Starting in trading is really humbling. We lose 45% of the time. What does that feel like to lose tens of millions of dollars in seconds? The very first time it happened that way, that was rough. Do you think you can get rich if you don't take risk?
Jenny Just is a self-made billionaire, co-founder of the legendary investment company Peak 6 that has made money every single year for 28 years. If you want to figure out how to bet big on yourself and whether the next right decision for you is to go left or to go right, you're going to want to listen to this episode.
Time is massively important. It's definitely a marathon. It's not a sprint. When you have that great year, think about it over a three-year time frame. Don't think about it as today's money.
What can poker tell us about reading the room in life?
You have to be thinking about the other cards at the table. Then you have to think about what they're thinking about your cards. If I'm sitting across from someone and I want something to happen, I want more money, I want a different position, I have to think about what they're thinking.
What's the most amount of money you've ever lost in a single day?
So you're a self-made billionaire, right?
That's probably what you lead with when you come into conversations. You're like, Cody, really? First question. But I think it's really cool because one, billionaires are super rare, but to be self-made, then throw on you're a woman. Not that many. And then you did it in finance and investing. But what's kind of cool, you didn't start out that way. And you said a line I loved, which is you said failure shaped you more than anything else. What does that mean?
Starting in trading is really humbling. We lose 45% of the time. So, it's over and over and over. And that repetition, you know, that compounds, I always talk about compound experience. Each one of those gets you a little smarter, a little braver, a little bit more nimble. I think I was really lucky to start in trading on a trading floor in person and sort of feel what it was like, right, to lose those dollars. But I did it when I was young multiple times a minute. So doing that allowed me then as I grew, I became put on my big boy pants and did a little bigger and a little bigger. You know, people think of me as a risk taker because of where I came from, but I became one.
A lot of people maybe don't know what trading is. And so really what this means is that you are either trading for your own book, your own wallet you could think of, or somebody else's, but you're on the line. Like every decision you are deciding, I'm going to put a dollar and bet quote unquote on X to happen. And if X doesn't happen, I lose money.
That's right. So, like to put this in perspective for people, what's the most amount of money you've ever lost in a single day? Do you know?
Uh, it's a lot. Tens of millions of dollars.
Yeah. And in seconds, right? That's not even, you know, a whole day. Doesn't have to go by for that.
Like, can we break it down, Cody? To 10 seconds was bad enough. Wow. What does that feel like to lose tens of millions of dollars in seconds?
When it first happened, the very first time it happened that way, that was rough, right? Was all that stuff leading up to this, you know, fantasy. So, a lot of second guessing, but you get better from it and you obviously don't want to do that again. But I literally just yesterday, right? So, we've been doing Peak Six for 28 years now. And there's always a situation in the market, right? It's why the smartest actually don't win. Long-term capital management is a great story for people to read about and they were the smartest and they didn't win. So being humble about when things are going well and acknowledging what was luck, what was skill and then recognizing a situation where that same thing it's going to happen again. What am I going to do then when it does? I just have to assume it's going to happen. I think that is the... so now how do I get comfortable because the first losses weren't that big obviously. But the more you put out the more the chances for a big loss are.
Yeah. I mean, was the first time did you like when you lost a bunch of money, are you like, I need to go to the bathroom and then you just go get sick in the bathroom or you just like do because I imagine like as you get older and better at it, those peaks and valleys, if you're going to stay in the game, if you can handle it and figure out mentally how to get through it, which I think by the end of this podcast, given everything I've read from you, we're going to help people get there, be able to manage the peaks and troughs. But, I imagine in the beginning the highs are high. You're like, you know, bottle service at Tao on Jenny. You know, I know what you traders did in finance. Yeah, that's right. That's right. But I imagine the lows are really low.
They are. Yeah. And it's really about recognizing you don't have to have the highest high because you don't want the lowest low. And that's really hard for traders. And you know, we've had 28 years, never had a losing year. You know, let me knock on something. So, and that's really unheard of in our business, but that's also... Do we have the biggest year of anybody? Probably not. But methodically reinventing ourselves and thinking about how that next market opportunity, new advances in tech, new advance in people who how we're approaching the problem differently, right? Each one of those we don't just assume that we're going to... we kind of think in three-year cycles roughly of the next Jenny and Matt. Matt is my co-founder, could be in the garage especially today with AI so they could be there. How do we... we probably have to... it's been three-year cycles, we probably have to shrink that cycle down but a lot is possible with very few people these days.
