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The Trader Who Builds Billion-Dollar Companies: Tom Sosnoff on Thinkorswim, Tasty, and What Comes Next
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- [00:00]
A
I'm not afraid of taking any amount of risk ever. I feel pain, but I'm not afraid of taking risk. He goes, how much money you need from us? I go 20 million. I just testing him. He goes, done on the spot. Here's my issue with prediction markets. If you trade $100,000 of notional, so let's just say you did 400 shares of Apple, which is $100,000. If you bought and sold it instantaneous, you would give up about four to eight dollars. That's it. If you do $100,000 of notional in the prediction markets, it's around 2,000 bucks. They offered us like around $200 million. We politely declined and we said we're just going to build another brokerage firm on our own. Well, it turned out to be worth 1.1 billion. When we sold Pink or Slim, Scott and I, we gave $20 million to to our employees. After the deal, when we sold Tasty, we handed out $30 million just to our employees.
- [01:02]
B
Welcome to Fintech Leaders. I'm Miguel Armasa and over the last six years I've recorded nearly 400 conversations with the top leaders in fintech. I also co founded Gilgamesh ventures, a fintech VC where we've backed almost 50 companies around the world. In this show we extract how the best builders and investors in fintech think. Think what they've learned and how you can apply some of these lessons to your own work. If you enjoyed this conversation, I invite you to leave a review on Apple, Spotify or YouTube. I sat down with Tom Sosnov, one of the most successful and consequential entrepreneurs in financial services. Tom spent 19 years on Chicago's CBOE trading floor and then left in 1999 to build think or Swim, the first online broker specialized in options, which he later sold to TD Ameritrade for $600 million. He then built tastytrade and nine years later sold it for over $1 billion to IG Group. He is now building Lost Dog, a career optimization platform to help fight wealth inequality. What I enjoyed the most in this conversation is how genuine Tom is. He is kind and cares about fairness and inequality. He prioritizes legacy over money and he is a builder at heart who loves to take risks. Tom, welcome to our brand new studio. Beautiful and thank you for coming here. Early morning and a very chill spring morning.
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A
Yes.
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B
How's it going today? All the way from Chicago, right? Yes. Yeah, great. Tom, I think let's a lot of people know you but I think it would Be good to get started with a couple of minutes of background. You have a very interesting background. Maybe tell us how you got started, what you've done, and then we'll talk also about what you're doing today, how
- [03:11]
A
far back you want to go.
- [03:13]
B
Let's go back to your childhood.
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A
I actually grew up in New York. And when I got outta college, I got a job on Wall street working for Drexel and met a couple guys that were also starting out there. And after about six months, they said, if you move to Chicago, we'll put up the money. They wanted to trade. They thought they could trade through me if I was on the floor in Chicago. And I took a trip out to Chicago one day to see what it was like. I'd never been, you know, west anywhere. And went to the trading floor at the cbo. Loved it. Fell in love, just walking on the floor, and I was like, all right, I'm gone. I'm leaving. Quit Drexel basically the next day and moved to Chicago. And I've been there, you know, going on 44, 45 years now.
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B
So it was a bit of an accident, right? It wasn't in your plans. These people just saw you as a vessel.
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A
Being in the world of finance is an accident for me because I was a political science major and I had no interest in Wall street and I thought I would be working for a lobbyist or go become a lawyer or something, who knows? And I got out of school in the middle of a recession, and the only interview I could get was on Wall street. And they offered me a job, so I took it. I've been here ever since. So everything's a fluke.
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B
So you. You spent the better part of the beginning of your career on the trading floor?
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A
I spent 19 years.
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B
19 years on the trade, yeah.
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A
That's a pretty good career.
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B
Yeah, yeah, yeah, for some Retire after that.
- [04:49]
A
I probably could have, but I don't even believe in retirement. Like, to me, there's no such word. So how old are you to. I am 69. I just turned 67. Birthday was last week.
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B
Yeah.
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A
So I have been doing this since I was 23, 22, 23. And I wouldn't even consider retirement ever.
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B
I mean, you're full of life. When I first met you, I didn't realize you were essentially my parents age because you act so much younger.
- [05:19]
A
I've hung around with young people my entire life, and I also love building stuff all with young people, so. And the trading floors keep you young in what way? Well, it's more like a locker room. You know, like, like the problem on the trading floors was that only a small percentage survive. Survival can mean lots of different things. But if you survived, then you had a kind of pretty fun, crazy life. You know, traders, floor traders, we were like athletes before athletes made as much money as they made today. You know, like we were making a lot more money than anybody else at the time. So like we were stupid and blew it all and all that kind of stuff.
- [05:56]
B
You know, a lot of, well, traders today, they're getting their education in very different ways. Right. So yeah, maybe tell us a couple things that you learned on the trading floor that you can't really learn behind the screen on a trading desk.
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A
Well, there are no such, there's no such thing as traders anymore. I mean, there's no such thing as, you know, the whole concept of floor traders. And you know, I was in like a generation where that was the, that was like kind of the frontier of like the most vicious form of capitalism. You know, like that, that was entrepreneurship before there was entrepreneurship.
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B
The movies. Yeah.
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A
A kid could go to the floor with, you know, $20,000, $10,000, $50,000 and turn it into millions. That does not exist today. None of that exists. You can't even get a job. You can't be a prop trader that way. It's impossible. So was just lucky, you know, era. But I think what I learned more on the floor than anything else was that I'm not afraid of taking any amount of risk ever. I feel pain, but I, I don't. I'm not afraid to taking risk. I make a lot of decisions fast too. I'm. I think over the years of all the trading, you know, you start to learn how to, how to make instantaneous decisions. Whether they're right or wrong, who knows. But you just, you make them and you live with it.
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B
Was that a necessary condition?
