Kalshi’s Tarek Mansour vs. the Federal Government

The thing that was unique about us is we never pivoted. It was always Kalshi. I mean, Kalshi is everything in Arabic. Like, we always wanted to build the everything exchange, the exchange for all these different assets. And we didn’t build Kalshi to build a company. We built a company to build Kalshi. It’s a bit different.

I see.

We were dragged by the idea. I wasn’t the type that wanted to be an entrepreneur. Like, I think if you reroll the dice multiple times, I’d probably just be a trader or risk manager. Like, I would not be an entrepreneur.

Got it.

But the idea was so, like, glaring in front of us that we just had to do it. Like, we felt that we had to do it. And so the whole point of doing this whole thing is the idea.

Hey, everybody. Today we have Tarek on from Kalshi. He is a gem. This is a really good episode. They walked through the desert for many, many years in this company, and went sideways. Then they made a very risky bet to sue the federal government and won, and this thing has ripped ever since. It’s growing, you know, similar rates to OpenAI and Anthropic, but a few years behind. I think you’re gonna like it. I’ll be back at the end for my takeaways.

We just met for the first time a couple of weeks ago at David Solomon’s house.

Yeah.

And it was a CEO dinner, and you had some very unusual ideas about CEOing. This is why I wanted to have you on the pod.

Yeah.

And so I want to get into those. Let’s just start with your co-founder. It sounded like it’s a semi-co-CEO relationship. How do you two run the company? How do you split it up?

Yeah, it’s interesting. You know, over the years we’ve constantly been asked this question, and we never really had a very clean answer to this. And we always thought it was sort of like a weakness. And our perspective on that has changed, I mean, dramatically. I actually think whatever model works for us works for us. Great. You know, and if you figure that out, then, you know …

Yeah.

And the best way to describe it is I think, like, I operate at the very high-level strategy, make sure that we’re going in the right direction. Where’s the world heading? Where are our rights to win? And just thinking, a lot of thinking continuously. And then I’m very, very low in the details.

Okay, you’re high and low.

Yeah, extremely high.

Head in the sky, feet in the ground.

Yeah.

Okay.

But very, very low. I’m talking like …

Coding.

Yeah, and more specifically like marketing and the copy and the details and everything around how we’re marketing something.

Okay, yeah.

Yeah, how we’re talking about the product, all these little things that the end consumer, whether it’s someone looking at a billboard or someone who’s, like, in the product, is gonna experience. Like what are they gonna feel? And everything else that is actually running the company is Luana.

Okay.

That’s basically, you know, I think one of the best ways to describe it. And then I do the external stuff, the regulatory, the policy, you know, the fundraising, all the other external aspects of the job that tie to marketing and sales. But the day-to-day running of the company, like, making sure that the company is actually run, is Luana.

How do you disagree? You must disagree about stuff.

We disagree a lot, like all the time.

So how’s that play out?

I actually think we kind of disagree by design. Like, we have this thing, this dynamic over time, it’s become a thing where we essentially will always take the opposite side of the argument.

Are you a contrarian?

I’m the guy in the room that will be sort of the negative. Everybody’s pumped about a plan. I’m like, “Oh, here’s how it’s going to fail and all the issues I have.”

Okay.

But we tend to sort of just disagree with each other often. And I think also, again, it’s people who are like, oh, you know how you disagree, and continuous disagreement is an anti-pattern. But for us, it ended up being a pattern because we’re this very complicated company that has this constant, continuous, delicate balancing between how much risk to take on the regulatory front and innovation regulatory. And you have to always balance those two things out. And you see it now in AI and safety and innovation, all of that.

And that sort of debate is a continuous force to drive us to the middle. We end up getting not always the right answer, but we’re not too far from the right answer. And we never oscillate between the two extremes. And I think that’s one of the powers of having two equally powerful—like, two co-founders in an organization. Because if you’re the only one, like, anyone that reports to you or whatever, like anyone that you hire that is not a founder, it’s inevitable that they won’t always tell you the truth. It’s inevitable. Like, no matter what culture you build, et cetera, there’s different incentive structure than someone who’s a founder that owns as much equity as you, et cetera. And so you can stray, right? And here it’s very hard for either of us to stray.

So I talked to Luana to prepare for the interview. It sounds like you’re kind of the more conservative of the two.

Yeah.

And maybe you’re on the regulatory side and she’s on the innovation side. Is that the way it sort of plays out?

More often than not, yeah.

Okay.

Luana is very faith-based, like, optimist. Sometimes I would say, like, super irrationally optimistic. Like, she sometimes doesn’t really do the math on how something is gonna work out, on why it’s gonna work out. And that’s continuously happened at Kalshi. And I mean, for years it frustrated me. I was like, this really doesn’t make any sense.

And I’m the other side. I’m a risk manager, and I have a paranoid demeanor, which is also usually an anti-pattern for a founder. I think about risk and expected values, and I think probabilistically about the world and here’s all the things that could go wrong. And I think that tension has led to all the decisions that we’ve made over time. But it’s interesting because, you know, Luana’s approach to things—and I now believe that given enough time horizon, it’s gonna end up being true no matter how irrational it sounds.

Okay.

It’s kind of amazing. But I think my side is the thing that for a company that has to get regulatory right, you have to make sure that, like, you’re doing things the right way. Like, I’m kind of that forcing function in the company. And again, so I think we land somewhere in the middle where we’ve managed to achieve the results we’ve achieved. I’m actually very bad at a lot of things. It’s actually shocking. Like, if you see my day-to-day …

Because you’re obsessive. You’re very good at a couple things.

Exactly, exactly.

A lot of founders are obsessive.

Yeah, but I’m kind of a procrastinator. I’m so disorganized. Like, people that work around me, you ask them, it’s just like such a shit show. But Luana orchestrates everything.

She’s organized.

Very. But I’m like the opposite of what you imagine for an operator. But I can get so obsessed with certain things that I want to get good at that I can get good at pretty fast, and I like to get good. So I don’t think I’m a good marketer. I just, like, obsess about it for long enough that I …

That’s how it worked with my co-founder. He’s very obsessive, and goes very deep down a rabbit hole, and you can’t get him out of that rabbit hole. You’ve had a long, strange trip growing up in Beirut.

Yeah.

Certainly an unusual childhood. Is the risk aversion sort of rooted in growing up in such an unusual place?

For sure. I mean, most things that end up sticking with you are really how you grew up. This definitely applies here. I mean, so I grew up with a single mom, and I grew up in Lebanon. And Lebanon, you know, it’s not a—I feel like oftentimes the headlines make it sound like a …

Sounds like a constant war zone if you read the New York Times .

Yeah, it’s not. It’s actually more of a volatile country.

Yeah.

Like, the word is “volatility.” It’s a lot of ups, a lot of downs. You can have a lot of fun, great life, and then all of a sudden you’re like, you know, running from a—so the mix of those two—my mom was paranoid. She was always afraid we would sort of take a lot of issues that would be thrown at us to the extreme and we would carry them as, like—and I was really young and I’m the eldest child—we’re two brothers. And that doesn’t leave you. So my brain is wired to think about all the ways that something is gonna, you know, go wrong, right? Like, if I get on a hot air balloon, I can list you immediately …

On a flight?

Yeah, on a flight, too. I can list you immediately all the 20 ways this thing is gonna go south, right?

Okay.

But it’s important for our company. We’re a company that has financial risk involved, regulatory. I mean, all these different things. But that has helped us over time really become very hyper-attuned to what exactly is our risk in a variety of different ways, and where we can take risk and where we can’t.

Okay. I’ve heard you on other pods bring your mom up. Can you just give us some more paragraphs on her?

