rep or data analyst, he carved out a role more simpatico with his worldview. Not unlike when he was 7 and made the case for getting a pet ferret, he pitched his dad on a big idea: that he could become the company’s first director of environmental, social, and governance (ESG) affairs, helping to make the firm a better steward of the Earth and society. Interactive Brokers would reduce its environmental footprint, boost gender and racial diversity, and, in the triple-bottom-line spirit, draw a whole new set of younger customers who want to invest in companies doing the same. “We’ve been saturated with this idea that we are separate—we are separate from each other, we are separate from the Earth, we are separate from nature—and it’s just not true,” he says. “We’re very connected with each other. All life is connected. And it’s not even woo-woo.”
A poet in his off-duty hours, he told the dinner party that this new life direction called to mind a few lines by ethnobotanist and psychedelic guru Terence McKenna. He pulled up the verse and read aloud to the table. “Nature loves courage,” he recited, continuing that the world responds to commitment by removing obstacles from your path. “This is the shamanic dance in the waterfall. This is how magic is done. By hurling yourself into the abyss and discovering it’s a feather bed.”
Capitalism could reasonably be called Peterffy’s personal abyss—and his feather bed, too. The system made his father, Thomas Peterffy, the 72nd richest person in the world. Before building a net worth of $21.5 billion on Wall Street, Thomas grew up in communist Hungary, immigrated to the U.S. at the age of 21 knowing no English, and saved up to buy a seat on the American Stock Exchange. He became an early player in electronic trading, building a company that used computers to transact in financial markets and eventually evolved into a broker that sells professional-quality trading software to individual investors and money managers, including hedge funds. He’d achieved the fantasy of amassing an unimaginable fortune. But his three children—Will and two sisters—wanted nothing to do with his business.
Thomas always dreamed that his son would someday join his Wall Street empire. There was the very practical matter that he would eventually retire—he’s now 77 and is Interactive Brokers’ chairman—and wanted to ensure his legacy wouldn’t be squandered by outsiders. There was also the instinctive urge for something his billions could not buy: his son’s approval.
“The actual ask to join the company was a vulnerable thing for him,” Will says. Thomas first soft-pedaled the idea in Will’s teen years and brought it up more formally when he reached college. “It wasn’t necessarily, ‘Hey, will you please join the company? I’d really like you to,’ ” Will says. “It was more, taking my temperature periodically.”
After Will’s years of flitting around, he finally convinced himself that by working at Interactive Brokers he could help fix the ruthless financial system from within. He joined a generation of soul-searching capitalists trying to figure out how to have it both ways. In recent years, a boom erupted in ESG—a catchall for sustainable investing—prompting a rush of new Wall Street products and tools that make it easier to identify companies that align with an investor’s values.
All along corporate America’s food chain, a certain breed of striver, from ambitious business school students to chief executive officers, began pitching a future where earning money in financial markets can be freed of the guilt of funding rapacious conglomerates. Capitalists could maybe solve the globe’s hairiest problems—climate change, social stratification, racism, sexism, homophobia—while also making a windfall.
It’s also an appealing concept for offspring, such as Will, at the receiving end of the largest wealth transfer in human history. Older generations will bequeath approximately $72.6 trillion in assets to heirs from 2021 to 2045, according to estimates by consulting firm Cerulli Associates. Many of these inheritors are trying to find ways to feel a little less conflicted by the unprecedented sums of money that will land in their bank accounts, earned by their forebears in ways they might prefer not to think about.
For Will, a new spin on Interactive Brokers meant it was no longer a binary choice or burdensome obligation, but a gateway of possibility. “I never dreamed that I would have this relationship with my dad,” he says. “Where we could be working together, and we could be changing together.”
Will has the dense, jungly beard of a mystic. His eyes, if they were healing crystals, would be aquamarine. He’s also a hugger. His main problem with Mark Zuckerberg’s vision for the metaverse, he’ll tell you, unprompted: no hugs.
