The Exchanges

Q What was your learning process to go down into those rabbit holes?

A It was a lot of brute force, but I basically, and this kind of came in hindsight when I look back at my life, it came at a little bit of a cost, but I basically didn't read fiction for 15 years. But I have read so many white papers on The impact between the shape of the yield curve and mortgage derivative pricing, or how do you model like Gaussian copula formulas when you're doing credit derivatives index arm? So it definitely started with the white paper, like go to the source. And then, you know, a lot of these things, like the books were being written as the events were happening, right? Like there is no credit derivatives book in like the late 2000. So that was a starting point. But then The next was being able to converse with a practitioner. And I think that that was something that I did differently where a lot of fund to funds allocators were, you know, they interface with prime brokerage, they interface with the allocator community. There's like a lot of comparing notes there. I was like, oh, like who's the biggest mortgage derivatives trader on the street and how do I get to meet him or her? And so I would go to ASF, which is like a big mortgage conference. I'd be like one of the few fund to fund guys There. But I was in the room talking about the yield curve, talking about how liquidity had been changing, and so I'm a great learner through, like, rote academic theory,…

AI assessment note: “started with the white paper... The next was being able to converse with a practitioner.”

Q So there's this like nagging underbelly of call it Lack of fulfillment, maybe discontent, low-grade anxiety. I hear it a lot, right? There's a lot of people in the industry that especially when things are tougher in the last decade or so that express it. What do you do to foster that feeling into some form of action?

A So again, it's not dissimilar from reading the white papers about mortgage derivatives. It was like, I'm going to throw what I know best, which is like my own time resources at the problem. And so it involved Just like trying to build businesses while I was working on wall street. And so I would wake up at like four in the morning and I just mothballed so many ideas for a long time. I wanted to do a CRM, like an online CRM tool that could help people like foster better connections. And so I like wireframe that. And so like in the process, I'm like starting to learn a little bit about how like tech products are made. And I'm just tapping into that real, like curiosity. For a long time, I've always enjoyed bringing people together. I thought about building like events companies, so I would organize secret events where I would bring people together, and this was like five to 10 hours a week on top of a 60 to 70 hour a week job trying to push these ideas. Really started to get into the fintech scene as an advisor angel-ish, being like, oh, I could see myself doing something in fintech. So basically, For two to three years, I spent five to 10 hours a week on top of my day job trying different things out. And then there were two key realizations. The first was you cannot tip these ideas over into something bigger with only 10 hours a week. That was the first realization. But the bigg…

AI assessment note: “I spent five to 10 hours a week on top of my day job trying different things”

Q All right. Let's tack into this coaching. This is sort of an interesting question, right? Someone who's been successful financially coming to you and saying, I'm not happy. What do you take them through?

A I'd never give advice. So I really ask, it's basically like the Simon Sinek start with why. You keep asking why until the other person's blue in the face. And so someone will say, successful manager might say, I'm doing really well, but I can't leave this seat. Why can't you leave this seat? It's like, well, if I left this seat, I couldn't cover my living expenses. What is it about your living expenses that is so inflexible? And like, well, it's, you know, it's really important that my kids get this great education. It's like, why is your children's education so important? Are there alternatives that are cheaper? And then you just kind of like keep going down that path. And then like, what usually happens is But we're all gonna die. What's the point? You know, so usually by the fifth why, it's kind of like my self-worth is tied to my money, or my father told me that I was so bad at money, and this is like me proving him wrong, or I know what it's like to have grown up in poverty, and I never want to go back to that place. Like, you end up in these places where honestly, oftentimes I tap out, where I'm like, this is the domain of a therapist. I'm not a therapist, so let me honor that space. But One of the most interesting things about the practice is like, people don't ask the question, why? And so I ask people, why do you make money? And I get some of the most bizarre answers. …

AI assessment note: “You keep asking why until the other person's blue in the face.”

Q What are the other common memes that you've seen through your writing and talking to people about this?

A The biggest one is this kind of marginal utility of money question. What's the next dollar worth to you? And there's like the Kahneman research, you know, 75 K. It's like, you probably know this. It's actually wrong. And do you know why it's wrong? Because that's all survey data. Rich people don't fill out surveys. And they definitely don't fill out surveys about how rich they are. So it's actually not really accurate, but I think we can all conceptually agree that money has some kind of margin. It flatlines at some point, right? I mean, if Bezos doubles for every person, it's personal for every family. It's personal. So I sketch out this marginal utility curve for people and there's three points on it to keep it simple. There's a point like in the steep part of the curve. Which is like when you're in poverty or leaving poverty, where there's a real benefit, you know, if you make 15 K doubling your earnings makes a material difference in your life. Then there's a flatlining part where you're Jeff Bezos, where if you double to twenty billion, it's worthless to you. It means nothing. And then there's like that inflection point where probably most of us lie somewhere there. So I ask people, what does it take you to get from point B to the Jeff Bezos point? How much money and what will you do with that money? And there's two answers that come up. The first answer, and again, a lot …

AI assessment note: “The biggest one is this kind of marginal utility of money question.”

