The Exchanges

Q What brought your interest in finance when you were in school?

A I wouldn't have heard of Goldman Sachs till I was 21, but Hunter High School had a program where you only had to take two classes as a senior. So I worked at a stock brokerage firm in 1987. I was there for the crash. I learned what money management was. Reading the tape, going through the quotrons, going through the annual reports. I wouldn't have said I was particularly interested in finance. I was a numbers guy growing up. I majored in political science in college, but when I got to be a senior, I joined the campus recruiting. Now people are like, hey, my dream is to be an investment banker, but that wasn't the world back then. What you saw was that the highest end kids were going into finance, and there was two choices. You could go down the banking route, or you can go down the trading route. I remember I went to a recruiting dinner at two-thirty in the morning. They went back to work, and I said, wow. Then the O'Connor guy showed up. O'Connor was one of the original trading shops The predecessors to the prop shops. Susquehanna and O'Connor were the two back then. The interview question was, what's 49 times 28? And I say 1372. They say, Mets play the Yankees in the World Series. What are the chances the Mets win in four? I say one out of 16, they say you're hired. So that's how I got into trading.

AI assessment note: “Hunter High School had a program... So I worked at a stock brokerage firm in 1987.”

Q Why don't you take me all the way back to your upbringing?

A I grew up in Queens. My parents were immigrants. My dad was an engineer and a builder. My mom was an accountant. Very excited to be in America. He was in the first wave of immigrants from Asia after the Six to Five Immigration Act. He gave us American names. He said, we're going to be completely integrated. I didn't meet another Indian family till I was 16. He said, in America, you have to learn golf, tennis, and skiing. In my neighborhood, I was the only kid that did that. Just me and my brother. I went to high school in Manhattan. I commuted an hour and 20 minutes each day from Queens. I went to Cornell. I majored in political science, government, and then I went on to Wall Street.

AI assessment note: “I grew up in Queens. My parents were immigrants.”

Q Where did you go when you left the trading floor?

A I ended up going to Credit Suisse Financial Products in 1996. That was the hot derivatives place at the time. For a derivatives trader, that was the ideal place to work. It was a joint venture, part of Credit Suisse versus Boston. I joined the index arbitrage desk. Now you'd call it the equity basis trade, maybe Delta One. Because most banks, the proprietary guy was the end of the desk of that relative group. We had one group with a special forces group, effectively, The job was to trade S&P futures versus the underlying 500 stocks. Credit Suisse Financial Products was a clever place. The guy before me made ten million dollars in P&L, making 40, 50 grand a day. My first year, we made fifty million dollars in P&L. We were treating every index R basket as an option. First, we were buying 500 stocks versus futures. Then I said, why don't we buy 50 stocks versus futures? Then instead of Stocks versus futures. Why not stocks versus stocks? Then if we're doing it in the US, why don't we do it in Europe and Asia? Within a short amount of time, it became a several hundred million dollar business. The first three arbitrages Were take technologists and pay them like traders, which people weren't doing then. So staffing yourself from the IT department and the quant research departments, not necessarily the MBA classes. The second was collecting and storing data and doing things with it an…

AI assessment note: “I ended up going to Credit Suisse Financial Products in 1996.”

Q What happened from there until you decided to leave?

A That Volcker rule, which was announced in 2010 or so, didn't get implemented till 2015. That was a fundamental change in the banking sector. People like me, we tried to do it within the rules of the bank. We realized it wasn't going to work. So 2012, I moved to run Credit Suisse Asset Management, which was a four hundred billion dollar asset management But the main goal was to move all the proprietary businesses into the asset management business, which we started to do in 2012. There was two things we were doing. One is bring over a lot of the proprietary trading businesses. Some of those businesses are some of the largest hedge funds in the world right now. The second thing was to see if you could change the nature of the bank. What happened in the markets is risk taking used to be done off of the bank's balance sheet, which is not that great because you're borrowing short and you're lending long. What we were trying to do, which has happened now, and it's the advent of private credit, is a lot of that lending off of an asset management balance sheet. We started doing that at Credit Suisse. People remember, we gave the employees a lot of what was considered back then the toxic assets, but they were not toxic assets, they were under marked assets. The question is, can you do things on an asset management balance sheet with pension funds, people that have longer duration assets…

AI assessment note: “So 2012, I moved to run Credit Suisse Asset Management”

Q What are some of the design elements of collaboration across the teams?

