http://www.bloomberg.com/apps/news?pid=20601109&sid=aI7Vgoya5Bak&refer=home Lime's Gorton Trades Fast, Seeks Car-Free Utopia (Update1) By Lisa Kassenaar March 23 (Bloomberg) -- Step off the elevator into Lime Group's offices atop an 11-story brick building in New York's Chinatown into a crowd of more than 60 stone Buddhas and Asian lions, all handpicked by the company's founder, Mark Gorton. To the right, down a staircase, is a metal door that leads to Lime Brokerage LLC, which Gorton says trades stocks faster than any other company on Wall Street -- as many as 6,000 orders a second. At the end of a long hall is LimeWire LLC, maker of the world's most-popular Internet file-sharing software, with 50 million monthly users. The U.S. recording industry says the product is designed for infringing music copyrights -- an accusation Gorton denies -- and is suing for damages of at least $450 million. Gorton himself sits at a corner desk with a group of math geeks writing algorithms for Tower Research Capital LLC, Lime Group's in-house quantitative hedge fund, a firm with $117 million in assets. His next project, due this spring, is LimeMedical LLC, which will sell software aimed at helping U.S. doctors reduce paperwork. He's also developing LimeSpot, Internet-based software to help people build and share Web sites. And he runs a nonprofit Web-based venture in urban planning, part of his pet project of reducing traffic in New York. ``He's a classic entrepreneur,'' says Fred von Lohmann, an intellectual property attorney at the Electronic Frontier Foundation, a nonprofit group based in San Francisco. ``He has a lot of businesses going at the same time, and if they don't work out, he'll start three more.'' Slices Gorton agrees. ``My to-do list doesn't ever seem to end,'' he says. ``The biggest problem is that I may not be able to keep the focus; I can get distracted,'' says Gorton, 40, an electrical engineer and former bond trader who has degrees from Harvard, Stanford and Yale universities. ``I didn't envision a lot of this stuff a few years before I was doing it.'' Lime's companies are slices of Gorton's view of the digital future -- one in which the right software will smooth almost any human interaction, from trading stocks to swapping songs, from recording a patient's medical diagnosis to placing speed bumps on city streets. His 140 employees are mostly computer scientists in their 20s and 30s who share his ideals, particularly that software should be open source, or editable by all of its users. Lime employees, on call for impromptu strategy meetings that may last into the wee hours, also make latkes or chili at bimonthly group lunches, ski and surf together and share Gorton's only car, a 2000 black Toyota 4Runner nicknamed the ``LimeMobile.'' Idea Man ``It's the ideas that push things forward for him,'' says Rob Hranac, 32, who worked for Lime from 2001 to '03 as a software developer in the charity wing and now heads business development at Berkeley Transportation Systems Inc. in Berkeley, California. ``The money is a vehicle to get things out there.'' Lime Brokerage, which has a growing roster of hedge fund clients, has attracted the notice of Scott Appleby, an analyst who follows publicly traded financial exchanges at Deutsche Bank Securities Inc. in New York, even though the company is private. ``Lime is a leader, and this is the future of part of the broker-dealer world,'' he says. ``Their pipes are built in such a way that you can get a lot of orders done in a short time.'' Sitting in a Chinatown bakery on a frosty winter morning, Gorton, dressed in jeans and a thick, gray sweater, talks about his ideas for an hour after the coffee is drained. Car-Free Broadway ``I've beaten the markets a half dozen times and will do it a half dozen more,'' says the Lime Group chief executive officer, who has recently read both ``Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street'' by William Poundstone and ``Team of Rivals,'' Doris Kearns Goodwin's biography of Abraham Lincoln. ``As a personal challenge, it doesn't mean that much anymore,'' he says. What means more, he says, is traffic. Gorton, who cycles six miles (10 kilometers) to work down Manhattan's West Side Greenway and dreams of his three children riding their bikes on a car-free Broadway, has just toured Chinatown's narrow streets, pointing out counterfeit parking passes and pedestrians bumping into each other to make way for a truck pulled up on the sidewalk. He says he spent $2 million last year on projects to promote pedestrian traffic and cycling in New York. Since September, he's more than doubled the staff to 27 people at The Open Planning Project, the nonprofit known as TOPP, which is developing software for a wiki, or collaborative Web site, to let anyone add to the urban planning in a given locale. ``Part of this, for me, is `What is there to do?''' he says. Moroccan Lanterns Gorton's surroundings have always mattered to him. He's outfitted Lime's headquarters with a Moroccan-themed common area featuring dozens of lanterns and a painted-ceramic toilet-and- sink set. A roof deck is planted with hundreds of pots of flowers, tomatoes and strawberries. At TOPP's offices in a 200- year-old former sail factory in Greenwich Village, Gorton decreed that the furnishings fit the theme of ``Budapest 1930.'' ``If you are trying to attract the best people, having a nice space makes good business sense,'' he says. ``But I do it mostly for myself.'' Mark Howard Gorton didn't start out in the city. He grew up in suburban Oradell, New Jersey, a town of 8,000 people 22 miles from New York, where his father worked as an industrial equipment salesman out of their three-bedroom house. In high school, Gorton played on the soccer team and watched a lot of TV, he says. Mondrian Clock In 1988, he graduated magna cum laude from Yale with a bachelor's degree in electrical engineering. He was studious and a little offbeat, says Sean Hecht, 39, a classmate who's now executive director of the UCLA Environmental Law Center at the University of California, Los Angeles. Hecht remembers that Gorton's passion for Dutch artist Piet Mondrian drove him to build a large clock in his dorm room influenced by the painter's geometric forms. ``It wasn't exactly something other kids were doing,'' Hecht says. ``He's always been a very creative and energetic guy.'' Developed Modems Gorton headed from Yale to Stanford, where he earned a master's degree in electrical engineering. He then joined Martin Marietta Corp., now part of defense contractor Lockheed Martin Corp., working with other engineers developing modems to help the U.S. Air Force outsmart enemy signal jamming. In 1991, he headed to Harvard Business School and, two years later, to Wall Street. Gorton traded bonds for almost five years on the proprietary fixed-income desk at Credit Suisse First Boston. At first, he loved the job. ``You felt like you were in the center of the world,'' he says. After a while, though, he wanted to do trades that incorporated stocks and other securities, as well as bonds, something that wasn't possible for him at the bank, he says. In February 1998, Gorton and Alistair Brown, a CSFB colleague and fellow engineer, rented a third-floor room on West 12th Street in Manhattan and started Tower Research with money they had earned at CSFB. Tower, which trades exclusively for Gorton and a handful of employees and friends, looks for statistically predictable patterns in the financial markets and works to profit from small discrepancies in the numbers. Its engineers program the fund's computers to trade every time the inequity occurs, without any human involvement. Weather Derivatives ``Right now, there's a gap between systems in the marketplace, and these algorithmic traders are taking advantage of that gap,'' Deutsche Bank's Appleby says. Tower trades global stocks, bonds, currencies and futures, as well as weather and energy derivatives, Gorton says, declining to elaborate. Weather derivatives let traders bet on above-normal or below-normal temperatures for a given city at a given time. One of Gorton's early employees was Brad Banks, who was completing a master's degree in engineering at Massachusetts Institute of Technology in Cambridge when he was hired in 1999. Banks recalls standing with a group of colleagues, all under age 30, on April 3, 2000, watching the Nasdaq Stock Market's 100- stock index tumble 7.6 percent -- while Tower's automated trading program raked in profits. ``I believed they would do impressive things, and it seemed potentially rewarding,'' Banks says of Gorton's automated trading strategies. ``And it was.''