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A
I think it's a necessary condition for wealth creation. I don't. Not just traders, not just traders. I. Brain processing speed and decision making ability. Not having that is a bias that's really hard to overcome as far as wealth creation goes. And we're talking about like independent wealth creation, like, you know, not. We're not talking about like somebody that comes from a lot of money or whatever, but if you're starting out like everybody else and you're kind of of on your own, starting with nothing or very little, next to nothing. Speed of decision making, how fast your brain processes things and how strong is your ability to take risk is really the Key to wealth.
- [07:56]
B
So at what point did you start to realize and notice that the trading floor era was starting to die?
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A
It's funny because when I got to the trading floor in like 1981, I never wanted to leave. Like I never wanted to even go away for a vacation. I never wanted to leave before because. And I used to tell my buddies, we would all stand together, same people, we're still friends today, all the same people. And it's been 40 some odd years. And I used to say to him, this is not gonna be around forever. Like you're not, money's not gonna fall onto your lap. Like you're not gonna sit down here as some, you know, stupid 23 year old and make $10,000 a day because you're, you know, because you're entitled to it. Like this is a gift that we're getting right now. So just get whatever you can because it's not going to be here forever. But it stayed for a long time. And 1990, the end of 1998 and kind of the dot com boom and then 1999. I know this is before your time be like, you know, but, but the 1999, the craziness of the NASDAQ rally in 1999 and the individual, the whole dot com explosion, we were starting to sense that the business was going to go fully electronic. And that's when we decided to take a crazy amount of risk, leave the floor and build thinkorswim.
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B
Yeah. And so the story of thinkorswim is very interesting. You built it, then it got acquired by I believe TD Ameritrade. Now it's sits under Schwab. I was, I was playing around a little bit with, you know, all the fun LLMs. And you know, the estimation is that today as an independent platform, could be worth maybe a tenth of Schwab, maybe more. So we could, could talk about a market of $20 billion. Who knows? What do you think? Yeah, maybe. Tell us.
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A
I think it's probably worth, I think thinkorswim. You know, it's funny when, when I like I was walking through my living room and I remember I was like, thinkorsome, I really like that name for the platform. And I called my partner Scott, we're still partners, and I said, what do you think? And he goes, ah, I don't, you know, he goes, I don't really have much opinion on it, but if you like it, let's go with it. And I'm like, yeah, let's go with it. And crazy name. And we didn't know much about building technology. And we built the platform. We're like, you know what? We hired some really smart people, and we got lucky and. And we built an amazing platform. This platform hasn't been touched in 25 years. I mean, this platform looks today the way we built it 25 years ago. And it's an incredible piece of technology. And it took off. And I always thought the thinkorswim name would carry on, but when we sold it to td, the first thing, the CEO of TD Ameritrade, who's still my friend, okay, we're still buddies, he said to me, I hate this name. And I'm like. I'm like, don't change it. And he goes, I got to change it. I can't stand the name Think or Swim. And he goes, I'm going to call it the ultimate trading platform. I go, don't do that. I go, fred. His name is Fred. I go, fred, don't do that. I go, you're going to. I go, at least promise me this. Go out. You guys blow so much money anyway. Go out and have somebody do a study. So we went out and had a study done. Ultimate trading platform. TD Ameritrade Pro, or Thinkers Fun. Came back 90%. Keep it thinkorswim. He goes, all right, I gotta keep it thinkorswim. And I told him that day, I said, listen, I don't know how long you're gonna be around or how long TD is gonna be around, whatever, but thinkorswim is gonna outlast td. And he's like, you're outta your fricking mind. And it did, and it survived at Schwab. And I love building stuff. So I don't look at this as, oh, man, we left $10 billion on the table type thing because we didn't have the reach of td. We didn't have he has or the reach of Schwab and stuff like that, but it would have been worth, you know, definitely billions of dollars Today. Like any entrepreneur, you just. You gotta move on. I mean, building Tasty was one of the coolest things we've ever done. So, you know, and that was worth a billion dollars. So, I mean, you know, now that's worth 2 billion. Like, we just build really cool stuff. Whatever happens later, I. My legacy, I don't care.
- [12:11]
B
And thinko Swim really was probably the platform that started to popularize and bring options trading, retail 100%, right?
- [12:22]
A
We changed an industry that's probably worth $500 billion with a crazy little platform that I Had a nutty idea of hey, this is going to be fun to build.
- [12:32]
B
When you started, I was doing some research. There were about 100 million options contracts per year. 100 to 150 today is about 10 billion contracts. And that's not obviously not touching the notional value which is in the trillions. Right. It was about 0%. Retail today is about 25%.
- [12:54]
A
Yeah.
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B
So let's talk, let's spend a little bit of time talking about the retailer because it's becoming more and more important and probably follow. But Robin Hood is paying a lot more attention and giving more say to, you know, pursuit the retail trader that is very serious and they've actually productized how to handle, you know, how to run their earnings call in a platform that actually is engaging with the retail trade. So platforms are paying attention. What do you think is going on?
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A
Well, I think it was just a matter of time. I mean options are the reason that I loved options because that's where basically I built my. That's where I, that's where I learned the business. But I figured out, I think before anybody else that there was a side to options that was not about like even the exchanges used to promote options as this incredibly efficient leverage vehicle. But it didn't make any sense to me because that's, that's not how I saw options. I saw them for retail investors as a strategic, almost as a like intellectual challenge, as like a strategic finance. And I also saw options as capital efficient, which they didn't because nobody really understood the art of spreading and nobody really understood like strategic option stuff. That's what we built at thinkorswift. That's what changed the whole industry. You can kind of link it all back to us. It all started with us. But I mean firms like Robinhood have blown it open.
- [14:30]
B
Yeah, yeah. What do you think happens when going forward with the retail investor? Because now they have so many options. You know, now you have the prediction markets, it's more and more global.
