Kalshi’s Tarek Mansour vs. the Federal Government

26:24Brian Halligan:Put some money on the Red Sox last night and they beat the Yankees. Yes. Nice. Great. But I think there was that. I think when we did get regulated and like we got approved, our trajectory just went, you know, really parabolic. And I think it's a mix of that sort of foundation lane that we've done for a while, which I really believe in. I think if you believe that you're going towards a good market, building a solid foundation, even if you're not growing is okay. And then I think we just have superior execution on product and growth. We compound at a much faster rate and given enough time, the results start showing.

26:52Brian Halligan:While you're there, 2018, you start the company. You wandered through the desert for a long, long time. Very long time, yeah. CFTC was smacking you, saying no. Yeah, the government was trying to kill us. Yes, it must have been brutal. Did you, what was the lowest point? Honestly, I don't even remember. It was basically like, it was it was truly like just sort of like it was bad like I mean it was it was so bad and and it's like you're constantly in a state of grief and then you start like you know you're like in this desert and you start seeing like you literally start like you're so desperate they start seeing fake mirages mirages yeah you you know you see something oh here's here it is finally and then it's not true and it's disheartening and it's just hard but the thing that was unique about us is we never pivoted it was always calcium and calcium is everything in arabic like we always want to everything exchanged exchange for all these different assets and we always stayed sort of because part of it and looking back and when I was thinking about it we didn't build cash to build a company we built a company to build cash it's a it's a bit different I see we were dragged by the idea I wasn't the type that wanted to be an entrepreneur or like I think if you re-roll the dice multiple times I'd probably just be a trader or risk manager like I would not be an entrepreneur but the idea was so like glaring in front of us that we just had to do it like we felt that we had to do it and so the whole point of doing this whole thing is the idea okay so when that's the case and like if you lose the idea then you know a lot of people listening to this are walking through that desert yeah and i read this book a long time it was called the dip and you're cruising along you get down the dip and you don't know if you're about to hit the bottom and come up or if it keeps going you everyone thinks you're delusional yeah advice for the ceos out there walking through the desert you know the book what is is it ben horowitz what that wrote a lot about the um hard thing about hard things yeah there's that that paragraph that's so good about it which is like the reason why it's hard it's not like you're lifting something heavy or whatever it's it's it's like no one can reassure you that it's gonna end right like what i feel firmly believe and i really do is the number one did you want to give up for sure every day you wake up you're like what am i doing and was luana like no we're sticking with it like what's the dynamic i mean we both had our points luana was definitely much more stubborn okay continuously like luana is just like yeah you know like luana had a lot more than you know stop being a little bitch basically like you know just life is fine whatever like let's move on yeah and what i believe is basically if you give yourself enough of a time horizon you inevitably win or you run out of money yeah but i think that's like a i don't think it's a real killer of companies okay you can always extend your runway and like it's not that hard to raise money these days nowadays yes and you can pivot with a new idea and like nowadays it's it's really the number one risk is giving up right and and so but but then but that it's interesting because when i say that to me the message should not be like oh i should like do it at all i actually i see a lot of founders and they're walking through the desert i think they should give up because it's opportunity cost yes you're 35 you're going to spend the next four years walking through the desert start something new i think just ask yourself why you're doing it right so so it goes back i mean you know that you know this like to me maybe like there's a few buckets there's like the idea is something that you're really passionate about you should keep going right because you're going to regret that there's i think it's hard i mean maybe you're not but like then there's a second bucket that's sort of all the things that people believe to be true after you make it and i think that's a bad i really think that's a bad reason i i like because but you know this like it's it's it's a career right it doesn't end you have all sorts of different issues over time that like thing in your gut stays there it never leaves you right you're always stressed you have to make sacrifices on your life like like entrepreneurs don't have a good life in the traditional sense of the term right you don't get to that oasis that you thought you were going to get to right you actually just get into different deserts and those deserts get maybe less there's some water in the desert but like okay like this but but maybe maybe the better analogy is like you go from a desert to like uh like a storm and that storm sometimes is like very clean water sometimes it's shit storm sometimes it's like you know and then you know but it's a different type of you know craziness or or and maybe it's more motivating day-to-day it's stress and it's not just like depression but like but it's not the life that you like oh you you finally made it you're successful you're on the pedestal like okay so what do people think about what the life of a rocket ship ceo is like versus the reality what do people have wrong it's just like is it glamorous no no I mean especially if you do I mean look some people I think I see it sometimes it's like when you get to that and it's finally made like they really go enjoy life but inevitably then like the company is gonna go sideways what's your life like I work a lot all the time I mean are you married do you have kids I have a partner it's been like four years and some complains a lot no she's honestly great but like it's tough right she sacrificed a lot also to for me to get here because she was supporting me in the hard times supported me in the in the good times which are also hard keep her right yeah yeah she's just like she's the best i mean i think the the but there's sacrifice on that front i think that i travel a lot i i wake up so basically i wake up every day at seven uh i'm usually at the office by eight and i work i leave the office usually at 10 uh i work a little bit at home i usually like maybe like waste time on Instagram reels for like 30 minutes and I go to bed.

