At CMT, we’ve worked in a variety of different asset classes through our history, but our company’s biggest asset by far is our people. We’re a relatively small firm, and thus our success has been predicated on finding talented people who make an impact by themselves and an even greater impact when combined with a strong team.
We are taking an opportunity to highlight the people who have made, and continue to make, CMT what it is today. We’ll be spotlighting key members of our team over the coming months, and we’ll start today with one of our co-founders, Jan-Dirk Lueders. Read on to learn more about Jan’s entrepreneurial background, the philosophy of the company, and much more.
Take us through your career journey — how did you wind up in Chicago?
Across my entire career, I’ve really only had three jobs, the first of which was while I was still in high school. I grew up in Germany, and I worked at a high-profile startup called Star Division, which was acquired in 1999 by Sun Microsystems. It was started by a guy who was not much older than I — that had an impact on me.
After my first semester of business school, I went to Chicago, purely by chance. I didn’t want to go backpacking during semester breaks — I wanted to learn. I had grown up riding and breaking horses, and I talked to my trainer about where I could go and do that. The only address he had was The Tempel Lipizzans, north of Chicago. I wanted to go somewhere closer, like the UK, but Chicago was the only option. This was in 1990, when the globe wasn’t quite the village it is today.
So I got on my first flight at age 20 and flew to Chicago. I had taken English in school but never really used it outside of the classroom, and I was living in a log cabin near the facility with a guy from the Israeli Special Forces — I have quite a few funny stories from that time.
How did you end up in the trading world from there?
One of the horses I trained was owned by a trader at the Chicago Board of Trade. We started talking and he invited me down to the office to see the floor — that was when I got introduced to Chicago Research and Trading (CRT). At the time, the early 90s, it was one of the two biggest market making firms in the world. I was introduced to the founder, Joe Ritchie, who offered me an internship.
During the internship, I was introduced to Scott Casto, who is five years older than I and was working for CRT in the pit. They were going to open an office in Frankfurt, and I was asked to join, so I followed there.
Scott and I ran the Frankfurt office for a couple of years until it was sold to Bank of America. Scott left, and we were out of touch for a year. Luckily, we met up again and I told Scott I was going to set up my own firm for electronic trading. Scott was going to set up an open outcry operation in London. So we thought: why don’t we figure out if we want to do this together? We spent a long weekend in Florida in March of 1997, and that’s when we set up CMT.
What were the guiding principles in setting up the firm? And how did it grow?
During that Florida trip, Scott and I realized that we could be more successful working together than we could individually. That philosophy is still very much ingrained at CMT. We are really a partnership of motivated, driven people who believe they can be more successful in a partnership than as individuals. To the extent that our interests are aligned, we will find ways to work together and overcome disagreements. That’s core to what we do.
One important point is that, rather than having one overriding vote, we set the firm up as an equal partnership — if there were ever an issue where there was a big enough disagreement, we would just dissolve the firm. This has served us really well. Not many trading firms make it 22 years, especially when they are co-led and no one has a majority vote. We don’t have any division of responsibility — if anything works well we can pat each other on the shoulder, and if there is a problem there is no pointing fingers.
With our structure in place, our team expanded quickly; we were already at about 35 people by the end of 1999. In 2000, the firm expanded to about 50 when we took on a former CRT team based in Tokyo. We first focused on trading in Europe, then Asia as we matured. We soon started to have more capital internally than we could use in trading, so we started investing. We decided we wouldn’t distribute profits individually, but rather keep the capital in the firm to make it stronger and invest the proceeds together. In the early days, our investments were mostly in hedge funds; later we began investing in private equity, and more recently, we began making venture capital investments in the blockchain space, led by Colleen [Sullivan, CEO of CMT Digital]. Today, we also have a couple of equity options businesses focused on European and U.S. equity options, as well as an energy trading business. Our trading businesses are based in London and Frankfurt, and our crypto trading activities are here in Chicago.
What prompted the creation of CMT Digital and the entrance into the cryptocurrency space?
Colleen fits right into our philosophy. She had a startup firm (iOptions) that we invested in nearly two decades ago — we got to know and appreciate her, and involved her in the company more and more. We leveraged her legal experience, and eventually she became partner and general counsel with us.
