WEBVTT 00:00:00.000 --> 00:00:01.992 align:middle line:90% [SQUEAKING] 00:00:01.992 --> 00:00:03.984 align:middle line:90% [RUSTLING] 00:00:03.984 --> 00:00:05.976 align:middle line:90% [CLICKING] 00:00:05.976 --> 00:00:18.260 align:middle line:90% 00:00:18.260 --> 00:00:19.280 align:middle line:90% PETER KEMPTHORNE: OK. 00:00:19.280 --> 00:00:21.880 align:middle line:84% Tarek has just joined us, I believe. 00:00:21.880 --> 00:00:23.640 align:middle line:90% TAREK MANSOUR: Hey, everyone. 00:00:23.640 --> 00:00:25.400 align:middle line:90% PETER KEMPTHORNE: Hey, Tarek. 00:00:25.400 --> 00:00:26.840 align:middle line:90% Well, welcome. 00:00:26.840 --> 00:00:30.280 align:middle line:84% And just as a brief introduction, 00:00:30.280 --> 00:00:33.160 align:middle line:84% I'm really very proud to introduce 00:00:33.160 --> 00:00:36.280 align:middle line:90% Tarek Mansour to everyone. 00:00:36.280 --> 00:00:43.480 align:middle line:84% He graduated from MIT about six years ago or seven years ago, 00:00:43.480 --> 00:00:45.580 align:middle line:84% and he was actually in this class. 00:00:45.580 --> 00:00:50.360 align:middle line:84% And so we're really very pleased that he 00:00:50.360 --> 00:00:52.580 align:middle line:90% has come as a guest lecturer. 00:00:52.580 --> 00:00:56.420 align:middle line:84% And his background, he left-- when he left MIT, 00:00:56.420 --> 00:01:02.790 align:middle line:84% he joined really the giants of Wall Street, Goldman Sachs, 00:01:02.790 --> 00:01:05.150 align:middle line:90% Citadel, and Bridgewater. 00:01:05.150 --> 00:01:08.870 align:middle line:84% I'm sure most of you are very familiar with those names. 00:01:08.870 --> 00:01:14.630 align:middle line:84% And three years ago he started Kalshi 00:01:14.630 --> 00:01:21.150 align:middle line:84% with Luana Lopes Lara, another MIT student. 00:01:21.150 --> 00:01:24.630 align:middle line:84% And I think it's been a phenomenal success, especially 00:01:24.630 --> 00:01:26.110 align:middle line:90% in the last month. 00:01:26.110 --> 00:01:31.710 align:middle line:84% So let me hand it over to Tarek to share his experiences 00:01:31.710 --> 00:01:35.237 align:middle line:90% and details on Kalshi. 00:01:35.237 --> 00:01:37.570 align:middle line:84% TAREK MANSOUR: Well, first of all, thanks for having me, 00:01:37.570 --> 00:01:38.670 align:middle line:90% Peter. 00:01:38.670 --> 00:01:41.450 align:middle line:84% Really, really excited to be back in the class. 00:01:41.450 --> 00:01:44.390 align:middle line:84% I know Lara did last year, and I think 00:01:44.390 --> 00:01:46.950 align:middle line:90% I did the year before that. 00:01:46.950 --> 00:01:51.457 align:middle line:84% And maybe I'll talk a little bit about background, 00:01:51.457 --> 00:01:53.790 align:middle line:84% leading-- the way I'm thinking about doing this is just, 00:01:53.790 --> 00:01:55.110 align:middle line:84% I'll talk a little about the story of Kalshi, 00:01:55.110 --> 00:01:57.630 align:middle line:84% how we decided to do it, what is the long term vision, what 00:01:57.630 --> 00:01:59.470 align:middle line:90% we're trying to achieve. 00:01:59.470 --> 00:02:02.310 align:middle line:84% And then we'll do a little bit of Q&A, 00:02:02.310 --> 00:02:05.110 align:middle line:84% and then maybe we'll see how it goes from there. 00:02:05.110 --> 00:02:07.750 align:middle line:84% PETER KEMPTHORNE: Excuse me, Tarek, just a quick question. 00:02:07.750 --> 00:02:11.930 align:middle line:90% Your video isn't on for us. 00:02:11.930 --> 00:02:13.450 align:middle line:84% I don't know if you can turn it on. 00:02:13.450 --> 00:02:15.270 align:middle line:90% That would be great. 00:02:15.270 --> 00:02:17.790 align:middle line:84% TAREK MANSOUR: It should be on, but let me check. 00:02:17.790 --> 00:02:19.040 align:middle line:90% It's on for me. 00:02:19.040 --> 00:02:20.290 align:middle line:90% It's on Zoom, so let me check. 00:02:20.290 --> 00:02:21.123 align:middle line:90% Let me double check. 00:02:21.123 --> 00:02:22.710 align:middle line:90% One second. 00:02:22.710 --> 00:02:25.150 align:middle line:84% PETER KEMPTHORNE: Oh, that's great. 00:02:25.150 --> 00:02:27.568 align:middle line:90% We can see you now. 00:02:27.568 --> 00:02:28.610 align:middle line:90% TAREK MANSOUR: Oh, great. 00:02:28.610 --> 00:02:29.390 align:middle line:90% Great. 00:02:29.390 --> 00:02:30.130 align:middle line:90% Sorry about that. 00:02:30.130 --> 00:02:35.790 align:middle line:84% I think I'm in a little bit of a unstable Wi-Fi. 00:02:35.790 --> 00:02:37.870 align:middle line:90% So yeah. 00:02:37.870 --> 00:02:40.170 align:middle line:84% Maybe I'll talk a little bit about my background. 00:02:40.170 --> 00:02:43.330 align:middle line:84% I really like coming back to this class 00:02:43.330 --> 00:02:48.790 align:middle line:84% because a lot of the interest in financial markets and math, 00:02:48.790 --> 00:02:50.130 align:middle line:90% I think, stem from the class. 00:02:50.130 --> 00:02:52.450 align:middle line:90% So I was born in California. 00:02:52.450 --> 00:02:53.790 align:middle line:90% I grew up in Lebanon. 00:02:53.790 --> 00:02:57.500 align:middle line:84% I think one of the things that I really 00:02:57.500 --> 00:03:00.912 align:middle line:84% enjoyed doing in middle school and high school is, 00:03:00.912 --> 00:03:02.120 align:middle line:90% I actually really loved math. 00:03:02.120 --> 00:03:04.270 align:middle line:84% I really, really liked math, and I 00:03:04.270 --> 00:03:06.020 align:middle line:84% think it felt like MIT was the right place 00:03:06.020 --> 00:03:12.720 align:middle line:84% to go if-- for someone who loves math, and so got into MIT. 00:03:12.720 --> 00:03:15.820 align:middle line:84% And I think the thing I realized is one of the best 00:03:15.820 --> 00:03:18.860 align:middle line:84% applications of math is finance, to start 00:03:18.860 --> 00:03:21.338 align:middle line:90% working in a number of-- 00:03:21.338 --> 00:03:22.880 align:middle line:84% whether it was sell side or buy side, 00:03:22.880 --> 00:03:25.020 align:middle line:90% so banks like Goldman Sachs. 00:03:25.020 --> 00:03:26.000 align:middle line:90% I worked at Citadel. 00:03:26.000 --> 00:03:30.580 align:middle line:90% I worked at small prop shops. 00:03:30.580 --> 00:03:33.400 align:middle line:84% And then the thing I realized is-- 00:03:33.400 --> 00:03:34.920 align:middle line:84% I would say, I realized two things. 00:03:34.920 --> 00:03:37.280 align:middle line:90% I mean, one, I like trading. 00:03:37.280 --> 00:03:42.080 align:middle line:84% I really enjoy trading, but I realized I prefer building more. 00:03:42.080 --> 00:03:45.420 align:middle line:84% I like the notion of building new products 00:03:45.420 --> 00:03:49.420 align:middle line:84% and building something new, but it's so tangible. 00:03:49.420 --> 00:03:53.160 align:middle line:84% And two, when I was at Goldman, I mean, 00:03:53.160 --> 00:03:59.410 align:middle line:84% I think a lot of the thing that we've seen 00:03:59.410 --> 00:04:01.860 align:middle line:84% is that financial instruments do get developed over time. 00:04:01.860 --> 00:04:03.610 align:middle line:84% They take a long period of time, but there 00:04:03.610 --> 00:04:05.590 align:middle line:84% is a lot of opportunities to basically develop new things. 00:04:05.590 --> 00:04:07.632 align:middle line:84% And there's always needs for a lot of new things. 00:04:07.632 --> 00:04:09.490 align:middle line:84% One example in 2016 is that a lot of people 00:04:09.490 --> 00:04:13.170 align:middle line:84% were actually trying to get a hedge or an exposure to Brexit, 00:04:13.170 --> 00:04:15.138 align:middle line:84% and they didn't really-- they weren't really 00:04:15.138 --> 00:04:16.430 align:middle line:90% the right instruments for that. 00:04:16.430 --> 00:04:18.555 align:middle line:84% People would use traditional financial instruments, 00:04:18.555 --> 00:04:20.890 align:middle line:84% like stocks and options and others, 00:04:20.890 --> 00:04:24.690 align:middle line:84% to get that binary exposure that people were looking for. 00:04:24.690 --> 00:04:27.130 align:middle line:90% And it was just not perfect. 00:04:27.130 --> 00:04:27.630 align:middle line:90% It was not. 00:04:27.630 --> 00:04:28.350 align:middle line:90% It was a proxy. 00:04:28.350 --> 00:04:31.050 align:middle line:84% It was indirect, and it was super expensive 00:04:31.050 --> 00:04:35.610 align:middle line:84% because it was what we call over-the-counter, OTC traded. 00:04:35.610 --> 00:04:38.635 align:middle line:84% And so what we thought, and it was kind of really early 00:04:38.635 --> 00:04:40.010 align:middle line:84% at the time was, like, well, what 00:04:40.010 --> 00:04:41.470 align:middle line:90% if we have a financial market? 00:04:41.470 --> 00:04:43.262 align:middle line:84% So we have a financial market for equities, 00:04:43.262 --> 00:04:45.690 align:middle line:84% so the price equities, one that prices credit, 00:04:45.690 --> 00:04:48.950 align:middle line:84% like bonds and so on; one that prices commodities; 00:04:48.950 --> 00:04:51.062 align:middle line:84% and we have financial markets for currencies. 00:04:51.062 --> 00:04:53.520 align:middle line:84% What if we had a financial market that prices basically any 00:04:53.520 --> 00:04:55.480 align:middle line:84% question about the future, any event that 00:04:55.480 --> 00:04:58.200 align:middle line:84% is in the horizon that is meaningful economically 00:04:58.200 --> 00:04:59.760 align:middle line:90% or socially or culturally? 00:04:59.760 --> 00:05:03.600 align:middle line:84% And I think the thing that became very apparent 00:05:03.600 --> 00:05:09.880 align:middle line:84% is, one, if such a market were to exist, it has the potential 00:05:09.880 --> 00:05:12.907 align:middle line:84% to be the biggest financial market of all, 00:05:12.907 --> 00:05:15.240 align:middle line:84% mostly because it's just broader than anything else that 00:05:15.240 --> 00:05:16.760 align:middle line:90% came before it. 00:05:16.760 --> 00:05:21.160 align:middle line:84% And two, there were a lot of regulatory issues 00:05:21.160 --> 00:05:24.213 align:middle line:90% with that type of market. 00:05:24.213 --> 00:05:25.880 align:middle line:84% Basically, historically, the US has made 00:05:25.880 --> 00:05:27.940 align:middle line:90% these illegal or unregulated. 00:05:27.940 --> 00:05:29.800 align:middle line:90% They haven't let anyone do it. 00:05:29.800 --> 00:05:33.200 align:middle line:84% And at the time we were very naive. 00:05:33.200 --> 00:05:38.600 align:middle line:84% We thought, well, that sounds like a problem we can solve. 00:05:38.600 --> 00:05:42.920 align:middle line:84% And we just got into it, so we decided to start a company. 00:05:42.920 --> 00:05:46.920 align:middle line:84% I didn't go back to Citadel, and so we just 00:05:46.920 --> 00:05:48.420 align:middle line:90% decided to start Kalshi. 00:05:48.420 --> 00:05:50.920 align:middle line:84% And the premise is really like-- it's like, how about-- what 00:05:50.920 --> 00:05:53.305 align:middle line:84% if we build the first large-scale prediction market, 00:05:53.305 --> 00:05:55.180 align:middle line:84% and we want to do it as a financial exchange, 00:05:55.180 --> 00:05:58.280 align:middle line:84% a regulated financial exchange so that this can become an asset 00:05:58.280 --> 00:06:00.640 align:middle line:84% class that's traded one day by the large hedge 00:06:00.640 --> 00:06:05.360 align:middle line:84% funds and institutions and brokers and so on and so forth? 00:06:05.360 --> 00:06:08.740 align:middle line:84% And when we first started, it was tough. 