Kalshi CEO’s Bold Vision For The Future of Markets | Tarek Mansour

Transcript

I what I was interested in is building the New York Stock Exchange but 10x bigger like that that was the sort of vision that was the thing that excited us at the core and for us is like the minute we have to waver on that on that commitment it just becomes less interesting to build this company we are building the everything exchange the exchange where you're going to be able to resolve any qualitative difference of opinions with a trade right and so that's that time is going to be very large long term this episode is brought to you by block damon you'll hear more about them later in today's episode. The digital asset summit, our premier institutional conference, is right around the corner in London. From the 13th to the 15th, we'll be at the old Billings Gate with some of the largest banks, funds, and

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All right, everyone. Welcome back to Empire. Very excited about this one. We have Tar, one of the co-founders of Kali joining the pod prediction market's obviously super hot. Khi, hot t, welcome man. Thanks for having me. I'm very excited. Yeah, pumped on this. Um, dude, I want to start with uh I want to actually start with like some turning points in the business. So, I was trying to think about uh from an outsers's point of view, like turning points for for Koshi. Um things that came to my mind were the 2024 election. Yeah. Um Susuana joining as a market maker. Um to me was like one of those moments where I was like, "Oh, these guys are actually pretty real." Um and that was really before I knew much about prediction markets in Kali. Um but maybe the first thing was uh just regulation.

And so actually I'd love to hear the story about um I've heard a story about you calling lawyers all day. Why Y Combinator? Calling lawyers all day. Um and just I'd love to hear about the extent at which trading event contracts was seen as this like outrageous idea. So let let me tell you maybe I'll just give you the kind of like u the key turning points in my view and then um I'll talk a little story of KHI but um I think the first key moment was when we first got regulated as a financial exchange in the US like the federal government approved us first. So that I think that was the first sort of I would say like crucible moment where we got the license finally like now prediction markets u are sort sort of legal.

When was this? What year? 2020. End of so you know um and then I think there was a launch of the exchange then I think the critical decision to sue the government then winning that lawsuit uh and actually in between them there's the Saskuana launch and then this year sort of the entry in sports and the launch of our brokerage the brokerage side of the business. Um so uh the the story so the story is um it's a very unusual story for a business um and it breaks a lot of patterns uh in many ways but but you know when me and so we started Kashi out of MIT straight out of MIT and and I always say this but and this is very important like Luan and I did not want to start a company like

we were not the sort of uh looking to be an entrepreneur or build product you know how like in school you have the persona of the guy the sort like tinkering with a bunch of things. He that was not that was not you. You were it was like totally not me, you know. Like what I was is a trader. Like I you know I mean my story is like I grew up I was born in California. I grew up in Lebanon. Um and and my life back in the day was I grew up you know it was decently harsh like war and terrorism and bunch of things. Um and I always had a little bit of an obsessive brain and so I was obsessed with math forever. Got really good at it. got into MIT and then at MIT is where I sort of like started spending a

lot of time in in finance. I went to Goldman, Citadel, a bunch of other places. Were you were you obsessed in other areas? You were obsessed with just math or were you just hyperco competitive or you obsessed with winning or I I I I was extremely hyperco competitive on everything like the the anything I would do and it was honestly comes a lot from my mom like my mom was was sort of like would push us at every single thing we do. We could not do something like there was nothing we could do sort of halfway. There was no sort of like it's okay to kind of have it for like do it for fun. It was like you got to win you know every single like you know playing soccer you got to win you're skiing you got to win. Uh you uh you

know you're your mom is Lebanese. Yeah. And was she was it uh single mom or were you Yeah. Yeah. It was so she's like yeah stereotype my parents were divorced but like I grew up really with with my mom. I I had some relationship with my dad, but not really and I didn't see him often enough. But um uh and so yes, it's a stereotype, right? It's it's a stereotype like chip on your shoulder, you know, like and so um the thing and that doesn't leave you, right? Like when you grow up, that doesn't leave you. And so I was really obsessed with math. My brain is a bit onedimensional. I get obsessed with one thing and I I can't get my brain off of it. So it was math then it was getting to MIT. Then then when I got to MIT was finance because a lot of these like

the people that were really good at math were sort of into finance. And then when I got into finance, I really got obsessed with financial history more than like so when I was trading at Goldman like like I was I find myself staying up till like 1 2 a.m. in the Goldman Sachs floor and just like reading up about about like why do we trade options? Like why do we trade swaps? How come five banks have a monopoly over the banking system in the US right? And you know, you kind of start realizing actually like um uh one there's a lot of arbitrariness to history. It's like some guy showed up and bent history and like now that's what we live with, right? And the answer to those banks is JP Morgan himself. He

just made it made it to be that way. And two, it was like the other thing that was interesting is like, you know, financial markets never had like an easy u path forward. You know, we saw it with crypto. I mean, it took so I mean, even now it's still a flight to basically legalize, but it was true for every single piece of meaningful financial innovation like the stock market and the bubbles that happened in the early days that you know, I don't know if you know about the South Sea bubble. Yeah. I'm I'm reading House of Morgan right now. Yeah. Great book. But I think you know it was stocks and there was a lot of fighting and at the time it was like the stock market is bad because people are losing money and that's just gambling and you know then obviously the

stock market is not bad and and then it was same with the with all the other markets like you know when when um credit default swaps got big and then grain futures got big. Um so that was an interesting sort of like realization in the early days and then you know the story I would say when when the idea of couch came to be was um at Goldman all the flow all the demand that we're getting was basically people wanted to they wanted to get exposure to events like simple questions about the future. It was not like it wasn't like hey I think the S&P is mispriced I want to put on this trade. It was like I think Trump is going to win. I want I want to figure out how to play that. Mhm.

And you know that was 2016 and we didn't start a company up until 20 um end of 2018 like really 2019. So that goes back to this whole like we didn't want to start a company but that was the first time we started think about the idea like there's financial markets for all these different things like equities commodities currencies um credit like it feels like there's a need for a financial market about simple questions about the future and and then I saw it everywhere like I saw it at Citadel the one I saw at Bridgewwater at Bridgewwater is interesting because they have two separate divisions one that comes up about the views of what's going to happen in the And then the other one that actually figures out how to play those.

Yeah. How do you make money from that view? Yeah, maybe it should be the same. Like, you know, and and and sa was the same, you know, actually, interestingly, both and I worked at a prop shop called Five Rings. Is that how you guys met? Your co- she was at MIT as well, so from before, but we had a lot of similar interest. And like the five rings thing like we used to play this game called make a market. Have you ever played the game? No. So, it's basically like, hey, what's the population of Nigeria? Make a market around that. So we would do a bit ask and you know you could trade and then you you pay the difference you pay the delta for the other person you know what and then you remember like the big sort of debate was like we were sitting in the office at one

point was just like I will take anybody like you know what's the probability that Kylie Jenner is pregnant and then Lana was just like I will take anybody 100 to1 odds basically like I'll pay 99 on 99 cents on the door and then you know a lot of you know nobody wanted to take that trade uh because she had so much conviction and then he was like well what if there could be a marketplace for that right Yeah. And this was sort of when we were like, well, I think there's something there. Um, we started looking at the history of prediction markets and like this idea. And the main one then was predict it. Is that it was predicted. It was kind of like nonprofit small, you know, kind of like a research purpose sort of type like a research project.