Q All right, let's rewind a little bit of that. In your time in investing, what were the aspects of it that you remember liking?

A I loved that you could, 10,000 hours your way, Into a competitive advantage. So like by sheer brute intellectual force and curiosity, you could outlearn the competition. And I think it was particularly salient in the fund of hedge funds industry where we were second derivatives of the investing process. And so for example, like I really understand mortgage derivatives, which as you recall, like those are some of the more complicated Instruments to evaluate, and they have so many risks, shape of the yield curve, liquidity, premium, things like that. And it was always fun for me to really put the hat on of a mortgage derivatives trader, not a fund-to-funds analyst who invested in mortgage derivatives, and say, okay, if I was going to buy the security, like, what are all the things that I would need to understand about it? And especially, I'm not a fundamental investor. I don't really It's not that I don't believe in it, but it's just not something that resonates with me. But being able to understand the thousands of variables that go into pricing and mortgage derivatives was like intellectually interesting to me, and it was an endless rabbit hole to just keep going down and to get better at. And I think that was what was so cool about Fund to Funds for me was that it gave me this canvas to say like, credit derivatives, go. LTCM hundred times futures, treasury basis strategies go.…

AI assessment note: “I loved that you could, 10,000 hours your way, Into a competitive advantage.”

Q And as you evolve through from there until, say, you left, two, and 15, what were you thinking about in terms of your life and career at that time?

A So I got promoted to MD at 32, and when you date back to that, like, insecure sixteen-year-old K, like, that was what he was playing for. He didn't know the terminology at that point, but that was what he was playing for. And I was like, Yo, I did this. And again, like at that point, we're not even one in 10 money. We're like 40 basis point money. I wasn't independently wealthy and, you know, I needed to work, but I had a great taste of financial success and status recognition. Two things that I had been dreaming of since I was like a young kid. And then I got them. And then I thought that like all of a sudden Rainbows would form in the sky, and the oceans would part as I walked through Times Square, and everyone would be my friend, and, and it was just like, wait a minute, nothing about my life has changed. Brene Brown uses this phrase, low-grade anxiety. I had this, like, burgeoning, low-grade anxiety that was kind of like, I looked around, and I saw people who were like, 1520 years older than me, and I could see those 20 years, boom, I could see them go by, My kids would go to the best private schools. I'd have a couple X-Fives and, you know, House and Summit, and I'd still be wearing those same Brooks Brothers shirts, and that same stain would still be on the carpet, but I was just like, I don't want that, and it was nagging at me, and I feel fortunate to have had a taste o…

AI assessment note: “I had this, like, burgeoning, low-grade anxiety... I don't want that”

Q wealth management firms moving to Ridgeline gain a decided advantage. That's why customers call it miraculous, game-changing, and an awakening. If that's not how you would describe your investment management tech, request a demo at ridgeline.ai. And now back to the show. And let's fast forward to today. What's the lump sum of this thing, this business that you've created and are creating? What are the activities you're doing today?

A The activities are a couple hours a day of writing, my newsletter, my blog, Quartz. I'm a contributing editor at Quartz. Then I have a money coaching practice where I have six to eight clients, mostly hedge fund executives and successful entrepreneurs who basically come to me with this question. I have a lot of money, and I'm not happy. Why not? What's wrong? And we can go into what exactly that means, but that's consultative one-on-one coaching practice. I probably get one to two speaking gigs, and that's what I call the stand-up comedian portion of my life. I was just thinking, I did a talk yesterday. The video didn't come out well. I'm gonna go home, and my wife's gonna film it in my living room, and I'm gonna make it part of my reel. So like, I don't want to get into the circuit. It's a nice source of idiosyncratic income that I enjoy. And with the leftover time I'm trying, and it's very difficult. I'm trying to figure out how to make other digital sources of revenue, which full disclosure, I haven't cracked the code.