Will grew up in Greenwich, Conn., shuttling between his divorced parents. By the time he was 14, Interactive Brokers was expanding and on the path to going public, and he began to realize his father was different. Thomas, whom Will saw twice a week and every other weekend, bought an 80-acre estate with an 8,000-square-foot main house, guest cottages, and a 22-stall horse stable, while his mother, Dale McDonald, mostly raised him, along with his two older sisters. After having kids, McDonald had quit her job on Wall Street but always pursued passion projects, which included forming a nonprofit “rooted in exploration of the world we share” and opening a short-lived pay-what-you-wish locavore restaurant. “She’s a free thinker,” Will says, adding that she taught him “to think for myself and to challenge ideas that were told to me.” After heading to boarding school in the Berkshire mountains, Will found himself arguing with his father about economic inequality. “My dad was always Mr. Capitalism,” he says.
As a 12-year-old in Hungary, Thomas got an early rush of capitalist euphoria by purchasing Juicy Fruit gum from a friend who’d visited Austria, cutting the sticks into smaller pieces, and selling them to classmates at a profit, until he got caught. He recalls the principal asking, “Where is your communist conscience?”
After arriving in the U.S. and elbowing his way into the American Stock Exchange, Thomas became an intermediary in the options market. With an inventor’s spirit, he used computers to make trading faster at a time when most transactions happened among throngs of human beings shouting on exchange floors. (He’s fond of saying he built a predecessor to the iPad, a mobile electronic tablet that could help determine options prices.) After Nasdaq introduced electronic terminals for trading in the 1980s, Thomas wired computers to buy and sell securities. When a representative for the exchange balked, ruling that orders had to be keyed into the terminal using a keyboard, he rigged up robot hands that typed in trades automatically.
As an arms race over trading speed intensified, Interactive Brokers settled into a different niche: trading tools. While the newer app-based broker Robinhood appeals to younger, newbie traders with a couple hundred dollars to mess around with, Interactive Brokers software is meant for more experienced people with hundreds of thousands of dollars or more in their accounts and no time to spare. Today the company has a market value of about $28 billion and is among the leading independent brokerages in the U.S., with more than 1.7 million customers. Its share price hit an all-time high in December.
Thomas says he and Will have long clashed on matters of human nature. “Will,” says Thomas, “believes that people are naturally good, and they will never want to take advantage of each other, even though he has been robbed a few times.” Will has largely spent his adult life road-testing his ideals against his father’s. He attended the University of Colorado at Boulder for three years through 2012, interned at Interactive Brokers, then wandered the American West and Thailand and earned a yoga certification. After that, he spent a year and a half working as a research associate and analyst for two investment firms. Tim Schenk, founder of Kuleana Capital Management, one of the firms, says Will was the type of guy who “was unlikely to be seen at a bar with the fleece vest crowd,” but he remembers him as a fearless cold-caller. At times, Will found these positions icky, like when one of the firms invested in an oil refinery. “I felt my soul was dying,” he says.
Later in his 20s, Will came to know an environmentalist and documentarian named Kenny Ausubel. After the hedge fund foray, he worked on Ausubel’s docuseries project, Changing of the Gods, which posits that certain alignments of Uranus and Pluto have coincided with dramatic moments of upheaval on Earth, including the French Revolution and the 1960s civil rights movement. Will worked with a team sifting through about 140,000 pieces of footage and images to seek licensing approval, says Ausubel.
While Will was off finding himself, Thomas doubled-down politically. He drew attention during the 2012 presidential election cycle when he funded and appeared in a series of ads warning that America could be sliding down a “slippery slope” toward socialism. Thomas now lives in Florida and is the richest man in the state. He’s also in close orbit to Donald Trump; his Mediterranean-style Palm Beach mansion is near Mar-a-Lago, and he gave a total of $350,000 to Trump Victory, which supported Trump’s campaign and the Republican Party, in 2016 and 2017. He said he favors Florida Governor Ron DeSantis for the 2024 Republican presidential ticket. “I think people are motivated to seek their own betterment before they would start thinking about society in general,” he says.
Thomas wears his white hair combed back, and his chin is cleanshaven. Will has his eyes. They are both Libras. Unlike the striving siblings on the HBO series Succession, Will and his two sisters—one is a stay-at-home mom, and the other is in the healing arts—all distanced themselves from their father’s business. Thomas is no fan of the show. (“It’s too crazy for me,” he says. “I don’t really understand the plot. I understand that people hate each other, and they use bad language.”) But he does envy one thing about Succession’s tempestuous patriarch, Logan Roy: His kids are vying for control of the company he built. “From that point of view, I’m kind of envious of the old man,” he says, laughing, though not actually joking.