Then there was there was intrade. I think in trade was the OG. Do you know about intra? No, I don't. No. No. Yeah. Yeah. So, it was this like market that like um got started in the 2000s and like you know the the founder um is this guy n trade n in trade. N trade. All right. And this guy was like um John Delaney like he was he was kind of like talking he was like he he even appeared on CNBC a few times talking about election odds back in the day. It was crazy. Um and uh you know the business was not regulated. It was a sort of like runoff shore like sort of not US but like 96% of their volume was US and and then the the CFC shut it down in 2012 and then

the the guy went to Mount Everest two week two weeks later and died and people don't know what yeah people don't know if he killed himself or like um that's crazy. Yeah. Uh this is interesting. I'm reading the Wikipedia page. It says um uh the 20 the 2012 US presidential election was a bellweather event for intrade giving the company high levels of web traffic. Well, we've seen that game before. We've seen that game before. So don't basically don't go climb Mount Everest is I mean yeah I mean yeah so so but but the the thing the other thing so but then we're like looking into it it's like man like this is like really like illegal like this is not allowed in the US and and I I I never doubt it. Like the US is the biggest market to start something like that and it's the one

that we need to get it right. Yeah. And um you know we sort of like could not stop thinking about the idea like I was going to go work at Citadel and and uh and I I just like it was one of those things where the idea pulled us into building it and so incrementally we started like reading more and then started building some stuff and then went to YC and to like it applied to YC because like why not and then we got into YC like well maybe we do YC for three months and see what happens. But like wait let's go there for a little bit.

Let's talk about YC cuz what what did YC say when you when you pitched this? So it was the first time we went to this uh one of my friends this guy Sudanchu uh he was telling me about like hey there's this like hackathon going on you should go and like do this this exchange event exchange idea there and uh we I pinged the guy from YC and he's like oh well the deadline has passed I was like man so sorry I didn't have like a some something but like I didn't have like a house to stay in or whatever like can I please come and he's like okay fine sure so we showed up to this thing we put together some like front end uh that looked the first version of like front of prediction markets and like um you know and then we it was so there was

Michael Cyel the CEO of YC who's now on our board and and you know I don't know if you know about a company called Vanta Christina Vanta yeah of course yeah yeah Christina the found the founder of Vanta was also one of the judges so Luan and I show up and like uh um actually funny enough this is 2018 20 uh end of 2018 2018 okay it was like Luan and I and we had found also So, another guy, this guy Duncan from Nifty Gateways. Oh, Duncan [ __ ] Foster. I went to I went to school with Duncan. I know Duncan. Yeah.

Two of us kind of like put together the side. Wait, I didn't know the That's crazy. Yeah. He was like, I'm going to I want to really go work on sort of Nifty Gateway. Nifty. Yeah, they sold to Gemini. Yeah, exactly. And then like, you know, we continue with Koshi, but like no, we started pitching Michael and Michael was like, well, this idea sound he he goes like he basically goes something along the lines like this is the stupidest thing I've ever heard. like your thing is outright illegal, like you know um like nothing about this is legal basically and and and so we got out of that room. We're like okay we probably lost so you have to pitch separate judges and they pick eight finalists and like you know and I I go and uh we're like kind of okay we did our best we tried like it is what it

is and so I I go and I drink a few beers. I got kind of tipsy and and then they call us to be finalists. I was like, "Okay, that was weird." Like, I mean, he shouted on the whole thing and then they call us to be finalists and like we didn't end up winning that hackathon. And so then we get get into YC and I always asked Michael like what like what went through your mind at the time and he was like it's just one of those things that sound he was like a pattern that we saw at YC. It was really one of those things that sounded so ridiculous. Like one of those things that like really like you know you see a lot of pictures of a lot of different things but then once in a while like you hear one thing that like really makes you

feel off like it was so ridiculous. There's like we we just had to take the bet you know you know and I just uh by the way I just pulled up the site the early site shared here. No there's an earlier one actually before I found this on archive. Yeah. Yeah. But for people who are listening, you could bet on Champions League, Game of Thrones, Brexit, and elections. I bet you couldn't even bet, but this is the front end for it. Yeah, you could do like some like no money at the time. I mean, yeah, some stuff like that. But yeah, no, it's it's crazy. And then we get into YC and like we didn't have a product because all they were doing is like figuring out how to get legalized.

I mean, because you cannot launch. So everybody was like metrics and users and customers and like week over week would be the kind of the like we were not like one of the cool like the you know there's like the cool companies at YC like we were just like we were the odd dog like we're like we were really weird you can't get customers so you're just we had no customers and everyone is looking at us like what like what are these what are these guys doing you know it's like it's like oh you're like reading legal papers all day you know and and then I you know at the end of YC like it was interesting because My pitch was like, look, I think there's like less than 1% chance that I get this legalized, but if we do, it's going to be a very

large company and a very large market, and I think if anybody does it, it's going to be us. Yeah. And we raised money. So, we managed to raise money out of that. And you know, then we went into sort of three years and a half, four years like literally no product, nothing. Like what were you doing? Just trying to get regulated. literally like regulation all day. Yeah. It was like I mean and this is what I talk about. Were you doing any product stuff? Not really. I mean some but like we couldn't put it in front of customer. I mean I always said because what Luan and I realized and we defined this principle very early and we looked at the sort of landscape prediction markets is like the only way this becomes a big business is we need to legitimize it as a

financial instrument. M it has to be something that is legal, approved by the federal government where one day we can put it on brokerages, work with market makers, um and make properly take it mainstream, put it in the app store, like not this sort of like website on the side that like people sort of sneakily, you know, like uh uh uh bet or trade on. I want it to be like right at the center of Wall Street. We're going to reimagine this whole ecosystem. So, um, we were so convicted in that and we're like, we're not going to waiver no matter what, no matter how hard. Either we die as a company or we make this legal.

Yeah. But why why did you take that approach? Because this was at the time like you know there were all these companies that were kind of skirting regulations like not not just crypto companies but like uh Uber or Airbnb like you it was kind of a tech playbook of like you do follow the regulations but like you kind of get around it too. Yeah, we were very intentional about that. I mean I think that like and and it's interesting because Uber a lot of our investors like are in Uber and Airbnb and we talked about a lot about this a lot. I actually think there's a big difference. So I think in financial services and healthcare there's two key differences that make these two sort of u uh industries unique. Um, one, it's generally more federal than state and federal law is

like, you know, it's like the, you know, it's just more like it goes criminal pretty quickly and it's it's kind of like the bad type. But that's not the most important. The most important is the second one, which is like when things go bad, they go really bad. you know like in an Uber and like every like okay some driver is pissed off and like but in financial services it's like you know you don't need the regulation in the in the normal days but in the bad days it's like the difference between you know when a deposit issues happen on Coinbase versus a deposit issue happens on FTX right and that difference is very key that's like do you survive as a business or do you end up being a a really negative thing for society long term so and so for us that second thing was a

key thing which is We are not going to be able to get that sort of mainstream adoption if it's not considered a real financial instrument. Like we we we just we knew there were because indeed you know as you saw like they did get somewhat big like we're not a small company and and there were a lot of trials in the past to me is like the elephant in the room is regulation. If we figure out that problem this is going to be a very large industry and but we need to figure out that problem and if we don't it's never going to be a very large industry. And for for us, I did not want, you know, we I just did was not interested in building something on the side, something offshore. I what I was interested in is building the New York Stock Exchange but 10x

bigger. Like that that was the sort of vision that was the thing that excited us at the core. And for us is like the minute we have to waver on that on that on that commitment, it just becomes less interesting to build this company. Yeah. Um, and so we wanted to deliver that to to the to the prediction market community because it's like without it, it was still going to be this sort of like weird niche corner of the internet, not what it is today, right? Wait. So then, okay, so you'd spend like a year or two years getting regulated. 2020 you're able to launch your It was two years first to get approval for the license.

