Lee Geiger

Who’s turn is it to buy donuts?

Scott Kovalik

Early on a September morning when my insomnia wanted some company, an email arrived from Scott Kovalik, Chief Executive Officer of BTIG, a muscular financial services firm of 700 employees co-founded by Scott. I couldn’t recall the last time Scott and I had communicated, but his understated subject line–“moving over…”—piqued my interest. Oh boy, I thought. This should be good.

Scott’s note announced his move from CEO to a Chairman role, which meant that instead of driving the bus Scott would sit in the front row and offer suggestions as to which direction the new generation of drivers should go. It’s a natural progression, of course. It just that Scott’s retirement, in whatever form it may take, happened much sooner than I expected. Why? Because Scott is a pro, a born trader divined by God with bid and offer chromosomes, and I always thought he’d draw his last breath at a trading desk. Not necessarily while hunched over banging away at a keyboard, but definitely with a phone in his ear.

No one I’ve ever come across from the sell side of Wall Street had more of the “it” factor to be a success than Scott. NOBODY. Exactly what “it” is may be hard to define, but I know it when I see it. Notable figures such as Ronald Reagan, Muhammad Ali, and Steve Jobs had it, and so do current luminaries like Lady Gaga and Steven Spielberg. It’s more than just a high-octane recipe of charisma and talent. It’s the ability to command attention, a pull of magnetic energy demanding all eyes on you. You’re drawn to listen to what they have to say, then follow what they’re going to do. You marvel at them as they embark on journeys to places others fear to tread, where boundaries don’t apply and forbidden zones are to be explored. It’s a gift, especially to those who have the guts to know how and when to exploit it. Humility is not a job requirement; they’re bold, brash, pain-in-the-ass visionaries prone to push envelopes as well as other people’s buttons. And they’re not afraid to fail. They’re not perfect, mind you. Far from it, and at times their decisions, attitudes, and postulations can be as infuriating as they are charming. They are fearless, game-changing leaders, passionate about the missions they have chosen, and they also happen to be very good at what they do. That is Scott.

It simply comes down to this: On my list of top-tier traders who also became successful Wall Street executives, it begins and ends with Scott Kovalik. He is the list.

The legend of Scott Kovalik goes something like this. He grew up on a pig farm near San Jose, burned the midnight oil to claw his way into UC Berkeley, then made the most of his larger-than-life personality to land a job at Salomon Brothers, at the time the biggest and baddest trading house on Wall Street. After learning how to slug it out with the big boys, Scott moved to Montgomery Securities, the ugly runt of the Wall Street trading litter where bare-knuckled trading tactics were raised to an art form. Scott spent the next dozen years helping grow the firm, making his bones while carrying a very loud chip on both shoulders. Shy and sensitive, he was not. Scott then co-founded Baypoint Trading, which merged with Bass Trading in New York to create BTIG where, rumor has it, he and his partners make more money than a Saudi Arabian goat herder. Scott also shocked the world by marrying Lisa, a California beauty cut straight out of central casting. Lisa is the glaze to his donut, offering proof that Scott could sell ice cream to Eskimos despite having the body of a pineapple.

It not enough to say Scott is intelligent. He is. Supremely, in fact. Nor to suggest he has ferocious instincts, because he does; Scott could make a herd of hyenas’ blush. And it’s not true that his you-know-whats are made of brass, because they’re not. They’re titanium, and, like the Mona Lisa, they will one day be displayed in a museum behind a wall of bulletproof glass. Or so I’m told.

A piece of advice I deliver to young people looking to get ahead in their career is to find a cheerleader inside their company, someone who will have their backs and promote them to their bosses. For me, that was Scott. He was the first Montgomery Securities colleague to acknowledge my meager existence. One evening during the summer of 1991, Scott and Lisa invited The Pretty Blond and me (and three-month old Ross) to dinner at Melo’s Pizza and Pasta in Pleasant Hill. My production to that point was abysmal. I’d been fired from First Boston less than a year earlier, and I needed someone to say I was doing OK. Scott did, imploring me to keep working hard and to just be patient. Three years later I moved to Robertson Stephens, a crosstown rival reknowned for its investment banking prowess. My big boss at Montgomery said my decision was “the worst career move he’d ever seen.” Scott, meanwhile, knew my professional growth was being stunted and encouraged me to exit. He even held the door open for me.

Fast forward to February 1997. A big hitter at Montgomery had recently left the firm, and I was the perfect replacement. But Montgomery had never before rehired a former employee, and my former bosses considered me more traitor than trader. But Scott used his leverage and pressed my case, and I returned to Montgomery with a significantly sexier title and paycheck. As they say in the industry — nice trade.

Two years later, at what had morphed into Nationsbank Montgomery Securities, a palace revolt resulted in Scott becoming the Godfather of Equities, and he made the decision to give me my first shot at managing. I’m forever grateful for the experience, even though years later I came to the painful realization that while I’m pretty good at analyzing numbers, I’m lousy at managing divas.

One story from that period stands out as a testament to both the evolution of institutional equity trading and the vision Scott saw as to where the industry was going. I had arranged a meeting for Scott with the head of a leading New York-based hedge fund, who concluded our informal chit-chat by informing us that his firm was immediately slashing their commission rates from $0.05/share to $0.04. Commission compression on Wall Street had been going on for years, but a line in the sand had been drawn at a nickel a share. Or so I thought. “That’s fine,” said Scott, who didn’t so much as flinch. I, on the other hand, fought back the urge to regurgitate my pastrami and rye. One of my biggest accounts was cutting my compensation by 20%, effective forthwith. Sadly, they wouldn’t be the last.

A coup of a different feather occurred in 2002 after Bank of America merged with NationsBank, resulting in Scott and three members of his management team to don parachutes and start Baypoint Trading, a nascent broker-dealer working out of a dusty office in San Francisco offering institutional customers high-quality execution services at discounted rates. My cheerleader was gone, and I resigned a year later from Bank of America Securities to make pancakes for my kids. I later broke bread with Scott and his team to discuss joining their startup, but as an employee instead of a partner. That was a no-go for me; my over-inflated ego thought it deserved a piece of the pie. Ultimately, JMP Securities flew in with an offer that included a partnership and the rest, as they say, is history.

But that wasn’t my last at-bat with BTIG. Fast forward once more to February 2009. I’m sitting inside a stylish conference room at BTIG’s vast San Francisco headquarters after spending the prior week in Hong Kong, at Scott’s urging, auditioning to become the firm’s new Hong Kong office manager. All the BTIG honchos were there, including a pair who had flown in from New York. After some download and deliberation, Scott instructs one of his partners to draw up a compensation package that would bring me aboard. Weeks passed, however, and in the end BTIG said thanks, but no thanks. I’ve happily been with Penserra ever since, and it’s safe to say all parties involved would agree the Hong Kong job was a good miss.

I want the record to show that this rambling missive is not meant to be a Scott Kovalik puff piece, and only his immediate family would consider recommending him for sainthood. Truthfully, I would describe our relationship as friendly but not necessarily friends. And Lord knows I’m not looking for a job. That being said, Scott and I worked together for many years, and his giving up the day-to-day reins at BTIG is cause for this former professional colleague to rise to my feet and applaud. It’s been over two decades since I last worked for Scott, and while he wasn’t necessarily the best boss I ever had, I have always respected the hell out of him. And I would gladly run thru a wall for him if he ever called and asked.

Congratulations, Scott. I wish you and your family nothing but the best for whatever comes next.