WSO Podcast | E57: One Quant, 3 HF Failures, 4 Pivots and $550,000

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Member @john_quant shares his path coming from an engineering background to landing in the hedge fund industry. Learn how he's managed to pivot successfully three times as several risky senior quant positions at hedge funds didn't work out as hoped. Find out how he came out relatively unscathed and what he recommends to younger listeners trying to position themselves as traders.

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WSO Podcast (Episode 57) Transcript:

Patrick (CEO of WSO): [00:00:06] Hello and welcome. I'm Patrick Curtis. Your host and chief monkey, and this is the Wall Street Oasis podcast. Join me! As I talked to some of the community's most successful and inspirational members to gain valuable insight into different career paths and life in general. Let's get to it. In this episode, member John Quant shares his path coming from an engineering background to landing in the hedge fund industry. Learn how he's managed to pivot successfully three times as several risky senior quant positions at hedge funds didn't work out as hoped. Find out how he came out relatively unscathed and what he recommends to younger listeners trying to position themselves as traders. Enjoy. John_Quant. Thank you so much for joining the Wall Street Voices podcast.

John_Quant: [00:01:03] I think you're hearing me better.

Patrick (CEO of WSO): [00:01:05] So it'd be great if you could just give the listeners a quick bio.

John_Quant: [00:01:09] That's all I have about decade of experience on the buy side on Wall Street. I worked at a logistics manager for a couple of hedge funds and recently actually moving to data center consulting was taking on the role leadership role in a large consultancy firm.

Patrick (CEO of WSO): [00:01:32] And so you said that data analytics role.

John_Quant: [00:01:36] Correct, yes. So, so building on my experience that I've had over the past decade, working in the buy side, in the quantity side, I'm not actually really helping consult with different institutions, financial non-financial on using data science to basically help with business.

Patrick (CEO of WSO): [00:01:58] Great. And so starting back from the beginning from undergrad, where did you go to school or do you know not what school? But like, were you back in the UK for school? Were you?

John_Quant: [00:02:09] Yes. Yes. I'm sure you can tell by my accent. I come from France, so I studied what people do in French. Go to engineering school so heavy on math, physics and computer science. I did that for about five years. Like, keep the on a call, which means like top school of engineering. Yeah. When I finished that, I went to the UK to do my master, which was in engineering because at the time I really wanted to work in aerospace, which actually I did for robotics from during my final internship. I liked it, but I found it was a bit too slow for me. You know, it takes about 10 years, roughly to between the time somebody designs the plane on a computer to the first flight and sometimes even longer. I think gas in the F-35 in the US Army is notoriously very, very late. So I was looking for doing something a bit faster paced and that's sort of when I got approached, you know, being London by other proof, by a lot of financial firms that were 2007. So it was right before the financial crisis. So I think it was still massive appetite to hire engineering graduates to banks, say, to be approached by quite a few financial institutions.

Patrick (CEO of WSO): [00:03:31] So what parts of the what parts of the banks were interested in you? I mean, I can guess, but better, you should tell us.

John_Quant: [00:03:36] Yeah. So I mean, I mean, given my background read at the time was the all like derivatives, you know, sales and trading, really that was hiring a lot of French guys. So, you know, big appetite for all the big banks in terms of hiring me for doing all the pricing and so on and so forth. What I ended up doing, though, was to take an internship with a hedge fund, which at the time was not very big, but since then grew to almost $30 billion. And that's pretty much what kick started my career, really. So did this summer internship rate as I was finishing my master. And from that internship, I managed to land a job at a larger manager.

Patrick (CEO of WSO): [00:04:18] Let's go back. So as an engineer, kind of with the really heavy quant background applied math, all the good stuff with a master's degree or earning your master's degree. Tell me about was it something where you and I know it was before the financial crisis, so it was kind of booming times. Were you getting heavily recruited by these firms or was it something where you still it was competitive and you had to kind of network your way in?

John_Quant: [00:04:44] I guess it was a mix of both. I mean, my university being a top school in London, you know, we actually had, I think every week there was a different bank coming and offering free drinks and free food and presenting data. And when you're a student and you're broke, I mean, you definitely go to all this stuff and you get some food and drinks. Yeah. And so, yeah, we are definitely approached by quite a lot of firms at the same time. Also use my network to, you know, I went to a few large bank and the trading floor and tried to meet with different people. So yeah, I must say what's kind of strange that I then study the other issue? Because, yeah, we were very approached by the sell side, and I think there's only one hedge fund. There was one Bayside guy that came from a university because the founder was from that university was an alumni. So was it

Patrick (CEO of WSO): [00:05:37] Was a competitive to get that one? Is there a reason why you think you got that one by side role?

