From High Frequency Trading to Silicon Valley

In 2012 I was on my noncompete (a paid vacation common in trading), and everyone expected me to go back into HFT after the year was up. When I started a tech company instead, people were surprised. The common response was, “Wait, your company’s not trading related at all?”

I traded in my East Village apartment, with its ambitious but empty yard where I never got around to having barbecues, for a Palo Alto Eichler, where we had many barbecues. My Ralph Lauren and Burberry dresses were replaced by Lululemon, so at any moment I could break into a jog or a 7 minute workout. My Stella McCartney vegan bags decayed at my dad’s house while I got my first car (electric) and started rock climbing. Instead of trading scandals on Squawk Box, I followed Elon Musk on Twitter.

High frequency trading is an exotic, shadowed land within the gated world of finance, and is the strangest place you can be, except for Silicon Valley. I was entering a complex tribe with unspoken castes and rites of passage – but I am from another secret tribe, with its own inscrutable numerology and hieroglyphics.

Silicon Valley surprised me:

1) Everyone is open.

Algorithmic trading works through intense secrecy. When an interviewer tries to evaluate you, they fully expect vague responses:

“How do your models work?”
“We capture edge using signals.”
“Do you add or remove liquidity?”
“It depends.”

After a few hours, they say, “Thanks for talking with us. We love what we learned about your approach,” and they mean it. You know that they know that you know the first rule of fight club. The best trading companies never let anyone know what they do, trade, or think – an algorithm sufficiently secret is indistinguishable from magic.

In contrast, everyone in the valley is amazingly open and helpful. People email me to ask for advice or intro’s, and we’ll talk about everything. Because two companies are rarely in direct competition, and the advantage your circle gains by sharing trumps whatever you could gain by hiding, Silicon Valley has developed an amazing culture of paying it forward. Everybody’s trying to conquer the same markets, and knows roughly what the space of ideas looks like, so sharing helps everyone. Around here, it’s execution over IP.

2) Valuation math is not intuitive.

When my friend asked me to invest, I asked, “What’s your company worth, like $100K?”
“No, it’s $6M.”
“Can’t I pay 3 developers $50K to make your product in a month?”
“That’s not how it works…”

I could build Snapchat in a week, but if I did, I would not have the user base of Snapchat. Same with WhatsApp – it’s worth an enormous multiple of what the app and architecture cost to build.

3) Money != success.

In trading, life was simple: PNL was all we talked about. Increasing this number was the goal. If we saw PNL underperforming, or the money eroding from a model that used to be our bread and butter, we knew we had to step it up to survive. In startups, the metrics for success are less clear, which makes it hazier to tell the difference between success and failure. One month, a startup has Hint in the refrigerator, dogs in the halls, and Friday hot tub parties. The next month, it’s selling all its Aeron chairs on Craigslist. Did the company suddenly tank? In HFT, yes- it would mean they were making money but then suddenly lost a ton of money in a few minutes due to a bug in its software. In SV, no- it probably means someone finally realized the company had died a year ago.

Lessons from algorithmic trading that have helped me in building Apptimize:

 1) Today’s future is not yesterday’s future.

While I was in trading from May 2007 to Jan 2012, several events happened that had never happened before: the collapse of the housing market, the financial crisis, the Fed’s repeated rounds of QE, etc. How are you going to backtest that? You know you’re in a scary regime that’s never been seen, which means there’s incredible opportunity, and the models have to handle it. Stuff changes under your feet and you have to run like the red queen just to stay put. You stay up at night adapting the models, because otherwise they’ll lose money in the morning. Predicting the future correctly is the first step to success; the next is making the right bet on your predictions.

Startups are the same way. Technology changes so fast that you have to work every advantage to its limit to compete. Innovate as fast as possible, invent things others believe to be impossible, and think what others haven’t thought of yet, because you’ll be swallowed by the current the moment it catches up.

2) Accept reality.

In trading, if the market tells you you’re wrong, you listen. No matter how smart you are, you can’t argue your way to victory: the market will take your money. If you’re underperforming, sometimes it means your connections are slow, but usually it means your models suck and you need to make new ones. You can lie to yourself, but you can’t lie to the market. All you can do is accept reality, and update your models to match.

 For startups, it’s human to invent excuses for everything. Even the most literal people suddenly get creative when confronted by unpleasant realities:

  • “Our users need our product; they’re not just doing it because they’re our friends.”