AI assessment note: “The activities are a couple hours a day of writing, my newsletter, my blog”

Q So talk a little bit through your career. You're at BlackRock. You're obviously deep in this particular space. How were you thinking about it at the time, and how did it progress?

A I'll take you back briefly before BlackRock. In 2003, when I joined the fund of funds industry, I knew nothing. And I kind of looked around, and it's not that I was smart or had some unique insight, but I said to myself, this industry is not going to be around for more than 10 years. I'm like, and it was mostly because we were expensive middlemen. It wasn't even a theory, but I was just like, I don't think expensive middlemen is like a great game you want to be in for the longterm. So that's all I knew. And I also realized that I met a lot of dopes in the industry. So there was like dopey, expensive middlemen. So I was like, something feels off. And so I kind of had this 10 year clock where I was like, this game's not going to go on forever. And so what will I do once it runs out? Like that was in my back of my mind from the day I started in the industry. So fast forward to BlackRock and I'm starting to run a team. And being at BlackRock and Quolos and the 2008 crisis was the best thing that happened to me because I was young enough. Like I was in my early thirties. So I hadn't like built up enough of a cache or enough savings to lose a lot. And I was young enough that I was still like the cheap go getter, no kids workhorse. And when 2008 happened, I was covering relative value manager. So I had a front row seat to like some of these big, big prime bro, you know, is it a renego…

AI assessment note: “I'll take you back briefly before BlackRock. In 2003, when I joined”

Q And still, we're rolling forward. There's a day where you say, okay, that's it. What happened leading into that, and how'd you make the decision?

A I had like a vague sense of how much savings I wanted to have, but it's that trap where, you know, like when's the best time to leave Wall Street after next year's bonus. Probably did that for a few years, but the biggest thing that hit me was having a kid. And so you would think that having a kid reigns you in. That's like, you can't go make zero dollars when you've got this, but having a kid for me Made me realize a few things. The first was that she turned one. When she was one, I quit. And the thing that I realized was you could have all the money in the world, but you're only going to have a one-year-old once. And there's a lot of possibility around that, right? Because even if you have ten billion dollars when you have a thirteen-year-old kid, unless you're homeschooling them, They go to school, and like, they have friends, and I think that hit me like, whoa, I don't like to come at these things from like a perspective of scarcity, like this fleeting moment, if you don't capture it, your life's fucked, but I did come at it like, yo, this is a unique window we've been presented with. Why don't we think about seizing it? So that was the powerful realization, and that was the second realization that prompted us to move to LA. We had a three-year-old and a newborn, and it was like, Oh, you only have a three-year-old and newborn once in your life, and you could kind of see the…

AI assessment note: “the biggest thing that hit me was having a kid. When she was one, I quit.”

Q So, you make the leap. You leave Black Rock. What happens?

A Oh, man. I sleep a lot. Uh, I grow out a beard. I get another tattoo. I guess the short answer is that we hop on a plane, and we do a family version of Eat, Pray, Love. And so, we basically traveled for, Four-ish months around Asia with our one-year-old. The true, like, one-way tickets, like, you don't know where you're going next around Asia and getting, you know, fourteen-dollar massages and drinking in the middle of the day. So we did that for a while, and then for four-ish months, come back, and then this, like, dark scepter of self-doubt, the clouds emerge, you know. And really what that period was, part of it was arrest and, like, Just disconnecting. There was a form of escapism in that, like, I didn't know what I was going to do. I thought I was going to be a fintech entrepreneur because I was in quant world. I kind of understood the systems that people use and all that, but it was a very linear way. You know, it was like, like tech, like finance, A plus B equals fintech. You know, it was just a very myopic way of looking at things. But again, I'd never been an entrepreneur. Nothing can prepare you for being an entrepreneur. So come back, and the deluge of daily text messages, what are you doing these days? And at that time, I was not emotionally prepared to answer that question. My identity was tied into being this, like, young MD, high work ethic guy, on the trajectory…

AI assessment note: “we basically traveled for, Four-ish months around Asia with our one-year-old.”

Q What's the one thing that you'd like to be doing now that you either haven't had time to or don't have the resources to?

