The Wolf Of All Streets - Dan Gunsberg, CEO of HXRO Exchange on Trading Psychology, Going Broke and Coming Back, the Importance of Ringing the Cash Register as a Trader, Being a Crypto Entrepreneur, Creating an Exchange and More

Episode Date: May 7, 2020

Dan Gunsberg, CEO of HXRO exchange and Scott Melker discuss whether golf is a sport or a drinking game, being a crypto entrepreneur through a bear market, developing and launching a novel exchange concept, why Bitcoin was never going to 0, removing emotions from trading, why traders need to ring the cash register, why many exchanges are not available in the US, how large funds trade, finding an edge as a crypto trader, going broke trading and bouncing back, the music industry and more. One of the best quotes from the episode when asked about his worst trading moments. Dan said he felt like "laying on my couch with my thumb in my mouth." --- ROUNDLYX RoundlyX allows you to dollar-cost-average into crypto with our spare change "Roundup" investing tool, manage multiple crypto exchange accounts in one dashboard and access curated digital asset content and services. Visit RoundlyX and use promo code "WOLF" to learn more about accumulating your favorite digital assets when making everyday purchases and earn $4 in free Bitcoin. --- VOYAGER This episode is brought to you by Voyager, your new favorite crypto broker. Trade crypto fast and commission-free the easy way. Earn up to 6% interest on top coins with no lockups and no limits. Download the Voyager app and use code “SCOTT25” to get $25 in free Bitcoin when you create your account --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe.This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

What's up, everybody? This is your host, Scott Melker, and you're listening to the Wolf of All Streets podcast. Every week, I'm talking to your favorite personalities from the worlds of Bitcoin, finance, trading, art, music, sports, politics, and basically anyone else with an interesting story to tell. So sit down, strap in, and get ready, because we're going deep. Let's go. I'd like to thank my sponsors, Round the X and Voyager, for making today's episode possible. We'll hear much more about them later on in the episode. This podcast is powered by BlockWorks Group, the only events and podcast production company I trust. For access to the premier digital asset conferences and in-depth podcast content, visit them at blockworksgroup.io.

I promise you will not be disappointed. Today's guest is a man of many talents who has chosen to bring his myriad skills to the world of crypto. He's the ex-Wall Street trading, globetrotting, competitive golfing, hockey playing founder and CEO of Hero Exchange. That's hero with an X, by the way. I'm thrilled to welcome Dan Gunsberg, a.k.a. Gunny, to the show. How are you feeling today, Dan? Feeling great, Scott. Could not be more excited to be here with you today. Well, thank you for taking the time to join us and share

some stories. Of course. So I know that you're a competitive golfer, and this is a debate that I've had many times. So I wanted to ask you, do you consider golf a sport or is it just a really fun drinking game? I think it depends on the context. I would say that, you know, prior to a couple years ago, I treated it much more as a sport, but it's become much more of an enjoyable drinking game for me now. Yeah, but even outside of your own experience, like in the context of sports, do you believe that it's a sport if a terribly out of shape human being can play it as a professional. I think the kind of the benchmark for athletic ability in professional golf has definitely changed. But there's no doubt that its roots were deeply embedded in cigarette smoking, alcohol drinking, debauchery. Yeah, I like to think about John Daly as my perfect example of why it's more like bowling than it is like football or basketball. But either way, I know that you've played hockey your whole life, so nobody can question your

athleticism on this one. Thank you. I appreciate that. Let's talk about your path to becoming a crypto entrepreneur. Can you tell us a bit about how you got here? Yeah, sure. So my background has been in derivatives trading. I started working on the floor of the Chicago Board of Trade when I was 18 years old during my summers home from college. And eventually, when I finished school, I started trading full time. And that ultimately led me off the trading floor to trading electronically. And I really started trading in yield curve products. So I

was trading a lot of spread relationships between like two year, five year, 10 year, 30 year treasury bonds. And then during the internet boom, I moved to start trading equities. And I did that until 2002, and then went back to trading short-term interest rates again, which ultimately led me to a proprietary trading firm in Chicago that was founded by two good friends of mine. And I came in there in 2011. And we really scaled that company up really successfully. And in 2015, actually in 2013, I hired a trader in New York that had told me about cryptocurrency. And I came back to Chicago, where our headquarters was. And I talked with a guy in my firm who turns out was actually spending his weekends arbitraging Bitcoin on various exchanges and just kind of doing it quietly and was very successful at it. And he ended up, I ended up spending a few days

with him and he was literally like going in deep whiteboarding everything about crypto to me. And obviously sent me down a very deep wormhole. And I started looking at the market and it actually ended up being right around the time that Mt. Gox happened. And obviously the market went through a, you know, a pretty deep crypto winter and I didn't end up doing anything in it. And more or less kind of forgot about it, just would occasionally look at it and, but just kind of went on with, you know, with staying active in legacy markets. And then in around like June, July of 2015, I started to look at the market again and noticed it was kind of forming some type of a bottom potentially.

And I kind of looked at it and said, well, you know, you have some good, good optionality here. Because if I make a small investment into it, and then start trading around my position, then the worst that happens, it goes to zero. And I've lost what amounted to be a small investment. And so I ended up buying my first few Bitcoins in late 2015. And then started to trade in some other coins. And the rest is history. By 2017, I ended up leaving the firm that I was at and going into crypto full-time. That was in late 2017.

