Full transcript: Kirk Wylie on London Real
0:47 This is London Real. I’m Brian Rose, I also host London Real, which is a similar format. We got three guys in the room. We try to figure some things out. We’ve had politicians like George Galloway.
0:56 We’ve had Max Keiser on here yelling about Bitcoin. We’ve had Howard Marks talking about smuggling drugs. It’s all good, but we’re here to talk about tech. My co-host today is entrepreneur Colin Pyle, who runs the online language school Lingos. You got new coffee pods coming out with Crew Cafe.
1:12 What’s going on? Yeah, Crew Cafe is coming along. We buy our pods coming out in the new year. It’s really exciting. That’s awesome.
1:18 Yeah, 8 billion aluminum pods and espresso puts in landfills every year. So if we can crank into that market a little bit and save the world at the same time, happy days. So Kickstarter 94% or so going on, so yeah. Congrats on that. That’s a big goal.
1:34 Yeah, yeah, that’s good. That’s nice to run that. It’s coming along really well, so exciting. Awesome, and thanks for being here. Our guest today is Mr. Kirk Wiley, who is the executive chairman and co-founder of OpenGamma, which is a London-based financial technology startup that provides open source risk and trading analytics software for the capital markets industry.
1:51 Pretty good? Pretty good. Pretty good. It’s been described as the future of quantitative finance. You’ve had three rounds of equity investment for I think about 23 million dollars.
2:00 Series A from Excel Partners, Series B by First Mark Capital and Series C by my old employer of nine years, iCap PLC. Kirk, welcome to Silicon Real. Thank you very much. Thank you very much for having me. Cool, and thanks for being here.
2:11 You know, you have a funny accent. What are you doing in London, first of all? Yeah, I get that a lot. You do? I do.
2:18 Most of the time get accused of being Canadian these days. Okay, is that good or bad? See, I always get accused of being American. Yeah. You know, depending on the audience, I’ll definitely take Canadian.
2:31 I definitely wished I sounded a little bit more Canadian. Sometimes, sometimes. About 10 years ago. 10 years ago was hard. Oh, yeah.
2:38 Yeah. No, I was born in Chicago. And then my family moved to Northern California when I was a kid. And then I lived in the Bay Area until just about 10 years ago. I up sticks and actually gave up San Francisco for the beautiful weather of London.
2:57 And I’ve been here ever since. And you weren’t in finance before you came over, nor were you? No, Pure Tech. I was one of those Silicon Valley tech prima donna dudes, you know, started my first company at 23, which was a complete and utter failure. Get that out of the way?
3:13 Yeah, it got the first failure out of the way, made every mistake that I think you could possibly make. Product mistakes, founder mistakes, corporate governance mistakes, hiring mistakes. It was dire. But I never worked for a large company when I was in Silicon Valley. Never did anything with finance.
3:33 And then when I moved over to London, I kind of looked around at the scene. And 10 years ago, there really wasn’t a whole heck of a lot happening in tech startups. I mean, you had a few. Excel was still investing out of the Silicon Valley funds. you had Baldurtin that was trying to do deals, but they hadn’t broken off.
3:53 Well, they were still benchmark at the time. So Baldurtin had broken off from benchmark, and Index was just kind of getting around, but they were sourcing a lot more internationally for deals. And I just realized there just isn’t much activity going on. And this was boom days of the city. So I looked around and I said, well, one of the things that one of my tech mentors that I’m still close with told me very early on in my career as a techie is always go where the smartest people are.
4:25 The reason you do that as a techie is that one of two things is going to happen. First of all, they’re going to stumble on the right product and the right execution. You’ll make a lot of money by being around them and learning from them. The second thing is, even if you don’t make a lot of money, at least you’re learning. Whereas if you’re the one superstar in a bunch of kind of mediocre people, you’re not going to learn anything, right?
4:52 So I looked around and all the smart guys were working in hedge funds. And so I ended up going to work for hedge funds. So I worked for a company that did all of the risk and trading software for Vega asset management. And when I joined Vega was about $6 billion under management. It grew to about $15 overall.
5:14 So at the time that was a mega fund, it was Europe’s second largest hedge fund, rumors of what we were doing would move interest rates globally, it was crazy. And then I left when it was five bills. So they had a pretty bad year, couldn’t pay me anymore and then started working for an investment bank. Okay. What year was that?
5:33 Roughly, 09? No, no. I started open gamma at the beginning of 09. So I started working for KBC Financial Products in 2006, 2007, and then I found out at the end of 2008 that the company no longer required my services. Apparently when you are winding down the company and you are choosing to not build any new software, you don’t need a Chief Software Architect anymore.
6:04 That makes sense. So you’re saying there was very little startup when you first got to London, let alone fintech startup. So it’s funny because we always are running into fintech. Obviously we’re in London. It’s one of our greatest strengths, it seems, from talking to, you’re the 25th person on here or 26th.
6:19 But back then, there wasn’t any fintech. That term wasn’t used regularly. All the hedge funds in Mayfair. Yeah. Yeah.
6:27 I mean, look at me. I was working at a hedge fund in Mayfair. My window works straight onto Mount Street Gardens. I know exactly how much that building cost. It was absolute ridiculous times.
6:39 But now, so I think you’re right. There’s a lot of fintech going on in London. And I think it’s something that the kind of establishment has started to realize is going on. They’ve also realized that it isn’t as centered on Silicon Roundabout as some of the other consumer-y type stuff. We’re much more scattered.
7:01 There are some fintech guys that are around here. There are people that are in the city proper. There’s us and a couple other people like Cashflow that are down in Bankside. I actually did buy SiliconSC1.co.uk as a joke. And there are people in Canary Wharf, so Level 39 is doing a great job at setting up some kind of FinTech presence in Canary Wharf.
7:24 And so you’re starting to see the press realizing what’s going on. The Prime Minister’s Office has actually realized, and they’ve been starting to do functions to kind of say, look, this is an area of tech where London is not in also-ran. London is the capital of the world for this type of stuff. There is a natural gravitational pull here that we should exploit. Is London the best in fintech?
7:48 Yes. You get honest with that. And that’s not because you’re vested interest. I mean, that’s not because you maybe are one of the better technology companies. It is.
7:55 Better than New York. It’s absolutely. I think it’s a better environment. So just as a story, when we were getting going in 2009, we had an offer, I’m not sure how serious it was, from the VC firm that had backed my first startup to drop what we were doing and get on planes to San Francisco. And by the time we landed, we would have a bank account open.
8:22 We would have money coming in. We would have visas sorted. We would have desks and phones and everything if we would start open gamma in Silicon Valley. And we said no, right? And then when Excel came on board, they sat us down.
8:37 They said, look, we’re a global firm. We have no problem investing anywhere in the world. Where do you want open gamma to be? Because anywhere in the world that you want it, if you want it in New York, if you want it in Chicago, if you want it in Hong Kong, if you want it in Dubai, anywhere that you want it, we can make this happen. And we said, no London, and we said why, which is we have the talent that understands capital markets better than anyone else.
9:02 We have a natural kind of gravitational well for tech talent Europe-wide. And we have a fantastic time zone. From London you’ve got overlap, you’re at the office, you can be at the office or be on a phone call with Sydney or Tokyo or Hong Kong or Singapore, and you’ve got a good amount of overlap with Chicago and New York at the end of the day. Yeah, for foreign exchange markets, it was always perfect because you come in the morning and it’s Asia, you go home at night and it’s New York.
