Animal Spirits Podcast - Talk Your Book: Choose Your Own Investments

Episode Date: August 8, 2022

On today's Talk Your Book we spoke with Composer founder Ben Rollert about creating your own automated investment strategies.   Find complete shownotes on our blogs...  Ben Carlson’s A Wealth of Common Sense  Michael Batnick’s The Irrelevant Investor  Like us on Facebook  And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by Composer. Go to Composer.com.com. To create your own symphonies, that's where you can create rules-based automated strategies, trading strategies, asset allocation strategies, anything you want, stock picking. That's composer. combe. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holt's wealth management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritthold's wealth management. This podcast is for informational purposes only and should not

be relied upon for investment decisions. Clients of Ritthold's wealth management may maintain positions in the securities discussed in this podcast. On today's show, we spoke with Ben Rollert, who is the CEO and co-founder of Composer. And the way that I've described Composer in the past is it is as if portfolio visualizer came to life. Portfolio Visualizer is a site that a lot of, I don't have a DIY or advisors, whatever, people use to create their own back tests. And there is no way to implement those, as far as I know, directly on this site. So what Composer is, is you can create your own back tests and actually have it be implemented.

And spoiler alert, one of the things that we spoke to Ben about was the ability to, like, where do these traits happen? Does it happen in the background? Do you connect your Schwab account? No, you can open up an account at Composer. they sit on top of like a clearing provider, but they are their own custodian. They're an RIA, and you can actually execute trades directly through the platform. One of the biggest themes on my blog, the past five to seven years, has been that there's

never been a better time to be an individual investor. And having a tool like this where you essentially have your own coding system, I don't know how to code. I don't know how to do algorithms, but the fact that you can create it in such an easy, simple way, and you and I, we recorded a podcast last week with Meb Faber. and should be out soon on his podcast feed, actually. And you said, hey, Mab, you wrote this paper back in 2007 for global tactical asset allocation. It was five asset classes using a moving average.

And you said, why didn't you ever make this into a strategy in an ETF? And he said, well, I did something similar. But if you wanted to, you could take all of the rules that were in his paper and create one. In fact, I actually did this with the help from Composer, and they put it on their website now. I think it's called Meb favor, GTA or something. but there's so many different types of strategies you can complete on here and having them all be automated is really interesting. And I think tweaking things and changing it around and changing the rules to show you how little changes can make big differences or maybe not big

differences is really interesting. I don't know if we first spoke to a composer six months ago however long it's been, but the site has come a long way since then. And what I especially like is it's daunting to come up with your own strategy, portfolio, symphony, whatever. The fact that they have so many pre-built that you can basically like a menu, see what you like. I'm a fan automated investing, systematic instead of just by the seed of your pants. Is it seat? Seed. Seed of your pants. That's a phrase. Seed? Yes. Seed? Not seed of your pants, no. It's seed with a day. Seat of your pants. That's a weird. We'll unpack that later. I love it. I think that's what I'm trying to say. I love it. And the best thing I think right now is you can kind of test some of these things

in the midst of a bare market and see, like, how bad the pain is. Because a lot of times you do a back test and you look at a bear market and you go, that strategy lost 30%. But look at the gains since then. You're doing amazing, like now you can see how are these things doing when they're really in it. So you can look at these strategies with these amazing returns, these amazing sharp ratios. And oh, by the way, it's down 40% now. Whatever it is, this is like a real-time test of these strategies. All right. So with that, here is our conversation with Ben Rollett from Composer. If you want to learn more, go to Composer.compoiser. We're joined today by Ben Roller. Ben is the CEO of Composer. Is it Composer Trade or Composer? Just Composer.

All right. Ben's the CEO of Just Composer. Ben, thank you so much for coming on today. Thanks for having me. We first learned about your company, maybe through Mike Winter, actually. And we were immediately intrigued by the idea of no code portfolio management, basically rules-based strategies for dummies. And so I guess a good place to start is just brief background. Like, where did this idea come from? Was it a light bulb moment? Was it something was not doing it in terms of investing? Like, where did it come from?

I find that most of the best things in my life have come serendipitously, at least for me, like I'm not smart enough to like sit at a whiteboard and just come up with a great idea from pure cogitation and it just appears or like a top-down market analysis or whatever. I've tried that. It never works for me. I don't think it actually works for anyone. If you look at the history of most great companies or interesting ideas or innovations, they kind of build iteratively bottom up and they kind of start as hacks.