A I would say there's three models. There's discouraged collaboration for whatever reason, because A, you're attracting people that don't want to collaborate. B, there's something structural that you don't want collaboration. Maybe it's correlation or something like that. One is enforced collaboration. You want to put an idea into the model, you have to come into the auditorium and explain it to everyone else. And one is encouraged collaboration. I'm in the encouraged collaboration model If you ask me, how does it happen? What happens in these hedge funds, better or worse, is that the culture of the firm reflects their founder. I'm a pretty collaborative guy. My instinct is when someone needs something, I say, why don't you talk to these people? That becomes a cultural thing, and people realize that's the accepted topic of the day. It's more a cultural topic than a structural topic. Everyone absorbs information differently. Some of the groups have daily calls, weekly calls, I never developed information that way. I'm more of a absorbing information through reading. We're not a heavy call place. Having said that, for the first 18 months of the firm, we did a weekly call every Monday morning for 25 minutes, where all the call was, was one p.m., got up in front of the whole firm, talked about what they do. Then someone from a staff role talks about what they do. After 18 months of t…

AI assessment note: “for the first 18 months of the firm, we did a weekly call every Monday”

Q What was the breadth of what you were doing leading into the financial crisis?

A We were doing all the things I'm doing now. In fixed income, you had commodity strategies, credit strategies, and rates of macro strategies. And in equities, you had arbitrage equities, you had fundamental equities, and you had quantitative equities. And those were the six businesses. We always had a big business in Asia because at a bank, you could leverage the entire architecture of having an Asia office. You have lots of different taxonomies. You have market-making strategies and market-taking strategies. And you want to balance across those things, because the market-making strategies tend to be reversionish, and the market-taking strategies tend to be momentum-y. You have momentum versus reversion, which is a slightly different context. You have fundamental versus arbitrage, or I call them artists versus harvesters. The harvesting business is a beautiful business, but they tend to be correlated, so you need a balance of all these businesses, and it got you to abstract the problem rather than just fixed income equities As you run one of these multi-strategy firms, that's actually pretty important.

AI assessment note: “In fixed income, you had commodity strategies, credit strategies, and rates of macro strategies.”

Q What did you see when you got there?

A I thought it was an incredible platform. What I thought of was try to turn this platform into an operating system to build up the IP in the center of it, to further diversify, to further industrialize the investment processes. I thought what you learn in the banks, for better or worse, is how to industrialize things, how to manage people, how to manage processes, how to build IP. That's what you're trained to do. You have a shareholder that's paying a multiple on your earnings to build IP and Perhaps superimposing that with incredible discipline on risk management. One of the things that you also learn in the banking sector is we're heavily marked to market. Millennium was one notch further, marked a minute. Why did we lose money last minute? Let's see if we could do something better about that. I learned that real discipline. I also learned the diversity of ways of making money. Millennium at the time certainly was very PM focused, and you could see People took the same problem from different vantage points, and that is another form of diversification.

AI assessment note: “I thought it was an incredible platform. What I thought of was try to turn”

Q One of the characteristics of the multi-strategy shops is they all have scale, and it's made it difficult to To enter that space. How did you think about what you needed just to get going on day one so that you could compete with the larger players?