Oh, it’s interesting.

Like, riff on your mom.

She’s very—I mean, she’s definitely a tiger mom, like, in that—you know, so tiger mom, very intense, like, very, very intense. My way or the highway.

You are too.

Yeah, I am very intense, too, yeah. But yeah, my way or the highway, like, completely uncompromising, completely. And then it was this sort of thing where, like—so what happened is I think she had to basically sacrifice a lot of her life because my dad left us at age six, and she had to sacrifice a lot of her career, everything she wanted to do to basically make sure that we’re okay. And she wanted us to have the best life we could and come back to America. So I was born in California, I went to Lebanon, and she wanted us to come back and get into a top school, et cetera.

And so what happened is I think a lot of her personal pride ended up being attributed to her kids. Like, my kids’ success are gonna be what I deliver in life. And so her bar was so high on us. Everything. Like, we would do a sport, like go play tennis or play soccer, and you have to win. And if you come silver, like, it’s bad. So that just creates a hypercompetitive nature. But also there’s this feeling of, like, there is always an answer. Like, you know, whenever we had a financial issue or, like—you know, you don’t give up. You bang your head against the wall. You go up, you go left, you go right, you go down. I mean, it doesn’t really matter. You’re gonna figure something out. All of that, I think, ends up now, like …

Ten years.

Decades later, right? Like, it’s all in me, and it matters because there’s this sort of higher gear sometimes that, like—so most people have this thing of, like, well, there’s certain things that are within my control and certain things are not. I don’t really believe in that dichotomy.

Okay.

I think it depends on the person. Like, some people can just make a significantly larger subset of the universe of things that are, like …

I feel like it can make things happen. Maybe irrational.

Yeah. You can make—you can bring more things into the control.

Yes.

It’s like some people just think like, okay, like I …

I can do it.

Yeah. And the scale of the problem could even become big. I mean, Elon has a little bit of it, right?

He has a lot.

Yeah. Like, I feel like Elon sometimes, and I’m not—you know, my sense is like, as long as it doesn’t break the laws of physics, like, we probably can make it happen. It’s in our control.

Yes.

Yeah.

We’re gonna get into more CEO stuff. We just heard Ken Griffin from Citadel speak at this conference we’re at, and he talked about picking best practices from different companies, and sort of assembling his CEO playbook from other people he learned from—Jack Welch, et cetera, et cetera. Do you look up to one CEO, are you following a playbook, or are you just I’m gonna make it up as I go?

I have a lot of I’m gonna make it up as I go.

Yeah.

So, you know, and I think this applies to Luana, too. Like, both of us, we’re probably very sort of entrepreneurially illiterate. Like, we haven’t read all the books, we haven’t watched all the podcasts.

You don’t live on Twitter.

I do Twitter a bunch just because a lot of our users are on Twitter, but not in the sort of here are the four steps to build a company sense.

Okay. You’re not in that ecosystem.

I look up to—like there’s a lot of aspects, a little bit like Ken honestly, like a lot of aspects of CEOs I look up to. Like, I think, the extreme boldness of Elon, his ability to attract talent is amazing. I think Tony Hsieh, I always go back to because I think his operational discipline and execution, I think is, I want to say is one of the best. His business is so hard.

So hard. So is yours, by the way.

Yeah, our business is hard, and marketplace and all these issues. But I think those are two names that consistently come to mind. But there’s everyone—like there’s so many people. I mean, the Carlsons have done such a great job at creating this sort of brand aura around their company to attract incredibly talented people to, you know, build something that just goes beyond what the company is actually building.

And so I observe a lot of different things and figure out, like, what I can take. But then after that, it’s continuous iteration. Like, what we do well, I think, is we just try and we try fast. And we’re continuously like, “Did this work? Didn’t work? Okay, change it fast.” Whether it’s a hire, whether it’s an approach to things, whether it’s my own voice, whatever it is, I think, we do this. And I think that’s the best way to find the right answer, because oftentimes these things are very like—I’m gonna say company dependent, but as I was saying that, it’s very CEO or founder dependent. Like, it’s to your image. It’s very hard, you know, to market even your product if it’s not coming truly from who you are, because the company is gonna be to your image no matter what you do.

And your headquarters are in New York. Do you think if you were based here, you would be more in the mold of every other company?

Probably. I also think it would’ve been harder because …

You would have been talked out of some of your crazy ideas.

Yeah, maybe to some extent. The harder piece I was thinking is just recruiting. I mean, one of the reasons we moved at the time—what I like about New York is for our company’s mission, which is, you know, figuring out how to build this idea of infinite market, the next generation exchange, like, fundamentally rebuilding Wall Street, like, this new Wall Street that is more global, more for the people, it has a stronger, let’s call it like a market fit with the talent in New York.

Yeah. Much better.

Much better. And then there I felt confident we could hire the top one percent of talent. Whereas here, maybe, but I don’t see it. It doesn’t feel like it burns as cleanly. I think here it’s really AI right now. And I think even if—I mean, we didn’t necessarily know that in 2020 but, like, even if it wasn’t AI, it was going to be something that is not finance.

You and Luana have, I think it’s 130 direct reports. Have I got that about right?

Yeah, pretty much. There’s some functions that we let them do what they do, but pretty much most of the company reports between the two of us.

Okay. That’s unusual.

Yeah, it’s pretty unusual.

Five years from now, are you—it’s unusual because it’s small and it’s unusual because there’s zero hierarchy, and it’s unusual because they report to both of you. How does it actually work? How is it not chaos?

It’s kind of chaotic.

Okay.

But I think you could build an organization that’s somewhat okay with that, because what you get out of chaos is continuous, constant adaptability. It’s very easy for our company to adapt. Very easy. I mean, Sam talked about pivoting, and “pivoting” feels like a bit of a strong word but, like, the point is you want to constantly reorient and reassemble around the biggest challenges or biggest opportunities for the company. And you want to be able to do that with no friction. That’s inherently chaotic. Like it’s a complex system.

Totally.

Like, it’s like organisms and cells are sort of moving around and, like, floating in the ether and then they—you know what I mean?

Yep.

And so, like, that’s it. Like, the world is an inherently chaotic system, you know what I mean? And so we’re trying to impose structure that is unnatural given how the world is moving. And in a world that’s accelerating over time, you kind of have to be more sensitive to the fact that it’s increasingly more chaotic. So your structure needs to be as adaptable as possible.

Okay, this is sort of the crux of the podcast, because the CEO playbook that I grew up with, like, handed down through the generations, I think is getting a big rethink. And, like, Brian Armstrong and Jack Dorsey are talking a lot about this new way to organize where it’s not a pyramid, it’s a circle. AI’s in the middle, you’re training the AI, all your systems are legible, your people are feeding the AI, and the AI makes more and more decisions. Org chart’s gone, compensation’s different, all the things are getting thrown out. Are you following along with any of that, or you’re just kind of making it up as you go?

Making it up as I go. I didn’t even know about that. I never heard about that. But, like, it’s interesting.

One of the things I’ve learned, by the way, about all this, I’ve interviewed all these CEOs, there’s no one way to do it.

Yeah.

You look at the way Jensen does it, it’s totally different than Elon. It’s totally different from …

Yeah, I was saying, imagine Jensen running Citadel.

Yeah, totally. [laughs]

That would be nuts. So I don’t know. I mean, I think that, like—or even funnier, like, imagine Ken getting dropped into OpenAI to run it. Like, it would be so crazy. But I don’t know. I’m actually curious to hear your thoughts. I mean, the world is more interconnected than ever, and I think just things are accelerating. Like the rate of learning, the rate of change is like, if it used to be—I mean, maybe you have to readjust fundamentally every three or four years, then every year. And honestly, I think you have to readjust fundamentally, what, every month or two months?