A few years back, she came to us and said, “Bitcoin is really interesting, we need to look at it.” At first, Scott and I were unsure; we didn’t know anything about bitcoin. We thought it could be a passing phenomenon, but in fact the opposite was true, and she became increasingly interested. It took Colleen two years to convince us that there is a lot more to it behind the hype, and at that point we got involved very heavily, which led to the launch of CMT Digital. We put our resources behind her, and she has been very passionate about it. The tech is groundbreaking, and it has the potential to change our lives profoundly.
What do you envision for the future of CMT/CMT Digital, and how does cryptocurrency play into it?
Our DNA and background is trading, and we will always be involved in trading. However, we’ll never be a large trading institution — there are great examples of that right here in Chicago, and they are very successful, but that’s not what we’re interested in.
We like to be very agile and pursue what we think are the best trading and investment opportunities at the time. If they turn out not to be so good, we move on. I hope that we can continue to do that successfully over the next 20 years.
Blockchain technology is the biggest opportunity I see right now. It is likely the one that will make the biggest difference during the remainder of my career, for the next 10–20 years. It is not only going to change us as a trading/investment firm, but it is going to change all of our lives. We’ve seen tremendous changes with the explosion of smartphones and the increasing ease of transferring free information — it’s really exciting to think of all the possibilities of transferring valuable information with the same ease, using Digital Ledger Technology.
What are your passions outside of CMT?
I grew up with horses but, once I started trading, I didn’t have the time to pursue any equestrian sport. For about 10 years, I just focused on being a trader, entrepreneur, and father.
Later, I started motor sports — that has always been a personal interest of mine. I started that about 15 years ago, doing endurance racing in Europe and America at the highest level you can do. However, I stopped when we adopted our youngest daughter; it became more and more apparent that while it’s a great sport, it’s probably not a great family sport, not ideal for a toddler.
My wife is an avid equestrian, and we were looking for an equestrian sport to do together. We had a chance to try polo and we fell in love with it. For the past five or six years, we have spent a lot of time enjoying that sport together as a family. We have a facility in Barrington Hills that we built a few years ago — Barrington Hills has a number of players and three fields, so there is plenty of opportunity to play.
What experiences prepared you to become an entrepreneur?
My decision to spend my professional life as an entrepreneur is due to a number of factors. My family history is one where entrepreneurs have played a big role. My great-great-great-grandfather was a carriage-maker by trade, and at 27 he founded a train car company — at the time, it was a big deal to switch from horse-drawn carriages to locomotives. The company was quite successful and had an impact on later generations. (It still exists today, although not owned by our family anymore.)
Many of my parents’ friends were entrepreneurs, some of whom I spent a lot of time with growing up. They all worked a lot and enjoyed their work, and were successful financially, so I was drawn to the lifestyle.
It was also interesting to see the differences between the U.S. and Germany. Joe Ritchie — who to this day is a very important mentor for me — gave me a chance for no other reason than I seemed motivated and spoke German. This was quite a contrast with what I saw in Germany. When I was 21, and had just worked for a year at one of the biggest options markets firms, I applied for a trading assistant job at Deutsche Bank. I was turned down because I did not have the requirement of a three-year apprenticeship at a German bank.
Two years later, at age 23, I was elected as the youngest member of the German Exchange Council. After the first meeting, the CEO of Deutsche Bank, Rolf Breuer, asked if I wasn’t German, and if I was, why then I was working for an American firm. I said that I had been turned down at his bank for a trading assistant position not so long ago.
What is a piece of advice you would give young entrepreneurs that you wish you had known early on in your career?
Setting up your own business can really be a life-fulfilling thing. Especially on our private equity side now, when we talk about millennials we hear a lot about life-work balance, and that’s always seemed a little strange to me — I guess all I know is running my own firm. If you’re setting up your own firm you need to make sure you really enjoy it. You’re not looking for balance between life and work — they are the same. Your mindset should not be focused on finding a clear separation and finding a balance. If you are unable to do that, you are probably pursuing something for the wrong reasons.
One thing I’ve found over the course of my career is that really good, really gifted entrepreneurs (or traders, for that matter) are in many respects like successful professional athletes — the people who are just doing it for the money typically burn out quickly. They’re not necessarily different in skill. It’s the guys who love what they’re doing and are really passionate about it, and not just about the money, who are successful in the long term.
If you’re an entrepreneur, you have to be successful financially at some level, of course, but if you’re just doing it for money, you ultimately won’t be successful. If you’re doing it, it has to be something you want to do for life.