John_Quant: [00:05:42] I mean, actually, I think that industry was very competitive because I remember I was at the business school and there was lots of people doing a master's in financial engineering that applied to the industry. But for some reason at the time, they were looking for somebody that could very well in MATLAB, in R, MATLAB and all. And because I had done my previous internship was again in aerospace industry and I basically did simulation in MATLAB for like six months. They said, Okay, we know you don't know anything about finance. We know you can this. So you're going to bypass all these guys that pay like 50 grand for their MBAs and whatever. We actually going to get you as an intern. So that's kind of my lucky, lucky break.

Patrick (CEO of WSO): [00:06:26] So do you think that was it was kind of lucky you didn't plan it that way. It sounds like it was just some skills you had developed it.

John_Quant: [00:06:33] Yeah, yeah. So I didn't plan to go into finance and I didn't plan to go into the buy side. I was what I would end up on a trading floor. And one of the big

Patrick (CEO of WSO): [00:06:42] Banks, I think that's an important lesson. You had just in-demand skills. You had demonstrated six months internship for skill that just happened to be in high demand for the buy side or for the specific fund. And so that that kind of made you stand out in front of all these kids who were doing heavy financial engineering with an expensive degree?

John_Quant: [00:07:00] Yeah, exactly. Yeah.

Patrick (CEO of WSO): [00:07:01] So you go there for now, this is, you know, nothing about finance. This is the job right after your masters or this is this is your internship.

John_Quant: [00:07:08] Yeah, right up to. And again, my mentor was in mechanical engineering, so I didn't even know what Roomba was like. Just, you know what? I barely knew what a bond and a share were. But I've had a very great mentor doing the internship and he taught me everything and he had a background in quantitative trading and had been like trading U.S. stocks and Japanese stocks within quant models for like 10 years. So he really, I mean, he really was.

Patrick (CEO of WSO): [00:07:37] But was that so you graduate, you graduate with a degree in mechanical engineering, but you're going to work for our hedge fund? Yeah. And you specifically like that wasn't where you intern or they said, Hey, we'll give you an internship first. And if you do well, we'll give you full time right after. Is that the was that the deal?

John_Quant: [00:07:56] Yeah, yeah. Yeah, they gave me an interesting personality. They say that. Let's see what happened. So here's the thing that happened with my team, though. If you remember in 07, it was the quant meltdown and there were exactly in the middle of it. So she may and her team, which was about 10 quant traders always remember they showed me the track record over the past five years, basically like a straight line up. And that's exactly when I was an intern. They had the most draw down. And basically, I think everybody by the end of summer got fired. So is your. It was your fault. So yeah, I'm lucky charm or whatever. Like, I don't know if I have other. I don't know. But yeah, they told me toward the end of the internship, they say, Well, look, we really like to hire you, but we're losing so much money you should basically interview somewhere else. And that's when I try to interview. And that's why I eventually got a job at a much larger asset manager, which at the time felt much safer. And little did I know that actually, that would be great. That was a great decision because it was about to happen. So many people are going to get laid off.

Patrick (CEO of WSO): [00:09:09] Yeah. So at that large asset manager, you made that transition to kind of almost a safer, larger company. But a lot of large companies are still laying off thousands of people at this time. What made you feel so safe to make that jump? Or you just felt like it was safer than where you weren't going to have a job either way? So it's kind of the best option is that how I should think of it?

John_Quant: [00:09:24] Yeah, everything was relative, right? Yeah. Like I already sort of. Despite my very limited knowledge, I understood there were some problems with banks, and I also understood some hedge funds were really struggling. And so I felt like it was something big and stable and then sort of weathered the storm over the next.

Patrick (CEO of WSO): [00:09:44] This may be very this may very be very applicable in 2020. We'll see.

John_Quant: [00:09:49] But yeah,

Patrick (CEO of WSO): [00:09:50] It could come full cycle if we're kind of at the top of the cycle, it'll be interesting to see if we have a recession and how people weather that.

John_Quant: [00:09:56] But and also not to give myself too much credit because again, maybe another 20 25. But I think at the time, also what I wanted to do is be somewhere big where I could learn lots of different things and not being a small hedge fund where you felt like basically you can only learn from your boss, and that's pretty much it. So that's why I think that was an important factor as well.

Patrick (CEO of WSO): [00:10:17] So you ended up at this large asset manager for a very long time kind of get it promoted a few times and tell me what was good about it. What was interesting the day to day, why did you stay for so long?

