Nobody who doesn't wear a number on their back retires at 38.
Laid off, maybe. Pushed out, certainly. But voluntary departure from an occupation that has brought both a fortune and a national profile simply is not done.
Nothing along the path John Arnold had followed for almost two decades suggested he would reach this spot at this moment - this headline-grabbing decision to walk away from Centaurus Energy, the centerpiece of which was a successful hedge fund that he managed. Perhaps the country's most celebrated energy trader, Arnold was supposed to keep applying his skills, turn the several billion dollars he had earned into many more billions, use that mother lode for ever increasing access and power, become a figure of greater national prominence and speculation, finally to emerge as the paterfamilias of a new name on the roster of American aristocracy.
But he had a simpler idea: To hell with all that.
"I see people working well beyond the point where they need to work to have everything they could ever want," Arnold said in an interview. "They spend their whole life creating a pile of money with no real plan on what to do with it. I view that as a partial failure of a life. With great wealth comes great responsibility."
As a natural gas trader, Arnold faced recent challenges brought on by a growing surplus of gas. When he announced to investors late last month that he was shutting down the Centaurus Energy Master hedge fund, there was media speculation that he had lost the urge to compete in a tougher market. The assertion belied his historic consistency of making smart and amazingly profitable decisions in a variety of market conditions, but he acknowledged such notions were at least half right: He had lost the urge, albeit for different reasons.
"Inertia is a powerful thing," he said. "I started to question what I wanted to be doing today. Recently, I came to the conclusion that I was more excited by working at the foundation coming up with effective ways of creating change and solving problems."
Neither John Arnold nor his wife, Laura, typically do media interviews. Private by nature, they see publicity as an unnecessary distraction from the work that has absorbed them for the better part of two decades. But with a new chapter looming following his decision to turn away from energy trading, they spoke openly last week about the task now confronting them - how to give away most of the money they have made, more than $3 billion, with the greatest possible benefit.
Sitting in a conference room at the Galleria-area offices of the Laura and John Arnold Foundation, they soon clarified one public misconception: There is no question of retirement. Investing a large amount of money in the areas that interest them, with the goal of solving problems sooner rather than later, is a full-time concern, not to mention the unswerving demands of three small children.
And it's not a hobby. The Arnolds are serious people who speak with precision, sometimes with language bordering on the academic, and their pleasant, low-key demeanor belies a mutual intense streak that tells you their philanthropic investment comes not as a casual, noble impulse but with a studied expectation of results.
If you are simply looking for someone to write you a big check in exchange for a name on the wall and a nice dedication ceremony, look elsewhere.
"At the most basic level, the mission is to change the country," said Laura Arnold, a former corporate lawyer who quit in 2005. "So we ask in what areas, with our personal bandwidth and intellectual capital and resources, can we make the biggest impact? We're open to doing anything."
Dressed in a stylish floral dress with an accent bracelet boasting large purple squares of amethyst, Laura would have fit in perfectly at any society luncheon. By contrast, her husband and his regulation business casual attire of slacks and dress shirt would have blended into any engineering office. But appearances have never been a matter of much concern. They have one objective with many facets - find a problem with a solution and do something about it.
The irony, of course, is that sometimes that means trying to counter the previous efforts of people like themselves.
"The influence of power associated with concentrated wealth often leads to sub-optimal results," John said, whose rhetoric often suggests his economics degree and the years spent in financial analytics.
Their foundation is not some mere tax-code fiction where they park money to hand out to good causes. They created it in 2008 as a way of institutionalizing an aggressive, hands-on and pragmatic approach to giving, which they had started a few years earlier when they become involved a couple of well known Houston charter schools. Their foundation now employs about two dozen people and had more than $711 million in assets in 2010, the most recent year for which IRS documents are available.
Serious about change
Their life's next chapter is one they approach with the seriousness of a first-year medical student. The foundation's earnest and wordy web site - no fancy graphics or colorful video clips - reflects the intense nature of its creators. Both are described by those who know them as diligent, tireless, studious and demanding. The mission statement they crafted contains no gushy sentiment or heart-warming platitudes: "Our core objective is to produce substantial, widespread and lasting reforms that will maximize opportunities and minimize injustice in our society."
