YouSaid · the spoken record

Brad Katsuyama

lines on the record: 113
first: 2015-03-15
most recent: 2015-03-15
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“I hope none others. It's just been, you know, I just feel very lucky. And I do feel like I get way too much credit because our team's done a lot. Ronan and John and Rob, we talked about them. There's a lot of other people that have been behind this. But coming up with the solutions was a lot of other people. I felt like the book's kind of thrown me out into the front. It's definitely a role I'm willing to play, but there's a lot of people that have made this happen.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So it comes in cycles, but you know, I think that cycle overall leads to a heavily, heavily regulated industry with fewer players and the entrenched players are just far more powerful, right? There isn't a huge amount of disruption happening. So I think the cultural cycle is a pretty tough one to break. We're hoping to break that in a minor or major way. We're just trying to do something different. The good part is that we do have partners that think IEX is good long-term for the market. So that gives us a lot of confidence.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's getting better more based on what people aren't doing versus what people have proactively done. But I still don't see a huge amount of accountability. You know, making your money and fading into the background and riding off into the sunset isn't going to prevent the next cycle. What concerns me the most is the cycle that we talked about, scandal, regulation, loophole, exploitation, scandal, regulation. It's gone on for so long. And what it does is it prevents talent scandals just drive people away, right? Certain people that would have come to Wall Street that you want to work here just don't want to work here, right? They go to Silicon Valley. They're going to work. By the way, that you.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right? Because we're trying to save people money they don't even know they're entitled to, but the people were kind of going after know exactly what we're doing and are very upset about it. So it's an interesting problem to be in the middle of.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the stock market, everyone can't win contrary to some people's beliefs. It's just not no, right? It's a zero-sum game. It is. And again. Should the distribution of winners and losers be a little bit more balanced and more fair? Absolutely. But that's, again, that's what we're out there trying to solve. But it is zero sum. It's coming out of people's pockets. And the hard part about it is that everyone's losing a little and a few people are making a lot. David Einhorn wrote an investor letter. I thought summed it up brilliantly. The problem is diffuse harm and concentrated benefit. That's brilliant.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“IRA. That's who's paying for it. If you followed the money far enough, yeah, it's coming out of everyday people's pockets.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so part of it is about the money that's being made. Part of it's about the money that's being spent because ultimately when you think about who's ultimately paying for the line between New Jersey and Chicago or who's paying for the Microwave Tower, it's coming out of somebody's pocket. It's going to be the investors because no one would buy the microwave tower if they weren't able to make money from the existence of the microwave tower. What you want to do is you want to make the microwave tower redundant. You can't make it illegal. And that's one of the issues is you can't regulate evolution of technology, but you can render it useless. What we're trying to do at IEX is create a level playing field where people don't feel the need to invest in microwave towers because it doesn't necessarily matter how much faster I am because we're trying to create the fairest possible place experience. But any new tower that goes up, someone's paying for that and they're paying for it out of profits or else they wouldn't pay for it.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Less reliable than in the ground, but still, but there's a cost, right? And I think that when you look at what's spent. It's billions, billions are being spent.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think, I mean, in volatile markets, big investors are trading more, which means there's more orders to get in the middle of. So I'd say volatility leads to a lot of volume and a lot of profits. I'd also say the margins are going down because it's becoming more expensive to trade. You have New York Stock Exchange selling laser beams on their roof and selling micro exchanges.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's probably a small number. The even smaller number is how many people will actually tell you about it? The game, the value of that knowledge is not monetized by trying to help other people understand. It's monetized by gaming the system. So I think that we were, you know, one of the first things I realized after we discovered Thor, we ran these experiments at RBC, we realized that, hey, by delaying when we send the orders, we get to all places at the same time. It was kind of like this eureka moment. I got home. I was in bed. I'll never forget it. I said, oh my God, we're not the first people to figure this out. We're not like fifth or 10th or 5th. I don't know, but everyone who's figured this out are the ones that are getting ahead of me. They're all part of the problem”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes. Well, you know, the amazing part is the people that I have a common connection and understanding with are traders. They've lived it. Sometimes when you get on fights on television, you're fighting with lawyers. You're fighting with people who've never traded a day in their life. If you look at heads of exchanges and markets, Know that experience allows you me and our firm and the people that have gone through it to speak with such conviction because we know that it's happened.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Lot of stuff. A book, I think a book's been written about why this doesn't Michael Lewis fiction. The amazing part is that, again, it's I can speak about this stuff. I'm so grounded in my experience. I've lived through this. I can testify in front of the Senate. I can get in fights on television.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely. So he nailed the book. He made some technical errors, which people are, you know, people are going to grasp at anything they get their hands on. They're grasping. And it's funny to watch, actually, because I've heard people say that what I experienced never happened. It's an amazing thing to tell a trader who's lived. Yeah, latency arbitrage doesn't exist. I listen to that and you can't even respond. Who's saying?”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Intel doesn't trade on the New York Stock Exchange, right? Because they only trade New York listed stocks. Well, who cares, right? Yes, it's a technical error, but that doesn't undermine the actual book, right?”