What does it take to not lose money for 28 years in investing. That's I mean it's like you and what Renaissance and I think they even had one year that was down. What does that mean like for somebody who's never really thought about like a risk budget or like risk allocation? How could they conceptualize managing risk?
You have to assume the worst possible scenario and you can also assume the best because people are already thinking about that, right? So I assume you're already thinking about what the best outcome is. But what is the worst possible and then what is the slightly less than the worst possible like there is a wide range of outcomes. I think people are quite binary in their thought process and what if... and then using examples from the marketplace that have happened before. You know people don't want to think GameStop's going to happen again and you turn around and then there's another one. So, right, even the smartest in the world at the time when that was happening were betting against that stock could actually go higher. It can.
Do we bet against it? No, we get out of the way. And then we'll figure out a good way to play it because we're active in three to 4,000 public company names in their options every single day. So we have a very broad, really broad portfolio. So there's a lot of things and we like to be where the volume is for sure.
That is a really good way to think about it because by binary you know basically meaning everybody thinks either I'm going to lose everything or I'm going to win everything and they're really at the broad end of both spectrums as opposed to thinking well what would it look like if we just continuously won a little bit over time or simultaneously continuously lost a little bit over time.
Interesting. You know what I think is really interesting about you is a lot of what you talk about is I even hate to use the word mindset because it's like almost touchy-feely and you're the opposite of that. You're like a very quant but you know your mission right now I think is to sort of what I would call break low-risk mindsets. Can you talk about why for instance so many people take little risk, don't take enough risk and what you would tell them if they were listening to this.
First of all, it's very unique to the person like what taking risk to you means is different than what taking to me. It's a very personal thing and I think people have to be okay because they compare themselves. So if you self assess where am I on this like give yourself a risk scale 1 to 10 and then what is the purpose right do I have a purpose for taking more or less risk and I think for most people that are listening to you or coming and listening to me they are yearning right there is a desire as much as I look like I take a lot of risk. But nobody would have called me a risk taker when I was younger. You can actually learn it. You have to start. So what is a small risk for, you know, if you're a young kid in school, it might be raising your hand in class, right? Okay, I got over that first hurdle. Now, how do I get over the second hurdle? How do I get over the third hurdle? But I have to make it a conscious exercise for myself which is why when we talk about poker I like poker so much because every hand is taking a risk right I mean for a lot of people just getting to the poker table is a risk so especially for women.
So you think young Jenny she wasn't a risk taker?
She was tough. She definitely was tough. I grew up with four brothers. Not a lot phased me. You know, I went down to the trading floor and, you know, it's a sea of men and the first day a gentleman came up to me and said, 'Don't worry, I'll protect you, a guy on our team.' And I was like, 'From what?' You know, I was like, 'I see a dude.' Yeah. But yeah, so that was the good fortune I think that I had that I didn't let the outside get in the way. I was always a high achiever in school, but I did what I was told. I didn't sort of go on my own and take risk per se.
Do you think that most people understand the risk level that they are? Like is that just it seems sort of nebulous in some ways. It's like a hard concept to wrap your hands around.
Yeah, we've been talking about building sort of a risk framework. Yeah, a framework because you're just putting a stake in the ground somewhere. Do most people understand? I think if they really were vulnerable with themselves, they do. And I think for people who actually who call themselves risk takers, they also know there's another level. And by the way, risk doesn't have to mean jumping out of a plane. It doesn't have to be betting all your money, right? It just has to mean taking more risk than you are today. You know, I was always looking in my rearview mirror when we were building our company and when we were winning. I was like, when's the loss going to come, right? And so, I didn't want to take that next risk. Hiring our 10th person, I was like, no way are we ever having more than 10 people. So, like that was a really big risk to me. And so, like I contextualize all the time what I do. Can I take more risks than I do today? Yes. I mean when we've been just recently right in the last couple years investing in AI like how big and where and right and it's another level for us.
I have a funny story really quick. This one I love this because I said no to Jamie Dimon. So we had a plan A and 28 years later we've never done our plan A. We were trying to get a bank to be our partner to do over-the-counter equity derivatives. That was what we left to go do. That's what we did when we left O'Connor. And it was taking forever. And in the meantime, we started Plan B, which is a business been around for 28 years now. And but it's not that we didn't want this other business to happen, but it was going on and on. We'd hired some people to work on it while we were focused over here. And Jamie Dimon was up for Chicago at the time. And so we got to the 11th hour with them. And it was dragging. It was dragging. It was dragging. So, this is 1999 and right, we don't have our phones or I had a little calendar on my desk and I circled the date and I was like if we don't have an answer by this date, we're out. And they just didn't have an answer yet, right? And we called. We said we're out. So,
I bet Jamie doesn't get told no very many times.