- [14:43]
A
Well, I mean first of all, the more products the better and the more participants the better. And the technology continues to get better, much better. And AI is only going to help everybody. You know, it's going to help the front end technology. It's going to help the know how it's going to help the kind of ease of use. And so I think that the market's going to continue to expand at breakneck speed. I don't see the world's become, the world's gone from this mentality. I mean remember we're still talking about, you know, a tiny section, a tiny subsection of the amount of money that's out there. You look at the clearing firms that clear option trades, I mean, you're talking about in total less than a trillion dollars. If you look at the amount of money that's managed by Schwab, fidelity, State Street, Blackrock, you're talking about 30 trillion. So it's not fraction, it's tiny. And I think their number's going to come down. I think the other numbers are going to go up. And I don't know if it's all just event based stuff. I don't think the prediction markets or event based markets are efficient enough to capture a big percentage of the business. But I think the listed markets are. I mean, I remain incredibly bullish on
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B
that space for Companies, for, for CEOs of public trade companies. Do you think managing their brand and their story has become more important than ever?
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A
Like, give me an example. You're talking about like Robinhood, the way they manage their, not just Robinhood, but
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B
like, it seems to me that like there's the cult stocks that can really command very strong multiples and then there's great companies that might not have the best communication strategy that seem maybe not undervalued, but underappreciated.
- [16:38]
A
I mean, I think there's a little to that, but not a lot. Okay. I'm an efficient market theorist, so I kind of believe that the. Well, I don't kind of. I believe that the market gets most things right. You know, I mean, there's an emotional side to commodities, to stocks, to everything, which we all understand. That's why prices get out of whack and that's why things get too cheap and they get too expensive. But generally speaking, you know, you're talking about 80% of the marketplace. It's priced pretty damn good.
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B
And do you still participate in daily trading or are you mostly a long term investor these days?
- [17:17]
A
Oh, no, no, no, no, no. I am a total junkie. I mean, yesterday I was doing a press tour and you know, for a new launch in New York and I still made, you know, 50 to 60 trades.
- [17:28]
B
50 to 60 from your phone?
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A
From my phone and my laptop, yeah.
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B
Yeah.
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A
I mean, I've already made, you know, 10 trades this morning and I got, I've been in a, in an Uber coming here, you know, so. No, no, no, I'm a junkie. And I do invest long term in some stuff, mostly in myself.
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B
Yes.
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A
You know, but I also invest in companies. I invest a lot privately I mean, I've reached a point in my life where I can afford to make a lot of, like, I invest in a lot of entrepreneurs, I invest in a lot of ideas that are stupid long shots because I don't care. But I also invest in stocks that I like. I invest in sectors that I like. Like, I've recently been buying, you know, some quantum stocks. I've been building a little portfolio. I have a digital asset, Portfol, which is passive. I don't touch that stuff. I invest in our own companies, of course, but then I trade like I traded this morning. I've been trading crude oil, natural gas, bonds. That's just futures, that's all.
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B
How about prediction markets?
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A
I do a little bit. Here's my issue with prediction markets. First of all, I'm not a big fan of the guys that run the prediction markets. So I'm a little at odds with some of the things that they've done. It really pisses me off when people sell their souls for when they sell out. And I think they sell out the consumer for their own, you know, stock value.
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B
And when you say sell out is they're being dishonest, they're not being dishonest
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A
necessarily, but they bring people like, they bring people that I despise onto their boards or they make deals that, you know, they, they back certain types of politics that I despise. And I just stay away from those people because I don't like. We've always stuck to our principles and politically we've never given in and I won't. And I think that. So some of these prediction markets and some of these crypto exchanges, they've all sucked up to this administration in a way that kind of pisses me off. And I think it's short, it's shortsighted. And the other problem with prediction markets is I have two other problems. One is that I will not do business direct with somebody that competes with the platform that I'm building. So in other words, like, I think exchanges should be exchanges and brokers should be brokers and high frequency firms should be high frequency firms. But in the prediction markets, these prediction markets like Kalshi and Polymarks, they want the customers to come directly to them, but they also want our customers. And I work too hard to get customers to give them my customers. That's one thing. The other thing is if you trade a hundred thousand dollars of no show. So let's just say you did 400 shares of Apple, which is $100,000, okay, $250 a share, 400 shares, $100,000. If you bought and sold it instantaneous, you would give up about four to eight dollars. That's it. Because the markets are tight, they're liquid, they're tight, there's no commissions. That's all it costs four to eight dollars to make that trade. $100,000. If you do $100,000 of notional in the prediction markets, it's around 2,000 bucks. So you have $8 trading $100,000 of Apple or Spy or whatever else it is OR S&PS futures. Whatever you want, it doesn't matter. You can trade 100, you can trade $300,000 worth of S&P futures and you pay $2. Okay. Plus the bit width of the market. You know, 300,000 maybe, let's say $12. So it's a total of $14 for $300,000 worth of notional. You do the same thing in the prediction market. $6,000. It's a rip off. And I hate ripping off my customers or I hate putting my customers in the position where they're going to get ripped off. And then that's the two main things. My third issue with it is, is our fourth issue is that they're not strategic. So they're binary.
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B
Right.
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A
So there's no strategy. It's just, you know, will Joe Blow win the election? I don't know. You know. Okay, great, thanks. That's. Who cares? Like to me it's, it's brain dead shit, but whatever.
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B
Yeah, I mean it's, it also seems to be taking a lot of volume from sports. Gamma Ring.
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A
Well, it is mostly. Most of the bets are sports related now. I think they're going to have a day of reckoning because now every state is losing, you know, revenue. Now I have a big issue with the states controlling how gambling is because they make the gambling market so bad. You know, there's a 10% vig and it's just, it's horrible for the consumer. But the states don't want to lose revenue. So the whole system when it comes to sports gambling is messed up. So you're going to see DraftKings launch their own brokerage or exchange. You're going to see the same thing with FanDuel. You're going to need some regulatory intervention. I'm not sure how this is going to resolve itself but every single state is going to sue every single exchange and you're going to be. And everybody's going to, you know, a bunch of lawyers are going to make billion dollars and I'M not sure, you know, like, I just don't want it passed down to our customers.
- [22:42]
B
So let's talk a bit about tasty. You exited thinkorswim. I think it was bought for about $600 million.
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A
$750,000.