Got it. A little bit more. Two years, which is from the CFTC. Yeah. Okay. Um, and then the minute we got it, the, you know, the the CFTC turns and basically says, "Actually, we're not going to let you launch any markets." And so that was horrible. So now we're like fighting for the right to exist and launch a single market for the next two years. So it was like really three to four years of like literally we cannot operate the business. And again, we're like we're going to be committed. We're going to do it right. Were you were you running out of money because you were spending on leg legal bills or it's like we had money had money crunch but then we raised a series A from Sequoia where we raised quite a bit.

So how did you raise money from Sequoia if you're like you haven't been around for two years just kind of been fighting with the lawyers. I think what happened is like Alfred you know he did a PhD on prediction markets when he was back when he was uh uh at Harvard. So he really believes in the market and he was always like he was he's seen it coming. He's invested in a bunch of prediction markets in the past also crypto and bunch of others. There was a company called um forgot the name of the company. It's like a decentralized prediction market. Oh yeah. Yeah. The one started by Jeremy um Yeah. Yeah.

Jeremy Gardner. Yeah. No, not Augur. Another one. Another one. Okay. There was another one also. But but but you know, he was like, you got to figure out the regulatory piece. That that's the And I think what Alfred realized is like I think there was a little bit of a founder thing. He was like, "Okay, the these guys, I think it was as simple as I think these guys are crazy enough to basically make it happen." This is Alfred Lynn. Yeah. That's a Yeah. He He was like, so he he led your guys' round. Yeah. He led the series A and like it was a very controversial series A. And he was telling me like this is one of the most debated uh rounds of the partnership.

He was like, which is usually a sign that like either the company is going to go zero or going to be a massive success. Like it's it's a very high variance type bet. Um, but I think it was the f I think he realized like look I it's we cannot know if this regulatory thing is going to happen but if anybody like he really felt like if anybody's going to make this happen it's going to be those guys and because he saw how committed we are to this like I really love this idea of a financial market and like in some ways it's interesting like I kind of want my legacy to be like okay he's he's a guy that sort of made financial markets and everything happen and I and I think there's I'm lucky enough that I'm being able to work on that. Um, so they gave

us money. So it gave us the runway to basically make it happen and then we launched and then it was a limited launch because they were blocking every single market. And I always say this like the first set of markets would take us like 18 months to launch with the CFC. Now we can launch stuff at you know within 30 minutes which is crazy. Um, and but like we got the approval that was key. Then we managed to launch like another year and a half later and and then like the fight for elections like because we were so dead set is like the way that this goes mainstream the way that people understand the power of these markets is you need one singular event that just takes it to the absolute.

So in your mind that was the 2024 that was going to be the 2024 election. Yeah. Across 30 plus networks and 180 endpoints. Block Damon Earnstack unites staking and DeFi into a single institutional toolkit for crypto rewards with multi-layered security, full asset control, and 247 support. Block Damon Earnstack is built for scale and regulatory clarity. Non-custodial staking, and seamless DeFi access allin one stack, direct access to DeFi with no intermediate smart contract or vaults.

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Before we got there, before we get there, talk to me about um what came first suing uh the the lawsuit or the or Saskuana? The lawsuit. The lawsuit. Well, no, we were talking to Saska before then and and so we started talking CFC about the election market end of 2021. Then we're trying to do it by 2022. They blocked it. Then they were trying to do by end of 2023. They blocked it again. And you guys had proposed also contracts about I think it was which party would congress. It was which party. Yeah.

Yeah. And they blocked it again. And you got to imagine like we're a company that now has spent three years fighting for this selection market. Yeah. and the employees started leaving, you know, because what happens when you like lose a fight like that is like people start saying that like it was a problem with strategy even though the coin just like landed on the other like you know so it was a very tough time like early 2023 was like one of the harshest times in the company because like we spent so much time on this uh so much money it's not really like like the government is dead set on not letting it happen you know that was peak sort of Biden era so like yeah also all the like uh kind G um not gambling but uh financial market stuff had quieted down. We had ZERP

and then tech companies and then everything had quieted down. Everything was sort of like very dark times for like any company in general. But for us it's like your regulator basically wants to shut this whole thing down and we don't even know if we're going to exist next month and then they're coming up with new rules to shut down the whole thing and then enforcement action like all the kind of stuff to basically kill this this business. And I think this is where like this was a very tough I would say this is one of the hardest times in I mean the early days were very hard because also we're doing regulation all day but this was a very hard time in the history of the company and and I think what like the craziest part of it all is like I think Lana like

it it was a sort of delusional like belief that like we were just going to make it happen just because we were right. She had like unwavering commitment to being like, I will literally not work on this business if we do not do anything in our power to get the election market. And so after two years, like end of 2023, she's like, we're going to sue the government now. And you know, we go to our board, we talk to Sequoiac, like a bunch of our shareholders, and like and they're all like this is like one of the worst ideas we've ever heard. Like this is literally what says this. every I mean everybody because they're like look I mean it's your regulator. Your regulator has all power over you. They can stop you. They can block you. They can shut you down.

They can pull the license. They can like they could do anything. And and you're a tiny startup like like even with as a big company they don't like suing their regulators or they kind of never do it because it never works. As a small company it's like you're going to die. And but the one thing to their credit like that Alfred and Michael said, it's like but like historically every time you came with a stupid idea like this to us, you know, magic ended up happening like some weird, you know, and and and they said it was also true that a lot of the most legendary companies ever built, they kind of break patterns, right?

You know, it's like you cannot apply like here's how this business should scale. It's there's some weird thing that happens at that company that like is unusual. Yeah. And so they're like you guys should make the decision. Yeah. Like you should decide. And you know I was like I'm a bit more calibrated. I like think about things a bit more. Lana is the more sort of stubborn like she just doesn't give a [ __ ] about anything. She's like I want to like whatever happens. And so we ended up suing. Um I didn't sleep three weeks before filing the lawsuit. And then the day I I filed the lawsuit I like went to sleep pretty well. He's like, "No, it's like I can see what happens."

But that I think was maybe one of the most like And then and then the district court ruled in your favor. Yes. Yeah. Yeah. Which was a glorious day. I mean that was the craziest day. Like that was the craziest I mean it it was like that day we knew it was like okay this is going to where were you at the office? Yeah. Yeah. Because the lawyer So the lawyer Yakov Roth is like this legend. The reason we picked this lawyer, we interviewed everybody, all the fancy, but this guy came to the office in 20 at the end of 23 to pitch us that, you know, we should go with Jones Day for And like this guy like I I I this guy I I've never seen someone as passionate with like like putting like like like like reigning in the federal government.

Nice. Let's go. And I was like, I I think this guy will lose Yeah. Yeah. All right. Good. Love that. So that's 23. Then you guys um No. Yeah. Then 2024 was and then 2024 was a huge year obviously because of the election. I remember I remember cuz I didn't know too much about Koshi but it was I think it was like Q1 or something or Q2 I read a news story about how Susuana was going to that's when they launched. Yeah cuz my problem with prediction market is I had played around with the liquidity. Yeah it was always the liquidity. So then I saw Susuana. So tell me about how that deal came to be.