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Amazon type. I asked him, and I said, you know, what I said to him, which was, I said, Michael, this is a very technical subject. Do you want my help? And he goes, you know what? You can't write 100,000 words without making a couple mistakes. And he goes, Just do me a favor after it comes out, make a note of the mistakes, and send them to me. And I found, you know, a dozen things, small stuff.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, he knew he had a feeling it would be explosive. What I didn't know was how big a part of the book that I ended up being. I had no idea.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“He said this is before the book was published. He said this is going to be explosive. This is going to be explosive because he was consuming everything that was written. And he realized he was writing things that have not been written before.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So he came to the conclusion about the book, his journey through high frequency trading and the exchanges and market structure was similar to mine. Everyone he talked to, and the more rocks he turned over, the more stuff he found. And he stumbled on a lot of stuff himself. Yeah, he's going to.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That was kind of it. And I ran out of reasons not to do it. And it's always scary to leave, especially a job you're comfortable at, you've been at your whole life. But yeah, by the end of it, it felt definitely like the right decision. And RBC is still a great client of ours. I still have a great relationship with my former team there. And they were very supportive. And they're still doing really well. So it kind of worked out for everybody. But yeah, it was interesting times. But, you know, to be in a Michael Lewis book, never in a million years. I spent my entire life trying to just get along with people. I'm more of a go-with the flow kind of guy. I don't have these like heroic tendencies where, you know, I'm running for class president. I didn't do any of that. Fairly normal guy. This just happened.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, well, we got to the right place, and she's been amazingly supportive. But what I said to her is I said, there are very few people in this world that can solve the problem we're trying to solve. And it may not work. But, you know, I would probably regret it for the rest of my life if I didn't actually try. So you had.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Company around it. Yeah. I mean, you nailed it. The one other big point that I made to my wife was that because she was really the one, she was the one who allowed IX to happen, right? Our second son was born three days after my last day at RBC. So there was a lot going on in our personal life.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hey That's right Part of it was the shoot. The very first idea we had was we wanted to be the smart order router for the street, which means everyone send us your orders and we'll route them out to the exchanges. Now the problem with that is all the big banks have built their own smarter to router. So it's a very invasive request to say I'm going to now route all your orders for you. That idea never would have worked. But we quit. The notion of that idea, which was slightly insane except for that we had a lot of faith in each other. And I think that...”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“This idea we have right now, what chance do you think this idea has of working? I was the highest at 25%. Everyone else was lower, which was funny, but what we all agreed was that there was a 75% chance that the four of us would fail.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Write on a piece of paper, what percent chance you think this idea we have right now for IEX, but it's not IX as you know it today. It was a different version of IEX. It actually wouldn't have worked. It wouldn't have worked.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Kind of collectively decided we're willing to take this risk. And there's one really funny moment where I'm home and I'm talking to my wife. I'm like, you know, we're getting ready to leave. And she's like, well, what percent chance do you think this has of working? I think I am like, oh, I think it's pretty low. This idea we have right now, probably 25%. And she's like, you should probably clarify that with Rob and Ronan and John. So I came in the next day and said, guys.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes. Well, that part of that was I sat down with John and Ronan and Rob and said, how important is this for us to stay together? And we had built, you know, when you go through things like that, and you come from nowhere to doing something and you had discovered the problems we had discovered because every rock we turned over had something under it. And it was just this amazing like mystery story. Like every person you meet, another piece that gets added to the puzzle.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“A lot of money. You were making seven figures there. Quitting was definitely at a character for me. I probably could have retired at RBC. It was actually the only company I'd ever worked for. I was an intern there and just stayed because it was comfortable. I got offered more money to work elsewhere, but I liked the people I had a great relationship with my immediate boss. It was kind of a different thing. Part of leaving, the big thing, one of the big reasons I left was that after we created Thor and RBC's electronic platform took off, all of the people on all of my key people, including myself, were getting big job offers away at different firms. And it became very evident to me that doing nothing would have led to our team getting dismantled.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And fascinating. I'm the most unlikely Michael Lewis character probably ever to be in a book. I think that's right. He told me he had a hard time writing about me.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, yeah, we talked to him for the big short. We talked to him for the big short. Every other person I talk to talked to him for the big short. I was like, now they never would have offered this information if they didn't know that we were talking to him. But you just realize how many people he actually knows. And some people at firms, where I'm sure they'd be fired if they knew that they were talking to Michael Lewis. Oh, really? Oh, absolutely. Oh, that's fascinating. And he's got a way. He's brilliant at what he does.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. And so it went from, I'm going to write a short story about IEX, which again was super exciting. He's going to put in Vanity Fair. But he started talking to more and more people. Every time he came to New York, he'd spent a little time with us, but he was out there canvassing the amount of connections he has. Incredible. The amazing part is we were going around to the asset management community to try to raise money. And as we started to talk to Michael Lewis.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so we got in a car and drove the routes. And spent the day with him going to different data centers. He walked away. His head was spinning to think, I just saw the stock markets, but not the stock markets people see on TV and on CMO list.