John_Quant: [00:10:30] Yeah, well, what is wrong? Well, I

Patrick (CEO of WSO): [00:10:34] Mean, it's just rare to see that nowadays, you know, so I'm just trying to figure out.

John_Quant: [00:10:38] Yeah, well, first, I think what I think was great during my first few years, I worked in risk management. And so think about it is when it was 07 to 09, and I work in a certain risk management. So again, that felt basically like a massive demotion because think about it, I was in front of his trading team in a hedge fund. I could have been higher there, but then they all blew up. So then I say, OK, I'm going to look this like risk management role in this asset manager, and I'm going to see what happens. It was just amazing learning curve. The next two years, from seven to 09 to learn about with everything that can go wrong went wrong. And then all the models blowing up, teams getting fire and all sorts of all the assumptions you had on finance

Patrick (CEO of WSO): [00:11:22] Was your butt was you're so like things were going up at a hockey stick from two thousand twenty to two thousand one or two thousand two to two thousand seven. Everything was great. Everything was way up into the right as you had that major draw down at that first internship, you jump. But did you specifically or strategically want to be in risk on purpose knowing that?

John_Quant: [00:11:42] No, no, no, no,

Patrick (CEO of WSO): [00:11:44] No credit for, you know, credit for you

John_Quant: [00:11:45] Because I would not say, I don't know. I think it was a lot of back. So it just felt like risk felt safer in a large firm felt safer. But just do they consider that?

Patrick (CEO of WSO): [00:12:00] Do they consider that more like middle office? You're still doing quantitative analysis, right in terms of looking to the traders, but you're kind of you're the you're probably the group that's saying, Hey, you can't do that or like you've got to hedge your strategy better or whatever.

John_Quant: [00:12:16] Yeah, no. The big advantage I had was the risk where the firm I was in really put risk management at the forefront of everything. And although not often do that, but they actually did that. And so I was a very exited from office. Connected role, and I was constantly in contact with the offshore manager of helping them understand the risks, so it was way beyond reporting. It was almost like consulting, really. So it was really being a risk consultant with the front office and helping them sending the portfolio. And again, during that period, they really needed with my job to give them the right information so that that's and that's sort of I mean, we can get on to that. But after two years of that, that's pretty much how I got into actually changing the vision and moving to front office again. Basically moving as a portfolio manager for the team that I was supporting.

Patrick (CEO of WSO): [00:13:10] So you were supporting this team as a kind of a risk analyst or quantitative analyst. And having developed that reputation was it considered a promotion to go to PM or, you know, in front office? Or was it were you doing less quantitative work as a PM or were you still standing?

John_Quant: [00:13:28] Yeah. Well, I remember my book. He told me, You're going to the dark side. So I decided I risk who are like the sort of geniuses in the like you say, like the pure geniuses in the firm. And because we do trade, we could just focus on models and all these other things and say, Yeah, you're going to the dark side. Be careful the upside and downside of being in front office. But it was pretty much I mean for me was, I mean, I was a massive promotion. I mean, because I knew both financially, but also in terms of my career. Yeah, that is very different than staying risk management for the next 10 years.

Patrick (CEO of WSO): [00:14:09] Let's talk about pay, then as a financial promotion. So you were doing you were in risk. You're a quantitative analyst at this large asset manager for a few years. What was the pay or trajectory or range? While you were kind of only your first few years out of your masters?

John_Quant: [00:14:23] I mean, I mean, look, I can tell you might say because that's a long time ago. And frankly, that's something I repeat a lot to my opinion now when they complain about not getting paid like, you know, $200000 a year, I'm like, Okay, here's the thing when I started in this largest measure, I was thirty five thousand pounds a year, which is eighteen dollars for electricity or something. Yeah, yeah. You know, living in London, which is not cheap.

Patrick (CEO of WSO): [00:14:48] Yeah. So you were saving nothing. You're saving nothing, living with roommates or whatever.

John_Quant: [00:14:52] Oh, yeah. Well, I was yeah, I was sharing with like three roommates and, you know, commuting and all this sort of stuff. And, you know, but you know, I could see that I could see people around me making a lot more money than that. And I was like, OK, if I stick around, I think it's going to be much better than this in a few years. But she

Patrick (CEO of WSO): [00:15:11] Did. So tell me what happened when you got promoted a couple of years later to PM

John_Quant: [00:15:14] As a vice president? Well, I mean, pretty quickly my salary for doubled. I mean, I had a very small bonus to the media that it was like five or 10 bonus when I started. But you know, it was away because it was. You are lucky to get the job at all. Yeah. But I think, you know, easily my salaries are double very quickly when I go to the front office. And the bonus structure also changes a lot on the front office. So actually, your base salary may not increase that much, but you start to get very quickly, like 100 percent bonuses. So, you know, then you might maybe pay 50k pounds, but then you get one 50k on us. And again, when you're like 22 or 23, you're probably pretty decent. I mean, dollar, how much

Patrick (CEO of WSO): [00:16:00] Were you expected to generate business in that front office role, like as a VP?