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B
750. And then you turn around and quickly start something else.
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A
Well, I signed a multi year deal when I left thinkorswim. And after two, I stayed two years after we sold and I went to the CEO, same guy, and I said, listen, you know, I, I actually, first thing I said to him is, am I ever going to be the CEO of TD Ameritrade? He goes, not over my dead body. And so like I, I'm still alive. Oh, yeah, yeah, he's great. Anyway, he, he goes, he goes, no. I go, listen, you know, I got to do something different. You know, I can't. This is not interesting to me working. I mean, I love, I love you guys, but. And I love the platform, but, you know, I got to try something else. And he's like, he's like, fine. He's like, I get it. So he goes, what do you want to do? So I told him I got this idea to build this company called tastytrade. And he goes, oh, my God, I can't believe you came up with another name I hate. He goes, tastytrade. He goes, who owns that name? And I go, well, it's a crazy story, but I kept the name in the deal. And even though I had bought it back whenever, but I kept the name. So he goes, you're really going to start a company called tastytrain? I go, yeah. He goes, all right, because I really like. Because I really think you're an interesting, a great entrepreneur. I want to be your partner. He's like, I want TD Ameritrade to be your partner. So how much money are you putting up? I go, I'm not sure exactly, but he goes, how much money you need from us? I go, 20 million. I was testing him. He goes, done. I'm like, on the spot. On the spot. And that's why I love this guy because he's a fast decision maker too. So he goes, done. So he goes, we'll do it in tranches, blah, blah, blah. So I go, okay, great. He goes, can I just ask one question? I go, sure. He goes, what am I investing in? And I go, well, I'm going to build this digital financial network, and instead of a traditional financial network like CNBC or Bloomberg or something, we're going to build a Financial network around. It's going to be a math network. He's like, a math network. Who's going to watch math? I go, well, we're going to turn finance into a logical equation. It's going to be this. We're going to challenge people through math. He goes, whatever, you know, he goes, all right, I'm in. So we cut a deal with them where we would know, send them customers. And we did that for five years. And we built up the. Within two years, we built the largest digital financial network in the world. Tastytrade was. We had people logging in from 190 countries. We had, you know, tens of thousands of people a day watching this crazy network on where we make jokes, where we have fun all day, where we had lots of different hosts, and where all we would talk about is complex math equations, like insane stuff. And people loved it. People wanted to be challenged intellectually. Nobody challenges them. They don't hear some guy on some network come on and say, I think bonds are going higher. Who the fuck cares? Who cares what you think? I want to know, based on current implied volatility, how much higher could they actually go based on how the derivatives are being priced or how much lower? What's my risk reward? Give me the real fricking numbers. Nobody does that. So Tasty took off and we started sending TD lots of customers. And after five years, our contract ran up and they said, we've been thinking about this. We would just like to buy you. So I go, you're going to go to the street now and buy me a second time? And they're like, that's what we want to do. So it was funny because they offered US like around $200 million for the network that they're an investor in. And we had four partners. We've always had, like the same. Scott and I have always been partners, but I also had two others. And we sat around, we were like, if TD wants to buy us for 200 million, we must be worth a lot more than that. We didn't even know because we don't know. So we said, we politely declined. And we said, we're just going to build another brokerage firm on our own.
- [27:03]
B
If you're sending them all the clients, why not keep them?
- [27:07]
A
Exactly. And we figured it'd be worth more. Well, it turned out to be worth 1.1 billion, you know, four years later and. Or five years later, 1.1 billion. And so we made the right move. We built new technology. The platform was even better than thinkorswim. But it was the same lead designer. Everybody's expandable, everybody's replaceable. But we have virtually, for the last 25 years, zero turnover.
- [27:35]
B
How's that possible?
- [27:37]
A
How is it? It is. It's the craziest thing, because we hire differently. We have no issue hiring friends who we know are going to be not just loyal, but they're going to work their asses off because if they didn't work for us, they wouldn't have a job. It's crazy to think, but we also hire really smart people, and we challenge them nonstop. Like, we found that the single most important thing is to challenge everybody. Like, don't make this like, some country club, or don't make this like some. Hey, you know, we're so happy to have you here. This is like, listen, either step up or we'll find somebody else. And the whole concept of challenging and then compensating. Well, you know, like, when we sold Thinkorswim, Scott and I, we gave $20 million just to our employees after the deal. When we sold Tasty, we handed out $30 million just to our employees after. Now, a lot of people had stock already, so they made a lot of millionaires. But on top of that, we took $30 million and just gave it, spread it out among all the employees.
- [28:50]
B
When there was no legal requirement.
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A
Zero. No, no, zero. Both times, we gave away $50 million total. Oh, probably over that. And there was not legal. Nothing. You know, we. Everybody that had stock already had it, and they got whatever was theirs. But in addition to that, we just gave away $50 million. And so that's just the way we are. That's the way we think. And we never publicized it. We never said a word to anybody. That's it.
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B
When it comes to managing people, you seem to be a very nice but direct person.
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A
One of the things that was challenging at first is that because we came from the floor where a lot of us were friends and we wanted some of these people with us is that it was like, we're friends, but I can't work for you. Like, that was the mentality. And a lot of the guys and women that are now running, like, the guy that runs Robinhood used to work for us, but he didn't want to come over right away. The guy that ran, you know, thinkorswim, he used to work for us. But these guys didn't want to come over right away because they're like. But they all eventually came over. Now they run the entire industry. Every. Almost every single firm. The person who Runs the trading at Robinhood, thinkorswim, Tasty E Trade. Like, all. They all used to work for us, and none of them wanted to come over initially. They're all like, yeah, I don't know. And then, you know, they all. As the floor started to die, they all came over and it's changed their lives. And we're all still friends. So you learn that there is. You can have a relationship with somebody and you can still be, like, buddies, but. But, yeah, you know, you just have to be whoever you were originally. When you have a certain amount of wealth, you will lose a few friends that can't handle it. And that sucks because I've lost, like, one or two really good friends that just couldn't handle somebody else's success. But for the most part, everybody's pretty cool with it. And. And that means you. You can't change either. Like, you know, I don't live. I live a really modest life. You know, I. I don't have any hobbies. I just work. I don't do it. Yeah, it's my hobby. I don't do anything crazy. I just. I just work. I don't even have an office.