So, so, um, we had met them actually way very very early and look, Sig is is incredible at spotting like asymmetric, um, opportunities and like getting in on them early. Yeah. Um and the other separate thing here is like Jeff Yas, who's the founder of SIG, um, he's really one of the most legendary figures on Wall Street. Um, and he's a bit more private about his life, so people hear about him less, but he is literally like, you know, um, I mean the OG sort of like market maker, like the OG, you know, started his career um, book m like book making and the horse tracks and then like evolved that into options trading because a lot of the similar

patterns were uh were emerging. Yeah. And then made, you know, like Bill Saskuana. So um, and as a side he owns a huge chunk of Tik Tok which is a, you know, I mean I people don't know him. He's like I think he's like the 20 or 30th wealthiest person in the world. He's just quiet. I think he's actually like bigger. Yeah. Yeah. He's but he's just quiet. He just lives a normal I mean yeah very humble but like um he loves prediction markets you know and he's always said he's a big gambler. He's a big he loves kind of this idea of pricing like like instead of emotional this idea of like taking qualitative opinions and turning them into quantitative opinions.

It's like if you have such a strong opinion why don't you put money on it like I I will buy you at this price at this size. and he loved this idea because is this idea that like we make the world smarter by by by enabling it. Sorry to interrupt there. Are you meeting with when you're talking to Saskan, are you pitching Jeff directly? Are you sitting down? Yeah, we're talking to like Jeff and the team with with Jeff. uh um you know uh two kind of ones that stand out like Jeremy and and and Rick from the from the team that sort of closest to this you know they're doing some of the macro stuff but that had done some sports stuff at the time and but Jeff loves this idea like he really loves this idea and I remember like we had a conversation he's like you know

we want to take a bet on this company because like you know we think you guys are we don't know if you're going to be he he literally told me he's like I think there's less one 1% chance you legalize election markets. But if you do, but if you do, it might be pretty large. But but he really thought it was less than 1%. He's like, "Look, I want this." It was a bit also emotional for him. Like I think it was like, "I want this to happen so bad. Like, you know, I want to I want to I want to help." And I remember I called him on the day we won and I was like, "Jeff, we won." And it was like the great greatest call.

He's like, "Look," he's like, "Tar, I told you. I really thought it was less than 10%. Less than 1%. But man, like I I've been thinking like, you know, uh I I think it's it's delusional people like you that make this sort of change happen, you know, and like and then he you know, he asked like I want us to be the first I want I want to try to be like first to market. We'll be ready the traders so that we do the first trade. Wow. Nice. And then we ended up doing like this really nice like uh plague for for uh I think he has it on his desk about like the first trade that ever happens on the Oh, that's cool. on a legal election market. Yeah. So are they still one of the big market makers on the platform?

They they are. Yeah. They're they're like a meaning like a meaningful part. uh they're great. Um and they've been supporting a lot of different markets now, sports and some of the other um but they made the bet before they launched before. It's it's a good question because um they they they kind of wanted to be part of the making it happen rather than just sort of like showing up when it happens. Yeah. Yeah. Um okay, fast forward 6 months, we get the election. You guys were I remember you guys were late to the election market. Very late. Yeah. Yeah. Why? Why was that regulatory?

I mean like the commitment, right? So it I mean it was hard because people like I I I think the the story of cash sometimes is a little bit misunderstood um in terms of sort of this legal regulated. So the problem with being a regulated exchange it comes with the ability to take this thing mainstream and like actually build it but it comes a lot of responsibility. There's always this burden on our shoulders that if we do something, anything that we do that can go bad will actually hit the industry pretty hard.

And so for us, it's like if we listed that market without the approval, that would make these markets illegal for forever basically. Yeah. Yeah. So we were like we cannot do like we just can't. Yeah. But take me like inside the company then because you must have been watching Poly Market obviously who had taken a different strategy and they had the markets and I'm sure you've got both investors and employees being like t I mean our customers were leaving the market they were all like we were losing a lot of our customers were going over uh to Poly and Paulie had a good product and it was and they did a great job at marketing um and we talked about about it with the investors a lot and they were like man

like what what what do what do you like why like uh you know um what is happening basically and like how is this sort of um allowed and like how would you make this and we were like what we sort of um we were adamant we were like we got to legalize it and if I don't do this we will lose the court battle which means these are going to be illegal for the rest of history and if we lose that court battle prediction marks are never going to be big doesn't matter like both of us will have a great year but this is not going to be the way to make prediction markets big long term and it's a bit like the story of crypto you know like I think Coinbase is often in a very difficult spot because they do something they will hurt crypto long

term and they always kind of take this sort of approach where like what is the right thing to do longterm for the community even if we trade off the short term and look when we did get it worked right like we're number one on the app store within like a week or two yeah I was looking at your guys' user numbers I think your adoption right now is faster than any company outside outside of the AI businesses like you can't compete with chatbt and stuff like that but I think you guys are one of the fastest definitely the fastest financial app maybe let's take it let's let's go into today like current state of the business snapshot um I don't know how much you share publicly but like users volumes all that all that kind of stuff so we are we're shocked by how large we've gotten

I was talking yesterday on the SEC CFT round table and I revealed that like we're now at 40 billion of annualized volume 40 billion of annualized volume so we're by far the artist today like the what what's poly? I honestly don't know. Okay. But you you guys just passed poly market. Yeah, we're bit I mean we we have been bigger. I think we have been bigger for some time because poly has a bit of the DYDX like uh effect where there's like some like farming farming right agile farming. And that's okay like that's I think fine and reason um and it helps foster the ecosystem.

But like we think of it as like what is the economic trading? what what's the one that you can like charge fees on which is the way to build this thing into a long-term business and if you look at that like we we've have been larger larger for for a while I mean now if you account even for the sort of that that way of accounting volume we're even bigger um but uh I mean I think we're also like a number of customers like you know we really have mainstream adoption like when you walk around in in various circles like people are using Khi like people are sending me you know pictures from the US Open where people had app and like you know a bunch of people were using Khi. I got like four or five different pictures. Uh uh I had a friend actually me who Penny Egg

Schmidt was was using Kali was while watching. Yeah. Yeah. So and then Terry Duffy yesterday said you know I saw the Duffy. Yeah. Yeah. Uh we come a long way you know four or five years ago I was like Terry is doesn't believe in these markets now. He's excited about them. So yeah. Yeah. Um okay. So you got 40 billion annualized volume. I mean you how many markets do you guys have now? So we it was it's crazy. Now we have I think around 3,000 2 to 3,000 cuz the last year around this time you had what 60 or 70. Yeah. Yeah. Because we didn't have So you're up from 80 markets to 2,000 markets and the government wouldn't let us do anything and then we didn't have a clearing house and then the election win kind of opened up kind of like a whole suite of markets

and it feel this year was the first year we felt like we can now execute. Actually the election month our execution was also pretty because if you look at that slope you know that on the election day we did the most volume out of any prediction market. So the slope was super fast when we got the opportunity to kind of really compete on on a level playing field. Um and this year I think we really kind of got unleashed. I think this this year what um how much volume in September alone? Two or three billion or something. I think we're going to I I need to check the number. So I'm a bit superstitious. I don't check the numbers until way after the end of Yeah.

Yeah. But like I think we're going to I think we're around three this month. Three. Okay. Do you know what percentage of that comes from sports? It es and flows, but right now I mean obviously it's football season, so there's Yeah. Yeah. So I think I'm not sure. It's I right now it's around 80 to 90 80 to 90% of the volume is sports. Yeah. But I think well when the mayor race is going to hit that's going to go much faster. So but it's it's dependent because now we're investing quite a bit in the experience in sports and like scaling. Yeah, but you look I mean people have when all of my calary bets right now are uh politics politics right like the the when last year in the election people were like well you're you're 90% elections what are you going to do after and like and

the point with these markets is like okay what is the steady state in two years it's like it's just going to depend on what's in the news and what people are talking about right now a lot of people are talking about football it's just huge um but I think culture is going to be a huge category it's actually the fastest growing is that what does the most volume is kind of whatever is trending on Twitter or Instagram or Tik Tok period of time. Yeah. Yeah. Yeah. Like the trending societal thing is the it's just that sports has a lot of markets. So we have we need time to scale the operations to have as many political markets as much liquidity in politics. Same with culture, same with all these different things.