John_Quant: [00:16:05] So, I mean, again, all of that came organically. I think first, frankly, I was sort of a glorified like risk analyst sitting in the front office. But what I what I again, I was very lucky. I had one of my boss that was great and he was really into options and he said, Well, look, you're seems like a dude. So here you go. Hey, I was getting back into derivatives, getting

Patrick (CEO of WSO): [00:16:28] Back into sorry, getting back into the what

John_Quant: [00:16:31] I thought. I'm getting into derivatives as derivative French guy in Wall Street. So he was like, Okay, well, right now you're doing what the modelling on risk. And so I said that you should want to be a PM and you should maybe stop trading. And how about you stop looking at buying put options to protect against crashes? And that's how very organically that sort of became the like the option guys for this mutual fund that we are managing.

Patrick (CEO of WSO): [00:16:57] Got it. And do you feel like, well, maybe I'll step back. So you were there for quite a quite a long time? So where was the before we get off of pay? Was the pay kind of the bonuses just totally dependent on the performance? Or was it as the PM there? Or was it like how will the firm was doing or was it more how you were doing specifically in your little world of whatever

John_Quant: [00:17:20] Assets you were managing? Absolutely. Yeah, I think it's always a mix of the three things is how the firm is doing, how your team is doing and how you are doing. So it's probably a mix of the three. What do you think

Patrick (CEO of WSO): [00:17:31] Was what was your best year like around? What did you earn like you were you? Did you ever get up to like one hundred k pounds base or one hundred K?

John_Quant: [00:17:39] I feel like as a DP, my base in palms was eighty thousand and my bonus was, I think, maybe six for one.

Patrick (CEO of WSO): [00:17:50] Forty one hundred forty pounds. Not bad.

John_Quant: [00:17:55] So, you know, it's 100k plus, which was all right. You know, just vice president. Yeah, yeah, great.

Patrick (CEO of WSO): [00:18:03] So you're there, you're kind of still learning. You still have good mentors. It sounds like,

John_Quant: [00:18:09] Yeah, my boss was just awesome. It was great. I mean, he was a bit of a maverick, but in a good way.

Patrick (CEO of WSO): [00:18:14] And so how did you decide it was time to leave? Like why?

John_Quant: [00:18:20] Yeah, things are going, yeah. Yes, I was I was on for five years, and at the end of the five years, I was managing almost a billion dollar book of notional in terms of options and other derivatives strategies. So, you know, after five years, I really made a name for myself in the company and on the street as one of the big buy side guys involving options and options on the VIX and different derivatives strategies and swaps, etc. So, you know, I wasn't a very good seed. And that's what all my brokers to tell me. But, you know, I was at a stage where I really wanted to maybe do something a bit more quantitative and more research rather than just trading. I mean, I was using models and stuff like that to trade, but I wasn't in a quant team and I wasn't doing like quant trading, right? And I, how should

Patrick (CEO of WSO): [00:19:14] I think about that? How should I think? How should the listeners think about like what is defined as quant versus not? So you were using models to guide your decisions, but it wasn't all algorithmic?

John_Quant: [00:19:23] Exactly right. So for example, I would have some spreadsheets in Excel that would tell me, Hey, these options strategy looks pretty cheap, or I would have some models that were developing or that would tell me. Or if you test, for example, the shape of the VIX future curve as the signal, it gives you pretty good hedge ratio or deciding you should buy or sell this feature, which was never like my model this morning telling you to buy two units of X. I should buy two units because it was more like, Yeah,

Patrick (CEO of WSO): [00:19:52] Or it wasn't your model actually executing

John_Quant: [00:19:54] The trades. Yeah, yeah. So, you know, but through developing some of these models to help me, I was like, if somebody were doing something completely systematic, but I was just waiting for the right opportunity to do that.

Patrick (CEO of WSO): [00:20:10] So tell me about how you even found that was it recruiter's? Was it just talking to people, your network over the? You obviously had a lot of connections at this point. You kind of like you said, we're well known it's to be very involved. And so tell me about that process.

