WSO Podcast | E181: Former Goldman Fixed Income Trader jumps to Head of Trading at Anchorage (Crypto)
About
In this episode, Yuriy shares his path from Boulder to operations at Goldman in Salt Lake City back in 2007. Learn how he survived job cuts and got promoted and why he eventually decided to get an MBA at Insead. Hear how he graduated with an MBA unemployed but then how he was able to get his foot back in the door at an unexpected team, only to be promoted again to a front office trading position on the fixed income desk. After 4 years, we learn why he risked it all to join a small 4 person start-up trading cryptocurrencies and how that lead to his current role as Head of Trading at the fast growing startup called Anchorage.
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WSO Podcast (Episode 181) 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.
Patrick (CEO of WSO): [00:00:22] Let's get to it. In this episode, Yuriy shares his path from Boulder to operations at Goldman and Salt Lake City back in two thousand seven. Learn how he survived job cuts and got promoted, and why he eventually decided to get an MBA at INSEAD. Hear how he graduated with an MBA. Unemployed, but then how he was able to get his foot back in the door at Goldman, at an unexpected team, only to be promoted again to a front office trading position on the fixed income desk. After four years, we learned why he risked it all to join a small four person startup trading cryptocurrencies and how that led to his current role as head of trading at the fast growing startup called Anchorage. Enjoy. All right, Yuri, thanks so much for joining the Wall Street Oasis podcast. Yeah, happy to be here. So it'd be great if you could give the listeners a short summary of your bio.
Yuriy: [00:01:18] Absolutely. So I grew up in Denver, Colorado, went to the University of Colorado, served in the Colorado Air Force National Guard. After that, I went to Goldman Sachs for five years, took a break from INSEAD. Mba went back to Goldman Sachs for another five years. I decided to go to crypto afterwards, joined a quant hedge fund, did that for about a year and a half, and for the last three years or so, I've been at a crypto company called Anchorage.
Patrick (CEO of WSO): [00:01:50] Very cool. So let's start all the way back in undergrad. Did you always know how you wanted to be in trading? And at Goldman, you were mostly on the trading side, right? So fixed income, what? What were you doing there?
Yuriy: [00:02:01] Yeah. First five years operations supporting the fixed income desk. The next five years post MBA Money Markets portfolio manager slash trader. But to go back to your first question as far as knowing what I wanted to do in college and undergrad. The answer is actually no. I was enlisted troops in the Air Force, so I joined right after high school and I always thought basically up until my senior year, that I would be. Once I got my degree, I would become an officer, a second lieutenant from the Air Force, and that was kind of the plan to be a career military officer.
Patrick (CEO of WSO): [00:02:40] And so did you have family, is that why in the in the Air Force or sorry?
Yuriy: [00:02:45] So all of the on my dad's side, all the men as far as we can track, you know, through our ancestry have been in the military in one way or another. But my dad was actually in the Soviet army, so he was in Afghanistan back in the 70s. He was in Farsi, Persian, Arabic and everything like that. So I was the first member of the United States military.
Patrick (CEO of WSO): [00:03:09] Very interesting. So in terms of just when things changed, so when did you think was it your junior year, senior year when you were at Boulder? Was it, you know, when did it change? When did it ship? When was Goldman Sachs? Suddenly, you know, operations there? Suddenly a.
Yuriy: [00:03:24] Yeah, I would say that it was my senior year. I graduated in two thousand seven and I got a little bit lucky that, you know, Goldman Sachs was opening their Salt Lake City office during that time. You know, right now, it's a really big office with thousands and thousands of people. But back then there was maybe under one hundred and they were looking for someone to join their operations team there. And it was the first year they came to recruit at the University of Colorado. So, you know, I did a few interviews, got a little lucky, and I'm sure I answered some questions, right? And then, yeah, I was one of the one of the two people chosen to go work there.
Patrick (CEO of WSO): [00:04:01] Don't be so humble. So what kind of questions, you know is about 15 years now? How many years ago, 14 years ago or 30? Yeah. But like you said, I got kind of lucky. Do you feel like obviously like on the operation side, it's maybe not as competitive? Do you agree or do you feel like there were tough questions and like you barely got the job? Or What was your thought? And like, how big was the class size? Give us an idea of at least back then what you what you remember?
Yuriy: [00:04:26] Yeah, I think it was the first time that that specific office really went outside of the University of Utah and BYU. So I think they did a lot of the kind of regional schools I think like UCLA was the big one. Texas, Oklahoma, you know, Colorado.
