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Billy Libby

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62
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2022-05-23
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2022-05-23
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1
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  1. “With a lot of these fintech firms that were just starting to emerge and needed advice of how to connect to the banks and how to acquire customers and how to hire people. So I was at advisor to Robin Hood in Kensho and all these firms. So I was investing and advising all these really small fintech firms. That was my first entree into the startup world. But a lot of the same attributes existed. And there was a way for me to add value because they needed some of that institutional knowledge. I started investing in all of these startups and advising them. And at that time, I got to know Jason Finger really well. And Jason started seamless. It was just an amazingly creative person. So most of my investments were in these really cool fintech startups or quant funds. I was at dinner with Jason looking at my phone and I was like, wow, this is great. This quant fund that I'm in, I'm up 5%.”

    2022-05-23 · Capital Allocators · Billy Libby – Disruptive Venture Funding at Upper90 (Capital Allocators, EP.251) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “So Citadel and Knight went to all the retail firms and said, you're being overcharged because the market doesn't know it's you. So they said, if we know it's you, like an insurance business, like if we know you're healthy and young versus old, so we went to all the retail firms and said, we will build a bilateral relationship with you. And if we know we're trading against you as retail, we'll give you a better price than what the market will give you. Using data to be able to tailor pricing, it's happening everywhere. Data is this ubiquitous asset. That was this eye-opener of the power of data and how you can do individualized pricing. I became a multi-billion dollar business for Citadel N9. Through that, Knight ended up getting acquired. They wiped out the management team. So I always let go. I find myself very comfortable talking about these experiences now. You learn and you grow from those things, but I had a year off or six months off non-compete. So I was working, it's like 2000.”

    2022-05-23 · Capital Allocators · Billy Libby – Disruptive Venture Funding at Upper90 (Capital Allocators, EP.251) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “When I was a Goldman, I thought it was really important to understand the client side of the business. Banks are really sales machines. You're selling product to clients. And I felt it was important to be on the other side to understand how does trading work and risk modeling. And I went to a company called Night Capital. One of the really fascinating things that I learned at night was micropricing when trading on the New York Stock Exchange. Every client effectively gets charged the same price. So if you have DE Shaw, which if they're trading against you, they're usually winning. Like they know at this microsecond that something's mispriced. And if you're selling to them, they're likely making money. So you don't want to trade against them on average. If you're trading against BlackRock, they have so much size that if you're making a market, they're going to keep impacting and buying more. If my mom is buying 100 shares of Google, she has no view of the market at this moment or no size behind her order.”

    2022-05-23 · Capital Allocators · Billy Libby – Disruptive Venture Funding at Upper90 (Capital Allocators, EP.251) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Pie as costs came down. But I think as humans, it's hard to give up something near term for the belief that it will be bigger long term, which is very interesting for me to see the power of technology as you reduce friction in a market, how much bigger the market becomes. You look at the Robin Hoods and other applications where you remove cost, the market gains or the size gains are exponential.”

    2022-05-23 · Capital Allocators · Billy Libby – Disruptive Venture Funding at Upper90 (Capital Allocators, EP.251) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “See the power of technology. One of my other bosses said something that really stood out with me in the trading world, the average commission was one or two pennies. That's what you would pay to get something transacted per share. That really doesn't work for quant trading or fintech. You have to charge fractions of that. And one of the things that he said to me, he's like, a lot of people are really hesitant to change business models because they're worried about revenue loss. Like, why hasn't the 2 and 20 model really changed for most people that are picking stocks effectively? He said, but what most people don't realize is when you lower the cost of something, when you reduce the friction, the volume gains far exceed the loss of revenue. What you saw is when spreads and commissions started coming in, the volume on the Nasdaq and NICE went up exponentially. And so there was much more revenue and total.”

    2022-05-23 · Capital Allocators · Billy Libby – Disruptive Venture Funding at Upper90 (Capital Allocators, EP.251) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Really, the early days of fintech and using data to price risk and do trading. I learned about operations and how to build product. And my boss at the time said, look, you're a natural salesperson, so we're going to put you in operations. I'm very thankful for that guy and force you to learn how things work and go in the bowels and you come out of it. And I think it makes you a stronger business person.”