Will’s change of heart happened in Punta Mona, Costa Rica, on New Year’s Eve, ringing in 2019. He was attending a party at an eco-village created by sustainable agriculture visionaries Stephen and Norman Brooks. Although he was trying to enjoy the festivities that night, a document was burning a hole in his inbox—a contract to join Interactive Brokers. Will was among the few, including board members, who knew that his dad planned to announce his resignation as CEO at a company party in Manhattan. “This was such a big decision that I’d been debating my whole life: Are you going to engage in your dad’s work and your dad’s creation?” he says. “Are you going to be able to do that and still be aligned to yourself, with your values, and true to yourself?” He flew to New York.
Watching his father address his staff, Will took in the weight of the moment. He realized how deeply his father cared about the organization and, in turn, how much his employees respected him. A new CEO, Milan Galik, would take over from his dad. “I saw him making that really hard decision that he was no longer the best suited to be the CEO,” says Will, the only Peterffy child who attended the event. “That’s not something that’s easy for a man, particularly of that generation.” Will says it moved him to tears.
Father and son decamped to the Plaza Hotel for drinks. Will told his father he was in—on the board, along with a formal role at the company—on the condition that he could use the position to drive environmental and social change. Thomas, of course, said yes.
Since Will joined in 2019, his biggest impact has been an app literally called Impact. Impact is a more crunchy alternative to Interactive Brokers’ main app; its icon is creamsicle orange, instead of Interactive Brokers’ casino-ish red and black. Whereas Interactive Brokers vows only to serve as “your gateway to the world’s markets,” Impact promises customers the chance to “create the world you want to see.” While the typical Interactive Brokers user is a seasoned investor who might also want to trade in currencies and bonds, a novice investor without any familiarity with the S&P 500 or Cboe Volatility Index would feel at ease on Impact. Under the hood the two apps are similar, offering access to financial markets, but on Impact users can filter investments based on issues that matter to them, such as racial equality or fair labor, and screen out specific industries, like gambling or fossil fuel.
When Will first arrived at his dad’s company, which has more than 2,500 employees, there was bristling among his new co-workers. Some privately groused about nepotism in which differing rules seemed to apply, according to a former employee who spoke on condition of anonymity. Before the pandemic, Will had the freedom to work from Boulder, while everyone else had to show up to a squat office building in Greenwich five days a week.
Others seemed to appreciate Will’s free-spirited approach. He was more tie-dye than suit and tie, wearing gauges—earlobe-expanding jewelry—and regularly interacting with humans. Interactive Brokers’ programmer-heavy workforce had a culture of keeping meetings to a minimum. Will called meetings of 10 or 20 people at a time, which at least some employees saw as an improvement, the person says.
Interactive Brokers’ programmers mobilized to assemble Will’s brainchild, the Impact app. Meanwhile, board meetings felt like hazing. “My dad’s a funny man,” he says about the first one he attended. “I was told I wasn’t even going to have to say anything. So in the middle of the meeting, my dad just looks at me and goes”—assuming a thick Hungarian accent—“ ‘Willie, what do you have?’ And I’m like, wow, OK, I’m going to have to address everyone.” So he riffed about a new generation of investors preoccupied with the environment and social causes—people like himself. In a best-case scenario, he says, all Interactive Brokers’ customers would eventually use Impact to make investment decisions. “My father created this company for what was needed for that time,” he says. “I see myself as bringing about change, evolving the company for what is needed in our current, modern time.”
So far, Wall Street’s sustainable investing boom involves a bit of magical thinking. To some, the mantra that you can “do well by doing good” contradicts finance’s otherwise zero-sum principles. Skeptics chafe at the idea that ESG measures actual impact or accountability. But the industry is going with the flow: ESG assets are on track to grow from about $35 trillion in 2020 to $50 trillion by 2025, according to estimates from Bloomberg Intelligence. Last year, according to Morningstar Inc., sustainable funds earned the asset management industry $1.8 billion in fees, up from almost $1.1 billion in 2020. (Bloomberg LP, which owns Bloomberg Businessweek, is also a provider of ESG data.)
