Ken Book, FluidInvesting.com: YouTube stock, futures, YC and AGI

and we are live with none other than Ken book he is CEO at fluid investing .com YC startup that caught my attention really cool idea um typical YC founder but on the East Coast so still very much a hustler cracks 15 hours days um High intellect good business idea High chances to make it I'm so bullish on on YC startups let's see um how fluid does I really liked the idea last time that we spoke but can can you introduce yourself and tell us a bit more about fluid yeah for sure so first off thank you for that overly warm introduction I I hope everything you said is is at least half true um but uh yeah just a quick background of myself so I'm Ken um was interested in finance for a long time ultimately found myself uh for a brief syntax golden tax where part of the time I spent there was in a group called Credit Solutions where we created these bespoke derivative products for clients and what I realized there was that you can really create a financial product for just about anything if you figure out how and meanwhile on the side I had my own portfolio and I realized that I wanted to invest in YouTube but you couldn't invest in YouTube because it's owned by Google and so I realized wait a second there's got to be a way to invest in YouTube without investing in the rest of Google so I went to Ben who's now our CTO and he was a quantet Goldman at the time in that same group I was a banker in and uh we basically brainstormed and figured out how to create investments in YouTube since then we've expanded to not just YouTube but not Google but any key kpis of public companies so we're enabling you to invest in a company's earnings or a company's revenue or if it's Netflix for example net subscriber group things of that sort so we're creating an investment platform that lets you invest in kpis for public companies such that when you invade your investment you can actually understand that if your thesis is correct you can actually make money every time and that's what's lacking right now in the public markets you can be correct in your thesis if you think a company is going to beat our revenue or earnings you can be correct but for other for an infinite number of reasons the stock can still fall and so that's the problem we're going after and how do you do that technically because the idea is really interesting it allows me for safer and more accurate predictions let's call it that way how do you do that technically on the the back-end side of things yeah so it's going to be structured so again we're not live yet because we don't have full regulatory approval yet um I guess now is uh an interesting time to say this uh but we're actually launching a paper trading competition very soon so check back on our website in just a couple days definitely by Monday we'll have that app uh in that paper trading competition will let you actually simulate real trading in our markets as if they were Fully Alive and you can actually earn real cash prizes in the thousands of dollars um but how it's going to be structured ultimately is it's going to be structured as a Futures Contract the underlying asset in this Futures Contract is going to be an index that tracks the performance of any of these given kpis so if you think revenue for Google for example is going to be 50 billion dollars in a corner and you go long at 50 and it ends up being 52 billion you would end up with 52 dollars if I went short at 50 and it went to 52 I would end up with 48 dollars so that's kind of how it works mechanically all right and okay index but an index typically when I invest in one it's an aggregation of multiple stock prices you're betting on kpis uh it's kind of the yeah so you actually buy the the bet you know like I still don't understand like the the mechanics who would do what mm-hmm yeah good question so there are two questions there number one is what do we mean by an index and number two is how do we actually get you these returns so when it comes to question number one about the index an index doesn't have to be a big conglomerate of a bunch of different things an index just means a number that's published that tracks something okay so oftentimes you don't need a number to track what happens to alphabet stock because alphabet stock is already being tracked but if you have a conglomerate of alphabet and Netflix and a bunch of other and 498 of the biggest companies right then you would want an index to kind of show you what that average is but when it comes to our case we just need a number that's published for to be the source of Truth for this contract so because of that we're making an index that just tracks that one number and that's its whole purpose is just to be the source of truth because for the for this contract the way we actually offer it is it's a two-sided marketplace right so if one person goes along at a certain price that's because somebody else wants or and so just like in wheat Futures right the way the CME which is the biggest Futures exchange is able to offer you your returns and wheat Futures is because anytime you went long someone else went short so we're going to use those same mechanics there um to make sure that we're able to actually pay everyone out based on their earnings right and I told you that yesterday I was building uh Charlie zalmanac GPD I was also uploading annual reports and uh creating chatbot out of them and creating cold email for uh public companies so is that how you track the metrics from uh annual public reports or quarterly reports yeah well well that's great and I'd love to see what what you end up