The 500 Dark Pools
Like everyone else, I love a great “origin story.” Especially since I’m in the middle of one myself (Black Irish Books).
These kinds of stories focus on the creation of something . . . be it a company (The Social Network), a pop star (The Idolmaker), an investigation that leads to a President’s resignation (All the President’s Men) or even the act of not creating something (The Shining).
So for fun, I thought I’d give you two book publishing creation stories.
FULL DISCLOSURE: I represent both of the writers in these stories. I believe in their work and I am biased.
In October of 2009 (that’s right . . . almost three years ago), my friend Trena Keating emailed me. Like me, she’s a former publisher/editor in chief turned literary agent (check out www.keatingliterary.com).
She wrote to tell me about a friend of hers who worked at The Atlantic. He recommended she read a novel written by one of his colleagues. She read a chunk of it and realized it wasn’t her thing. But she thought that the writer had a certain something and she thought his book was in my arena.
She suggested I take a look and referred the writer, Matthew Quirk, to me. (This happens all the time in the business and is one of the reasons why I love publishing so much).
I read twenty pages of Matt’s book and quit. It was a mess. It was trying to do far too many things with far too many plot devices with far too little specificity of purpose. It was a dog’s breakfast. For me, it was a pass, a rejection, a “hit the bricks, Kid” kind of e-mail chore.
99% of the time, the story ends here.
In March 2011, my client, seasoned Wall Street Journal reporter Scott Patterson, was in a pickle. After doing a painstaking amount of research and over a hundred interviews using the good old-fashioned wearing down of shoe leather method—like literally meeting his sources—he had a mountain of material on his hands.
He couldn’t seem to get his arms around it.
His first book was no walk in the park either. The Quants was a New York Times bestseller. Quite an achievement considering it concerned difficult to understand stock market manipulations by a new breed of Wall Street traders who use science and quantitative reasoning to make their bets instead of the old gut-instinct model. Whew, that wasn’t easy to summarize.
But what The Quants is really about is the age-old “cool kids versus the nerds” drama—Wall Street’s shift from the Ivy League good old boy network, to the Caltech, MIT, we’re smarter than you, set.
Today, because of the work Scott did on The Quants and scores of follow-up stories, he’s widely acknowledged as the go-to guy for high tech Wall Street journalism. It’s his territory and well earned.
I sold his new book to the publisher of The Quants (Crown Publishing) in the spring of 2010 and Scott was required to deliver the manuscript to them in July 2011.
But he had a big problem. He had just too many storylines . . . He’d literally turned over every rock he could find concerning a very controversial and exponentially expanding form of Wall Street trading—high frequency trades placed in milliseconds by artificially intelligent computer generated algorithms dumped into secret exchanges called DARK POOLS.
He got the idea for Dark Pools while being interviewed by Jon Stewart on The Daily Show. Stewart is very well versed in the Wall Street world. His brother, Larry Leibowitz, is Chief Operating Officer of The New York Stock Exchange.
Stewart was fascinated by these mysterious and virtual mini-NYSEs where trades are made blindly. That is, the identity of the trader and the firm he works for is not made public until the trade has gone actually gone through. The buyer doesn’t know the seller and the seller doesn’t know the buyer until the transaction has been completed.
He grilled Scott about how DARK POOLS worked on the show and gave Scott the idea for his next book. Thank you Jon Stewart!
But how could Scott humanize something that by its very definition is artificial and anonymous?
He understands that if you are not writing about people (or anthropomorphized beings) you have no story. It’s hard to have any feelings for an algorithm.
How was he going to solve this problem, especially since he was sitting on a 175,000 words of seriously rough draft and only had four months to deliver not more than a 95,000-word manuscript?
Like my friend Trena, I could tell The Atlantic guy, Matthew Quirk, could write. Between Trena and me, we must have read close to 10,000 submissions over the course of our careers. After you’ve read that many, you become a pro at identifying fresh talent. It’s all about original narration, which only comes from hard work. But talent is just the beginning . . .
Until he switched gears and flip flopped between too many plots in that original manuscript submission, Quirk’s line-by-line writing was breezy and smart. Addictive.