9:34 How far is New York behind? Or is New York a close second? Or in your mind, where does it rank when fintech when it comes to London? I think, interestingly, if you take a look at fintech across America, it’s – okay, Moving in as a capital markets company, we don’t do anything for retail at all. If you don’t work for iCap or a hedge fund or investment bank or a pension fund or a clearing house or something like that, you’re not really going to get any utility out of it.
10:03 You’re just wasting your time. You’re better just using Excel because it’s a better tool for the job. In capital markets, New York is second, but we’re actually seeing some more interesting stuff happening in Asia that are targeting problems that are specific to the Asian market. One of the things that’s interesting about the US though in the retail and consumer side, the stuff that typical people might understand that don’t work in the industry, is that it’s a lot more scattered than it is in Europe.
10:35 Square is not… Square’s in Portland or like Pacific Northwest, Simple’s up in Pacific Northwest. You’ve got people doing payment stuff in all manner of random places. You’re not seeing as much of a concentration in New York. They’re not selling to banks, so they don’t need to be in the banking centers.
10:54 Okay. Now, we’ve had a few fintech companies on. We had TransferWise, you know, we’ve had Stripe. We’ve had just recently DigitalShadows, you know, but these are more, there’s some consumer plays. DigitalShadows isn’t really consumer, but you’re very specific, and I just quickly explain to people if you could, you know, how your play has nothing to do with consumers.
11:13 That’s a business play and like what the capital markets are and and yeah, tell us about open gamma So when tell us about the name first Yeah So if this was one of the things when we had our one of the very first like intro meetings with a VC We didn’t have a name yet. It was just this idea And we met with the guy and he said well Sounding kind of interesting. Do you have a name for it yet? And we said well, you know, we’ve kind of been using a working title of open gamma and he goes that. Do you own the domain names?” I’m like, not yet, but they’re available. He’s like, I want you to leave this meeting, immediately get to a computer, and buy the domain names. And we now own every permutation under the sun, misspellings, you know, it’s ridiculous. We tested the name before we kind of launched with it, and we walked up to people in the industry and we said, you hear of a product or a company called OpenGan. What do you think they do? And the The first thing people that were in our target audience said is, sounds like an open source derivative system.
12:16 We’re like, ding, ding, ding, ding, ding. It does sound a bit like that. Of course, that was in the industry. Yeah, it depends who you ask. Some people might say, it sounds like a fraternity.
12:24 Like a gamma. Yeah, like a gamma welcome to everyone. We feel bad because there is another open source project called Open Gamma that’s on x-ray crystallography analysis, right? And we feel bad because you can’t Google them at all anymore, but it was just this little SourceForge one-man project, and we actually got in touch with him and said, hey, we just want to let you know what’s about to happen, is that a VC-backed startup is basically going to destroy any hope that you have of getting Googled at all.
12:58 Would you like some assistance in changing the name? Would you like us to pay you for the SourceForge bit just to compensate you for this? He never got back in touch, so we tried to do the right thing. It’s quite a strong arm tactic, you know, people wouldn’t argue that’s the right thing. Well, it’s like a mafia style, you know, there’s a reason why, you know, trademarks cover very specific areas of business is, uh, you know, nobody’s going to confuse his project with ours, right?
13:22 Like x-ray crystallography. I don’t even know what that means. It’s yeah, I think I know what it means. I believe their gamma is about gamma rays or something, rather than our gamma, which is about the Greek. So in layman’s terms, when you interact with a retail banking institution, you give them money and they do something with that money.
13:49 That’s the fundamental thing. And whether that’s a pension where you’re putting money in and then they’re investing it in some form to give you money later on or whether that’s putting money in the bank or taking a loan out or something like that. That’s the kind of retail side of the banking and financial services industry and it’s pretty understandable because you deal with those types of things every day. I’d say most people have no idea where that money is going.
14:16 They think there’s just this big pot or they honestly think that actually what happens is they put their money in a savings account in a bank and then the bank uses that to make mortgage amounts. That’s part of what goes on but that’s not where the money is actually going on because it turns out that that’s really bad from a banking perspective, both in terms of the return that they make and in terms of their ability to handle events like all of a sudden 20% of their mortgages pay off all at the same time. All of a sudden, they’re in a bad situation.
14:48 Northern Rock, does that sound familiar, or? Northern Rock. So non-diversified. Non-diversified. Or when you put money into a pension here in the UK, if it’s not self-directed, if you’re not just investing directly in the stock market, then they’re going to balance out a whole bunch of factors in trying to figure out what asset classes that they need to invest in, in order to get a good enough return that your pension is worth something, as well as handling any possibility of egregious loss, if something bad happens.
15:22 That side of the industry is capital markets, is what happens after you give the money to the banks. So it’s stock market, But stock market is the simplest thing in the world to deal with, and it’s something that a lot of people deal with. It’s bonds. It’s futures. It’s options on equities and futures.
15:41 It’s things called interest rate swaps, where I agree to pay Colin 5% a year for the next 20 years, and he agrees to pay me a floating rate based on an index that then gets manipulated by people at certain interdiller. It’s those evil derivatives, man. Evil derivatives. They’re all bad. The credit default swaps and CDOs.
16:04 When I was at KBCFP, I built a system to help structure and trade synthetic CDO squares, which is something that was so insane that I looked at it and I just said, really? People were, and they’re like, yeah, we’re making hundreds of millions of dollars a year off these things. I think there was a cubed deal as well. There was a, well, that was an ABS cubed. Okay.
16:27 Well, that’s all on this. the people the software that they use to manage their risk. Yeah, because at the end of the day, one of the things that’s interesting about these products is you can figure out what a stock portfolio is worth in a microsecond, right? You just check the stock exchange, it says you have these stocks, they are worth this amount of money. It’s a very simple calculation. Even figuring out what one of these things is worth at any given moment in time, it is a mathematical problem. And so the amount of data that you need, the amount of mathematics that It has to go on the amount of processing power that you need to throw at it, the amount of historical data you need to store.
17:04 There are all these things that are pretty fundamental to operating the derivatives market and that everyone needs that is going to play in them. And that’s what we do, is we make the software to allow people in capital markets to understand their portfolio, which is what is called risk in the industry. And traditionally, in these companies, they have their own proprietary systems, they run and their risk in their own specific way, which has led us to a host of problems in the past.
17:28 You’re doing this open source piece, which must be a tough sell at first. It’s very unique, that business model when you guys started it. How has that been? And also, you’ve had to pitch to banks, which we’ve had people in here talking about, is a long process. So explain the open side of things.
17:45 Yeah, yeah, yeah. So it’s completely, just give it over to them? Yeah, the vast majority of what we call our intellectual property footprint, which is a fancy way of saying our source code, is released under an open source license. And what that means is that we retain the copyright and we put it out there for anyone to download and use and modify and do whatever they want and we give them a license that says, essentially, you can do whatever you want with this except sue us, right?
18:16 So it’s- So it doesn’t work. Yeah, and we’re using what’s known as the Apache public license, which has one other bizarre thing, which actually did happen at one point in the open source community, which says, and by the way, if we put code in here that we have a patent on, we give you a limited royalty-free grant to use that patent because somebody snuck some code into a project, had a patent on the implementation, and then started suing people, right? So that’s where the Apache license comes about.
18:51 So they can do whatever they want, but what they can’t do is, first of all, sue us if anything goes wrong. We also don’t do what’s known as IP indemnification, which seems like it’s a type of thing that you would never get involved in unless you’re a bank, right? Because banks got sued by SCO when they went after Linux. So if you go back to the SEO case where they said, we actually own stuff that’s in Linux and we want all this money. They didn’t sue Red Hat or IBM or anybody else.