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data for their users all over the world. Tokenized robots are generating revenue for token holders. The first machine economy free zone is live in the Emirates and it's all happening on Peak, the machine economy computer. Head to peak.xyz. That's paq.xyz. XYZ to find out how you can benefit from the age of automation or click the link in the show notes to find out more. As always, investments in blockchain technology involve risk terms and conditions apply. What do you think about um there's a really interesting Matt Lavine piece a couple months ago?

Which one? uh he was talking about the impact of uh I think it was the big beautiful bill uh basically of taxes on brand and draft kings and how it's actually not profitable for um whales for whales in sports betting anymore but but it but if they move over to uh prediction markets and make those same bets it is it is still profitable for them because of how they're changing the taxes. Yeah. Um I don't know if you followed that but how do you think about compete like let's just talk more about fantasy sports and sports and like that market. How do you think about competing with the FanDuel and DraftKings a little bit?

Yeah, I mean on this specific Matt called me before releasing that piece and he was telling me like, "Hey, a bunch of people think that like you were behind this this bill thing and like and it's just funny how that would have been sappy. That would have been Well, I mean so well first of all I think this is not a very good bill. He changed the tax code. Like I I don't think it's a good bill at all. I I think this is kind of in my view anti-competitive and I I don't I don't think should exist. Um, but it's funny like this just kind of conspiracy theories that happen on like, you know, um, uh, uh, behind the scenes. I didn't know about it. I only knew about it because people start saying that like I was involved and then I read into it. I

don't think it's a very smart bill. I think they should, you should probably just not have that in there. Um, uh, it is obviously probably net positive for us, but like I I think it's going to get repealed. I hope it does. But um I think this is a bit there's like business model disruption in here where like the prediction market model is is superior in my view. Why why is that? Because you I my mental model for it is OTC versus on exchange you know so and by the way this how we started cashy like you know people were coming asking for us for over the counter trades on whether Brexit is going to happen or not. how about we make it on exchange and when something is over the counter you have one counterparty so one person that's pricing it's very opaque and you don't get to sort of know you

don't have transparency you don't know what the prior price is um on financial markets you have you have a price you have a moving price the whole time so you can see you have much more transparency on pricing and then the other thing is you can price improve there's competitive bidding for your flow yeah like I'm looking at the Rams verse ner game and you can see the whole chart of of the markets moving which is very nice. Yeah. And I think that's important because like um when you go to like a sports book they set the odds and you kind of like are are betting against the house and you like you know there's a little bit of a inherent conflict of interest. Whereas in prediction market it's like people are trading against each other, right?

And so it's a bit more of a level playing field. It's a fair game. You know, you want to you want to be a taker and like take whatever is available you can. And if you don't like the price, you can actually add your own price and and and take out the price you want. Yeah. What do you think will be bigger in 5 years on on Cali? Sports or like what I'd roughly call traditional markets? I think it was sports will be like 20% 25% of the business and then there's like going to be So you think it'll come down from 80 to 90 down to like 25? Right now it's very high, but like in the summer it was like less than, you know, it's like way less than that. Yeah true.

So So it just fluctuates a lot. I mean like next next year I mean obviously the World Cup is going to be very big but like the there's the midterms that's going to be huge and like um it's just going to like fluctuate but I think there's gi means everything in Arabic right like we are going to we are building the everything exchange the exchange where you're going to be able to resolve any qualitative difference of opinions with a trade. Yeah right and so that that time is going to be very large long term. Yeah. Will you eventually I saw the um the hearing with SEC and CFTC and you're next to you know Adena from NASDAQ and CME and you know bunch of the big uh I think it was Arjun from Kraken and uh I was you know I saw a picture on

Twitter and I was like oh that's interesting. It made me realize eventually you guys will you'll you'll be in everything exchange so you'll you'll be able to trade tokens and stocks and everything on the platform. Is that is that the end goal? I think that like um because you're not I was like and the other qualifier to this question is you're not just competing against Poly Market and other prediction markets platforms. You're competing against Coinbase and NASDAQ and CF. You know, I've always been consistent about this. Uh I've never thought that the kind of direct even back in the day like you know I've never thought that the direct competition was was uh I mean look I think Paulie is direct competitor but like I've always thought that the like the competition at the end of the day is like like the asset classes themselves like how do we make

prediction markets and over time Koshi which is going to incorporate multiple asset classes just like a bigger piece of the pie and we have a long way to go but but I agree with you I I think all of these will intersect over time uh because trading is trading like you know we when you like is trading on a stock that fundamentally different from trading on politics like not really if they're both very liquid it's kind of the same thing. Yeah. Um let's talk like crypton nativity which has been a conversation on Twitter recently like how do you think about Khi being a crypto company or not a crypto company? So, look, I mean, we're not a crypto native company in in like um in a in a sort of like crypto Twitter sense, right? Like I think that and you know, I think there's

a lot of debate around like around that piece and and I find a little bit um and we're not claiming to be I think that's that's totally fine. It's like um the one funny piece is like actually when you first start in in YC when Michael said that like well how what if we did it on the blockchain and then realize like but the problem still exists which is like we got to get regulated and blockchain is going to make it harder actually and in that at that specific point in time. Um the way I think about it is is the way that a lot of uh companies like Robin Hood and Stripe are thinking about it which is like look if you believe in AI if you really believe in AI in five years there's is not going to be AI companies and non-AI

companies. There's going to be winners and losers. There's going to be like companies that have adopted AI to improve the the product experience and companies that didn't which are going to be left behind. And I think crypto is the same thing like if you really believe in crypto like if you really believe in the infrastructure layer and what the blockchain provides and what this sort of like developerled ecosystem brings to the table. It has to be embedded in our financial system in ways that are like kind of like seamless. You know that the average person doesn't really care if you're using Python or Rust on the back end.

They just don't like they don't even know what that is. Um just and I see that I see it evolving that way, right? And and for us it's the first time I think you know first we're kind of like literally fighting for the right to legalize the asset uh prediction markets then we're fighting for right to exist then we're fighting the right to grow and then now we're finally you know fighting to thrive like like actually growing more and I think it's the first time I feel like there's openness to basically bring um uh uh bring more of crypto and and embed them into financial services And there's so many examples like we've been talking to CFC about, for example, instead of holding dollars and fiat at the clearing

house, can we hold USDC and other stable coins, right? And why? Because it makes perfect sense. Like, you know, right now we accept the USDC and we're forced by the government to flip it to US dollars. Why? There's no point in that. Um, and it seems like CFC is kind of open to uh enabling us to do this. But over time, like I I see kind of a seamless integration where like there's going to be a very there's obviously going to be an onchain flavor to this. And you know, for crypto Twitter and like the crypto native people, there'll be like an experience that they're used to where they don't have to go to kind of like a trapfi platform to trade. They can trade on the whether the front ends and UIs and uh that they're used to um uh to trade like

racial markets on Koshi. And then for mainstream um uh uh people they just won't even know that their payments are so much better now because on the back yeah you know we have crypto rails. Will you move Kali onto crypto rails like will will you ever like settle trades on Salana or Ethereum or something like that? I think over time especially as sort of like I don't see it as binary people because like look I when I think about Hyperlid which in my view is in in recent history I I would argue they're like they're the most successful sort of I would say quoteunquote cryptonative company. Totally. It's kind of somewhat centralized, right? Like like you know the the core infra is actually the reason it works so well is that there's a centralized database at the core and then they print transactions on chain. And so they got

the best of both worlds which is like you know a reasonably centralized company but like you have the you have the transparency that comes out of printing transactions on chain. You enable the you enable obviously like fast in like you have access to liquidity that's sitting on chain. And then three you they have a very thriving developer ecosystem which is like they have an open ecosystem where people can build on top. Yeah. All these things can be achieved without this sort of strong binary dichotomy of like are you onchain or are you offchain. Yeah. It to me it comes down to actually just KYC which is like antithetical kind of to your regulated. So like for me like uh as a I'm a user of Kouchi, right? And I've got I the way I think I the way I got money on the platform was