That was the case for composer. So the backstory here is I was previously an exec at a sort of late stage real estate tech startup, as I guess how I would describe it. And I left that company. And when I left, I had this interim period where I finally had time to figure out what to do with some of my liquid savings. And I've been interested in trading investing since I was a teenager. And I worked as a data scientist for about a decade.

So kind of like had these intersecting interests in investing and also data science and statistics. And I just assume that there was going to be a good opportunity, good options off the shelf for retail investors. And I was just really disappointed, frankly, in what I found. It just nothing could do what I wanted to do. What did you want to do? I wanted to just implement basically some of the papers I read. Like, I wanted to implement, like, a poor man's version of Ray Dalio's, like, risk parity stuff and some things like that. I knew, essentially, like, I think the original motivating thing is I wanted to use leverage, but intelligently.

And so I read some papers, too, on sort of like the mathematics of leverage and all of this. And I was like, okay. And it kind of took me down a rabbit hole. I also had read some papers on risk parity and sort of the impetus behind that. And some literature on kind of like, basically, I just wanted a bunch of uncorrelated return streams, which is like a thing. theme I come back to a lot. Were you always a quant when it came to investing? Or was this something that you made like a huge mistake day trading and then decided to make it into the more automatic sale investing? Yeah. So I did not start out in quant investing. My first investing

was like picking stocks because I'm just old enough that the first money I ever invested, you had to like call someone and place trades for like $20 plus commission. And I remember reading books, the Peter Lynch books and stuff like that. And I started out like a lot of people like just picking stocks. But I think I had enough of a track record to know that I was not good at picking stocks. I don't think most people are. Welcome to the club. Yeah, I just couldn't do it. Finally, like I had enough evidence just to be like, okay, I am not going to beat the market long run. My ideas are usually wrong. So that's when I became interested. Like, is there a more systematic way to do this that has a stronger theoretical justification.

When was this? This would have been just about three years ago. Composer wasn't a company or anything at this time. I spent a while essentially like I started hacky around an R in Python and creating automated trading scripts and basically screwing around creating my own automated training programs. Had no intention of commercializing anything. This was just for my own use.

That's when like I went down this rabbit hole. So what was the impetus for you turning to? into something that other people could actually use. I was spending all this time working on this stuff, like working on these automated trading scripts. And I started to write about what I was doing for fun. Frankly, it was just a fun project. It was a nice distraction and it was useful.

And I started to share what I was doing with my friends and family because they asked like, okay, you seem pretty captured by whatever you're working on. What are you working on? I said, oh, I'm just working on this stuff. Where I said that there was an actual commercial opportunity is that a majority of the people I share what I was working on. I said, well, can I invest in it? I was like, really? And they were like, really interested. I was like, yeah. I was like, well, there's both a technical and illegal barrier for you to invest in what I'm working on.

First off, I'm not an RIA. I don't really want to deal with a regulatory overhead. And second, technically, like creating a bunch of separately managed accounts that I trained. Like, it's a lot of work. When I was about to start working again, I was like, I don't have time to manage this for you. So what I did instead is I created a Slack channel, like a Slack group. And I put the people who were interested in the Slack group. and I started just like printing trades that would show what I was doing. So they could just fall along. I was like, I'll do this, but like buyer beware, not investment advice.

I'm just showing you what I'm doing kind of thing. And when I realized there was like really an opportunity is that when my little Slackbot that was printing these trades would break, people would get mad at me, like say, Ben, fix this. And I'd be like, I don't do this for a living. Like this is, you know, no warranty. Come on. And they would be like, can you quit your stupid job and just work on this full time? Like, this is an opportunity.

Like, you want this, which means other people want it. that's really how it started. You're like, all right, this is getting traction. People seem to be really into it. I'm going to build a piece of software where the average investor like me, who wants to be a little bit more sophisticated, can build strategies, whether it's systematic, quantitative, whatever, just simple, complex, instead, everything in between. Where did you start?

Because you have to, like, plug into, like, custodians and learn about, like, back office. So I'm sure there was like a lot of dead ends that you hit. Oh, yeah. I mean, I had to learn all of the back end plumbing and all of the details from scratch. The answer is when I really got serious about this and sort of formed the founding team here, is we spent a lot of time in customer discovery because in research, nothing's 100% new as one of my mind. No idea is totally new. There's like versions, the classic founder, hubris, is to say, oh, we know, no competitors.