And then in 2018, I hooked up with my partner, Rob Levy, whose background was in derivatives trading as well. He came from, um, the options market-making world. And, uh, we started trading crypto together. And while we were sitting there trading, we, we, um, we came up with this idea and this really came out of kind of looking at like, looking at, um, you know know what was going on with bitmex and we were watching these like massive liquidations go off on a daily basis and just for sitting there kind of chuckling thinking like oh my god like the the retail kind of trading world is just getting rinsed left and

right on this and um we said you know we started to think about, like, what if we could create something that not necessarily, you know, not necessarily was the same thing as like a perp swap, but was something way easier to understand, simple to engage, a way for, you know, for traders to take a look at the market and take a view on the market in various timeframes that didn't really have all of the makings of a legacy double auction market, which is what everybody's kind of used to trading. And we came up with this concept, which ultimately became the core product of Hero, which is a paramutual digital derivative. And what we mean by that is the product itself is really boils down to a simple question of, you know, over a certain fixed timeframe, will the price of the underlier

so in this case, Bitcoin, be higher or lower? And just using a candle as reference point, will it be higher or lower from close to close? So close of the previous candle to the close of the next candle in various timeframes, will it be higher or lower? And we essentially created a product that distilled it down to that level of decision making and ended up building that product over 2018, launched it in 2019, and the rest is history. So you basically dumbed down trading for retail to make it more of a binary decision, a bet on whether things were going to be higher or lower a day later, four hours later, a week later, or whatever time frame you were on. Yeah, it's just, you know, just a simplified way to interact with the market.

You know, an alternative way to express a view to hedge risk to trade. And the one thing that we did differently, you know, we kind of looked at what was going on in the binary option market. And, you know, Rob and I also knew binary options in a different way, as a true exotic option that is traded often and heavily in the bank world and in the proprietary derivatives world as well, although it's generally done OTC. moved into, you know, there's companies went out and basically promoted it to retail audiences. And it ended up being very toxic, because, you know, they were doing things like the same company that was offering the binary option product was also the market maker, and they were also controlling the pricing index. So they created their own index. It wasn't independent. So we kind of took those elements, remove them from the equation. So all of our pricing is a hundred percent transparent and independent from

us. We don't control any of the index or any of the pricing. The, the platform is, is peer to peer. So there is no, you know, quote unquote market maker in there that you're trading against. And then we also applied what's called a paramutual payoff function. And what that means is that in our markets, when you take a position, whether it's, you know, whether you think the market's going to be higher or lower, you're essentially purchasing the position. So like paying a premium in that premium is whatever size position you want to take on. It's, it's, it's actually infinite in the, in the size that you can take on. So you take that position, all the positions, all the higher positions, lower positions, in our case, that's, you know, moon and rect, are pooled together in the contract. And let's say the contract is a one hour Bitcoin contract.

And so all of the positions are pooled together. And then at expiration, if it's higher, then everybody that had a position on moon would split the entirety of the pool pro rata based on your position size. Does that make sense? Yeah, it makes perfect sense. And it's funny you touched on obviously calling it moon and rec. So you've sort of capitalized on the memes of the space to make it more accessible. Again, I mean, I have to say every time I check the site, I feel like I'm at a rave or like on an amazing acid trip of some sort. So I'm assuming that that was deliberate that you actually made the site that way. And you've sort of, I mean, the feeling to me when I'm on there is that you've

somewhat gamified trading. You've sort of merged the worlds of gaming and crypto trading, which is interesting because obviously there's a major crossroads between those two worlds, I think, in the people who choose to interact in this market as well. Was that the intention? Yeah, that was the intent. And when we first created MoonRect, look, we knew it was some form of trading. We also understood that there was like, you know, a game element to it. And so we really weren't sure where it fell. So, you know, our thought was, look, we're really kind of intersecting these two verticals,

one being trading digital assets and one being, you know, taking elements from, from games, from games, and essentially putting out what becomes, what becomes a form of a financial market game. And when you think about, you know, when you really think about trading, like in the banking world or the institutional world, and they're doing things like exotic options,

it really is a game that two traders are constructing to decide the outcome of an event. And so we kind of took that and turned it into something that was more approachable. Our thinking was that it could be a good, useful on-ramp and turned it into something that was more approachable. Our thinking was that it could be a good useful on-ramp for a much wider audience if it's approached with game layers over it and not just cut and dry, a cut and dry exchange.

You know, we kind of like to say it's like softening some of the sharp corners that, you know, that you may engage when you come to a more vanilla exchange platform. And we put it out to the market. And a lot of the elements in terms of the design were, yes, to, you know, to bring some game elements and make it feel a little more approachable and easier to understand. And we launched the product in 2019, in January 2019, had some really good platform feedback and market validation and have been growing it ever since. That's awesome. So you touched on, obviously, the timing. I think a lot of things, there was this boom in 2017 in crypto, and then a lot of people started building things only to sort of find themselves in of building a product first. And, you know, the market for ICOs was really starting to die out at the time. We obviously do have a token on the platform, but we focused our efforts really on the fundraising front. We sold equity, and then on the platform development front,

we really just focused on building the best platform that we could and didn't really, you know, kind of take the path that a lot of people in 2017 were, you know, did or were able to. And so I think now that's, you know, it really benefited us now, because it put us in a position to, to really grow long term, because, you know, the fact that we did get through kind of the early stages of our MVP and work out a lot of the kinks that needed to be worked out in the platform is really setting us on a trajectory for growth, you know, now and looking forward. Obviously, a lot of pundits and certainly people from the outside world claim that crypto is going to zero, Bitcoin was worthless.