I think through Moonay like a Moon Pay integration, something like that because I wanted to go through the whole user flow or something. But for me, I'd way rather just connect my Phantom wallet and well that that would work your arm. So So you will Yeah, we have a question. I mean even by the way Phantom has a question and this is sort of so the KYC question is a very very good one, right? Like and we think about this. I'm fine KYCing but I just want to be able to connect. Yeah, but I just want to be able to connect my wallet. No, that that's going to be fine. So, the wallet integrations are all going to be fine. I think the core qu So, my view is like everything is going to be largely the same. Then there's one core question which is the KYC question.

Yeah. And to be super honest, I don't really have the answer to that yet. And because it's like it's it just sort of depends on like kind of where this administration takes us and like where the government goes. Uh and look, I see the I see the arguments for both sides, right? Like I think a fully permissionless experience which by the way may be enabled on Kashi. I think we may have something actually coming pretty soon much sooner than people expect um is important because some people like you know want to want to be anonymous and they want to be able to like know deal with their money without having a centralized company uh you know handle that for them and I totally see it.

And on the other side I think you know um KYC there there are reasons for why KYC exists. Look and and it's painful. We've made it actually very smooth now. It's it's very easy now. Sometimes you can just give us your name and we'll we'll figure out everything on the back and you don't have to worry much. Um, but you know the history of KYC, I've been reading about this a little bit like why do why why is KYC so important for the federal government? It's like when when there was no KYC a lot of bad stuff happened like there was a lot of fraud and and moneyaundering all these different things. And so like could we come up to a reasonable middle ground where we can have an experience that's seamless and permissionless without you know like Iranians moving money on the exchange without us

knowing. Yeah. Right. and and and that's I feel confident that we're going to be able to get there. It's going to take a little bit more time. I will say the KYC tools are getting so good now so fast. Um uh let's we need better the always we need better fingerprinting printing for on onchain. Yeah. Presence. Yeah. Or eyeball scanning. Uh but I'm talking about something simpler which is not even about like I'm talking about something like you can build a profile of a person that's been on chain that this is like a real legitimate trader that anonymous versus like this is Iran, right?

That's a good that is a good idea. Yeah. Uh so if anybody wants to build this, it'll be a very very early adopter. Yeah. Shout out to today's sponsor, Katana. Katana is a DeFi first chain built for deep liquidity and high yield. No empty emissions, just real yield and sequencer fees routed back to DeFi users. Incubated by Polygon Labs and GSR, Katana is launching with notable ecosystem of primitives, assets, and partners like Morpho, Chain Link, and more. Katana's 1 billion CAT campaign is live. Bridge and deposit directly into vaults in one simple click and start earning immediately on your Ether, Bitcoin, USDC, and more. Follow the link

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All economic activity within UR will be captured by Mantle Network to further drive value to Mnt token holders. Follow Mantle on X at Mantle_official for more. As always, investments in blockchain technology involve risk, terms, and conditions apply. Let's talk about uh partnerships and white labeling Keli. So, you guys have done it with um two FCMs, I think it is. It's um Robin Hood and Weeble. Yeah. Um it's interesting. I was thinking about because, you know, we've we've had our conversations and stuff like that. And I was thinking about like the strategy from your point of view. Um on one hand, you get more distribution. I saw Robin Hood is has had a ton of success already out of the gate and you share the

revenue. I don't know what the revenue split is, but you share you share the revenue. The downside is you don't own the relationship with the customer and the user, right? So, how do you think about that trade-off as a founder? It's a tricky balance, but like look, I think that um and this we discuss this a lot like if you look so NASDAQ, New York Stock Exchange, CME, CBOE, um uh uh they're all what we call intermediated exchanges. They don't have like when you want to buy a share of Apple, where do you go? You don't go to New York Stock Exchange. Right. Right. Or you go to a brokerage that sits on top that then wraps the trades.

And that's the usual go to market strategy for exchanges usually. Oh, I see. That's actually the more normal. The weird part about Kashi is that we have a cashi.com. That was always weird with the CFC. It's like a little bit of a weird situation there. And we were always always believed in the broker strategy. That's also part of why we really wanted to be regulated because like if you want this to be mainstream, this has to exist in the large retail brokerages long term where you know like if you combine the large like the the you know 10 largest brokerages in the US, you're talking about 200 250 million accounts. That's the sort of thing that you're you're not going to get out of like Yeah. Yeah. You know, take a little while to get those two.

It's going to take a little bit little bit of time. And like this is the way that you make this asset class truly mainstream. You have to put it on the brokerages and and it's working really really well. But we've been working on this for three years now. Yeah. Yeah. I was looking at Vlad. I just pull this up. Vlad tweeted yesterday. He's like, "Robin Hood prediction markets just crossed four billion event contracts traded all time with over two billion in Q3 alone." It's pretty phenomenal. Um, so that so that then routes to Cali and you guys share the revenue. Yeah, I mean we we we uh we we're like the it's a bit like how the you know if you route again like a share of Apple being bought, you route it to the exchange and so it's a very similar setup, right?

I mean yeah, obviously Rob I mean you know the Robin has done an incredible job at like I mean they move so fast as a company. It's like amazing. Um it's amazing to see and like you know their offering has gotten uh much better uh really quickly. I mean, I encourage people to check it out if you have a Robin Hood account or if you don't. Like, it's really amazing how fast sort of the offering has gotten better and now you have more markets and they're diversifying their sports, but there's also like economics, some politics, some culture. So, it's it's really cool to see how the integration has evolved. How do you think about um media companies? That's very important. Yeah.

And we're talk we have a few things coming, but like that's a great question. Uh I I mean, you and I talked about this a lot right? the you know is there a word like where like you know CNN and Fox and Block Works and like you know all these like you know important media publications over time are sort of like um you know they have their sort of commentary on what's happening in the world and what's going to happen but it's sort of like grounded and related and set in a markets based environment.

