First Time Founders with Ed Elson – How Kalshi Made it Legal to Bet on this Election

Ed speaks with Tarek Mansour, co-founder and CEO of Kalshi, a regulated exchange and prediction market that lets you trade on future events. They discuss Kalshi’s fight to legalize betting on the election, how to deal with negative press, and his prediction for the outcome of the election. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Speaker 00

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• 0:27Speaker 01

  Hogging seats on a crowded train, not saying, excuse me, watching videos on your phone with no headphones in. Sometimes it feels like we don't know how to act anymore. What we have been seeing increasingly is people breaking rules. Why should I play by the rules if nobody else is going to do that for me? This week on Explain It To Me, how to mind your manners. New episodes, Sundays, wherever you get your podcasts.

• 0:56Ed Elson?

  Scott, we're two days away from the presidential election. I know who you're voting for, but who do you have your money on?

• 1:03Scott Galloway?

  I'm actually thinking of going into one of these gambling markets and placing some money on Harris. They have 300,000. This is where the money and the ground game kicks in. They have 300,000 volunteers getting people to the polling station, making sure they know where the polling station is, banging on doors. When you bang on a door and someone says, yes, I'm voting for that person, they are much more likely to actually go vote. Supposedly, they have 300,000 people on the ground, feet on the street over the next two weeks. And estimates are, Trump claims he has 50,000, which means he probably has 30. So I like our ground game. I like our choices. I recognize I'm hugely biased here, but I wonder if people are just sick of the chaos.

• 1:46Scott Galloway?

  Anyways, I think Harris is going to be our next president.

• 1:55Ed Elson?

  Welcome to First Time Founders. I'm Ed Elson. This election is very unique for a lot of reasons. But one of them is that for the first time in our nation's history, Americans can bet on it legally. My next guest is responsible for that change. He created the country's first CFTC-approved prediction market that lets you trade on future events, including the election. And if you're a regular consumer of politics, you've likely heard of this company before. This is my conversation with Tarek Mansour, co-founder and CEO of Kalshi. Tarek Mansour, thank you for joining me.

• 2:34Speaker 04

  Well, thanks for having me. I'm excited.

• 2:36Ed Elson?

  I'm just gonna start with, I was driving over here, I was in the Uber over here, and I was just scrolling on TikTok.

• 2:41Speaker 04

  Yeah.

• 2:42Ed Elson?

  This is 100% true, about 20 minutes ago. And this was the video that came up. I'm just gonna show you what this video is. Can you, can you see this?

• 2:51Speaker 04

  Yeah, I'm looking, I'm looking.

• 2:53Ed Elson?

  It captures Uber driver kicked us for saying he's gonna lose his bet on Trump.

• 2:56Speaker 05

  Uber driver's literally kicking us out because we're not Trump supporters.

• 3:00Speaker 06

  That's not why I'm kicking you out. I'm kicking you out because you made fun of me for voting for Trump.

• 3:04Speaker 05

  You're betting while driving. Why are you doing that?

• 3:12Ed Elson?

  For people who are not watching on YouTube, it is an Uber driver who is betting on Kalshi, on Tarek's platform, on the election, on his actual screen on the Tesla. And then the passengers are complaining about it and he's kicking them out. Your reactions to that TikTok I saw 20 minutes ago?

• 3:31Speaker 04

  Well, I mean,

• 3:33Speaker 04

  it's pretty ridiculous. But like, I mean, first of all, don't bet and drive.

• 3:39Speaker 04

  You know, so we legalize betting in the US, but not betting and driving at the same time. That is actually dangerous.

• 3:44Ed Elson?

  That's good, okay.

• 3:45Speaker 04

  You know, I think betting on the election is not dangerous. Betting on the election while driving, that is actually dangerous.

• 3:50Ed Elson?

  Very different thing.

• 3:51Speaker 04

  So do not do that. Kalshi's not advocating for doing that. But pretty cool, though.

• 3:56Ed Elson?

  Crazy. And I will also say, you are everywhere right now. There are articles about you, a lot of very negative articles or about your company. We've talked about your company multiple times on the pod. We've had debates about whether it should exist or not. So I would like to just get your, on a personal level, how does it feel to be everywhere right now?

• 4:23Speaker 04

  Yeah, we are in a lot of places. I mean, I think, you know, it's, we are, we're obviously ramped up the marketing. We have billboards. I don't know if you saw these live billboards.