00:06:08.740 --> 00:06:12.920 align:middle line:90% 00:06:12.920 --> 00:06:14.780 align:middle line:84% Well, any company is really tough to start, 00:06:14.780 --> 00:06:17.985 align:middle line:84% but I think this was particularly tough because we-- 00:06:17.985 --> 00:06:19.360 align:middle line:84% it was kind of a funny story, was 00:06:19.360 --> 00:06:22.040 align:middle line:84% we called pretty much every single securities/derivatives 00:06:22.040 --> 00:06:24.040 align:middle line:84% lawyer in the country and asked them, hey, 00:06:24.040 --> 00:06:25.580 align:middle line:90% we're trying to do this. 00:06:25.580 --> 00:06:28.280 align:middle line:90% Can you help us? 00:06:28.280 --> 00:06:30.960 align:middle line:84% And the answer was basically, everybody-- the range 00:06:30.960 --> 00:06:33.560 align:middle line:84% was either being laughed out of the room, all the way to, 00:06:33.560 --> 00:06:36.600 align:middle line:84% hey, this is just not going to work. 00:06:36.600 --> 00:06:39.440 align:middle line:84% The CFTC and the regulators just never 00:06:39.440 --> 00:06:41.120 align:middle line:90% wanted to do anything like this. 00:06:41.120 --> 00:06:45.840 align:middle line:84% And the reason we kept going is because none of the answers 00:06:45.840 --> 00:06:47.740 align:middle line:84% are actually intellectually satisfying. 00:06:47.740 --> 00:06:49.190 align:middle line:90% There wasn't a clear answer. 00:06:49.190 --> 00:06:49.890 align:middle line:90% Like, OK, why? 00:06:49.890 --> 00:06:53.958 align:middle line:84% They're like, well, because of they could be manipulated. 00:06:53.958 --> 00:06:55.750 align:middle line:84% I'm like, OK, but that's solvable, same way 00:06:55.750 --> 00:06:57.280 align:middle line:90% we solved the stock market. 00:06:57.280 --> 00:06:59.530 align:middle line:84% And then the other one is, well, it could be gambling. 00:06:59.530 --> 00:07:01.572 align:middle line:84% It's like, well, why is it gambling and something 00:07:01.572 --> 00:07:04.390 align:middle line:90% like a grain future is not? 00:07:04.390 --> 00:07:06.605 align:middle line:84% I mean, some people are betting on grain futures. 00:07:06.605 --> 00:07:08.730 align:middle line:84% And sure, some people are hedging on grain futures, 00:07:08.730 --> 00:07:09.830 align:middle line:84% but it's the same thing for Brexit. 00:07:09.830 --> 00:07:11.630 align:middle line:84% A lot of people are exposed to Brexit. 00:07:11.630 --> 00:07:14.210 align:middle line:90% And we kept going. 00:07:14.210 --> 00:07:17.663 align:middle line:84% We basically got the company regulated. 00:07:17.663 --> 00:07:19.830 align:middle line:84% We took three years, so we took two years and a half 00:07:19.830 --> 00:07:21.890 align:middle line:84% to three to basically get it regulated. 00:07:21.890 --> 00:07:24.670 align:middle line:84% And we basically launched the first legal exchange 00:07:24.670 --> 00:07:27.510 align:middle line:84% or legal prediction market in the US after that. 00:07:27.510 --> 00:07:28.770 align:middle line:90% It took us a very long time. 00:07:28.770 --> 00:07:30.250 align:middle line:90% It was a very long journey. 00:07:30.250 --> 00:07:31.250 align:middle line:90% But we got the exchange. 00:07:31.250 --> 00:07:32.430 align:middle line:90% We got the clearinghouse. 00:07:32.430 --> 00:07:36.950 align:middle line:84% Well, we got the exchange at the time, and we got up and running. 00:07:36.950 --> 00:07:42.230 align:middle line:84% And I think Peter has seen all the journey of the company. 00:07:42.230 --> 00:07:47.360 align:middle line:84% We started running and then we grew a lot. 00:07:47.360 --> 00:07:49.660 align:middle line:84% And then we had a bunch of, I would say, 00:07:49.660 --> 00:07:55.320 align:middle line:84% issues and infighting between us and the federal government, 00:07:55.320 --> 00:07:58.563 align:middle line:84% the CFTC, especially this prior administration, which 00:07:58.563 --> 00:08:00.980 align:middle line:84% was kind of really tough on financial-- financial services 00:08:00.980 --> 00:08:02.203 align:middle line:90% and financial innovation. 00:08:02.203 --> 00:08:03.620 align:middle line:84% And the big thing that happened is 00:08:03.620 --> 00:08:06.700 align:middle line:84% they didn't let us list the election market, which we always 00:08:06.700 --> 00:08:12.642 align:middle line:84% believe is one of the biggest markets of all basically. 00:08:12.642 --> 00:08:14.600 align:middle line:84% We took a very long time to make that decision. 00:08:14.600 --> 00:08:16.580 align:middle line:84% It was a very tough one, but we ended up 00:08:16.580 --> 00:08:18.200 align:middle line:90% suing the federal government. 00:08:18.200 --> 00:08:21.580 align:middle line:84% So we were really one of those first, I would say, 00:08:21.580 --> 00:08:26.500 align:middle line:84% examples of a regulated company suing its own regulator. 00:08:26.500 --> 00:08:29.280 align:middle line:84% It's a very tough and painful decision to make at the time. 00:08:29.280 --> 00:08:33.100 align:middle line:84% Obviously, it was the right one now, looking back in retrospect. 00:08:33.100 --> 00:08:36.539 align:middle line:84% And we won earlier this fall, and so that win 00:08:36.539 --> 00:08:38.260 align:middle line:84% was actually the first time in 100 years 00:08:38.260 --> 00:08:39.860 align:middle line:84% that you can actually trade legally 00:08:39.860 --> 00:08:41.539 align:middle line:90% on the election in the US. 00:08:41.539 --> 00:08:43.220 align:middle line:84% And that opens up a lot of opportunities 00:08:43.220 --> 00:08:46.500 align:middle line:84% beyond the election because what the lawsuit was about is, 00:08:46.500 --> 00:08:48.740 align:middle line:84% it's really expanding the universe 00:08:48.740 --> 00:08:52.700 align:middle line:84% of things that are considered financial instruments now. 00:08:52.700 --> 00:08:56.337 align:middle line:84% And so where Kalshi is at now, we've 00:08:56.337 --> 00:08:58.420 align:middle line:84% grown a lot over the last few years but definitely 00:08:58.420 --> 00:08:59.045 align:middle line:90% the last month. 00:08:59.045 --> 00:09:02.980 align:middle line:90% 00:09:02.980 --> 00:09:06.040 align:middle line:84% We've done over a billion of volume in the last month alone. 00:09:06.040 --> 00:09:12.460 align:middle line:84% And now, as we think about our future expansion plans, 00:09:12.460 --> 00:09:15.260 align:middle line:84% we're getting into a number of different categories, 00:09:15.260 --> 00:09:17.260 align:middle line:84% financial services, just basically 00:09:17.260 --> 00:09:19.580 align:middle line:90% like financial markets, sports. 00:09:19.580 --> 00:09:21.020 align:middle line:84% We want to basically have a market 00:09:21.020 --> 00:09:23.562 align:middle line:84% for every single piece of news that's out there in the world. 00:09:23.562 --> 00:09:24.757 align:middle line:90% And we want to over time. 00:09:24.757 --> 00:09:26.340 align:middle line:84% What we're doing is, we're integrating 00:09:26.340 --> 00:09:29.690 align:middle line:84% some of the large brokerages, where we're going to have-- 00:09:29.690 --> 00:09:32.540 align:middle line:90% 00:09:32.540 --> 00:09:34.760 align:middle line:84% people can come to kalshi.com to trade the asset. 00:09:34.760 --> 00:09:36.980 align:middle line:84% But also if you want to trade the asset from your own 00:09:36.980 --> 00:09:39.600 align:middle line:84% brokerage account, like see your 401(k) in your stocks, 00:09:39.600 --> 00:09:42.058 align:middle line:84% you will be able to do that on Schwab, Robinhood, Fidelity, 00:09:42.058 --> 00:09:44.410 align:middle line:90% and so on. 00:09:44.410 --> 00:09:48.390 align:middle line:84% Let's talk a little bit about finishing the narrative arc, 00:09:48.390 --> 00:09:50.290 align:middle line:84% and then I'll talk some of personal stuff, 00:09:50.290 --> 00:09:52.910 align:middle line:84% going from being a student to starting a company and so on. 00:09:52.910 --> 00:09:57.930 align:middle line:84% But one of the things that was interesting throughout 00:09:57.930 --> 00:10:02.490 align:middle line:84% the journey is, a lot of what it basically ends up taking 00:10:02.490 --> 00:10:07.970 align:middle line:90% is just perseverance around-- 00:10:07.970 --> 00:10:09.690 align:middle line:84% basically perseverance towards the goal 00:10:09.690 --> 00:10:10.940 align:middle line:90% that you're trying to achieve. 00:10:10.940 --> 00:10:14.555 align:middle line:90% 00:10:14.555 --> 00:10:16.570 align:middle line:84% I mentioned at the beginning that we were naive 00:10:16.570 --> 00:10:17.590 align:middle line:90% when we first started. 00:10:17.590 --> 00:10:19.423 align:middle line:84% And in retrospect, I think that was actually 00:10:19.423 --> 00:10:21.240 align:middle line:90% one of the best things that-- 00:10:21.240 --> 00:10:23.490 align:middle line:84% or I'd say one of the best tools that we had, actually 00:10:23.490 --> 00:10:26.890 align:middle line:84% being naive, because a lot of the people that-- 00:10:26.890 --> 00:10:29.450 align:middle line:84% if we knew how hard it would be, we probably just 00:10:29.450 --> 00:10:30.842 align:middle line:90% wouldn't have done it. 00:10:30.842 --> 00:10:33.550 align:middle line:84% And there's something to be said about when you climb a mountain, 00:10:33.550 --> 00:10:36.450 align:middle line:84% people tell you, just look at the next step, one 00:10:36.450 --> 00:10:37.450 align:middle line:90% step at a time. 00:10:37.450 --> 00:10:40.050 align:middle line:84% Don't look at the summit, just because when you look 00:10:40.050 --> 00:10:41.920 align:middle line:90% at the summit, you get tired. 00:10:41.920 --> 00:10:44.200 align:middle line:84% And I think there's a lot to be said. 00:10:44.200 --> 00:10:47.160 align:middle line:84% I think this applies to pretty much anything 00:10:47.160 --> 00:10:48.080 align:middle line:90% meaningful in life. 00:10:48.080 --> 00:10:50.080 align:middle line:84% I think just doing anything meaningful basically 00:10:50.080 --> 00:10:52.960 align:middle line:90% requires a lot of perseverance. 00:10:52.960 --> 00:10:56.760 align:middle line:84% The company has raised more than $100 million 00:10:56.760 --> 00:11:03.360 align:middle line:84% from a few investors, Sequoia, KKR, Schwab itself, YC, 00:11:03.360 --> 00:11:06.840 align:middle line:84% and a bunch of others in Silicon Valley. 00:11:06.840 --> 00:11:09.340 align:middle line:90% And I think that's about it. 00:11:09.340 --> 00:11:10.850 align:middle line:90% I think I covered most things. 00:11:10.850 --> 00:11:13.100 align:middle line:84% Peter, I was thinking we could do a little bit of Q&A, 00:11:13.100 --> 00:11:14.725 align:middle line:84% and then we can orient the conversation 00:11:14.725 --> 00:11:17.800 align:middle line:84% to some of the places that the students want to hear about. 00:11:17.800 --> 00:11:18.920 align:middle line:90% PETER KEMPTHORNE: Yes. 00:11:18.920 --> 00:11:19.420 align:middle line:90% Great. 00:11:19.420 --> 00:11:20.540 align:middle line:90% Thank you, Tarek. 00:11:20.540 --> 00:11:22.240 align:middle line:90% And let's see with questions. 00:11:22.240 --> 00:11:26.640 align:middle line:84% Just so Tarek can hear you, I'll hand you a microphone, 00:11:26.640 --> 00:11:29.120 align:middle line:84% or we'll pass a microphone to you. 00:11:29.120 --> 00:11:30.100 align:middle line:90% STUDENT: One, two. 00:11:30.100 --> 00:11:30.600 align:middle line:90% OK. 00:11:30.600 --> 00:11:33.800 align:middle line:84% I don't know where you can see me from. 00:11:33.800 --> 00:11:37.960 align:middle line:84% Yeah, this is really fascinating. 00:11:37.960 --> 00:11:40.430 align:middle line:84% I have a question, which is, what 00:11:40.430 --> 00:11:43.970 align:middle line:84% is the difference between this and a betting market? 00:11:43.970 --> 00:11:47.950 align:middle line:84% To me it sounds the same, like you're betting on an event. 