There's nothing like this. never true for anything. That wasn't true for Google. It wasn't true for Facebook. And it's not true for composer. There are past attempts at this kind of thing and they generally didn't work. And the reason they didn't work is because the user experience challenge of building this is harder than even the technical or legal or any of those challenges. So like the real hardest challenge that we started with was like, okay, unless this is usable, it's not going to work. People will just like prefer to code actually because the only thing harder than trying to program is using like a confusing editor.

It's probably helpful to kind of explain some of the options because it's essentially, if I had to explain it, because Michael and I have been playing around on Composer for a while now, it's almost like an if-then framework, but you can also, I guess there's probably two camps to put it in. There's one where you can do trading strategies that might be a little more higher turnover, higher leverage, higher juice kind of things. Then you also have your longer-term sort of asset allocation that is more of like a rebalance kind of thing.

So maybe you could just distill down some sense. of concepts for people, like what are some of the options you have in terms of creating strategies? Because I've created a few on here before, and it is very easy and intuitive to do, but I think there's so many options for people. It's interesting to hear like some of the biggest ones that people use. That actually like helps to explain how we're different than I think past attempts. A lot of past attempts, I feel like they're all based around like scalping or like day trading a single ticker at a time. So like overlay a bunch of like indicators and like complicated logic and trade something back and forth. First off, that's very hard to actually do well.

Average retail person is not going to make money just trading a single ticker over and over. Whereas what we're doing is actually helping you to construct intelligent systematic trading strategies that can actually make you money over the long run. So to give you some concrete examples, some of the general buckets or styles of strategies, one is momentum. There's no good way that I found off the shelf to do just a momentum strategy, which is to say, okay, you have this universe of assets you're looking at and you rank them by, say, their 200-day cumulative return. and you want to select the top two or three or four of those, and that's your momentum portfolio. Like these momentum ETFs and all the stuff, that's what they do. It's really simple to understand.

It's actually pretty hard to implement for a retail person. Generally, you'd have to be a coder to do that. So one bucket is you can do momentum strategies. Another one is what I call like tactical or paired switching. There's different names for it. But the idea being that there's some condition. And you can also kind of put course. satellite into this category. So this idea of you have some condition and when that condition is

triggered, you actually swap out part of the portfolio. So you actually have like a risk on and a risk off branch and you're actually tactically changing your allocation based on some condition in the market, but doing it systematically rather than by the seat of your pants. So that's one broad bucket. And then another one would be like risk paired. So you're taking a group of assets and you're waiting them in an inverse proportion to their risk, to their volatility. So those are all three things that I just described, each of those, as you know, there's billions and billions of dollars of assets under management in just each of those three categories of strategies. And yet there's no easy way to design and deploy those things as a retail investor and Tocomposer. So you said, like,

one of the challenges is user interface. When I first got a composer, you and I spoke a few times because I knew what I was trying to do, but I found it a little bit challenging to implement. So talk about some of the challenges because this stuff, even if it's like something as simple as when stock, whatever, like if this and that, like simple type of stuff, just to like implement that where you're not just dealing with inbound calls today, how do you do this, how do you do that? That sounds like it was probably the biggest challenge. Yeah, the user experience making it usable is by far the biggest challenge while maintaining flexibility because usually you have a tradeoff. usually you're trading off one for the other. So if something's usable, it means it's not very flexible. There are tools, like the robot advisors.

I'll be the first to say that if you really don't need much flexibility, some of these robo advisors are decent. It'll kind of like rebalance and you have a few different portfolies you can choose from. It's pretty usable. It's just not flexible enough. So I looked at the robo advisors that I weren't flexible enough. Now you look at other things like actually a full turn complete programming language is extremely flexible, but it's a huge pain in the ass to maintain everything.

That's like the other extreme. So managing that trade-off, I think, is the biggest challenge. We did just hundreds and hundreds of hours of customer discovery, watching people, prototyping, mocking up different things. We have an unusually large U.X and front-end team for a company at our scale, because we just knew that that was always going to be the single biggest challenge to getting adoption. That's where the real innovation is. It's really looking at it as almost like a cognitive science challenge.