Did you ever have your doubts that you were building something in a effectively dead market? You know, absolutely not. You know, my partner and I kind of took this idea on just from trading and just understanding the nature of volatility and kind of the nature of Bitcoin itself and, you know, a peak to valley move of 80, 90 percent in anything in crypto and especially, you know, in just in space when the space was kind of reeling and in a place of kind of, you know, the majority of the people in the space were kind of somewhat in despair. And, you know, we felt that our platform and kind of the approach we're taking was giving them kind of a refreshed look at the market. And, you know, we really kind of never had a doubt in our mind that over time that, you know, Bitcoin and just crypto would kind of get its legs back under it and push forward. It's just kind of part of the cycle that we're all,

you know, deeply entrenched in. I mean, do you think that that's a result of all of your experience trading that you were sort of able to remove the emotion and not go that route of extreme fear and, you know, selling off and thinking the market was dead? Because I personally believe that, you know, emotion is the biggest impediment to trading. So I'm assuming that your experience, especially in something like the internet boom and bust may have lined you up to not react to something like that in this space. Yeah, absolutely. It helped a ton. And, and look, you know, every trader that's been around long enough has gone through his, his ups and his downs. And, you know, you kind of need to cut the tails out and focus on focus on the emotions that are in the middle and um you know we it really helped

especially you know i would really say that it helped um going through things like uh like the internet boom bust and kind of seeing what was happening in the tech cycles then um it it's not that it numbed me to it like we're you all you always get you always have that uncertainty in the back of your head and i i think good trading is kind of, on one hand, you have to be super confident, but on the other hand, you always want to be cautious. And so, you know, I'd be lying if I said that there weren't moments where we were kind of having, oh, shit moments. And, you you know especially because the the environment for um raising capital at the time um definitely had changed and so you know i think we you know we had ultimately ended up making a good play with the timing of launching the platform when we did and

you know kind of coming out of of this fair market has really helped. You know, we brought on some amazing investment, strategic investment partners and, you know, kind of holding to create Hero, specifically on BitMEX and watching the absolute mass rinsing of retail traders over and over again, getting destroyed using 100x leverage. What are your thoughts on unregulated exchanges in this space, some that have suboptimal ordering options, no OCOs, no trailing stops, things like that, the structure of the BitMEX liquidation fund, and I think retail doesn't understand that even just getting liquidated versus putting your stop a dollar above it can save you 30%, 40% on your position. I mean, how do you feel that these exchanges are helping or hurting the space and what needs to be improved? So I think that they're ultimately helping the space.

I think that it's incredibly early. Like we're still so early in crypto just as a whole, whether it's derivatives exchanges or other projects that are building out technologies that will be meaningful at some point in the future. And I think what they are doing is setting groundwork for changing how the world really interacts ultimately with financial markets. And I don't want to comment on... We take what we think is a more conservative approach

on the regulatory front. We are pursuing licensing. And, you know, we do completely prohibit and geofence out US from accessing the platform and in other restricted jurisdictions. But, you know, I ultimately think there's going to be a happy medium. Like there's no doubt that platforms like BitMEX... Arthur was incredibly smart for the way that he ultimately set it up. He was operating in a very

nascent and gray area at the time that nobody could understand and was able to really capitalize on it. I definitely think there's going to be an intersection of regulation, global harmonization around regulation, and the need for platforms that are exchanges needing to do some level of regulation. And at the end of the day, a regulator's job is really to protect the, you know, the common person from being defrauded or just unfair practices. Or often from themselves. Yeah, and often from themselves, correct. And so I think that there's going to be some happy medium. As far as things like the insurance fund, look, you know, I operated in a legacy derivatives environment. And I've seen practices from, you know, from futures clearing merchants that were, you know, were disgusting. I've seen owners of FCMs tell their risk managers

to let a trader continue to go and then have him sign his house over as collateral. Right. So, on one hand, I understand that the exchange needs to protect itself. I think the insurance fund, I prefer it relative to socialized losses. And I think that it was, I think it's a pretty genius innovation, to be honest. And if you're going to really have

a platform where you're not, where you're going to have quick access to a product like a perp swap, or other products that are available on platforms like BitMEX, you're going to need to have some level of, the exchange is going to need to have some level of cushion to make sure that it can comfortably support the volume and the risk that's being taken. Otherwise, they're risking going out of business essentially on one road position. And so I don't think that, I think that the innovation in the technology is definitely innovative. Will it be the end all be all? I don't know.