The last of the 10 principles which they say guides the foundation's approach indicates why John felt the need for more time.
"Philanthropists should take an active role in their own projects, and not be primarily staff or consultant driven," they wrote.
Like others of their generation who have acquired great wealth, the Arnolds are eager to give, but they want something back, something more than awareness or recognition of an issue. Putting out a thoughtful report that shines a light on some important subject, grabs a few minutes of media interest and then gathers dust on a shelf is an exercise they would see as a waste of time and resources.
"We think of ourselves as sort of R&D for the country," Laura said. "A kind of laboratory for the country. We pick the idea up, whatever it is, and make it happen by whatever means necessary. We are committed to achieving change."
To them, the D, development, is just as important as the research.
"If there is not a reasonable chance of success, we are not interested," John said. "What we ask going in is whether there's a pathway to success. Is there a bipartisan willingness to solve a problem?"
Whatever their area of interest - be it criminal justice reform, fundamental restructuring of education for disadvantaged children or an overhaul of public employee pension programs so that they can continue to meet the needs of those yet to retire - they are looking for lasting solutions, not incremental improvement.
A visit to the foundation website finds no mention of a cure for cancer, a new wing on a hospital, a home for troubled children or a program for teen mothers. It's not that the Arnolds are opposed to any of that. Periodically they quietly bestow one-off personal gifts to causes or institutions, especially in Houston, because they said it is important to honor the city where they found their success. But individual acts of charity are not what drive them.
"Everybody has a different definition of what philanthropy means," Laura said. "Our definition is achieving social change. We view ourselves as an entity designed to achieve policy goals."
Politically, they said, they are all over the map. They have supported President Barack Obama, but the president of the foundation, Denis Calabrese, was a longtime conservative consultant, spokesman and policy analyst. Certain initiatives, including education and pension reform, will put the Arnolds at odds with entrenched Democratic Party elements. Criminal justice reforms typically face GOP opposition.
However they and their foundation spend their money, they are determined to spend it. Figuring out how may have seemed all the more daunting because of their backgrounds. The Arnolds were not born into wealth. They never expected to have a fortune so vast, nor did they particularly want it. Making it grow even bigger, establishing a "House of Arnold" to perpetuate their name and legacy, had no appeal.
"We do not believe in dynastic wealth," Laura said. "We believe our children will benefit much more from what we do philanthropically than what we leave them in the will."
Grew up in middle class
According to the lists that rank billionaires, the Arnolds are among the 100 richest Americans (No. 91 in 2011, according to Forbes magazine), with assets that reportedly exceed $3.5 billion. It's a shocking thing, they admit. Both grew up in typical middle-class homes, John in north Dallas and Laura in Puerto Rico and Florida. Neither experienced any financial hardship - both of their fathers were professional - but they attended public schools, worked as they got older, never went on fancy vacations or lived in homes where luxury was in evidence.
They went to good colleges, John at Vanderbilt and Laura at Harvard. They shared drive and ambition. Success was just a matter of time. What they could not have predicted was how little time that would be. Enron's meteoric rise took John, its star trader, along with it. Its sudden fall had nothing to do with his part of the business. He moved on.
In late April, when Arnold wrote a letter to his investors telling them he was ending the fund that had been highly profitable, he did not mention what he was going to do next, saying only that he was pulling the plug in order "to pursue other interests." But hints of his shifting priorities had already surfaced when he and Laura joined the Pledge Givers, a collection of some of America's wealthiest people who have agreed to give away most of their fortunes to charity.
The Arnolds explained then that finding the best use for what they have earned had become an overriding concern. The last sentences of their formal statement on the Pledge Givers website all but telegraphed his intention. The end of the fund should not have been such a big surprise.
"We fully intend to achieve transformative results during our lifetime," they wrote. "And there is no reason for delay."