It's like someone has something in their head that they want to do. How do you lower the barrier from taking that idea in their head and implement? And I think that's the challenge of all these no-code tools, too. They all struggle with this. Any big surprises that you and your team have seen from some of the strategies that people on the platform have created where you go, I never even thought people were going to go down this route and I look what they're doing and this is crazy. Is there anything like that that you're seeing? Oh, yeah.

I mean, the really cool thing is we have a community Slack. The people in that are creating things that I could never have thought of. There's some really interesting, really smart people in that group creating things that we never would have thought of. So absolutely. And some of them are really funny, too. It's always funny when they have like a sense of humor. So, all right, I'm in the app, the website, whatever. You make it really easy for people.

You've got these feature strategies. You've got the community developed ones. You've got composers picks. And you break down very nicely. You've got all the data. You've got the fact sheet. You show like the how it works, what you call symphonies. And even though you've done all of this beautifully, it is kind of a lot when somebody's

never seen anything like this. So if somebody is new to the site, where do they begin? How does it work from the user's experience? So this is something that we're, first off, always trying to improve. One thing we do is, especially above a certain sort of available to invest, so people who have X amount of money, we do live onboardings. So we have a great team that helps with that. But usually what will happen is people will start by investing in one of those existing symphonies.

They'll say, okay, what do you recommend? This is also foreshadowing for something we're working on, which is what we're calling, it's going to be like our own flagship fund, that demo is the power of composer so that when you get this sort of analysis paralysis, it's like, okay, well, you can just start with this one symphony, this one strategy, and that will give you a feel. But anyways, the way most people start is they'll invest in a couple

symphonies that are pre-built, and that's how they sort of get their bearings. And then they start to modify them and play with them. Instead of starting totally from scratch, I agree, like starting totally from scratch, like I remember when I was trying to use Figma, like I'm not a designer, so for me, Figma was very overwhelming. So what I did is I watched demo videos of people, building existing things or I played with templates of existing things and then just like modified small pieces because like I'm not skilled enough to use Figma to like build a website

from scratch. I'm on a designer. So I really took inspiration from that. I think one of the reasons that I've always been attracted to automated strategies just because it takes your emotions out of the equation. I would rather not be making decisions in the heat of the battle. And there was that great Joel Greenblatt book about the magic formula of investing and he did two things. And I think he said in the second round of his book that he created this and he'd give off like 25 or 50 names for people from his magic formula and say hey pick these names and just buy them and a lot of people tell them well this is great the formula is great you made it really simple but i just want someone to do this for me So maybe you can talk about the evolution of composer because I think when Michael and I first started talking to you, it was just you could follow these and kind of implement it yourself. And now you actually have the ability to invest on composer and put your money there. So talk about that evolution and how that changes the psychology part of it because I think that's a big thing for a lot of people is just having this automated system, but also having it do it for you.

When we interview people and ask them, what's one of the biggest benefits, the number one that comes up is automation and saving time. A lot of these people, they're less gated. by money than time. Time is their limiting factor. And obviously, we cater to a slightly more sophisticated audience, but that doesn't mean that they want to sit around looking at charts and like terminals all day. They want their time back. That's a huge part of our value prop. And yeah, as you mentioned, the other part is just sort of avoiding the behavioral biases. And I've experienced that firsthand. Like, I've experienced that pain firsthand where I have the counterfactual, whereas, like, if I had just stayed the course on my actual system, I would have avoided

this big boss that I locked in because it's really tough. It's usually not the intellectual part. That's the hardest. It really is the psychological and behavioral part. And it's like the classic stat. The Magellan Fund, best performing fund, like the average investor in a Magellan lost money because they would buy and sell it the worst times. So it's not enough just to have a good strategy. You have to tie yourself to the mass kind of thing. So one of the big things that we did is made sure that this is an end-to-end integrated product. So we actually have like a white label brokerage, you can fund an account, and all the trading is automated. And without that, it's very hard to stay the course. And I know that from my own experience. Let's say that you find

the strategy that you like. And again, you guys have done a beautiful job with the symphonies in terms of somebody clicks in. They see exactly what they're invested in. They could even edit it. It looks like, I mean, you guys like, kudos to you, you've come a long way in a short period of time. This is very easy on the eyes. But the question is, if somebody's like, all right, you know what, I want to invest in this. Where do they begin? Do you integrate with all custodians? And are like, are you guys registered as an RAA to implement these trades?