So I think I was, they took two people from Colorado, and I think my class was around 15 to 20 people total just from those kind of satellite schools from around, you know, just outside of Utah. And the reason I say I was a little bit lucky, I'll tell you a little bit of a story of how this went. So you know, I won't finance major and I interviewed with a bunch of companies all much lower tier than Goldman, and I basically didn't get any of the jobs. So after about five or six days, I was kind of like thinking, Right, well, I'm going to go into the military because it's kind of what I wanted to do and I'm going to go ahead and proceed with that career path. And one of the counselors said, Well, look, the gold, when people are coming, just go to the interview, you know, just be have nothing to lose. So I still prep, of course, and then everything like that did all my homework. But I was definitely a lot less nervous, I would say for it. So I go into the interviews, you know, I go through obviously answer all the questions and everything like that. And they,one of the final interviews they asked me, these are the onsite ones where they flew you out. They asked me, you know, have you ever worked at night because we just opened the business? We're building it up in the Middle East and we need some support staff here in Salt Lake to work at night. And I said, Well, yes, I've been, you know, an Air Force police officer. I was working from 6:00 p.m. to 6:00 in the morning at the Air Force Base and then driving back to school in the morning. So they were like, Oh! You’re Hiring, you know, when you have experience working night shifts, you can work night shifts here for us in Salt Lake City. So that's how that one got it.
Patrick (CEO of WSO): [00:06:16] Ok, so you suddenly like you had this job is operating almost like a trade management job. So what were you doing like through the night? Like providing support? Can you give us an idea of like the first few years, what it was like, how it evolved, if at all, like why you were there for five years before kind of making a move?
Yuriy: [00:06:33] Yeah. So it was your basic, you know, trade management support analyst job. So we supported a lot of the, you know, private wealth advisors, you know, towards the later time zones in Asia and the Middle East. So, you know, they place trades. We make sure that they properly get processed. Everything gets reconciled. You know, your basic trade support associate at the analyst job, right? But yeah, did that for about two years. You know, I was pretty decent at it. You know, it wasn't exactly hard. So like, you know, I used to at like 14 hour shifts. So, you know, I was never complaining about it. At least, you know, the office is nice and warm in the military. They keep you outside where it's kind of freezing. So I was kind of just glad to be inside. And, you know, I have all the food and coffee that I wanted. So, yeah, it's settled a little bit in the analyst role, you know, then they gave me a kind of a tea lead role in the daytime, you know, then got promoted to associate, you know, while half of my class pretty much either quit or got fired. So, yeah, just had a pretty good path in operations.
Patrick (CEO of WSO): [00:07:31] Why do you think you could? Why do you think you moved up in operations so well? Why did you get that promotion while the other people kind of burned out? Is it just your personality? Is it? Than you did specifically on the job.
Yuriy: [00:07:42] Yeah, hard to say, I guess I never. I was going to just doing a lot of repetitive tasks without complaining. You know, I think the military completely beats the notion of complaining out of you. So you just kind of, you know, whatever tasks to get handed, you just kind of deal with it. So I already had that mindset for there's three or four years of being in the military, so I didn't really view the work as awful or bad or anything like that. I just try to learn as much as I could. You know, every time one of my teammates was sick or, you know, there was a move to a different team, I always try to learn their their job. And I guess, you know, my superiors kind of like that the fact that I was cross-training myself all the time. So I think that helped.
Patrick (CEO of WSO): [00:08:22] That's cool. And did you find Wall Street races back around that time or I know you've been with us for like 10 plus a year.
Yuriy: [00:08:27] So yeah, that's right. Well, you always this is one of my favorite websites back then because, you know, when I entered the operations world, you know, it's kind of embarrassing to say, but I actually had no idea of the difference between banking or trading or venture capital or anything like that, right? Oh, and I started kind of figuring out on the job and like, All right, well, my way is kind of like a client facing person. All right. So, you know, Wall Street races are just reading everything about it and it's kind of banking heavy was like, OK, so I'm not even near anywhere near investment banking. I'm in the trading division. So I started figuring out who was who. And I think, yeah, Wall Street waits and definitely helped me figure out like what the different parts of finance and all the people that work in those divisions do.
Patrick (CEO of WSO): [00:09:10] So are you thinking like once you started learning that stuff like, Hey, I want to be an actual traders out kind of push you toward going to INSEAD or like eventually? Or what was the was the goal like to get the MBA to say, Hey, I'm going to try to move more front office and make the decisions on the trades versus actually just execution operations at the. Is it as simple as that?
Yuriy: [00:09:28] Yeah, yeah. There's that. And so those two reasons I decided to do the MBA. So no one was just like you said, you know, when I moved back to the daytime away from supporting the businesses in Asia and Middle East, I was supporting the, you know, all the trading desks in the and management divisions. So, you know, I would talk to the traders all the time and, you know, I would visit New York sometimes to sit next to them and their jobs just seemed a lot more exciting. And you know, I started following the markets, a lot of reading, a lot of macro research. So I was like, OK, I need to figure out how to how to do it. So course, I had a really good relationship with a lot of the traders just because I was always, you know, I always supported them in the way that they kind of liked and was doing a good job. So I always ask them like, Well, how do I get your job? They said, Well, you know, take your CPA exams, you know, take an MBA, you know, and we'll we'll have a spot for you. You know, just let us know, like within a year of graduation, right? And then the other thing too, you know, after working in office for five years and you know, I was getting worked out a little bit towards the end there because, you know, the job is, like I said before, the repetitive, there's always a mountain of work to do. There's a lot of things that aren't really automated, you know, even Goldman. So I just needed a little bit of a break.