So, and look, Bloomberg and CNBC have done a good job to about having a commentary plus financial markets integration. Totally. But man, prediction markets plus news is an even cleaner integration because now for every single piece of content, everything that you're talking about, there is a market. Yeah. You don't have to tie it back indirectly to some sort of stock. Now you can just talk about the direct direct thing itself. So, I think that would be a very big part of this being embedded in culture, going mainstream. Um, and in some ways honestly making the news better like which is a part of the mission, right? Like the whole point here is like maybe CNN and Fox don't need to be polar opposites every single issue. Maybe maybe climate change is not 0% real or 100% real. Maybe it's like

40% chance that next year is going to be a little bit warmer, right? Like so so if you were Mark Thompson at CNN or um, you know, Lachlan Murdoch at Fox or something, would you would you embed a Cal what should they do? I mean absolutely you know first start start with the reporting um you know make sure that there's all the tools for reporters to basically use if they want to and might we have strong I mean they're using them already very organically right like I mean Harry Anton at CNN like uses koshi very pretty much weekly now which is amazing he's one of the main he's he's he might be the main you know uh political forecaster on democratic side and he's using and to be clear like the democrats were the most skeptical of friction markets last year right and now they're

embracing them which is amazing to see and and I think he's kind of being a leader on that front and like CNBC is integrating more prediction markets. Fox is also using the the predictions. So, reporting and then over time, yeah, that that evolves naturally into kind of like embedible widgets, you know, um maybe one day trade even from their own platforms, you know, the same way that we've set it up with some of the brokerages. Yeah. You think that'll happen? I don't see. Do you think people want to go to CNN to trade though? It's such a different This is This is But think about it this way. Like do you prefer going to CNN where you can uh you know engage with the content and then maybe trade on it versus go to CNN where you can engage with content and then be fed a bunch of

ads. You don't have to trade, but you can if you want. I I mean my candid take is just no one will be going to CNN in a couple years, but that's a separate that's a separate conversation. I think that's possible. And then we need to figure out okay like is there another medium for this to basically happen? And I I actually somewhat agree with you. Um especially with AI like who knows what's going to I mean there there's some uh so I think voice is becoming increasingly more important and like uh like audio and video is is much more important. Um yeah, I mean I we're going to need a little like we're going to need surface areas that are different than the iPhone to let people interface with this sort of content better.

Let's talk video. Um because we that is so I'm I'm very bearish on websites as a as a platform. Very bullish on on on video and like live streaming and things like that. You guys have um had some really nice hires, John Wang obviously, and some some some other people. How do you think about just distribution and like audience building and you guys are pulling you're I'm trying to follow what you're doing with this like ecosystem strategy like talk Yeah. Tell me about that strategy. So, so I'll talk about first about hiring strategy because that's Yeah. So we we are very I think and honestly this is kind of a falsifiable statement like I think we we we have pro we have done an incredible job at building talent density in the company like we we have very good

um not because you're like kind of geniuses like we spend so much time focusing on recruiting and recruiting great people and the more great people you recruit the more great people want to join the company. That's the kind of the key thing about recruiting is like people want to join a company because they want to work with the best people. It's not comp, it's not, you know, that's by far the kind of most important thing. And then obviously the mission and vision needs to sort of like align, be exciting. You want to work on something that you want to kind of die on a hill for. And I think that's the type of mission that is easy easy to die on a hill for in my opinion. Um, and we've applied this to engineering, to product, etc. And when it comes to crypto, like we spent a lot of time in

and very opportunistic, like we don't rush. We take a long time to hire. It's it's actually pretty hard to get into into Gausy. And like I spent like a month you know, talking to John, asking for docs. He was like writing a bunch of thoughts. Like I would give him some stuff. I see kind of his thinking. He'd come back and like he spent a lot of time with Matt Hong from Paradigm with Calamani from Multicorn. He even spent some time from Alfred from Sequoa and really thinking like what do you think? And we had a lot of other options which like more like veterans in the industry like older have run big orgs etc. And I think John is like 23 or something. And yeah, and it's like the same way that we did this, you know, we took a bet on Leor like five years ago and like he was

like I think 20 or something like we're like we're going to take a bet here as well because that's how we do. We take bet bet bets on young people that grow with us. They grow within the culture and they become part of the team and and then you know they embody the culture over time rather than bringing a lad higher. Yeah. And then Altra, ICO, all these guys are like have been really amazing. Ultra did this sort of South Park image generator a week ago. It was like incredible. Did you see it? Yeah. Yeah, I did. It was crazy. Like thousands of people were like changing their profile pics and stuff. Yeah, it was great. Um maybe a few more things and we can start to wrap. I know you've got a I know we got to wrap this up in a little bit. Um

uh John, speaking of John, John wrote a piece about per. Yeah. Um and I'm curious how you think about like per and maybe more broadly just like leverage leverage on prediction markets. It's um you know um let me answer the first question. I mean look I there's a lot of debates between PES and futures. Like personally I think perhaps are a better mechanism than futures. Yeah. Like if you want to close you can close. If you don't want to close you don't have to close and I like the upshot that per um I I understand why for traditional markets per are are challenging like if you're it is true like yesterday Terry Duffy from CM was talking about that. It is actually a good point like if you trade in like interest rate swaps or

grain futures like purpose may not be very good for that market structure because people do actually want to have their weekend. It is not as much of a global market. It's a market that follows the banking schedule or like the farmer schedule and like these people want to be want to have an end of date. They want to have physical delivery like that's how they kind of operate. So, I don't think it's a one I really don't think it's a one-sizefits-all, but when you think about products are digital first, like like really sort of like either very retail heavy or like like obviously crypto the traditional future structure doesn't really fit.

Yeah. And that's why per successful way more successful. So, I'm very bullish on purpose. Very very bullish. Uh leverage on prediction markets. It's a it's a very exciting thought and idea and we've been thinking about this a lot. It needs to be done well because le when you add leverage to a system, this is when things can get really dangerous, right? Like this is when you can be in a situation where there's a whole and if it wasn't properly managed, things can go bad and we're going to I think if we do it, we're going to do it right. Yeah. Yeah. Like how should this work? So I like I'm looking at the New York City mayor election. So mom Donnie is 84%.

Unless I want to bet on that, but I was like all right, well I'm not trying to make like 20% here on M Donnie. I'm trying to make like I don't know. You want to 3 4x that? Yeah, I want to 5x my mom Donnie bet or something, but I'm I'm willing to lever up. How How should that work? Can or can that even work? It can, but it's tricky because think about it like it's tough because it's a binary outcome, right? So, how do you because the odds it's more like the odds can move can shift very drastic. So, imagine you margin this thing like 50%. Right. So, instead of putting $84, you're putting 40. Oh, yeah. Right.

And we can eat from your 40 and close you. But the problem is that that 84 can go to 10 overnight. Now we are at the hole we're with 30. Yeah. So it's it's a very complicated problem. It's not unsolvable, but I think it's going to take some time. Will you Is that a thing you want to solve now or it's like punt that until just punt that out? I think it depends on the market. Uh we'll see. I mean it's it's a TBD, but uh um I mean there's also a difference between retail and like like a Citadel, right? Like a Citadel you can always call them back and say, "Hey, you owe us another 30." Yeah. Retail tough to do.

It's a bit hard, you know? Like you know Yeah. Yeah. They're like 30. Yeah, I am I am bankrupt. My god. Um, let's talk Poly Market for a quick sec. They um people have described it as like the most intense competition behind the scenes right now is Poly Market versus Cal. Behind the scenes, I feel like it's it's more intense. You know, I would say I would say behind the scenes for the last year and now it is becoming more public for of how how intense the competition is. And it makes sense like I mean you guys are going after such a large market opportunity.