making with with Charlie GPT um but at least in our case we just buy it from a data vendor because we don't want to have any hallucinations that at this point um AI seems to act pretty regularly right and how do you make sure that the data is accurate in those reports is it like validated by third party or generally accepted that this provider has accurate data yeah so it comes directly from the sec's database the companies reported directly to the SEC so it's straight from the source straight up okay now um I still have questions as per the the mechanics um so what would be word one share let's say that I'm betting on YouTube's uh subscription right uh they were supposed to have um 5 million this quarter they ended up at 7.5 um and the the bets do I have options in terms of bet can I bet on 5 million new subscribers can I bet on six can I bet on seven how does that work do I have options yeah so that's a good question you can place just like with the stock for example if a stock is currently trading at ten dollars per share and you think it's worth fifteen dollars per share you won't go to the NASDAQ and place an order for fifteen dollars and they give you odds for it right that would be much more like a sports book right if you went and said I think this is gonna happen that give me odds what happens is you buy until it reaches 15 or until you have your desired exposure and the difference between 10 and 15 would be your profit so same here right if the market currently expects there to be a billion dollars in earnings for a company and you think there's going to be one and a half billion you would just buy at the market price which is a billion and your profit would be the difference between that and one and a half okay and on the back end who keeps track of that who's accounting all of these different do you have a software for that and you need to get an approval uh how does that work I'm curious as for the back end yeah so all of our um all of our backend is going to take place on What's called the DCM which is a designated contract Market it's a cftc designation for what in layman's terms we just call a Futures exchange um and so Futures exchanges are heavily regulated um we have matching engines or all Futures exchanges have matching engines um which is this technology that keeps track of everyone's Bid And everyone's asked so basically any type of order um and it submits um all the data that's legally required at the end of the day to a public database and if you look at any DCM right now so for example the CME ice which actually owns NASDAQ they're the second biggest DCM um so if you actually look in their website can few lists of all of their data everything's public so we're going to be listed on a DCM how long does it take typically and how much does it cost to be listed up there well it depends there are a few ways you can go about it um if you're building your own DCM it's millions of dollars in a couple of years um and if you are not building your own DCM it's it's anyone's guess so so we obviously have our strategy um towards getting them listed fully with full compliance in a cost-effective way um but it's it's that cheap so I guess the the first initial capital I mean you got probably 200k from ycru Raising pretty soon um when and what's the next round yeah so we actually closed our precedure round a few months ago um we haven't made a huge Public Announcement about that but that was a a nice round we did and so we're not actively raising and it we we don't anticipate raising in the near future but one two years in the line anything can happen so it's called that precede uh 2 million I'm not going to go into exactly what it is but it's it's not so far from there all right thank you for for the details um my brain is a bit more familiar when uh with the the topic um I also had the blockchain keyword popped while you were speaking why not build all of that through blockchain because yeah the SEC SCC has been cracking down on blockchain I feel that this technology could be more simple than building your whole backend or maybe it's straight up required by SCC to to go through the the process that you're going through right now uh what what do you think about that yeah so the blockchain is a touchy subject right now obviously um I mean a year ago it was much more in Vogue but it's still fairly popular um however it's not that popular with Regulators when you want to get something approved and do something um I'm not saying blockchain isn't the right way but if you want to guarantee that you're doing something the right way uh you want to make it as vanilla as possible you only want to innovate where you have to innovate and you want to make it recognizable by The Regulators as stuff they've seen before that's been okay and especially in the wake of the FTX drama and and a million different um crypto um news stories going through the headlines um keeping things off the blockchain is just a much more simple plain vanilla way to do things especially since there's no real added value for us to be on the blockchain we're actually talking with the vendor once that we uh that we were thinking of working with about tokenizing our Securities or our our product um and he it's funny I asked like so what what good like what added value does tokenization have and he said that well listen you can say it's tokenized and I'm like what does that mean he's like well you can say it's in the blockchain and I said well does that does that add any value and he's like no but some craft stores like saying they're on the blockchain it helps to Murray's money so again if it doesn't really