Fear & Greed

While I worked in restaurants, I took a few thousand dollars that I had saved up from working and convinced a friend to day trade with me. We dropped out of school with the reasoning that the “risk of doing something crazy like this would only increase”. We’d learned some candlestick patterns, read some blogs and thought we were Paul Tudor. It was the equivalent of not knowing how to surf, seeing Hurricane Fran hit the coast and buying an El Camino.

My co-founder is another NCSSM alum I actually met after school, through the other alum I lived with. This experience taught us the boundaries of our humanity. That we needed to design systems to prevent ourselves from essentially gambling. It became obvious that our friendship could survive erratic swings of capital. ($5000 was everything at the time) We weren’t afraid to go against the grain of what we were supposed to do to miss potential upside. What did we have to lose?

At the time there was a limit to the number of day-trades an individual could make called the “Pattern Day Trader” rule. If you had a balance below $25,000, which we 100% did as two broke 19 year olds, you were only allowed to buy and sell a stock 3 times per week. We thought this was our constraint, so we engaged with a “prop firm”, which acted as a single pool of capital to get around these limits. We gave them $5000, they would give you a $100k of leverage. The $5000 acted as our deposit, if we dipped below that in losses we were wiped out. They policed this by giving us access to their own trading software.

In this proprietary software we were exposed to the complexities of trading: there were different tiers of data for retail investors and institutional ones. It became more and more obvious that this wasn’t going to work, that we didn’t have an edge.

After college, we lost touch for a few years but both wound up in enterprise software. He did QA at a publicly traded financial services company before Engineering another tech company that later went the distance. I would go into software sales at another public tech company before jumping into dating start-ups. The one I got hitched to gave me a chance to run sales solo all the way through to acquisition by an experience management goliath.

10 years later, my friend and I are surfing the web again. This time we have more control over the waves. No car payment.

Lessons

  1. Conspire, collude
  2. You should have an edge
  3. Don’t play zero sum games
  4. Stay scheming
 
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