John_Quant: [00:20:24] I mean, again, I mean, I'd be lying to listeners if I say, Oh, the perfect opportunity just happened to fall on my lap. I mean, I did pursue quite a lot of things, and I went on many interviews and many of them went very bad and I never got the job. And so, you know this your journey, but especially the past the last two years where I was really looking to make a move. So, you know, it wasn't like everything happened, like magic. But yeah, one day I got a call from a recruiter. He was retained. You know, I always tell people, you know, the obviously there's two types of recruiters, the ones that are contingent. And so they're more like, you know, basically very aggressive and they don't have unique access to a job. Yeah, somebody that you retain has been hired by the hedge fund to recruit one person. And this guy is the only guy hunting for the right candidate. And you want definitely to talk to these guys because they're usually the smartest people. They usually would take time to listen to you and usually know what the client wants. And frankly, usually when you can pay somebody for somebody for retaining wall, it means the world pays really well. So, so I got approached by this firm and they were, yeah, they were looking for somebody that was, you know, discretionary team. So, you know, had traded and had expense trading different products, but also could code and manage a team of quants and wanted to bring the best of the two together in a new team. That will basically be some sort of, if you like, continental team within the hedge fund.

Patrick (CEO of WSO): [00:21:59] Great. And so was this kind of a new arm for the hedge fund?

John_Quant: [00:22:04] It was a totally new team, and it came directly from the CEO. So the CEO was like, I mean, obviously over the past few years, we've all seen that a lot of hedge funds see the, I mean, the older discretionary funds they all trained to bring, like data scientists, quantitative researcher to help them with the investment process. So that was definitely along those lines.

Patrick (CEO of WSO): [00:22:27] Do you feel like that's a little bit like late to the game in the sense of like if it's the last few years, but there's other hedge funds like quant hedge funds specifically that have been in the game for 20 plus years. Like how? How are they able to compete? How are you able to compete just opening up a branch or opening a quantum of your discretionary hedge fund in twenty fifteen sixteen, whatever it may be like?

John_Quant: [00:22:48] Well, I think it's tough. Well, I think there's two different things. I mean, OK, if there's two different things, if you just try to beat two sigma or renaissance at their own game and you starting now, I mean, you might as well just give up. Yeah. So but I think there were more thinking relative to the other fields that we have in the discretionary space. Can we have some sort of an edge by using some quantitative tools, but not about trying to reinvent the two sigma was more about can I be better than familial piece x y z or large macro hedge fund x y z by having some quantitative or some system to help us be fair?

Patrick (CEO of WSO): [00:23:29] Ok, that makes sense. And so you were there for almost a couple of years and you kind of jump to another role that was similar. It looks like. Tell me about why that move happened was where things are not going well at that first kind of jump, that first fund.

John_Quant: [00:23:46] Yeah. So for me, this was kind of so jumping to the hedge fund world had so many advantages. I mean, I think those two years allowed so much. I met so many people and I really, really took my career to the next level, both professionally and financially, to be really honest with you. But despite my project itself, I imagine being highly successful. The firm itself had a lot of issues and lost a lot of their, um, like more than half their um. So after three years, there was basically lower in cost cutting mode and I was sort of been told, you know, basically look for something else. Yeah, they did it in a very gradual, nice kind of way. So I say to look around and then for the first time in my career, directly from my network or from my next job. So this time there was no future involved and all these kind of things. I just had a coffee with somebody and she was like, I'm starting this hedge fund and looking for head of research and pretty much made up the discussion at Starbucks. And then other a process was pretty much clear from having coffee at Starbucks. There would be a good match, so that was much easier than going into round and round of interviews, for sure.

Patrick (CEO of WSO): [00:25:01] Tell me a little bit about those interviews, the rounds and rounds for the first place and then the difference of just having that network or that connection over coffee. So when you know we're going for that first one where you grilled on like brain teasers and quick mental math questions or what was it like?

John_Quant: [00:25:17] Oh, of course. I mean, I have a love hate relationship with brain teasers because I hate being asked them, but I love asking people.

Patrick (CEO of WSO): [00:25:27] So you love to torture the interviewees, but you don't like to be in there. See, that's fair.

John_Quant: [00:25:34] Well, look, yeah. I mean, I think especially when you're early or mid-career, you're definitely going to get brainteasers. And the primary point is that they can be so many different things. There's one great book I'm sure you've mentioned many times in the podcast, but it's called Hurled on Wall Street by a guy called Crack, I think, and it's kind of a classic and it has a brain teaser and things like that. And if anybody wants to study for racism, that's probably the best book. But frankly. This kind of at the end of the day. You know, there's so many different questions that can come your way.

Patrick (CEO of WSO): [00:26:09] Yeah, you can't be prepared for all. You can't be prepared for all of them. It's more about making sure you're communicating your thought process, right? I mean, your thought process and how you're outlining the position and just knowing it's a brainteaser thinking, OK, what's odd about this? What's not obvious? Right. So like the initial usually the first answer you think of is wrong, so just stop yourself.