- [31:00]
B
You know, I was actually going to ask you. Yeah. What's your relationship with. With money? Because you've had crazy multigenerational success.
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A
Yeah.
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B
And I've always heard some people I really respect say that money just enhances your personality. Whoever you are deep inside, money just brings it out.
- [31:23]
A
I think for some people, like, there's definitely. Money can change some people. I think in our world, we've stayed very grounded. It's easy to say when you have money, it's easy to say nothing changed. I think, you know, you have nice stuff, nice toys, whatever, nice houses. But I think people really respect the fact that I try to be the first person at work. Now I've been working 45 years. I try to be the first person in every day. You know, I work basically seven days a week still. My whole family thinks I'm insane. But my kids work really hard and, you know, my daughter kind of manages our family assets because I don't even want to. I don't even care. Yeah. I'm going to leave them and their kids generational wealth. So that's cool.
- [32:09]
B
For entrepreneurs who experience that kind of wealth and who are raising a family.
- [32:15]
A
Yeah.
- [32:16]
B
How do you do a good job keeping not just you, but the next generation grounded? Because that's one of the hardest things.
- [32:22]
A
Yeah. You know, it was tough because when we first. When I first Started out as a floor trader and we were making, you know, like my first year that I started to make money is probably like maybe two or three years into my career. Like I was probably like 1984 or 1985, I think 1985. I was down on the floor for three years and I made like $2 million, let's just say in 1985, trading my parents. My dad was a civil rights attorney, my mom was an art teacher. They made no money. They lived a very comfortable middle class life. I couldn't even tell them anything. I made more money that year. They made their lives. So it was really weird, you know, that kind of stuff. But you have a crazy life with all your friends in Chicago and they're all like you. And it's a weird city because there's 20,000 traders there and. And it's just. You almost think it's normal. But I, I remember when the Bulls drafted Michael Jordan, 1984. We were lucky enough to get floor seats that year and we had them for the whole time. Anyway, that's not the point. They were $75 a ticket when they first came out. Now they're like the floor seats. Floor seats, they were $75. Cause the bulls couldn't sell tickets then. Now they're like $2,500 a game per ticket. But then they were $75. And I remember my dad came out to Chicago. My dad grew up in the Bronx. He was an usher at Yankee Stadium. Make 25 cents a day, you know, like he hadn't been to a professional basketball game in probably 20 something years. So I took him to a Bulls game, he looked at a ticket, he goes, $75. I'm not going. I go, dad, there, it's, that's for the season. And he goes, oh, okay. And I'm like, oh, God, this is like that. That's, you know, anyway, that's the crazy, you know, it's weird.
- [34:11]
B
And how do you pass, pass that on to your kids?
- [34:15]
A
My wife is strange. Like she'll spend money, but she's cheap and she doesn't like to flaunt anything. And my kids, they stayed super grounded. I'm not sure that we did because we kind of always say, you know, you're raised by wolves, but you came out normal. And I think that's the case. Sometimes good kids come from bad parents, and sometimes bad kids come from good parents. I think in our case we had good kids came from bad parents. And, you know, they're both doing really well now still. And they're pretty grounded and they don't do anything. They know what's going on, but they, they live a normal like, you know, you would never know.
- [34:58]
B
So last time we talked, Tom, you told me that you're lost dog. You're building a trading platform without the trading.
- [35:08]
A
Yes, I like that.
- [35:09]
B
Trading is your whole brand. What's going on?
- [35:12]
A
Well, first of all, I have a few, I had a few restrictions, plus I, I didn't want to build a third trading platform. But as I've gotten more into what we're building, there's definitely aspects of it that are very much like a trading platform. What I wanted to do, I had this crazy vision that I could try to do something that nobody else has done. Well, first of all, you know, we built technology without knowing how to build technology. We, we built media without knowing how to do media. So I'm figuring, well, we can attack one other thing, which is this wealth inequality in America. Right now, wealth inequality is just, you know, it's, it's, it's gotten significantly worse over the past five years. It has not, there's been no contraction. It's gotten much worse. And to address it requires somebody taking a very hard look at, you know, where's the problem? Well, executives, specifically CEOs are grossly overpaid. Nobody needs to make $21 million a year or you know, or whatever the number is.50 million, who cares? Nobody needs to make 500 times or a thousand times more than an average employee at your same company. And so there's this, there's this wealth inequity and we started to research it and we found that the average employee at most companies is under compensated over the course of their lifetime by a few million dollars. The average CEO is overcompensated by tens of millions of dollars. Somebody's got to point that out and show where that statistically how we get there and really prove that this is something that can be addressed through education and through. Just like we kind of changed the game of derivatives by providing the quantitative side to it. Explaining to people like, okay, here volatility means expected move. Expected move gives you a price target on both sides that's actually real. It's not some made up thing by some crazy person. The same thing with career. So we started down the path of career optimization for individuals. Anybody making between let's say 50,000 and 250,000, like a pretty big range. And our goal is just to give people information. You know, let's give you a ton of information. But since we started building the software, we've expanded on it, and now we're including portfolio optimization in there because I wanted to tie more back to finance. So now you can upload your resume and optimize your career path. Not, we don't, we're not interested in resume, you know, fixing your resume. We're just interested in telling you kind of what you should be worth and what you're leaving on the table and what you should be asking for. And the same thing with your portfolio. Hey, here's why your portfolio is not optimized. And here's also a lot of statistical information about outlier risk. That's for starters. Then we're adding all these agentic AI tools to allow you to do everything from portfolio creation to risk monitoring to all this stuff that. No, it doesn't exist on any trading platform. That's why I said it's trading platform without the trading. And so it's all this cool stuff and it's free. Then we're launching a stablecoin because I want to build the Rails to deliver access to tokenized derivative markets, which I think are coming soon. And we started off by giving away a million dollars in crypto, just a pure giveaway, just to help us seed our base so that when we launch we'll have, you know, 20 or 30,000 people and that'll be really cool. You know, people have some money in their account and they'll feel like, oh, this is a real, you know, this is real. And so that's what I'm doing right now. Launching in a couple of weeks.