Patrick (CEO of WSO): [00:10:45] And that was even with moving up, you're still kind of doing the day to day. It was still repetitive, but it's more just title change. Or was it like, did the function change or you're overseeing a group, but you still had to do some of it, too?
Yuriy: [00:10:56] Yeah, exactly. Like every time somebody is gone, but you as a team leader, you're kind of filling in for them. And then every time there's like a really big issue at, really pissed off trader or a portfolio manager somewhere, you're kind of the one that has to figure out how to solve the problem because your junior analyst usually, you know, can't do it. So, you know, there's a lot of that type of work that's usually a little bit more stressful. So. So yeah, that's where the burnout really comes from.
Patrick (CEO of WSO): [00:11:18] Is it typical for like a trader like, let's say, the fixed income division to have a good relationship with somebody like you and operations and say, Oh yeah, I just go get your MBA or CFA and we'll have a seat for you. Is that typical or is it pretty rare?
Yuriy: I don't think it's typical because, I think you need to absolutely provide the best support humanly possible. You need to basically be able to figure out what the trader wants before they even ask you. And then I think you, as an operations analyst, really need to not be nervous about asking them what you want and telling him how you feel and do a lot of the research, you know, on your own. You know, for example, like when I see a bunch of trades come in, you know, I see what they are. And sometimes, you know, I would look into what those companies are doing or what the pricing looks like. Maybe do some self-study and what things mean and then maybe talk to the trader about them. And if you don't sound too stupid, maybe they'll be a little bit open to when you're actually telling them that you're interested in their job.
Patrick (CEO of WSO): [00:12:20] Interesting. So you kind of show you're saying you kind of looked at the trade flow coming in to be able to make interesting conversation and do almost self-study on your own to try and figure out, OK, what's this job all about?
How am I going to do it? You know What, How are they going about thinking about, like, whether it's macro ideas or,
Yuriy: [00:12:38] Yeah, exactly like, you know, actually a position being built up? And then, you know, maybe I. It's so off like later, so maybe I'll ask the guy like, Oh, well, you guys have been building this up for the last month. Why are you selling it off like this? Have anything to do with like event aid that I saw on the news. It's relevant to this industry and the other guys are usually pretty open about talking and stuff as long as they are kind of informed.
Patrick (CEO of WSO): [00:12:57] So do you think that it was like in particular like one or two people like this is now like twenty twelve, you're kind of approaching the MBA application process. Did you approach that conversation kind of before the applications to say, Hey, is the MBA worth it? Or what was your thought process kind of like and why INSEAD?
Yuriy: [00:13:15] Yeah, exactly like that, I by the time I started talking with the trainers about actually like moving up, I definitely was already in my head. I knew that I didn't want to become VP in ops because I knew that that was kind of a move that gets you kind of focused inside that division.
Patrick (CEO of WSO): It's locked In, gets you locked in, basically gets you locked in there, kind of your pigeon.
Yuriy: Yeah, exactly. Like one of the best pieces of advice I think I've ever received was, you know, don't become vice president from the decision. You don't want to be a managing director. And I think that's very true because, you know, if they look at your resume and you're like, All right, well, you were an associate for three or four years, fine. You can still come into a trading division. But if you're a vice president, you know, and I kind of saw that when I was already on the trading desk interviewing people, you know, if you have a VP, you're not much room for a kind of a junior associate like PM position, right?
Patrick (CEO of WSO): [00:14:08] Yeah. So tell me a little bit about just, you know, why INSEAD and so you knew you wanted to make the move. You kind of had confirmed from some of these front office traders that like, Yeah, yeah, they'd have a seat for you. If you went and got the MBA, why not the CFA? What was the decision to do the MBA?
Yuriy: [00:14:24] Well, I did see if they actually parallel as well, so I applied to MBA. I already had level one and two knocked out,
Patrick (CEO of WSO): [00:14:30] Ok,
Yuriy: [00:14:31] Yeah, I was just going to do those on the side, and I was also doing a series of exams as well, just trying to do as much as I could just to kind of show these guys that I was serious about it. But the reason I chose INSEAD is, again, twofold. It seems like all my decisions to make one was so look, I obviously wanted to go, you know, obviously everyone on Wall Street was of blue top 10 or don't even go right? Yeah. So I was like, OK, I got to get into the top five times top 10 school. So INSEAD was like the only school that was one year long and I was never, you know, an honor student or a foreign guy or anything like that. So I was like, I'm not a good test taker or a student in general. So I figured, you know what, I'm going to do the one year program. It seems to check all the other marks. And then the other reason was, you know, I've never, ever stepped foot in Asia. And besides, obviously growing up, you know, from zero to eight years old in Russia, I've never really been to Europe. So I'm like, Wow, so I can go to this school that has a campus in France, a campus in Singapore. And I also get to do, you know, they have an exchange with the Wharton School. So I get through like Experience Wharton for a semester. So I was like, This is perfect. So instead, it was actually the only school I applied to at the time. And luckily, you know, I got in, so I didn't really have to apply anywhere else. So it kind of just fit what I wanted to do.