    2022-05-23 · Capital Allocators · Billy Libby – Disruptive Venture Funding at Upper90 (Capital Allocators, EP.251) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Any new career, I just going through this with my team. Just raise your hand, you take on projects You do a good job, you get more responsibility. So, my first client that I was covering was a company called Get Go. Just to give people a sense, Gecko traded more orders in a minute than all of Goldman's clients at the time in a day. How do you build systems to handle that level of transactional volume? Really, it's fintech. It's how do you look at data? How do you build algorithms? And how do you efficiently do it?”

    2022-05-23 · Capital Allocators · Billy Libby – Disruptive Venture Funding at Upper90 (Capital Allocators, EP.251) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Said we just bought this new business called Ready, which does electronic trading. Own the first exchange called Arca. They put me in this world. Quant trading and electronic trading that there were no experts. You rolled up your sleeves. And so my first clients were gecko and DE Shaw and Two Sigma and No one wanted to cover those kind of firms. Everyone wanted to go to lunch and do block trading. So I trusted people and followed their advice. Let me go into an emerging area. Data was really being used to change the way that trading worked.”

    2022-05-23 · Capital Allocators · Billy Libby – Disruptive Venture Funding at Upper90 (Capital Allocators, EP.251) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Worked one summer following that at the White House for the Clinton administration. And then I ended up Working in Hong Kong, doing investment banking. My junior year. Use those years to explore and try to do different things. And when I graduated from Warden, I just didn't want to do investment banking or consulting. I wanted to be in a more fast-paced Environment. And when I interviewed Goldman was the one firm and I really give them a lot of credit, they said, we're going to hire you. You're a cultural fit for the firm And we see a lot more of you than you see of us at age 21. And so if you're a fit for the firm, we will figure out where you will be the most impactful. Just made a tremendous amount of sense to me. Every other firm you had to interview to be on this trading desk for fixed income. Would you know what exists at a bank?”

    2022-05-23 · Capital Allocators · Billy Libby – Disruptive Venture Funding at Upper90 (Capital Allocators, EP.251) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “It's a random walk, and I think that's helped us with Upper 90 because we came with fresh eyes into the VC world that hasn't changed that much in 20 years. My dad was always entrepreneurial. He was a small business lawyer and worked for a gentleman that ended up starting this company called Telebank. Telebank was one of the first online banks, and I got an internship there with his help as a senior in high school in 1999. And Telebank went public that summer. The stock opened at 13 and closed at 113 or something. It was wild. I always was really interested in technology and how to apply that through traditional businesses. Know much about private equity or venture capital. I wish somebody had told us you can get leverage on your investments. All the upside”

    2022-05-23 · Capital Allocators · Billy Libby – Disruptive Venture Funding at Upper90 (Capital Allocators, EP.251) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “I always loved being parts of teams. I grew up in a suburb of Washington, D.C. in Bethesda, went to a private school that's pretty homogenous through sports, it's equalizing. I remember so many of my friends ring from every part of life in different parts of the city, and you just learn a lot about things that you wouldn't in the classroom. And I think that helped me a tremendous amount, different perspective and exposure. And then I played soccer in college. I've always tried as much as I can with the family now to be as active as possible.”

    2022-05-23 · Capital Allocators · Billy Libby – Disruptive Venture Funding at Upper90 (Capital Allocators, EP.251) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “My guest on today's show is Billy Libby, the co founder of Upper 90, a firm that invests in a hybrid of debt and equity in early stage technology companies to help founders scale efficiently. Billy partnered with Jason Finger, the founder of Seamless, to address a capital structure inefficiency in the venture world. Upper 90s deployed a billion dollars of capital for an LP base of more than 300 entrepreneurs. Our conversation covers Billy's background in electronic trading, formation of an investment club that brought together quantitative investors and tech founders, and the evolution of that club into upper 90. We discussed Upper 90's approach to investing in tech startups, use of data to find lendable opportunities, sourcing and diligence of deals, and lots of examples along the way. Please enjoy my conversation with Billy Libby.”

    2022-05-23 · Capital Allocators · Billy Libby – Disruptive Venture Funding at Upper90 (Capital Allocators, EP.251) · IDENTIFIED FROM THE TRANSCRIPT · source