- [38:55]
B
So I want to come back in a second to tokenize derivative contracts. But stay a little bit on, on the product of Lost. Lost Dog. I guess you're targeting professionals kind of mid career. Are those the, the ideal also young.
- [39:11]
A
Yeah, yeah, yeah, yeah, yeah. We just signed up, you know, 2,000 kids in from a couple universities in North Carolina.
- [39:17]
B
So before they even get started, before
- [39:19]
A
they even get started.
- [39:20]
B
When I was in banking, the most frustrating part was that if you stayed and I was Citigroup, if you stayed, you were not rewarded for loyalty. It was the complete opposite. You were paid like shit. Whereas people who left, they double their salaries and people who left and came back, they tripled their salaries. Right. So there's also something rotten about the system.
- [39:47]
A
Yeah. Oh, the system. Listen, we can get into all the things rotten about a lot of things. We could start at the tax code and work our way all the way down. You know, there's so many issues that need to Be addressed. Yeah, I mean that's kind of stuff where all we're trying to do is give somebody the, the bullets, give somebody the information they need to talk to their firm and say. And not do it in an arrogant over the top way, but just say, listen, we've done a lot of research and I'm currently making X. And based on what. And I feel like people come in with a very logical, straightforward approach that usually works. People that are in my position in this city, I'm making 82,000. Most people that are in this position are making 85,000. I think I should be fairly compensated. I'm not asking for something that's unreasonable. And that's one thing that we're doing other things is we're giving people an opportunity to be able to see what they might be worth if they switch a job to different kind of career move to a different city, that kind of thing. Because we have it all mapped out. And I think that that's again, just trying to provide people with information and numbers. We also do a live show every day called One Lucky Dog where we answer questions on anything.
- [41:06]
B
You have the media DNA.
- [41:08]
A
Yeah. So we do an hour long live call in show every single day. And it's picking up a lot of steam. It's getting a ton of traction now. You know, it's starting out just like Tasty started out, but it's, it's just we're only doing an hour a day instead of eight. You know, I did four hours a day on Tasty and so far One Lucky Dog has been great. We built incredible new studios, we're building a new headquarters. We have a compound in Chicago on the north side of Chicago. And we're building out new headquarters and really all new production facilities. So it's cool.
- [41:38]
B
Why the name? Do you love dogs?
- [41:40]
A
Lost Dog. So you may appreciate this story. So I've been on the road doing live events. That's how we build our business. I do live events for 25 years, every other weekend. 25 years. Like 500 cities, insane stuff. One city that I was in, Atlanta, at some theater, most times we have like 500 people in a room. I'm doing a show in Atlanta and in the green room they have this giant poster of this thing called Lost Cat. L, O S S Cat. And it's this cat, it's this dirty, mangy cat. He's like missing teeth. It says help me find like whiskers, you know, like everything's spelled wrong, you know, drool, drooling, hungry. You Know dirty, you know. It was just the most amazing poster called Lost Cat. So I find who out who the owner of this theater is. I'm like, dude, I gotta buy that poster. I don't care what you want. Just give me a number and I'll buy that poster. He goes, not a chance. He goes, this is. He goes. He goes, I love that poster too. You're. You can't have it. It was like painted on wood or something. So he goes, you can't have it. I go, I go for. You mean there's no amount of money. He goes, there's no amount of money. It's like, okay. So I tracked down the artist and he sells me a ver. Because it's a print. He sells me like one made on wood, you know, like I have it hanging up. And I always said if we start another firm because I didn't know at the time this is back when we're own. Tasty. I'm going to call it Lost Dog because I love this Lost Cat thing so much. So it only has to do with this one poster which we actually have hanging up. We have a coffee shop that is just. It's a front for, for our production facility. It's. It's called Bad Coffee. It doesn't make any money.
- [43:32]
B
I love the naming of your products.
- [43:34]
A
So Bad Coffee is a really cute coffee shop in an industrial neighborhood near where I live. And it's a beautiful coffee shop. But it's, but it has on the wall, it has the lost Cat and the coffee shop. It's like for artists. It's a funky coffee shop and it has a huge mirror and behind the mirror is all our production facilities. And then it goes into like this 10,000 square foot space and all this other stuff. And so that's kind of where we work and so it's got a fun little vibe. So I moved everything up to the north side of Chicago.
- [44:07]
B
So let's switch gears. Talk about tokenization. I know this is, this is a super interesting topic. I think it's widely under appreciated by, by the market. But you, you've been following closely and you have some thoughts about what my equity tokenization and all the toxic tokenization bring.