19:24 First people they sued were JP Morgan. The users at that point. The users. Okay. Right?
19:30 And so they’re all worried. So you have this thing called IP indemnification where our commercial customers, we sign a contract with them that says if anyone sues you and says that we violated their intellectual property, we will defend you in court, right? They are taking that liability off of you and we’re guaranteeing a competent defense. And then as well, what they don’t get is they don’t get confidentiality, right? And when you’re dealing with a bank, the thought that the only way that their techies can interact with the authors of this big complex system is via Google-able forums is absolutely anathema.
20:11 And then finally, it’s just a basic support arrangement. It’s an insurance policy. What we do is fundamental to the operation of any of these firms, whether it’s a hedge fund or a bank or an insurance company or anything else. Rolling something like that, that is that fundamental out into production without having some form of support contract is the type of thing that if something goes wrong, that’s a career-limiting move. I mean, that’s like somebody gets sacked.
20:38 You’re saying you put it out in the open, but of course they’re going to need you if they use yourself. of at least one company that is getting ready to go into production and they have not paid us a dime. So it is absolutely possible. People can do it if they want to. We only found out through like rumors and whatnot who it was, but we know of Furman India that has built a commercial software product that is embedding OpenGamma and they’ve never paid us any money.
21:10 It’s it’s a real thing, you know, the open source part is real as it isn’t just some gimmick or anything Um, and we know that there are people that are starting to use the source code in Masters and financial engineering programs because here’s a production grade system It isn’t some toy system that somebody came up with just as a pedagogical exercise This is actually studying what a real system that does this for real looks like But this is open source thing is a new phenomenon, right? It’s it, you know with the Linux and all that stuff It’s it’s let’s put this out there. Let people use it first and then maybe down the line You obviously make money by them getting contract I was reading the story of Google Maps recently and when they first put it out there There was some guy in San Francisco They took the map and overlaid it over the real estate market and all of a sudden put out this thing and Google was like We can either sue him or hire him and then they hired him and now Google Maps is everywhere And now they’re making money off like the top 1% of the clients that actually make money and everyone else uses it for free That’s quite a forward-thinking idea, right?
22:05 Traditional software companies would never open it up. Correct. Especially in the financial world. Oh, yeah. Yeah.
22:10 I mean, you know, I can know about the finance side, but if you take the long view of computing history, open source is actually the oldest concept in software, right? It used to be that people made all their money on the hardware, right? And so they just gave you the software. IBM gave you the operating system. They gave you the tools, because otherwise, you’ve got this big beast that you’re paying millions of dollars for, what are you going to do with it?
22:35 No idea what to do with it. So they gave away the software. And then Microsoft came along. Well, it was more people realized actually, I think it was like IBM and whatnot, that started realizing what was going on and that they could actually make money by having value-added services and value-added software. And so the software industry got started.
22:53 So this predates Bill Gates. This is back in dawn of computing, the 60s, that you actually had a commercial software industry. In finance, so really everything is now kind of eventually going back there where there’s an assumption I think in most industries that if you’re a technologist buying a technology as opposed to a business person buying a product, right, you kind of go open source first and there’s very few technology led companies out there that are not leading with open source especially in in the core technology space.
23:31 So, all of the most recent databases that have come out, all of them are open source. Okay, tell us a bit about open gamma. We always ask like, what have you done? What are you going to do? You’ve raised quite a chunk of funding.
23:40 I mean, Series C, we haven’t had many people here that have done that kind of funding. We had Halo on the other week and they raised a ton of money, but otherwise no. Not many people that have raised those kind of chunks. So what’s that money for? And what’s it been like the last four years for you guys?
23:52 You started off with CTO, right? Yeah, I started off as CTO and acting CEO. And then the board decided to drop the acting part and make me like for real CEO. And then we kind of went into growth phase. And I realized that I was absolutely hating my job as CEO.
24:16 Growth phase would be more sales and less development, right? Yeah. So one of the reasons why we’ve raised as much money as we have, and we’ve done Series C, but realistically, our Series A was slideware. We had a PowerPoint deck, a keynote actually, and that was pretty much it. So it was really a seed investment, and anybody else would call it a seed investment in the common parlance because we didn’t really have anything. It wasn’t a traditional Series A, so it’s just that in the nomenclature, we can’t do a Series minus one type of thing you convention is ABC so realistically that last round was more of a series B because the first round was was you know just a couple million dollars and it was done in two tranches right okay um and you know realistically almost all of that has funded development so this is big big software that is very expensive to build how big is your team we’ve got 35 people globally, of which I think 20-something are in R&D.
25:29 If you consider sales, we have three people working in sales. That’s it. One in New York that also looks after Chicago, one in London, and then one in Paris. That’s it. The skills that I had and the natural temperament that I had that made me phenomenal at guiding creating this product driven, R&D driven company that had to be really nimble and scrambling for anyone that might think to pay us money while we’re building this thing out and being very reactionary and those skills, great at those skills, the running of sales and delivery machine which is really what you need when you’ve kind of turning the corner into full on commercialization, that’s just not me and I was hating it, right?
26:20 And so, I was at the Founders Conference in Dublin and the number of people there that were founder or co-founder and CTO, we are just chatting about it. It sucks. You get to the point where you’re really selling and do you really want to be beating up a sales force to make sure that CRM is being updated and that all of the probability weightings are down so you can get the correct pipeline to deliver to your, do you really want to be going in and dealing with having customers that decide they’re going to light a fire under your ass for some random reason and then snap their fingers and want the CEO in the room within the next 24 hours.
27:07 It’s not a very enjoyable thing if you’re a techie. And so we brought on a chief operating officer whose job was to do that. And he’s an experienced guy from a very successful financial technology company in a similar space, experienced at running sales organizations, running delivery, doing all of that stuff, the real commercial side. And I personally couldn’t delegate sufficiently for him to do his job. And so I sat there and said, hold on, I brought on the COO in order to do the stuff that I’m finding myself doing and hating and not doing a great job at.
27:48 This is stupid. The whole plan was to eventually make Moss CEO. So I just decided to do it in four months rather than four years. So it’s like, okay, Moss, we know we brought you on as COO, but yeah, you’re going to to be CEO faster than you thought. Okay, so that happened quicker.
28:04 How many employees are you now and how many clients do you have roughly and then like where are you guys going with this? Do you have enough money for now? Are there more people coming on board? So, you know, I mentioned the amount of money that we’ve raised. So much of it has gone into R&D.
28:18 So we’re- A lot of employees. That’s a lot of software development. It’s a lot- And the R&D is primarily just salaries? Yeah, it’s a head count, right? You know, you take a look at our offices They’re not that expensive, internet, don’t have that many computers, although we…
28:35 It’s highly skilled, our HR as well. Highly skilled. We aren’t competing with, okay, I’m not competing with Halo for talent, and by the way, I know some of the Halo guys, we share an investor, I see them at conferences, I love the company, I love the product. I don’t use it as much as I use their main competitor, but that’s a whole separate matter. But we’re not competing with Halo for talent.
29:08 We’re not even competing with some of the less skilled, I would say, banks for talent. We know exactly who we’re competing with for talent. And we’re not competing with our competitors either. We are competing with Goldman Sachs, and JP Morgan, and Merrill Lynch, and Brevin Howard, and Bluecrest. And these are the Renaissance technologies at one point SAC, but now they’re shedding people away as fast as they can.
29:43 That’s who we compete with. And those people cost money. And then you look at our quants. And for people that aren’t from the industry, a quant is a quantitative analyst. And it’s someone that has a PhD minimum in a highly numerical discipline, either applied mathematics or high-energy physics.