What sort of paperwork do people need to sign? Talk about the onboarding process from the user experience. The very original vision was that we were going to like integrate with all of these third party brokerages. And I've seen other apps do that. What we learned that I think most people learn the hard way is that's a recipe for a really bad user experience. When you have to like connect to a third party account and you don't control the end-to-end

experience. It's just not good. A lot of things can go wrong. The connection to that API can break, yada, yada. So we're actually end-to-end integrated, which means that, A, we're an RIA. So that helps with the experience. Like, we're allowed to actually make investment recommendations. Second, we've actually white-labeled as a broker. So we are UKYC throughout. You actually fund a composer account. We're not actually doing the clearing of cost of yourselves, of course. We have a third party we work with. But from the user's perspective, they are opening and funding and doing KIC and the wire and everything within Composer. And it takes like 60 seconds to get through KYC. There's an account approval process, but getting set up is really fast. So you're not like

opening different accounts and third parties and linking them Composer. Like that's a really crappy user experience. We avoid that by having everything integrated end to end. It's actually a composer account that you're creating. Exactly. You're actually wiring money to a composer account and funding it. That just gives us way more control. It allows us to also do things like send you trade reports and tax documents and all of that under one place and report on the performance, all of that. It's all done. When you were first starting out, did you ever run into anything where Michael and I have done our fair share of back tests back of the day, not to brag, but sometimes you do a back test and you realize, wait a minute, this back test looks amazing

and the equity line looks awesome and the drawdowns. And then you realize, okay, but you couldn't actually done this in reality because it's buying microcap stocks. There's something wrong with it. Every time you sell in February 2020, you do great. Right. Exactly. So did you run in any challenges when you were first building the whole system of trying to make it so these back tests are more realistic than what it would look like if someone just created the God's greatest back test? I mean, back testing is always, always going to be overfit to some degree. I think there's no way to fully 100% get around that. There are some tips and tricks. which I can share, that there are things you can do to try to test the degree of overfitting,

but we always warn people in all of our materials, everything, like, hey, you cannot extrapolate from a back test that this is how you're going to perform going forward. I mean, the whole industry is sort of, I hope people, it's something that's very hard to drill home. Some things that we do that make us a little better, well, first off, a lot of tools they use like monthly data, which is just way too coarse. We use daily data, which just gives you a lot more granularity. So that's already unique for a retail product. The second thing we do is we actually include a slippage model, which is customizable.

So you can actually say, hey, I want to simulate if I lose X amount for trade. And we actually tell you the turnover. We're not incentivized like some other people to make people over trade or turn their accounts. If anything, the opposite, we want people to do well. So I'm unaware of any other retail product that actually shows you your turnover, how much we estimate you'll lose for slippage. So just by putting transaction costs front and center, I think we're giving people more visibility. and at least adding that,

does it totally overcome the statistical issues around, like, overfitting? No, I mean, there's no way to fully overcome that. I've even read the Prado's book where he talks about like purged, commentatorial, cross-validation, yada, yada. Most results you read in papers, they don't actually generalize well.

So, I mean, like, that's a broader academic problem that's still unsolved. I think the key is Kyle, who writes for this is amazing. He wrote a piece on this, which is like, it's still better to back test

than not backtest at all. You still got a, better sense of what's going on. It's still better than the alternative, which is just flying by the city of your pants. You get some sense of the statistical progress. Crappy systematic is better than guessing. Yeah, with the alternative. Yeah, you take it with a huge grain of salt. There are things you can do. One of the things I like to do is you deliberately vary parameters, like the input parameters a little. And if it's really unstable, so if like changing a look back window by a few days, completely throws off your result, then you know

that what you had was just, it's too sensitive. Like, if it's not sensitive to those conditions, So there's things like that. You can also have holdout samples. So you say, okay, I'm going to like optimize on this set of data. And then I'm going to time split and have this section of time that I'm going to use as a holdout. And then I'm going to see if it actually holds out on that. You can do that. There's all kinds of little techniques that you can do that's borrowed from statistics that quants do.

But again, everything ends up. I learned this. I used to work on machine learning. Nothing when you put it in production actually performs as well as it did in your simulations. So what is the business model? You said that you're not incentivized to get people to trade. How do you guys get paid? Yeah.