I kind of agree. I’m learning so much faster than I used to learn. I’m picking up skills so much faster than I used to learn. Yeah, the world has changed.

Like January to today, like, it’s so crazy. I mean, it’s hard for me to imagine making a certain set of decisions in January that truly applies still today.

Okay. So how do you plan?

Dynamically, right?

Okay. It’s the end of December. You got a board meeting. Alfred Lin’s on your board. What do you actually even present to the board?

Yeah, it’s kind of like hazy a bit. Like, the board used to be like, “Oh, it’s not structured enough.” But now I think they’re kind of used to it.

What is it?

It’s usually—so look, I—yeah, it’s a good question. I tend to not have too much structure. And one other thing actually at Kalshi, we’re not super metrics-y in general.

Okay. I thought you’d be the opposite.

No, we’re metrics-y, very hardcore on risk, like, how much margin we’re giving to customers, things that go directly into the product. But in terms of decision-making, we should be a little bit more, and we will probably get to there a little bit more over time. But it’s really more, like, what are the customers saying? What are the pockets of demand that basically the energy is about? And where can we basically be first or be most aggressive or have a right to win? That’s all the conversation where it’s at, right? And then there’s usually, like, one or two key challenges that tend to be the single most important challenges in the organizations.

Like what?

Yeah, let me give you the last sort of maybe 18 months. So off of the election, all the conversations were what are we gonna do about the election? How are you gonna cross-sell people? Are they gonna stick?

Yep.

And what they’re saying at the time is, like, well, let’s prove that there’s sort of this network effect engine. Now that we had a massive growth catalyst, that it is gonna create the chain reaction. Let’s figure out how to make sure that people are adopting other products and get going. And that worked. Like, we really created that network effect where we use that new demand to attract more liquidity, which boosted all the other markets. And then that helps us get demand at a lower cost. And then we basically compounded there.

Then after that, it was essentially like, okay, we need to prove our broker strategy is working. So we had the direct-to-consumer. That was going pretty well. We wanted to make this bet that becoming an infrastructure layer, like all traditional financial markets, that we enable a bunch of brokers to basically go and, like, could we prove that we can do both at once? And that one was going a little bit slow. So the next six months were, like, scaling that. We got a bunch of brokers, and that sort of really started working out. Then the next challenge was actually proving that we’re not too dependent on the brokers.

Okay. It worked too well.

They became 80 percent of our revenue.

Okay.

So all of a sudden it’s like, oh, amazing, the revenue ripped. But, like, now you’re super dependent on a bunch of your big broker partners. So what are you going to do now? It’s like, okay, now we have to go back to focus on the direct and really scale that now that we have an extremely liquid ecosystem, because the brokers brought more demand, more liquidity. The whole thing is flowing now. Now the brokers are, like, 10 percent of our volume.

Okay, all the way back to 10.

Yeah. And I want to talk a little bit about this adaptability thing, because all of these were very—I mean, we’re talking about, like, going from elections and sports, then we got into financials, then you went to a consumer business, then a B2B enterprise motion, and we went back. And we did all these in the span of, like, what, eight months, right? And then it was like a lot of the policy stuff. And we should talk about that a little bit. But, you know, you’re like exciting, exciting, exciting all the way till you get mainstream. And when you get mainstream, society all of a sudden is like, “Whoa, whoa, whoa, stop, stop right there. Let’s figure out what this is. We don’t understand it.” You know, now you have the grandmas and the moms …

I feel like that’s going on right now.

Yes, exactly. It’s been going on for six months. But in AI, you know, AI is battling with it. Like, Airbnb, Uber, all of them, at some point you get a reckoning. And now number one priority since January—and I think we’ve done a great job at sort of positioning ourselves as a safe, responsible actor. But …

Particularly right now after all the news about Polymarket recently.

Yeah. And we’ve done a really good job at always being kind of regulatory first, do the right thing.

Yeah.

But we had to kind of tell that story. And that’s also hard and comes with all these challenges. But I mean, think about that, right? Like, it’s completely different functions that, you know, even if I build the best consumer marketing company, how’s that gonna help me with the brokers? And if I build the best sales function, how’s it gonna help me—you know? And so it goes back to, I think, okay, how do we really solve these problems? Generally, there needs to be at least one founder in any of these big meaty problems that we need to get right. I really strongly—I affirmatively strongly believe in that.

And so is there one of you that’s the DRI on these big hairy issues?

Always.

Okay.

The responsibility—the person that is going to get grilled is one of Luana and I on these top issues, these things that we need to get right. And I cannot—and I may be wrong, and maybe over time as the company gets more mature, I may change. So maybe in a few years we should have another chat and see what I think. But in this growth phase and all of that, my analogy to this is a bit, and I think honestly this applies to any company at any scale. I really, really think so. It’s like you’re on this big ship, and you’re driving the ship as fast as you can, you’re trying to win this, but there’s always a hole in the ship. And that hole is leaking, and there’s water coming out of it. And I think there’s two types of organizations. One where the CEO or the founders are straight up staring at the hole all day, every day, which is brutal. It’s painful.

That was me.

Yeah, it’s you, right? I think you talked about that, you know?

That was me.

And the other type of organization that sort of either gives it to someone, and generally, what that someone is gonna do, I mean, it’s very painful. Why would they take through all that pain? I mean, you know how painful it is, right?

Yes.

It’s constant pain. It’s essentially like continuous torture, right?

Yeah.

So they add, like, a rug on top of the hole, you know?

[laughs]

And, like, we’re good, you know? Things are growing. But inevitably, that hole at some point is gonna start sinking the ship. Inevitably. And whether this is your Google and AI is coming after you, or, you know, you’re AI and 90 percent of America hates you, you know what I mean?

What’s your hole now? What hole have you got?

I think in January, what I would say our big hole was like, we need to differentiate ourselves with the unregulated stuff and the insider trading issue. Because you’ve always taken it seriously, but you know, you poll people and they had no idea. They have no idea of the difference between, like, the regulated onshore prediction markets like Kalshi and Robinhood and others, and some like Poly and others that are doing it offshore. And that was really bad for the industry.

So we had to clean up the industry’s reputation. And I would say we’ve made a significant amount of progress, but that hole is not fully covered yet. We still have work to do in terms of explaining that, look, the right solution to all these things is get it regulated, do it the right way, and there are people doing it the right way, and here’s how. Like with all things, there’s a right solution for AI, which is you don’t decelerate AI, you add the right guardrails. And I think figuring out what those guardrails are and figuring out how to communicate it effectively and figure out why they’re the right ones is the hole. And that’s where I spend pretty much 80 percent of my time in right now.

Okay. The hole’s in an interesting spot in your competitor has been called out by the Wall Street Journal for their marketing practices and Congress is taking them up on it. You’re used to all this stuff. Is this thing that’s happening to Polymarket at this moment good for you or bad for you?

I think it’s bad for us.

I think it is, too.

Yeah, for sure. Like, I think when you start competing, you realize competition is actually really never a real problem. I really think so. I mean, unless you’re in a small market, I guess maybe that’s a problem. But if you’re in a small market, then you figure out the next big market and figure out how to go take it and split it with the competition. It’s okay.

We used to always say at HubSpot—we competed with Salesforce.com, and every time Salesforce would move the ship a little bit, everybody in the company would be like, “We got to move the ship in the exact same direction.” And I would say, “Every time they zig, we gotta zag.”