30:05 So we have four people that have worked at CERN that work for us. You know, and then they’ve gone, and it’s an apprenticeship thing, right? you have to start out the ground for at a bank. And then we’ve got those guys, every single person on our team is reasonably compensated, but all of those guys know that they could get more money cash-wise outside the firm. Right, so you’re competing with a lot of these banks that are trying to offer a similar service to these hedge funds, and you’re not even necessarily competing with other software people, not necessarily.
30:39 Okay, where are you guys headed from here? So global domination. Awesome, spoken like a true American. When we set out- That’s when they realized you’re not Canadian, right? Yeah, yeah.
30:50 What is it? Global domination. This is a go big or go home play. We knew that from day one, so we were very clear with the initial investors that this was going- that although it was going to be a capital efficient company over time compared to what it would have cost to build this technology 10 years ago when you physically couldn’t even do it. I mean, I remember my first startup where it wasn’t the case that everything was going on salaries, computers.
31:17 Just to do basic development, you had to spend a couple hundred grand with Sun. Every computer was costing $10,000 minimum, and the monitors were thousands, and you actually had to pay for software. We had John Bradford from Techstars here, and he said back in the day, he raised $20 million at the $99 million. That’s equivalent of $2 million today, just because you have so much quicker access to so much more. And open source.
31:42 Yeah, and open source. And open source, you don’t have to start out and say, I’m going to have to pay for this framework and that technology and anything else. You may end up bringing in commercial stuff over time, but you just start out pure open source, so you’re not paying anything, and then you figure out where it makes sense to potentially bring in commercial stuff later on. So you had to go big. So we had to go big.
32:01 And you want all the market. You want like 90% of the market. So the rule of thumb for a successful open source entrant into a market, whether that market is software frameworks like Spring, or whether it’s databases like Oracle or MySQL, or whether it’s operating systems like Linux, is that the total size of the market actually shrinks by 40% to 60%. So the market actually gets smaller. You are attacking the pie directly.
32:38 But that open source entrant ends up getting 40% to 60% of what’s left. Interesting. So, our goal, and we’ve been very open with this from day one, is to become the de facto standard industry-wide for risk management, period. We need to get to a point that other open source technologies have gotten to, which Which is, if you know you need to solve problem X, and in our case that’s derivative pricing and risk management, you grab open gamma first and then you figure out if you have to do other stuff.
33:11 But there’s just no thought in your mind. The thought of starting a project at a bank or a hedge fund, not using open gamma would be a career-limiting move. You just wouldn’t even think to do it. And where are you guys at now? How many clients do you have roughly and where do you want to be in a few years?
33:27 We’re still in single digits in clients, although we’re, you know, it’s the end of the year rush, so we’ll have a fair number that are closing on December 32nd. I have to stay in the country. I’m actually at a friend’s house out in Kent for a New Year’s Eve dinner party and I had to check with them in advance and make sure that they have a printer and scanner so that I don’t have to physically bring one with me for all of the deals where there has to be a timestamp on the email before 1201, so it could be one of these things while the countdown is going, I’m going to send on my email rather than raising a glass of champagne.
34:10 You won’t be drinking until midnight, right? I don’t think there’s any rules on executing impaired. Exactly. Yeah, it’s funny. There probably should be.
34:20 It could be, honestly, the way these deals work, I don’t sign until several other people, including counsel, have told me to sign. So I’m just the final pen. So I think we’re still early. So the types of people that are coming on board are still somewhat early adopters because technology is it’s growing and it’s expanding and it’s changing and it’s changing as a result of people using it and it’s for the better and so you know there are some people that are gonna be die-hard holdouts until they’re dying breath on using expensive proprietary in-house systems, right? It’s just always but eventually the people that are defending those decisions will retire is a simple fact of the matter and then they won’t have to be worried about job security anymore.
35:16 And then the next wave of people will start bringing it in. So even just growth in the last year has been, last year around this time, we had, you could count customers in one hand and not a single one was fully in production. Whereas at the moment we have people that are in production and we’ve been much better at selling the vision selling the vision and actually the industry has been changing a lot as well. So there are a lot of positive things in the industry for us in our message and the line of business that I personally look after at the moment didn’t exist this time last year.
35:54 We had no idea that we would launch a product that we launched a few months ago this time last year because nobody knew that it would be an issue in the industry. We always ask a couple of hard questions about your business model and the first one that struck me is how do you sell a system to a set of clients that are traditionally some of the most secretive, some of the most cult-like creatures in the industry. Some hedge funds, they all read the same books, and it really is a mentality.
36:20 It’s a small number of head kind of make the decisions at the top. How do you crack that nut? How do you get in there? It’s hard, and it’s a lot of shoe leather. This is not a popular thing for a software company founder to say anymore, but we have an enterprise sales model, right?
36:44 We don’t have a credit card, use my Amex black card and deliver online and direction right there and then. This is an enterprise sales process. This is experienced software sales guys doing proper driven sales campaigns and having meetings with, you know, 50 people in an organization and, you know, nobody goes straight into like a signed contract. You know, it’s a pilot, you know, they’ll try the software for three months, you know, they’ll pay us something for it and then they’ll make a decision and, you know, just to give an example, I’m going to be going straight back to the office after this to almost certainly close a deal.
37:27 That deal, we had the first meeting with that client almost exactly a year ago today. That was the first meeting, and we are executing that. So one year sales cycle. One year sales cycle. And that’s not a bank.
37:40 That’s a hedge fund. What? I can’t say who that is. Hedge funds tend to move a lot quicker. Just for the record, he’s on his second Dr. Pepper Zero.
37:49 When you opened both, when you started, I was like, is this going to happen? And that’s happening right now. So we were discussing earlier on our website, there’s the famous statistic of number of cans of Dr. Pepper Zero. And it isn’t all Dr. Pepper Zero, but we do have caffeinated diet soda delivered by the palate every week.
38:15 And every night the cleaners refill the fridge. We have two soda fridges in London, one because the main kitchen was just too far away for the quants. And so, because they’re the other end of the office and they’re like, we need something closer. And so that number is updated every month, and it actually is updated with the number of cans of things that are brought in to the office. And you’re about $48,000 right now.
38:38 So that’s where all your money’s going. That’s where all our money’s going. If that’s the most expensive employee perk we’re giving out, it’s not a bad deal. It’s Goldman spend on employee perks. Yeah, yeah.
38:51 R&D costs. Colin, what am I missing? What do you see here? I’d love to hear some of your ideas about competition in this space and some of the big players. Like when I was running, I used to run an FX company and I would mark to mark on my derivatives using Bloomberg.
39:06 Pretty simple subscription based model. Maybe tell me a little bit about some of the competitors and how you’re different. So the number one, both competitor and helper of us is build and house, right? So we actually don’t describe ourselves as a risk solution or a risk product. We really come in when there’s been a decision made at senior levels that the requirements and flexibility and transparency and everything warrant an in-house built system, but they want all of the customizability, the flexibility, the transparency, everything that they could only get from building a house with the time to market and ROI advantages of using an external system.
39:52 So, we come in and we say, look, here’s the foundation, 20% of your app is going to be unique, right? And it’s going to be unique because you’re not starting from scratch. There is no such thing as greenfield, right? You’ve got existing systems, you’ve got stuff that you need to interact with, with exchanges and clearing houses and counter parties, and you need to get trade feeds in, you’ve You’ve got market data coming from Bloomberg and Reuters and emails, and there’s all this stuff that is going to be unique.