Patrick (CEO of WSO): [00:15:51] That's awesome. Yeah, a lot of people don't know that it's just a one year program. Does that? Do you feel like that's a was a disadvantage on like recruiting or you felt like it was already lined up for you? So it's just more like a check the box type of type of thing.
Yuriy: [00:16:04] You know, it was a little tough because, you know, there's two classes in this year. You know, one starts in December and you have the summer for an internship and one starts in July and you kind of go all the way through for a year without an internship. And I chose the one without the internship because I just didn't think it through very well. So yes, the recruiting was a little tougher. But having said that, you know, I still interviewed with, you know, the Mbb consulting firms and, you know, some of the top investment banks for, you know, associated banking roles know still pretty easy to get, you know, just being at the school. But you know, I always wanted to go into a training role just because I was kind of used to it and that was in that environment.
Patrick (CEO of WSO): [00:16:43] Did you get offers, from like Ivy associate roles or were you not prepped for like that specific type of interview?
Yuriy: [00:16:49] I made it. I was one of the last three people out of maybe like 40 that applied for a Goldman Sachs London banking associate role, but I eventually did not end up getting it. That's just interesting. I got pretty much everywhere else.
Patrick (CEO of WSO): [00:17:06] Yeah. Yeah. So in terms of you got a lot of luck obviously coming from INSEAD. So that's that's good to hear in terms of like. So then, you know, once you're kind of approaching, you have that full year, you're starting the summer and you kind of know you're going to be ending. At what point was Goldman in
New York saying, Yeah, come here and you know, you can be a trader with us? Yeah. Were you like approaching or you're approaching the end of your school and you didn't have a job lined up? Or was it getting nerve wracking? Like, what did you?
Yuiriy: [00:17:34] Yeah, a little bit. I actually ended up graduating without a job. You know, kind of. You know, floated around for a little bit, but I knew I didn't want to take anything that like I wasn't really passionate about it. I just started really heating up those golden traders that I used to work with. And eventually one of them who I still kind of remained close to. You know, he told me about an opening. It wasn't a trading opening. It was actually a role. Was an RFP writer for the GCM fixed income division. So my job was literally to just work an RFP, which is definitely a full time job for we had like, I think, a five person team doing that. And it's a very thankless job and it's very difficult. But the good thing about it is when you write RFP that have like hundreds of questions for institutional investors about different strategies, you actually get to learn those strategies really well and you get to learn pretty much just about how the entire division operates because, you know, the investment consultants and the institutional investors,
they ask just about everything. So after writing, these are fees for a year and a half, I felt like I really got a good feel for how the entire fixed income provision of the entire asset management division work.
Patrick (CEO of WSO): [00:18:43] And so how do you make that internal transfer? How did you eventually get off that team?
Yuriy: [00:18:47] Yeah. The way it works is so whenever the any, any trading or PMC opens up, there's kind of a little bit of a feeding frenzy, right? Yeah. So you're not allowed to switch jobs for the first year and a half. So while I was sitting in this hour of payroll, I started noticing exactly how it works, how people start, apply, like which people are successful, which people aren't. So, you know, I started trying to follow what all the successful people that were getting those seats when they opened up did. So you get to know the portfolio management teams, you obviously have to do a really good job in your role. And then once the seed opened up after a year and a half of the RPC, you know, I went for it with the money markets desk and luckily, I took good notes, I guess, from what other people were doing. So I got the job.
Patrick (CEO of WSO): [00:19:34] What were the other people doing? Yeah, share those notes.
Yuriy: [00:19:37] Yeah. Well, obviously you need to understand what's going on with the strategy and how the desk makes money. That's the first and foremost. So look like money market desk. You know, there was a lot of two way seven reform that was going on. You know how different commercial paper markets work. So I just kind of dug into some presentations that the desk was making for their clients. You know, just learn the, you know, kind of the intricate details of that stuff. Even if I didn't fully understand it very well, I was able to refer to it in the interviews and kind of tell them what I thought about it. And I think that's a lot more than other people did. I think like one of the things I actually see CMW, so that the good advice that people give out is that, you know, everybody seems to overestimate their competition, but the competition is usually like, not that great. Like, I was actually a little bit surprised, like how some people don't really do a lot of the homework when they're going for one of these seats. So just the fact that I read a bunch of stuff about the two eight, seven one, you know, I think put me, you know, ahead of some of the other candidates going for the seat.
Patrick (CEO of WSO): [00:20:41] So they're like, OK, yeah, you got it. And the rest is history. You had a good another two and a half years or three years almost with that team. And tell me, tell me how that worked out or what was it like day to day? And was it kind of what you expected?