Weighing a company’s relative virtuousness is a difficult task, though ratings giants create lots of business by trying. PepsiCo Inc., for instance, scores highly in ESG because of its governance and carbon footprint, despite making sugary drinks that come with health risks. Those quandaries are magnified when packaging companies into funds with a sustainability stamp, something large fund managers now do with abandon. Just this year, Morningstar stripped the ESG classification from more than 1,200 funds according to its own system, fueling worry about ambitious ESG claims.
Will prefers to get worked up about the larger shortcomings of the free market. During the dinner at his friends’ regenerative farm, he talked about how, in a functional economic system, philanthropy shouldn’t even be necessary. At one point, he wanted to explain how ecology relates to economy, and turns to his public-relations minder. “Should I tell my tree story?” he asked. She nodded yes. He likens economies to giant jungle trees, full of Darwinian competition. The old trees need to fall for new ones to sprout and replace them. “Money is a blanket form of energy,” he says. “It can be a force for healing or separation.”
Thomas Peterffy, who doesn’t describe money as a form of energy, still works CEO-like hours. He still keeps an eye on employees’ expenses, according to a person familiar with the matter. He suggests new products, such as a recently launched tool that allows investors to compare price/earnings-to-growth ratios. In a New Year’s video message sent to clients in January, he stood in front of a mantle festooned with pine cones to tout Interactive Brokers’ prosperity in 2021. Dressed in a suit and tie, he crowed that his firm gained more customers, trading activity, and revenue than ever.
Thomas is pleased with the Impact app thus far. He even downloaded it himself. “I only have $486,000 in my account,” he says. “Which is not bad.”
He ticks off the values he prioritized in his own account, including sustainable product cycles, company transparency, clean air, and pure water. He says he didn’t add race, gender, or LGBTQ equality to his list of priorities. He’s an E and G guy; S, not so much. “Frankly, I’m not as interested in that part,” he says.
That’s reflected in his own company’s rating. For an Impact user who ranks racial, gender, and LGBTQ equality as “very important,” Interactive Brokers flops.
Will says he’s focused on the small wins. The Greenwich headquarters began using 100% recycled paper products, and it’s looking at alternatives to plastic silverware. Used Keurig coffee pods are now put in a collection box to be disassembled for composting and recycling. Employees can also get their charitable donations matched, and Will is pushing to hire a more diverse workforce. He’s one of 10 White men on the company’s board, alongside one woman, who joined in July 2020.
Impact is hardly a high-stakes risk for the company. If it fizzles out, it’s harmless to Interactive Brokers’ bottom line. The company and its subsidiaries raked in about $1.6 billion in net income in 2021, generated by its active trading platform, on which users placed an average of about 2.6 million daily trades. If the app happens to take off, more than upending the capitalist system as we know it, it could help Interactive Brokers win a chunk of ethically minded investors. (Interactive Brokers declined to provide data on user growth or engagement.) Either way, the company continues to make Thomas richer. He maintains majority control through a vehicle that owns about 75% of the company.
Asked whether he’d be open to taking the helm of Interactive Brokers one day, Will doesn’t even pause to think: The answer is no. He’ll always be involved, he says, but even that will fluctuate. He plans to publish a book of poems. He’d like to focus on his own personal development. He periodically tests his stamina by going into a nearby forest without any food for three days at a time. He’s working up to doing it without a tent. “The person who’s CEO of Interactive Brokers might not have the time or space to be able to dedicate themselves to that as much as I want to,” he says, sipping from a mug of bison bone broth in his Boulder office space. A figurine of the elephant-headed Hindu god Ganesha, remover of obstacles, stands watch beside another citrine crystal.
When Thomas is asked whether he could see Will as CEO, he takes a long moment before responding. “I don’t think that he would want to basically sacrifice his life,” he says. “I think he’s too interested in traveling, in nature, and in South America.” He adds, “I don’t think he’ll ever be a CEO. But hopefully he’ll be a very good and useful board member.”
For two who agree on so little, they seem aligned there.
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