32:15What's the weekend like? I usually try to like go out for dinner one of Friday or Saturday. Generally Saturday because Friday I'm so tired like I just need to rest. And if I'm not trying like I'm basically in the office Saturday, Sunday. Like I go to the office Saturday. I kind of like being in the office. Is everybody, by the way, you're getting... Most people,

32:36Brian Halligan:most people like... They're in there. Yeah, I mean, but it's not forced. It's not like, oh, you know, like the hardcore. Yeah. We try to do it in a way of like, so no one is ever kind of like slapped or there's no expectation you need to be in the office with these hours. I don't believe in that sort of like put everyone in the office 24-7 hardcore grind. That's going to, I do believe the founders can do it because we have the most incentive to do it. And if the founders do it, naturally others are like motivated. They want to be next, like they like coming on Saturday because there may be a little bit less people and they can sit next to you and ideate about a bunch of things.

33:05And hopefully you got the right people that would show up, but they don't have to, you know.

33:08Brian Halligan:Okay, let's just get back to the CEOing since we're there. 100, what did we say? 130, 150 direct? 130. 150 now, we go a little bit. 150. And like 150 is an interesting number because it's Dunbar's number. It's hard to keep track of anything north of 150. It's hard to interview those people. Most companies start hiring middle managers. What is, is it like 170 three years from now? Is it 500? Are you like, William, I'm friends with William Hockey at Column. And he's like at 130. He's like, I'm staying at 130. Is that you? William is very good. I think he's done a great job. I don't know. I mean, I'm just thinking about the things that scale linearly.

33:51So historically support, but we have less than 10 support people. Obviously millions of customers. You can automate a lot of that. Yeah, it works really well. Honestly, if you train the right, it's amazing, honestly. So that's a linear thing that's gone. I mean, as we scale our institutional side, I think potentially sales could scale somewhat linearly, but I don't know. You know, I'm kind of a believer in, I'm actually curious what we think, but I'm kind of a believer in like a strong marketing and brand marketing as a fundamental enabler of sales and like enabler of top of funnel. Yeah. If you do that very well, I think people would just sort of follow each other.

34:27Brian Halligan:Where does that come from from you? You've mentioned that a couple of times. Like you're really detailed in the copy and all that. You didn't grow up. You grew up as a kind of mass CS guy. Where does that come from? And is it all gut feel? Part of it is the paranoia, but the perfectionism that came from my mom. I tend to have OCD and obsessive with these things, and I want things to be as perfect as possible. And actually, it really matters. This is the key thing. All the results are in the last 10%. Most people are 80-28. That doesn't work. Everybody's 80-28. It has to be perfect. And it's like this sort of, especially with marketing, there's this sort of resonant frequency that you have to get.

35:07Brian Halligan:This is your mom talking right now. But this resonant frequency concept is very interesting because I think when you hit it, you get these dramatically improved results, right? Give me an example. You know, there's so many of them. But I'll give two separate ones, specifically on marketing. So one is like, so when we first went mainstream was during the 24 election. And one of the ideas I had is like we should do billboards across the country. And the billboards are basically the product. It has to be the exact same as the product. And it's live. And it has to be piped with the API. and every time a trade happens on the app, it's going to be projected out in Times Square and in LA and all these billboards in real time.