John_Quant: [00:26:35] But I like the branches of that have a brute force answer where you really need to like do very complex stuff, but they also have a very elegant elegance. And that's a good way to separate people that are just very good at studying from people to actually see the big picture.

Patrick (CEO of WSO): [00:26:51] Right, right. So tell me a little bit about. Yeah. And then so this coffee chat is through a network and tell me why you felt comfortable going to a new fund.

John_Quant: [00:27:01] Well, first, because I had to because

Patrick (CEO of WSO): [00:27:03] You had to you

John_Quant: [00:27:04] Didn't have a choice.

Patrick (CEO of WSO): [00:27:06] Fair, did you feel like that? Did that? Did that impact your ability to negotiate? Did you feel like you weren't didn't have as much leverage, even though they didn't potentially know?

John_Quant: [00:27:16] Frankly, to an extent at that time, I had a pretty nice, detailed package. And you know, my wife, I remember she told me, You know, you're the only guy that gets basically let go and doesn't take like three months holiday to go to Bali and think about life. I think because I was straight into looking for another job, despite the fact that I could literally not work for like three years.

Patrick (CEO of WSO): [00:27:37] But because you were getting the two, the two years you were at that, that hedge fund, even though they lost 50 percent of them, you were getting paid pretty well.

John_Quant: [00:27:47] Yeah, I wasn't reading people, I mean, easily double what I was doing in my previous role.

Patrick (CEO of WSO): [00:27:51] So almost three hundred pounds or around

John_Quant: [00:27:53] There, yeah, all you here was 360 pounds total. So that has to be close to half a million dollar. Yes, I guess.

Patrick (CEO of WSO): [00:28:02] Yeah. So you had really that was a big jump in your career, for sure. So. So you're kind of coming into this other one, your wife's like, why aren't you just taking a break for a minute? But you start kind of networking and then it just kind of fell in your lap. It was a great connection with this, this woman who was starting this hedge fund, you said.

John_Quant: [00:28:20] Exactly. Yeah. Ok. What really attracted me to it is, you know, I was in a very big asset manager. Then I went to this hedge fund that was smaller, and I like the funding more smaller, more small and being able to develop my own system and manage a team. And in that new opportunity, that was all of that. And then so because it was a startup because I was only 12 employees, so it was all the stuff I liked the going even smaller and even more entrepreneurial. And that time I would be, you know, leading the research team. I would be reporting directly to the CEO. So it was a big step for me. The responsibility, although it came with the fact that, yeah, it was a startup and it clearly involved a lot more risk.

Patrick (CEO of WSO): [00:29:03] Was there was capital already kind of raised before you joined or was it you were in the fundraising process?

John_Quant: [00:29:10] Yeah. So I think to me, you know, I would tell people momentum is everything on the upside and downside. So momentum when the firm has momentum in general, gathering is always a good sign. So at the time, the film had a lot of momentum. I mean, they had already been trading seed capital for years, so they had been raising a lot of institutional, um, you know, they were two a quarter of a billion dollars, already 250 million. Yeah, they had been raising also not only capital to manage, but also operational capital like they had raised a few million dollars for the actual company to actually run. The company paid the salary and the computer of etc. There was a lot of positive momentum and positive press, so I felt at the time that it was great fun to join and we could have been, you know, multibillion dollar in year.

Patrick (CEO of WSO): [00:29:59] So you thought this was the ticket to super wealth and, well,

John_Quant: [00:30:04] It was not on you, but it wasn't really about money. I just I'm an engineer. You know, if you come back to the beginning, I love building stuff and I was like, This is the way I just build the quantitative system for this firm and build a team. And I was very excited about that.

Patrick (CEO of WSO): [00:30:19] And so tell me about your time there.

John_Quant: [00:30:22] Yeah, what's the first thing I think about? There was lots of talk about that. Basically, we were very busy because we had to build everything from scratch. I mean, everything I've seen in my previous terminal where you have an AC system and you have databases and you are developers and you have all this kind of stuff to help you like, we had to get everything. I mean, I had to plug my own computer on myself. I mean, that's all that was. So we the software was so busy just building all our code by then switch to Python like lots of people. So getting all the code base in Python and building all database with all of data feed and all the libraries. And so we had to build the entire firm.

Patrick (CEO of WSO): [00:31:06] How much of that was you? How much of that was you bringing stuff you had learned at previous jobs like IT systems, python and your own coding ability? Like how much of that were you able to kind of transfer over to this new system?