00:11:47.950 --> 00:11:51.430 align:middle line:84% Because, surely, if someone wanted to hedge against Brexit, 00:11:51.430 --> 00:11:53.830 align:middle line:84% they could just go into a betting market 00:11:53.830 --> 00:11:57.380 align:middle line:84% and bet a certain quantity of money on whether Brexit happens. 00:11:57.380 --> 00:12:00.710 align:middle line:90% 00:12:00.710 --> 00:12:03.430 align:middle line:84% TAREK MANSOUR: I do think there's a lot of similarities. 00:12:03.430 --> 00:12:04.710 align:middle line:84% And I would say there's a lot of similarities 00:12:04.710 --> 00:12:06.910 align:middle line:84% between betting markets and any traditional financial markets, 00:12:06.910 --> 00:12:08.868 align:middle line:84% a lot of people that are speculating or betting 00:12:08.868 --> 00:12:11.710 align:middle line:84% or gambling on a lot, really a lot of markets, including crypto 00:12:11.710 --> 00:12:13.950 align:middle line:90% and stocks and really anything. 00:12:13.950 --> 00:12:16.930 align:middle line:84% But I think it's a bit more of a structural difference. 00:12:16.930 --> 00:12:19.210 align:middle line:84% First of all, this is an exchange. 00:12:19.210 --> 00:12:20.950 align:middle line:84% People are trading against each other. 00:12:20.950 --> 00:12:21.650 align:middle line:90% There's no book. 00:12:21.650 --> 00:12:22.400 align:middle line:90% There's no bookie. 00:12:22.400 --> 00:12:23.790 align:middle line:90% There's no concept of bookie. 00:12:23.790 --> 00:12:24.870 align:middle line:84% And actually, any institution that 00:12:24.870 --> 00:12:26.578 align:middle line:84% wants to hedge against Brexit would never 00:12:26.578 --> 00:12:28.950 align:middle line:84% do it on a betting market, just because the prices 00:12:28.950 --> 00:12:30.812 align:middle line:90% are set by the bookie. 00:12:30.812 --> 00:12:33.270 align:middle line:84% They would do it probably with an investment bank, which is 00:12:33.270 --> 00:12:34.520 align:middle line:90% what they're doing right now. 00:12:34.520 --> 00:12:36.770 align:middle line:84% But the prices are kind of bad at the investment bank. 00:12:36.770 --> 00:12:38.310 align:middle line:90% It's over the counter. 00:12:38.310 --> 00:12:40.653 align:middle line:84% You negotiate bilaterally with the investment bank 00:12:40.653 --> 00:12:42.070 align:middle line:84% instead of just basically doing it 00:12:42.070 --> 00:12:44.653 align:middle line:84% on exchange, where there's other people that are independently 00:12:44.653 --> 00:12:47.873 align:middle line:84% pricing the events so that you can basically 00:12:47.873 --> 00:12:49.790 align:middle line:84% know what the right price is to basically make 00:12:49.790 --> 00:12:51.870 align:middle line:90% the transaction at. 00:12:51.870 --> 00:12:53.870 align:middle line:84% I think there are a lot of similarities. 00:12:53.870 --> 00:12:57.110 align:middle line:84% And frankly, I haven't-- we don't really discern them quite 00:12:57.110 --> 00:12:57.610 align:middle line:90% much. 00:12:57.610 --> 00:12:59.318 align:middle line:84% I think over time the two are converging, 00:12:59.318 --> 00:13:01.932 align:middle line:84% and they're going to end up being one and the same. 00:13:01.932 --> 00:13:03.390 align:middle line:84% The fundamental difference, I would 00:13:03.390 --> 00:13:06.330 align:middle line:84% say, like from a regulatory or legal perspective, 00:13:06.330 --> 00:13:09.310 align:middle line:84% but also like, why is it the financial instrument? 00:13:09.310 --> 00:13:11.270 align:middle line:84% is, are you trading on natural risks, 00:13:11.270 --> 00:13:13.333 align:middle line:84% or are you trading on artificial risks? 00:13:13.333 --> 00:13:14.750 align:middle line:84% So when you go to a casino and you 00:13:14.750 --> 00:13:17.110 align:middle line:84% roll a dice, that's a risk that you're 00:13:17.110 --> 00:13:21.967 align:middle line:84% creating for the purpose of entertainment, whereas Brexit, 00:13:21.967 --> 00:13:23.550 align:middle line:84% that's not a risk that you're creating 00:13:23.550 --> 00:13:24.925 align:middle line:84% for the purpose of entertainment. 00:13:24.925 --> 00:13:27.710 align:middle line:84% That's a risk that exists that some people have and they're 00:13:27.710 --> 00:13:29.960 align:middle line:84% exposed to, and they may want to basically transfer it 00:13:29.960 --> 00:13:30.750 align:middle line:90% to someone else. 00:13:30.750 --> 00:13:32.630 align:middle line:84% And so that's of the delineation of why 00:13:32.630 --> 00:13:34.190 align:middle line:84% this is a financial market and why 00:13:34.190 --> 00:13:39.415 align:middle line:84% having it on a financial market is appropriate. 00:13:39.415 --> 00:13:41.540 align:middle line:84% But yeah, I mean, I think the two main differences, 00:13:41.540 --> 00:13:42.260 align:middle line:90% it is an exchange. 00:13:42.260 --> 00:13:43.000 align:middle line:90% We have an order book. 00:13:43.000 --> 00:13:44.417 align:middle line:84% People are trading it the same way 00:13:44.417 --> 00:13:47.020 align:middle line:84% as a stock market, the same way they trade in a stock market. 00:13:47.020 --> 00:13:49.818 align:middle line:84% And then, two, it's risk that exists. 00:13:49.818 --> 00:13:52.360 align:middle line:84% And so people can basically do what they want with that risk, 00:13:52.360 --> 00:13:54.818 align:middle line:84% whether they want to get exposed to it more by speculating, 00:13:54.818 --> 00:13:57.740 align:middle line:84% or they want to expose-- get exposed to it less by hedging. 00:13:57.740 --> 00:13:58.680 align:middle line:90% It's a great question. 00:13:58.680 --> 00:13:59.347 align:middle line:90% STUDENT: Thanks. 00:13:59.347 --> 00:14:01.788 align:middle line:84% Can I just ask a quick follow up, which is-- 00:14:01.788 --> 00:14:03.580 align:middle line:84% and this has just come to my mind, so maybe 00:14:03.580 --> 00:14:04.860 align:middle line:90% a silly question-- 00:14:04.860 --> 00:14:07.380 align:middle line:84% has there been any arbitrage opportunities 00:14:07.380 --> 00:14:11.833 align:middle line:84% between the betting markets and this exchange? 00:14:11.833 --> 00:14:13.500 align:middle line:84% TAREK MANSOUR: Yeah, I mean, well, we're 00:14:13.500 --> 00:14:15.700 align:middle line:84% the only legal one in the US, so there's kind of-- 00:14:15.700 --> 00:14:16.860 align:middle line:90% I mean, in terms of-- 00:14:16.860 --> 00:14:19.660 align:middle line:84% there's more arbitrage between us 00:14:19.660 --> 00:14:21.080 align:middle line:84% and traditional financial assets. 00:14:21.080 --> 00:14:23.455 align:middle line:84% So with the election, for example, people were arbitrage. 00:14:23.455 --> 00:14:26.580 align:middle line:84% A lot of hedge funds were arbitraging the election market 00:14:26.580 --> 00:14:33.550 align:middle line:84% with other assets like crypto or S&P and so on. 00:14:33.550 --> 00:14:36.030 align:middle line:90% And that, we see a lot of that. 00:14:36.030 --> 00:14:36.530 align:middle line:90% STUDENT: OK. 00:14:36.530 --> 00:14:37.470 align:middle line:90% Yeah, that makes sense. 00:14:37.470 --> 00:14:38.230 align:middle line:90% That's fascinating. 00:14:38.230 --> 00:14:38.750 align:middle line:90% Thank you. 00:14:38.750 --> 00:14:47.515 align:middle line:90% 00:14:47.515 --> 00:14:49.890 align:middle line:84% TAREK MANSOUR: Steven, I don't know if you can give him-- 00:14:49.890 --> 00:14:53.770 align:middle line:84% I don't know if you can unmute yourself or-- 00:14:53.770 --> 00:14:54.270 align:middle line:90% oh, sorry. 00:14:54.270 --> 00:14:55.810 align:middle line:90% What's the question? 00:14:55.810 --> 00:14:58.050 align:middle line:90% STUDENT: Can you hear me? 00:14:58.050 --> 00:14:59.450 align:middle line:90% TAREK MANSOUR: Yep. 00:14:59.450 --> 00:15:01.450 align:middle line:90% STUDENT: Yeah. 00:15:01.450 --> 00:15:04.470 align:middle line:84% I'm also interested in careers in trading as well, 00:15:04.470 --> 00:15:05.910 align:middle line:84% and I find it fascinating as well. 00:15:05.910 --> 00:15:09.610 align:middle line:84% So it's good to hear that you were interested in that 00:15:09.610 --> 00:15:10.970 align:middle line:90% and did that as a career. 00:15:10.970 --> 00:15:15.410 align:middle line:84% But I was just wondering, how did your experiences working 00:15:15.410 --> 00:15:18.250 align:middle line:90% in trading help you to-- 00:15:18.250 --> 00:15:22.490 align:middle line:84% or if those skills helped you with what you pursued at Kalshi 00:15:22.490 --> 00:15:23.070 align:middle line:90% or not? 00:15:23.070 --> 00:15:25.850 align:middle line:90% 00:15:25.850 --> 00:15:30.430 align:middle line:84% TAREK MANSOUR: I would say maybe a few things. 00:15:30.430 --> 00:15:33.830 align:middle line:84% So one, I mean, it's always good to get first-hand exposure 00:15:33.830 --> 00:15:35.330 align:middle line:84% into how things are done in a market 00:15:35.330 --> 00:15:40.970 align:middle line:84% that you're trying to be-- trying to disrupt. 00:15:40.970 --> 00:15:41.550 align:middle line:90% It's good. 00:15:41.550 --> 00:15:43.550 align:middle line:84% You have to have a reasonably good understanding 00:15:43.550 --> 00:15:44.358 align:middle line:90% of how things work. 00:15:44.358 --> 00:15:46.150 align:middle line:84% And the thing I'd say is, it's interesting. 00:15:46.150 --> 00:15:49.970 align:middle line:84% If you stay in an industry for too long, 00:15:49.970 --> 00:15:52.110 align:middle line:84% it actually gets a bit harder to disrupt it. 00:15:52.110 --> 00:15:55.570 align:middle line:84% You get too conditioned to how things are done, 00:15:55.570 --> 00:15:58.930 align:middle line:90% and maybe you get-- 00:15:58.930 --> 00:16:01.010 align:middle line:84% maybe it gets harder for you to become-- 00:16:01.010 --> 00:16:04.290 align:middle line:84% to have any degree of naivete, which I think 00:16:04.290 --> 00:16:05.390 align:middle line:90% is not a very good thing. 00:16:05.390 --> 00:16:06.932 align:middle line:84% But I think some degree of experience 00:16:06.932 --> 00:16:09.690 align:middle line:84% is good so that you have a baseline understanding of what 00:16:09.690 --> 00:16:11.913 align:middle line:84% your end customer-- how your end customer basically 00:16:11.913 --> 00:16:14.330 align:middle line:84% thinks about the world and how they use different products 00:16:14.330 --> 00:16:16.730 align:middle line:90% and adopt them. 00:16:16.730 --> 00:16:19.770 align:middle line:84% The second thing I think is, I would 00:16:19.770 --> 00:16:21.672 align:middle line:84% say I learned a lot from the Citadel culture, 00:16:21.672 --> 00:16:23.630 align:middle line:84% maybe less from Goldman and some of the others, 00:16:23.630 --> 00:16:27.730 align:middle line:84% but Citadel, I really enjoyed working at Citadel. 00:16:27.730 --> 00:16:30.160 align:middle line:84% I really like a lot of the aspects 00:16:30.160 --> 00:16:32.240 align:middle line:84% of the culture and the way that things are done. 00:16:32.240 --> 00:16:34.400 align:middle line:84% And I would say, it was interesting 00:16:34.400 --> 00:16:42.560 align:middle line:84% because I think citadel had this ultimate version of, let's call 00:16:42.560 --> 00:16:45.600 align:middle line:90% it performance-driven culture. 00:16:45.600 --> 00:16:47.860 align:middle line:84% And what I mean by that is, it's a full meritocracy. 00:16:47.860 --> 00:16:50.240 align:middle line:84% It's very little management layers. 00:16:50.240 --> 00:16:52.960 align:middle line:84% Even if you're young, they will give you a lot of ability 00:16:52.960 --> 00:16:56.640 align:middle line:90% to take risks and do big things. 