Yuriy: [00:20:55] Yeah, it was. It was definitely the most fast paced job I've ever had, you know, because yeah, you're responsible for all the overnight repo and funding the rest of the division, making sure everybody, you know, have their trading lines lined up. And so, you know, you learn to talk to 20 counterparties, you know, from 6:00 in the morning to seven, you know, get all the trades lined up for the overnight roll. And the faster you you're able to do that and the more automated you get, the more responsibility they give you because the senior, you know, they want to hand off as much stuff as humanly possible to you. So, you know, the better, the faster you learn, the more stuff you get. So. So yeah, so that's kind of how to be successful in the RPM role is just take everything you can for the senior guys.
Patrick (CEO of WSO): [00:21:39] What are you doing like what's 60, 80 hours a week, 70 hours? What would you say?
Yuriy: [00:21:44] Yeah, I would say at the beginning it was probably 70, 80, you'd come in around 6:00, you know, I'd go home around like nine or 10 pm, but yeah, you know, you learn quick. You know, I would say six months in, you know, you maybe shave 10 hours off your day just because you're a little bit more automated. You understand things a little bit better. You don't have to research everything quite as in depth as you get a little bit better intuition. But yeah, that's just about right.
Patrick (CEO of WSO): [00:22:09] And then in terms of pay, can we talk about how to jump from like operations, pre MBA to our RFP team to and you have to tell me exact, but just like a range to like to once you got the full the fixed income trader role. Was it like, you know, I'd assume Salt Lake City operations role you're looking at like 50 ish. Is that around accurate or for base?
Yuriy: [00:22:33] Well, as far, yeah, as far as comp, yeah. Back then again, this was like pre massive inflation, you know, because I have a friend right now who just got out of Cornell and she just got her first job and she's already at like,you know, one 10 back
then. Yeah, I think my first night shift was like forty five k with like a six percent. I think because you're working nights, A six percent bonus. But yeah, that was about right. And then post MBA, I think like one 10 or something like that, which I know was like, now analyst's salary. Yeah, that's not bad.
Patrick (CEO of WSO): [00:23:06] That's a big jump for for the one year MBA. And then from there, any bonus on that like that team like that RFP team or anything like that, or it's just more like just salary.
Yuriy: [00:23:14] Yes, it's a scratch, though. Yeah, it's whatever. You know, the trading desks don't take, they kind of give to these product teams. And then, yeah, the guy gets a little bit. But you know, I never tried not to complain anyway.
Patrick (CEO of WSO): [00:23:27] And then as a junior pm like that jump to the actual trading role. Was the base similar, but the bonus? Just jump right up? Or was it both a bump on like the base and the bonus?
Yuriy: [00:23:36] Um yeah. I think they view like the way I think I'm trying to say, like, how do I answer this? Like in a PC manner,
Patrick (CEO of WSO): [00:23:48] We don't have to share exact numbers. I'm just curious, is it like because I know in trading you can make everything from like zero all the way up to like double or triple your salary?
Yuriy: [00:23:58] You know, the salary, I would say, goes up in line with, you know, just your corporate title, I would say. And then the bonuses, yes, depending on how the firm does, how the division does, how the team does. And then, as you can imagine, a money market team with zero percent rates, you know, I think when I joined, there was a, you know, we went from five twenty five pips on like the overnight repo. You know, you don't really see waivers because there's not that much return. So you can imagine it's very competitive with the amount of money your desk makes.
Patrick (CEO of WSO): [00:24:33] Got it. Got it. Ok, so what kind of made you start looking around in terms of potentially going to the hedge fund side?
Yuriy: [00:24:42] Yeah. So the way my team was structured is the average tenure of the PMS and the money market team, there were six of us. Total was, I think, like high teens or low 20s. So, you know, the partner of our team was there for about 30 years. It was a couple other guys. Yeah, that was like in there kind of 20 plus years on that same team. So it wasn't it wasn't a team with a lot of turnover. So I was kind of thinking, Right, well, I am eight years as a professional here. I'm still like the junior PM, so probably not going to be named on this team anytime soon. Right? And then I started really getting
into just reading about bitcoin, you know, listening to some of the crypto podcasts out there. And then what clicked for me is not necessarily, you know, the inflation hedge that bitcoin is kind of known for, but it was more like, all right. Well, in my ops role and as a junior PM, you really see the inefficiencies as far as like how money moves, how settlements happen, you know, all the sales, all the craziness and the amounts of people required to settle a single trade. I was like, This is a little crazy because bitcoin, you know, I can send it to somebody, you know, you don't have custodians or transfer agents or, you know, groups and groups of ops people on both sides of the counterparties, you just kind of put send to an address and then the other person just received it was like, Well, this tech is definitely something because the entire Wall street
infrastructure of Swift's and faxes and everything like that that has to change, right? Because, you know, Swift's have been around since the eighties and basically the infrastructure of Wall Street is not as shiny as maybe you see the front office stuff on CNBC or when you're dealing with your PM or whatever. And it's very like, you know, rusty and kind of broken it. So I was like, I need to learn more about crypto. So yeah, so I just kept listening and learning, and eventually I was like, All right, I need to go, do this.
And you know, I started learning a little Python started, you know, really getting my quant skills together. And then I interviewed with go on. And luckily, by then I studied enough to pass very rigorous quantitative reviews. And yeah, they chose me to be one of their first five employees in the company.