add value it's not something we're super interested in to continue on the back end details you're kind of scrolling me with like how the stock market works here but um the the thing you mentioned there and when I invest it automatic automatically puts my money in some bot and if that if the person decides to okay yeah I think I understand if if someone decides to sell another can buy and that's where the money comes from now on your end how do you make money off that you know is it per transaction um tell us a bit more about that aspect yeah so we make money in two primary ways number one we make money on a transaction just like any given exchange when you place a trade on an exchange you pay exchange fees um and then the other way we plan on making data is by monetizing with it or other people the other way we're kind of making money is we plan on monetizing the data so we'll have incredible data um not again we're not going to sell your user data at all we're just basically saying hey look these are the orders that were placed on Amazon's revenue share and then that might give investors a better understanding of oh look here's what people think Amazon's revenue is going to be it'll kind of just be like another equity research report fascinating yeah and like yo let's hurry up else we're gonna get or ask it on the next uh quarterly report uh sort of what other creative pricing or monetization models have you thought about because yeah that one the transaction that's pretty normal selling the data is another one uh what else do you have in mind yeah I mean those are those are the big ones um again right now we're more focused on getting this product up quickly and legally and affordably um and once we get there I mean we'll look at monetization but first off we're just trying to get something up make sure we're fully compliant and make sure that we're actually providing something people want would you like to try the etoro model in the face tube like have copy people's bets um build their Community out of it wouldn't that be fun yeah yeah it could be fun all things to explore but I think those are those are second level um second level things to consider whereas right now we're just trying to nail the basics right uh what's your growth strategy to acquire users yeah so strategy number one is coming on to podcasts like this talking with people about what we're doing really spreading the message uh we're actually about to launch our own podcast coming very shortly we have we have one episode already in a soft launches called metrics and markets you can look it up on Spotify um but again it's just getting the word out to people we have a different a few different marketing techniques that hopefully uh if we do it right you guys will see in the coming weeks how's this YC played for you so far who has been mentoring you and how has it potentially changed changed a game for you yeah YC is great um ysc I mean in terms of mentoring us specifically everyone is placed with a specific group partner who has experience speaking with and helping companies in your space and so for us that's been super helpful we really like and respect our partners um and then when it comes to other companies right the peer group is really incredible so there are a bunch of other fintechs that provide a lot of support to us and and they're just great proton things through I want to give the folks a glimpse of our last Convoy about AI which was very stimulating um what I mean yeah I can't help myself but think that in five years there's gonna be some form of AGI on the market that's gonna totally dominate or obliterate everything until it reaches equilibrium when there will be other agis competing against it do you share that vision you're talking about in terms of Stock Market trading yes so we've been over this um but I'm happy to share the conversation with everyone um I I don't believe that that's going to be the future um if you look at markets already uh information that's publicly out there is already mostly if not entirely priced into the market um if you look at the hedge funds that are already operating at massive scale they already analyze big data in a trillion different ways we couldn't even imagine um trying to find every single correlation to the past and making sure that it's currently priced in and so the reason that the stock market prices change is because things change in real time and that's not going to change right you can have an AGI perfectly pricing something at ten dollars today but it's priced at ten dollars today because it's expected to be priced at 12 a year from now right so then that that still happens today right something's priced today based on its future value discounted to its present value weight obviously for the probability that it actually ends up getting there so the the algorithms might get sharper you might get more precise pricing but that doesn't mean that that pricing won't change because things change in real time and these AGI is going to be able to predict the future with 100 certainty yeah because my brain's asking itself uh has it not been done because Finance is like Wall Street and and broe but I mean there's been Citadel and other companies that have attempted that there's been numer AI I believe that attempted this um and yeah they they probably tried you know because the open AI model is just reuniting the best scientists in the world in one room um they did it for the tax industry copywriters um knowledge workers and so forth Consultants I think Consultants are gonna eat it in the next couple months I'm building gpts to like fully AI Avatar Dam um and