Yeah, yeah. There’s always—I mean, but I just think—and maybe let me say it maybe a slightly more nuanced way. I don’t think competition is ever a true sort of company killer. It’s like if you’re in a big market, you’re going to have a big piece of the pie. And if you’re not, you should probably be in a—should be constantly iterating and shipping product and finding new untapped markets to basically go and win in. And I believe in abundance. It’s hard not to believe in abundance, right? Like, look at the last five years. It’s crazy.

And so you were well behind them, and from what I can tell, you passed them. A lot of it in sports, like really crushing that.

We’re bigger than—I mean, like, in the US, 95 percent market share now.

Okay.

So, like, across the board.

How’d you do it?

I mean, I think it’s like …

You were way behind, right?

No, it’s interesting. We were way behind in the headlines, maybe but, like, so we started the company in 2018. It’s been a long time.

Yeah, I want to get into that.

It’s been eight years, right? But we didn’t relaunch to general public until end of ‘22. And I think our proper launch was end of ‘24 when we were allowed to do the markets that people really want, which is the election and other markets. And they launched in 2019, a year later—or started the company, and then they launched immediately without a license. So they were the brand that sort of did it, but we were very dogmatic in our approach, which was we are gonna do it the right way.

Why?

I think there’s two reasons. One that is practical, which I think in financial services and healthcare, I don’t think you can cut too many corners.

I see.

I don’t really believe in that. I know in Silicon Valley it’s like, move fast and break things and figure out how to regulate later. Not in financial services. I think financial services, inevitably things go wrong, and when they go wrong, they go wrong bad. And so if you want to build true mainstream adoption and true institutional adoption and all of that, these people will care. How are you doing things? Are you regulated? So they will care. And I think, so that was one.

Number two is honestly, like, it’s a bit more philosophical. I was excited about changing the system, fundamentally building the next generation New York Stock Exchange from within, like, change the system no matter how hard it is. Then going offshore and building something on the side, like, that was just not exciting to me. I didn’t feel like I’m pumped about doing that. And we stayed dogmatic about that approach. But what we were doing is building an incredibly great product and great infrastructure and great regulatory infrastructure. Like, the word “trust.” Like, I think people trust us more. Like, when they put their money, they feel good about putting money with us. They feel good that there’s not gonna be …

Put some money on the Red Sox last night and they beat the Yankees. Yes! [laughs]

Yeah, nice. Great. But I think there was that. I think when we did get regulated and we got approved, our trajectory just went, you know, really parabolic. And I think it’s a mix of that sort of foundation laying that we’ve done for a while—which I really believed in. I think if you believe that you’re going towards a good market, building a solid foundation, even if you’re not growing, it’s okay. And then I think we just have superior execution on product and growth. We compound at a much, much faster rate, and give it enough time, the results start showing.

While you’re there, it’s 2018, you start the company. You wandered through the desert for a long, long time.

Very long time, yeah.

CFTC was smacking you, saying no.

Yeah, the government was trying to kill us.

Yes, it must have been brutal. What was the lowest point?

Honestly, I don’t even remember. It was basically like—it was truly like just sort of like—it was bad. Like, I mean, it was so bad. And it’s like you’re constantly in a state of grief, and then you start like—you know, you’re, like, in this desert and you start seeing, like—you literally start—like, you’re so desperate that you start seeing fake …

Mirages.

Mirages, yeah. You know, you see something, “Oh, here it is, finally.” And then it’s not true, and it’s disheartening. And it’s just hard. But the thing that was unique about us is we never pivoted. It was always Kalshi. I mean, Kalshi is everything in Arabic. Like, we always want to build the everything exchange, the exchange for all these different assets. And we always stayed sort of—because part of it—and looking back, and when I was thinking about it, we didn’t build Kalshi to build a company. We built a company to build Kalshi. It’s a bit different.

I see.

We were dragged by the idea. I wasn’t the type that wanted to be an entrepreneur. I think if you re-roll the dice multiple times, I’d probably just be a trader or a risk manager. Like, I would not be an entrepreneur.

Got it.

But the idea was so glaring in front of us that we just had to do it. Like, we felt that we had to do it. And so the whole point of doing this whole thing is the idea.

Okay.

So when that’s the case, then, like, if you lose the idea, then, you know …

A lot of people listening to this are walking through that desert.

Yeah.

And I read this book a long time ago, it’s called *The Dip*. And you’re cruising along, you go down the dip, and you don’t know if you’re about to hit the bottom and come up.

That’s what’s hard about it.

Or if it keeps going. Everyone thinks you’re delusional.

Yeah.

Advice for the CEOs out there walking through the desert.

You know the book—is it Ben Horowitz that wrote a lot about …

The Hard Thing About Hard Things ?

Yeah, there’s that that paragraph that’s so good about it, which is like, the reason why it’s hard is not like you’re lifting something heavy or whatever. It’s like no one can reassure you that it’s gonna end, right? Like, what I firmly believe—and I really do, is the number one reason …

Did you want to give up?

For sure. Every day you wake up and you’re like, “What am I doing?”

And was Luana like, “No, we’re sticking with it.” Like, what was the dynamic?

I mean, we both had our points. Luana was definitely much more stubborn.

Okay.

Continuously. Like, Luana is just like—like, Luana had a lot more that, you know, “Stop being a little bitch,” basically. Like, you know, just life is fine, whatever. Like, let’s move on.

Yeah.

And what I believe is basically if you give yourself enough of a time horizon, you inevitably win.

Or you run out of money.

Yeah. But I think that’s like a—I don’t think it’s a real killer of companies.

Okay.

You can always extend your runway and, like, it’s not that hard to raise money these days.

Nowadays, yes.

And you can pivot with a new idea and it’s really, the number one risk is giving up, right? And so—but it’s interesting, because when I say that, to me the message should not be, like, “Oh, I should do it at all costs.”

I actually see a lot of founders and they’re walking through the desert. I think they should give up because it’s opportunity cost.

Yes.

You’re 35, you’re gonna spend the next four years walking through the desert? Start something new.

I think just ask yourself why you’re doing it, right? So it goes back— mean, you know this, like to me, maybe there’s a few buckets. There’s the idea that if it’s something that you’re really passionate about, you should keep going, right? Because you’re going to regret. I think it’s hard. I mean, maybe you’re not, but like, then there’s a second bucket that’s sort of all the things that people believe to be true after you make it. And I think that’s a bad—I really think that’s a bad reason, because, I mean, you know this, like, it’s a career, right? It doesn’t end. You have all sorts of different issues over time. That thing in your gut stays there. It never leaves you, right? You’re always stressed. You have to make sacrifices on your—like, entrepreneurs don’t have a good life in the traditional sense of the term, right? You don’t get to that oasis that you thought you were gonna get to, right? You actually just get into different deserts, and those deserts get maybe less—there’s some water in the desert, but, like …

[laughs] Okay, I like this.

But maybe the better analogy is like, you go from a desert to a storm. And that storm sometimes is like very clean water, sometimes it’s a shitstorm, sometimes it’s like—you know? But it’s a different type of craziness, and maybe it’s more motivating day to day. It’s stress and it’s not just like depression. But it’s not the life that, like, oh, you finally made it, you’re successful, you’re on the pedestal.

Okay, so what do people think about what the life of a rocket ship CEO’s like versus the reality? What do people have wrong?

The reality is it’s just like a …

Is it glamorous?

No, no, no. I mean, especially if you’re doing—I mean, look, some people, I think—I see it sometimes. It’s like when you get to that and it’s finally made, like, they really go enjoy life. But inevitably then the companies kind of go sideways.

What’s your life like?

I work a lot, all the time. I mean …

Are you married? Do you have kids?