35:43That had to be perfect. So that every time people look up, they build a habit of like, I want to see the odds and like Kalshi is there for me to see the odds. And if it is, then you get the viral mechanism and like, you know, all of it works and it worked. But it took maybe something like 20 iterations of putting it out there, retaking it back and to get it right. It's brutal. Like your designer get exhausted at the time the engineer gets, I mean, everyone is exhausted. Yes. And, but that's sort of stuff that no one's going to do other than the founder. The other thing I think I believe strongly in marketing is, uh, the timing needs to be like exactly right.

36:15It really matters. And you know, people always, you know, even when, for example, they, what do you mean? Around what? Pretty much everything. The more important, like people don't care about us. People don't care about anything. Like they just care about what themselves and then what they're reading on any given app. I mean, it used to be any given month and week, day and maybe now every, every, few hours that changes they forget there's so much stuff going on all the time you have to basically bring cash to whatever is happening or the yourself to whatever happening in the wild not try to kind of push whatever you're offering to people and so what i mean by that like so in the last few months if you look at all the marketing integration we do a lot like we partner with this and that so we did messy two days before his first game of his last workout why because well it's two days before his last i mean he's peak relevance right now right timothy chalamet we launched that commercial 12 hours after the whole thing that happened with the Knicks.

37:06Why? Because everyone's talking about Timothy Chalamet at the time. Right.

37:09Brian Halligan:If we had done it now, you also did the AI video before anyone did the AI video. Because it was a time where, you know, the artist, there was a whole debate about the like, you know, the artists are they going to go now? It's not cool to do that. Because that's you. You're obsessive about that kind of thing. Nailing that kind of thing. And always knowing what. But now if you do the AI video, like you should not do AI videos anymore now. It's done. Now it's cool to do real things. Yes. Right. Right. But that's so the timing with these things is like it's OK. That's what you mean by that. The messy timing was incredible.

37:36Brian Halligan:Yeah. The Timothy Chalamet timing was incredible. I assume you had that in process with. Yeah. But we were always waiting. I mean, Giannis, when we announced him as like the Knicks get knocked out in the early round, you're still going live with that. Yes, but we were waiting for the right. So we were used to think we were going to do it at the Oscars. But then we waited. I see. And so we were waiting for the perfect moment because then that's when you get the 100x outcome. right when janice when we announced janice a basketball player was essentially a day after he announced he's not going to leave uh his team there was all yeah exactly and now he's going to miami now he's going to miami he's peak relevance uh at the time and now he's peak relevance again but um but that applies to everything the ai ads i think we've done a lot of work on the um uh like when we did the news integrations back in in the fall we announced cnn and cnbc and fox all of where we really wanted to time them at peak moments where people were talking about this debate between is the news sort of like gone?

38:34Is it like a thing of the past? And for us, the angle was never like, oh, Calci partners. It was like the news is actually modernizing.

38:39Brian Halligan:I know you want to time it well, but does Timothy care? Does CNN care? Does the New York Times care? Do the counterparties care? You have to fight and battle all these different things and you cannot have too much process and you have to break their own processes. Okay, fine. You know, it's all of the same that we discussed. That's a shit fight. If you had a partnership that's doing, you know a whole structure and they plan for three weeks you can't do that did you hire any professional marketing person inside your company not like i had in any way i could not and i mean we have a cmo alan is incredible so alan takes care of all the scientific pieces very good at spending money to basically with high roi um and then the rest is like you know so the person that leads our brand or leads is doesn't have any direct reports they're just sort of flying around country and like doing cool stuff and he he ran a twitter account before the you know the inverse Kramer.

39:26Brian Halligan:Wait, that's where he started? He's the inverse Kramer account. Remind me. You know the inverse, like Jim Kramer when he, at the time he picks his stock book? Yes, yes, yes, yes. He's like the inverse Kramer index or whatever. Yes, you make more money betting against Kramer. Yeah, exactly. And I thought he was like - That was him. Yeah. And I hired him. I was like, you want to come and do our social? He started doing our social. And he had like a knack for, he came up with the AI idea. He has a knack for these sort of like weird esoteric ways to just like be part of the zeitgeist and and you know what's interesting that has worked equally for consumers and for institutions okay which is yeah you people would think like oh you know institutions want sort of this they do and like they want to they want to be able to talk to a chief risk guy and like they will and we have all that like we have a very strong robust foundation but being top of mind just matters continuously top of mind you've got What a knack.

