Trading firm co-founder James Hawkes pursues math 'courseware'
James Hawkes has led what most would consider a successful life.
At a glance
Name: James Hawkes.
From: A farm near Wilsons, Va.
Residence: James Island.
Family: Married to Anne Rahtjen; son, Ian, 31; daughter, Ellen, 28.
Education: University of Richmond, bachelor's in business, 1969; New York University, MBA, 1972; Clemson University, Ph.D. in management science, 1978.
Representative work experience: bank applications analyst, Federal Reserve Bank of New York; founder, Quant Systems; professor, College of Charleston; co-founder, Automated Trading Desk; founder of Quant Systems India.
Hobbies: Playing bridge; target shooting; composing and playing piano music.
He earned graduate degrees in business and math, started companies, has been a college professor and is married to a clinical pharmacist who shares his passion for bridge.
But decades after the fact, one fork in the road still haunts Hawkes: the decision not to go all-in on Automated Trading Desk, the firm he co-founded with his former professor that relied on rapid-fire computers and algorithms to play the stock markets. ATD was sold to Citigroup for $680 million in 2007, years after Hawkes had stepped away from any active role in the company.
It wasn't about the money for Hawkes, who still owned “a few percent” of ATD when it was sold. It was about the work. “I gave up my dream,” Hawkes said during an interview last month at the Mount Pleasant offices of the software firm he started before ATD and still leads.
“One of my dreams was I wanted to play a game for money that I could use a computer to play with,” he explained, “and I had to forgo that dream, I'm afraid.”
Hawkes didn't want to reveal the whole rationale publicly, but his other business, a mathematical modeling software company called Quant Systems, now called Hawkes Learning Systems, had something to do with it.
“God, did I want to go” to ATD, Hawkes said, but it was “hard to know whether it was going to be successful or not. And I had a real company. It wasn't a very big one, but it was big enough to launch this other one.”
Plus, Hawkes still held a stake in ATD, so he stood to gain if either venture succeeded. “If he wins, I win,” he said, referring to co-founder David Whitcomb, “If the company wins, I win. It was really a two-chance opportunity.”
To hear Hawkes tell it, ATD, and, by extension, the rest of his career, was the result of a series of coincidences.
After growing up on a tobacco farm south of Richmond, Va., Hawkes moved to the state capital for college. He was about to graduate, with no particular plans, when he walked past a pair of fellow students talking about graduate school, a possibility that hadn't occurred to him.
“I thought you had to be some kind of genius to go to graduate school, and I didn't perceive myself to be any kind of genius” he recalled.
A few paces later, he noticed a poster advertising New York University's on-campus information session and on a whim went in to chat with the recruiter. An hour later, he emerged with an offer to attend the MBA program for free, and a few months after that, he set foot in the Big Apple for the first time.
At NYU, Hawkes “had this crazy idea about modeling horse-racing,” specifically using historical data to predict how fast each horse would run. One of his professors, Whitcomb, was intrigued. “That sounds like fun,” Whitcomb said, according to Hawkes. “Let's do it together.”
They made several thousand dollars before Hawkes moved back south to Clemson to pursue a doctoral degree.
He moved to Charleston in 1977, where he began teaching at the College of Charleston. Two years later, he started Quant Systems, which initially consisted of Hawkes developing and selling project management and statistical analysis software out of a bedroom on the Isle of Palms.
His first employees were a couple of local math and computer geeks, Jonathan Butler and Steve Swanson, who went on to lead ATD, and later included Al Parish, who went on to run a massive Ponzi scheme. In 1985, the company transitioned into interactive educational software. “There was a wide open market,” Hawkes explained.
But another opportunity arose in 1987 when Hawkes happened to link up with his former teacher and co-bettor again.
Hawkes wrote Whitcomb on behalf of a student job seeker and, in the postscript of that note, he mentioned he'd just installed a satellite dish to receive real-time data feeds from New York in connection with a big options bet he'd made. They got to talking about how else computers could be used to revolutionize stock trading. “He came down that weekend and started ATD,” Hawkes said.
They brought on Butler and Swanson, who would become CEO; Hawkes withdrew from an active role after about a year. The rest is history.
Looking back, Hawkes estimated the probability of it all working out the way it did at “one in a googol,” a reference to the mathematical term that represents the number 1 followed by 100 zeroes.
Meanwhile, Quant Systems became Hawkes Learning Systems in 2004 and continued making “courseware” for everything from basic math to calculus. The core idea of Hawkes' approach is step-by-step instruction, aided by artificial intelligence, followed by as many tests as it takes to demonstrate mastery, with no pressure.
Of the company's roughly 500 customers, the majority are community colleges like Greenville Tech and four-year schools like the College of Charleston. “I really think if they used our products in high school, it would solve the math crisis,” he said.
Now based in the old Maersk shipping offices down a sylvan driveway off Long Point Road, Hawkes Learning Systems employs 60 people and is hiring.
Most of Hawkes' programming muscle comes from about the same number of programmers at Quant Systems India, a company Hawkes set up in 1994. Among their main tasks now is transitioning Hawkes' offerings from a client-server model to a browser-based infrastructure and optimizing its display on the iPad.
Just recently, Hawkes launched yet another venture, The Writer's Muse, to market a passion project that dates back to his first trip to India in 1994. It's an app called Spice that consists of tens of thousands of clever phrases culled from literature and elsewhere that have been linked together and organized into a “phrase thesaurus.”
“This is not something you've ever conceived of before but it's really cool,” he said, at least as excited about this writerly tool as he is about the math software.
Despite his regrets about not pouring his whole self into ATD decades ago, Hawkes has pressed forward. Now 65, Hawkes still speaks at an urgent pace. Hawkes said he thinks about retiring but “not imminently.”
Whenever he does, there will always be bridge, which involves enough math and modeling for most people.
Reach Brendan Kearney at 937-5906 and follow him on Twitter at @kearney_ brendan.