• 4:31Ed Elson?

  I did, in New York.

• 4:32Speaker 04

  These are actually, if you bet on Kalshi right now, it will show up live on billboards in New York, Vegas, LA, pretty much every single major city. So yeah, I mean, it's a big moment. Look, I personally, on a personal level, I mean, I think

• 4:44Speaker 04

  there's ups and downs in companies. I think what Luana, my co-founder and I have learned, you just gotta ride it out. Like, we're less volatile now. Like, we feel the ups a bit less and we feel the downs a bit less. And everybody's super excited and loves us right now. And in four months, we're not the news anymore and people forget about it. And it goes on and on. And that's what building a company is, right? Like, people, you know, there was a tweet today that's like, oh, Kalshi is the newest quote unquote overnight success, but they've been grinding it out for, you know, God knows how many years. So it's a grind. There's been a lot of down moments, a lot of pain, but these up moments make it worth it. It's really fun to do. But I honestly, I don't, I don't think we really care about the attention so much as much as like, we just love this product. Like, we love that people can, you know, trade on the election right now. We're having these real time odds.

• 5:28Speaker 04

  You know, we love that we're providing, and we believe we're providing more truth and we can talk about that. But it's been tiring as well. We've been working 24/7.

• 5:35Ed Elson?

  For people, for people who don't know, I think most do, what actually is Kalshi?

• 5:39Speaker 04

  So Kalshi is the first legal prediction market in the US. So the first legal place in the US where you can bet yes, no, or trade yes, no on any future events. So who will win the election as of this October? We can talk about us winning the lawsuit, but also will it rain tomorrow? Will inflation go up? Will the Fed raise interest rates? Will COVID come back? Will TikTok get banned? Really, anything you can think about. We don't do violence for terrorism assassinations. And as of now, we don't do sports.

• 6:06Ed Elson?

  And how did you come up with this idea?

• 6:07Speaker 04

  So I worked at Goldman Sachs when I was at MIT. So at MIT, I interned at Goldman Sachs in 2016. And I also worked at Citadel and a few other places. But at Goldman, something striking happened in 2016, that summer. Most of the institutional money, like high net worth individuals, family offices, just big, you know, rich corporations or people.

• 6:29Speaker 04

  It was crazy because they weren't asking about the instruments that we were trading. You know, there's like options and swaps and credit defaults and all these complicated things, but no one actually gave a shit about that. Like, what people cared about, they were like, what do we do about the election? What do we do about Brexit? So those two were happening right in that fall. And it was like, we want to bet on the election, or we want to hedge against Trump, like bet on Trump or hedge against Trump, bet on, at the time it was Hillary against Hillary. And so we'd come up with these bundles, and you see them right now, like Goldman and JP Morgan, they're all like, the Trump bet, the Trump bundle, whatever.

• 6:57Ed Elson?

  Yeah.

• 6:58Speaker 04

  And it was weird because, one, it was a proxy, it wasn't exactly what they wanted for, it was indirect. Two, we would charge them crazy fees, it's over the counter, not on exchange traded. And three, this is the thing that hurt me the most, which is like, why is it not accessible for everyone? Well, they're doing it, why could anyone do it? So the idea of building, hey, like, what if you build a New York Stock Exchange, where this is actively traded, it's transparent, everyone can see, and anyone can access, it's like an exchange where you can bet on an event, where you can trade on an event the same way you trade a stock.

• 7:23Ed Elson?

  Yeah.

• 7:24Speaker 04

  That was the genesis of Calci. It was illegal, we spent three years getting it regulated, and we did get it regulated by the federal government.

• 7:29Ed Elson?

  So, you said, at the time, betting directly on an election was illegal. Why was it illegal?

• 7:34Speaker 04

  It was kind of never regulated in the US, but it was done a lot. So it was insane. If you look at the New York Times and publications back in 1900s, 1800s, they had like live tabloids of live bets, live election bets, yeah, yeah. And it was huge, it was huge, like, even back in the time, it was like, you know, hundreds of millions, if you adjust for inflation, but I don't think it's election specific. I think it's like, financial instruments consistently, consistently, whenever they come in and they're new, they face scrutiny, and it's like, is this gambling, is this not?

• 8:04Ed Elson?

  Yes.

• 8:05Speaker 04

  I don't know, did you know, grain futures, you know that at some point they were gonna get legalized?

• 8:08Ed Elson?