So we're flipping on monetization shortly, which is to say that it's almost like a newsletter subscription product. So we charging $30 a month. Oh, interesting. Okay. Yeah. It's a subscription model. A cool thing there is you're not penalized for doing better.

You put in more AUM, you're not paying more. It's not an AUM model. That makes sense. It's a flat subscription model. So you just pay that $30 a month. If you put in enough money, you have to think about it from our perspective. There's no like, it doesn't cost us more to manage more money. You guys know how this.

That's the great thing about this industry is it's very scalable. Yeah, software. If anything, frankly, it's better when people put in more money for us. They're less likely to have issues. They tend to be better customers. So we don't want to penalize people for getting rich, right? I assume you all really sort of track and follow the different symphonies that people are making on the website. Is it just all inflation in bare market symphonies right now that are going in, new ones?

I mean, it has to be, right? That's some of it. But it's actually pretty diverse. The really cool thing is, like, this is not the norm in retail. We haven't seen anywhere near the level of churn or decline in assets under management that you would see in other retail products. Your typical customer is actually relatively flat. I wouldn't say people are crushing it right now.

Hey, Ben, can you make me a symphony of non-profitable tech names? Of non-profitable tech names? I could. Absolutely. So we've spoken about prices and if-then rules that are primarily momentum trend-based. Is there any fundamental components that are either available or on the horizon? There's some basic ones in there right now, in the screener. This is the difficulty of being constrained with all the things you want to do.

One thing that, like, everybody requests that we want to build that is just really difficult, but we will eventually ship, but we want to do it right. Like our whole thing is we're never going to compromise our quality bar. I'd rather have a pared down feature set and have less features, but have it be really stable and high quality, which is what any of our competitors or copycats kind of haven't gotten the memo is they just try to ship a lot of stuff and it breaks and it's crappy. We're never going to compromise our quality larve for the things we should. But anyways, yes, what we would love is what I would love, what everybody wants and everybody

asked for is like a dynamic screener, like a dynamic fundamental screener, which actually says like at this point in time, simulate if you had only held this set of companies that had like this price to free cash flow and had this book value and this debt to equity ratio and simulate that over time. The difficulty there is getting that data is a lot harder than. just price time series data, getting that clean so that you can actually simulate it over time. That's a multi-million dollar project for most people historically. There are hedge funds that have that. It's not even public, but they spent millions of dollars doing that. Just getting

like ticker changes, name changes over time, corporate actions over time, getting that clean. It's called a securities master so that you can actually simulate these types of things over history is like so much work. Getting clean historical data for fundamental data is a lot of work. That makes sense. If someone comes to composer and signs up and they are a little bit overwhelmed and they want to talk to someone and they say, this is a strategy I want to implement. I need some help. Is there any way for them to talk to anyone? How does that work if someone wants to get some help from your team? We really try to pride ourselves on having really solid customer success team, which is really basically one person who probably deserves a raise

because he's incredible. But yeah, jokes aside, we have an amazing customer success team. We try to respond quickly. I wanted to implement Meb Faber's trend following system. Michael, the one we talked out in the past, he came out like 2007, and he used five different asset classes. And your team helped me build. I think it's on one of the pages now, but it's Meb's trend following. Yeah, we have that. Is it GTA5 or GTA 13? Yeah, we have those. So, Ben, right now it seems like the focus, I don't want to say historically because it's a brand new product, but up to date has been the retail investor. Any desire to work with advisors one day? What would that look like? Oh, absolutely. In fact, that's like the temptation. We're already getting so much organic pull from advisors. I would say we have half a dozen advisors reach out to us like every week asking if we can set them up with composer. That's coming. It's not going to come that soon, though. I'll be honest. And the reason why we had to make a conscious decision here is this is not a good time in history to like have distracted focus. I feel like in the go-go years at the height of the bubble, people were doing like 30 different things.