40:18 We can optimize as much of it as we can, but at the end of the day, you’re gonna have to do some work. But you start out with a clean framework and you don’t have to build the database at work and you don’t have to build a risk engine and you don’t have to implement Black-Scholes-Murdin for the 900th time and curve management, all of these fiddly details. So, you know, that’s kind of competitor number one versus, you know, partner number one, right? Because if people didn’t need that, basically, if our traditional risk product competitors didn’t suck so much, people wouldn’t be going for building house. I mean, the competitive software out there, it has, it all has some really good parts to it, right? It is mature, it is stable, it has been beaten down in production, their bugs have been worked out, there’s tons of features that we don’t have, they’re great systems in terms of the breadth and depth of the functionality that’s there, right?
41:27 But they are horrible to work with. To work with meaning changing them later or adding things and adopting. experience. I’ll give examples of two products that people use in this space, both banks and hedge funds. I’m not going to name them, but when I gave this anecdote, I actually had a VC tell me to my face, I was lying to him and ended the meeting because he said there is no way that a company is earning $150 million a year selling a product as bad as as you just said, right?
42:02 So one of them is, so both of them, and this is in 2013, are two-tier apps, right? So they have a big, rich client that runs on the desktop and they have a database server, that’s it, right? So there’s no servers-oriented architecture, there’s no web front-end, there’s just, and all of the calculation happens on the desktop. So one of them, the app that you have to run is single-threaded, completely single-threaded. And up until recently, and this is recent within the last 18, 24 months, while it’s processing anything, the whole machine locks up.
42:55 Because Windows keeps sending events to the app and they’re not pulling them off the event queue even, and so Windows just, the whole system stops. It also can’t handle overnight roles, right? So an overnight role is basically, if you leave the app up overnight, it will think today that it’s actually yesterday, right? So it needs to be shut down every night and restarted. This is your competition.
43:18 Yeah, and then it would take for a decent sized portfolio up to eight hours for the app to launch in the morning. Still, this is your competition today. This was, they’ve gotten that down to like in an hour or two. And so what everybody would do is they’d run it on Windows terminal servers and they, everybody would have to have a script that at 1230 a.m. It would turn it on so that it was ready for trading at 830 in the morning.
43:51 That’s app number one. I’ve seen some really scary hacks in some banks in the past, yeah, where it’s just like some Excel script runs like the whole risk management for a whole desk and you’re like, are you kidding me? When I joined Vega, the… I ran it on Excel for a long time. Yeah, it was bad.
44:07 Exactly. And we were like manually putting in figures, it was… When I joined Vega, their risk system was a spreadsheet that had a button that said like, go. Macro. And then you would come back eight hours later and if you were lucky, PDFs would spit out the back end, right?
44:26 So, yeah. So that was competitor number one. Better number two, well, they were quite a bit better than competitor number one because their thick desktop app had two threads instead of one. So they had one thread to do the UI and one thread to do the processing. So at least it didn’t hang your entire machine.
44:48 But their biggest enhancement one year was they had a Windows 64 bit binary because it was requiring like 16 gigs of RAM to run. And this was like a few years ago when people didn’t have 128 gigs on the desktop. So you’re not weighted by a competition, it seems. Why wouldn’t they just buy out if they’re turning over 150 million a year? Who’s that?
45:13 So the biggest fintech company in the space in the world is Sun Guard, which you’d never heard of, unless you’re in the space. But the most likely outcome for any startup, aside from failure, is acquisition, right? So and there are a lot of private equity guys that absolutely love FinTech and capital markets, because retail investors don’t understand it, so the stocks tend to be undervalued. But private equity guys love it, because once you get a sustainable business, it’s just throwing off free cash flow, right, which they know how to monetize.
45:49 So, you know, you saw Vista recently that basically spent a couple billion dollars in the last couple of years hoovering up all of this stuff into the new Mises, right? So there was the old Mises and then there was stuff at Thomson Reuters and then Vista bought the Thomson Reuters and all this stuff, but basically they just slapped all of this capital market stuff into Mises, which is a private company, they spent billions doing it. So, why don’t they buy us?
46:16 I think one reason is that in capital markets tech, it’s not common to buy an early stage company as a strategic threat, right? They tend to buy free cash flows, so they wait until your revenue is starting to plateau, at which point they say, aha, the revenue is kind of plateauing, they look at the cash flow, they figure out how much they can slash R&D, and then they essentially price the cash flow. So, multiples on deals are usually 3 to 5x revenue, not 10 to 100 times revenue or infinity times revenue in the case of like an Instagram or Snapchat or whatever.
46:55 The second reason is they don’t get it, like they don’t understand open source at all. These guys are, some of these founders are very idiosyncratic characters. They’ve never experienced something like this. People are waiting to see because we may, and I’m just brutally honest, we may end up hitting the wall and realizing, okay, we can get far enough, which we’ve proven that we can get a number of good high quality customers, but we might find out that we can’t get enough to build a billion dollar business, right?
47:36 That is entirely possible, at which point we’ll figure out what we’re going to do. But I think they’re waiting to see that as well, is everybody wants to see the J-curve in action. But I think they’re starting to get worried, rather than just sitting around idly figuring out. They’ve gone from being dismissive to being worried. So we know that the competitors have talking points on us.
48:05 We know that we have lost deals recently to establish companies, and we know why. Those companies have had a lot more time to polish stuff, mature things. They have more functionality, and we’re fine with that because we know that in a few years, those customers will be at that level, and those customers will come to us because we have things that those guys will never have. Kirk, let me get your perspective on the London scene. You’ve been doing OpenGammon now for four years.
48:33 American, which brings a whole different perspective. What do you think London is lacking? Or what frustrates you about the scene? And what do you think is like the hidden gem here, that you think can really make this, you know, a real global player when it comes to a tech tech city? So I’m American, but I’m also actually now a subject of her majesty. So I took my British this of Yeah, early conflicting oath, right? Yeah, what do you pledge to the queen? You pledge something to the queen, right? Oh, man, there’s the I forget whether I think I’ve been the oath of allegiance, It’s not the pledge because the pledge had God in it and I forget, I mean I wasn’t going to bother memorizing it because they tell you to repeat after them.
49:12 So you’re dual? I am dual. I have two passports. Me too. It’s cool.
49:17 You’re like Jason Bourne. No, no. My dad has Canadian and American. I just have Canadian. Okay.
49:22 If you have to travel with one, like travel the stage, you got to use your US one. The only time I use my US one is to enter the US where it is a legal requirement that if you have an American passport, you must enter the US with it, otherwise it is considered to be an implicit act of renunciation and they may choose to strip you of your citizenship for doing it. Is it? Yeah. I always do that, but I didn’t know that.
49:43 Oh, yeah. Yeah. No, no, because there’s full passport transparency. So they’ll have something on the screen if you enter with your British one, they’ll have it on screen that you’re actually an American as well and they’ll warn you, right? They’re like, did you mean to do this?
49:57 Because I know people that are dual that had lost a passport and couldn’t get an emergency done in time and had to, you know, family funeral type of thing. People were like, whoa, you know, they just like, what are you doing? It’s great because you always go in the short line. It’s awesome. You don’t want to mess with US immigration.
50:16 No, no. So you were saying, you’re here to stay. Yeah, I’m here to say, well, I’m not going to retire in London. But that’s just because the Californian in me says, there is no way you are going to spend the end years of your life dealing with six months without sun, which is what the winters are here. Great city, though.
50:39 I think one of the- Sure. The lack of sun bothers me more than the weather, the rain. Okay. By far. It’s been good lately.