40:19Brian Halligan:I'll give you that. Okay, I want to wind the clock back because we haven't completely finished the desert story. At some point, the conversation happened inside of the company. Hey, we should sue the CFTC. Whose idea was that and what was the reaction? I mean... What did you say? I mean, it's crazy, right? I mean, it is crazy. It is actually crazy. I mean, it ended up being crazy, even though we won. I mean, because like it's so much more than just being right. Like it's so much more than just the law being, you know, right. It's unfortunate, but it's the truth. A lot of things are political and depends on how the winds are shifting.

41:00And the government is truly all powerful. They can just do things to private companies or companies, just like companies in the private sector. Because by the time you hold the government accountable to that thing, you probably will be damned, basically. or the cost would be so ginormous. Yes. You know, the government doesn't really incur any cost. They're protected from any cost. Okay, but take me in the room when she brought it up. So, you know, there's a little bit of context to that because we started trying, and this goes back to how much foundation we built. People always think overnight success, oh, it's been two years, but it hasn't.

41:31All of this has been like part of a very long-term plan. A bit like Jensen, right? Like he's built such a foundation for so long and that's how these things go. And we started engaging about the election market before we even launched the general public in the end of 21. Started talking to the government saying we want to do this it's very important here's why it's going to work it's going to be the most accurate gauge and here's how it's legal which it is um and they're like okay fine we'll work with you you know whatever month after month they wouldn't give it to us they wouldn't give it to us i had bet all the company on like the election market for 22 the 22 midterms that was what we're aiming towards the board is ready for it etc and they keep like delaying delaying delaying up until they pushed it after the midterms so they pocket vetoed like they didn't say no they just managed to politely delay us enough that it didn't happen so that was heartbreaking you know it's been like we started in 2018 we finally got to 2021 finally excited about launching the whole

42:22Brian Halligan:company was excited everyone's excited launch and all the issue about launch started working on the election market and it gets banned at the end of 22. so now we launched with a very limited set of things that's going to be very hard to get the exchange running but they banned us we lost a lot of the team over it and you know with these situations what's really hard about this did Did you push them out or they left? A bunch of people left. Did you do a layoff? And then we had to do a layoff. Because what happens in these situations is that, I'm going to go on a tangent. I think it's an interesting thing.

42:49Let it rip. So there's this concept of expected outcome and outcome. Yep. And they're oftentimes not the same. There's a variance for the outcome. And the expected outcome is, you know, based on your decision making where it should land. And then there's a bunch of variance in the world that pushes you in either direction. The world doesn't reward you for expected outcomes. they reward you for outcomes expected outcome is what you have control over is like the work you do and it's interesting because i think at that point like the coin flip landed against us and the entire world is like wrong strategy wrong execution etc and it's interesting because that was the same time where i'm a big messy fan so so argentina won the work i was super happy but you know the day after argentina won the workup i don't know if you you know know this but the french you know the the the france the country really the population wanted to kick ass the French coach, Deschamps, who is an absolute legend.

43:37Like, the guy won them the prior World Cup, incredible performance, got them to the final of the next World Cup and to the penalties. And obviously penalties are a coin flip, I mean. And they blamed him. And you know how hard, like the number of teams that made it past the sort of group stage after having won a World Cup is basically trivial. It's very, you know, usually the team is very hard. It's very hard to kind of go twice in a row. So, and it was an interesting thing, which is like he flipped the coin, landed against him and people wanted to ask him immediately right and so we lived through that and did any did they want to ask you no i think but like people lost confidence it's like we should pivot and like it's the wrong strategy wrong strategy wrong execution all of that like we were not doing a good job basically it's on us and it's fine you should hold the followers accountable but the key learning with that what's interesting a little bit with poker the best poker players they know when they're playing a good hand and they're okay with the variance they can lose a lot they'll stick to their game and they know that over time the variance is going to come back and with enough plays they're going to get to you know they're going to win over time and you see with elon you see with with some of these founders that can take these extreme risks as long as they know that expected outcome and they can intake the variance over time yep and i think there's a lot of alpha in there yep because and for founders that have gone through that multiple times i see it with vlad and robin hood i see over time they gain a certain level of confidence yes that is hard to describe but it's like i i've gone through it i'm okay with the