I’ve long since decided not to mince words with prospective clients. Why hold back? So I e-mailed him and told him he should put this book in a drawer and start over.
Even if an agent picked it up and even if the agent sold it, it wouldn’t perform. He’d then have a bad sales track record, which would hurt his chances of selling another novel to a publisher, and even if a publisher gave him a second chance, he’d be in the “throw it on the wall” category.
That is, the publisher would print a few thousand copies and wait and see if anyone cared out in the wilderness. Thousands of books are published like that every year and very few break out from the pack. Maybe ten. Not very good odds.
I then explained that after his second novel didn’t work, he’d have to change his name and write under a pseudonym if he wanted to publish another.
After I gave him this horrible news, I told him that I thought he had the skills to write a very compelling and commercially appealing thriller. I told him to email me the next time he was in New York and I’d buy him a coffee.
Matthew Quirk came to New York the following Wednesday. He brought fifteen ideas for thrillers that he’d been tinkering with for years. He had medical thrillers, action adventure stories, mysteries, science fiction, horror . . . the gamut. It was obvious he was serious about being a professional novelist. And not a novelist intent on plumbing the depths of his innermost thoughts, one that people actually read and enjoyed.
I nixed every single one of his ideas.
I could tell he was deflated. He told me that he’d promised his fiancé that he’d only take two years off before they got married to see if he could be a novelist. He’d left The Atlantic and they were living in a studio apartment in Washington (both working from home) and their nest egg was eroding faster than they’d anticipated.
Matt figured out that if he picked up a freelance piece here and there, he could give it one more year. His fiancé gave him the thumbs up to do it too. She told him they could get married at City Hall. No big deal. This is the kind of relationship you just know is going to last.
I’d heard variations of all of Matt’s ideas before and I’d seen scores of books just like the ones he described bomb. I wasn’t going to bullshit him. This guy was a writer. He needed a career, not just a sale. And a career requires singularity.
I asked him to tell me about the work he’d done at The Atlantic and what it was like in Washington.
He told me about “opposition researchers.” These are young College grads who work for private consulting firms whose sole job is to find out the deepest dirt they can about their clients’ political opposition. Once they find the dirt or even just someone willing to claim there is dirt and go public with the information, they leak it to media sources like Drudge Report or Politico and soon we have organizations form like “the Swift Boat Veterans for Truth.”
He told me about the way influence is peddled at big Washington consulting firms—how the men behind these firms are the real power players in the country . . . even the world.
“These guys control the 500.”
“Who are the 500?” I ask.
“Oh, you know, there’s a saying in Washington that there are really just 500 people who matter in the world. These are the people who really hold power and it doesn’t matter what political party is represented in Congress or the White House. These are the people who maintain the status quo.”
“You mean a consulting firm like Kissinger Associates wields more power than John Boehner?”
He laughed like it was one of the stupidest questions he’d ever heard.
“Think about it. If you can’t get elected if you don’t have the right political strategist handling your campaign . . . which of the two of you in that relationship is indispensible?”
Now I was the neophyte.
“This is what your thriller should be about, Matt.”
He didn’t get what I was saying exactly. So I blathered on.
“You know this territory in a way that few do. What you just told me is an explanation of our world that the average Joe—like me—suspects is the truth.
How do you explain Timothy Geithner or Lawrence Summers or Secretary’s of the Treasury who used to run big investment banks? All these guys seem to be able to work for both sides of the political sea saw. They never seem to lose their status. It’s like they’re part of some secret group that is always in control.
But it’s also difficult to buy into the innumerable ‘global conspiracy theories.’ Are the Freemasons behind everything? Is there some Crypt at Yale that holds the answers? Hard to believe that New Haven is the center of the Universe . . .
What you just explained to me, Matt is that Washington and every other seat of global power just run on Realpolitik. Doing what’s necessary to keep power . . . Today . . . who gives a shit about tomorrow. There’s no big long-term plan. No core ideology. What you just described is how government sausage is made day after day.
There is no grand design. It’s just a bunch of jackals clawing at each other to maintain their place in the 500.
People love thrillers because they make sense of the world. In these kinds of stories, there is logic and justice and they alleviate a modicum of the reader’s anxiety about the real world. A thriller that explains how our political world works, in the most entertaining way, would be awesome.” I say.