00:16:56.640 --> 00:16:59.520 align:middle line:84% And they're uniquely fit to do that because in trading, 00:16:59.520 --> 00:17:03.020 align:middle line:84% something that's very unique to trading is that you have a P&L. 00:17:03.020 --> 00:17:06.398 align:middle line:84% It's undeniable whether you're doing well versus not. 00:17:06.398 --> 00:17:07.940 align:middle line:84% If you make money, you're doing well. 00:17:07.940 --> 00:17:09.760 align:middle line:90% If you're not, you're not. 00:17:09.760 --> 00:17:13.040 align:middle line:84% Whereas in tech and others, there's a lot of politics. 00:17:13.040 --> 00:17:14.460 align:middle line:90% The boss likes you versus not. 00:17:14.460 --> 00:17:16.880 align:middle line:84% I mean, there's just a lot-- a lot of noise. 00:17:16.880 --> 00:17:20.000 align:middle line:84% And I think we try to bring that to the culture of the company 00:17:20.000 --> 00:17:21.020 align:middle line:90% as much as we can. 00:17:21.020 --> 00:17:22.260 align:middle line:90% We're very flat as a company. 00:17:22.260 --> 00:17:26.180 align:middle line:84% We have a lot of people that are a few years out of college. 00:17:26.180 --> 00:17:27.380 align:middle line:90% A lot of them are from MIT. 00:17:27.380 --> 00:17:31.370 align:middle line:84% They're running huge, huge chunks of the company already 00:17:31.370 --> 00:17:33.350 align:middle line:90% and with teams and so on. 00:17:33.350 --> 00:17:35.333 align:middle line:84% And just because for us, it's very similar. 00:17:35.333 --> 00:17:36.750 align:middle line:84% If you do well, you basically grow 00:17:36.750 --> 00:17:39.010 align:middle line:84% extremely fast within a few months within the company. 00:17:39.010 --> 00:17:41.030 align:middle line:90% And if not, then not. 00:17:41.030 --> 00:17:46.250 align:middle line:84% And that comes a bit from the trading culture, I would say. 00:17:46.250 --> 00:17:46.750 align:middle line:90% STUDENT: OK. 00:17:46.750 --> 00:17:46.910 align:middle line:90% Yeah. 00:17:46.910 --> 00:17:47.618 align:middle line:90% That makes sense. 00:17:47.618 --> 00:17:48.130 align:middle line:90% Thank you. 00:17:48.130 --> 00:17:57.070 align:middle line:90% 00:17:57.070 --> 00:17:59.870 align:middle line:84% JAKE XIA: I can field you a question. 00:17:59.870 --> 00:18:00.890 align:middle line:90% Hey, Tarek. 00:18:00.890 --> 00:18:03.298 align:middle line:84% Good to see you back in the class. 00:18:03.298 --> 00:18:04.590 align:middle line:90% TAREK MANSOUR: Good seeing you. 00:18:04.590 --> 00:18:05.673 align:middle line:90% JAKE XIA: Good to see you. 00:18:05.673 --> 00:18:08.990 align:middle line:84% So can you talk a little bit about your margin 00:18:08.990 --> 00:18:14.030 align:middle line:84% requirement and also maybe central clearing, I guess? 00:18:14.030 --> 00:18:18.030 align:middle line:84% You have two parties taking the opposite side of a contract. 00:18:18.030 --> 00:18:21.150 align:middle line:84% I mean, the payout that says 100%, 00:18:21.150 --> 00:18:26.480 align:middle line:84% they may have paid a percentage of that total payout. 00:18:26.480 --> 00:18:28.580 align:middle line:84% When the market moves, do you require them 00:18:28.580 --> 00:18:31.100 align:middle line:90% to post the variation margin? 00:18:31.100 --> 00:18:34.820 align:middle line:90% How do you monitor that? 00:18:34.820 --> 00:18:35.660 align:middle line:90% TAREK MANSOUR: Yeah. 00:18:35.660 --> 00:18:37.690 align:middle line:84% So we are fully cash collateralized 00:18:37.690 --> 00:18:39.940 align:middle line:84% right now, so what it means is people put the money up 00:18:39.940 --> 00:18:43.182 align:middle line:90% front for their positions. 00:18:43.182 --> 00:18:45.140 align:middle line:84% And then we basically mark to market every day. 00:18:45.140 --> 00:18:47.182 align:middle line:84% Actually, we mark to market on a real-time basis, 00:18:47.182 --> 00:18:50.620 align:middle line:90% so we do it in real time. 00:18:50.620 --> 00:18:52.880 align:middle line:84% We are going to introduce leverage next year, I think, 00:18:52.880 --> 00:18:54.630 align:middle line:84% and that's going to be pretty interesting. 00:18:54.630 --> 00:18:57.657 align:middle line:84% We're thinking about what our margin model is going to be. 00:18:57.657 --> 00:18:59.240 align:middle line:84% And maybe for the class, I'll explain. 00:18:59.240 --> 00:19:02.540 align:middle line:84% So in a lot of financial markets, you-- 00:19:02.540 --> 00:19:05.620 align:middle line:84% what people consider margin leverage is when you buy-- 00:19:05.620 --> 00:19:09.300 align:middle line:84% when hedge funds basically buy, let's say, 00:19:09.300 --> 00:19:13.580 align:middle line:84% interest rate futures or S&P future. 00:19:13.580 --> 00:19:16.280 align:middle line:84% Let's say they want to buy like $1 million worth of S&P futures. 00:19:16.280 --> 00:19:18.552 align:middle line:84% They don't put up $1 million with the clearinghouse 00:19:18.552 --> 00:19:19.260 align:middle line:90% and the exchange. 00:19:19.260 --> 00:19:23.320 align:middle line:84% They put up, let's say, $100,000 or $10,000, which would be 10%, 00:19:23.320 --> 00:19:25.100 align:middle line:90% 1% in margin. 00:19:25.100 --> 00:19:28.100 align:middle line:84% And then as the thing moves over time, 00:19:28.100 --> 00:19:29.780 align:middle line:84% the clearinghouse asks you to-- if you 00:19:29.780 --> 00:19:31.560 align:middle line:84% made a little bit of money, the clearinghouse pays you. 00:19:31.560 --> 00:19:33.180 align:middle line:84% And if you lost, the clearinghouse 00:19:33.180 --> 00:19:36.580 align:middle line:84% asks you to put up a bit more margin to cover your losses. 00:19:36.580 --> 00:19:39.020 align:middle line:90% And it goes like that over time. 00:19:39.020 --> 00:19:41.140 align:middle line:84% Kalshi is a simpler model where we actually 00:19:41.140 --> 00:19:42.920 align:middle line:90% ask for 100% upfront. 00:19:42.920 --> 00:19:45.417 align:middle line:84% We tell everyone, hey, give us all the money upfront 00:19:45.417 --> 00:19:47.000 align:middle line:84% so that there's no risk in the system, 00:19:47.000 --> 00:19:49.580 align:middle line:84% and you're always sure that anything you lose 00:19:49.580 --> 00:19:50.840 align:middle line:90% is what you lose upfront. 00:19:50.840 --> 00:19:53.642 align:middle line:84% What you put up upfront, you cannot lose more than that. 00:19:53.642 --> 00:19:56.100 align:middle line:84% Over time, we're going to start introducing leverage, which 00:19:56.100 --> 00:19:59.220 align:middle line:90% is, we don't take 100% upfront. 00:19:59.220 --> 00:20:01.275 align:middle line:84% And that's what Jake was asking about. 00:20:01.275 --> 00:20:02.900 align:middle line:84% And I think it's a complicated-- that's 00:20:02.900 --> 00:20:05.020 align:middle line:84% a complicated thing because regulators are becoming very 00:20:05.020 --> 00:20:06.240 align:middle line:90% strict about how we do this. 00:20:06.240 --> 00:20:08.657 align:middle line:84% And we have to be very-- we need to make sure that nothing 00:20:08.657 --> 00:20:11.062 align:middle line:90% like 2008 can happen again. 00:20:11.062 --> 00:20:13.020 align:middle line:84% And so there's a lot of requirements around how 00:20:13.020 --> 00:20:15.260 align:middle line:90% this needs to be done. 00:20:15.260 --> 00:20:20.900 align:middle line:84% And so we expect to introduce maybe margin like end 00:20:20.900 --> 00:20:23.770 align:middle line:90% of next year here potentially. 00:20:23.770 --> 00:20:26.170 align:middle line:90% And we'll see how that goes. 00:20:26.170 --> 00:20:28.127 align:middle line:84% We do have some products where, for example, 00:20:28.127 --> 00:20:30.210 align:middle line:84% if there's a lot of strong correlation between two 00:20:30.210 --> 00:20:33.530 align:middle line:84% products, we return some collateral to the participant. 00:20:33.530 --> 00:20:36.210 align:middle line:84% And we've already started doing some of that. 00:20:36.210 --> 00:20:38.113 align:middle line:84% But over time we'll do more and more. 00:20:38.113 --> 00:20:39.280 align:middle line:90% Yeah, it's a great question. 00:20:39.280 --> 00:20:43.570 align:middle line:90% 00:20:43.570 --> 00:20:46.930 align:middle line:84% STUDENT: Yeah, so I have a question on how 00:20:46.930 --> 00:20:50.130 align:middle line:84% the projections for the company have changed since the election. 00:20:50.130 --> 00:20:52.745 align:middle line:84% I assume there's a lot more volume going through Kalshi 00:20:52.745 --> 00:20:53.870 align:middle line:90% during the election period. 00:20:53.870 --> 00:20:55.250 align:middle line:84% Have you guys been able to retain 00:20:55.250 --> 00:20:58.130 align:middle line:84% a lot of that trading volume, or did you see a huge falloff? 00:20:58.130 --> 00:21:00.690 align:middle line:84% And how did just the election in general 00:21:00.690 --> 00:21:03.307 align:middle line:84% change where you see the company going? 00:21:03.307 --> 00:21:05.390 align:middle line:84% TAREK MANSOUR: Yeah, I mean, I think the election, 00:21:05.390 --> 00:21:06.790 align:middle line:84% so it's obviously it's super huge. 00:21:06.790 --> 00:21:08.832 align:middle line:84% But it's interesting because our volume right now 00:21:08.832 --> 00:21:11.570 align:middle line:84% is actually higher than it was in the days leading up 00:21:11.570 --> 00:21:12.430 align:middle line:90% to the election. 00:21:12.430 --> 00:21:14.710 align:middle line:84% And I think that's how exchanges work. 00:21:14.710 --> 00:21:17.490 align:middle line:84% Once you acquire a lot, acquire and onboard 00:21:17.490 --> 00:21:19.930 align:middle line:84% and open accounts for customers, they kind of retain. 00:21:19.930 --> 00:21:20.702 align:middle line:90% They stick. 00:21:20.702 --> 00:21:21.660 align:middle line:90% They do other products. 00:21:21.660 --> 00:21:24.240 align:middle line:84% Now we're seeing a lot of uptick in crypto. 00:21:24.240 --> 00:21:26.640 align:middle line:84% We're seeing a lot of upticks in our economics products. 00:21:26.640 --> 00:21:28.700 align:middle line:84% We're seeing uptick on a lot of the politics, 00:21:28.700 --> 00:21:30.000 align:middle line:84% like who's going to be in the cabinet, who's 00:21:30.000 --> 00:21:32.320 align:middle line:84% going to-- there's all these questions about, what's 00:21:32.320 --> 00:21:35.200 align:middle line:84% government going to look like in the next year? 00:21:35.200 --> 00:21:37.720 align:middle line:84% And then you have a lot of crazy categories like weather. 00:21:37.720 --> 00:21:40.840 align:middle line:84% People come and are very active on daily weather 00:21:40.840 --> 00:21:43.120 align:middle line:84% markets and then entertainment markets and so on. 00:21:43.120 --> 00:21:47.400 align:middle line:84% So we see a lot of opportunities across all these categories. 00:21:47.400 --> 00:21:49.160 align:middle line:84% And yeah, I mean, I don't think-- 00:21:49.160 --> 00:21:52.000 align:middle line:84% so it's not going to be the same levels that we've 00:21:52.000 --> 00:21:54.140 align:middle line:84% seen in the two days leading up to the election, 00:21:54.140 --> 00:21:57.800 align:middle line:84% but I think we're at a much higher level than what we 00:21:57.800 --> 00:21:59.960 align:middle line:90% were prior to the election now. 00:21:59.960 --> 00:22:04.560 align:middle line:84% Think of it as a huge marketing moment for the company. 00:22:04.560 --> 00:22:07.420 align:middle line:84% And that enabled the product to go mainstream. 00:22:07.420 --> 00:22:14.956 align:middle line:90% 00:22:14.956 --> 00:22:16.120 align:middle line:90% VASILY STRELA: Hey, Tarek. 00:22:16.120 --> 00:22:17.600 align:middle line:90% It's Vasily. 00:22:17.600 --> 00:22:19.740 align:middle line:90% Yeah, good to see you in class. 