Goldman Sachs Steals Open Source, Jails Coder

Flash Boys: A Wall Street Revolt, Lewis, Michael. 2014. W. W. Norton & Company. pp. 141-149.

After a few months working on the forty-second floor at One New York Plaza, Serge came to the conclusion that the best thing they could do with Goldman’s high-frequency trading platform was to scrap it and build a new one from scratch. His bosses weren’t interested. “The business model of Goldman Sachs was, if there is an opportunity to make money right away, let’s do that,” he says. “But if there was something long-term, they weren’t that interested.” Something would change in the stock market— an exchange would introduce a new, complicated rule, for instance— and that change would create an immediate opportunity to make money. “They’d want to do it immediately,” says Serge. “But if you think about it, it’s just patching the existing system constantly. The existing code base becomes an elephant that’s difficult to maintain.”

That is how he spent the vast majority of his two years at Goldman, patching the elephant. For their patching material he and the other Goldman programmers resorted, every day, to open source software—software developed by collectives of programmers and made freely available on the Internet. The tools and components they used were not specifically designed for financial markets, but they could be adapted to repair Goldman’s plumbing. He discovered, to his surprise, that Goldman had a one-way relationship with open source. They took huge amounts of free software off the Web, but they did not return it after he had modified it, even when his modifications were very slight and of general, rather than financial, use. “Once I took some open source components, repackaged them to come up with a component that was not even used at Goldman Sachs,” he says. “It was basically a way to make two computers look like one, so if one went down the other could jump in and perform the task.” He’d created a neat way for one computer to behave as the stand-in for another. He described the pleasure of his innovation this way: “It created something out of chaos. When you create something out of chaos, essentially , you reduce the entropy in the world.” He went to his boss, a fellow named Adam Schlesinger, and asked if he could release it back into open source, as was his inclination. “He said it was now Goldman’s property,” recalls Serge. “He was quite tense.” Open source was an idea that depended on collaboration and sharing, and Serge had a long history of contributing to it. He didn’t fully understand how Goldman could think it was okay to benefit so greatly from the work of others and then behave so selfishly toward them. “You don’t create intellectual property,” he said. “You create a program that does something.” But from then on, on instructions from Adam Schlesinger, he treated everything on Goldman Sachs’s servers, even if it had just been transferred there from open source, as Goldman Sachs’s property . (Later, at his trial, his lawyer flashed two pages of computer code: the original, with its open source license on top, and a replica, with the open source license stripped off and replaced by the Goldman Sachs license.)

The funny thing was that Serge actually liked Adam Schles-inger, and most of the other people he worked with at Goldman. He liked less the environment the firm created for them to work in. “Everyone lived for the year-end number,” he said. “You get satisfied when the bonus is sizable and you get not satisfied when the number is not. Everything there is very possessive .” It made no sense to him the way people were paid individually for achievements that were essentially collective achievements. “It was quite competitive. Everyone’s trying to show how good their individual contribution to the team is. Because the team doesn’t get the bonus, the individual does...”


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