  Is that right?

• 8:09Speaker 04

  People were saying it was gonna be gambling, and there was a Supreme Court decision in 1905 that legalized them.

• 8:14Ed Elson?

  Yeah.

• 8:15Speaker 04

  It said like, look, some people speculate, yeah, sure, some people are quote unquote gambling or betting on grain futures, which is true, it's still true today.

• 8:19Ed Elson?

  Yeah.

• 8:20Speaker 04

  But they have economic value, because people hedge and people use them to know what the price, the future price of grain is gonna be, and that's very economically relevant.

• 8:27Ed Elson?

  So why was the election contract, the one they said no to, they said, yeah, we're down with you trading on the weather?

• 8:35Speaker 04

  Why elections?

• 8:36Ed Elson?

  Yeah, as you point out, the economic value argument doesn't seem to hold up, because there's no economic value necessarily in understanding what, if it's gonna be rainy tomorrow.

• 8:47Speaker 04

  Sure.

• 8:48Ed Elson?

  So what was the sticking point on the election question?

• 8:51Speaker 04

  So look, I mean, I think there's like a Well, first of all, I do think whether it's gonna rain tomorrow or not is very important.

• 8:57Ed Elson?

  Okay.

• 8:57Speaker 04

  I do think it has economic value.

• 8:59Ed Elson?

  Let's hear that, let's hear that.

• 9:00Speaker 04

  Yeah, I mean, I, well, I mean, I think, you know, the OG traders of the weather are actually the farmers.

• 9:06Ed Elson?

  Right.

• 9:06Speaker 04

  It's like, you know, you know how like there's this lingo of orange futures forecast the weather better than the weather channel?

• 9:12Ed Elson?

  I didn't know that, but I love that, and I'm sure that's true.

• 9:14Speaker 04

  And they do because actually oranges are very, fluctuate a lot with the weather. Like, the harvest and the prices of oranges fluctuate a lot with the weather, but, um, so, you know, forecasting the weather is very important, actually.

• 9:25Ed Elson?

  Okay.

• 9:25Speaker 04

  And you can extend it to knowing whether a hurricane is gonna hit a certain territory versus not. Like, we actually have people in the Keys in Florida, and every hurricane season, it's interesting. We do have a phone number on Calci, we keep it very hidden because we don't want a lot of people to call us and support, we get flooded. No one uses it, right? People use Zendesk and chat and, but actually, around hurricane season, we start getting phone calls. And it's basically people from the Keys in Florida, uh, that usually, you know, it's a bit, kind of like, older, older generation and so on. Insurance companies have pulled out of the Keys in Florida, they don't insure, they don't love insuring and taking the risk because there's been so many hurricanes, it's kind of like a very dangerous area.

• 10:01Ed Elson?

  Yeah.

• 10:01Speaker 04

  But we have a market about that.

• 10:02Ed Elson?

  Right.

• 10:03Speaker 04

  So people put on a hedge on Calci against damages to their properties, against a hurricane hitting their time. So that's economically relevant, that's insurance, that's important, like, that's important to do. And yes, some people are speculating, but that's true for insurance, right? If you're insuring against something bad happening, someone else is speculating on that on the other side, which could be the insurance companies and so on. You asked about elections, I mean, look, I can't speak on behalf of a regular, but the thing that happens is like, there's always a sort of official and unofficial, like, I think the official response was like, hey, trading on the election is gaming.

• 10:36Ed Elson?

  Yeah.

• 10:36Speaker 04

  That's no different than, you know, going to a casino and betting on a slot machine or betting on, uh, the outcome of roulette. And I think you're asking a good question, like, how is that gaming but weather is not? That, that sounds like a weird line to be drawing.

• 10:53Ed Elson?

  Yeah.

• 10:53Speaker 04

  So there's an unofficial answer, it's just like people have found it to be taboo. DC doesn't love the idea of people trading on the election. Generally speaking, that has always been true, but that does not mean it's a bad thing, right? And, and so we argued in court, actually, it is, it is, it's a tremendous proposition to be arguing that elections are a game.

• 11:11Ed Elson?

  Right.

• 11:11Speaker 04

  If elections are a game, what are we all?

• 11:13Ed Elson?

  What are we doing?

• 11:14Speaker 04

  What are we, what are we doing, right? Like, what do people get some, I mean, you know, if elections have no economic impact on society... That is hedgeable, like clearly like hedgeable and you can transfer risk with respect to. Then why do we care so much like, you know, and we won, right? I mean, the law is on our side very squarely.