I'm sure there's going to be more innovation around it in the future. And it'll probably end up being something that will be manageable, but also will allow a much wider audience to more easily access, you know, things like perp swaps on BitMEX and on other exchanges. And, you know, we have a unique proposition in that we don't really require things like an insurance fund just because of the nature of our platform. And we don't use leverage and all of the, you know, the contracts are pooled. So when contracts are pooled. So you know exactly what's available in each contract in terms of what a position can gain

or lose. We don't really confront those same issues, but ultimately, I think things like that are important innovations to the overall growth of the derivative space in crypto. You talked about not being available in the United States. I think that a lot of the listeners probably hear constantly that they're being locked out of ICOs, not being able to trade on exchanges. At the most simple level, maybe you're a good person to explain to them, why is your product not available in the United States? Why are similar products not available here? it's a function that we will never be able to operate here, but it is considerably cost prohibitive for a platform like ours right now to engage a US-based user base. There's just too many

questions around where regulators are going to land, whether it's the CFTC or the SEC. There are some, but, you know, we're taking an approach that what they have offered in terms of prescriptive rules are enough to keep us out of the U.S. for now in the format that we deliver our current products in. So it's not even something that you think most exchanges are even pursuing at this time because the barriers to entry or to the expenses associated with attempting it would just be too great? I think too great. The regulatory burden is too great. And it would dilute a lot of the innovation that I think a lot of platforms are working on right now. But look at our hope. My partner and I spend a ton of time with our lawyers, a ton. And they have their ear to the ground on everything happening across the regulatory landscape. And there's no doubt that, you know, something will come out that I would guess within the next 12 to 18 months, that would be more prescriptive. But,

you know, even though we, we stay out of the, out of the US, we, you know, in other, there's other jurisdictions that are restricted as well. You know, we do take a pretty sound approach in terms of our KYC and just other elements that we know are just more global risks that, you know, to deliver, ultimately deliver a good platform. You know, when we have a, we want to take a long ball approach to what we're doing. We have, you know, we have plans for, for growth over, over coming years. And, and doing that, like, you know, I think it would be foolish to, to completely disregard any regulatory, you know, any concept of, of what might be now or in the future in terms of regulation. And that's, you know, it's kind of the approach that we're taking.

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Yes, you heard that correctly, 6%. And there are no limits or lockups, which means your funds always stay liquid. Find out why so many people are making the switch to Voyager. Visit investvoyager.com or search for Voyager on the iTunes or Google Play Store and get $25 in free Bitcoin when you use the promo code SCOTT25. That's investvoyager.com, promo code SCOTT25 for $25 in free Bitcoin and start trading today. So having worked in the proprietary trading space forever, can you maybe offer some insight about how bigger firms trade and what they're focusing on? I think that obviously, most people in crypto are relatively new retail traders and don't have any sort of fundamental

understanding of what it's like at a big shop and, you know, what the goals are there and that they're not just looking at charts and picking up and down and hoping for the best like most retail traders. So can you talk about that a bit? No, I think one thing when I, you know, when I got into crypto, one thing that I really noticed collectively, and this may be coming from, you know, just really following crypto Twitter and just kind of some of the other social media outlets, is that so many people focus on price, on, you know, up, down and the price of Bitcoin or, you know, shit coins or whatever alts they're trading. And what you, you know, what you find is that you really go into a kind of a proprietary trading setting, they end up doing more, at least in my experience, I've seen much more along the lines of like relationship trading or exchange arbitrage or even the proprietary firms that are doing more market making, part of their P&L is really driven by the volume that

they're trading on these platforms, on the different exchanges. And that volume obviously is a key metric for revenue of any exchange platform. And so providing deep liquidity for proper risk transfer is a requirement on any exchange. So what I've really seen is that while a lot of the trade is really done through kind of more relative value type of trading, more spreading, meaning like you're trading asset A against asset B, or arbitraging

different derivatives against each other, there's also this element of can I borrow on certain positions that I have at very cheap rates? Or can I negotiate a deal based on my volume with various exchanges that will lower my net trading costs to a point where I can make tighter spreads and capture more of the bid-ask edge. And in doing that, a lot of firms will try to build their businesses around that as kind of their residual income. And then when there are distortions in the market or there's significant opportunities, they'll allocate a certain amount of those assets to those, you know, kind of to those more Delta one positions. And, and then from there, you know, that can kind of make or break that way, you kind of know, like you're running a, you're running a business, like it's any other business. And you're just being paid for the transfer of risk onto your

books. And then you having the ability to hedge that risk or lay that risk off or carry it to some extent, and then applying some of those revenues to more concentrated positions or kind of leaning the firm's books in a way that is expressing more of a view. And then that kind of can make or break whether the firm will have an exceptional year or a normal year. But it's definitely, you know, it's a departure coming from that world

to watching, you know, what kind of happens in crypto where everybody is very, very dialed in on the front month or on spot price and very technically driven markets. I mean, I guess they need something to hang their hat on, right? But when there's no fundamentals, how are you going to determine your entries and exits? Are there more buyers than sellers is kind of what it comes down to at any given point. Yeah. And look, it works.