A Any answer that I will give you is, is a function of the responsibilities of having kids. So the first thing that comes to mind is like, We live on the coast, and there's plus two hours north, two hours south that I could drive to, to chase waves when they're firing, and I don't have like a nine-to-five job, so I could go whenever, but I can't do that because of my fatherhood duties, and so that's probably the thing that I miss. I miss the untetheredness of not having Kids and the freedom that that could afford you, but it doesn't like bum me out because I know that the minute that I'm able to do that is the minute that they stopped needing a hundred percent of my time. And I don't know which scares me more of like, am I more excited to be able to just grab my surfboard and drive for two hours and no one gives a shit of where I am? Or am I terrified of the fact that I could go surf for two hours and my kids are like, don't even know that I'm gone. But I really have tried to design a life. Like that's how would you live your life if you won the lottery? The things are actually, I would spend a lot of time with my kids. I would write, I would teach others, and I would do cool digital products, and I would surf, and I would like meditate and sleep. I kind of do that every day. I try to say that with humility, but what I would say is that that's much more accessible to you, especia…

AI assessment note: “I could drive to, to chase waves when they're firing, and I don't”

Q The writing piece, you talked about things in and around the psychology of money. What are some of the recent things you've written that speak to that?

A One that really captures the, I like to provoke and then leave people with possibility. Provocative possibility, I guess, would be the genre that I would call myself. So, so the question that I ask is, how much you want your kids to inherit? And people just in general don't like meditations on mortality. So right away, there's like a, why, why are you asking me that? But it confounds a lot of things, this question. So for starters, you think about like a DCF, right? The terminal value is a big driver of the valuation. So it's actually an important variable in the financial picture. And what I have found is Is when I've asked my coaching clients, they came from middle class backgrounds, a lot of children of first generation immigrants, the amount of money and success they've had is a hundred X beyond what they ever thought they would add and what their parents ever thought they would have for them. So that's like the starting point of a lot of the people. There's just this, holy shit, like this is happening to me. And it's like great, but it's also like when humans discovered fire, like we, we moved so far up the food chain that we were like, Wait a minute. We're like now the kings of the jungle. Like we're not really like evolutionary ready for this. So a lot of these humble, like hardworking people in finance will say, well, I work so hard because I want my kids to have the be…

AI assessment note: “the question that I ask is, how much you want your kids to inherit?”

Q that you're sort of missing? And, you know, I'll give you one example. You were looking at mortgage derivatives, like a highly quantitative exercise, and now you're doing a lot of, like, psychology and introspection, so this is left side of the brain, right side of the brain. How do you bring back the skills that you enjoyed practicing for a while in something that's just sort of quite different?

A I do miss it, but the things that I miss about my old life are not the things that you would think. I really miss the social interaction. This kind of, like, solo creator path is, like, extremely lonely, and you have no sounding boards. Yeah, you have friends and all that, but, like, you really don't have any sounding boards. You sit with a laptop by yourself, right? And I'm a social person. I like hearing stories, you know? So I think that's one thing that I miss. I also miss, there's so many smart people in the financial services industry, and you just take for granted that you could just show up in an industry and just be surrounded by people that, and it's not just smart, finance smart, just like worldish smart, and I don't know many other industries, so I can't compare, but I miss that a lot, but the thing that I still do that I kind of, again, I realized it after is one of the things that I love, Loved about being in finance was teaching. So I was the guy that did all the one-on-ones with my direct reports. I wrote the training manuals. I did the lunch and learns on credit derivatives, and I'm doing a version of that right now. My writing is a form of teaching. My coaching is a form of teaching. It just believed so passionately that the transfer of knowledge of something that I know that you may not know is That I can kind of present to you in a way that's accessible and …

AI assessment note: “one of the things that I Loved about being in finance was teaching”

Q What are the key lessons you've taken out of making this dramatic career shift?

A Markets can stay irrational longer than investors can stay solvent. There is a version of this that applies to entrepreneurship. Which is basically like, people can think you're crazy longer than you can stay emotionally solvent. And that's where these questions of money, why did I care that people were asking me, what are you doing? But you talk to any new entrepreneur, that question is like hell. And so, what I kind of stumbled upon, like this was not by design, was I found ways to boost my emotional solvency. Unless you can stay emotionally solvent, you're done. But again, I mean, it's the same way that like the Seth Klarman's and the Buffett's is like, if you can then shift that from being a disadvantage to an advantage in their case, like true permanent long-term capital, yo, it is green open fields. And you got to get out of that trough. And I mean, that's the thing is like a lot of people don't make it out of that trough. And I think it's because of the emotional, their emotional solvency breaks. And it could be because of money. It's usually because of status. And they're like, this is too painful. I'm out. That would be the first lesson. The second lesson is related to like my first generation immigrant kind of upbringing is it is possible for things to be meaningful if they're fun. Or maybe said differently, you don't have to suffer to have good things in life. We bel…

AI assessment note: “That would be the first lesson. The second lesson is”