John_Quant: [00:31:19] I would say at least two to three. What we had was really transcending my previous roles, both on management side risk management and just like your coding, got it. And then obviously, we obviously there's always new stuff, probably, but I would say more than half fairly imported, and that's a bit why I was brought in as well. And obviously, as you know, you never come with your code. Like we say, I would have loved to be able to take a USB key and just copy paste, but you cannot do that. Obviously, it was all in my head, but I had to record everything. So, yeah, so simple things like Portable Optimizer, which every film has what you need to record it and the risk management system to record it and bug testing engine when to record everything. And so were you

Patrick (CEO of WSO): [00:32:02] Doing most of that? Were you overseeing the developers that were doing that?

John_Quant: [00:32:06] Well, I was very hands on more than half my time. I was coding in the trenches and the rest of the time, you know, interfacing with different people.

Patrick (CEO of WSO): [00:32:14] Great. So you're OK. So you're there for almost a couple of years? Tell me what happened there.

John_Quant: [00:32:20] Well, pretty much the same story happened again. So this time the issue is we got some percussion. So yes, the film had difficulty with acid raising and then performance was, I would say, mediocre. I mean, not just not excellent. And when you are small hedge fund, you really need to be posting double digit returns, you know, double digit every single year. And we just didn't manage to do that. I think we were sort of trying to create a mini two sigma and obviously you cannot redo that as fast as you can. And so it was just difficult to get the film to scale in terms of generating P&L. So you

Patrick (CEO of WSO): [00:32:59] Had gotten up to 250 a.m. Did it get up to higher to that four hundred or three hundred

John_Quant: [00:33:04] Or pretty much even peaked as I joined? So again, not sure if I was that exact. I look for the firm, but yeah, we just could not develop the firm in the trading strategy fast enough to really make the firm scalable and many other issues that we had with the start ups, such as the systems and the trading and people turnover and many things that happens to, you know, any startup. And so for all these reasons, you know, the stock was struggling after the first two years.

Patrick (CEO of WSO): [00:33:36] Yeah, no, for sure. So you started kind of looking again. The writing was on the wall and was flowing out. And so where did you look? How did you decide on that, that next jump?

John_Quant: [00:33:47] Yeah, so I had really two choices from there. And the first one was, okay, I'm just going to do this full time, right? So I've already been to two hedge fund. I tried to create this systematic trading strategy and clearly, if I could do that in the right firm, I should be able to do it. And actually I got approached by the right firm. I got approached by a massive asset manager, extremely stable, very well capitalized. And they were like, We want to create this new quantitative trading team and we would like you to be one of the CPA firms like developing all the systems. And they played very well and was actually outside of New York City. So I would have had a great lifestyle, you know, being paid Wall Street salary and not being on Wall Street, you know, to pay for Manhattan price is crazy. But you know what I remember at the time, and I realized. Number one, I I just don't want to I don't know if I have to meet with a full time because, you know, I had twice already built this sort of system and the management team. And then pretty much every time when we just started trading, the firm had a problem or whatever, and I was like, I don't want to be like the guy that does the same thing over and again. And the second thing is that I had rediscovered that are really a passion for data science generally and not necessarily applying data science to trading. And I've been learning so many things about Python and big data and machine learning that I was like, maybe I should just do a general in. And that's when I started to basically talk to people like Facebook and Google and like Big Tech firms.

Patrick (CEO of WSO): [00:35:24] Tell me a little bit about specifically where you learned all that. Was it just from coding in Python, like the data science and the big data? Was there somewhere where you went to learn online or any anything you did on the side

John_Quant: [00:35:36] While you were? Yes. Look, I'm a big fan of Coursera. Not that I have any shares in them, but I you know, I love I love Coursera. I think it's a great platform. I've learned most of my machine learning things. I mean, I have a background in applied math, but you know, when I was in school, he was not called data science. It was called applied math. Now it's called data science. So I had to learn a lot of things online. But there is a great platform. There's many other things like Kygo and sort of things. But yeah, of course, there are as many courses when it came around, basically machine learning.

Patrick (CEO of WSO): [00:36:10] So you wanted to get into more data analytical role where you could apply some of the skills you had and kind of keep it a little bit more broad and not stay in the hedge fund world, not necessarily utilize that for trading. And so tell me what made you decide go to go where you went and you ended up, you ended up at a large, a big four firm.