Patrick (CEO of WSO): [00:26:58] Yeah, tell me about that. So that's kind of an exciting. Some people would say super risky move to go from a, you know, a bulge bracket bank where you have a steady salary to you, set a startup basically start-up fund, right?
Yuriy: [00:27:11] Yeah, it was definitely scary. So, you know, I guess they told me which address to show up in San Francisco. So, you know, I show up, and once I get there, I kind of realize this is an office building. It's an apartment complex. So, you know, I meet, you know, the founder of the fund who meets me downstairs, I go up to them. And then lo and behold, I am definitely going into an apartment. And there's four other guys sitting there with laptops, a little kitchen table, and I'm like, Holy Moly, what did I get myself into? But then, you know, they were like, Well, we're doing all see trading. You know, this is pretty much how it works. We're doing kind of everything in spreadsheets and in Skype chat rooms. And here, here we are, right? And then the volume just kind of like came in super-fast. We had a bunch of clients that were looking to just execute all sorts of crypto assets. And, you know, I definitely got thrown in the deep end of the pool. You know, I'm so used to, you know, Bloomberg chatrooms, you know, dealing with, you know, treasuries and repo and giant lots, you know, that don't really move in price. And here you go. I'm starting to look at order books and, you know, figuring out the slippage and trying to, you know, principal coding for clients. But you
Learn really fast because if you don't do it right, you're going to lose money on the hedging. You know, when you're trying to get back to market neutral and then that's the best teacher is like just losing money really quick. And then eventually you figure out how to properly price people so that they take your price and who makes the money.
So that's what I do.
Patrick (CEO of WSO): [00:28:45] Interesting. Yeah, so you're kind of tell me a little bit about that. I think that's fascinating. So you go from this large bulge bracket bank, suddenly you're working in an apartment with three or four other people around a kitchen table, but you're learning a ton, right? And so tell me about like, do you feel like you are prepared with the pie? Mostly, like you're writing code. What was the day to day like? How did it? How did it switch like you said, I know, I know the assets obviously were very different that you are suddenly dealing with. But what about like the day to day and the skills you were using?
Yuriy: [00:29:14] Yeah. So I wasn't writing any code. In fact, I was the only trader at Galois that did all his scripts in Excel and VBA because I was way more familiar with it and love it on my phone. But, you know, like, for example, in crypto, you have to have, you know, engineering, right? So the because I learned a little bit of python, it was easier for me to like communicate to the engineer like what I want or be able to kind of like think about how he thinks about certain logic. So I wasn't necessarily writing anything, but I was able to communicate with the other guys basically in the same language. And so how were you,
Patrick (CEO of WSO): [00:29:48] How were you guys even making money? There was a startup fun, but it was like, how were you guys even getting any flow?
Yuriy: [00:29:54] Yeah, so the founder, Kevin, he was actually the head trader over at Kraken, which is, you know, now one of the biggest, you know, exchanges in the United States in the world, really. So he had a lot of experience and he had a lot of clients that he brought in from Kraken to work with Gauloises this. So yeah, we just had quick
settlements we would deal and pretty much any coin that, you know, we were dealt with, like properly approved. So we would deal with like very illiquid stuff. And I think we did a really good job and really good customer service. We were around twenty four seven of these chat rooms. So I think the clients really appreciated that white glove service and a wide breadth of assets.
Patrick (CEO of WSO): [00:30:38] So like in terms of like how how would somebody who's not very familiar, obviously, traders would understand like in terms of how you're making the money, but like, can you give me an example of a trade that you guys would do for a client so they'd say they'd come to you and say, Hey, we want to? I don't know. We want to sell short some Solana or we want to go long, you know, whatever? Or are they saying, give me, give me an example.
Yuriy: [00:30:59] Yeah, yeah, I'll give you an example. So, for example, one of the most profitable things you can do is help a VC get out of a very concentrated position. So, you know, you have these guys, you know, they invest in these coins like nice and early, like 10 cents or something like that. And then the thing's like 40 bucks and the guy has like five percent of the float and he's like, OK, well, I got to start getting out of this thing, you know, liquidating, but I don't want to move the market. So, you know, you work through, you know, you look at the volumes, you look at how much lower participation you can feed through the market without really disturbing the price. And you're like, All right. Well, Mr. Ribisi, I will. It'll take me the next month to liquidate this. This is how fast we're going to do it. And this is you know what our goal is, we're going to use and how which exchanges we're going to use, et cetera. So, you know, every time he sends over a cliff, you kind of price them on it. He says, OK, I accept this price, and then you have to basically hedge it while not going below the price the client did for you. And then basically the spreads you make is your profit.
Patrick (CEO of WSO): [00:32:00] I assume for crypto, the spread has to be pretty wide, right? Because the markets can turn on a dime, right?