yet it seems like a good solution um short term right but yeah interesting to take go on camera yeah I mean I mean just just think of it this way Finance is the one area where you have a very clear path to monetization if it's possible to make a good uh AGI for it and so if they've already done it with areas like copyright and other Industries you have to think why it hasn't hit Finance yet and the answer is because Finance has been using big data for decades already and it's already pretty Advanced and and it it doesn't take away trading right you can still um things still change over time prices still change over time and that's not changing anytime soon right and nowadays I'm studying the history of public um Stock Exchange Toronto Stock Exchange New York Stock Exchange Singapore Stock Exchange and I'm learning quite a lot um have you studied the history of these and what insights have you learned from the history of stock exchanges oh that's a good question yeah of course we've been studying um we've been studying the history of stock exchanges there are a few good books that I recommend specifically regarding the history of Futures exchanges which people don't know nearly as much as stock exchanges but in my opinion that's where all the fun happens because in Futures exchange the exchange can actually choose what they list whereas with the New York Stock Exchange for example to an extent they can improve and not approve different companies for listening but they're listing public companies whereas on the Futures exchange you're listing different contracts so there's a lot more financial engineering that goes into a lot more thought that goes into it so I encourage people who are interested to take a look at two books there's a book called man of the Futures which is about Leo malamud who is a key player in the development of the Futures world he was the one who created uh Foreign Exchange futures markets among many other products that have ultimately been life-changing he was the one who who really spearheaded index Futures which are now mainstream so there's there's a lot of a lot of interesting stuff there and then there's another book called Zero Sum game which talks about the Chicago Board of Trade that was known as cbot during their acquisition period with um with the CME Group which is now the biggest features Exchange in the world kind of the two big Chicago exchanges merging with each other and it's told from the perspective I think it was the chief marketing officer at the time so those are both um so so those are both really great books to learn more about the history of Futures exchanges because their history of stock exchanges is just like 20 dudes in a room uh speculating about a company that might go up in our time well in these times it it was Gold Rush right most of them it was petroleum it was steel and it was like okay yeah this company might go up let's invest in it so that it can grow faster and in a year or so we'll ask um or per money back most probably are we're just gonna hold the stock is that a fair and accurate way to describe how it all started um for stock markets I guess you could say there might be a little more speculation but for futures markets uh they actually started out to serve a very specific purpose and that's hedging so I'll give you an example there's a reason the biggest Futures markets and the one of the oldest Futures markets in the world the Chicago Board of Trade started in the 1800s in Chicago right Chicago was at the center of all the trade routes in America and so you have to wonder why did it start there it's because because people came to Chicago attack actually trade and they were trading for example they weren't selling their their wheat they were selling their uh they were selling their pork barrels they were selling everything and so they needed these Farmers needed a way to make sure that even if they had a bad crop one year for wheat for example that they make the same amount of money so what they might do or is they might say listen if I have a bag prop this year or other people might also have a bad crop that year so that's going to make the price of wheat go up if I produce less weed right so I can buy a wheat future and that wheat future will pay me money if the prices of wheat go up so I can sell my wheat right now if I get more wheat for my crop then I sell more of it but it's for less money so I'm fine but if I sell less of it right I'm not screwed I just get way more money from these Futures contracts that help me hedge my risk and so it was actually much less speculation and way more professionals just trying to make sure that they can predict their income in advance understanding the world economic economy is like one of the funnest um most fun thing to do um it's very intellectually stimulating which is why a bunch of folks go into Finance it's not all bros um and I really like that and well the bro and testosterone stuff is the betting part right we all love Tibet I mean when I get with my friends you know there's a reason why we often end up around the poker table it's just that like okay uh here's my point here's my thesis I think I'm gonna be right um I'm going all in you know um it's very intellectually stimulating uh and it's so complex right there's so many elements to to this world economy you probably need to go Ken uh we will need to do around to because I have other questions uh but it's been very insightful thank you for showing up today where can people find out more about you yeah so thank you for having me it's been a pleasure we'd love to chat again uh people can find us at fluid invest