No. Yeah. Well, for sure less so today than... but that is a hack right there. This is totally unrelated kind of but like I'm divorced and remarried happily. But my first marriage like we just couldn't figure it out and it was not good. And I put a date on the calendar same thing and I was like we will either work through this and we will get or if doesn't come to the table in the way that we need to this is the out date. Yeah. And I remember when the date came up I was like what am I going to do? not keep my word to myself, right? Like that's a pretty important word.
Yeah. And I think when you do it the first time you do something like that, it's definitely motivating and it's inspiring. You're like, 'All right, I did what I said.' And because it's time, right? You that's a ways out. You don't know how you're going to feel or think or anything about that. Obviously, you have the luxury of changing your mind if you want, but sticking to it definitely changed my trajectory.
Well, you inspired me. Right now, actually, we do like our members do like $300 million in small business transactions a year. Nice. And we have some banking relationships, but I want one deep banking relationship. And when I tell you working with these SBA banks what the piecemeal nonsense they want to do where you can't actually see through to who bought the business and they're like well why don't you email us when they close. I'm like we have 100 million eyeballs a month. We're doing so many we're doing more transactions in cumulative than some quarters you are. That doesn't work and I think I need to put a calendar on the date to say if we don't do it by this date I'm going to buy a bank and then I'm going to have no partners. And it's another example of an industry that is so outdated for small business that is so hard that I'm like you know fine I can buy one. And so all right now next time you talk to me if I don't either have the partnership I want or have bought a bank you have to yell at me which is annoying. I don't know if you were like this but my mom like when I was growing up. She would always say like she was worried about risk. Actually, risk was bad. And I think if you were to ask her, she would still kind of think risk's a four-letter word just like the rest of us. And why would you do something that takes more risk? And you know, I think she's a woman. You know, my family, she was a school teacher. She really wanted things that were quote unquote guaranteed. Yeah. And I'm wondering, you think that there is maybe this one skill or even a game that can help women break out of that? You want to talk about what it is?
I've been a quiet person for 24 years. I was a quiet person until I learned the game of poker. And I didn't necessarily have to be out there for our companies. But I have been trying to help women accomplish more what they want to do, which for me it was clearly taking risk around money was like the biggest inhibitor. And when I saw poker, it was the closest thing I've seen to the training I got as an options trader, right? Because people aren't just going to become options traders. First of all, there's not that many in the world, men or women. And 'I'm going to go study options trading' is unrealistic. I think playing a card game, however, is not. And the irony of the whole thing is, you know, our firm is filled with poker players. In the financial world, you see them all the time. And I just ignored the game because only the guys were playing. First of all, I thought it was a waste of time. And little did I know there's a little secret. They've been doing it for literally hundreds of years. And so I'll just tell the backstory real quick. So my daughter was 14 at the time. So since 2019, playing a tennis match, losing, her dad was a college athlete, frustrated. She's losing to someone she looks like she should be able to beat. And comes home and sort of chirps to me because he doesn't want to to her and says, you know, she may as well be hitting against a wall. She doesn't realize she's playing against someone who is thinking and strategizing. She needs to learn to play poker. And he wasn't really, he was more of a blackjack guy. And I just thought he was being ridiculous. And I walked away. And like two weeks later, I was like, should I teach my 14-year-old daughter to play poker? And then of course that annoyed me because I would never have said I have three sons as well. I've never said that about them. And by the way, they already knew how to play because they all just seemingly figure it out. And so we did an experiment, right? What does a good entrepreneur do? And 10 girls, 10 moms. And it's the only reason I'm sitting here, honestly. So the transformation in those girls from lesson one literally four 1-hour lessons to lesson four was like literally the skies opened. It was so extraordinary. Now that at the time was really all about confidence. That's what I saw. But as we proceed to move forward actually was going right into COVID I was like well we'll do more of this. We had like three states, 17 clubs, something like that. And this is all about being in person. We, you know, months in, we're like, I guess it's not about being in person anymore. So, we better figure this thing out. So, we actually go to Peak Six employees, a few thousand employees. Said, we want to teach your daughters and your sisters and your nieces. And the women were like, 'So, good for them. Why aren't we learning?' And I was like, 'Great idea.' So, we start doing it on Zoom, of