Flash Boys Epilogue - Riding the Wall Street Trail Through Pennsylvania
The book ends the way it started. With a cable buried under American soil and the people who live above it having no clue what it does.
Michael Lewis grabs a bicycle and rides along the Spread Networks fiber optic route through Pennsylvania. And the people he rides with make the whole ending feel like a quiet punchline.
The Women’s Adventure Club
Lewis joins the Women’s Adventure Club of Centre County, Pennsylvania. These are not regular Sunday bikers. Between them, they’ve swum the Chesapeake Bay, won silver at the downhill mountain biking world championships, finished 24-hour mountain bike races, and done thirteen Polar Bear Plunges in freezing rivers. Ronan heard about them and said: “It’s a bunch of lunatic women who meet up and do dangerous shit.”
It’s January. Below freezing. Windchill eleven degrees. They ride out of Boalsburg on Route 45. Pickup trucks roar past them way too close. “They hate bikers,” one woman explains calmly.
White Poles With Orange Domes
Every few hundred yards along the road, there are white poles with bright orange domes. The markers for the Spread Networks cable. If you were ambitious enough, you could follow them all the way to the Nasdaq data center in New Jersey. Or turn west and follow them to the Chicago Mercantile Exchange.
The women had noticed when the cable was being laid back in 2010. Construction crews blocked lanes. Amish kids in their wagons had to hop over the trenches to get home. A local government official told everyone it was a government project to bring high-speed internet to local colleges.
It wasn’t.
When Lewis told them it was actually a private cable built to give high-frequency traders a 3-millisecond edge, they had questions. Good ones. “How does a private line get access to a public right-of-way?” one woman asked. “I’m really curious to know that.”
That is actually an excellent question that the book never fully answers.
Goldman’s “Transition”
Meanwhile, Goldman Sachs was saying “We’re in a transition.” Their explanation for going from prosecuting Serge Aleynikov for emailing their HFT code, to supporting Brad’s IEX exchange that would make that same code worthless.
But here’s the thing. Goldman figured out that high-frequency traders would always be faster than big banks. Always. HFT firms didn’t need much capital. They went home every night with no stock positions. They only traded when they had an edge. That’s why some went five years without a single losing day.
So Goldman was stuck in a bad deal. When things went well, HFT firms took 85% of the profits. When things went badly, HFT firms disappeared and the banks ate the losses. Sound familiar? Same relationship Wall Street had with the rest of society.
Goldman saw the math. Started sending customer orders to IEX. But then pulled back a little. Internal politics. Some people inside Goldman weren’t happy about giving up short-term profit for long-term fairness.
The Real Cost-Benefit Analysis
Lewis does a simple cost-benefit breakdown of the entire HFT infrastructure. And it’s not pretty.
The Benefit
Stock market prices adjust to new information a few milliseconds faster.
That’s it. That’s the whole benefit.
The Costs
Market instability. Billions in intermediary fees that act as a tax on every investment. Smart people choosing careers in market gaming instead of building something useful. And maybe the worst part: once you pay brilliant people huge money to exploit flaws in the system, they have every reason to keep those flaws alive.
Brad put it simply: “We know how to cure this. It’s just a matter of whether the patient wants to be treated.”
The Red Round Barn and the Microwave Tower
The riders stop near a local landmark, the Red Round Barn. One of the women shares the old story that round barns were built so mice had no corners to hide in. Lewis connects this to something Brad once said: “People don’t know how to live in a world that is transparent.”
But look past the barn, up the mountain. There’s a microwave tower. Actually, a whole chain of them. Thirty-eight towers from Chicago to New Jersey.
When Spread Networks was building its fiber cable, everyone said microwave could never replace fiber. Too little bandwidth. Needs direct line of sight. Doesn’t work in bad weather.
But microwave is faster. About 4.5 milliseconds faster for a round trip. And it turns out, the data you need to front-run the market isn’t that complicated. Just: up or down. Buy or sell. In or out.
So while Spread Networks spent $300 million digging through mountains to shave off milliseconds, someone else was already building towers on top of those same mountains to beat them.
The FCC License Number
Before leaving the mountaintop, Lewis notices a metal plate on the tower fence. An FCC license number: 1215095. That number, plus an internet connection, leads to the company that built the tower and filed the application in July 2012. And that leads to yet another Wall Street story of secrecy and edge-seeking.
Lewis ends the book with this: “All that one needed to discover the truth about the tower was the desire to know it.”
My Take
This is what makes Lewis such a good writer. He starts the book with a cable being buried in secret, and ends it with towers being built on mountains in secret. The technology changes. The speed gets faster. But the game stays the same. Someone is always looking for an edge. Someone is always willing to spend hundreds of millions to get a few milliseconds ahead.
And the Amish kids hopping over the trench in their purple dresses? They had no idea they were jumping over a Wall Street arms race. Neither did anyone else driving past those white poles with orange domes.
The book leaves you with a question, not an answer. Can this be fixed? Brad thinks so. Goldman says they’re “in transition.” Everyone else is still building faster cables and taller towers.
The patient knows the cure exists. It just doesn’t want to take the medicine.
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