Lake Success, the latest novel by Gary Shteyngart, is a story whose themes sit at the core of American life. Protagonist Barry Cohen is a man at a crossroads. He’s a hedge fund manager with $2.4 billion under management, but his life and his business are on the verge of collapse. Barry decides to run away from it all by spending the summer of 2016 on a Greyhound bus, traveling across the country in search of an old flame. Meanwhile, his wife is left to take care of their disabled son and make sense of their lives. The Knowledge at Wharton radio show on Sirius XM invited Shteyngart to talk about his book, which is based on the lives of hedge fund managers he knows in New York. It a telling indictment of the world of finance.
An edited transcript of the conversation follows.
Knowledge at Wharton: Why hedge funds, why Greyhound, and why both together?
Gary Shteyngart: Hedge funds because I live in Manhattan, and all my previous books have been about life in New York. In the last decade or so, I realized that the friends I have in Manhattan, who I grew up with, were gone. Everybody had moved on because they couldn’t afford to live here anymore — moved to Berlin or the Middle East or Los Angeles or the mid-Hudson Valley. I thought, “Well, who’s left?” I looked around my building, my neighborhood, and I realized almost everybody works in finance or is somehow affiliated with finance. Maybe they worked for a law firm that had finance as a client.
I decided to get to know the financial industry, and I fell in with a bunch of hedge funders. I became friends with them and decided that my next character would be a hedge fund manager in great distress.
Knowledge at Wharton: Why put him on a Greyhound bus?
Shteyngart: After I’d gained a fair amount of knowledge into the world of hedge funds, the second thing I realized was that to delve into a character psychologically, it would be better for me to get him as far away from his money as possible. Various things happen to Barry, and he has to flee the city. He’s being investigated by the SEC. He has a crumbling marriage. He finds out that his kid is autistic. He leaves and makes a run for El Paso, Tex., where his college girlfriend lives. Instead of putting him on a NetJets or some kind of highfalutin way of traveling, I decided to put him on the most traumatic form of transportation in our country, and that is, of course, the Greyhound.
Knowledge at Wharton: I found a really interesting quote from you in The New Yorker, which is, “If you want to try to figure out America, get on the Greyhound,” or as you called it, “the Hound.” You actually traveled on the Greyhound while you wrote this book. What was that like?
Shteyngart: Yes, so I got on the Hound, or the Dog, as some call it. It was illuminating. It’s something that a lot of people, certainly people who live in this very rarified world of finance or tech, don’t get to experience. Or if they have experienced it as young people, they want to forget it as quickly as possible. But there was a whole new set of rules. It was the opposite of being on the Acela or something like that. It felt very militaristic.
The bus driver would issue instructions, and you’d have to comply with them. They often had to do with things like opening a can of tuna or sardines on the bus, or using profane language on the bus. It was a very monitored environment. But the people were also very different. Some were very hopeful. Others, it was clear, had recently left a correctional facility or a mental institution and were making their way across the country to reconnect with their families.
I wanted to combine these two very separate worlds — the very elite world of hedge funds and the quite non-elite world of the Greyhound bus. After a while, I think I almost wanted to spend more time on the Hound than in the hedge fund world because I never knew what would happen next, whereas in the world of finance, everything felt very decided-upon.
There’s a line in the book where Barry meets an architect in Greenwich, Conn., and the architect says, “I only build houses for bankers because it’s very easy. They have the same four houses, the same cars and the same four wives.” That’s an actual quote I heard from an architect who caters to people in hedge funds. I thought that was a perfect quote.
Knowledge at Wharton: When you got into the hedge fund culture, what surprised you?
Shteyngart: The big surprise was the level of unhappiness I encountered. Most of us know better than to equate having vast sums of money with happiness. In fact, studies show that beyond a modest level of income, very little additional happiness accrues. But these people are stressed out. Many of their funds were not performing well. They had very little connection with their families. They didn’t often see beyond their Upper East Side apartment, their Midtown club, their Midtown fund and their house in the Hamptons.
It almost fell to me to point out the intricacies of New York to them because they didn’t really experience the city in a big way. I would take them to my favorite bars and my favorite restaurants, which were not very expensive places but lovely nonetheless and try to reacquaint them with the rest of humanity.
Knowledge at Wharton: I read that some of them told you not to invest in their funds?