I have a partner. It’s been, like, four years and some.

Complains a lot?

No, she’s honestly great. But it’s tough, right? She sacrificed a lot also for me to get here, because she supported me in the hard times, supported me in the good times, which are also hard.

Keep her.

Right. Yeah, yeah. She’s the best. I mean, I think the—but there’s sacrifice on that front. I travel a lot. So basically I wake up every day at seven. I’m usually at the office by eight, and I work—I leave the office usually at ten. I work a little bit at home. I usually maybe, like, waste time on Instagram Reels for 30 minutes and I go to bed.

What’s a weekend like?

I usually try to go out for dinner one of Friday or Saturday. Generally Saturday, because Friday I’m so tired. Like, I just need to rest. And if I’m not—like, I’m basically in the office Saturday, Sunday. Like, I go to the office Saturday, Sunday. I kind of like being in the office.

Is everybody—by the way, you’re getting …

Most people. Most people like …

They’re in there.

Yeah. I mean, but it’s not forced. It’s not like, oh, you know, like the hardcore …

Yeah.

We try to do it in a way of, like, so no one is ever kind of slapped or there’s no expectation you need to be in the office with these hours. I don’t believe in that sort of put everyone in the office 24/7 hardcore grind. That’s gonna—I do believe the founders can do it, because we have the most incentive to do it. And if the founders do it naturally, others are motivated. They want to be next. Like, they like coming on Saturday because there may be a little bit less people and they can sit next to you and ideate about a bunch of things. And hopefully you got the right people that would show up, but they don’t have to, you know?

Okay, let’s just get back to the CEOing since we’re there. 100—what did we say? 130, 150 direct? 130?

150 now. We grew a little bit.

150. And, like, 150 is an interesting number because it’s Dunbar’s number. It’s hard to keep track of anything north of 150. It’s hard to interview those people. Most companies start hiring middle managers. Is it like 170, three years from now? Is it 500? Are you like William—I’m friends with William Hockey. I call him and he’s at 130. He’s like, “I’m staying at 130.” Is that you?

William is very good. I think he’s done a great job. I don’t know. I mean, I’m just thinking about the things that scale linearly. So historically support, but we have less than 10 support people. We have, you know, obviously millions of customers.

You can automate a lot of that.

Yeah, it works really well. Honestly, like, if you train the right—it’s amazing, honestly. So that’s a linear thing that’s gone. I mean, as we scale our institutional side, I think potentially sales could scale somewhat linearly, but I don’t know. You know, I’m kind of a believer in—I’m actually curious what you think, but I’m kind of a believer in strong marketing and brand marketing as a fundamental enabler of sales and, like, enabler of top of funnel.

Yeah.

Yeah. If you do that very well, I think people would just sort of follow each other.

And where does that come from for you? You’ve mentioned that a couple times, like you’re really detailed in the copy and all that. You didn’t grow up—you grew up as a kind of math CS guy. Where does that come from? And is it all gut feel or is it studies you’ve done?

Part of it’s paranoia, the perfectionism that came from my mom. Like, I tend to have OCD and obsessive with these things, and I want things to be really perfect, like as perfect as possible. And actually, it really matters. This is the key thing. Like, all the results are in the last 10 percent. Like, most people are 80/20. That doesn’t work. Everybody’s 80/20.

Okay.

It has to be perfect.

Okay.

And it’s like this sort of—especially with marketing, there’s, like, this sort of a resonant frequency that you have to …

This is your mom talking right now.

But this resonant frequency concept is very interesting, because I think when you hit it, you get these dramatically improved results, right?

Give me an example.

You know, there’s so many of them, but I’ll give two separate ones specifically on marketing. So when we first went mainstream was during the ’24 election. And one of the ideas I had is, like, we should do billboards across the country. And the billboards are basically the product. It has to be the exact same as the product, and it’s live and it has to be piped with the API. And every time a trade happens on the app, it’s gonna be projected out in Times Square and in LA and all these billboards in real time. That had to be perfect so that every time people look up, they build a habit of like, “I want to see the odds and, like, Kalshi is there for me to see the odds.” And if it is, then you get the viral mechanism and, like, all of it works. And it worked. But it took maybe something like 20 iterations of putting it out there, retaking it back, to get it right.

Okay.

It’s brutal. Like, your designer gets exhausted at the time, the engineer gets—I mean, everyone is exhausted.

Yes.

But that’s sort of stuff that no one’s gonna do other than the founder. The other thing I think I believe strongly in marketing is the timing needs to be exactly right. It really matters. And, you know, people always …

What do you mean? Around what?

Pretty much everything. The more important—like, people don’t care about us. People don’t care about anything. Like, they just care about themselves and then what they’re reading on any given app. I mean, it used to be any given month and week, day, and maybe now every few hours that changes. They forget. There’s so much stuff going on all the time. You have to basically bring Kalshi to whatever is happening or you, yourself, to whatever happening in the wild, not try to kind of push whatever you’re offering to people.

And so what I mean by that is like, so in the last few months, if you look at all the marketing integration, we do a lot. Like, we partner with this and that. So we did Messi two days before his first game of his last World Cup. Why? Because well, it’s two days before his last—I mean, he’s at peak relevance right now, right? Timothy Chalamet, we launched that commercial 12 hours after the whole thing that happened with the Knicks. Why? Because everyone’s talking about Timothy Chalamet at the time. Right? If we had done it now …

You also did the AI video before anyone did the AI video.

Yeah, because it was a time where, you know, the artists, there was a whole debate about, you know, the artists, are they gonna go? Now it’s not cool to do AI video.

Okay, so that’s you. You’re obsessive about that kind of thing, nailing that kind of thing.

And always knowing what—but now if you do the AI video, like, you should not do AI videos anymore now.

No.

It’s done. Now it’s cool to do real things.

Yes.

Right? So the timing with these things is so important.

Okay, that’s what you mean by that. The Messi timing was incredible.

Yeah.

And the Timothy Chalamet timing was incredible. I assume you had that in process with …

Yeah, but we were always waiting. I mean, Giannis, when we announced him as a …

Like the Knicks get knocked out in the earlier round, you’re still going live with that.

Yes, but we were waiting for the right—so we used to think we were going to do it at the Oscars, but then we waited.

I see.

And so we were waiting for the perfect moment, because then that’s when you get the 100x outcome, right? When Giannis—when we announced Giannis as a basketball player was essentially a day after he announced that he’s not gonna leave his team.

He got locked in.

Yeah, exactly. And …

Now he’s going to Miami.

Now he’s going to Miami. He’s peak relevance at the time, and now he’s peak relevance again. But that applies to everything. The AI ads, I think we’ve done a lot of work on the—like, when we did the news integrations back in the fall, we announced CNN and CNBC and Fox, all of these were like, we really wanted to time them peak moments where people were talking about this debate between is the news sort of like, gone? Is it a thing of the past? And for us, the angle was never like, oh, Kalshi Partners. It was like the news is actually modernizing.

How did you—I know you want to time it well, but does Timothy care? Does CNN care? Does the New York Times care? Do the counterparties care?

You have to fight and battle all these different things. You cannot have too much process and you have to break their own processes.

Okay, fine.

You know, it’s all of the same that we discussed.

It’s a shit fight.

If you have a head of partnership that’s doing a whole structure and they plan for three weeks, you can’t do that.

Did you hire any professional marketing person inside your company?

Not, like, ahead in any way. I could not. I mean, we have a CMO, Allan. He’s incredible. So Allan takes care of all the scientific pieces, very good at spending money to basically—with high ROI. And then the rest is like—so the person that leads our brand or leads doesn’t have any direct reports. They’re just sort of flying around country and doing cool stuff. And he ran a Twitter account before. You know the inverse Cramer?

