Saturday, 21 May 2016

Celebrating 1000 days of independence

15:42 Posted by The Thalesians (@thalesians) No comments

Time is wonderfully eclectic. The present sprints on, a fleeting flash, the past clings on in memory, the future, that world of the unknown, waits to be fashioned by the sweeping hands of chance, a realm where perhaps fortune or disaster beckons. Repeatedly, the past transcends into present, reminding us of its passing. There is a certain human obsession with anniversaries, the time when the past barges most forcefully into the present. Whilst we might celebrate anniversaries, which coincide with multiples of years, those relating to a multiple of days are usually simply ignored. It is rarely the case that anyone points out when 1000 days have passed since a certain event was plucked from time. After all, it constitutes 2 ¾ years, a duration of time which hardly bears any significance from any astronomical viewpoint. In that case, why do I seek to draw attention to 1000 days as a specific anniversary?

This week, I noticed by pure chance, that it has been 1000 days since my career abruptly changed. It was 1000 days ago, that I resigned from my job at Nomura to embark on being a full time entrepreneur at the Thalesians, an organisation had co-founded several years earlier in 2008, initially to host quant finance talks. I had spent years building up systematic trading strategies in several large institutions. Rather than doing this in an investment bank, I was seeking to do this as an independent entity. How difficult could it be?

There is little I could have predicted on this journey, neither the successes nor indeed the numerous failures. It all seemed so obvious when I resigned from my job. I thought that I knew precisely what I would do to make this endeavour a success. However, what I have learnt in these 1000 days, is that very little is obvious or predictable, when undertaking a totally new project. Whatever vague plans I had inside my head 1000 days ago, have dissolved under the weight of pragmatism. Events are the master of every well intentioned plan (or indeed lack of plans).

I under appreciated the role of chance, for example a chance meeting, and overstated the role of hard work. This is not to say that building a business makes you a servant to chance and hard work is dispensable. A chance meeting with a client will only happen, if you go out and try to engage with people, attend conferences, visit clients and present your work. All of this is indeed hard work, but not necessarily the type of work I had envisaged. I had previously thought that the vast majority of my time would be spent on researching trading strategies, coding them up and testing them. Whilst I do spend a large part of my day doing analytical work, I devote a large proportion of my time interacting with clients, doing marketing and travelling.

If clients are unaware of you, there is no chance of engagement. Marketing in all its forms gives you a better chance of engaging. Yes, social media might be a way to broaden your viewpoint and I would strongly recommend using Twitter and LinkedIn. But ultimately a relationship is not built of 140 characters, but in actually meeting people in real life. At the beginning I was working either at my home or more often, a Starbucks and in retrospect whilst it was ok for the first few months, particularly when I was writing my book, it later became far too much of a hindrance. Later, I was accepted to join Level39, a fintech accelerator based in Canary Wharf. Having other startups developing around you, albeit often with very different business models, has been a fantastic experience and has been a great way to meet folks. It also makes you realise that many other people are in a similar situation to you. The view from Level39 isn’t too bad too (see sunset image above).

There is the cliché which states “failure is not an option”. In practice, failure is the default option. Most of what you try will fail. Through the course of your business, you will meet many potential clients. Most of these people will not become clients. Far from seeing this as failure, it is a necessity to find the clients who really find value in your work. Each meeting is a learning experience, and particularly valuable for getting feedback. From a research perspective, hearing what smart folks think about my work has been crucial in helping to improve it. Also seeking to understand what clients have wanted, has been important. This has led me to pivot from purely offering research on systematic trading to doing bespoke client projects, running workshops and also building a software framework for developing trading strategies (PyThalesians, an open source project available on GitHub). In a sense, I have been lucky that I have been active at a time of the burgeoning data science scene and the use of Python. Many of the projects I have been involved in have involved Big Data, and seeking to understand how it can be used to generate alpha.

Along the way, there were numerous times when I questioned my decision to jettison the relative safety of a bank for a startup, particularly at the initial stages, when most of my time was devoted to building an analytical framework for my work and writing a book about markets.

However, I am glad that I have persisted on this project during the past 1000 days. I have learnt a huge amount during this time and developed new skills. I have built up an array of clients both from hedge funds and a number of data companies. I have now got to a stage where the business is sustainable and growing organically without external funding, save for my own trading income which I’ve used to seed the endeavour.

Yet there is still far more to go in terms of establishing the business and indeed, I suspect there always will be. Would I have done some things differently? I am sure I would have done, although, I am still of the belief that it was the right decision to pursue an independent path, even if has been far more difficult than I had ever envisaged.

Let us see what the next 1000 days hold. Time will pass, it is time to grasp its opportunity. 

Like my writing? Have a look at my book Trading Thalesians - What the ancient world can teach us about trading today is on Palgrave Macmillan. You can order the book on Amazon. Drop me a message if you're interested in me writing something for you or creating a systematic trading strategy for you! Please also come to our regular finance talks in London, New York, Budapest, Prague, Frankfurt, Zurich & San Francisco - join our group for more details here (Thalesians calendar below)

25 May - London - Paul Bilokon - How to run electronic market making business?
09 June - Zurich - Felix Zumstein - Python in quantitative finance
16 June - New York  - Tobias Adrian - Nonlinearity and Flight-to-Safety


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