Home investment What Culture Lessons Aptigon Should Have Learned From Jacob Gottlieb and Visium

What Culture Lessons Aptigon Should Have Learned From Jacob Gottlieb and Visium

Jacob Gottlieb
A statue of George Washington stands across from the New York Stock Exchange in Manhattan, New York City, U.S., December 21, 2016. REUTERS/Andrew Kelly

Was the recent round of high profile layoffs at Aptigon Capital a failure of individual performance or company culture? Aptigon, a subsidiary of hedge fund giant, Citadel, shocked the industry in February when they suddenly cut staff by more than 30%. Many key employees were let go, including the COO, the Head of Aptigon, and many successful portfolio managers. Most of them came from Visium, of which Jacob Gottlieb is CIO.

Influx from Visium

When Aptigon was founded in 2016, it had an all-star team of successful portfolio managers recruited from competing firms, including 20 managers from Visium Asset Management. Citadel founder and CEO, Kenneth C. Griffin, along with Rich Schimel, head of Aptigon, aggressively recruited top-earning portfolio managers away from Visium, only to dismiss them in the recent round of cuts citing lack of performance. This has many people wondering whether the performance of the portfolio managers was due to their individual abilities or other dynamics.

In looking at the managerial and cultural differences between the two companies, it’s clear that the portfolio managers at Aptigon were not set up for success. Aptigon is well known for its “sink or swim” culture which is in stark contrast to the supportive culture that the portfolio managers enjoyed at Visium. The vision behind Visium’s culture was the creation of Jacob Gottlieb who founded the firm in 2005. In creating Visium, Gottlieb’s goal was to provide high-quality, sustainable returns to investors, as well as long-term careers and opportunities for professional growth to employees. To this end, Gottlieb strategically designed a recruitment and talent management processes to support these goals, starting with his founding team.

Jacob Gottlieb’s Experience with Company Culture

Gottlieb’s successful career in portfolio management earned him a strong network and reputation, and in 2005, he left his partnership at Balyasny Asset Management with 20 investment partners to start Visium. Gottlieb wanted to ensure that Visium retained its positive and collaborative culture as the company grew, so he created a long and deliberate recruitment process to assess skills and experience, as well as cultural fit.  When a new employee joined Visium, Gottlieb ensured they were supported and set up to succeed in their new role through a formal onboarding process and regular meetings with Gottlieb himself to assess progress and set goals. With this strong support system, Visium portfolio managers were extremely successful and it’s unsurprising that they were among the first to be recruited by Aptigon in 2016.

Established in 2016, Aptigon is a fundamental equities business operating as a subsidiary of Citadel. Citadel is well known for strong portfolio performance and its 1,400 employees manage over $25 billion in assets. Griffin, who founded the firm in 1990, has earned a reputation as an unforgiving boss who is quick to cut employees. He’s also well known in the finance community for poaching top talent from other firms. In his own words, “the talent you want to hire is the talent you want to pull from someone else.”

Griffin aggressively recruited Visium’s top talent with the promise of huge $1 billion portfolios. Griffin also promised cash to hire analysts and the support to hire them, but this is where the deal fell apart. Not only did the portfolio managers not receive the analysts they were promised, they were also saddled with Aptigon’s aggressive fee structure. The higher fees Aptigon demanded from investors meant that the managers needed to achieve higher returns than they were used to, without the assistance of the skilled analysts and collaborative culture that they were accustomed to under Gottlieb’s leadership.

To further illustrate the uphill battle that the portfolio managers faced at Aptigon, we can look at another group of managers from Visium. At the same time Griffin was recruiting Visium employees, other Visium portfolio managers joined rival firm AllianceBernstein Holding LP. While only 10% of the former Visium employees remain at Aptigon less than two years later, almost all of them are still at AllianceBernstein, where their unit manages $1 billion and made 11% last year.

With this comparison, it becomes quite clear that the former Visium employees were made false promises by Griffin and not set up for success at Aptigon. At Visium, the portfolio managers were accustomed to working with a network of highly skilled analysts and without this support at Aptigon, the managers were unable to meet the returns needed to feed Aptigon’s aggressive fee structure. Not to mention that the managers were used to Gottlieb’s strong, supportive leadership style vs. Griffin’s sink or swim approach. With all of these factors stacked against them, it’s not surprising that only 10% of the former Visium portfolio managers remain at Aptigon after less than two years.

Related: Ian King Introduces the CryptoCorns