There's more than enough people, including yourself, that have been incredibly successful at it. And I definitely am seeing more and more of kind of where my background has been in proprietary trading come to the surface in the crypto space. And you are seeing a lot more pairs and a lot more kind of duration trading, especially with the advent of things like futures and futures curves and basis trading and other ways to trade relative, which ultimately over time is going to, I think it's going to more mirror, it's going to create a volatility environment that more maybe mirrors what equity markets are, where you're going to have these longer periods of kind of tamed volatility and then these jumps of like really intense volatility. And then it'll kind of go back into a consolidation mode again. But, you know, as that comes on,

and as you kind of have more touch points in the market for market makers and for traders that are trading more on a relative basis, it allows people to create more and more liquidity, tighter and tighter spreads. And that, you know, I kind of think that is the evolution of creating a really deep market, which ultimately we're going to need to really bring much larger players into the space. Yeah, that's what will bring the institutional money. So at the very core, you really are looking to capitalize on inefficiencies to sort of find your edge. So if you were doing that in those much more difficult markets, I mean, coming into crypto for you must have felt like you were like dunking a tennis ball on an eight foot basket while everybody else was like, you know, shooting on a 20 foot

basket having that experience. I mean, what edge did you find you had in the market? And what inefficiencies did you see where you could capitalize, you know, as a retail trader coming in? I mean, I think some of the basic stuff that a lot of firms are doing, you know, just more cross exchange and, you know, the fragmentation of the price of Bitcoin just offered so much opportunity that, you know, that's definitely gotten more competitive now. But, you know, a few years ago that was was very available i mean at all-time high i remember literally price was 19k on some exchanges 16 on others and and anywhere in between yeah that was like um in like that december of 2017 yeah there was that i remember like coinbase was uh was 3 000 over basically the rest of the market. Maybe it was Coinbase or Bitfinex, one of them. Right. And then there was the Korean premium at

times that for months at a time in Korea, the price would be trading thousands of dollars over. So if obviously you had access to a Korean bank account in exchange, that was free money. Exactly. Exactly. And so people in firms and know, whether it's a trader or whether it's firms that had the ability to do that, there's you know, there's a lot to be capitalized on there. And, you know, look, I actually had experience in one of the things that really attracted me to to to trading crypto was I remember opening up some of the exchanges in 2013, 2014, 2015, and seeing the way that the order books were trading. And it reminded me so much of trading internet stocks. And when I traded internet stocks, I didn't trade relative value. I traded outright, just like everybody else. And So a lot of the opportunity came there for me. So I did trade, I did continue to trade a lot of outright. And then the,

you know, the other thing is really building into a core position. And if you can build yourself into a core position, you can end up basically gamma trading around your position. So basically trading long and short around your existing position. Yeah, to lower your cost basis. Lower your cost basis at alpha. And it's a much more comfortable way to trade if you have been able to accumulate a good position that you're on sides with. If you're not on sides with it, it's equally as important to trade it to continue to lower your cost basis.

Of course. But being on sides with it definitely helps. I mean, since you've been trading for over two decades, have you ever gone completely broke or made some epic mistake that maybe people could learn from? Yeah, I've had a couple of moments where I you know, I like to say that I ended up laying on my couch with my thumb in my mouth. And I think two specifically, one, when I first started trading and I just got off the trading floor, there was a trading platform that was internal to the Chicago Board of Trade called

Project A. And I had really just started trading and I had kind of built an account up for myself. And I actually waited tables in college to fund this account. So it was hard-earned money. And I ended up, I ended up putting a position on the way that that market traded was pro rata, meaning that the out the fill algorithm, if you were if there was 1000 contracts on the bid, and you didn't have time priority, meaning that you weren't the first one to make that market, get in line. You have Yeah, but it, it allocated to you based on your size. So if a hundred lot came in and there was a thousand on the bid and everybody was a hundred, you know, had a hundred lots sitting there, then it would allocate a 10, 10, 10, 10, 10. And, um, so what you would do is you would load, people would really load up their bids,

like, you know, their, their markets to try to get a portion of an incoming order. Well, this is very, very, I mean,

this is, we're talking about 21 years ago now. So the advent of electronic trading, as we know it today, and somebody, a bank came in the market and sold a, I want to say they sold 15,000, um, 30 year treasury notes on a, on a fat finger. Oh, fun. And yeah. And, and I, it was overnight and I was sitting there and I was kind of half

asleep and, um, I ended up about $300,000 offsides in a matter of like 15 seconds. And that was more than I had in my trading account. And nothing like a margin call to wake you up in the middle of the night. Yeah. And I, you know, I traded my way out of it and basically got it back to a scratch within like 36 hours. And that actually, you know, that taught me a really good lesson. And really from there, I ended up becoming more of a, you know, I kind of looked at trading as like, I'd look at my friends who were like going through medical school or becoming doctors and, or sorry, becoming lawyers and the hours that they were putting in. And I kind of started to look at trading and say,

if you really treat this as a business, and you can grind out X amount of money every day on average, and obviously you're going to have your down days. Like, frame that relative to somebody who's working 100 hours a week, trying to make their way up a law firm. And, you know, that guy is making four or $500 an hour. It's a great living, obviously. And so you can kind of back into what your goals are. And just how do I work my way up to getting to those numbers. It's a great way to really build a base for yourself. And that's kind of the approach that I took trading ever since. And even when I got into the internet stocks, I really traded, like I traded Cisco more than I traded anything else. And the reason I did was that

although it moved heavily, but it was very thick. So there was a lot of bid, a lot of offer on the market and you can trade really good size. And so I, I really started scalping that in a way that, you know, everybody else wanted to be on high flyers. I wanted to trade, you know, pets.com that would go to $1,200 and then down to 300 in like a day. Right. And, um, you know, ever since I went through that first experience that, that was, um, you know, I kind of stayed away from those things and really approached it more as a grind. And then, um, you know, I got, I got dinged up pretty bad off a nine 11 as well. And, um, that was kind of a, another learning experience for me. And, and, you know, it took me, it took, definitely took me a few months to get back on my feet and, and to get my legs under me and really start