- [44:28]
A
Well, I've actually built a few other businesses in the process that you're a builder. So I built an exchange, okay. Called the Small exchange License Exchange because I wanted to create this before there were micro futures. So micro futures dominate the industry now. But before there were micro futures, the CME didn't want to launch anything. So I said, fuck it, Fuck it. We have retail customers. I want to trade small futures. I'm going to build an exchange. So I went through the entire process of building an exchange, called it the Small Exchange. And then when we launched the small exchange, the CME came out and launched micro futures to put us out of business. Tried to, or whatever. This exchange wasn't successful because we couldn't compete with the, the cme. But I packaged that with another thing. We sold it for a quarter billion dollars to crypto.com. crypto.com, turns out didn't need one of the two exchanges, didn't need the small exchange. So they sold it back to me for 10 million. Then I was going to launch, I was going to tokenize it so we could let our customers be shareholders. I went through the whole process, but it was really with like Republic securitized, you know, whatever. We talked to everybody. It was such a legal hurdle, you know, this is a couple years ago. And it wasn't worth the effort, like to get to raise capital and for all the stuff we had to do on our side from an accounting standpoint and from just. There wasn't a lot of advantages to tokenizing at the time. So I went through the whole process, learned a lot, but ended up then. So bought the exchange back for 10 million and then sold it to Kraken for 100 million. So I have these other trades in there, you know. So I scalped that exchange twice that we built and now Kraken's going to do something else with it. But I'm telling you this because it was our first, like, attempt to get into liquidity pools and tokenization. It was really hard. The whole liquidity pool concept I wanted to do because I wanted to kind of do a, a listed version of like uniswap type thing. And then on the tokenized side, I wanted to be the first exchange where it could have Sheryl, you know, the whole thing. And I, I just couldn't pull it off because the regulatory environment at the time was a couple years ago, was not very conducive to that kind of approach. And the DCOs are, are clearing firms, they clear exchanges and the DCO, the DCOs that were available to us, like OCC and the CME and stuff like, refused to clear us because of the nature of the products. So it became a very difficult, you know, now I think you could pull it off, but the regulatory environment's changed a lot, you know, with Gensler gone and new people at CFTC and everything else. And the whole blow up of, you know, the event based stuff I think I could pull up today. But you know, I'm not going through the whole process again.
- [47:18]
B
For the consumer, both in the US and internationally, what do you think is going to be the biggest benefit of tokenization?
- [47:25]
A
Well, I mean not having to deal with. Not having to deal with clearing and currency conversion, I think so. Tokenized assets to me aren't that interesting anymore because tokenized assets, I'm going to view those as a little bit of dead money, kind of like crypto. And when I say dead money, I just mean it doesn't trade. It just sits there like you buy crypto. Okay, fine, you buy crypto, there's nothing else you can do. You buy some tokenized stock or some tokenized asset, you're going to sit up with it. That's the whole reason you did it. It does make it easier for international customers, especially not having to convert to US dollars. It makes it easier. You don't need a clearing quotes, all that kind of stuff because it's all generated, you know, third party, it's free, it's 100 times better. But I think the real future is going to be in tokenized derivatives. So in other words, the strategic side to tokenization, that's where I can see this exploding. Options, futures, anything that's leveraged, anything that's strategic. Liquidity pools. Like I can't believe. I mean we designed an incredible mechanism for liquidity pool. Liquidity pool functions for futures. Meaning just what that means is essentially why should Citadel get all the action? You know, let's let everybody participate. I mean, I'm a customer. If I want to put up a hundred thousand dollars to make markets, why not?
- [48:54]
B
And this is probably going to be driven by platforms like crack and like, you know, their, their peers or.
- [49:03]
A
I mean, I would think that. Yeah. I mean Kraken, Kraken's very aggressive. I don't know that they are ready for this yet. They don't even have options on their US products yet. They're way behind in that marketplace. Way, way behind. I mean I would think that Robinhood's probably the most forward and I don't think they're quite there yet, but I think they're probably the closest thing would be Robinhood right now.
- [49:28]
B
Makes sense.
- [49:29]
A
Yeah, I mean there's probably some other firms. There are other firms that are, but they're mostly institutional and so they're building like prop products and stuff. But on the retail side I'd probably
- [49:39]
B
say Robin, Tom, before we run out of time. I wanted to ask you, after all this time, all the success, you're clearly having fun, Is that what motivates it? Well, what keeps you motivated?
- [49:50]
A
I don't do anything. It's not fun anymore. Yeah, I mean, you know, you do certain things, you know, that you have to do to make the business work. But what motivates you at a certain point in your life is your legacy, you know? What are people gonna say about you? I want people to say, hey, he was a really good entrepreneur. I don't need any more stupid money. I don't need any more, like, you know, success. I'm motivated because what we're building today is another challenge. And I want to keep, like, building really cool stuff that challenges people, that challenges our own teams, that challenges myself and. And we have fun doing it. I can't imagine anything worse for me when would be, like, sitting on a beach or. Or going to a country club. Like. Like, I would seriously kill myself. Like, I can't. Like, that is, you know, I mean, fine for a weekend or whatever, but that's not what. How I want to live my life, you know? Like, I want to build stuff. I love working 10, 12 hours, 15 hours a day, and I love building stuff and just seeing, oh, this is a really cool piece of technology, and I love answering emails, you know, like, it's. It's a sickness. But I'm still alive. Right.
- [50:55]
B
You know, I. I empathize. I mean, the. Why. Why do anything else?
- [50:59]
A
Yeah. That's why I said I don't believe in retirement. Like, people talk to me about retirement. Like, why would you ever freaking retire? Like, what's your. What are you gonna do?
- [51:06]
B
Someone who I've interviewed and built a relationship with is Alan Patrick. I don't know if you've met him.
- [51:11]
A
I don't know. He.
- [51:12]
B
He's 91 years old.
- [51:13]
A
Yeah.
- [51:14]
B
Still going. He's one of the first veg capitalists in history. And he says the same thing. Like, why retire? You just keep going. He's like, all my friends are retired are now gone.
- [51:24]
A
Yeah, you know, yeah, he's totally. He's right.
- [51:27]
B
What's one thing that you would still like to achieve?
- [51:29]
A
Well, I've always wanted to dunk a basketball, and I don't think that's going to happen at this point in my life. That's one of the major regrets. You know, I. I don't know. I mean, I don't think about things like that. You know, I just, you know, hope that. Hope that what we're building is successful and it's fun, you know, continues to be fun.
- [51:46]
B
You're very public. You. You're very open. Yeah, a lot of people feel like they know you because they listen to you. What's one thing that people misunderstand about you?
- [51:56]
A
I'm not sure they misunderstand too much. I mean, because we have been. When we built Tasty, originally, we had a. It was. It was Tony, myself, a handful of other people, Liz, Janny, Veneta. There was. There was a group of us core that started. And we had this rule. If you're not willing to expose everything about yourself, you can't be part of this team. You cannot hold back. There's nothing off limits, because if there's something that's off limits, it's not going to work. And I always admired that on certain hosts doing crazy talk shows and stuff like that. And I feel like that's been one of our strengths, is that we've been so open about every part of our lives and so public about it. That's why so many people kind of, you know, we've developed these relationships. You know, they're clients, but they're also friends. You know, it's hundreds of thousands of people. It's. It's kind of crazy.