44:57Brian Halligan:fluctuations and is this making sense in the rearview mirror or is that making sense at the time no not at the time okay but now in the rearview mirror because okay so 22 happens and we so our answer at the time a hole we go to reset we're going to do something else we're going to figure out what to do but again we're so we want to build calcio that's what we want to build and we cannot do it without the election markets we're going to try again okay so you go back to what we're going to try again everyone's like i mean okay these guys are saying we got delusional we try till the end another year end of 23 now they say no they reject us okay so again you know It's like goes from a low to a lower.

45:30And this was, you know, in the room, it's like, oh, what do we do again? Rollercoaster inside the company. And I was like, you know what, this time we'll sue them. You know what I'm saying?

45:38Brian Halligan:How did it actually work? Like you got the email of it. It's like, no. And then right away, she's like, we should sue them. We want to, and that someone was like, we're probably going to get a no again. So we should start preparing the lawsuit. Okay. And we should sue them. We started talking to the board. You know, we had a lot of conversation with Alfred. You know, Michael was at the board at the time. And what did Alfred say the first time you pitched him on it? he's like it's a crazy idea like you're a tiny startup even if you win you're probably gonna like incur a significant lot you're probably gonna lose and he's right that we were probably going to lose and he's like coming of your size even for bigger companies you never win against the government it doesn't you know he's your own they have all power over you they're your own regular suing them is gonna call like they're gonna kill you and and when i was super dogmatic i was sort of battling it etc but then there's a few things that sort of came out of that like one one i was a complete no-brainer it was pretty much i mean i would oscillate all the time i would be like this is crazy i mean okay can i come after us i can come after us personally i think ceos are gonna love this because i oscillate all the time on stuff like that i i oscillate a lot which i think is okay i hid my oscillation as much as i could but it definitely showed up yeah and i think it's okay honestly like i i because it's hard to have the right i mean it's so complicated right and but um and i would all say it etc and i remember we got to a meeting at some point that like i was still oscillating and like you know it's the night before we're gonna file etc and like you know i was like are you shitting me like you know it was basically she like went so hard and she's like you know fuck this like you know like we should just do it like we're wasting time and you know it was like everyone else in the room there was this sort of feeling the missionary thing you could feel it of like you know we came so far like fuck it let's just go full on war let's bet everything in your poker head where you're like there's probably a 20 chance this will work is a one percent chance it was so hard to prize but i thought through all of it which was basically and like Alpha was right in many ways, but like they could kill us because they could essentially yang the clearinghouse from under us and kill the company.

47:28We would die. Maybe even before we even get the result, which is the risk. They would, they could like death by a thousand paper cuts. They can start doing a bunch of things for you. But then I was like, if it does work, the outcome is so big and the expected value seems pretty attractive actually. Even at low percentage odds of success, the outcome is so big.