Yuriy: [00:32:05] And yeah, back then, spreads were way wider than they are now. I mean, in today's day and age, you know, there are so many sophisticated players, you know, like John J Street, like all those guys are in crypto. So, you know, spreads have tightened a lot. But back then, when there wasn't really a lot of sophisticated audits, you see, the spreads were nice and wide. Yeah, you can definitely make some good money, especially if you knew how to hedge properly, you know, on the exchanges.
Patrick (CEO of WSO): [00:32:31] And so was the goal. Are they still going?
Yuriy: [00:32:33] Oh yeah, yeah, go on right now is they're still going and they have a very advanced, you know, algorithmic market making platform. So that's what they're focused on. So the entire galaxy right now is mostly mathematicians, computer scientists and yeah, they do a lot of really interesting stuff that it's cool. That's there.
Patrick (CEO of WSO): [00:32:52] And so tell me a little bit about kind of why the move and when it happened and what your thought process was in terms of jumping to Anchorage.
Yuriy: [00:33:00] Yeah. So one of my friends from INSEAD, who also went from Morgan Stanley to crypto, was working at Anchorage at the time. And she, you know, she was one of the sales people here, you know, and she's like, You know, we're looking we're a custody platform and we're looking to build a brokerage on top of it, and we're looking for somebody to kind of spearhead the brokerage build out.
Patrick (CEO of WSO): [00:33:19] Can you? Yeah, let's talk a little about what is Anchorage and just so the listeners know what it is.
Yuriy: [00:33:23] Yeah, yeah. Good a good point, Patrick. Yeah. Anchorage For those of listeners who don't may not be familiar, we are the first federally chartered OTC Federal Bank. So Acreage started as a crypto custody platform. Our co-founders, Nathan Deal, our security engineers, and they used to work at Docker. They were the first employees over to square a company and they started Anchorage. I want to say about four years ago, probably a year and stealth. And then a year as a pure customary platform. And then I got brought on to help build the trading business on top of custody.
Patrick (CEO of WSO): [00:34:09] So custody platform just is that just holding assets, basically?
Yuriy: [00:34:12] Yeah, exactly. And it's a little bit different, you know, for everybody who's only, you know, familiar with how the traditional custodians work like be and why Mellon or State Street crypto is just a little bit different just because, you know their assets that if somebody steals, you know, your bitcoin or your Solana tokens or whatever, like, you're probably never getting it back right? You know, if somebody steals, I guess, like a share of going from State Street, you know, there's the transportation sector. That's not the thief stuff actually belongs over here. So they just
move to the computer and crew, you know, cryptographic assets don't work with that.
Their assets so secure crypto custody is of extreme importance in the crypto space.
Patrick (CEO of WSO): [00:34:50] Got it. So it was almost like the first kind of, would you say, large or trusted kind of large platform custodial platform for digital assets?
Yuriy: [00:35:00] Yeah, it wasn't the first, you know? Like, how
Patrick (CEO of WSO): [00:35:04] Does it relate to like how would how would I see Coinbase versus like an anchor, I guess.
Yuriy: [00:35:08] Yeah. So Anchorage, you know? You know, I can definitely take this in a very technical direction. But I think like at its base level, most custodians at the time were what we call, I guess, like pirate custody, right? So you take know, private key, you kind of divided into three pieces and you kind of put it in three different areas, which are different security procedures and you need kind of like the entire key to sign something so that an asset gets transferred. What the Anchorage system is, it's what we it's what we call hardware security modules. They're used in a lot of military grade security aspects and other use cases. You know, feel free for the listeners you know, who are more interested in, you know, Google hardware security modules. You know, you open a rabbit hole, you can get room for weeks and months, right? But basically it's it's air gap. It just sounds they're not connected to the internet. And basically you have military grade security, but also with very fast speed of withdrawals. So without going too much further into technical details, that's how Anchorage work. It's just more of it just doesn't have that sharding of private keys.
Patrick (CEO of WSO): [00:36:21] Interesting. Really cool. Ok, so in terms of, you know, your classmate convincing you to come over there, what convinced you? Is it pay? Was it the trajectory of the firm? What was exciting to you?
Yuriy: [00:36:32] Yeah. So yeah, I met Nathan and I talked to him about his vision. You know, Nathan, you know, he does a lot of podcasts and the panels on YouTube, so you can watch him. He's incredibly passionate. Guy, really has a good vision. I think he has an incredible understanding of global macro. The regulatory environment kind of has a good vision of where the world's going and finance or finance is going. So I had I had a dinner with him and you know, I really liked what he had to say, and I think I had a really good experience of Google Walk on a building that business, you know, kind of helping Kevin in my old build it from the from the beginning. So I thought I had a little bit of experience in building and Nathan wanted me to come in and help build kind of those brokerage more or less from scratch. So I took it a little bit of as a challenge. I was like, All right, well, I'm either going to, you know, crash and burn and fail, or this is going to be successful and who knows where it can lead. So luckily, so far it hasn't failed. And we're obviously, you know, building a lot. We're hiring a lot of people, you know, just for as an example, I was employee. I want to say like 20 something, I think. And then now we're approaching almost two hundred. And again, like we started the brokerage business with chat rooms and spreadsheets, and now we have fully automated, you know, twenty four seven API enabled our platforms, you know, automated just about everything, and we're getting ready to scale the business even further. So. So yeah, it's so far it's been an incredibly rewarding process of building.