• 11:33Ed Elson?

  How did the ruling go down? What were some of their reasons for why you are correct?

• 11:37Speaker 04

  So, I mean, we've always been consistent about the law. We're like, look, I think the law says the underlying, the thing that you need to be trading on cannot be gaming. Right? And we argued elections are not a game. Right? Elections are not, are different from looking at, you know, two boxers fighting and betting on the outcome. Right? Like, or rolling a dice and betting on the outcome. And at a high level, the way to think about that and how do you differentiate these from betting? Look, I'm OK with people calling this betting. I'm actually OK. People, when CME launched Water Futures, one of the most economically relevant commodity, like financial instruments you can imagine, it's water. People called it betting. Oh, now you can bet on the water. OK, fine. So that's fine because betting is very similar to speculation. Are people betting on the stock market?

• 12:22Speaker 04

  Yes, in some forms, but that doesn't mean the stock market in itself is bad. But there is a line to be drawn and the line is artificial risk versus natural risk. Right? If you and I right now, I don't know, like pick a, pick dice and roll it. And we bet on the outcome. We create an artificial risk so we can speculate on it. That's entertainment. We're having fun with it.

• 12:42Ed Elson?

  Yep.

• 12:42Speaker 04

  Right? Brexit happening or not, hurricane hitting somewhere, TikTok being banned or not. Legislation, elections are natural risks. They exist independently of you and I. And once there's a risk that exists, you now have the need for a market to transfer risk. For people that have it but do not want it, they cannot bear it, to people that don't have it and have capacity for it. It could be hedge funds, it could be large institutions, it could be people, it could be people that want to speculate and so on and so forth. And that's why we have a derivatives market, it's risk transfer essentially.

• 13:12Ed Elson?

  I think that the majority. Of transactions that are happening on the stock market are gambling.

• 13:19Speaker 04

  Sure.

• 13:20Ed Elson?

  Um, I think that's true of options too. I think that's true of trading and that's okay. And we're down with that. I don't think it's necessarily a good thing, but I almost don't feel like it matters whether it's a good thing or not. It just is. It's something that people do. Um, and that's okay. And so that's how I view. Kalshi, I'm like, in my view, I think it is gambling in most cases. I'd be interested to see if you agree with that. But that's fine with me. If you want to gamble, you can gamble and that's okay. Um, and the, the other side to this is.

• 13:59Ed Elson?

  Gambling is legal. You can go to the casino.

• 14:02Speaker 04

  Yeah, yeah.

• 14:02Ed Elson?

  And gamble and you can bet on a boxing match. So why, I still don't fully understand what the regulatory questions are here. Because there are many, you know, in many states, you can gamble on sports. You can do whatever you want.

• 14:19Speaker 04

  Look, honestly, I think that's a very informed view. Uh, and I, and I love that because like, I, I've, I've learned to believe like the, the. Simple statements like gambling on elections is bad. Just resonate better, you know, than like telling people like, hey, you should get informed, like read why economists love these markets. Why like, people don't like going below the surface. They're just like, here's the thing and like, you know, great. So, so, but like.

• 14:42Ed Elson?

  And by the way, I just want to point out, like, again, I kind of agree with that personally. I don't want to gamble on the election personally.

• 14:49Speaker 04

  But you think it's like.

• 14:50Ed Elson?

  But it's fine. So, I mean, I don't, I also don't want to like smoke, chain smoke cigarettes.

• 14:55Speaker 04

  Yeah, I mean, I, no, no, I, I get it. So I think like, I would say a few things and I kind of like, I'll address a few. So let's talk about some of the kind of alternatives and we come back to our markets. So.

• 15:04Ed Elson?

  Yeah.

• 15:05Speaker 04

  Credit default swaps, which are basically a way to insure against company debt, right? So generally the market for that is around, like, I think it per year. Uh, today it's like in the tens of billions of dollars, like maybe close up to a hundred billion, right? That's the market for hedging actual debt, but the, the trading volumes, the volumes are actually closer to trillions. So you have a solid like 10 to maybe even like 50 X factor.

• 15:30Ed Elson?

  Exactly.

• 15:31Speaker 04

  What, what is the rest of that? That's speculation.

• 15:34Ed Elson?

  Speculation.

• 15:35Speaker 04

  Yeah.