50:47 Anyway, sorry. You were saying- Well, it rains more in San Francisco. It’s just that it rains on more days. Here. I mean, my fiancé and I, we have to schedule, even if it’s just a long weekend in Dubai or something, just somewhere where we will get winter sun, right?
51:03 Because otherwise, we just go insane. You have a sun lamp at home? We don’t, but it’s not a bad idea. I’m a London Texian. I think one of the things that frustrated me for a while, although I think there’s been enough recognition of this that it’s starting to change is the relentless fixation on shortage, right?
51:33 Shortage, shortage, shortage, shortage, shortage. And we’re in shortage just for the record. We are in shortage, but the reason why I found it kind of irritating is that in fact at At one point, when the Tech City map came out online and it had bars and hairdressers and anyone that wanted to advertise as long as you were in the right area. The guy that actually did the development for it came to work for us and it hadn’t launched when he came to work for us and he’s like, oh yeah, I did that.
52:10 I’m like, why won’t it let me register? Fired. He wouldn’t let us register. It’s like, oh yeah, that’s because you have to have an E in front of your postcode. They made me put that in.
52:19 I’m like, or N, they had a special exception for N1. And I’m like, really? And I actually got in touch with people, and there were people that were defending this of saying, no, no, no, we have to be this hyper-local thing because it’s the only way that we’ll get people paying attention. But I think one of the things that it did early on is it focused, you know, what’s been happening in shortage is there are a few Big guys, there’s huddle and moo and mind candy and people like that.
52:47 But there’s a lot of little tiny two-man dudes, the two-man shops. And when you start getting the real press looking in, they’re like, this is two dudes working out of a pub. Is that an actual company producing jobs? Whereas you’ve had the kind of enterprise-y and media startups elsewhere in London for years now. You wanna be near your customers.
53:08 So media ones are out. King. King’s nowhere near shortage. They’re in Soho. They’re in Soho because it’s a media type of business. We’re in Southwark along with a bunch of other enterprise guys because it’s the most convenient place to get to Mayfair, the city, or Canary Wharf. I’m 20 minutes door to door to any one of those three, and those are the three largest financial centers in Europe, each in their own right. We were just all getting completely ignored.
53:40 The fact that, so I think that was one thing that was kind of negative for a while was this whole Silicon Roundabout is the end all be all and consumer internet is the only thing that matters and that’s it. But that started to turn around a bit, I mean the tech city map now actually does include us on it. Hey, congratulations. It took a while. Little victories.
54:05 Victories, the amount of fintech that was going on was also ignored and that’s one of London’s big strengths and actually I credit Level 39 and Eric Vander Klee of really kind of driving that agenda of saying, look, there’s a lot of these little consumer guys and some of those guys will turn into massive companies, some of them will shut down, it’s a very Darwinian model, but these finance and enterprise guys, we’ve produced more man years of employment in this country than dozens of the little startups put together because it’s a human intensive business and the government is actually starting to realize it and so even the government’s getting involved and saying, actually, we’re going to treat FinTech as a special thing because it is something that we do better than any other city in the world, and Boris and the Corporation of London.
55:04 People are starting to wake up to the fact that London tech is not just building mobile apps in shortage, and going to shortage grind, and riding your bike from Hackney every morning. That’s not everything that’s going on. Sorry, yeah, anybody from … I like a man that’s opinionated. Yeah, exactly. You’re not holding back.
55:30 It’s good. No. I don’t disagree. It’s true. Yeah.
55:35 Sure. And so I think that’s … I think one of the other things though that … I have a lot of anecdotes, but I don’t know whether I really have a strong opinion on it, is the tendency to leave London to get funding, set up a business, do all that stuff. I’ve got two friends that tried to do consumer type apps and startups here and they both left and one of them is now living in San Francisco and one of them is living in Vegas.
56:06 They left to get funding or they left to get funding and get more opportunity. I think there are definitely cases where it is better for companies to relocate to the the states, at least the west coast for better funding opportunities, better, sometimes better hiring opportunities, although right now trying to hire in Silicon Valley, it’d be much better doing what Huddle’s done and have sales and execs over there and keep your development here because we’re cheaper than Silicon Valley at the moment and quite frankly, we’re better. And you don’t have to deal with all the fuck you money problems that Silicon Valley has, right?
56:48 What does London need? What’s things getting in your way right now or getting in our way here more than anything? So I hear a lot of people saying, oh, you know, series A, crunch, seed, blah, blah, blah. We hear it a lot. I hear it a lot.
57:01 I think some of that’s true. I think some of that is also entrepreneurs not taking the hint, right? If you have one data point, which is I cannot get funding for my startup, it’s dangerous to extrapolate that into there is an insufficient funding climate in London for startups like me. It’s not a popular thing to say, but there are people that will always have startups that will not get funded and should not get funded. It may be that the team isn’t strong enough.
57:49 It may be that they don’t know how to pitch correctly. It may be that the product isn’t strong enough. You know, there are all of these things that can go on. And that really impacts, right, it could be any one of those. Just saying, I have a startup and I have an app and you could be technically brilliant.
58:09 You could be, you know, have something that’s great, but it’s not going to be a billion dollar business. You know, you’re not going to get venture capital attention. If you don’t have certain things in your tracker, if you don’t understand the domain, if you haven’t done some of this before, you’re not going to get the type of funding that you may think that you want, right? And so I think it’s dangerous to extrapolate from people that haven’t had investment and say that is a sign that there is no investment.
58:44 That just may be a sign that their startups or teams or whatever aren’t strong enough or they don’t know how to pitch correctly, right? So I think that’s one thing that I would say because if you look, Excel is doing deals, Index is doing deals. Euclid who invested in us in the Series C, which is the early stage VCR of ICAP, they’re doing deals. deals. Amadeus is doing deals, Passion is doing deals. There are a lot of deals that are getting done at all levels of the chain. From our last round was $15 million in total to people doing a couple hundred grand to writing convertible notes. There are deals getting done, right? And the volumes of the numbers of deals are going up. It’s just not everyone’s firm gets funded because not, and this is the thing about the Silicon Valley and talking about the Series A crunch, right? I don’t think it’s a Series A crunch.
59:45 I think it’s a, the angel market there is completely uncritical of anything. It’s just there’s so much money, so many people have said, I’m going to do some deals that it’s, you know, handshake, boom, here’s some money. So angel rounds are undifferentiated. So there’s no real evaluation going on, which means that you’re getting firms that are failing to get funding later on in the cycle, right? So that’s one explanation.
1:00:14 They’re just saying, my company’s worth half a million. Here’s 15%. They get their money, and they’re on their way. And then they try to raise more, and now someone actually breaks down their business. Yes.
1:00:25 Right. Right. Breaks down the business, breaks down the team, looks at the numbers. Just more sophisticated investors that are taking more time to make it. Exactly.
1:00:33 Exactly. So if there’s no real Series A crunch, is there any barriers right now? Employment’s not one, you’re saying? So I think what London needs that we have not had is we need a couple of the firms that have gotten big and profitable to have some form of exit and we need that so that there are more people out there doing two things that are critical for Silicon Valley. The first is you have newly minted guys who have their fuck you money who are doing some angel deals right because you still need cases where people are chucking one or two under grand in just just to see what’s gonna hit but the second is you have teams that are experienced at working together that are setting up new ventures right because one of the things that is the most important in doing team selection at a VC stage is have these guys work together before right you know a mate that you met down at the pub, you don’t know if he’s any good.
1:01:41 You don’t know if he can actually do his job. You don’t know what he’s going to be like under stress, under fire, doing endless nights, under deadlines, and yell about by customers. And all these things are going to happen. You haven’t seen him under fire. So you take a look at all the various waves in Silicon Valley.