getting back to trading how I knew to trade. And, you know, ever since then, I've just really been able to kind of grind and, and for the most part, stay out of trouble. And, and, you know, I guess it's the same things that, you know, you probably tell your audience on a regular basis is there's just kind of these baseline things with trading, like bringing the cash register is so damn important. Take profit. Take profit. Even if like, I know I'm trading well, if I can't, if I'm constantly a little bit frustrated while I'm in the moment because I'm getting out a little

bit too early or I'm even getting in maybe a little bit too late, but I'm getting enough meat off the bone that I'm more consistently profitable. And then as I build that up and I'm measuring the amount of risks that I'm taking, my position sizing is going up and up, which is then turning into better and better P&Ls. And, you know, and that kind of has worked well for me. And look at some other people have, you know, have risk tolerances that are way larger and some are way tighter. And it just kind of depends where you fall on the spectrum. But I can say that ringing the cash register is most important to me than anything when you're really starting to trade more professionally. That's such an important point, though, because I think that especially in this market, a lot of people never really, you know, they feel like maybe they're taking profit to Bitcoin from an altcoin, but

they're very, very hesitant to actually cash out the fiat because either they have their sort of preconceived notion that the dollar is going to die, which you hear in this whole market, and that Bitcoin is the future, or just because they're afraid that they might miss the next Bitcoin move coming out because Bitcoin is sort of this intermediary currency between the two. But it's interesting that you learned the lesson. I mean, you can't live as a trader unless you can pay your bills with actual money. Right. And you have to remember that the like the market's on a continuum. It's always there 24, 7, 365. So, you know, you find the things that work for you. You take your opportunities. And then once in a while, you fall into things that you get a real you end up with a really deep edge on or you timed it incredibly well, which is not always – it doesn't happen often.

But when it happens, that's where your base hit and your double turn into a triple or home run. Right. And that grand slam pays for 10 strikeouts. Pays for 10 strikeouts. And more. And more. And then psychologically, it really works wonders for how you're thinking about everything. And it just makes your whole life better as a whole. Yeah. I just want to go back and touch on something that you said. So you were trading, obviously, that first bad experience was in the late 90s.

But then you said you also got somewhat destroyed at September 11th, 9-11. So I mean, that's a 12-year gap. And there was still some huge mistake that you made. And I think that touches on no matter how long you're in this market, or any market, there's always going to be those bad moments. I mean, with as much as you learned, you've still sort of had that. I also had a huge, I mean, I went effectively broke in 2012 on a single trade after all of my experience. So, I mean, how does that really happen? What can people learn from that? I think that for me, it was going from being a trader and what that really

meant to being a trader professionally and being an investor. And because I was having success as a trader, I think it gave me a little more ego than I needed in terms of thinking that I was having success as a trader. I think it, it gave me a little more ego than I needed in terms of thinking that I was, um, not necessarily smarter than the market, but could look at things differently than how I looked at it to earn a living as a trader. All of a sudden you were much more handsome and women were calling you and all the things that never normally happen. But we, yeah. And, you know, I got on the wrong side of, of ultimately 9-11. And, and then, you know, what was even worse was that, and this kind of goes back to ringing the cash register is that after it,

you know, the, the daily P& L that, that I was capable of earning, um, it no longer had as much meaning to it because all I can think about was what I had lost. Right. And that ultimately, you know, after a couple of months, I, I backed away for a little bit. I mean, there's almost no worse, uh, mentality for a trader than trying to recoup losses. Yeah. And my partner and I, we talked even through 2018 and watching Bitcoin trade lower and shorts pounding it, we just could see people literally driving their Lambo off the cliff. And, you know, that, that money that was handed to people in 2017, it once, you know, in a couple cycles that you're ever going to get opportunities like that. And, you know, I think it probably turned a lot of people into a lot of people came

out of it and continue to be amazing traders. There's no doubt. And I think some people kind of wrote it up, wrote it down and, you know, ended up in a worse, you know, probably wish that 2017 never happened.

And some people took it and, you know, and kept living high on the hog during that period, you know, in 2018 and now are, you know, trying to figure out how to make their way forward again. And it's just the nature of a market. And when you have, 2018 and now are trying to figure out how to make their way forward again.

It's just the nature of a market. And when you have those kind of once in a, or maybe a couple in a lifetime opportunities, it's so important to understand what they are during that period. And to ring the cash register. And to ring the cash register as much as you can. Yeah. And I think those couple of things could carry people who are in trading professionally, or even retail guys that are doing it full time, a long, long way. Yeah. I mean, I think it's important to mention something I've always believed. Like if you have an investment or a trade or something and it becomes life changing

money, you should basically ignore the future and not worry about what's going to happen and just take your profit and run. Exactly. It's handing it to you. So there's no need to be, you know, it's not a game of hitting bullseyes over and over again. So. Yeah. I mean, I wonder how many paper millionaires there were in Bitcoin in 2017. Yeah. There's no doubt an absurd amount and probably many who, you know, didn't understand the responsibility of what that really meant. And when you actually ring it and it ends up in your bank account, it has, it takes on a very different meaning. But, but this market's amazing. And, you know, I mean,

I saw a tweet you put out earlier basically saying what a great time to be alive. And I think that kind of, I think everybody that's still here feels that way. And I constantly think about how early we really are. And, you know, when in, even like, think about in 10, 15 years from now, it'll still kind of be early relative to what you're seeing in, you know, in legacy markets and, and, you know, kind of how technology has evolved. So I, I'm super excited for, for, you know, what's going on. And I'd love to see the innovation that's happening. And there's so many smart, intelligent people in this space.