  • “We can’t show live demos, not because our demo is jury-rigged to work only on our special setup, but because we want to show a build of our SDK we haven’t released yet but will soon.”

  • “We’re going to beat the competition despite { an inferior product; an unimpressive team; a lack of funding; having no user base } because { we’ll out-execute on something else; we’re differentiated; the market is huge }.

This is not accepting reality. In order to win, you have to be honest and ruthless in admitting every weakness, because you can only correct the flaws you know you have.

3) Make your own bets.

Never believe what people say without examining it, especially if it’s about the future. People are wrong all the time. The ones who are right are too busy succeeding to tell you what to do. By the time the world knows where the market’s going, the money’s gone.

 Nobody knows exactly where the prize is, but if you have a good idea, you need to make big bets, and you need to obsess about the future – the future’s where everything happens. If you copy the people who have already done the legwork for you, you’ll always be eating their scraps. You can’t afford to follow. Ask questions. Bet your beliefs. Test your hypotheses. Rely on yourself.

There’s one thing that holds true across HFT and tech startups: it’s all about the talent. At Apptimize, our investors have often remarked we have one of the strongest teams they’ve ever seen. That lets me be confident no matter what: in trading or tech, NYC or SV, it’s about betting on the right people, and I’m all in on us.




Thanks to Lucas Baker for editing this and vetoing the boring post I was considering publishing instead.

Never Be Intimidated makes me so happy! makes me so happy!

After I introduced Lynn to my friend, she said he seemed intimidating.
“Really?! Why?”
“He’s a CS professor, the CEO of a successful startup, and is too busy to talk with anyone but you.”
“…Maybe your power is that you’re not afraid of stuff.”

I was flattered to hear this but it’s not the whole story. I think I was never intimidated by intelligence or wealth, but once upon a time I was intimidated by physical beauty. Here’s how I realized one should never be intimidated, even by hot, rich geniuses:

I was an unkissed nerd for 16 years, then I had boyfriends for 4 years, and then I was single for years. During my senior year at MIT, which was the start of my 2nd phase of monkish devotion to knowledge, I went on 1 date. It was because he was the most beautiful human I’d ever seen in real life. The first time I saw him, he wasn’t wearing a shirt because he was ironing it. Yes, he went to Harvard. His suite mates were probably milling around- I have no idea. I remember I said, “Do you wax your chest because of swimming?” He had the grace to blush. “Mainly because I model.”

After verifying there were no pictures of him on the first Google results (his name is very ungoogleable. What were his parents thinking?), I forgot about him for a week. Then he asked me if I wanted “to hang out.” That night, I found that the shirtless pictures of him were on Facebook (this was many years ago and Facebook was not yet the first place one went to look at people).

That Friday, we walked around Harvard square. I found it hard to not stare at him, but I also evaded touch and felt anxious to be alone. Nothing happened. I can’t “date;” I’m incapable of romantic relationships that aren’t based on a monkish devotion to work. After the most awkward date this kid had ever been on, and the least awkward of the 5 dates I’d ever been on, I went back to East Campus and did a problem set while a black cat rattled my door and freshmen screamed on the thundering roller coaster in the courtyard.

I had expected the date to be really fun, but it wasn’t anything. I’d expected it to be more fun than being with a normal person because he was so much hotter than a normal person, and I realized this logic was wrong. I’m exceedingly grateful to him because it was actually the epiphany that he would ever consider dating *me* despite being so much hotter that allowed me to realize physical beauty doesn’t matter. For me, maturation has been a series of realizing what doesn’t matter.

Intelligence, beauty, and wealth used to seem like notable qualities, but now they’re commoditized by technology. Jesus and Buddha always said beauty and wealth didn’t matter, but for years I was reluctant to conclude intelligence was also irrelevant.

It was in high school that I realized I was in danger of dooming myself to unhappiness if I defined myself by my intelligence. Intelligence seems fundamentally different from beauty, right? Because it’s easier to use intelligence to create something… but it ultimately is just another commoditizable property. There will always be someone more beautiful or intelligent, and now technology elevates everyone to a high level. When headhunters were pimping me out to billionaires, “Her brain is huge and will make you a lot of money,” it was obvious intelligence has been commoditized.