Wait, that’s where he started?

He’s the inverse Cramer account.

Remind me.

Like, you know, Jim Cramer when he picks stocks?

Yes, yes, yes, yes, yes.

He’s like the inverse Cramer, like index …

Yeah, so you make more money betting against Cramer.

Yeah, exactly.

That was him.

Yeah. And I hired him. I was like, you wanna come and do our social? He started doing our social, and he had a knack for—he came up with the AI idea. He has a knack for these sort of weird esoteric ways to just, like, be part of the zeitgeist. And you know what’s interesting? That has worked equally for consumers and for institutions.

Okay. I didn’t expect you to say that.

Yeah. People would think, like, oh, you know, institutions sort of want this. They do and they want to be able to talk to your chief risk guy. And they will. And we have all of that. Like, we have a very strong, robust foundation. But being top of mind just matters. Continuously top of mind is very …

You’ve got a knack, I’ll give you that. Okay, I want to wind the clock back, because we haven’t completely finished the desert story. At some point, the conversation happened inside of the company, “Hey, we should sue the CFTC.” Whose idea was that and what was the reaction?

Luana.

And what’d you say?

I mean, it’s crazy, right? I mean, it is crazy. It is actually crazy in all—I mean, it ended up being crazy, all of it, even though we won. I mean, because it’s so much more than just being right. Like, it’s so much more than just the lobbying, right? It’s unfortunate, but it’s the truth. A lot of things are political and depends on how the winds are shifting. And the government is truly all powerful. Like, they can just do things to private companies, or companies, just companies in the private sector, because by the time you hold the government accountable to that thing, you probably will be dead, basically.

Yeah.

Or the cost would be so ginormous.

Yes.

You know, the government doesn’t really incur any cost. They’re protected from any cost.

Okay, but take me in the room when she brought it up.

So, you know, there’s a little bit of context to that, because we started trying—and this goes back to how much foundation we built. Like, people always think overnight success. Oh, it’s been two years, but it hasn’t. All of this has been, like, part of a very long-term plan. A bit like Jensen, right? He’s built such a foundation for so long. And that’s how these things go.

And we started engaging about the election market before we even launched to the general public in the end of ‘21. Started talking to government saying we want to do this, it’s very important, here’s why it’s gonna work, it’s gonna be the most accurate gauge, and here’s how it’s legal—which it is. And they’re like, okay, fine, we’ll work with you, you know, whatever. Month after month they wouldn’t give it to us, they wouldn’t give it to us. I had bet all the company on the election market for ‘22, the ‘22 midterms. That was what we were aiming towards. The board is ready for it, et cetera. And they keep delaying, delaying, delaying up until they pushed it after the midterms. So they pocket vetoed it. They didn’t say no, they just managed to politely delay us enough that it didn’t happen. So that was heartbreaking. You know, it’s been like—so we started in 2018, we finally got to 2021, finally excited about launching.

The whole company was excited. Everyone’s excited. And then they pushed it.

Then they let us launch. And all the issues about launch, started working on the election market, and it gets banned at the end of ‘22. So now we launched with a very limited set of things that’s going to be very hard to get the exchange running, but they banned us. We lost a lot of the team over it. And, you know, with these situations, what’s really hard about these situations …

Did you push them out or they left?

A bunch of people left.

Did you do a layoff?

And then we had to do a layoff, because what happens in these situations is that—I’m going to go on a tangent. I think it’s an interesting thing.

Let ‘er rip.

So there’s this concept of expected outcome and outcome.

Yep.

And they’re oftentimes not the same. There’s a variance for the outcome. And the expected outcome is, you know, based on your decision-making where it should land. And then there’s a bunch of variance in the world that pushes you in either direction.

Yep.

The world doesn’t reward you for expected outcomes. They reward you for outcomes. Expected outcome is what you have control over, it’s like the work you do. And it’s interesting, because I think at that point, like, the coin flip landed against us, and the entire world is like, wrong strategy, wrong execution, et cetera.

And it’s interesting, because that was the same time where—I’m a big Messi fan. So Argentina won the World Cup, I was super happy. But, you know, the day after Argentina won the World Cup, I don’t know if you know this, but the French—you know, France, the country, really, the population wanted to oust the French coach, Deschamps, who is an absolute legend. Like, the guy won them the prior World Cup, incredible performance, got them to the final of the next World Cup and to the penalties. And obviously, penalties are a coin flip. And they blamed him. And you know how hard it is. The number of teams that made it past the group stage after having won a World Cup is basically trivial. Usually the team is very hard—it’s very hard to go twice in a row. And it was an interesting thing, which he flipped the coin, landed against him, and people wanted to oust him immediately. And so we lived through that.

Did they want to oust you?

No, I think, but people lost confidence. It’s like, we should pivot, and it’s the wrong strategy, wrong strategy, wrong execution, all of that. We’re not doing a good job, basically. It’s on us. And it’s fine. You should hold the founders accountable. But the key learning with that, what’s interesting is it’s a little bit like poker, the best poker players, they know when they’re playing a good hand and they’re okay with the variance. They can lose a lot, but they’ll stick to their game. And then they know that over time the variance is gonna come back and with enough plays they’re gonna win over time. And you’ll see with Elon, you’ll see with some of these founders that can take these extreme risks as long as they know their expected outcome and they can intake the variance over time.

Yep.

And I think there’s a lot of alpha in there.

Yep.

And for founders that have gone through that multiple times, I see it with Vlad at Robinhood. I see over time they gain a certain level of confidence.

Yes.

That is hard to describe, but it’s like, I’ve gone through it. I’m okay with the fluctuations.

And is this making sense in the rearview mirror, or is that making sense at the time?

No, not at the time.

Okay.

But now in the rearview mirror, because, okay, so ‘22 happens, and so our answer at the time, oh, we gotta reset, we’re gonna do something else. We’re gonna figure out what to do. But again, we want to build Kalshi. That’s what we want to build. And we cannot do it without the election markets. We’re going to try again.

Okay.

So you go back to work. We’re gonna try again. Everyone’s like, I mean, okay, these guys are starting to get delusional. We tried another year, end of ‘23. Now they say no. They reject us. So again, you know, it goes from a low to a lower.

Yes.

And, you know, we’re in the room, it’s like, oh, what do we do again?

Roller coaster.

And I was like, “You know what? This time we’ll sue them.” [laughs] It’s like, we’re not …

Like, how did it actually work? Like, you got the email.

It’s like no.

And then right away she’s like, “We should sue?”

Luana, that summer, was like, “We’re probably going to get a no again, so we should start preparing the lawsuit.”

Okay.

“And we should sue them.” We started talking to the board, you know, we had a lot of conversation with Alfred, you know, Michael was at the board at the time.

And what did Alfred say the first time you pitched him on it?

He’s like, it’s a crazy idea. Like, you’re a tiny startup. Even if you win, you’re probably going to like incur a significant—you’re probably going to lose. And he was right that we were probably going to lose. And he’s like, a company of your size, even for bigger companies, you never win against the government. It doesn’t, you know—they have all the power over you. They’re your own regulator. Suing them is going to call—like, they’re going to kill you. And one, I was super dogmatic. I was sort of battling it, et cetera. But then there’s a few things that sort of came out of that. Like, one-to-one, it was a complete no-brainer. It was pretty much—I mean, I would oscillate all the time. I would just be like, this is crazy. I mean, are they gonna come after us? They’re gonna come after us personally.

I think CEOs are gonna love this, because I oscillate all the time on and stuff like that.

