Ken Griffin isn’t a people person. The billionaire founder of hedge fund Citadel has proved himself an adept reader of markets and a savvy investor, thriving in areas of finance where an otherworldly mastery of electronic markets takes precedence over personal relationships. Back on earth, Griffin is notoriously hard to work for.
Case in point: Kevin Turner, the former chief operating officer of Microsoft, who lasted only seven months in the hothouse of Citadel’s Chicago headquarters before unexpectedly leaving on Jan. 27. Griffin hired Turner in July as the first chief executive officer of Citadel Securities, a market-making business that acts as a middleman for its customers, trading stocks, options, swaps, and Treasury bonds. Griffin’s objective is to transform the little-known operation into a powerhouse that facilitates buying and selling in an array of securities for investors around the world.
“We were struggling with how to manage the complexity that goes with achieving global scale across products and geographies,” Griffin said in a November interview for a profile of Turner that fell apart after his surprise departure. “How do you handle the matrix of Europe, Americas, and Asia across rates, FX, commodities, and equities? How do you make that work every minute of every day?”
Apparently not with Turner in charge. That conclusion was reached by “mutual agreement,” Citadel says. Turner has an impressive résumé. He ascended from cashier to high-level executive at Walmart Stores. In 2005 he was wooed away to Microsoft, where he spent 11 years as chief operating officer and became its highest-paid executive. “He is a guy who is very results- and accountability-oriented,” says former Microsoft CEO Steve Ballmer.
Griffin gambled that Turner’s résumé could translate to finance, agreeing to pay him $25 million a year for two years for his perspective, according to a person familiar with the matter. The challenge Turner faced was parlaying his experience building out Microsoft’s cloud computing business and boosting retail sales at Sam’s Club into increasing swaps and bond trading.
Turner often speaks of businesses “creating clarity” to “separate the urgent from the important” to “generate energy.” A voracious reader of business strategy books, he seeks out the famous authors. At Walmart he brought in Jim Collins to help his executives learn how to go from Good to Great. Deepak Chopra got the call to discuss The Soul of Leadership with Turner’s Microsoft colleagues. Within his first few days at Citadel Securities, he gave Carol Dweck’s Mindset: The New Psychology of Success to senior executives. “One leadership guru doesn’t fit everyone,” he said in November.
Turner’s unfamiliarity with the world of finance came out at client meetings, where his repeated use of clichés and catchphrases from the business books he constantly read made for uncomfortable encounters, according to people familiar with the matter. One Citadel Securities executive would warn customers before meeting Turner not to expect any details from him, according to another person. Turner name-dropped his former bosses Bill Gates and Sam Walton. He was unwilling to engage with employees a few levels below him, even when they knew more about the business than he did, according to one of the people who encountered him at Citadel and asked not to be named. Turner declined to comment.
Turner’s departure brings Citadel Securities back to Square One. Peng Zhao had left the unit upon Turner’s arrival to take on the newly created role of chief scientist. Now that Turner’s gone, Zhao, who has been a standout success in his decade at the firm, has been named the new CEO. One of the most senior executives within Citadel Securities, he previously held the title of global head of market making. Profit margin at Citadel Securities “should be north of 30 percent,” according to Griffin, who declined to comment beyond a statement the company previously sent after Turner’s departure.
Zhao has stayed mainly in the background while earning Griffin’s respect for his intelligence, according to a person familiar with the matter. While earning a Ph.D. in statistics from the University of California at Berkeley, he published a paper about an analysis method, “On Model Selection Consistency of Lasso,” in the Journal of Machine Learning Research in 2006.
A methodical executive, Turner counted the days he’d been on the job. In an interview in November he noted it was his 70th day in charge. A couple of weeks earlier—Day 58—as part of the great fanfare surrounding Turner’s hire, Griffin brought him onstage at a client event at the New York Public Library. Former Federal Reserve Chairman Ben Bernanke, whom Citadel named as an outside senior adviser in 2015, also spoke at the event.
Griffin has seen executives come and go in short order before. In 2008 he hired former Merrill Lynch executive Rohit D’Souza to spearhead his plan to create an investment bank; he quit a year later. His replacement, Patrik Edsparr, was ousted after seven months following disagreements with Griffin over business strategy and management. Griffin disbanded the investment bank in 2011, but its electronic trading systems and infrastructure became part of what’s now the market-making unit.
“I want tension in my business,” Griffin said last year. “Tension creates change. Change is necessary to evolve and prosper. I am never satisfied.” No doubt Turner understood this best on Day 125, his last at Citadel Securities.
The bottom line: Ken Griffin hired Microsoft’s highest-paid executive, even though he didn’t have a finance background. He lasted seven months.