00:22:19.740 --> 00:22:20.428 align:middle line:90% Yeah. 00:22:20.428 --> 00:22:21.720 align:middle line:90% TAREK MANSOUR: Good seeing you. 00:22:21.720 --> 00:22:22.920 align:middle line:90% VASILY STRELA: Yeah. 00:22:22.920 --> 00:22:23.860 align:middle line:90% A question. 00:22:23.860 --> 00:22:27.680 align:middle line:84% So can you reveal what's the percentage 00:22:27.680 --> 00:22:32.800 align:middle line:84% between institutional clients and individuals on Kalshi 00:22:32.800 --> 00:22:35.352 align:middle line:90% at the moment? 00:22:35.352 --> 00:22:37.560 align:middle line:84% TAREK MANSOUR: Right now it's the breakdown of volume 00:22:37.560 --> 00:22:40.770 align:middle line:84% is 30, 40% institutional, and the rest is retail. 00:22:40.770 --> 00:22:43.760 align:middle line:90% 00:22:43.760 --> 00:22:50.480 align:middle line:84% And I expect it to basically go towards 50/50 over time. 00:22:50.480 --> 00:22:51.280 align:middle line:90% It's interesting. 00:22:51.280 --> 00:22:53.260 align:middle line:84% Institutions do a lot more volume, 00:22:53.260 --> 00:22:56.360 align:middle line:84% but you can charge them less; whereas retail, 00:22:56.360 --> 00:22:58.900 align:middle line:84% like individual customers, they do less volume. 00:22:58.900 --> 00:23:00.440 align:middle line:90% They can be charged much more. 00:23:00.440 --> 00:23:03.960 align:middle line:84% And historically, people have seen 00:23:03.960 --> 00:23:06.360 align:middle line:84% the business model of being kind of institutional first. 00:23:06.360 --> 00:23:08.660 align:middle line:84% The large exchanges like NASDAQ or CME, 00:23:08.660 --> 00:23:11.902 align:middle line:90% they're mostly institutional. 00:23:11.902 --> 00:23:13.860 align:middle line:84% But I think it was kind of a strategic mistake, 00:23:13.860 --> 00:23:15.360 align:middle line:84% and I think they're waking up to it. 00:23:15.360 --> 00:23:18.470 align:middle line:84% They're realizing like, oh, God, people on Reddit and Twitter 00:23:18.470 --> 00:23:21.456 align:middle line:84% and average people now hold a lot of the power. 00:23:21.456 --> 00:23:23.630 align:middle line:84% They can decide that a company like NVIDIA 00:23:23.630 --> 00:23:26.350 align:middle line:84% is going to be worth a few trillion dollars. 00:23:26.350 --> 00:23:28.450 align:middle line:90% And that wasn't possible before. 00:23:28.450 --> 00:23:29.770 align:middle line:90% People are richer now. 00:23:29.770 --> 00:23:32.835 align:middle line:84% People are more involved in the financial market, 00:23:32.835 --> 00:23:34.210 align:middle line:84% and they're less price-sensitive. 00:23:34.210 --> 00:23:35.950 align:middle line:84% And so you see companies like Coinbase 00:23:35.950 --> 00:23:38.030 align:middle line:90% are doing incredibly well. 00:23:38.030 --> 00:23:39.310 align:middle line:90% And yes, they have much less. 00:23:39.310 --> 00:23:41.870 align:middle line:84% Coinbase's volume on a yearly basis is around, I think, 00:23:41.870 --> 00:23:44.950 align:middle line:90% like $50 to $60 billion. 00:23:44.950 --> 00:23:47.630 align:middle line:84% CME'S volume is like a quadrillion. 00:23:47.630 --> 00:23:50.190 align:middle line:90% It's just not even comparable. 00:23:50.190 --> 00:23:52.390 align:middle line:90% But Coinbase charges a lot more. 00:23:52.390 --> 00:23:56.630 align:middle line:84% They charge you a lot more per dollar traded. 00:23:56.630 --> 00:23:58.970 align:middle line:84% And I think we see that same balance, 00:23:58.970 --> 00:24:02.550 align:middle line:84% and I think that it's interesting. 00:24:02.550 --> 00:24:08.470 align:middle line:84% The thing that we see, and I see this trend continuing 00:24:08.470 --> 00:24:10.110 align:middle line:84% in the next few years, especially 00:24:10.110 --> 00:24:14.230 align:middle line:84% with the Trump administration, there's 00:24:14.230 --> 00:24:18.460 align:middle line:90% a very strong appetite for new-- 00:24:18.460 --> 00:24:21.980 align:middle line:84% new financial markets and new media. 00:24:21.980 --> 00:24:23.920 align:middle line:84% There's a lot of distrust in the system, 00:24:23.920 --> 00:24:25.880 align:middle line:84% both in the Wall Street and financial markets 00:24:25.880 --> 00:24:26.940 align:middle line:90% but also media. 00:24:26.940 --> 00:24:29.380 align:middle line:84% People just don't really believe the pundits 00:24:29.380 --> 00:24:32.180 align:middle line:90% and traditional authorities. 00:24:32.180 --> 00:24:35.660 align:middle line:84% And I think prediction markets are very uniquely suited to be 00:24:35.660 --> 00:24:39.180 align:middle line:90% at the intersection of both. 00:24:39.180 --> 00:24:41.800 align:middle line:90% That's a retail-first market. 00:24:41.800 --> 00:24:43.780 align:middle line:84% That's retail first, and then the institutions 00:24:43.780 --> 00:24:45.447 align:middle line:84% follow, rather than an institution first 00:24:45.447 --> 00:24:49.580 align:middle line:84% and then figure out how to get the retail to adopt essentially. 00:24:49.580 --> 00:24:50.640 align:middle line:90% And we're seeing that. 00:24:50.640 --> 00:24:53.025 align:middle line:90% We're seeing that. 00:24:53.025 --> 00:24:53.900 align:middle line:90% VASILY STRELA: Right. 00:24:53.900 --> 00:24:54.840 align:middle line:90% Very interesting. 00:24:54.840 --> 00:24:56.700 align:middle line:90% Thank you. 00:24:56.700 --> 00:24:58.293 align:middle line:90% TAREK MANSOUR: Steven. 00:24:58.293 --> 00:25:00.460 align:middle line:84% STUDENT: Yeah, I have a question about-- because you 00:25:00.460 --> 00:25:04.440 align:middle line:84% said that you were trying to also get into sports as well. 00:25:04.440 --> 00:25:10.580 align:middle line:84% So I was wondering if you planned on offering-- 00:25:10.580 --> 00:25:13.770 align:middle line:84% or similar things to other sports books and stuff, 00:25:13.770 --> 00:25:17.230 align:middle line:84% like traditional bets, like money lines and stuff like that, 00:25:17.230 --> 00:25:21.610 align:middle line:84% or would it be more of the work, more like a broader 00:25:21.610 --> 00:25:24.060 align:middle line:90% prediction-type sports bets? 00:25:24.060 --> 00:25:30.090 align:middle line:90% 00:25:30.090 --> 00:25:31.690 align:middle line:84% TAREK MANSOUR: That's a good question. 00:25:31.690 --> 00:25:34.690 align:middle line:84% Both basically is the way I put it. 00:25:34.690 --> 00:25:37.770 align:middle line:90% I think both. 00:25:37.770 --> 00:25:40.010 align:middle line:84% The prediction stuff is the one that's 00:25:40.010 --> 00:25:42.608 align:middle line:84% more interesting because that's the one that people in news 00:25:42.608 --> 00:25:43.150 align:middle line:90% thinks about. 00:25:43.150 --> 00:25:45.210 align:middle line:84% What are some of the big things that 00:25:45.210 --> 00:25:48.750 align:middle line:84% are going to happen in the next few months or years? 00:25:48.750 --> 00:25:51.092 align:middle line:84% And then the money line is just very retentive. 00:25:51.092 --> 00:25:53.550 align:middle line:84% It's, like, people come back, and they do it over and over, 00:25:53.550 --> 00:25:55.092 align:middle line:84% and then they engage with the product 00:25:55.092 --> 00:25:56.910 align:middle line:84% meaningfully in a very consistent way. 00:25:56.910 --> 00:25:59.388 align:middle line:84% So I think that, yeah, I think the answer is both. 00:25:59.388 --> 00:26:01.430 align:middle line:84% We have some regulatory work to do on that front, 00:26:01.430 --> 00:26:03.933 align:middle line:84% but the next administration is going to be very favorable. 00:26:03.933 --> 00:26:06.350 align:middle line:84% I mean, Trump himself has been courting our markets a lot. 00:26:06.350 --> 00:26:06.990 align:middle line:90% He loves the market. 00:26:06.990 --> 00:26:07.870 align:middle line:90% He loves the company. 00:26:07.870 --> 00:26:12.123 align:middle line:84% I think he's going to see a big shift from an administration 00:26:12.123 --> 00:26:14.790 align:middle line:84% that was somewhat anti-financial innovation to an administration 00:26:14.790 --> 00:26:17.370 align:middle line:84% that is going to be very, very pro-financial innovation 00:26:17.370 --> 00:26:20.270 align:middle line:84% and prediction markets specifically. 00:26:20.270 --> 00:26:20.770 align:middle line:90% STUDENT: OK. 00:26:20.770 --> 00:26:23.010 align:middle line:90% Yeah, that makes sense. 00:26:23.010 --> 00:26:26.570 align:middle line:84% JAKE XIA: So Tarek, I'm throwing you another question. 00:26:26.570 --> 00:26:29.810 align:middle line:84% I don't know if you can talk about the revenue 00:26:29.810 --> 00:26:30.750 align:middle line:90% of the company. 00:26:30.750 --> 00:26:33.610 align:middle line:84% Is the company profitable so far? 00:26:33.610 --> 00:26:36.910 align:middle line:84% The revenue model is from a commission model, 00:26:36.910 --> 00:26:40.250 align:middle line:84% just to give students some idea how-- 00:26:40.250 --> 00:26:44.480 align:middle line:84% why the investors are interested in owning the company. 00:26:44.480 --> 00:26:47.930 align:middle line:90% 00:26:47.930 --> 00:26:51.250 align:middle line:84% TAREK MANSOUR: The company can be profitable if you want to, 00:26:51.250 --> 00:26:54.730 align:middle line:90% but we don't right now. 00:26:54.730 --> 00:26:57.910 align:middle line:84% And oftentimes, it's a little bit of a counterintuitive thing. 00:26:57.910 --> 00:27:02.610 align:middle line:84% But I think increasing the growth at this stage 00:27:02.610 --> 00:27:05.020 align:middle line:84% is more important than profitability in a lot of cases. 00:27:05.020 --> 00:27:07.503 align:middle line:90% 00:27:07.503 --> 00:27:09.170 align:middle line:84% And the reason why exchanges-- exchanges 00:27:09.170 --> 00:27:10.380 align:middle line:90% are very popular businesses. 00:27:10.380 --> 00:27:11.565 align:middle line:90% They're very hard to set up. 00:27:11.565 --> 00:27:13.940 align:middle line:84% It's unbelievably hard to get an exchange up and running. 00:27:13.940 --> 00:27:15.400 align:middle line:84% It's just really, really difficult. 00:27:15.400 --> 00:27:17.300 align:middle line:84% But when it's up and running and you have liquidity, 00:27:17.300 --> 00:27:19.140 align:middle line:84% it's actually one of the best form of businesses. 00:27:19.140 --> 00:27:20.960 align:middle line:84% It's some of the most profitable businesses 00:27:20.960 --> 00:27:24.440 align:middle line:90% are exchanges actually. 00:27:24.440 --> 00:27:28.460 align:middle line:84% And so right now the strategy is basically hardcore expansion. 00:27:28.460 --> 00:27:30.060 align:middle line:90% Just grow, grow, grow, grow. 00:27:30.060 --> 00:27:30.780 align:middle line:90% Go mainstream. 00:27:30.780 --> 00:27:32.863 align:middle line:90% Get people used to the asset. 00:27:32.863 --> 00:27:34.280 align:middle line:84% And we're making revenue, but it's 00:27:34.280 --> 00:27:36.880 align:middle line:84% just like we're reinvesting it all into marketing and growth. 00:27:36.880 --> 00:27:39.920 align:middle line:84% And then over time, we're basically-- as we taper, 00:27:39.920 --> 00:27:42.680 align:middle line:84% and as we get to even larger scale basically, 00:27:42.680 --> 00:27:44.372 align:middle line:90% turn on the profit machine. 00:27:44.372 --> 00:27:46.080 align:middle line:84% And the source of revenue is essentially, 00:27:46.080 --> 00:27:50.540 align:middle line:84% like, we make money on trading fees, 00:27:50.540 --> 00:27:52.138 align:middle line:84% like CME or New York Stock Exchange. 00:27:52.138 --> 00:27:53.680 align:middle line:84% You take a fee off every transaction. 00:27:53.680 --> 00:27:56.320 align:middle line:84% If you put $100 in cash, you take $1 to $2. 00:27:56.320 --> 00:27:59.057 align:middle line:84% And then on market making, so we have a separate arm, 00:27:59.057 --> 00:28:01.140 align:middle line:84% a bit like Citadel market making, on this product. 