A One of the things my dad said is, take the pain up front. What makes this thing relevant, whatever it wants, is another viable, competitive, first-tier hedge fund designed as such. The hard part is the normal stuff. You have to put together a leadership team. Thankfully, I've been doing this for 30 years, so I knew those people already. The second is, you have to hire a bunch of people to build this with you. Most people in the infrastructure side of the world are playing for a B. They're coming into an existing thing and they're saying, hey, go figure out how to go to the cloud from data centers. Go stack on this thing, go tack on this thing, but build your architecture problems in the beginning attracted a lot of people. Then you have to attract a bunch of risk takers to say, I see the lane you're picking. I want to be the first one in a hedge fund because everyone that's ever been in a hedge fund knows that the people get there first, do better than the people that get there later. Then you have to go put together an investor base. An investor basis understands what you're trying to do, has been in this industry before, and sees the prize at the end of the tunnel. Biggest barrier to entry is people say, well, there's a chicken and an egg. You have to put together the scale. What comes first? The investors are putting together the scale. Actually, there's no chicken and egg. …

AI assessment note: “You have to build it all off your own balance sheet, and then the money comes in.”

Q How did you go about interviewing and assessing talent to tease out who you think is top tier from maybe somebody who's just good?

A It's a pattern recognition. I probably interviewed 200 people a year for 28 years. One is getting a feel for it. Two is, there's a word that gets thrown around a bit, but I'm going to use it here as alignment. What I try to figure out every day is, do I feel aligned with the people that work here, the risk takers? Do I feel like they're aligned with the interests of the investor? Inherent in these businesses is the trader has an option that if it goes well, they get some percentage of that. If it goes poorly, you're left with the bet. Do I feel a line? A lot of people, they talk about risk in the first couple of minutes. They're thinking about risk, and some are hedging to be polite. That's a different thing. Some people, when they lost money, they start using the passive tense. So when they talk about making money, they use the active tense. When they start talking about the winning trades, they talk about clever they were. When they talk about losing trades, they talk about the unwind. Okay, what about the wine? That you can get a pretty good feel. You start thinking about how they think about the people that work for them. Are these tools for me, or are these people that have their own goals and ambitions, and how you're using them, how you're developing them? This process is more self-selecting than you would think. If people get a feel for what you're trying to accomplish,…

AI assessment note: “Some people, when they lost money, they start using the passive tense.”

Q As you take a step back and look at all the structural ways that you've been able to make money in the past and are trying to do it today, what opportunities are you most excited about?

A What are you looking for? You're looking for areas that there's not necessarily enough capital. To provide for the service the market wants. Areas that you can find cheap volatility. And sometimes you're trying to find areas where you're willing to take complexity risk to take to get into some market. Banks trying to figure out how to get partners in hedging some of the risks that they're left with that either take up a lot of regulatory capital or are not necessarily capital efficient for other reasons. It's called strategic risk transfer. We've set up a business to do that. Asia has some of that in the complexity side. You're setting up a business in India, not that easy, but once you do it, you could probably get access to some things. If you took it at a business level, a more concrete level, the fundamental equities business, I started trading indexes in the mid nineties. The S and P was at 500, about five percent of a company was indexed. Now, round numbers, I'm making up a number, 25% of a company's index, and the S and P is up 14 X, so that's 70 times bigger. So the fundamental equity, someone's picking stocks in a structured way, doing the work, given the size of the market, pretty good business right now. There's really opportunity in the liquid credit markets. A lot of people have moved into the liquid credit markets. The private credit business has been the biggest …

AI assessment note: “It's called strategic risk transfer. We've set up a business to do that.”

Q You mentioned that all of these Multi-strategy hedge funds have their own different flavors of how they do things. After seeing so much of this over a couple of decades, what first principles were you bringing to develop the chain?

A First of all, this core satellite thing bothers me. And it was something that to the extent of firm is seen as a fixed income firm or an equities firm or a quant firm, it's difficult to shed that label. When you're attracting people into the satellite, someone said it to me once, well, you haven't done this thing in 10,000 days. It can't be that important to you. People know it. You attract better people if you get it at the beginning. One way to do is hire a bunch of PMs and put in a manager later to run that business. It's a lot easier to build it from the beginning that way. It's part of your core thing. You have a seven-legged stool at the beginning. That's a different topic than I have a one-legged stool, and I've added a second layer of the stool. When that thing doesn't go right, your own investors, your own people say, why are you doing that then? Whether that thing's not going well, whether your thing's not going well, people say, why don't you get out of the non-core thing? The core satellite thing is the first thing. Second thing is, the world has confused a couple of things. The view of a PM in this industry is, they want autonomy. Especially the people in the next generation don't necessarily want autonomy. They want autonomy of compensation, but they don't necessarily want autonomy of lifestyle. So they want to say, if I make money, I should get paid on what I do,…

AI assessment note: “The core satellite thing is the first thing. Second thing is”

Q How have you thought about cutting off the tails? A lot of the multi PM pod shops, there's certain drawdown and they're out. What's your game theory around that?

