Home / Research Interests / Finance and Business / Business


Business and Finance Biography

by Elwyn Berlekamp

In 1973, my wife Jennifer Berlekamp and I and Solomon Golomb cofounded Cyclotomics, which became the focus of my engineering and business interests. In December 1985, Eastman Kodak acquired Cyclotomics and renamed it "Kodak Berkeley Research". I then also served on the internal board for Kodak's Federal Systems Division from 1986 through 1989.

In 1984 some of Cyclotomics' small consulting contracts dealing with commercial cryptography were spun off into a new company called Cylink, which I cofounded with Jim Omura, its first CEO. Jim became CTO when we hired Lew Morris to be CEO. Cylink received venture capital funding in 1985. I became an outside member of its Board of Directors. Cylink grew to over 400 employees, and went public on NASDAQ in 1995. The stock soared and remained aloft even after Lew Morris had a debilitating stroke. We recruited a new CEO and expanded our Board of Directors to nine, to include such very well-known people as Silicon Valley marketing guru Regis McKenna and former Secretary of Defense Bill Perry, as well as Wall Street wizard Jim Simons. In the mid 1990s, I served as the liaison between Cylink's Science Advisory Board and its governing Board of Directors. I was also one of the three members of the Board's audit committee. This became a more intense educational experience than anyone had expected. After we discovered some serious problems with revenue recognition, we ordered a forensic audit, and then fired our CEO, CFO, and VP of Sales. We restated earnings and worked through class-action litigation for several subsequent years. Cylink's boom, financial scandal, and bust all happened a couple of years earlier than similar but better known sagas in many other companies. Cylink survived these crises, and was eventually merged into another NASDAQ company called Safenet.

For most of the 1980s, I served, along with John and Patti Torode, on the board of their company, IC Designs. In the early 1990s, it prospered and was acquired by Cypress Semiconductor. It became Cypress Timing Technology, Cypress' most successful division for a time.

In the late 1980s I also began studying and making small investments in a variety of instruments including private placements, angel investments, and venture capital funds. Some were successful and some were not.

In 1986, in an effort to learn more about futures and derivatives, I began spending a couple days a month consulting for Axcom, a small company whose sole business was to devise computer-based systematic trading strategies and use them to manage all trading of the Medallion Fund, of which Jim Simons was then the Pool Operator. My interactions with them lapsed for several months in the spring in 1989 while I was preoccupied with revising my part of the Kodak organization chart to optimize it after my impending exit. When I visited Axcom again that summer, I was surprised to find that their performance had deteriorated badly. Several of my earlier recommendations had been implemented incorrectly or ignored. Believing this to be a turnaround opportunity, I bought the biggest share of Axcom and became its CEO. Sandor Straus and other members of Axcom moved from Newport Beach to Berkeley. We were pleasantly surprised both by the speed and the magnitude of the turnaround. We resumed trading in late 1989. Calendar 1990 was a very good year. After deducting our fees of 5% of assets and 20% of profits, the net return to our investors that year was 55%. Jim Simons was eager for us to move to New York to be closer to the markets. But I wanted instead to devote more time to academic pursuits. So I sold out to Jim Simons at six times the price for which I had bought my Axcom interests 16 months earlier. It is now worth over a thousand times more. The Medallion fund has continued to be extraordinarily successful ever since. It is now widely regarded as THE most successful hedge fund in the world.

In 1991 I accepted the invitation of Alice and Klaus Peters to join them in cofounding their own small publishing company, A.K. Peters, Ltd. They were by far the best of several publishers with whom I had worked as an academic author. Their company published high-quality books and journals in mathematics and computer science, and sold them at reasonable prices. In 2006 we expanded the board from three to five to include William Randolph Hearst III and Fields Medalist David Mumford. In 2010, A.K. Peters was acquired by Taylor & Francis. They are now a part of CRC Press.

In 2008, I became chairman of a hedge fund called "Berkeley Quantitative". At our peak, we managed over $250 million of investors' money. In August 2009, we began trading the futures markets, primarily on the Globex exchange, using computerized algorithms. In February 2012, we discontinued trading, redeemed all accounts, and closed the fund. Those initial investors who stayed with us all 2.5 years realized a net return after fees of slightly over 1%.

In the 1990s I became more involved in nonprofits.

In 1992, I joined Tom Rodgers (an Atlanta businessman and puzzle enthusiast) and Mark Setteducati (a prominent professional magician) in organizing a gathering of fans of Martin Gardner, the writer whose Scientific American column on Mathematical Games had inspired many in the 1950s, 60s, and 70s. This first "Gathering for Gardner", was followed by "Gathering for Gardner 2", and then a third. The fourth was called G4G4, followed by G4G5, G4G6, etc. In 2007 we institutionalized these events as a nonprofit 5013C corporation named G4G, through which we are continuing and expanding our efforts to increase public appreciation of the importance of curiosity-driven math and science. Tom Rogers died in April 2012, and I became chairman of the board.

From 1994 to 1998, I was Chairman of the Board of MSRI, the Mathematical Sciences Research Institute, an NSF-funded independent organization located in Berkeley. I chaired the search committee which recruited a new director, David Eisenbud, and much of a new board. We eventually succeeded in raising private donations to fund increased programs and a new auditorium. As one of the world's two leading research centers for core mathematics, MSRI rivals the Institute for Advanced Study in Princeton, (which is also independent of the University located in the same town). More than a dozen foreign countries have established their own national mathematics research centers based on MSRI's model.

From 2001-2003 I was Chairman of the Board of ICSI, the International Computer Sciences Research Institute, another nonprofit research organization based in Berkeley. Although ICSI is less well-known than MSRI, its budget, much of which was originally funded by European governments, is more than twice as large.

In 2004, in cooperation with the East Bay Community Foundation, I sponsored and organized a fair for nonprofit organizations focussed on K-12 education. Over 20 such organizations came to exchange ideas and to build some alliances. Many donors also came, and some increased their support for a broader range of organizations. These fairs have become an annual event, now also attended by influential California state legislators.

I was elected to the NAE in 1977. I have been an active member of the NAS Finance Committee since 2000, and a new member of the NAE Finance Committee since September 2007. I was elected to the NAS in Applied Mathematics in 1999. I later became a founding member of its Section on Computer and Information Science, but later transferred to its Mathematics Section.