47:46Brian Halligan:Were you, okay, so obviously. It's an asymmetric bet. it's a it's a big one we bet the farm and we're like yep let's see what happens no plan b in the moment you the timing was extremely good on on what was was it an email did someone call you what was going on and where were you yeah so you know i the litigator yakov roth who who led this and you know we interviewed everybody i picked him because he's extremely smart but the thing that i felt he was really good at he like he had a missionary like this man wakes up in the morning and thinks about how to put the federal government in check okay you know you want that person just he's an amazing litigator but like in the summer of 24 you know usually we text and all that he called me and i got really anxious i thought that the court hearing came like i was like what like you know he's like what's up and he like talked to me about something like dude my heart dropped don't ever call me like you should only call me once you have the court decision like never call me ever again text me i don't want you to call me because you know in the 10 seconds where i have to pick up the phone my heart dropped she's like okay fine i won't call you until the decision and i was sitting you know on my desk and remember like reyner one of our engineers sitting next to me and like his name pops up on my phone okay and like i could like my entire body like i just could feel you know you know these moments where you feel your entire body just sort of paralyzed like oh and so i pick up the phone and i was i was like why are you calling me you know and then he's like we won and after that i don't remember like we were throwing like chairs like blackout i mean yeah we're throwing chairs in the office we like we like basically destroyed the office i mean it was unbelievable because you know it's like you want and in that year we suffered so much because you had like the competitor like where you know poly was getting the brand and we're staying true to our strategy we're going to stick with it the government was yanking the clearing house from under us um enforcement action after the other they were finding random things to just like create actions against us audits you know the audits that usually take 10 days they were mill to nine months yeah it was just sort of like truly painful like you know the whole like warfare thing it truly happened and they make your life miserable and not just the company you own personally it's like kind of this intimidation tactic up until you cave up until they you know you're so exhausted and and it was just so vindicating it was so nice right like then and finally like we find it felt like we finally had the opportunity to just sort of like win yeah for the first time okay you win and of course you knew this was going to work did it work like way better than you thought not in the first few days oh it's like all things yeah it's like all things you have to build emotion and you have to build the brand and you have to but this is the thing you win and then you're like oh let's launch it and then nothing happens by the way you won this case like three weeks and a half before the election was that random timing?

50:44yeah you gotta get it sometimes

50:47Brian Halligan:fascinating Tony says it sometimes you need luck sometimes is it because we're just lucky? I think part of it you need to get lucky you took risk and we took five, six years of expanding that luck surface area so at some point but it didn't work even better than you imagined after we started compounding So it takes time. Everything takes time. But in those three weeks and a half, we're like, look, we have three weeks and a half to make this go mainstream. Everybody's in the office. I don't care. I basically, honestly, would shower maybe like once every four days. I was just like, I don't care about anything.

51:15This is my shot. And so we worked so hard in those four weeks. It was slow, slow, slow, but then it started upticking, and then the machine started going. And then when it started going, it was beautiful.

51:23Brian Halligan:It was amazing. I got a 21-year-old son, and he and all his friends use Calci. Yeah. and i know you're going to say it's trading not gambling but i'm a little afraid some of them are going to get addicted there are similar impulses i mean look i think there's a few ways to think about it so so let's talk about the policy and then actually what we're doing because i care like i think about that a lot and i care about that yeah um it's like my paranoid brain i don't want people to get hurt and with all technologies people whenever we get hurt they will use it in a bad way right this is true for airbnb and you know and are you hearing from mothers yeah and actually it's mixed because so let me kind of walk through a few things so first the policy aspects i think and this is important for everyone at some point you're going to build something very big especially in consumer and when it truly hates mainstream you're going to get haters there's going to be a bucket of society that's going to be worried because they don't understand it or they don't get it and they're worried about the risks and they don't see the like a lot of people don't see the point of ai why why lose our jobs over someone something that can do our homework better i think they're missing the point obviously but you need to educate that part of society and then you have incumbents because inevitably if you go mainstream you're gonna be taking it for someone and those incumbents will go very hard after you when the taxis went after uber they didn't go after them saying hey our margins are threatened that's why you should shut it down what they say is that it's unsafe and kids are getting hurt and kidnapped and airbnb was the same thing with the hotels like they would find one case of one person that you know had a very terrible bad experience or something really horrible happened and they would blow it up in the New York Times.

52:53And the press likes scandals and drama. So for us, the easy low-hanging fruit is called gambling. And it's interesting because pretty much all trading products that has ever come to society have come through a fight, like have basically emerged through a fight of them being called gambling. So grain futures were actually legalized in the Supreme Court decision in the 1900s, like futures, a boring commodity futures market. at the time, the states were suing and there was lawsuits.

53:24Brian Halligan:But my son is not trading commodities futures. I know, but they used to be. Fine. The farmers weren't. But kids weren't. No, that's not true. Like, I mean. Oh, is it really? I don't know anything about that. The farmers were 20 and 18. All right, fine. By the way, the age of trade futures is 18. Okay. Right? It's actually, you know, that's what it is. I mean, now there's other more interesting. Maybe my son runs in a different crowd, but none of them trade. No, no, but I want to address this. But I'm saying, but that's because society evolved. Like there's now crypto and meme coins and all these other things, right?