A There's the premortem and there's the mortem. So you try to do your best to figure out what the premortem. You've constructed a portfolio. Broadly, 95% of what we do or more is liquid. The vast majority of what we do is exchange traded markets. So at least you have a chance to get out generally in exchange traded markets. If you do the premortem and you say, hopefully I've constructed a portfolio that is robust. To many of the things that are thrown against me. Generally speaking, in these models, you make more money in a high-vol environment, but you lose money in the move from a low-vol environment to a high-vol environment. As you've extended risk capital to the market, and now the cost of risk capital has gone up, you're going to lose on mark-to-market on your current risk capital. The second thing is the mortem. When it's happening, you have to move your feet of, so does that get crowded? Do you get everyone to rush the hills at once? There's some of that. The markets have gotten so big relative to the growth in this multi-strategy industry. The industry's put on tens of trillions of dollars of market cap in the last few years. The multi-strategy has grown by a hundred billion, hundred and fifty billion. The second thing is the capital structures in this industry have gotten infinitely better. People have five-year lockups, three-year lockups, four-year lockups. So it's no…

AI assessment note: “There's the premortem and there's the mortem. So you try to do your best”

Q When you go from a larger platform, the prop desk at Millennium to a smaller business, What are the things that as you look out over the next couple of years, as you develop scale, that you can add in to what you're doing that you might not be able to do today because you're smaller?

A I don't think there's much. One of the leaders in the industry said to me when I was starting, you're going to underestimate the benefits of starting from scratch. He said, so often I want to throw the whole thing out. It's not just legacy systems. It's legacy architecture, legacy people, legacy processes, legacy mindsets. We got to build everything instead of buy everything. We got lucky that AI became native to this place. We didn't have to hire hundreds of technology people and fire hundreds of technology people. The biggest thing that would change as we scale is you're going to see the operating leverage start kicking in because we think we can get the two, three times the size without having to hire that many more people. If we had more scale, would I start doing a couple of things that I say a little more speculative? You have some firms that view themselves as manufacturers, and some firms that view themselves as packagers. Like, I'm packing the alpha, and we're hiring places. You hear them talk about their BD departments. We view ourselves as a manufacturer, and the first iteration of it, we're not doing a lot of speculative things. Let's figure out if AI can do this or that or the other thing. The model itself was innovative by launching it all at once, by launching comprehensively, by building it that way. The challenge in this business is balancing patience and excit…

AI assessment note: “I don't think there's much. One of the leaders in the industry said to me”

Q What's the culture around the behavioral aspect, the psychology for your portfolio of managers inside your shop?

A When you start a new firm, that's one of the things you don't really know. In the interview process, you tend to get people that are a little less optimist. If they were more optimistic and more growth minds, that they would have gone to a place where they could just belong. We emphasize risk management, and so people get that. We got a little lucky in that a financial crisis happened in March and April of 2025 with the Liberation Day and all that. So I got to experience it of how much did I feel like I was pushing people and how much did I feel like people were reacting. And it turns out, at least in that environment, I didn't have to do much. People got it. Harder to push people to take risks. What is hedge funding? Hedge funding is Taking a bunch of information, turning it into data, taking that data and forming convictions on that data, then taking those convictions and doing things in the marketplace. When you have less data, especially in the first 18 months, it's hard to form those convictions. You don't have enough data on your own systems of efficacy, on your own risk modeling, on your own PMs. They feel the same way. They don't have data on how you're going to react at a tough time. So that data building gets better every day. In the beginning, it's harder to push people to take risk than it is to stop people from taking risk. As we've gotten more and more data, we fe…

AI assessment note: “In the beginning, it's harder to push people to take risk”