WHY GLASSBOX?

Alfred Winslow Jones, credited for creating the first modern hedge fund in 1949, named his company A.W. Jones & Co. He inspired generations of founders to name their funds after themselves: Tudor, DE Shaw, SAC, Brevan Howard, etc., to convey that their personal investing style was the source of their overperformance. As more than 15,000 hedge funds operate globally, the quest for serious, awe-inspiring, gravitas-inbued names has often ended in picks from mythology (Cerberus, Apollo, Safkhet), pretty landscapes (Bridgewater, Blue Mountain), and street addresses (Point72). The better names can illustrate the philosophy of the company, from the now common "this is solid stuff" (Citadel, Fortress), to my personal favorite "let's watch this crash and burn", Hindenberg Research.

Who cares about the name of a hedge fund, though? Whatever you think of the aesthetic value of the fund names quoted above, they were all wildly successful in delivering performance and raising capital. Branding, which includes naming but also the principles and values of the company, is not what we sell. It can help, however, with defining our company culture, creating common knowledge of how we'll work together. Left to their own device, hedge funds have a notoriously ruthless and mercenary culture, as winner-takes-all incentive systems push people to operate in silos, and compete within and amongst teams. That's fine. But if we want a different culture, we need to think about it from the start. (Also, we have to pick a name.)

Esoteric buddhism recognized the power of a good riddle to spark philosophical musings and an earned sense of achievement. A riddle to solve, especially to riddle-loving quants, can make the most boring name feel like an epiphany. Blame my French mathematician bias, but I loved it when I realized that Squarepoint, on its face the most boring name of all, was an English translation of Poincaré, an eminent mathematician who went to the same university as Squarepoint's founders[1]. Symbolism plays a similar trick, providing a sense of satisfaction as one unfolds the thinly veiled metaphors[2].

So, why Glassbox? A glass box is the opposite of a black box, straighforwardly enough[3]: one is opaque, the other is clear. (I prefer *clear* to *transparent*, as the notion of transparency has somewhat been tainted by politics and morality[4]). On a superficial level, this means that our process should be intelligible, auditable, that we should always understand *how* the process is working. Our process is a glass box we can look into and explore its inner workings. But a clear design can only be the product of clear intentions, and more critical is understanding *why* the process was built the way it was. That is, laying out the problems that lead to the solution we picked, the alternatives we did not chose, the ambiguity we faced.

I started with these ruminations on fund names because it was fun to write, and to illustrate the first principle of Glassbox. When you have to do anything, ask yourself why you're doing it. And when you do it, do it with intent.

[1]: Disclosure: my university too.

[2]: Perhaps the most famous example in buddhism is the lotus flower, whose glowing beauty and continous blooming is rooted in muddy swamps. Please don't call your fund Lotus Capital. 

[3]: the ML community has preferred the term white box though, as if the color of the black box was its defining attribute, not its opacity. Obviously a fund followed suit.
[4]: Kundera in *The Art of the Novel*: "TRANSPARENCY. In political and journalistic discourse, this word means the unveiling of individuals' lives to the public eye. This brings us back to André Breton and his desire to live in a glass house under the gaze of everyone. The glass house: an old utopia and at the same time one of the most terrifying aspects of modern life. As a rule: the more opaque the affairs of the state, the more transparent the affairs of an individual should be; bureaucracy, although representing a public entity, is anonymous, secretive, coded, and unintelligible, whereas a private individual is obliged to reveal their health, finances, family situation, and, if the mass-media verdict has decided, they will find no moment of privacy left, neither in love, nor in illness, nor in death. The desire to violate the privacy of others is an age-old form of aggression that is now institutionalized (bureaucracy with its files, the press with its reporters), morally justified (the right to information becoming the foremost human right), and lyricized (by the beautiful word: transparency)."