I oscillate a lot, which I think is okay.

I hid my oscillation as much as I could, but it definitely showed up.

Yeah. And I think it’s okay, honestly, because it’s hard to have the right—I mean, it’s so complicated, right? And I would oscillate, et cetera. And I remember we got to a meeting at some point that, like, I was still oscillating and, like, you know, it’s the night before we’re gonna file, et cetera. And, like, Luana was like, “Are you shitting me?” Like, she went so hard and she’s like, “You know, fuck this. Like, we should just do it. Like, we’re wasting time.” And, you know, I was like everyone else in the room. There was this sort of feeling, this missionary feeling, you could feel it of, like, you know, we came so far, like, fuck it, let’s just go full-on war. Let’s bet everything.

In your poker head, were you like, “There’s probably a 20 percent chance this will work, there’s a 1 percent chance?”

It was so hard to price, but I thought through all of it, which was basically—and, like, Alfred was right in many ways, but they could kill us, because they could essentially yank the clearinghouse from under us and kill the company. We would die, maybe even before we even get the result, which is a risk. They would—they could, like, death by a thousand paper cuts, they can start doing a bunch of things for you. But then I was like, if it does work, the outcome is so big and the expected value seems pretty attractive, actually. Even at low percentage odds of success, the outcome is so big.

Okay, so obviously …

It’s an asymmetric bet. It’s a big one. We bet the farm and we’re like, let’s see what happens. No plan B.

In the moment you—the timing was extremely good on winning. Was it an email? Did someone call you? What was going on? Where were you?

Yeah. So the litigator, Yaakov Roth, who led this—and we interviewed everybody. I picked him because he’s extremely smart, but the thing that I felt he was really good at, he had a missionary—like, this man wakes up in the morning and thinks about how to put the federal government in check.

Okay.

You know, you want that person just sort of …

I like this guy. Yeah.

So it’s like, he’s an amazing litigator. But, like, in the summer of ‘24—you know, usually we text and all of that—he called me and I got really anxious. I thought that the court hearing came. Like, I was like, what? Like, you know, he’s like, “What’s up?” And he talked to me about something already. And, like, I was like, “Dude, my heart dropped. Don’t ever call me. Like, you should only call me once you have the court decision. Like, never call me ever again. Text me. I don’t want you to call me, because, you know, in the 10 seconds where I have to pick up the phone, my heart drops.” So he’s like, “Okay, fine. I won’t call you until a decision.” And I was sitting, you know, on my desk. I remember like Rainer, one of our engineers, sitting next to me and, like, his name pops up on my phone.

Okay.

And, like, my entire body, like, I just could feel—you know these moments where you feel your entire body just sort of like paralyze? Like, oh shit. And so I pick up the phone and I was like, “Why are you calling me?” You know? And then he’s like, “We won.” And after that, I don’t remember. Like, we were throwing chairs in the office.

Did you black out?

I mean, yeah, we were throwing chairs in the office. We, like, basically destroyed the office.

[laughs]

I mean, it was unbelievable because, you know, it’s like you won, and in that year, we suffered so much, because you had the competitor, like, you know, Poly was getting the brand and we were staying true to our strategy, we’re going to stick with it. The government was yanking the clearinghouse from under us, one enforcement action after the other. They were finding random things to just create actions against us. Audits. You know, the audits that usually take 10 days, they were [inaudible] to nine months.

Yeah.

It was just truly painful. Like, you know, the whole warfare thing? It truly happened. And they make your life miserable. And not just the company, your own personally. It’s like kind of this intimidation tactic up until you cave, up until, you know, you’re so exhausted. And it was just so vindicating. It was so nice.

Yes.

Right? Like, it felt like we finally had the opportunity to just sort of like win.

Yeah.

For the first time.

Okay, you win. And of course you knew this was going to work. Did it work way better than you thought?

Not in the first few days.

Oh, really?

Yeah, it’s like all things. You have to build emotion and you have to build a brand and you have to—but this is the thing. You win and then you’re like, “Oh, let’s launch it.” And then nothing happens.

By the way, you won this case, like …

Our weeks, like three weeks and a half before the election.

Was that random timing?

Yeah. You gotta get it sometimes, you know?

Fascinating. You know, Tony says it sometimes. Like, you need luck sometimes.

Yeah.

Is it because we’re just lucky? I think part of it, yeah. You need to get lucky. But I think …

You took risks.

And we took five, six years of expanding that luck surface area. So at some point we could …

But did it work even better than you imagined?

After we started compounding. So it takes time. Everything takes time. But in those three weeks and a half, we’re like, look, we have three weeks and a half to make this go mainstream. Everybody’s in the office. I basically honestly would shower maybe, like, once every four days. I was just like, I don’t care about anything. This is my shot. And so we worked so hard in those four weeks. It was slow, slow, slow, but then it started upticking, and then the machine started going. And then when it started going, it was beautiful. It was amazing.

I got a 21-year-old son, and he and all his friends use Kalshi.

Yeah.

And I know you’re going to say it’s trading, not gambling, but I’m a little afraid some of ’em are gonna get addicted.

There are similar impulses. I mean, look, I think there’s a few ways to think about it. So let’s talk about the policy and then actually what we’re doing, because I care about—like, I think about that a lot and I care about that.

Yeah.

That’s like my paranoid brain. I don’t want people to get hurt. And with all technologies, people inevitably get hurt. They will use it in a bad way, right? This is true for Airbnb and, you know, all that.

And are you hearing from mothers?

Yeah, and actually it’s mixed because—so let me kind of walk through a few things. So first, the policy aspects. I think—and this is important for everyone. At some point you’re going to build something very big, especially in consumer. And when it truly hits mainstream, you’re gonna get haters. There’s gonna be a bucket of society that’s gonna be worried because they don’t understand it or they don’t get it. And they’re worried about the risks. Like, a lot of people don’t see the point of AI. Why? Why lose our jobs over something that can do our homework better? I think they’re missing the point, obviously, but you need to educate that part of society.

And then you have incumbents, because inevitably if you go mainstream, you’re gonna be taking it from someone, and those incumbents will go very hard after you. When the taxis went after Uber, they didn’t go after them saying, “Hey, our margins are threatened, that’s why you should shut it down.” What’d they say? They said it’s unsafe and kids are getting hurt and kidnapped. And Airbnb was the same thing with the hotels. Like, they would find one case of one person that, you know, had a very terrible bad experience or something really horrible happened, and they would blow it up in the New York Times .

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

My son is not trading commodities futures in the app.

I know, but they used to be.

Fine.

The farmers were.

But kids weren’t.

No, that’s not true. Like, I mean …

Oh, is it really? I don’t know.

The farmers were 20 and 18. By the way, the age to trade futures is 18.

Okay.

Right? It’s actually—you know, that’s what it is. I mean, now there’s other more interesting …

Maybe my son runs in a different crowd, but none of his friends trade futures.

But I want to address this. But I’m saying—but that’s because society evolved. Like, there’s now crypto and meme coins and all these other things, right? Like, at the time, there was nothing else. This was the primary mechanism of speculation. That’s what everybody was doing. But the claim at the time was like, this is gambling and we should basically regulate it as gambling and not as a financial market. And the Supreme Court said speculation does look like gambling—because it does.

Yeah. So does the stock market.

Yes, exactly. But there’s a price discovery aspect to this where you’re on an open, transparent exchange where people are trading against each other. That makes it a financial market. And that’s why it needs to regulate as a financial market, and so on and so forth.