00:28:01.140 --> 00:28:03.420 align:middle line:84% And they're already one of the prime market makers. 00:28:03.420 --> 00:28:04.520 align:middle line:84% They have competition, so they compete 00:28:04.520 --> 00:28:07.080 align:middle line:84% a lot against SIG, which is one of our major partners. 00:28:07.080 --> 00:28:10.950 align:middle line:84% And then there's a few other prop shops or market making, 00:28:10.950 --> 00:28:13.483 align:middle line:90% like hedge funds in the firm. 00:28:13.483 --> 00:28:15.150 align:middle line:84% And then, three, over time, right now we 00:28:15.150 --> 00:28:16.530 align:middle line:84% make it all free and open source, 00:28:16.530 --> 00:28:18.350 align:middle line:90% but the data is very valuable. 00:28:18.350 --> 00:28:20.350 align:middle line:84% We have a lot of very valuable data about trends 00:28:20.350 --> 00:28:22.310 align:middle line:90% and where the world is going. 00:28:22.310 --> 00:28:25.553 align:middle line:84% And there's a lot of demand to get the data. 00:28:25.553 --> 00:28:27.470 align:middle line:84% But for now, we're just making it open source, 00:28:27.470 --> 00:28:28.250 align:middle line:90% so anyone can use it. 00:28:28.250 --> 00:28:30.030 align:middle line:84% Anyone can make use of it, so over time it can basically 00:28:30.030 --> 00:28:31.530 align:middle line:90% capture value in that as well. 00:28:31.530 --> 00:28:34.470 align:middle line:90% 00:28:34.470 --> 00:28:36.750 align:middle line:84% JAKE XIA: Just a follow up on that. 00:28:36.750 --> 00:28:41.350 align:middle line:84% You mentioned Citadel, SIG, those market makers. 00:28:41.350 --> 00:28:45.750 align:middle line:84% How do you incentivize them to come to Kalshi? 00:28:45.750 --> 00:28:51.030 align:middle line:84% And are there any requirements of how tight the bid offer 00:28:51.030 --> 00:28:53.550 align:middle line:84% spread they need to make when they make 00:28:53.550 --> 00:28:56.037 align:middle line:90% market on certain contracts? 00:28:56.037 --> 00:28:56.870 align:middle line:90% TAREK MANSOUR: Yeah. 00:28:56.870 --> 00:28:58.620 align:middle line:84% So, no, there are definitely requirements. 00:28:58.620 --> 00:28:59.770 align:middle line:90% So I'll give an example. 00:28:59.770 --> 00:29:01.353 align:middle line:84% In the election market, they had to be 00:29:01.353 --> 00:29:07.100 align:middle line:84% $0.01 spread with $1 million on each side at least. 00:29:07.100 --> 00:29:09.920 align:middle line:84% And it was funny because Jeff Yass, the founder of SIG, 00:29:09.920 --> 00:29:12.500 align:middle line:84% actually texted Elon and asked him 00:29:12.500 --> 00:29:14.020 align:middle line:84% if he wanted to do a $100 million 00:29:14.020 --> 00:29:17.740 align:middle line:84% trade on Kalshi during the election. 00:29:17.740 --> 00:29:20.100 align:middle line:84% But Elon was too concerned of conflict of interest 00:29:20.100 --> 00:29:22.115 align:middle line:90% and a bunch of things. 00:29:22.115 --> 00:29:23.740 align:middle line:84% And they could have done it with $0.01, 00:29:23.740 --> 00:29:25.400 align:middle line:84% so the spreads were very, very tight. 00:29:25.400 --> 00:29:26.380 align:middle line:84% I'm saying this because they could 00:29:26.380 --> 00:29:28.380 align:middle line:84% have done-- they could do up to $100 million 00:29:28.380 --> 00:29:32.121 align:middle line:84% within like $0.01 slippage, which is really awesome. 00:29:32.121 --> 00:29:34.204 align:middle line:84% And so, yes, there are requirements around spread. 00:29:34.204 --> 00:29:37.260 align:middle line:90% 00:29:37.260 --> 00:29:40.860 align:middle line:84% I think the way we think about the ecosystem needs to be-- 00:29:40.860 --> 00:29:47.080 align:middle line:84% or the way that it's structured, you 00:29:47.080 --> 00:29:49.080 align:middle line:84% give some incentives at the beginning of markets 00:29:49.080 --> 00:29:50.880 align:middle line:84% so that after that, you basically let it do. 00:29:50.880 --> 00:29:51.900 align:middle line:84% And the incentive's basically there. 00:29:51.900 --> 00:29:52.920 align:middle line:90% They're getting flow. 00:29:52.920 --> 00:29:54.480 align:middle line:84% They're trading against a bunch of other people, 00:29:54.480 --> 00:29:57.180 align:middle line:84% and then they hope to make money market making and doing-- 00:29:57.180 --> 00:29:59.100 align:middle line:84% getting bid at spread essentially. 00:29:59.100 --> 00:30:01.980 align:middle line:84% And so that's our sort of, I would say, the structure. 00:30:01.980 --> 00:30:05.700 align:middle line:84% And it's pretty common structure in the traditional markets. 00:30:05.700 --> 00:30:08.960 align:middle line:84% I think your question is good because the stock exchanges, 00:30:08.960 --> 00:30:11.188 align:middle line:84% they do a lot of incentive because stocks-- 00:30:11.188 --> 00:30:12.480 align:middle line:90% there's a lot of stock markets. 00:30:12.480 --> 00:30:13.460 align:middle line:84% There's a lot of stock exchanges. 00:30:13.460 --> 00:30:15.620 align:middle line:84% They're very competitive with each other because of the way 00:30:15.620 --> 00:30:16.980 align:middle line:90% that the SEC has set up rules. 00:30:16.980 --> 00:30:18.920 align:middle line:84% In the CFC world, there's not a lot of competition. 00:30:18.920 --> 00:30:20.740 align:middle line:84% It's actually very monopolistic in nature. 00:30:20.740 --> 00:30:22.020 align:middle line:90% Each one has their-- 00:30:22.020 --> 00:30:23.780 align:middle line:84% CME has their interest rate swaps 00:30:23.780 --> 00:30:26.053 align:middle line:84% and S&P. ICE has all the energy stuff, 00:30:26.053 --> 00:30:27.220 align:middle line:90% and I think we may be able-- 00:30:27.220 --> 00:30:28.595 align:middle line:84% I think it looks like we're going 00:30:28.595 --> 00:30:32.260 align:middle line:84% to be able to dominate anything that's event-related over time. 00:30:32.260 --> 00:30:35.860 align:middle line:84% STUDENT: So I'm just intrigued as to how you've 00:30:35.860 --> 00:30:39.780 align:middle line:84% gone from just working in a company like Citadel, Goldman, 00:30:39.780 --> 00:30:44.300 align:middle line:84% to just having this idea of this exchange and actually just 00:30:44.300 --> 00:30:45.520 align:middle line:90% being able to make it. 00:30:45.520 --> 00:30:48.340 align:middle line:84% Because to me, it seems like even if I had an idea of, 00:30:48.340 --> 00:30:51.980 align:middle line:84% oh, this would be a great thing to turn into an exchange, just 00:30:51.980 --> 00:30:54.580 align:middle line:84% the idea of actually making that happen 00:30:54.580 --> 00:30:57.900 align:middle line:90% seems really hard to achieve. 00:30:57.900 --> 00:31:00.780 align:middle line:84% From the idea to actually getting it 00:31:00.780 --> 00:31:05.470 align:middle line:84% into a reasonable product, how did you-- 00:31:05.470 --> 00:31:06.470 align:middle line:90% what did you have to do? 00:31:06.470 --> 00:31:08.290 align:middle line:84% Did you just have to literally start 00:31:08.290 --> 00:31:10.330 align:middle line:84% emailing people in the industry, and then 00:31:10.330 --> 00:31:12.570 align:middle line:90% start working your way up? 00:31:12.570 --> 00:31:13.510 align:middle line:90% How did that work? 00:31:13.510 --> 00:31:15.250 align:middle line:90% TAREK MANSOUR: Yeah. 00:31:15.250 --> 00:31:17.583 align:middle line:90% So yes, that's it. 00:31:17.583 --> 00:31:18.750 align:middle line:90% I mean, that's literally it. 00:31:18.750 --> 00:31:24.730 align:middle line:90% 00:31:24.730 --> 00:31:26.588 align:middle line:84% I'll say a few things about this because I 00:31:26.588 --> 00:31:27.630 align:middle line:90% thought about this a lot. 00:31:27.630 --> 00:31:33.090 align:middle line:84% So it was a tough decision to leave Citadel, like when I-- 00:31:33.090 --> 00:31:35.730 align:middle line:84% and I think, Peter, you and I had a conversation about this 00:31:35.730 --> 00:31:36.230 align:middle line:90% as well. 00:31:36.230 --> 00:31:38.680 align:middle line:90% I think at the time, we-- 00:31:38.680 --> 00:31:41.210 align:middle line:90% 00:31:41.210 --> 00:31:44.170 align:middle line:90% Citadel pays a lot of money. 00:31:44.170 --> 00:31:46.270 align:middle line:84% Even as a first timer, it's crazy. 00:31:46.270 --> 00:31:48.567 align:middle line:84% And so I didn't come from a very privileged background, 00:31:48.567 --> 00:31:50.650 align:middle line:84% so I remember I had a conversation with my parents 00:31:50.650 --> 00:31:52.710 align:middle line:84% like, hey, I wanted to start this company. 00:31:52.710 --> 00:31:53.670 align:middle line:84% They're like, oh, what is it about? 00:31:53.670 --> 00:31:55.837 align:middle line:84% I was like, oh, this thing called prediction market. 00:31:55.837 --> 00:31:58.450 align:middle line:84% Obviously, they had no idea what I was talking about. 00:31:58.450 --> 00:32:00.450 align:middle line:84% And I was like, I mean, there's another problem. 00:32:00.450 --> 00:32:02.760 align:middle line:84% So it's illegal in the US now, and I want to do this. 00:32:02.760 --> 00:32:06.072 align:middle line:84% And they're like, OK, and so you have to leave your job? 00:32:06.072 --> 00:32:06.780 align:middle line:90% I was like, yeah. 00:32:06.780 --> 00:32:08.220 align:middle line:84% And then they obviously got inflamed. 00:32:08.220 --> 00:32:09.920 align:middle line:84% They were like, what are you talking about? 00:32:09.920 --> 00:32:11.462 align:middle line:84% These guys are paying all this money. 00:32:11.462 --> 00:32:13.360 align:middle line:90% Well, does that make any sense? 00:32:13.360 --> 00:32:16.840 align:middle line:84% And I think the thing that pushed us to do 00:32:16.840 --> 00:32:19.728 align:middle line:90% it is, I think I kind of-- 00:32:19.728 --> 00:32:22.100 align:middle line:84% some people make decisions based on regret minimization. 00:32:22.100 --> 00:32:25.760 align:middle line:84% It's like, in 10 years, what path would I regret the most? 00:32:25.760 --> 00:32:28.253 align:middle line:84% And I just thought I would regret if I hadn't done it. 00:32:28.253 --> 00:32:29.920 align:middle line:84% I just thought I would be very regretful 00:32:29.920 --> 00:32:32.440 align:middle line:84% if I didn't do this, or at least try or give it a shot. 00:32:32.440 --> 00:32:34.640 align:middle line:90% And so I just had to do it. 00:32:34.640 --> 00:32:36.700 align:middle line:84% And then I really liked the idea. 00:32:36.700 --> 00:32:38.320 align:middle line:90% I just really love-- 00:32:38.320 --> 00:32:40.680 align:middle line:84% I love the idea of basically creating 00:32:40.680 --> 00:32:42.520 align:middle line:84% a market where you can price anything 00:32:42.520 --> 00:32:44.645 align:middle line:84% and making the world just smarter about the future. 00:32:44.645 --> 00:32:47.240 align:middle line:90% 00:32:47.240 --> 00:32:49.380 align:middle line:84% So then, OK, what do we actually do? 00:32:49.380 --> 00:32:52.680 align:middle line:90% 00:32:52.680 --> 00:32:59.000 align:middle line:84% The simplest way to describe what 00:32:59.000 --> 00:33:02.018 align:middle line:84% it takes to build a company, so Mark Andreessen has this quote-- 00:33:02.018 --> 00:33:04.060 align:middle line:84% I forgot if it's Mark Andreessen or Ben Horowitz, 00:33:04.060 --> 00:33:06.760 align:middle line:90% one of the two a16z guys-- 00:33:06.760 --> 00:33:10.040 align:middle line:84% about how when he talks about-- to a lot of CEOs, 00:33:10.040 --> 00:33:14.680 align:middle line:84% he basically has this whole thing about all the pretty-- 00:33:14.680 --> 00:33:16.640 align:middle line:84% the good CEOs usually respond with, OK. 00:33:16.640 --> 00:33:18.280 align:middle line:84% When he asked them, How did you do it? 00:33:18.280 --> 00:33:23.700 align:middle line:84% they say, it was a great strategy, great execution. 