course. And Morningstar, large international firm, heard what we're doing, asked to do it and today now we've taught over 300 I think it's like 370 companies, 60 countries. And through that process I started to learn and that's when I saw that same repetition playing that hand making that decision with imperfect information playing people right because we're trading right? There's a customer on the other side. Even if I don't see them, there's somebody there. What are they doing? Why are they doing it? Right? A thought process that I hadn't seen outside of trading was right there in this card game. And when you think about how men espoused a game for so many years, but you know, our presidents play. I just met a man the other day who would play with Obama in the White House when Michelle was on vacation, you know, so it was naturally. Yes. Yeah. And I think a Trojan horse honestly for women to learn this game, play this game, build those skills. By the way, this isn't something that you are naturally... someone might be naturally good at it. There's zero reason why you cannot be good at poker. And then once you start to understand the core of it, how it translates not just to business but to life too, whether it's relationships, decisions that you have to make in life, right? You can see how that hand you just played looks like that negotiation you just did that how that hand you played looks like that meeting you were having. Like where's the power, right? Is the person with all the chips? Certainly. But what if a couple people have the chips at the table? Now, where's the power? Well, where's the position that they're sitting at the table? Each layer is quite an extraordinary way of unfolding stories in your life. And when you start talking to people about why they played a hand a certain way, there's so much to gain about how other people think and how they approach. My last bit is the most fascinating thing. We've been doing this because obviously we're teaching mostly women. We will teach men. We're teaching some of your men today, but most men already know how to play and we're teaching people from scratch, but the surprise when they start playing the game, what's actually happening and how quickly they can translate it to what they do at the office every single day.
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Yeah. I mean, I also think it's, you know, it's got a cool factor.
Oh, yeah. You know, doesn't hurt the swag at all.
Yeah. You know, no, it does not hurt that. And I always thought about it as gambling, you know, and I don't like gambling because I don't like risk, right? So, I'm like I'll bet on myself all day, which if you think about it is another type of gamble. But you know, it wasn't until I first started talking to you that I thought, 'Huh, this is interesting.' Because you and I talked last time about the thing that keeps me up at night. Because I know there are people listening right now and we could give them every tool and every tactic and every how-to, but if they don't have the right mindset, if they're not willing to actually take action, which is a risk and increase their risk tolerance, because my belief is by and large it's harder to get rich if you don't take some risk. It just seems harder. And that part I've never had a really good solution for how we could teach them that because it's all the touchy-feely stuff, right? Like manifest and fluffy and blah blah blah. And I'm not so good at that. And so, but then I read this thing the other day that I want your take on. The quote was 'making money isn't hard. Unlearning everything you know about it is. Money goes to people who treat life like strategy, not survival. This isn't about luck. It's about leverage. Understanding the rules, then bending them in your favor.' Do you think that's true?
I think there's a lot of truth to that. I think there are a lot of things we're told about money that may or may not be true. And I'd be curious your take if I could rapid fire some like money sayings to you. And you could tell me what do you think about that? True, false, and what are your thoughts? Okay, here's the first one. You should just save and skip the coffee. I think you got to have your coffee. But you know if you're not saving somewhere we're really good at defense as well as offense. So and I think you have to have members of your team on both sides. But if you're not enjoying yourself along the way, none of it's worth it.
Yeah. What about if you deserve it, you'll get it?
That's a little tougher for me. I would say an above average talent, right? But and you know, we've done a lot of experiments at Peak Six on types of people we've hired. And maybe deserve is the same as the hard worker. I'm not sure. I don't hear it that way. But the hardest working people are the people that have succeeded on our team and people stay because they know they're rewarded for working their butt off and the version of them that comes right. It's not the most obvious person. I think Peak Six has done a really good job of bringing a wide range including a lot of females more than anybody else in the market in terms of capital allocators. People are actually making decisions around money. Yeah. We kill them. And honestly, I think one of the reasons why we succeeded is because I brought a different viewpoint. You have to remember this is 1997. Like for my co-founder to choose a female that wildly unheard of. Well, there was very few to pick from to begin with. Did I deserve it? I worked my ass off.