Patrick (CEO of WSO): [00:38:14] So do you think you're going to be with Anchorage till IPO time or what's the thought process?
Yuriy: [00:38:19] Yeah, absolutely. I mean, I have absolutely no desire to be anywhere besides Anchorage besides anywhere besides crypto in the next for the next, like near future next decade or so. Quite amazing. Yeah, that's for sure. I think the business is going in the right direction, without a doubt.
Patrick (CEO of WSO): [00:38:36] Great. So just looking back at your whole path or your whole path through your career so far. Any final words of wisdom before we call the pod in terms of just looking back and saying, Wow, I'm here and I would have never thought it or anything that the listeners should pay attention to.
Yuriy: [00:38:52] Yeah. Look, no matter how comfortable you are in whatever role you may be in, Oh, like just always be willing to take risks. I felt if I never went to crypto to a small fund from my very comfortable seat of Goldman, life would be a lot different right now and not for the better. I think I definitely that was one of the greatest choices I think I've made in my life, even though it was super scary at the time. And the interesting thing here too, is, you know, I joined Galois, the crypto industry during the start of a very prolonged bear market back in February of twenty eighteen. So for a whole year, you know, I was full of a lot of self-doubt, but I just put my head down and built, you know, Kevin. Luckily, he's been on bitcoin since like twenty thirteen, so he's been through plenty of bear markets. He kept saying, you know, but you know, the one thing I would say to people is always be open to new opportunities and don't just feel comfortable, you know, always push yourself to. New limits and test yourself and your skills.
Patrick (CEO of WSO): [00:40:03] That's great. Was it a big pay cut kind of going to the smaller startup when you were initially or did you did it do so well, a huge pay cut? Yeah, sure. But you're but you're happy and excited every day waking up.
Yuriy: [00:40:15] Oh, you know, if you. So even though it was a huge pay cut overall, I would say the last four years, encrypt all together have been a big raise over what it would have made
Patrick (CEO of WSO): [00:40:26] Because you personally have been invested in investing in crypto.
Yuriy: [00:40:29] Well, a little bit of everything, right? I mean, you know, when you join any company as one of the original employees, you know, you get a lot of you don't get a lot of cash. And that's what I meant by pay cuts. You get a lot of equity, which is worth a lot when you get it. But when you build a company, you're like, Oh, wow, like over the last two years when equity is kind of gone up like a pretty crazy amount, right? Yeah. And the trajectory seems to be on target for it to go up even more. Right. So even though you may be a little bit more cash for, you know, overall you're all income can really grow exponentially if you if you're building something that's special.
Patrick (CEO of WSO): [00:41:08] Well, it's not capped either, right? It's it's not capped like whereas Goldman, it was like kind of capped in the sense that you could you could go step wise, but you're not going to see that parabolic jump.
Yuriy: [00:41:17] Yeah, exactly. Like, you know, in Sam in general, it's like, you know, you kind of going to move a little bit up and down with how the firm in the division does. But overall, like, you know, unless you're, you know, you're making 50 returns, which you know, isn't really the case right now just because of just general risk aversion and zero rates. Yeah, probably you don't have that potential up there.
Patrick (CEO of WSO): [00:41:42] Do you have any strong opinions on just DeFi in general or the timing of how long some of the stuff will take if, if before it kind of. You know, disintermediate some of the banks or any of that stuff, do you feel like this is a
years away? Do you feel like it's decades away? What's your thought Process on that?
Speaker3: [00:42:00] Yeah, look, the DeFi stuff works like, for example, like yearn. finance. Why a fee for you folks out there is something that can literally replace the entire money market PMT, you know, as it's like smart allocates across like, you know, the highest yielding like instruments out there, right? So there's definitely the tech is there, and the tech is kind of at a point where it's starting to scale. Now what's going to hold it up is, I think a lot of the regulatory questions that are in existence. You know, the U.S. regulators, I feel, are interested in making this work, you know, because they definitely don't want the United States to fall behind as a technology leader. But they also don't want, for example, a big insurance company or a big asset manager to get defrauded because they overlook something, right? So while it's going slow, like, I'll tell you, you know, I work a lot with our legal team and our compliance team on how we can get this license. That license can trade this and trade that and trade in different jurisdictions. And I do feel that the regulators are definitely open. You know, we engage them very, you know, we engage the regulators a lot and I feel they're very open to, I guess, you know, moving this industry forward. Although if you just read Twitter on the media, it may not seem like it.
Patrick (CEO of WSO): [00:43:24] All right. Well, you're I really appreciate your time. Sorry, I was late and hopefully everyone enjoyed it.
Yuriy: [00:43:29] Yeah. Thank you, Patrick. Yeah, very good talking to you.
Patrick (CEO of WSO): [00:43:32] 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 com. And till next time.
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