1:02:00 Every time you have one of these mega companies go public or something, you’ve got the PayPal mafia and you’ve got people that have already left Twitter and doing other things and Facebook and Google and Sun and Apple. This is the way you build a strong enough ecosystem to sustain long-term value is by having people that have gone through this process together and experience it and then set up. Mind candy, eventually they’ll go public or get bought or whatever.
1:02:33 When they have an exit, they’ll – they’ll probably be, you know, it won’t be Michael Acton and Smith probably, but you’ll have a few other groups that say, ah, I’ve got my money, you know, I’ve done my six month to year commitment, now we’re going to leave and do the next thing. And by the way, I’ve got, you know, I – it’s me, I’m a back end guy and I’ve got a UI guy and we had somebody strong over there and all of a sudden you’ve got a pre-gelve team that knows what they’re doing. You know, that looks pretty good from a VC’s perspective.
1:02:56 So it’s just a matter of time in your – I think it’s a matter of time and by the way, I don’t think we need the megas. I don’t think we need a $50 billion IPO, right? I don’t think we need that because that isn’t, you know, you need some people to get fuck you money, but you don’t need everybody in front of you. You don’t need thousands, it’s not that. I mean, a strong successful exit within a few hundred million dollars is gonna be enough to do that.
1:03:23 And you just need a couple of those guys to happen and to not get cold feet and sell out too early or get bought by Nokia and then get shut down a couple years later or any of the stuff that’s gonna happen. So I think it’s gonna happen and I’m actually liking the fact that people like Moo and Huddle and Mind Candy and King haven’t rushed to go public or sell out or do whatever. They’re holding off and they’re gonna do some big rounds and big deals and whether they list in London or the US is with apologies to the index guys, I think is a matter for their boards.
1:04:05 And I wish them luck in whatever they decide. I don’t think you have to list in London, although the financial press here loves talking about people that are listing in London. The index guys pro listing in London? Yeah. So they’ve made an argument, and I think it’s quite reasonable, which is they have firms that are at that stage where they can think about doing it.
1:04:27 And the position is they think it would be better for London to have more firms list in London. But when it comes down to their fiduciary responsibility to their investors, every time they face that choice on an individual case-by-case basis, they list in the US. It’s not the best option. OK, right. So it’s one of these classic tragedy of the commons.
1:04:55 I think it’s a matter of time. I think we’ll see an experience of that when autonomy goes, because I don’t have any privileged information, but they’re clearly gearing up to it, getting the executive team set up. They’re restructuring things. So autonomy is going to happen. Although most of those guys are out in Maidenhead, you’ll probably see people that say, hey, now it’s time for me to do something in London, rather than out in the Thames Valley.
1:05:19 Just a few more questions, Kirk. If you had to, say you sold open gamma tomorrow, and you signed a non-compete in the industry, and you couldn’t be in it for like three years, but you had to stay in London, What would you go do? I don’t want to give away any of my good ideas. You don’t seem like a guy that wouldn’t do anything. No, no, no.
1:05:37 Maybe just the industry or not a specific idea. I would start another company once I’d done my time off. Two weeks. Well, I think my fiance might insist on a bit of a more extended holiday than two weeks, although I’m sure the laptop would be open various times during the holiday. So I think it would probably still be in finance or FinTech and probably still in capital markets.
1:06:09 I mean, I think one of the things that is uniquely important when evaluating a kind of capital markets business as opposed to a retail FinTech business is the amount of deep domain expertise have to have on the founding team. You cannot just hire that stuff in, you’ve got to have it in your DNA kind of very early on and I think the exact opposite is important for a consumer facing one because there you’re running product from the perspective of the consumer so you’re kind of designing for yourself. So I think there aren’t that many people that have the desire to build companies and do all that and have the domain expertise, and quite frankly, there are other areas in capital markets that I think are ripe for disruption.
1:07:01 And I love playing Loki. I love going in and saying, aha, here’s a little nice duopoly. What happens if we just come in and shake that up again and open source the hell out of that? Yeah. And then you’ve seen some massive companies come about from doing that.
1:07:21 So I would definitely do another company, probably in capital markets. I don’t really know much more. I definitely wouldn’t do the whole English country gentleman thing. I think that’s- Hounds, fireplace. You know, I actually say this, I think one of the reasons why London hasn’t had as much of this type of thing, so one of the things I’m glad this is changing in London is that there is this whole thing in, you know, traditional English culture and it could just be a stereotype or whatever, but I know so many people, it’s like all of a sudden you get a ton of money you’re in your late 30s, early 40s, whatever. Well, what do you do? Well, you do the English thing of you buy a country home and you go and you live on your country home and you have your hounds and you drive your Range Rover to the local pub and you kind of check out economically. Maybe you still have a pied-a-terre and you come into town a couple days a week, but you’ve kind of said, ah, I have enough money. The thing I most want to do in life is to retire as early as I can and drop out of the workforce, right?
1:08:32 And that’s kind of, it’s been valued by certain sections of society. And it could just be a stereotype, it could just be, I’m a Silicon Valley guy that doesn’t understand but- It’s definitely a non-American way of doing it. Yeah, no, no, no. Whereas, you know, you’ve got, you know, the culture that you need to do this stuff is, again, it’s the, I just, you know, sold a company, I’ve got a lot of zeros in my bank account. I don’t need to work ever again, but I need to work.
1:09:05 I’m not working to retire. I’m working because I have a psychological need to work. One of the PayPal guys said that after he sold out of his shares, he said the following year was like the worst year of his life. He had no goals, nothing to do, didn’t know what he was going to do, and it was just a harsh thing. I took a whole year off, and yeah, you lose value of time off.
1:09:31 So the first month, you really enjoy. And then all of a sudden, you stop appreciating each day that you have off. And so each day you have off incrementally becomes less and less valuable. Towards the end, you’re just kind of like, fuck, let me just get back to do something. Because the harder you work, the more you value your time off, I think.
1:09:48 So keep it short and sweet rather than sort of long. That’s well said. We always end with the advice question, I’m gonna hit you with it. If you could make a phone call to the 20-year-old Kirk Wiley, who’s probably hanging out in Berkeley, California, and give that young man a bit of advice, what would you tell him? I would tell him, the first person that proposes marriage to you, say no.
1:10:12 It will not end well. That’s a first one. I’ve asked that question 150 times. I’m sorry, that’s the number one thing I would tell 20-year-old Kirk is the first time you get proposed to absolutely say no and every time you have second thoughts from there up until the day of the wedding, listen to him. Do you think that’s good advice for everyone?
1:10:41 Every 20-year-old maybe? No, but you said 20-year-old Kirk. Oh, yeah. No, no. 20-year-old Kirk.
1:10:46 Do we see a romantic then? All right, so but to a generic person like me. Yeah, but I’ll get to that one. On that same note, what’s the best bit of advice you’ve ever received? Best bit?
1:11:05 I think there are two. One of them is specific to being a techie, which is what I mentioned earlier. Always, always, always work with the smartest people you can, right? Always, always, always, because you’re always going to be learning and it’s your highest probability having a you know a significant financial upside as a result. The second thing though is something that I really needed to tell 20 year old Kirk which is it doesn’t matter what industry you’re in whether it’s tech or finance or fashion or retail or advertising or whatever. The world is a really really really small place and you’re going to have to work with people throughout your career, right?
1:11:55 You’re going to keep running into people over and over and over. Don’t be a dick, right? Just generically in business relations, don’t be a dick to people because you never know when it’s going to come back to bite you if you are. Have you had experience with that? I was a complete prima donna programmer, right?