“Ok, I hear you.” He was silent for a minute or so, then . . . “I think I can do this . . . It’s a Faustian story kind of like The Devil and Daniel Webster . . . ”
It took Matthew Quirk fifteen months to finish the book, not the twelve he had budgeted.
In that time, he and his fiancé were living off of macaroni and cheese. He’d even torn his ACL in one of his knees and was hobbling around Washington with only bus fare and the prospect of having to find a job in one of the worst economies of the past century. But he finished the book.
I read The 500 in one sitting.
This time, I got on a train and met Matt in Washington to go over my plan to sell his book.
“Matt, I think it’s fantastic, but this is the kind of book that everyone will want or no one will. I can’t guarantee anything.”
“I’m just glad I finished it. It was a lot of fun, but it beat me up too. Whatever happens . . . happens.” He said.
We finished our ham and cheese sandwiches, shook hands and said goodbye.
Whatever you may read or hear about Matthew Quirk or his first novel The 500 (and I think you’ll hear a lot about it), you should know just how hard he worked to get it published. He had the guts to throw away a book he toiled on for a year and a half. He started another one from scratch and pulled his hair out trying to find a way to reinvent the Washington thriller.
The day after I sold The 500 to Reagan Arthur Books, an imprint of Little Brown, which is a division of the multinational publishing corporation Hachette, and my book-to-film colleague Justin Manask, sold the film rights directly to 20th Century Fox, Matthew Quirk woke up, kissed his new bride, took a shower, got a cup of coffee and sat in front of his computer to map out his next novel.
It took Matt more than five years (probably his whole life) to become an “overnight success,” but it is the work itself that sustains him.
As I expected, he’s a writer. A pro.
So Scott Patterson has four months to figure out a way to narrate a beginning, middle, and end to a story that doesn’t seem to have any characters . . . just ones and zeros.
How he did it was to step away from the research mountain and ask himself one question, which led to another, and another.
Who started all of this DARK POOLS stuff?
Without Bill Gates or Steve Jobs or Steve Wozniak or Mark Zuckerberg there would be no Microsoft, Apple, or Facebook.
Electronic markets didn’t just appear one day. Someone had to have had the idea to digitize the stock market. What precipitated the idea? Who wrote the code to the first electronic network? What was the first electronic network? Why did he do it?
Why isn’t he as big a household name as these other guys? Is he a Gazillionaire?
I can tell you this. Scott found the man responsible for electronic markets. This man wrote the code for an exchange called ISLAND because he believed the trading markets was disingenuous and exclusionary.
This man believed that information should be free and that everyone should be able to buy a stock or bond without having to know someone who went to Harvard or Dartmouth to do it for them.
He believed that everyone should have the same information as Goldman Sachs or JP Morgan Chase.
The very forces he opposed then corrupted this man’s egalitarian electronic dream. ISLAND became what we now call NASDAQ and NYSE EURONEXT and scores of DARK POOLS mimic what this man created over twenty years ago.
In a ratty office littered with take-out boxes, empty Coke cans, servers stacked inside bakers’ racks, and a pet lizard he kept in a kiddy swimming pool, Josh Levine created the modern financial system. Large swathes of his code, like primordial DNA, remain in those exchanges.
Josh Levine is the ghost in the machine.
Scott Patterson figured out that Dark Pools, at its core, had to be an “origin story.” It has to feature the work of Josh Levine.
While he continued to regularly file pieces for The Wall Street Journal as his deadline approached, Scott also spent hours every day mapping out the narrative of his book. It’s just what he does. He’s a pro.
DARK POOLS is a jaw dropping achievement. It should result in SEC investigations and Congressional hearings. Seriously. If you have money in the market, you really need to read this book and then find some way to talk to one of “the 500” to do something about it.
Whether it changes the status quo or not, the pure storytelling of DARK POOLS is remarkable. Scott Patterson has reduced one of the most complex systems on the planet into a story about a human being trying to change the world for the better. He almost succeeds if not for the dark forces that preyed upon his magnanimity.
It ain’t hard for anyone to relate to that . . .
Congratulations to Matthew Quirk and Scott Patterson . . . two writers I’m privileged to work with.
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