Fast forward to us. There’s a few things that are very important. One, the incentive structure in the model. Gambling—I don’t gamble. You know, I don’t really like gambling. I like trading. Gambling is a business model where, like, the revenue of the company is equal to the customer’s losses. So over time, you block the winners, which is what they do. They don’t want the smart, mathematically oriented people that are doing research, and they want the people that continuously lose. And those people, they give them promos to come back, and that’s how you create these addictions.

But they cannot really solve the problem of addiction because the revenues are equal to the losses. So over time, what do you do? Well, you have to increase the losses. That’s what you do. You have to create those types of behaviors, or at least not throttle them too much. The losses don’t go to me on Kalshi. That’s the beauty of a derivatives market.

Liquidity goes to you.

Yeah, I take a one percent fee whether somebody loses or not. So when someone is exhibiting bad patterns, those losses are going to someone else. I have all the incentive in the world to basically throttle them and figure out how to get it right.

But let me just push back a little bit on that. In the casino, they try to block the card sharks.

Yeah.

But in your world, there’s a lot of card sharks betting against my son’s friend.

For sure. But that’s like …

Who’s going on a gut feel.

Yeah, that’s absolutely right. Absolutely. Now, it depends on the incentive structure. I want smart trading. I want to incentivize people to do research, because the more liquid, the better the forecast, the more truthful my forecast, the more people look at it, the more my top of funnel increases. I want the smart traders, which is a very different structure from the casino, which is like you don’t want the smart behavior; you want just the excessive money losing, continuously money losing behavior, right? So there’s that. Now it’s important to understand: not everybody wins on Kalshi.

Of course.

Not everybody wins in the stock market. Not everybody wins in the options market. Not everybody wins in athletic competitions. Not everybody wins in highly competitive environments, right? It’s a highly competitive—it’s a competition. It’s a highly competitive activity in nature, and inevitably there’s gonna be some people that win and win more. Like, how many people win the NBA Finals, or how many people win, you know, the Champions League? It’s a small percentage of participants. Now here’s what’s interesting: everybody can win. It’s a fair and neutral platform, and my incentive is to give as many tools as possible for people to do the right thing and do research and do all of that. And what we do and what we do really well is we do take this sort of issue of excessive behaviors pretty seriously. So for example, in the 18 to 20 buckets, I think the data doesn’t show dramatically different behaviors, but society tends to be worried about that. We add a lot more throttling to the accounts.

What does that mean?

Like, you cannot basically lose too much in excess. We add throttling and we start asking for additional verification that makes it so hard, adds a lot of friction for you to keep going or to keep going in this excess. And the reason we do that, is because of the positive sides of this. So when I ask the parents—and this is the mom question—and their 25-year-old is trading on Kalshi, what they get excited about is, like, they’re actually getting smarter about the future. They’re smarter about the world, because the alternative is they’re spending time on Instagram and social media where it’s like extremists and all the hate and constant brain rot and all these different things. Whereas here …

And they get addicted to that, of course, but they can’t lose all their money on it.

I think they’re losing a lot more.

They can lose their—they can turn their brain to mush.

And I think sometimes I’m losing my brain on that. But, like, I think there’s all sorts of other issues there, but my point here is like, they’re spending time getting smarter about the world, which I think is the whole premise of what we’re building. Like, I think this is gonna be the ultimate antidote to a lot of the polarization extremism we’re seeing, because, you know, these calibrated, well-reasoned takes are not getting reward on social media, but they get reward in prediction markets. And that trains people over time to get a little bit smarter. And I want it to be a tool for that, especially for younger people, rather than a tool that’s like I’m losing all my money and I’m doing excessive behaviors. And there’s easy ways to do that, which is like, you can cap how much people are doing, you can throttle these accounts.

You know, one of the things we do very well, I think better than even some of the financial brokers or traditional brokers, we self-regulate. We don’t just do what regulation requires us to do, we go above and beyond. Because I think about all the risks. So minors, for example, obviously they’re banned, and we do KYC and all these different things. But the way that minors access all these platforms is they use their parents’ IDs. So one of the things we create is a parent portal where moms and parents can give us their ID and tell us don’t let anyone else use it. That solves 95 percent of the issue.

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

Okay. I guess my last question—this pod has a lot of CEOs and founders that listen to it. You’ve had a really unusual, like, really long, strange trip.

Yeah.

One last piece of advice or tips for folks going through the desert?

I think that, like—I would say a few things, but one, like, really question really hard why you’re doing it, you know? Because the thing that you’re—like, if it’s not for the company itself, the thing that you’re hoping to get, I don’t know if it’s really there, which is a glamorous …

Yeah.

You know?

I never found it the least—obviously, financially rewarding at some point after a very long time.

Oh, for sure. But there’s many ways to do that these days. The opportunity cost is very high, right? Like, I mean, you can join a fast-growing company. I mean, there’s so many ways to do that, right? So I just think the monetary reward just feels like …

Risk-adjusted is probably a stupid move.

Yes. And if you adjust also for lifestyle and amount of pain, it gets pretty unattractive, right?

Okay, your little brother comes to you and says, “I want to start a company.” What do you say?

I just say, “Why?”

You push back?

Yeah, why? Like, explain. What is it? Like, oh, I wanna be my own boss?

You’re not really your own boss.

Yeah, what does that even mean?

You’ve got a board, you work for all your employees and your customers.

You work for everyone, your users. I mean, if you’re a good CEO, basically …

You work for everybody.

Yeah. I mean, I don’t think that sort of sense of freedom is real in any way. Actually, you’re the least free, right? And the more it grows, the less free you are, right?

I agree.

So the second thing is like, I really believe in the sort of theory—like, I really strongly believe in the theory of, like, it has to be true to you. Like, it’s going to be very hard to build a company, market a product, build a product that is not you. It’s very hard. I honestly don’t see how that works. And it’s so interesting, because every time you see a big company and then you meet the founder or the CEO of that company—and you’d probably agree with me on this—like, it’s shocking.

It’s them.

Yes.

Yes. The office is them.

Like, you meet them, you’re like, oh, it’s—I now totally understand why that company is the way it is.

It’s a mirror.

Right? And so I feel like, people—I don’t know, I feel like that’s not put into practice enough. Does that make sense?

Yep.

I think people just try to figure out all the right ways to do things. I mean, I wish there was, but if there was, then everybody would do it.

There’s a really good quote, “Be yourself, everyone else is taken.” You’re definitely yourself. Thanks for coming on the pod.

Thanks a lot for having me.

Congrats on all your success.

Thanks so much for having me. This was great.

Okay, hope everybody liked that. I really enjoyed talking to him. It’s the second time I met him. He’s a gem. Couple of my takeaways: Holy crap, is he mission driven! He had a mission of how he wanted to see the world change, and the company was just like, okay, we’re gonna build a company to pull that mission off. People talk about mission a lot—very much in his case.

It rhymes with kind of how HubSpot started. Our vision mission was we wanted to change marketing from outbound to inbound. And we just were like, oh, we need to create a company to pull that off. It wasn’t originally a company, it was an idea. So I like that.

And I like founders who are—he’s very obsessive and very mission-driven. I feel like today with startups, everyone’s trying to win Twitter for the day, and sometimes making short-term decisions. The thing I like about Kalshi and the thing I really like about SpaceX is they made some big foundational bets and were super patient, and were really rewarded once those things paid off. And I think more founders can learn from that.

Last thing I would say is he’s got a unique relationship with Luana, his co-founder. Luana is the kind of organized one and very risk-seeking, and he’s a little bit all over the place, and he’s risk-averse. It was the exact opposite of what I thought those two relationships were, but it’s very much 1+1=3. It reminded me of my relationship with Dharmesh in how complementary the two are. Hope you liked it.