1:12:13 I was one of these guys who was- Not you, not you. Me. It’s like I was quite frankly too smart for my own good, coming out of Berkeley Computer Science and then going to work for a startup. I stepped on a lot of toes by just flat out telling me, oh, his code sucks, I don’t want to work with it. I had knowledge but not wisdom.
1:12:34 I was very immature. I was probably too good a programmer for my level of emotional maturity. And then a couple of the people, you know, a few years later were asked, you know, blind references on me and they said, well, you know, he, he’s absolutely brilliant, but he’s an absolute pain in the ass to work with. I do not recommend hiring him because he’s so volatile, he’s basically, he’s a, he’s a toxic influence regardless of the quality of his coding. And I think it took me finding out about that to sort of, that actually, it’s not like it killed my career or anything because it’s going very well and I had other jobs and whatnot, but I think it took me hearing that, that really, and just generically maturing as a person to really get that you have to work with these people over and over and over again and that even if you do think somebody on your team is terrible at their job or is obnoxious or whatever else, there are polite and impolite ways of handling that.
1:13:50 You should always go for the polite and mature and professional one rather than just flying off the handle all the time. Good advice. Last bit of that is to the 20-year-old that’s listening out there. He could be some student in Berkeley listening to this on iTunes. What advice do you give to them if they want to grow up some day and be like Kirk or get involved in this industry here in London?
1:14:10 I’m going to treat this as kind of a specific thing and the reason why I’m going to do that is that I’ve had a lot of various bits in my career and I don’t think it’s possible to have the exact same background that I’ve had but I’m going to tell you what happens you want to end up being a founder of some domain specific tech company, right? And I think the number one thing is that you’ve got to think ahead, right? Now I happen to fall into this, right, of saying, well, I happen to have the Silicon Valley background.
1:14:47 So I look at markets and I think of disrupting them and doing go big or go home style deals and open source and all of that. And I had the domain expertise from having worked at a bank to see the problems and see how you could build a business around those specific problems. If you know that there’s a domain that eventually you’re going to want to disrupt or do whatever, go into it. You need to acquire the knowledge. Even if that means doing a normal tech business and then saying, hey, I want to do fintech, so you know what?
1:15:22 I’m going to swallow my pride and I’m going to go work for Morgan Stanley for two years or I’m going to go work for JP Morgan. I’m going to do whatever. Acquire that knowledge and it’s gonna say, you know, I’m not just gonna Look at Hacker News and magically and ask Hacker News. Oh, what’s it like to work in a bank, right? Like you find out what it’s like to work in a bank by working in a bank, right?
1:15:40 You find out what it’s like to to do FX trading by doing FX trading or sitting next to an FX trader or going on to the Trading desk on a regular basis. That’s how you acquire this stuff. So either Acquire the domain knowledge that you need expensively for you in terms of time or what I love about the kind of Halo story is the serendipity of saying you know I did something else before what I’m doing now right and now as someone that’s doing something I have a unique sympathy for what that’s like and so I’m gonna go from being a taxi driver to starting a tech startup for taxi drivers.
1:16:29 Or I’m gonna go from being an architect at a investment bank to writing software for architects and investment banks. And so it’s never too late to do a tech startup, right? Never, because if you are in an industry, you just look for what’s broken in that industry. You look for what isn’t working. You look for those couple of guys that you’d shaken up.
1:16:55 You look for areas of inefficiency. That’s why some of these … It can sometimes be hard to make a $100 billion company out of doing that, but a lot of these successes that are quietly unsung … I know it’s quiet anymore, but people like Halo and all the travel booking companies and whatnot, they’re coming at it because they knew the domain going in and they solved a problem and they they solved a real need for people. Good advice, we had a Brian Taylor from Pixelpin here.
1:17:25 He was in his 50s or something and he was just like, what advice do you have for people your age? And he was like, do a startup, which was like, it was fantastic. Anyone can get involved and disrupt this industry. I think that’s important, like in your domain where you understand. I think some people try to start up, do a startup for the sake of doing a startup and maybe have no idea of where they’re going into or what they’re getting themselves into.
1:17:46 So I think that’s good advice. Spend time working in something or acquire that knowledge from people early on in your team. Yeah, we’ve heard this mothers do what you know, right? Do something in which you know. And solve a need, which you hit both of them.
1:17:58 Or at 20, ignore the whole cultural insanity of starting your first startup right out of university. You do not know what you’re doing. You know, take a few years, you know, a 24 year old is still gonna have good pattern recognition. You don’t have to just live in a house with your friends and code. Spend a few years working at a firm that has people that you respect and learn your craft because you may be a good hacker, you may be a good computer scientist, but what you never are coming out of university is a good software engineer.
1:18:39 That takes craftsmanship and it’s an apprenticeship. You got to learn by doing and you got to learn by doing with good people. Good advice. Kirk, how do people get ahold of you if people were watching this video? I’m sure there’s going to be some hedge fund guys that are watching this late night somewhere and they’re like, yeah, yeah, yeah.
1:18:54 How do we get ahold of them? Do you think that’s our audience? I don’t know if there’s hedge funds listening to us. I’d be surprised. How do people get in touch with you, open gamma, the whole thing?
1:19:01 So I’m probably, I’m one of the easiest people to get in touch with in the world. Everyone always says that when they’re in this chat. Well, interesting. It’s interesting. If you Google me, there appear to be two Kirk Wylie in the world that have an internet presence.
1:19:16 And then there’s this guy that does this terrible masonry work somewhere in Ohio. Terrible. Oh, no, no. Find it. It’s Kirk Wiley masonry.
1:19:25 Sorry if you’re seeing this, dude, but the crazy paving fireplaces is so 1970s. So I’m kirk at openyama.com, right? I am Kirk WY on Twitter. I’m on LinkedIn. although I prefer not to have a first contact be like adding me to your network because I get probably, LinkedIn is primarily a spam generator for me at the moment.
1:19:54 Just reach out, go to the website, there’s forums, say, get in touch, you know, yeah. Fantastic, good stuff. Kirk, thanks so much for coming on. You know, you’re a super intense guy. I wish you guys all the luck.
1:20:06 I got my, you know, I’ve got my bets on you, you know, as far as cracking this industry. Thank you very much. It’s really exciting stuff. I love the whole open source thing. Siliconreal.com, it’s out, it’s looking great.
1:20:16 You know, we’re gonna take- Slick new website? Yeah, it looks- Love the site. Oh, thanks man, I appreciate it. We’ll be taking a picture after this. And we need help, guys, come on.
1:20:23 If you’re young, if you’re looking to learn, get into the tech industry, reach out to us. You know, it’s a new year, coming up soon, new goals, new ideas. Maybe you can start working for us and helping us out, cause we need it, we need it. Yeah, and you can’t do much, but I mean, like in the last 25 weeks, we’ve met 25 of the top, coolest, most interesting people in this whole business. And so yeah, come work with us, help us do some biz dev, do some promotion, that kind of thing.
1:20:47 Guarantee, it’ll change your life. So do that. If you’re listening to us on iTunes, come to see our beautiful faces at our YouTube channel, Silicon Real. The website, siliconreal.com, we’re on Twitter. It’s all good.
1:20:59 We’re gonna continue doing this. If you’ve got any guest suggestions, we’d love to hear them as well. So as we say on Silicon Real, it’s about the people. That’s the damn truth. Thanks, Kirk.
1:21:08 Wish you all the best. Thank you for having me on. All right, guys, take care.