53:52Like at the time there was nothing else. This was the primary mechanism of speculation. That's what everybody was doing. But the claim at the time was like, this is gambling and we should basically regulate as gambling and not as a financial market. And the Supreme Court said speculation does look like gambling because it does. Yeah. So it's the stock market. Yes, exactly. But there's a price discovery aspect to this where you're on an open, transparent exchange where people are trading against each other that makes it a financial market. And that's why we need to regulate as a financial market and so on and so forth.

54:20fast forward to us there's a few things are very important one the incentive structure in the model gambling i don't gamble i you know i i don't like i i don't really like gambling i like trading gambling is a business model where like the revenue of the company is equal to the customer's losses so over time you block the winners which is what they do they don't want the smart mathematically oriented people that are doing research and they want the people that continuously lose and those people they give them promos to come back and that's how you create these addictions and but they cannot really solve the problem of addiction because the revenues are equal to the losses so over time what do you do well you have to increase the losses that's what you do you have to create those types of behaviors or at least not throttle them too much the losses don't go to me on cash that's the beauty of a derivatives market liquidity goes to you yeah i take a one percent fee whether somebody loses or not so when someone is exhibiting bad patterns that those are going to someone else i have all the incentive in the world to basically throttle them and figure out how to get it right

55:12Brian Halligan:But let me just push back a little bit on that. In a casino, they try to block the card sharks. Yeah. But in your world, there's a lot of card sharks betting against my son's friend who's going on a gut feel. Yeah, that's absolutely right. Absolutely. Now, it depends on the incentive structure. I want smart trading. I want to incentivize people to do research because the more liquid, the better the forecast, the more truthful my forecast, the more people look at it, the more my top of funnel increases. I want the smart traders. There's a very different structure from the casino, which is like you don't want the smart behavior.

55:49You want just the excessive money-losing, continuously money-losing behavior, right? So there's that. Now, it's important to understand not everybody wins on CalSHE. Of course. Not everybody wins in the stock market. Not everybody wins in the options market. Not everybody wins in athletic competitions. Not everybody wins in competitive environments, highly competitive environments, right? it's a highly competitive it's a competition it's a highly competitive activity in nature and inevitably there's going to be some people that win and win more like how many people win the nba finals or how many people win you know the champions league it's a small percentage of participants now here's what's interesting everybody can win it's a fair neutral platform and my incentive is to give as many tools as possible for people to do the right thing and do research and do all of that and what we do and what we do really well is we do take this sort of issue of excessive behaviors pretty seriously so for example the 18 to 20 buckets i think um the data doesn't show dramatically different behaviors but society tends to be worried about that we add a lot more throttling to the accounts what does that mean like you cannot basically lose too much in excess we add throttling and we start asking for additional verification that makes it so hard add a lot of friction for you to keep going or keep going in the success and the reason we do that because the positive sides of this so when i asked the parents and the mom question and their 25-year-old is training on cash what they get excited about is like they're actually getting smarter about the future they're smarter about the world because the alternative is they're spending time on Instagram and social media where it's like extremists and all the hate and constant brain rot and all these different things whereas here

57:22Brian Halligan:and they get addicted to that of course but they can't lose all their money on it I think they're losing a lot more they can lose their they turn their brain I mean I think sometimes I'm losing my brain on that I mean you know but like I think there's all sorts of other issues there but my point here is like they're spending time getting smarter about the world which i think is the whole premise of what we're building like i think this is going to be the ultimate antidote to a lot of the polarization extremism we're seeing because you know these these calibrated well-reasoned takes are not getting reward on social media but they get reward in prediction markets and that trains people over time to get a little bit smarter and i want it to be a tool for that especially for younger people rather than a tool that like i'm losing all my money and i'm doing excessive behaviors and there's easy ways to do that which is like you can cap how much people are doing you can throttle these accounts um you know one of the things we do very well i think better than even some of the financial brokers or traditional brokers um we think we self-regulate we don't just do what regulation requires us to do we go above and beyond because i think about all the risks so miners for example we obviously they're banned and we do kyc and all these different things but the way that miners access all these platforms is they use their parents ids so one of the things is we create is a parent portal where moms and parents can give us their id and tell us don't let anyone else use it.