And I'm really proud of what we've built and kind of where we're going with our platform. And we definitely see it as being another touch point for traders, both experienced and new um in the space uh and just being another touch point for people to you know to to trade their view on you know on these markets and other markets that we're going to present um onto the platform in the future so uh being an entrepreneur in this market, it's a 24-7 market, the market your work in now, hopefully, for a greater future for yourself. And my day is really spent. I mean, I've definitely spent a lot of time with our lawyers and accountants. There's no doubt about that. But it's going from that to working with the development team to

marketing to product developments and it's you know we're just running a full scope business and it it removes a lot of you know some of the elements of of kind of the crypto aspects of it because underneath it it really is a it's a growing company. Right. So it's, you know, whatever is laying on top of it. Um, it's, it's just a growing company in a very nascent new space. So, um, you know, it definitely comes with its challenges, you know, whether it's, um, you know, managing, uh, uh, you know, financial side or, um, making decisions on products and or, you know, the regulatory side. We've been, look, I ultimately feel we've been very fortunate. You know, we recently brought on some incredible strategic investment partners and, you know, they've definitely

provided a ton of value in terms of, um, bolstering growth on a, on a forward looking basis. And, um, you know, I, I enjoy it. I, I, I'm in love with what I do and, um, I, I love our product and I love the space and, you know, and I'm here to support it for, you know, hopefully for the rest of my career. But what does like an average Sunday look like for you when, you know, everybody else is somewhere watching football or hanging out? I mean, same way it looks that on Tuesday or Wednesday.

That's pretty much it. But, yeah, it really is, you know, spending a lot of time just interacting with my team. And, you know, obviously, because it is global, doing a lot of phone calls in the middle of the night. And, you know, we have to constantly monitor the diagnostics and health of the platform and, you know, making sure that from a security standpoint, it's running on point and that the, you know, the platform is delivering an optimal experience for our user base and so it you know like I said that the day is kind of blend together and the the months go by super fast and then you know the time that I'm not working which is not often I'm you know probably more 80% present otherwise is yeah I try to do a couple of things for myself, whether it's going to do yoga or spending time with my family.

But we're really committed over the next few years to make this platform what we feel confident that it will be. And, you know, kind of, it may come at the price of some other things in our lives, but it really, you know, should offer a good end game for, you know, for us for the future. So kind of what I'm hoping is that ultimately we continue to build it up. And the seven day a week, I don't mind it because the work is, is ultimately enjoyable. And we, you know, we, we're hoping and we're confident that it's going to get to a point where the, the machine kind of starts to run itself and grows much bigger than, than me and Rob. And, and, you know,

we're definitely on the trajectory towards that happening. And at that point, you know, we're definitely on the trajectory towards that happening. And at that point, you know, we can kind of change the scope of, of how, how we interact with it on a day to day basis. Are there any key pieces of advice that you would give to someone who wanted to be an entrepreneur in general, or in this space? I mean, from your experience over the past few years? Yeah, you know, I would say that, you know, you really focus on your product and make sure that you're coming to market with something that, you know, that at least on a test basis has got validation before you really start scaling it. I think it works out much better from a fiscal standpoint. And you constantly want to be testing out what the market feels about your product and making sure that you do have fit. And I would try to do as much as you can with as little as you can early on and, you know, and really take your time on, you know,

procuring your brand and making sure that the messaging is right to, you know, to the rest of the world. And I think those are some basic things that you can do to really improve your chances of succeeding. But there are so many unknowns that cross your path along the way. And there's no doubt you'll have so many oh shit moments. But as you scale, although those increase, the instances of that may increase, but they become less impactful to the overall health of the organization. So you definitely have to get through that first couple of years. And I think there's just hire people that you like working with and that are really good at what they do and smart and set yourself up for success. And I think you can

definitely go a long way. Now, people don't know that you and I actually met randomly at a wedding and had no idea that we were both into crypto. We were sitting across the table from each other and didn't actually find that out until years later. Our mutual friend told me to ask you if you got into crypto because you were influenced by games like Tuzbeer. And I have no idea what that means. Oh, my God. Tuzbeer is a game that was played by, I think it's a Middle Eastern card game. He told me Chaldean.

Yeah, by Iraqi. Chaldeans are iraqi uh christians i think and um our where where we grew up had a uh you know a large chaldean population they love to play this card game um non-stop and so uh yeah our mutual friend, to this day, and it's been 30 years. Um, we literally, every time we talk that Tuz beer comes up and it's, uh, we get, we get a big kick out of it. Yeah. He told me to basically just talk to you about night at the Roxbury or like how to swear in Chaldean.