What is the um what is your relationship with Shane and what is your what are your thoughts on Poly Market as a business? So, first I think it's actually more intense in the scenes than behind the scenes. I I think a lot of things end up like that. You know, it's like I was thinking a lot like do people in the boxing like do people that end up boxing like when they when they you know when they're not on camera like are they actually you know like you know is it the same like you know are they actually insulting each other or like and look I think like my my general view um I've been thinking about this uh recently like man I think like in five to 10 years we're probably both going to look back at this and think that like

we're kind of going to be grateful for this dynamic. I think it's a bit like you know when Tom Brady um talked about Manning and like he would talk a lot about like at the time it was like so intense like you know but like in retrospect like both of them achieved like just like significantly greater heights because they existed. It's a bit like Messi and Ronaldo. Like would they have I don't know. I don't know if they would have gotten that level. And part of me thinks that like some of that is happening, you know, like this sort of rivalry actually like it pushes you to your limits. It pushes you like, you know, we do something and they have to kind of like oneup us and they do something and we have to one up them and and that sort of thing. The net

the net result is like, you know, we have prediction markets are legal now. We have way more mainstream awareness. We have way more markets. we have way more decor. We have way more volume. So if you're a customer and you're sitting around, you're like, "This is great." You know, like these two gladiators in the arena are like making this way better, way bigger, way more fun, way and so in some ways like I think it's interesting like I you know I think it's a net good overall. Um there are some parts I think are like are sort of extractive like I think the the higher level sort of thing. I think this rivalry is pretty good. I think it's going to make prediction I think it's going to help both of us make prediction markets as large of an asset class as it can be which is amazing. Um

I think um there are some negative um I would say there are some sort of toxic aspects of this rivalry that like we've completely leaned out of leaned out of like we obviously made the mistake with the Antonio Brown tweet in um uh last year and it wasn't like a top down orchestrated you know the whole thing when the FBI raid happened there was a little bit of controversy I don't want to get into it and so the team got really annoyed by what happened that what Paulie did and so they basically made wanted to make these memes. Um, we made it extremely clear like don't ever do this again. This was bad. It doesn't reflect what we want to do. It kind of like makes us look bad. It makes everybody look bad.

Um, and I think now there's also some of it that that's happening that we're like on the other side there's a lot of I think there's a lot of FUD like there's you know like uh sometimes like fake like there's a lot of like fake like yesterday there was like a fake um image being circulated by CalDM being sent to somebody and it's like just like not even true. Mh. Um, and I hope that we stop like the the the not like the not real paying influencers to fud each other like that. I mean, we've had never done it since they turn around, but I hope the other side stops doing it. Um, and I I I right now we're just really focused on product and if you see the product velocity at this point, uh, um, we're just kind of super locked in and I think they will do

the same over time and I I think the net winner is going to be the consumer. Yeah. Why why do they why have they been able historically to raise at higher valuations than you guys? Because you guys raise around the similar time. Well, the C we raise at higher I don't I don't think valuations matter at all. Like I you know there's a lot of stuff that behind the scenes that happen with valuation. So the headline number is very different from the actual number in general and I I don't know much about the but like look I mean I think uh I don't think that's the most important thing honestly like viation I think is irrelevant but even then like today we're bigger we're we're bigger we're more mainstream I think we're uh we're more integrated in the enterprise side we uh obviously we're monetized um I

mean we're the fastest growing company in America today I think aside from AI yeah I think so too and and the difference is AI there's negative gross profit so we don't we'll see uh they're not you know, they're negative unit economics, whereas I think we we there's a prediction markets are real now. Like it's it's Yeah totally. So I I don't think that matters. It's like do you think um have you have you been thinking about IPO at all? The IPO market a lot of IPO uh IPO market is very open. Have you we've eny recently because you know we are so it' be good for you guys to be a publicly traded company.

What's more important, you know, and we think about this a lot like whether it's an IPO or like a token or other like like what's more important is is building a great company like a truly generational company than when you go IPO and how like I always think about Door Dash like Tony never cared about anything. Yeah. He just cared about building the single greatest company of all time and he and just to be clear the reason I think Door Dash is so great they have the shittiest market of all time. Yeah. Tonyy's an amazing operator. Like he has the shitty like it's the shittiest market of all time and he built a hundred billion dollar company out of it like you know and like people forget like you know Uber was outspending them 20 to1 um and giving incentives and like lower

fees and like all this different stuff and Tony was like we're not lowering our fees. We're going to focus on making this experience better for for our customers until we have like and then you remember he had the metric where it's like once I have 2x the retention of Uber Eats I will drive the marketing. So his market share went from like I think 5 7% all the way to 55% in 9 months. That's crazy. Yeah. Right. And so I'm answer it's a long-winded way to say like I just want to build a great company that will sustain like that will make prediction markets big and sustainable long term. And if we do I think everybody's going to be happy. It doesn't really matter when we go public how you know uh I I personally don't care about like our short-term personal gains for me or

and our employees are all long-term alliance same with our investors. Yeah. Maybe just as we wrap this up from a I guess just like founder to founder perspective um one thing I'd be curious about is you know you had like four four or five years of like you things are going well like you're raising from Sequoia and your like company's growing but the last year is just parabolic growth like yeah just just like true truly insane growth. How has that just been from like a I don't know like what do your days look like? How's that been from like a mental perspective? Like how is it I imagine it'd be tough to like prioritize inside of the company when so many things are going well. Like how just talk talk about I I think um I'll say a few things but like um you know 2021 was like a crazy

period. We raised a bunch of money. It was it was exciting. Then 22 23 hit and it was horrible. And what I realized is like it's very easy to to uh get pretty arrogant in good times and it's very easy to really beat yourself bad in bad times but the reality is like it's a cycle. Yeah. You know and same with Robin and Corin is like you know and and I asked that same question and he he has this kind of perspective like well it goes up it goes down as long as you go up over time but but you know Vlad is a complete killer. He's really like that, you know, like he like, you know, he seems he speaks in very simple terms, but he just like absolutely kills racist. But like I think that like the first up and down I think I I I

overshot more on the up and then you know undersshot harder and and the down. Now I think the one thing that we've done really well as a company is we we really have this philosophy of the score takes care of itself. Just just keep doing what you're doing. Keep training. Keep doing the reps. And then that's why I don't look at the volume like I I you know it's it's going great now at some point we're going to get it's going to get harder and then it's going to go great again. We just got to keep focusing on the process. And I try not to kind of like my life hasn't changed basically. I I I live in the same apartment. I like you know um I do the same things. Like I I don't I haven't really changed much.

Um um I I just love building this. Like I really do. I don't want to do anything else. I just want to work all you know. Um I just want to work all all the time. Like I I I love doing it so much. The one thing I'll say is like and I have a lot of respect for people like for people like you that have conviction like you have this sort of like unusual view like it's somewhat of a contrarian view and you kind of have the balls to stick with it but the interesting the hard part is not the work dayto-day the hard part is that psychological thing of like am I right and like how long should I do this for before I'm getting the rewards and like you know my other friends are doing better and oh well there's this guy in

AI who's being paid $200 million by Zuck to join his company and that's the hard part the psych the psychological problem is the uncertainty it's not the work it's like I don't know if it's going to work and I don't know if it's going to like I'm ever going to make it to that to that nirvana and but the interesting thing is like like and this is why I have respect for characters like you because these types of characters are like they kind of will it to existence over time it just happens it in some ways if you keep going inevitably the probability of that happening it's like what Jeff was saying it's like less than 1% in some ways he was wrong the probability is actually closer to 100% because you're going to keep going until it happens just keep doing it yeah right like and like

and it genuinely works maybe like the advice to founders there is like like or whatever it's like if if you have a contrarian view that's grounded like that's you know you're not just saying stuff out of thin air you actually thought about it a lot and you really believe it at your core Like just the sheer like just continuing just keep going actually works. Yeah. Isn't that amazing? Like it's you know it's like amaz it's an amazing thought because like all you have to do is keep going you know. Yeah. Yeah. I agree. Um yeah it's it's very cool to hear your journey man. We've had some dark I mean these days uh actually right before this podcast we just uh record quarter as of uh as of like an hour ago. So biggest

biggest quarter in Blockworks history. We're feeling good, but we've had times where it's like, yeah, just the the dog days and just Yeah. You think you think it can't go on, but yeah, you just got to keep putting one foot in front of the other. Yeah. I mean, you don't know. So, yeah. Exactly. So, all right, my friend. Well, this was this was great. Thanks for the time. Congrats on everything and Yeah. Well, [Music]