John_Quant: [00:36:30] We'll say, yes, I'm in a large consultancy firm right now. I like to think that the one I mean, they are really cutting edge in terms of data science. And what I liked about it is, I mean, so many fingers, I don't even want to start. So first, the culture is much different. People are much nicer. Second, you're always facing clients. So I like to have this feedback from clients and the tools and you was working on different projects. Third, the difference is changing so much right now that you cannot just shut Google in just being like one single thing. You're not risking the entire spectrum of techniques. So I like the idea of like just learning new techniques and different things like, right, I'm doing a lot of natural language processing, which I never done before. And the last thing is, frankly, I thought if I do consulting and in five years, I have three choices. Either I can stay in consulting and become a partner, or I can come back to asset management and be head of data science for classroom, or I can also move to tech. And I have also interviews with large tech firms, and I decided not to pursue it further. So I thought that that that's what gave me like the most array of options on a sort of reasons.

Patrick (CEO of WSO): [00:37:52] Yeah, smart. So you had this, you wanted to be in an area or at a firm where your skills would continue to be honed and you'd be on different projects getting touching a lot of different, you know, data science projects that to big data projects, machine learning and help you and you're doing now, which is cool. So do you feel like in terms of like, I guess you don't really know since you just started in terms of what's next for you? I think it's just kind of just see where this path leads you. Huh?

John_Quant: [00:38:19] Yeah, I just saw a couple of months ago, so this really, really liking it. I did not expect to like it as much, but actually really been enjoying myself. That's good. Yeah.

Patrick (CEO of WSO): [00:38:31] Congrats on that. I mean, that's the most important thing is that you enjoy waking up every day, right? And the money, the money is nice at the hedge fund, I'm sure, but it's probably stressful too.

John_Quant: [00:38:40] Well, that's what I wanted to finish. Maybe not, but the pay is definitely lower. I mean, you know, you're not going to get a hundred percent bonus in consulting unless you get to partner level. But I think it's a much more interesting career. And again, I think that would be a great springboard for me to come back to the asset management industry or visit one of my clients potentially, you know, as head of data science at some point. I think it opens a lot of doors to actually very senior role in big firms. Yeah. So it's great, tool to provide area.

Patrick (CEO of WSO): [00:39:17] Yeah, it's kind of an interesting career because you're kind of you were very like, you've kind of went from the very engineering applied math side to kind of being middle office risk to a little more front, a little more front office and this PM role then jumping to the hedge fund with a big pay jump but high risk and it burned out twice of no fault of your own before, almost like the systems were even up and running. And then now it just kind of a complete another, another pivot almost this late in your career, which is interesting to see, but again, client facing. So you've got a nice mix in there where you think your skills will be in demand for a very long time. Hope so, yeah, so is there anything before we call it like you'd give advice to your younger self or to the young listeners here? Any skills they should absolutely learn if they're interested in data analytics or anything like that besides Python?

John_Quant: [00:40:11] Yeah. Well, yeah, well, I'm probably going to repeat, I'm sure something you just said many times, but I think the training aspect, you can always learn it. So I get a lot of people asking me questions and they're like, Oh, I want to be a trader, and I'm like, Look, trading, you can always run in finance and all this stuff you can do on the job, but you need to know how to code even if basic, and you need to know how to use excel efficiently and in general, some sense of statistics. And if you don't have that, I mean, it can be as passionate as you want about trading and that, especially now, it's very difficult for people that just rely on the hunch to make a living. So I would say focus a lot on coding and math and stats and then read a few books about trading because this game now more than ever. So yeah, that would be great advice.

Patrick (CEO of WSO): [00:41:07] It's not. It's definitely trending that way. So I think it's a future proof yourself. I think the listeners, I think that's a great, great advice to them is

John_Quant: [00:41:15] Coding and I like to finish and I don't have any shares in whatever, but that's great. You mentioned pivot and the fact that pivoted many times. There's a great book called Pivot by a guy called Adam Macro and Akl, and I read it. And actually, it has a lot of sort of did with bring the book to my life, but I think it has a lot of great advice on how to pivot if people are listening. And they like working as a lawyer and they want to go into finance or they're working as an engineer and then go into finance. I mean, that book is really great in terms of framing your mind and projecting yourself in what you want to be. So the best people to take away?

Patrick (CEO of WSO): [00:41:57] That's awesome. Let's end on that. Thank you so much for the advice. Pivot. And it's Adam Markle. You said, right?

John_Quant: [00:42:03] But I'm Michael Markle. Yeah.

Patrick (CEO of WSO): [00:42:05] Awesome. Well, anyways, thank you, John underscore Swan. Thank you so much for joining us.

John_Quant: [00:42:11] Thank you, Patrick,

Patrick (CEO of WSO): [00:42:12] And thanks to you, my listeners at Wall Street Oasis. If you have any suggestions whatsoever, please don't hesitate to send them my way. Patrick at Wall Street Oasis Dot. And till next time.