But, uh, I want to say that for, say that for offline, but perhaps. So I know we only got a couple more minutes, but we talked recently and you told me that you actually owned a piece of an indie record label when you were younger that your brother ran. Obviously, music is close to my heart and that's a business I know probably even better than trading in crypto. So could you just give me the quick hits on that? Yeah, quick hits is, you know, my brother founded a record label in the early 2000s that I ended up being the investor behind. And he was remarkably talented at spotting talent early, which for an indie label is important. And that ultimately turned into a distribution company and, you know, they had some mild success.

And it was at a time where, and, you know, this is just an ode to the advancement of technology. You know, I think our second or third year in is when Napster really started to pick up. So the margins that a label could make on things like CDs, which at the time, which was, you know, that was kind of the primary medium, diminished. And so we ended up getting out of the business, but that was an amazing experience like that. You know, it had all those bands come through, you know,

in Chicago and stay at my house. And, you know, they, they got, they had a couple of bands that were on their label that, that ended up relatively pretty big. You know, nobody that went to like super kind of major stardom.

But, you know, I think you'll understand this is that there's so many musicians out there you never even heard of that are, you know, making fortunes just on, you know, on the checks that they're receiving from you know a music producer for a movie you know found one of their tracks and put it in or a TV commercial like we have we have one we had one musician who ended up with like the main jingle for a big regional bank in the South. Huge. Yeah.

The guy was making, you know, a ridiculous amount of money every year off of it. And, you know, it was, was living on ramen prior. And so that,

that is a, I mean, I'd like to hear your, you know, kind of your crazy stories from that, but you want to talk about a grinding business. It makes. Yeah. I mean, I have a million of them, obviously, but I think it kind of touches on people don't realize that, you know, how many records you sell is somewhat

irrelevant to your overall business model, which is why labels went to sort of the 360 deals with artists over the years, especially in the digital era, kind of what you touched on, where they get a piece of the merchandising, a piece of the touring, a piece of all those placements and stuff. Because as a record label, just having a piece of record sales became, like you said, I mean, it was an obsolete business model. So like you said, if you place a song in a commercial or a movie, that's where you make your money. If you can be a touring artist and never even have anyone listen to your CDs, that's where you can make your money out there selling merch. I mean, I know artists who have never had a hit,

never had a gold album, who are making multiple seven figures a year because they've built a huge touring base and they can go out and get 10 grand a show and do that 180, 200 days a year, even though that's a brutal lifestyle. Brutal lifestyle, it's no doubt. And you're right.

I mean, that's the same thing that we saw is that these bands early on, I mean, they have to hit that road. And, you know, a lot of when you're in that indie business, it's, you know, filling up a bar or a small venue with three to 500 people is a home run. It's a huge paycheck if you're getting a big chunk of that ticket sales or all of it, because sometimes, you know, obviously a venue will give you basically the full door if you take on all the risk with a bar guarantee or something like that. Yeah, exactly. I think that, you know, at the end of the day, everybody sees the upside of it. You don't really see the inner workings of it. And it kind of goes for every business that's out there. And it's, it's, I mean, you can tell, you know, you probably can tell everybody better than anybody is it's a grind, just like being a plumber, just like being a lawyer, just like being the doctor. And if you have the gift and you're able to do that and deliver that to an audience and make it captive,

then, you know, that's, that's what you were put on this earth to do. Yeah. And I don't think people realize how difficult it is to show up every single day, play the same songs, have the same fake smile, have the same conversation with every promoter, shake hands with every single fan who wants to talk to you. But you know, it's funny being in this space, and certainly you see it that that kind of carries over because you know, whether it be on Twitter or in real life, I mean, you know, the more you interact with individual people, the more opportunities tend to present themselves. You never know who that one person who you're kind of blowing off could have been in your life. Yeah, exactly. It's definitely one of the beauties of crypto.

It's a blessing and a curse, I guess, is the accessibility to, you know, to kind of people that are either CEOs of companies, or, you know, people like yourself that are, you know, well known in the space. And it, we really try to, you know, approach everybody equally and, and, and kind of put our best foot forward with everybody. And sometimes it, you know, it kicks you in the nuts pretty hard and sometimes it, um, it works out incredibly well. So all comes with a risk, I guess. Yeah. I would say over a 30 year career doing the kind of things we've done, the kicks in the nuts have been, uh, have been plenty, unfortunately, but it's a couple of good, uh, good runs though. And, um,

and you can forget it all. Exactly. It makes it all, it makes it all worth it at the end of the day. So I really want to thank you for taking the time to be on the podcast is a great chat. And I think that, uh, I definitely learned a lot and hopefully other people will. So, uh, look forward to, uh, catching up with you in the future and having you, having you back and, uh, seeing what hero has for us, uh, moving forward. I would love that, Scott. And thank you very much. And looking forward to watching you grow. You've been incredibly impressive with what you're doing in the space. And you definitely can see that your user base is really captivated by the value that you're providing.

And I'm excited to see where this podcast goes. Appreciate it, man. Thank you very much. And we'll play a game of TUSB here next time we see each other. You're on, man. Let's go. Hey, everyone. Thanks for listening.

New episodes go live every Tuesday at 7 a.m. Eastern Standard Time. Links to our Apple and Spotify channels are in the show notes. You can also follow me on Twitter at Scott Melker to continue the conversation. See you next week.