A millennia ago, physical strength was actually useful and prized- the strongest dude was also the richest because he could bop you on the head and take your cow- but now physical strength is useless. Most modern men can run a marathon. One day science and technology will allow everyone will be as strong, healthy, smart, and beautiful as they wish. Technology made many crafts and skills obsolete because it commoditized fine motor skills. Technology is the great equalizer that commoditizes and equalizes everything, taking beauty, information, strength, and health, and giving it to everyone.

When you take away everything that the robots are going to do for us and allow us to be, when we’re all genius supermen, what will be left for us to identify ourselves by? If you put your identity next to beauty, you’ll feel worthless when beauty is commoditized by technology because anyone can purchase your identity. If money is an important part of your identity, you’ll bemoan the fact there’s always someone richer and scuff the wheel of your Tesla every time someone mentions Bill Gates. Instead of forming my identity in a way that allows technology to erode it, I want to form it such that technology would enhance it.

Now when I meet someone with intelligence, beauty, or wealth, which is basically everyone in the post-singularity society of Silicon Valley, I automatically delete those qualities from my perception of their Real Identity. I still recognize intelligence, etc. as a property they possess, but I don’t define them by it. I try to define people by their ambitions, creativity, drive, perspective, attitude, inspirations… that soft gushy core inside the genius billionaire playboy. Love, values, interests, goals. Not where they went to school, how good they look in Lululemon, or how many Lamborghini’s they drive, because eventually we’ll all be downloading MIT OCW straight into our brains using Matrix-style optogenetics tech, have enhanced cyborg bodies, and harvest infinite energy from asteroids so that resource constraints become a purely theoretical problem.

What do you view as the most important aspect of your identity?


My theory is pg has some kind of alphabetical list he periodically runs down to make sure you’re on the way to becoming the next Dropbox. When he gets to the App*’s he’s all, “Apptimize, when are you launching?”

What does launch mean? We’re out there with the programmatic interface… In any case, I say, ”1 month.” Amazingly, that actually happened, sort of! We had a launchathon and Jeremy made a webcam app that allowed us to show our library changing apps live. You can see our crazy setup in my kitchen! Jeremy somehow happened to randomly own all this equipment before we even started Apptimize, and it’s how we made this video of the Visual Apptimizer.

Our recording setup!

setup in kitchen

The day of the launch, everyone stayed up till 5AM, except Jimmy who lost consciousness at 3am, and Jeremy and I who stayed up all night. In a startup one must be antifragile and tolerate crazy deviations in sleep, etc.

3AM day of launch!

6 hours before launch

I made the below, terribly edited video and tried to sound upbeat at 5am. To lower expectations, this is the 2nd video I’ve ever edited, the first one being the PGSS one.

Lynn was completely reorganizing our marketing website up until the last minute, adding a ton of new content. 9 hours before launch, the whole frontend dashboard changed to something no one except Joey had ever seen before. We all relearned the new UI and rolled w it. Our friends all helped!

Sky user testing

Professor Quirrell!

Professor Quirrell!

MIT Fencers!

MIT fencers all the time

We were overthinking the reporter thing and got a ton of amazing advice. Finally we were like, “Time to bring out the big guns.” So MG hooked us up! We asked for a quote and he wrote the following:

When we first heard the pitch for Apptimize, it sounded like something extremely useful that obviously needed to exist. But when we actually *saw* the product in action it seemed like a no-brainer that every single app developer should be using this service. A/B testing has been so vital to the web, and it should be even more vital to mobile. And you shouldn’t have to be the largest app in the world, Facebook, to have access to such powers.

Sweet, right?? Dude’s a writer.

Research for our bios

Techcrunch and VentureBeat covered us. My favorite part of the launch is that we unveiled our About Us page. Can you tell that I wrote Shannin’s bio at 1AM? Our investor Ken wrote, “The programming team looks outstanding, but just as important you’re well-protected by martial arts experts.” Lucas, Lynn and I went to krav maga and my abs got sore from pretending to knee Lucas in the groin. My core is weak but he’s also too tall.

When you have a launch, the following happens a dozen times:

“What’s the status of the library, Jimmy?”
“Extremely unstable.”
Half an hour later, “Fairly stable.”
Ten minutes later, “I’ve downgraded since my previous answer; now it’s moderately stable.”
“Woohoo! Hug! …Whoa, how are you so good at hugs?”
“My sister taught me.”

So yeah, everyone go try out our tech! And give us hugs.