- [53:00]
B
Yeah. All right, so in 30 to 60 seconds, we're gonna do rapid fire. Okay, favorite story from your trading floor days.
- [53:08]
A
Favorite story. You mean good or bad? Okay, up to you. Favorite story. I've told this before, but the.
- [53:17]
B
The.
- [53:18]
A
It's a little long, but I'll shorten it. Desert Storm, I think it's 1991. It's an invasion of Iraq, the whole deal. One of the kids that used to be on a clerk on the floor was. Became a cameraman for cnn. He calls into the pit on the afternoon before we go to war that night. And he calls into the pit and he tells everybody, we're going to war tonight. Because I'm on the front lines with my camera for cnn. He goes, it's going to be televised. And everybody kind of knew it. But everybody goes crazy. Everybody gets short buying puts, selling calls, selling futures at the cbo, at the cme. The market starts to tank, and in a short period of time, it's only like 30 minutes before the close. And the broker standing next to me, still one of my closest friends, gets stuck with a 50 lot of calls that are in. In the money. And he's like, I gotta. I gotta get rid of these calls. Like, for a customer. I'm like, none of us Wanted to buy calls because we were crashing. He goes, tom, you gotta take these calls. I'm like, great. So I take the 50, lot of calls. Meanwhile, I have a ton of puts, I have a ton of short deltas, all this stuff. Long story short, that night we go to war. Everything's televised. We're all figuring out how much money we're going to make on all of our short positions. And I figure out how much money I'm going to lose on those longs and make on the shorts that was going to basically break me even whatever. The next morning we open up limit. Everybody on the civo floor, everybody on the, on the Merc floor. Everybody gets killed. I make a stupid amount of money because those 50 calls that he stuck me with opened like $50 higher. It was insane. And so, so I make like a ridiculous amount of money for all the wrong reasons. I would have given those away for nothing. The night before, I couldn't sell. And that was like one of my
- [55:12]
B
funny stories that maybe it's the same story, but what's the worst trade you ever made?
- [55:20]
A
Oh, well, I made a lot of really bad trades. But one of the worst trades that we made was we were doing some program trading that's like index arbitrage. So we had one afternoon on expiration, we had about a hundred million dollars worth of stock to buy. That's just because we had the equivalent amount of short derivatives. There was no risk to the trade, but we knew we had $100 million worth of stock to buy. So we figured that if we were short all this stock that everybody on the street who does index arbitrage also had to be short. So we thought there's going to be a huge markup on the close. So we come in the pit about an hour, half hour before the close and start buying every call on site for a markup. It didn't work. For some reason, we were the only buyers. Everybody else was a seller and they killed the market for close. And we got close. Killed on a riskless trade. Murdered.
- [56:14]
B
Any book that you recommend, often
- [56:18]
A
on finance, on any topic, the only book, there's two books, I mean, in the world of finance. My favorite book is When Genius Fails. That's about long term capital management. Yeah, it's a great book. It shows you that even if you're a Nobel Prize winner, nobody knows anything. And it, it also shows you that, and I've used this line a billion times, genius fails when you forget that size matters. You know, like your trade. Size is one of the Single most important things. And, and I think that's, you know,
- [56:50]
B
who's a leader that you admire and why. And by the way, the, this question is the reason we met because I asked Edward Woodford from ZeroHash that question and he brought a view.
- [57:04]
A
Edward is the best young CEO I know and I've known him since he got out of MIT and since he started his first business. And I've been mentoring him and working with him and he's been a close friend, you know, ever since. It's over 10 years now, 12 years to see what he's done. It's freaking incredible. I'm a huge buyer believer in him. Amazing story. For me, this is a more difficult, this is a more difficult question because in the industry itself I don't really have like a mentor or leader, you know, that kind of thing. I admire people that are willing to take certain amount of risks. I've always admired like Howard Stern because he put it all out there. I've always admired Larry David because he puts it all out there. Like that's, it's, it's very different. I don't have like an, an entrepreneur. There are a couple of like local Chicago entrepreneurs that I think are incredible but nobody would have ever heard of them, you know, and that I really respect and like, and things like that. But I think, yeah, I don't have like a business mentor.
- [58:10]
B
If you were starting over as a 20 something year old with $10,000 in savings.
- [58:16]
A
Yeah.
- [58:16]
B
How would you invest those?
- [58:17]
A
It doesn't matter. I would take as much risk as you can if I was starting over. As I tell every 21, 22, 25 year old, listen, don't overthink this. Spread it around. Take as much risk as you can. Learn. Either you're going to learn how to win or you're going to learn how to lose. It doesn't make any bit of difference. But just learn how to take risk. And every time you come to this crazy little fork in the road, go the way that you think gives you the best probabilistic chance of success with the greatest reward. Like take as much risk. The Gen Z or whatever they are today is a little bit on the gutless side and they need to really appreciate, you know, that. And I understand why. They have more debt, they have more, they have more concerns. But you guys take a lot of risk. I mean, I got out of college when we were in the middle of a recession. Interest rates were 20%. So I don't really listen to all the crap when people say, oh, there's nothing. You know, we all went through that. Yeah. You know what? Just take as much risk as you can. Take as many chances as you can. Don't be conservative about anything.
- [59:24]
B
Love it. It's a great place to end it. Tom, thank you. This has been fascinating. I. I could talk to you for hours. Thank you so much.
- [59:34]
A
Thank you.
- [59:36]
B
Thanks for tuning in, and I hope you enjoyed this great episode with Tom sosnov. If you want more interviews, please subscribe, follow and leave a review on Apple, Spotify, or YouTube. It helps and means a lot. And if you have any suggestions or thoughts about the show, just drop me a line on LinkedIn or email. See you next time.