00:33:23.700 --> 00:33:25.180 align:middle line:84% We had all these great decisions, 00:33:25.180 --> 00:33:26.680 align:middle line:84% blah, blah, blah, blah, blah, blah. 00:33:26.680 --> 00:33:30.200 align:middle line:84% And then he says, the absolute great CEOs, usually their answer 00:33:30.200 --> 00:33:33.720 align:middle line:90% is, we didn't give up. 00:33:33.720 --> 00:33:36.360 align:middle line:84% We just pushed harder than anyone else. 00:33:36.360 --> 00:33:38.540 align:middle line:84% And I think there's a lot of truth to that. 00:33:38.540 --> 00:33:41.540 align:middle line:84% I really do, because when you're young, people say, 00:33:41.540 --> 00:33:44.040 align:middle line:84% well, when you're young, you have to wait and get experience 00:33:44.040 --> 00:33:44.923 align:middle line:90% to build a company. 00:33:44.923 --> 00:33:46.340 align:middle line:84% And there's pros and cons to both. 00:33:46.340 --> 00:33:47.280 align:middle line:84% When you're too experienced, I think 00:33:47.280 --> 00:33:48.960 align:middle line:84% it's harder to be a little crazier 00:33:48.960 --> 00:33:51.840 align:middle line:90% and do bolder, crazier ideas. 00:33:51.840 --> 00:33:54.700 align:middle line:84% But when you're younger, you don't know much about anything, 00:33:54.700 --> 00:33:55.220 align:middle line:90% really. 00:33:55.220 --> 00:33:56.720 align:middle line:84% You don't know how to manage people. 00:33:56.720 --> 00:33:58.910 align:middle line:84% You don't know how to raise money. 00:33:58.910 --> 00:33:59.910 align:middle line:90% You don't know anything. 00:33:59.910 --> 00:34:01.130 align:middle line:90% And you just have to stumble. 00:34:01.130 --> 00:34:06.350 align:middle line:84% You just have to run and fall, and then stand up, and run 00:34:06.350 --> 00:34:07.850 align:middle line:90% and fall again, and stand back. 00:34:07.850 --> 00:34:08.949 align:middle line:84% And then you do it enough times, and then you 00:34:08.949 --> 00:34:10.170 align:middle line:90% get used to falling. 00:34:10.170 --> 00:34:11.070 align:middle line:84% And then you getting used to falling 00:34:11.070 --> 00:34:13.530 align:middle line:84% is actually one of the best superpowers you can ever have. 00:34:13.530 --> 00:34:18.770 align:middle line:84% Literally, I think the capacity to fall and stand back up, 00:34:18.770 --> 00:34:21.350 align:middle line:84% I think is the single best determinant of the entrepreneurs 00:34:21.350 --> 00:34:22.650 align:middle line:90% that go furthest, really. 00:34:22.650 --> 00:34:24.989 align:middle line:84% And you can look at it even-- you 00:34:24.989 --> 00:34:27.128 align:middle line:84% don't need to look at small private companies 00:34:27.128 --> 00:34:28.170 align:middle line:90% or big private companies. 00:34:28.170 --> 00:34:31.736 align:middle line:84% You can look at public massive large companies. 00:34:31.736 --> 00:34:34.150 align:middle line:84% Just look at the stock price of Meta and Tesla, 00:34:34.150 --> 00:34:35.429 align:middle line:90% and see how it goes. 00:34:35.429 --> 00:34:36.929 align:middle line:84% It's just not straight to the right. 00:34:36.929 --> 00:34:39.969 align:middle line:84% It goes to the shitter for a few years and goes back up, 00:34:39.969 --> 00:34:41.750 align:middle line:90% and then it repeats. 00:34:41.750 --> 00:34:45.050 align:middle line:84% And in every cycle, it goes higher than the prior cycle, 00:34:45.050 --> 00:34:46.030 align:middle line:90% and they keep going. 00:34:46.030 --> 00:34:49.010 align:middle line:84% So I think that's really what it is. 00:34:49.010 --> 00:34:51.270 align:middle line:84% And when I think about my younger 00:34:51.270 --> 00:34:53.683 align:middle line:84% self, what is the type of advice I would give? 00:34:53.683 --> 00:34:55.820 align:middle line:84% I think take more risks, and that's 00:34:55.820 --> 00:34:58.860 align:middle line:84% one of the things I learned a lot from my co-founder, Luana. 00:34:58.860 --> 00:35:00.240 align:middle line:90% She's always been risk-loving. 00:35:00.240 --> 00:35:04.820 align:middle line:84% She never really, really worried about much. 00:35:04.820 --> 00:35:06.660 align:middle line:84% I was more of a person that would 00:35:06.660 --> 00:35:08.100 align:middle line:84% think about optimizing my career, 00:35:08.100 --> 00:35:12.460 align:middle line:84% and what's the highest expected value path? 00:35:12.460 --> 00:35:15.720 align:middle line:84% What I learned over time from the company and from her is, 00:35:15.720 --> 00:35:17.820 align:middle line:84% actually, you just need to take more risks. 00:35:17.820 --> 00:35:19.700 align:middle line:90% Taking risks is a very good-- 00:35:19.700 --> 00:35:21.790 align:middle line:84% it's a very good way to live a life, 00:35:21.790 --> 00:35:23.040 align:middle line:90% because what's the worst case? 00:35:23.040 --> 00:35:24.457 align:middle line:84% You fail and then you do it again. 00:35:24.457 --> 00:35:29.060 align:middle line:90% 00:35:29.060 --> 00:35:32.420 align:middle line:84% I would say number two is, pick something and just 00:35:32.420 --> 00:35:33.735 align:middle line:90% stick with it. 00:35:33.735 --> 00:35:34.860 align:middle line:90% Just try to pick something. 00:35:34.860 --> 00:35:36.693 align:middle line:84% If you don't know what it is yet, that's OK. 00:35:36.693 --> 00:35:38.500 align:middle line:84% Take a few years to figure that out. 00:35:38.500 --> 00:35:40.180 align:middle line:84% But once you feel like you really like and enjoy 00:35:40.180 --> 00:35:41.660 align:middle line:84% working on something, you just pick something 00:35:41.660 --> 00:35:42.720 align:middle line:90% and just stick with it. 00:35:42.720 --> 00:35:47.220 align:middle line:84% Just go for it and have conviction. 00:35:47.220 --> 00:35:48.992 align:middle line:84% And usually, the results, the results 00:35:48.992 --> 00:35:50.200 align:middle line:90% end up being pretty positive. 00:35:50.200 --> 00:35:51.408 align:middle line:90% It's a very, very tough road. 00:35:51.408 --> 00:35:53.610 align:middle line:84% I mean, Professor Kempthorne can tell you 00:35:53.610 --> 00:35:56.065 align:middle line:84% about a lot of the stuff we had to go through to get here. 00:35:56.065 --> 00:35:58.190 align:middle line:84% It's a very tough road, but if you have conviction, 00:35:58.190 --> 00:35:59.270 align:middle line:84% you're excited about what you're working on, 00:35:59.270 --> 00:36:00.953 align:middle line:84% I think you can get very, very far. 00:36:00.953 --> 00:36:01.870 align:middle line:90% STUDENT: That's great. 00:36:01.870 --> 00:36:05.810 align:middle line:84% So did you ever set in your mind essentially a stop-loss, 00:36:05.810 --> 00:36:08.545 align:middle line:84% where you thought, right, well, if this person-- 00:36:08.545 --> 00:36:11.170 align:middle line:84% I've asked this many people; if this person says no, maybe it's 00:36:11.170 --> 00:36:12.150 align:middle line:90% not actually possible? 00:36:12.150 --> 00:36:13.550 align:middle line:84% Or did you just never have that in your mind? 00:36:13.550 --> 00:36:14.383 align:middle line:90% You just kept going. 00:36:14.383 --> 00:36:24.268 align:middle line:90% 00:36:24.268 --> 00:36:25.810 align:middle line:84% TAREK MANSOUR: Not really, basically. 00:36:25.810 --> 00:36:29.130 align:middle line:84% I mean, definitely not a people-driven thing. 00:36:29.130 --> 00:36:31.610 align:middle line:84% What I've learned is, also, a lot 00:36:31.610 --> 00:36:34.530 align:middle line:84% is like, don't really listen to authority figures. 00:36:34.530 --> 00:36:38.930 align:middle line:84% You'd be surprised by the extent to which people just don't 00:36:38.930 --> 00:36:40.250 align:middle line:90% really know what they're doing. 00:36:40.250 --> 00:36:42.630 align:middle line:84% And by people, I mean not average. 00:36:42.630 --> 00:36:47.930 align:middle line:84% I'm talking the President of the United States, the Supreme Court 00:36:47.930 --> 00:36:51.843 align:middle line:84% Judge, Elon Musk, like Mark Zuckerberg. 00:36:51.843 --> 00:36:54.010 align:middle line:84% People don't really know what they're doing, really. 00:36:54.010 --> 00:36:56.010 align:middle line:84% Everyone is figuring it out on the fly. 00:36:56.010 --> 00:37:01.410 align:middle line:84% And it's interesting because if anyone had the answer of whether 00:37:01.410 --> 00:37:05.010 align:middle line:84% something is going to be a multi-billion dollar company-- 00:37:05.010 --> 00:37:07.870 align:middle line:84% sorry about the noise, by the way. 00:37:07.870 --> 00:37:09.370 align:middle line:84% If anyone had the answer if anything 00:37:09.370 --> 00:37:11.930 align:middle line:84% was going to be a multi-billion dollar company, 00:37:11.930 --> 00:37:13.690 align:middle line:90% they would just do it. 00:37:13.690 --> 00:37:14.870 align:middle line:90% Why didn't they just do it? 00:37:14.870 --> 00:37:17.810 align:middle line:84% So in a lot of cases, you cannot really get the answer from 00:37:17.810 --> 00:37:19.010 align:middle line:90% outside. 00:37:19.010 --> 00:37:19.890 align:middle line:90% It's interesting. 00:37:19.890 --> 00:37:20.670 align:middle line:90% You really can't. 00:37:20.670 --> 00:37:22.550 align:middle line:84% You just have to have it inside you. 00:37:22.550 --> 00:37:23.530 align:middle line:90% And you may be wrong. 00:37:23.530 --> 00:37:24.230 align:middle line:90% That's a risk. 00:37:24.230 --> 00:37:25.673 align:middle line:84% You may be wrong and you may fail. 00:37:25.673 --> 00:37:28.090 align:middle line:84% And it might suck, but that's the risk that you're taking. 00:37:28.090 --> 00:37:30.640 align:middle line:90% 00:37:30.640 --> 00:37:32.310 align:middle line:84% But it has to come from within you. 00:37:32.310 --> 00:37:33.450 align:middle line:84% It's like, do you have conviction in this thing, 00:37:33.450 --> 00:37:35.390 align:middle line:84% and do you believe it can work one day? 00:37:35.390 --> 00:37:37.910 align:middle line:90% And if you do, then go for it. 00:37:37.910 --> 00:37:38.910 align:middle line:90% STUDENT: That's amazing. 00:37:38.910 --> 00:37:40.250 align:middle line:90% Thank you so much. 00:37:40.250 --> 00:37:42.750 align:middle line:84% PETER KEMPTHORNE: So, Tarek, if I could just chime in there. 00:37:42.750 --> 00:37:51.280 align:middle line:84% I think what Tarek has is passion, persistence, 00:37:51.280 --> 00:37:52.860 align:middle line:90% and energy. 00:37:52.860 --> 00:38:00.360 align:middle line:84% And knowing how hard he worked and how inspiring he was, 00:38:00.360 --> 00:38:04.800 align:middle line:84% that inspiration led to significant investments 00:38:04.800 --> 00:38:07.220 align:middle line:90% from top people in finance. 00:38:07.220 --> 00:38:12.640 align:middle line:84% And so I think it's a testament to those characteristics 00:38:12.640 --> 00:38:13.340 align:middle line:90% he mentioned. 00:38:13.340 --> 00:38:19.100 align:middle line:84% Also, it's a great benefit to have a good partner. 00:38:19.100 --> 00:38:22.040 align:middle line:84% And Luana Lopez Lara really, I think, 00:38:22.040 --> 00:38:25.300 align:middle line:90% is a great partner with Tarek. 00:38:25.300 --> 00:38:27.590 align:middle line:84% And they've helped each other achieve this. 00:38:27.590 --> 00:38:31.747 align:middle line:90% 00:38:31.747 --> 00:38:32.580 align:middle line:90% TAREK MANSOUR: Yeah. 00:38:32.580 --> 00:38:33.540 align:middle line:90% No, I appreciate it. 00:38:33.540 --> 00:38:35.580 align:middle line:84% I mean, maybe my last few parting words, 00:38:35.580 --> 00:38:37.788 align:middle line:84% unless there's any other questions, I mean, I think-- 00:38:37.788 --> 00:38:41.600 align:middle line:90% 00:38:41.600 --> 00:38:42.460 align:middle line:90% I was still at MIT. 00:38:42.460 --> 00:38:44.900 align:middle line:84% I don't know how many of you are sophomores, freshman, juniors, 00:38:44.900 --> 00:38:45.400 align:middle line:90% seniors. 