Shteyngart: I heard that quite a bit. This was at a time when funds were really getting hammered. The S&P was out-performing most of the funds I was covering by a huge amount, so there was a level of depression there, too. But even when things were going their way, there wasn’t a lot of happiness. Everyone was looking over their shoulder. Everybody was also very competitive with one another. That’s true in many industries, obviously. Even writers can be competitive with each other. But it was rare for anyone to say a kind word about anyone else, even though all these people were supposedly friends. That was a little disturbing.
Knowledge at Wharton: There have been a lot of media stories about the hidden role that hedge funds play in a lot of industries, including health care, newspapers and retail. The book touches on that. What do you think the implications are? Before you answer, I’d like you to read a short passage from the book. Barry has found himself in Atlanta, and he’s trying to reconnect with somebody he once mentored who ended up getting fired from his fund. He’s hoping to get a bridge loan.
Shteyngart: Sure. So, this is his former employee who was fired for making a critical mistake on an Excel spreadsheet:
That’s how I think of people like you. I always have the same visualization. I start with a row of middle-class houses, like the one my dad lives in, and then I see you. You go from house to house, from family to family, and you take money from their wallets, from their purses, from under their sofa cushions, and you put it into your pockets. And when your pockets are full, you put it in a duffle bag with the logo of your fund. You don’t sneak in. You don’t break in. You just walk amongst these people as if they’re invisible, and you take the money they’ve earned. And then you go home, and you buy a watch or whatever.
I’ll start by saying that a lot of the investments that many of the people I was following were making were quite morally dubious. There was no moral compass in making these decisions. For example, there were medical companies that were clearly benefiting shareholders at the expense of patients. Some of these were fraudulent and would later fall apart. But as soon as they’d sense that there was money to be made, they all piled into the very same trades.
A lot of these people made a few good trades, even though their lifetime profit and loss statements were in the negative sometimes — probably in the negative hundreds of millions. In the long-term, they hadn’t made a lot of money for their investors. They’d lost money for their investors. But because they’d made one great trade here or there, they felt that that entitled them to be sort of arbiters of anything — working with charter schools in Manhattan, trying to launch different educational initiatives.
In Lake Success, I lampooned that a bit. Barry is a watch fanatic, and he wants to start something called the Urban Watch Fund, where he wants to introduce poor kids to their first Rolex to help them take care of their first high-end mechanical watch. That becomes his idea of giving back. But it didn’t feel so much as charity as just willing to be proven right in front of their peers on some hare-brained scheme. Whether or not people benefit from that almost seems to be beyond the point.
Knowledge at Wharton: This novel says a lot about wealth and what it means when the wealthy control what happens. With Barry’s watch fund, he’s deciding what he thinks people need. What do you think happens when we have just a couple of rich people who are maybe using their private wealth to decide what the world’s problems are, and maybe they’re not really right?
Shteyngart: In this country, more than in other countries, we place such an emphasis on financial success above everything that we think that people who are successful financially have all the answers. Conversely, I think we feel that people who are poor are somehow morally dubious. There’s something wrong with them. There’s something in their values that didn’t work for them. We blame them for their own problems and for society’s ills. But at the same time, we celebrate anyone who makes a lot of money.
Our current president rose to power partly by exposing his wealth and, I would say, his questionable business acumen. I know he’s a graduate of your school, but there’s a feeling that we trust people who have a lot of money. Mike Bloomberg, who I think is a much better manager than Donald Trump and other business people, actually created a product that people in finance use. He also thinks that he has a great chance now of becoming a president and is starting to explore this possibility.
But the track record hasn’t been great. Elective office may require other qualities than success in business. The country, the city, the state — they’re not companies. They’re something quite different, and they require a different sense of stewardship than people who run companies. So, my feeling after living in the hedge fund world for quite a while was that being successful in finance does not automatically predispose you to a career in politics.
Knowledge at Wharton: Both you and Barry take your trips in the summer of 2016. What was that like ahead of the election?
