For all the swagger of that description, Arnold himself has virtually none. He is universally described as quiet and introspective. At Enron, a company famous for its brash, testosterone-laced cowboy culture, the perennially boyish-looking trader was reportedly so soft-spoken that his colleagues had to gather in close to hear him at restaurants. “People would read into it, and they would say he’s just being cagey,” D’Agostino says. “And then, after a couple of years, people were like, oh, no, he’s actually like that.”
Arnold is still quiet. “Usually the division of labor in most of our work is that I talk,” Laura Arnold says in a phone interview. By all accounts, Laura, who attended Harvard College and Yale Law School and worked as an oil executive, has been equally influential in setting the direction for the foundation. But when I visit the Arnold Foundation’s Houston headquarters in June, Laura has been called away on a family emergency, leaving John to do the talking. Arnold is 5'10", trim, and blandly handsome, his unusually youthful appearance now somewhat concealed by a salt-and-pepper beard.
Arnold grew up in Dallas. His mother was an accountant (she would later help manage the books at his hedge fund). His father, who died when Arnold was 18, was a lawyer. By kindergarten, Arnold’s talent for math was apparent. “I think I was just born with a natural gift for seeing numbers in a special way,” he says. Gregg Fleisher, who taught him calculus in high school, recalls an occasion when Arnold instantly solved a math puzzle that had been known to stump PhDs. But he also stood out for his skepticism. “He questioned everything,” Fleisher says.
By the time he was 14, Arnold was running his first company, selling collectible sports cards across state lines. Those were the early days of the internet, and he managed to gain access to an online bulletin board intended only for card dealers. The listings let him see that the same cards were sold at different prices in different parts of the country—which presented an opportunity for arbitrage. “Hockey cards didn’t have much of a market in Texas,” he tells me. “I would buy up all the premium hockey cards and send them to Canada or upstate New York.” He called the company Blue Chip Cards. Arnold estimates that he made $50,000 before he finished high school.
Arnold graduated from Vanderbilt University in 1995, taking only three years to finish his degree. He started working at Enron four days later. A year after that, at age 22, he was overseeing Enron’s Texas natural gas trading desk, one of the company’s core businesses.
Arnold’s work at Enron—seeking to capitalize on seasonal price differences in natural gas—wasn’t all that different from what he’d done as a teenager selling sports cards. In Hedge Hogs, a 2013 book about hedge fund traders, Jeff Shankman, another star trader at Enron, is quoted describing Arnold as “the most thoughtful, deliberate, and inquisitive person” he worked with on the gas floor. But Shankman recognized that he and Arnold were different in one key respect: Arnold had a greater appetite for risk, a quality that seemed at odds with his quiet demeanor. On some days at Enron, Arnold would trade more than a billion dollars’ worth of gas contracts. In 2001, even as Enron was collapsing amid an accounting scandal that covered up billions in debt, he was reported to have earned $750 million for the company. A former executive at Salomon Brothers later told The New York Times that there were very few incidents in the history of Wall Street comparable to Arnold’s success that year.
As Enron neared bankruptcy, executives scrambled to hold its operation together, offering bonuses to keep traders on board. Arnold was given $8 million, the biggest payout of all, just days before Enron filed for bankruptcy. He started Centaurus the next year, bringing along a small group of former Enron traders, who worked out of a single large room.
Arnold says he wasn’t sure if he could match the success he’d enjoyed as a futures trader at Enron. As a pipeline company, Enron had a direct view onto many of the factors that influence gas prices. Now he’d have to rely purely on his prowess with data. By law, natural gas pipelines had to make much of their information public, and around the time Centaurus was forming, more of that information began to appear online. “A lot of people didn’t know it was out there,” Arnold says. “People who did, didn’t know how to clean it up and analyze it as well as we did.”
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