58:30That solves 95 % of the issue. And I think we're doing a great job. And the numbers show like, you know, the percentage of people that show these signs of these patterns of excessive behaviors or are losing excessively or losing in general on CalShea is actually lower than options trading. And it's lower than any active trading of stocks. So if you buy a stock and hold it for five years, it's investing. But if you're trading in a daily basis, et cetera, 75, 80 % of people lose. And I think people have not come to terms that there are irresponsible behaviors in all these markets. And the way to do it is basically you have to figure out how to flag these behaviors and basically get better at throttling them.

59:08Brian Halligan:Okay. I guess my last question, this pod is a lot of CEOs and founders listen to it. You've had a really unusual, like really long, strange trip. Yeah. One last piece of advice or tips for folks going through the desert. I think that like I would say a few things but like one like really question really hard why you're doing it you know because the thing that you're like if it's not for the company itself the thing that you're hoping to get I don't know if it's really there which is a glamorous yeah you know I never found it the least obviously financially rewarding at some point for sure there's many ways to do that these days the option cost is very high right like if you I mean you can join a fast-going company.

59:55I mean, there's so many ways to do that, right? So I just think the monetary reward just feels like...

1:00:04Brian Halligan:Risk-adjusted is probably a stupid move. Yes. And if you adjust also for lifestyle and amount of pain, it gets pretty unattractive, right? Okay, your little brother comes to you and says, I want to start a company. What do you say? I just say, why? You push back? Yeah, why? Like, explain. What is it? Oh, I want to be my own boss. You're not really your own boss. You've got a board. You've got, you work for all your employees. You work for everyone. Your users. I mean, if you're a good CEO, you're basically. You work for everybody. Yeah. I mean, I don't think it's that sort of sense of freedom is real in any way.

1:00:38Actually, you're the least free, right? And the more it grows, the less free you are, right? I agree. You know, so like, the second thing is like, I really believe in the sort of theory, like, I really strongly believe in the theory of like, it has to be true to you. Like, it's going to be very hard to build a company, market a product, build a product that is not you. It's very hard. I honestly don't see how that works. And it's so interesting because every time you see a big company and then you meet the founder or the CEO of that company, you'd probably agree with me on this. It's shocking.

1:01:15Yes.

1:01:16Brian Halligan:The office is them. Like you meet them and you're like, oh, it's, I now totally understand why that company is the way it is. Right. And so, and I feel like people, I don't know. I feel like that's not put into practice enough. Does that make sense? Like, I think people just try to, you know, figure out all the right ways to do things. I just, I mean, I wish there was, but if there was, then everybody would do it. There's a really good quote. Be yourself, everyone else has taken. You're definitely yourself. Thanks for coming on the pod. Thanks a lot for having me. Congrats on all your success.

1:01:47Brian Halligan:Thanks so much for having me. That's great. Okay. Hope everybody liked that. I really enjoyed talking to him. It's the second time I met him. He's a gem. A couple of my takeaways. Holy crap, is he mission driven? He had a mission of how we wanted to see the world change. And the company was just like, okay, we're going to build a company to pull that mission up. People talk about mission a lot. Very much in his case. It rhymes with kind of how HubSpot started. Our vision mission was we wanted to change marketing from outbound to inbound. And we just were like, oh, we need to create a company to pull that off.

1:02:22Brian Halligan:It wasn't originally a company. It was an idea. So I like that. And I like founders who are, he's very obsessive and very mission driven. I feel like today with startups, everyone's trying to win Twitter for the day and sometimes making short term decisions. The thing I like about CalShe and the thing I really like about SpaceX is they made some big foundational bets and were super patient and were really rewarded once those things paid off. And I think more founders can learn from that. Last thing I would say is he's got a unique relationship with Luana, his co-founder. Luana is the kind of organized one and very risk seeking.

1:03:04Brian Halligan:and he's a little bit all over the place and he's risk averse. It was the exact opposite of what I thought those two relationship were, but it's very much one plus one equals three. It's reminded me of my relationship with Darmesh and how complimentary the two are. Hope you liked it.