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“We had started the firm with our own money, which basically we ran out of. And at the time, I don't think it ever would have been a personal choice of mine to be in the position I'm in because it changes your life. Being on 60 minutes, being in this book, it has changed my life. But as the CEO of IEX, it was absolutely the right thing to do. Sure. So we kind of went all in. We had nothing to lose at that point. And I think the very first thing we did is we went and got in a car. Drove to all the different data centers with Michael Lewis in the car. We drew out the map and said, you know, here's why our orders were getting to different exchanges at different times.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, we just try to convey what we knew and do it in a way that would make him somewhat interested in us. At the time, we had no money. We had nothing. You had already lost it.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's probably my favorite Michael Lewis book, including Flashboys. I love Moneyball. It kind of changed my perspective on business and challenged me to think differently.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“The funny part is Michael Lewis is kind of horrified that people read Lyrics Poker as a how-to manual on Wall Street because he wrote it as kind of like a warning story. Right, right.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it was. I had read almost everything that he had ever written. I read Lyra's Poker. I'm sure like everyone does. Before they come into business, you ask, what book should I read? You read Lyra's Poker.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Simple, transparent, and fairer stock exchange. I mean, that's what we're trying to be. And, you know, there's an elegance that comes with simplicity, meaning people understand what your market does and why you exist. And the stock market is anything but that. You need to hire people from a firm to understand what that firm actually does, right? And so most of what we've learned from exchanges, you can't find by going on Google. You have to find people that have worked at exchanges or find people that know them intimately well. So I think it's amazing. The function of the stock market is so central to the economy, it's amazing how few people know how the stock market actually works. Myself being one of those people five years ago, right? So we want to build a market that people understand.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, it unlocks more than half the market that we just can't touch right now. And I think that's significant. We're keeping the principles of what we do. We're not paying rebates. Maker-taker is obviously no make-up.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Becoming an exchange obviously unlocks a lot of potential for us. So, you know, we feel like this is kind of just the beginning. Back to talk about Joe thinking we're in the fourth inning or four out of 10. Yeah, I think we're a third or fourth inning of the game. There's a lot of ball to be played. So,”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you look at it, we're around 1% of the total market right now. But we can only really compete for 15 or 20 percent of the 100 pi. 50 to 60 percent of the volume every day is displayed quotes, which only exchanges are authorized to do. You know, 10% roughly is the open close in auction plus pre and post-market trading 20% trades retail with wholesalers and internalized. So there's so much volume that we don't have access to right now.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're building, you know, and the great part about it is IX is not the best short-term lucrative place to work. People aren't getting rich this year. So people come for the mission. They come because they believe in it and they believe in it long term. And the goal is to be successful long term. So there's a long-term payoff to this. People come looking out three, five years. And those are the kind of employees that you really want. And part of the challenge on Wall Street in general is a lot of people live year to year on guarantees. There's a huge sense of loyalty. What I find is that certain firms are incredibly well cultured and certain firms are just completely toxic. That's fascinating. You want to build long-term Culture. And again, we're trying to build that at IEX.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our CTO worked with me at RBC, and John Schwall is our chief operating officer, hired him at RBC from Bank of America. He was kind of the LinkedIn guy that did all the background research. Don Buhlerman was a co-founder. He came from Nasdaq. So Zoran Perkov ran global operations at Nasdaq. He came aboard. John Ramsey came from the SEC. Sophia Lee came from LiquidNet. We just feel very lucky. Claudia Crowley, we just hired as our chief regulatory officer. She came from the New York Stock Exchange.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Every single person at IX owns equity. And it's very evenly spread out amongst kind of the top. There's my structure. What's the matter?”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“We couldn't let the solutions suffer because of the way we structured the company. So, you know, we'll continue to look for just doing the right thing for the mission. That's the key. There's been a lot of interest in IEX already. We've turned all that down because we feel like we're still on a mission. But if the right partner comes along and you think it's the right thing to do for the mission and the business, it's really, this is a mission-based company. We care a lot more about that than anything. And it's very distributed. I don't own a huge chunk of IEX. I mean, we're going around talking.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think, I mean, you know, we thought a long time about IEX starting as a nonprofit. And the reason we decided against it is because we're competing against for-profit entities. And when it comes down to competing for talent, when it comes down to a lot of things.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Most people own a percent. Like, it's very, very small, but we wanted a broad consortium of interests that represented the end users of the stock market. And really, it's the issuers and it's the investors in the stock market that matter most.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Bill Ackman, Dan Loeb, Capital Group, Franklin Templeton, Mass Mutual, Jim Clark from Netscape, Steve Wynne. So we have a really great group of end users. And it's very, you know,”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is an investor. No broker is an investor in IX. So it's all mutual funds, hedge funds. There's some venture firms. There's entrepreneurs. It's all sorts of...”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, so RBC is not an investor. Originally, we went around to try to do this with RBC. I brought the idea to my bosses there and I said, this is an idea. Let's start an exchange. The feedback we got from our clients, the big mutual funds, was that we like the idea, but RBC can't be involved.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Without question, without question. So I think for us, starting a new market in 2013, understanding very clearly the mistakes that others have made, we just feel like we're in a very good position to just build a different kind of marketplace.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source