Shteyngart: I started in June in New York and ended in September in San Diego. During those four months, I started out thinking, as most New Yorkers did, that Hillary Clinton was going to win, that Trump was a joke candidate that the GOP was mistakenly fielding. But by the end of the journey, you’d meet so many people, especially outside of the bubbles of New York and California, who were telling me otherwise. The mood was quite different when you left the coasts, for sure. I don’t ever believe that there’s this idea of “the real America.” I think New Yorkers are as real as anyone else, and Californians are as real as anyone else. But there are definitely different Americas. Traveling across the country on the Hound is a great way to see the totality of our country, which is often beautiful and often not.
Knowledge at Wharton: As Barry is on the bus and interacting with people, one thing that comes up over and over is this idea of, “If I could just teach them about capitalism, if they could just understand capitalism, they would understand what I do.” Do you think he understands capitalism? And what does it mean for us if the country is skewing closer to his version, rather than some other version?
Shteyngart: The fact that many people don’t have a good financial understanding is a big problem. There are statistics [showing] that many Americans don’t have enough money to cover a roof repair, not to mention any kind of medical problem that they or their families may face. This creates a less-informed electorate that would elect somebody like our current president because they don’t quite understand how capitalism works.
I’m not against all aspects of capitalism, and I’m not for all aspects of capitalism. I think there are good and bad things about it. But figuring it out means first understanding a little bit about how the system works. That means knowing a lot about finance, knowing something about technology. All these things should really be baked into our [education]; it should start in elementary school. It should be emphasized because this is something that everybody lives with and something that voters get to decide on.
Knowledge at Wharton: There are a lot of very rich people in the book who come from middle-class backgrounds, and you hear them romanticizing that a little bit. But it also reflects how disconnected they’ve become from that. Do you believe that’s also reflected in our society?
Shteyngart: Yes. I would say the vast majority of wealthy people came from a very similar background as I did. That’s maybe one reason I was able to enter the world so easily. I grew up an ambitious immigrant kid. I went to Stuyvesant High School, which is a math and science high school that has a lot of Asian immigrants.
A lot of the people I met fell into those categories as well. At a recent high school reunion, I realized that a large proportion of my fellow graduates at my high school were now working in finance. But we all grew up not rich — we were poor or lower middle class. We were sort of staving things off and living in the edges of places, like just outside of a major city like New York or Moscow or Rome or Bombay.
That feeling of being slightly on the outside, having a chip on your shoulder, often not getting all the love that you would want from your parents — those were all economic or psychological traits that were a part of most of the people I met. There’s definitely a profile of a successful hedge person. There’s certainly a lot of intelligence required, but there’s also a feeling of bottomless wants that can’t really be satisfied by anything.
Knowledge at Wharton: The other main character in the book is Barry’s wife, Seema. She alternates chapters with him. Why was it important to have a dual focus?
Shteyngart: The book is about finance. In some ways, it’s about the state of our nation after 2016. But it’s also about a family, because I think all good novels aspire to be novels about the relationship between partners, husbands and wives, and children and parents — all of this stuff is of primary interest to the novelist. Especially since Barry is on the road, his wife is left in New York, and has to pick up the pieces of not just the marriage, but the fact that she has a disabled son who is nonverbal and autistic. I wanted that kind of counterpoint. Barry is on the road, trying to find himself, but his wife is in New York, actually taking care of business. She really doesn’t have time to find herself because she’s raising a kid with a disability.
At first, I toyed with the idea of having the main character be a woman. But there weren’t that many female portfolio managers that I met. And the ones I did meet were pretty good at their jobs. They didn’t make these stupid trades that would blow up in the end. Maybe it was [because] they weren’t going through these horrible testosterone-fueled trades that were bound for failure. They were investing quite wisely and beating the S&P, if not spectacularly, but doing quite well. … So these women were not going to fit the bill. But the men were constantly on the verge of collapse, so that wasn’t a problem.
Knowledge at Wharton: Most of your novels previously have been about the immigrant experience, yours and others. I thought Seema’s character had some interesting things to say about the first-generation American experience. Can you talk about that a little bit?
Shteyngart: I was born in Russia, and I came to the United States when I was seven years old. But I’ve always felt like I was very much an immigrant because we grew up only speaking Russian in the house, and I didn’t lose my accent until I was much older. This was the first book that I wanted to have not as an immigrant, but as a first-generation American story. I think it’s in part because I have a kid who’s four years old. He’s the first generation to be born in this country, and there’s something exciting about having a progeny who’s an American but who has some connection to the immigrant experience through his dad.