Yeah. I like it. Yeah. And I was watching a video the other day and it was like, I just want you to keep repeating like, I will be rich. I deserve to be rich. I was like, we're going to need to add a few steps to this process because I was like, that's not going to get you there. At the most. Yeah. I was like a lot of conviction, you know, the young woman had. But then I saw it had a million and a half views. And I sat there thinking, oh man, you know, sometimes we've got to ask ourselves, are the people that we were listening to the ones who have actually done the thing that we're trying to get? Right? That's why I think it's interesting when people who have made a lot of money, had a lot of success, are willing to talk about it. It's not that common, right? Like, does it still feel weird for you to talk about like when people call you a billionaire, are you like, h, it feels awkward.
It's yeah, it's weird. But I also know like to represent it's important.
Totally. So, yeah. You know what's crazy? We've had three female billionaires in here in the last week.
Wow. Is that because there's not very many. So then I was like what's our percentage? We got a high swing ratio here. I was like this is pretty good.
What do you think about be patient? Wealth comes with time.
For sure. Time is massively important. You know it's definitely a marathon. It's not a sprint. I do think there are moments that are not exactly that right? You know, unexpected days, we make a lot more money than we should have. I, you know, we tell our traders, too, when you have that great year, think about it over a three-year time frame. Don't think about it as today's money, right? We don't want because traders can be like athletes in many ways. Way too much money and too young of an age. And we're really proud that people tend to stay a really long time with us and being a role model who's conservative around spending, right? We're really also super conscientious there. Maybe maybe too much so. We've definitely been criticized for that in the past like we're watching the pennies too closely. It's like well if you don't want me to watch your pennies I won't but I'm going to watch mine.
What you said you do a lot of experiments at Peak Six. What are some experiments you do with your employees or to determine strategies because it does seem like you're a very systems-oriented thinker.
Yeah, we are. Well, we like to know what is working. It's really hard to discern what actually it is. I'll give you this, this is a fun example. So my co-founder grew up playing hockey. Six years in, we got married, as an FYI, so I know him very well. But always interested in the NHL. And so when the opportunity was there to potentially be part of a team, we were looking at it. He at the time, so let's call it early 2000s. There were like six guys talking about hockey statistics on the internet, you know. And so and he was one of them, but they're all really bright. And we said, well, what if we took all of those people and we just brought them in as a class and is there something about their approach, the way they think that might make a different type of options trader? We did that with poker players many years ago before I knew poker. We've done that with taking the smartest people that we could that would possibly come to us. That was a complete fail by the way. Wow. But anyway, so back to our hockey people. So they came on and they were okay. They weren't great traders, but they were there working on hockey analytics. So if indeed we ever had a team or not. Anyway, they ended up leaving going to hockey teams and we were talking about this the other day, which is why I was thinking about it. I think the last 12 Stanley Cups, five were either one, I think four, and then one was second place, you know, whatever runner up, whatever you call them, loser. But we're ex-Peak Six data people.
Wow. Well, they're data people for the hockey teams, but yeah, ex-Peak Six employees. You're like, what's that movie with the baseball guy? Yeah, you're like the Moneyball of NHL.
Yeah. Oh, yeah. I mean, Matt loves loves loves. So,
Should you have taken a little piece of those teams?
Yeah, exactly. Wouldn't that be nice? Yeah, the Panthers is one of them. But we ended up being part of the Minnesota Wild for a little while.
So then is it true that the smartest people that you've hired for traders do not make the most money?
We train people have no knowledge coming in. So you don't have to know. You don't have to have a finance background, econ background. You could have a history background. Matt has an English major. So I was an English major. I was a business major. So we're looking for people at the end of the day who work really hard, who are curious. And obviously they have to be above average intelligence like just to get into the math side of options trading.
As measured by IQ. Do you give people IQ tests?
We don't give them IQ tests but there are lots of interesting mathematical ways to solve problems. Yeah. You know Google when they first started all those creative ways of testing people we like to do that too.
Do you have like a question you ask them every time? If I want to come work for Jenny, do I got to?
No, we don't. No, I obviously don't want to interview these young kids anymore, but you know, we keep it fresh because there's so much sharing and stuff that happens now. But otherwise... Yeah. But there's a lot of culture that's involved in our hiring, too. We are different than a bunch of the other trading firms on who we bring in and who we don't bring in. But it is... they love it when they come like that. That is one of the things we're most proud of. Though the other interesting thing is if they leave we haven't had any ex-Peak Six people really create a firm like we created a firm.