at the same time. They had all these different business lines. They were serving different customers. I think that's unbelievably dangerous right now. Now is a time to be very focused and just nail one thing. So we are really hyper focused on just nailing B2C, doing an amazing job at nailing that core experience. And it's also more scalable. If you focus on B2C and you have B2C C grade UX, you can always move up market. The danger I feel like of going B2B too early is then you just end up with like one, someone had a tweet thread about this recently, but like it's dangerous to have one mega customer, a couple mega customers that you just like optimize for that need because you can lose the scalability and sort of you're not as productize that. What we're trying

to do is has anything really scalable and product ties first, and then we can always move up market. What are advisors looking for if they come to? Are they looking for tactical strategies? Are they saying we have asset allocation models that we want you to track for us? The biggest value for them that they want and why this is tricky, but it's definitely doable, is automation. They have ideas for rules-based strategies. They want to fully automate end-to-end. And right now, what most of them are doing is they have an expensive team, a back office team that actually goes into Excel, manually enters trades based on some model. And it's just the human cost is incredibly high. There are fat finger errors. There are all kinds of issues. Reporting is a mess.

They oftentimes have like six or seven different tools. And they're like manually parsing data from six different tools to make one master report, and it's just a disaster. I want to say, some of these are big names, too. Some of these are, they have real budgets. Just, I think software at the B2B level has historically been very poor quality. Maybe there's some good stuff now, but I guess like a lot of it's this legacy, like it's just like tech debt that they've accumulated from old legacy systems. It's a real mess.

Ben, what did we not get to that you wanted listeners to know about composer? Well, that's a good one. I'm trying to think the thing that I'm most excited about. Yeah, what he most excited about, I guess, said differently. I think kind of like the impetus, like, why would people need this versus like, I think a question that comes up a lot. And I actually like one of the questions here is sort of like, what is the goal with systematic strategies?

Like, what's the Holy Grail kind of thing? Like, what are people looking for? I would say that the whole reason for this existing is so that people can build a portfolio of uncorrelated strategies. That's the holy grail. And connected to that, it's like a lot of the question I get is like, why systematic investing? Because guessing is hard. Guessing is hard.

And I think the other question get those, like, why not just an ETF? Why would you do this versus just investing in an index fund? I think it's a really interesting question. The answer to that is that first, what I find fascinating is that index funds are systematic investing. What a lot of people don't realize is that there's no such thing. is truly passive investing. What is passive investing? And sort of rethinking that because like truly passive investing means maybe you buy 10 stocks and you hold them forever. Like is that truly passive investing? Because the S&P 500 is not truly passive. There's turnover in the S&P 500. And second,

the S&P 500 is rules based. The S&P 500, not only that, it was a quantitative. It was only doable if you read the history of index funds. It was the only way to create an ETF. It was because of advances in computing and in automation. There's a lot that goes into creating an ETF. Well, one of the things we've learned in the last few years, too, is that even if people have that index portfolio in their 401k, whatever, they still have an itch that they want to scratch and try something else and be a little more speculative. And I think this is a way that if you wanted, you can obviously do a total asset allocation strategy on Composer, but you could also do more of a speculative strategy where you're doing something tactical that scratches

that it. But you do it in an intelligent way where you're not potentially blowing yourself up, and just trying to guess what's going to happen next. Yeah, some of it is just like, okay, I have this like risky sleeve of my portfolio and I want to invest in this risky sleeve. And I think that's a really interesting case. So if you have like a barbell portfolio, okay, this is my risky money, but I want to be smart. I want to take smart risks. I think that's a big case.

But the other thing is like, there's thousands and thousands of ETFs now. Just saying investing in an ETF is not really a satisfying answer. That's why people still work with advisors. It's like which ETFs, in what proportion, when? How do you answer those questions? And so the way I think about Composer, it's a layer of abstraction above ETFs, which is really missing. It's like, okay, if you think of an ETF as a wrapper around a bunch of holdings, right, you can buy this one thing that just represents all these underlying holdings. Well, Composer is like, now it's saying, okay, what about the logic on top of that?

So it also allows you to neatly encapsulate a set of rules or logic that operates on those ETFs. It's just a one level above, but it's still very important. And that's where, like, I want the symphony to be like the next really powerful abstraction like ETF was. I want people to be able to buy and sell these neatly encapsulated strategies. That's the big audacious thing. So, Ben, if people want to build their opus, where do we send them? Composer.composer.composer dot trade.

All right, Ben, thank you so much for coming on. We really appreciate the time. Thank you. Thanks to Ben. Again, composer.trade to learn more, build your own symphonies, check out ones from everyone else. And then send us an email, Animal Spiritspot at gmail.com.