00:38:45.400 --> 00:38:47.593 align:middle line:84% But here's all the stuff I would tell myself 00:38:47.593 --> 00:38:48.510 align:middle line:90% if I was still at MIT. 00:38:48.510 --> 00:38:51.230 align:middle line:90% 00:38:51.230 --> 00:38:55.230 align:middle line:84% I would take more classes like Peter's class and less classes 00:38:55.230 --> 00:39:00.430 align:middle line:84% that are purely theoretical and far removed from practical-- 00:39:00.430 --> 00:39:03.590 align:middle line:90% many practical things. 00:39:03.590 --> 00:39:05.710 align:middle line:84% I would probably study a little less 00:39:05.710 --> 00:39:08.030 align:middle line:90% and have a little bit more fun. 00:39:08.030 --> 00:39:11.750 align:middle line:84% And I would worry a little bit less about the optimal career 00:39:11.750 --> 00:39:15.863 align:middle line:84% paths and just explore what interests me more. 00:39:15.863 --> 00:39:18.030 align:middle line:84% It's crazy the extent to which a lot of these things 00:39:18.030 --> 00:39:21.742 align:middle line:90% matter much less than you think. 00:39:21.742 --> 00:39:24.088 align:middle line:84% And a lot of life is just actually trying things out 00:39:24.088 --> 00:39:25.630 align:middle line:84% and seeing what works and just making 00:39:25.630 --> 00:39:28.150 align:middle line:84% sure you're excited about the things that you're working on. 00:39:28.150 --> 00:39:31.113 align:middle line:84% But yeah, if you guys have any questions, reach me. 00:39:31.113 --> 00:39:32.530 align:middle line:84% Just please don't share the email, 00:39:32.530 --> 00:39:34.550 align:middle line:90% but it's tarek@kalshi.com. 00:39:34.550 --> 00:39:38.110 align:middle line:84% My first name at the name of the company dot com. 00:39:38.110 --> 00:39:40.270 align:middle line:84% Happy to help in any way, shape, or form. 00:39:40.270 --> 00:39:43.270 align:middle line:84% But yeah, you know, congrats to you guys making it to MIT 00:39:43.270 --> 00:39:46.110 align:middle line:84% and hopefully making it out of MIT. 00:39:46.110 --> 00:39:47.890 align:middle line:90% And really excited to be here. 00:39:47.890 --> 00:39:49.270 align:middle line:90% Thank you for having me. 00:39:49.270 --> 00:39:53.310 align:middle line:84% JAKE XIA: Tarek, before you go, I have to ask you this question. 00:39:53.310 --> 00:39:55.910 align:middle line:84% What was the most memorable thing 00:39:55.910 --> 00:39:58.610 align:middle line:84% you learned from this class when you took it? 00:39:58.610 --> 00:40:02.270 align:middle line:84% And do you recall anything interesting 00:40:02.270 --> 00:40:04.950 align:middle line:90% you heard from this class? 00:40:04.950 --> 00:40:06.450 align:middle line:90% Advice to the students? 00:40:06.450 --> 00:40:06.950 align:middle line:90% Yeah. 00:40:06.950 --> 00:40:10.888 align:middle line:90% 00:40:10.888 --> 00:40:13.430 align:middle line:84% TAREK MANSOUR: I really liked that every mathematical concept 00:40:13.430 --> 00:40:16.950 align:middle line:84% had an application towards finance, 00:40:16.950 --> 00:40:21.790 align:middle line:84% and I think that was a very palpable thing essentially. 00:40:21.790 --> 00:40:24.227 align:middle line:84% It was, a very, very palpable thing was, OK, well, 00:40:24.227 --> 00:40:26.310 align:middle line:84% you're kind of learning this mathematical concept. 00:40:26.310 --> 00:40:27.450 align:middle line:84% It's pretty cool in and of itself. 00:40:27.450 --> 00:40:29.033 align:middle line:84% But then when you apply it to finance, 00:40:29.033 --> 00:40:31.230 align:middle line:84% you see there's actual real practicalities 00:40:31.230 --> 00:40:33.070 align:middle line:90% to the whole thing. 00:40:33.070 --> 00:40:35.730 align:middle line:90% And I think that stuck with me. 00:40:35.730 --> 00:40:38.350 align:middle line:84% I think that because a lot of the other classes I was taking 00:40:38.350 --> 00:40:41.550 align:middle line:84% was basically mostly pure math or kind of very removed 00:40:41.550 --> 00:40:43.700 align:middle line:84% from industry, whereas here, I remember 00:40:43.700 --> 00:40:47.048 align:middle line:84% one of the projects we had to do was-- 00:40:47.048 --> 00:40:48.590 align:middle line:84% there was this paper we had to write. 00:40:48.590 --> 00:40:51.820 align:middle line:90% 00:40:51.820 --> 00:40:53.450 align:middle line:90% And I think the one I wrote-- 00:40:53.450 --> 00:40:54.200 align:middle line:90% it's been a while. 00:40:54.200 --> 00:40:56.320 align:middle line:84% It's been like, I don't know now, like six years, 00:40:56.320 --> 00:40:57.140 align:middle line:90% seven years. 00:40:57.140 --> 00:41:00.853 align:middle line:84% But the paper I had to write was, 00:41:00.853 --> 00:41:02.520 align:middle line:84% we were running some form of regression. 00:41:02.520 --> 00:41:06.820 align:middle line:84% It was a complicated form of regression on-- 00:41:06.820 --> 00:41:07.980 align:middle line:90% now I remember. 00:41:07.980 --> 00:41:11.780 align:middle line:84% I wrote a paper that was trying to use reinforcement learning 00:41:11.780 --> 00:41:14.540 align:middle line:90% to predict the stock market. 00:41:14.540 --> 00:41:17.040 align:middle line:84% And it was, I think, our final paper of the class, 00:41:17.040 --> 00:41:19.920 align:middle line:90% and it was pretty hard. 00:41:19.920 --> 00:41:24.140 align:middle line:84% I don't think our model worked, as you would expect, 00:41:24.140 --> 00:41:25.920 align:middle line:84% but it was really interesting just trying. 00:41:25.920 --> 00:41:28.868 align:middle line:84% I think that was very useful after when I went into trading. 00:41:28.868 --> 00:41:30.660 align:middle line:84% People would be talking about Markov chains 00:41:30.660 --> 00:41:32.535 align:middle line:84% and how they wanted to apply them at Citadel, 00:41:32.535 --> 00:41:34.260 align:middle line:84% and I had already done that in the class 00:41:34.260 --> 00:41:36.120 align:middle line:90% and had already applied them. 00:41:36.120 --> 00:41:39.052 align:middle line:84% And when I used it at Citadel, it 00:41:39.052 --> 00:41:40.760 align:middle line:84% was like, holy shit, this guy's a genius. 00:41:40.760 --> 00:41:42.250 align:middle line:84% I'm like, you don't know anything. 00:41:42.250 --> 00:41:44.850 align:middle line:90% At MIT people do this every day. 00:41:44.850 --> 00:41:46.853 align:middle line:84% And that was the next MIT guy, by the way, who's 00:41:46.853 --> 00:41:48.770 align:middle line:84% now-- you should Google him, Jon Tipermas He's 00:41:48.770 --> 00:41:50.270 align:middle line:84% one of the most successful portfolio 00:41:50.270 --> 00:41:54.100 align:middle line:90% managers on Wall Street. 00:41:54.100 --> 00:41:58.690 align:middle line:84% He's a G. This desk is one of the best performing desks 00:41:58.690 --> 00:42:00.170 align:middle line:90% at Citadel. 00:42:00.170 --> 00:42:02.490 align:middle line:84% The reports is that apparently they made $2 billion 00:42:02.490 --> 00:42:05.370 align:middle line:84% in 2022 alone, and they've been making more since then. 00:42:05.370 --> 00:42:07.203 align:middle line:84% And they were impressed by some of the stuff 00:42:07.203 --> 00:42:11.090 align:middle line:84% that I learned in this class that I was applying on the desk. 00:42:11.090 --> 00:42:14.610 align:middle line:84% I think this goes to the broader thing that I was mentioning. 00:42:14.610 --> 00:42:16.970 align:middle line:84% I think it's just good to be practical, 00:42:16.970 --> 00:42:18.350 align:middle line:90% just very good to be practical. 00:42:18.350 --> 00:42:20.143 align:middle line:84% I get very, very smart, but also be 00:42:20.143 --> 00:42:21.810 align:middle line:84% practical because a lot of the world is. 00:42:21.810 --> 00:42:23.570 align:middle line:90% And you see it like-- 00:42:23.570 --> 00:42:26.650 align:middle line:84% like an example, the people that have 00:42:26.650 --> 00:42:30.730 align:middle line:84% run the largest companies, even the largest hedge funds, 00:42:30.730 --> 00:42:32.070 align:middle line:90% are not exactly the smartest. 00:42:32.070 --> 00:42:33.888 align:middle line:84% Maybe Jim Simons is an exception, 00:42:33.888 --> 00:42:35.430 align:middle line:84% but they're not exactly the smartest. 00:42:35.430 --> 00:42:37.728 align:middle line:84% LTCM blew up, and those were the smartest guys. 00:42:37.728 --> 00:42:41.518 align:middle line:90% 00:42:41.518 --> 00:42:44.060 align:middle line:84% A lot of the others, like Steve Cohen and some of the others, 00:42:44.060 --> 00:42:47.022 align:middle line:84% they're pretty smart, but they're more well-rounded. 00:42:47.022 --> 00:42:48.480 align:middle line:84% They're just much more well-rounded 00:42:48.480 --> 00:42:50.280 align:middle line:84% than just being the best at math. 00:42:50.280 --> 00:42:52.500 align:middle line:84% And I think there's a lot of learning to that. 00:42:52.500 --> 00:42:55.640 align:middle line:90% 00:42:55.640 --> 00:42:56.440 align:middle line:90% JAKE XIA: Great. 00:42:56.440 --> 00:42:58.255 align:middle line:90% Thank you. 00:42:58.255 --> 00:42:59.380 align:middle line:90% TAREK MANSOUR: Well, great. 00:42:59.380 --> 00:42:59.922 align:middle line:90% Well, thanks. 00:42:59.922 --> 00:43:01.600 align:middle line:84% Thanks so much for having me, everyone. 00:43:01.600 --> 00:43:03.100 align:middle line:84% And hopefully we'll catch up soon. 00:43:03.100 --> 00:43:04.100 align:middle line:90% PETER KEMPTHORNE: Great. 00:43:04.100 --> 00:43:06.098 align:middle line:90% Thank you very much, Tarek. 00:43:06.098 --> 00:43:07.140 align:middle line:90% VASILY STRELA: Thank you. 00:43:07.140 --> 00:43:10.160 align:middle line:90% 00:43:10.160 --> 00:43:13.120 align:middle line:84% PETER KEMPTHORNE: But I think his comments 00:43:13.120 --> 00:43:19.960 align:middle line:84% about basically having passion and persistence and energy, 00:43:19.960 --> 00:43:25.100 align:middle line:84% you can really achieve many things and achieve your dreams. 00:43:25.100 --> 00:43:32.520 align:middle line:84% So I do want to encourage you all to take stock of that. 00:43:32.520 --> 00:43:36.680 align:middle line:84% And just as a general comment about my career, 00:43:36.680 --> 00:43:42.000 align:middle line:84% I started off in academics and then found consulting projects 00:43:42.000 --> 00:43:45.260 align:middle line:84% to be very stimulating and engaging. 00:43:45.260 --> 00:43:50.160 align:middle line:84% And I decided to leave academics and start my own company, 00:43:50.160 --> 00:43:53.440 align:middle line:84% and ended up starting a couple of hedge funds 00:43:53.440 --> 00:43:58.520 align:middle line:84% and then doing investment management for 20 years. 00:43:58.520 --> 00:44:03.840 align:middle line:84% Then 10 years ago, I had the opportunity to come back to MIT 00:44:03.840 --> 00:44:07.720 align:middle line:84% and teach, and I've been savoring that experience 00:44:07.720 --> 00:44:08.340 align:middle line:90% as well. 00:44:08.340 --> 00:44:12.000 align:middle line:84% So don't be afraid of changes in your life 00:44:12.000 --> 00:44:14.400 align:middle line:90% and changing your paths. 00:44:14.400 --> 00:44:19.660 align:middle line:84% And taking risks leads to great opportunities. 00:44:19.660 --> 00:44:28.880 align:middle line:84% So hopefully you'll all benefit from that kind of perspective. 00:44:28.880 --> 00:44:30.670 align:middle line:90% All right. 00:44:30.670 --> 00:44:37.000 align:middle line:90%