• 15:35Ed Elson?

  Same with, yeah.

• 15:36Speaker 04

  No, no, I mean, it's speculation. So my point is, we've just established that in traditional market, and by the way, this is also true for grain futures, for commodity futures, all these things that have a lot of economic value. They're important. And the stock market, I actually, you know, do think that most of the transactions in the stock market are not capital allocation.

• 15:51Ed Elson?

  That's right.

• 15:51Speaker 04

  And the reason why you cannot stop speculation, if you take out speculation on the stock market, you know what would happen? There's no more liquidity.

• 15:58Ed Elson?

  Yeah.

• 15:59Speaker 04

  It it dries up. There's no more stock market. There's no transactions anymore, right? Like, there's no live taking prices. Nothing is happening. So the people that need the capital at that point, the the very purpose of the stock market fades away. And we've seen that. No stock market weakens capitalism. It you start erring on the side of telling people what to do and what not to do with their money. So it's the same thing here. Yes, there's a lot of speculation. And I'll tell you, like, majority of things are going to be stuck. If the market is liquid on cash, it will be a lot of speculation. Because for every hydro, you need multiple speculators. You need that market to be vibrant and and you need that type of speculative activity. But it doesn't make the market itself bad. Gambling and betting, in my view, though, like, I I'm OK with calling betting and speculation. Gambling is a bit weird.

• 16:39Ed Elson?

  OK.

• 16:40Speaker 04

  It has some negative connotations historically, which come with, I'm betting against the house.

• 16:45Ed Elson?

  Hmm.

• 16:46Speaker 04

  Right? Like, I'm going to a casino and I'm betting against the house. And if I make a lot of money, they'll kneecap me.

• 16:50Ed Elson?

  Right.

• 16:50Speaker 04

  Right? There's like odds that are tilted against me because the the a house usually rigs the game so that they always win.

• 16:56Ed Elson?

  That's a really good distinction.

• 16:58Speaker 04

  Whereas on cash, it's, and this is why I call it maybe speculation or betting, or like the stock market, you're trading against other people. It's fair game. You're not trading against, like, we're not the ones setting the odds. It it's not tilted towards us. You're trading against other people.

• 17:10Ed Elson?

  That is a good point.

• 17:11Speaker 04

  Transaction fees. And so that's a different type of dynamic.

• 17:16Ed Elson?

  Right.

• 17:16Speaker 04

  You're not always negative E V in our in in our markets.

• 17:19Ed Elson?

  Yeah.

• 17:19Speaker 04

  Hopefully, if if you're informed, I mean.

• 17:21Ed Elson?

  I'm just trying to think like how sports betting works. I guess that's gambling.

• 17:25Speaker 04

  It is against the house.

• 17:26Ed Elson?

  Sets the.

• 17:27Speaker 04

  You bet against DraftKings or you bet against FanDuel.

• 17:29Ed Elson?

  Right.

• 17:30Speaker 04

  There are some new ones where it's like kind of more exchange driven, where you, you know, I'm betting against you or other people and we are setting the odds by putting orders against each other.

• 17:39Ed Elson?

  Yeah.

• 17:39Speaker 04

  So our prices are not set by anyone. It's like actually market supply and demand.

• 17:43Ed Elson?

  Yeah.

• 17:43Speaker 04

  It's like the stock market.

• 17:44Ed Elson?

  Totally. I I hadn't thought of that. And I think I think that's exactly right. So I'm gonna I'm gonna go along with you on this.

• 17:50Speaker 04

  Sure.

• 17:51Ed Elson?

  We're down and and propose some. Potential issues now that

• 17:55Speaker 04

  That's great.

• 17:56Ed Elson?

  Let's assume we agree. One of the events you can trade on is whether or not Elon Musk will be nominated to the cabinet, to Trump's cabinet.

• 18:04Speaker 04

  Yeah.

• 18:05Ed Elson?

  Let's say you're Elon Musk. You've just had a private conversation with Trump. He tells you, I want to have you in the cabinet. What is stopping Elon legally from rigging that market and thus rigging all the other gamblers?

• 18:21Speaker 04

  Yeah.

• 18:21Ed Elson?

  Sorry.

• 18:22Speaker 04

  And that example applies to a lot of event contracts

• 18:25Ed Elson?

  Yes.

• 18:25Speaker 04

  in prediction markets. I mean, that's definitely true. And guess what that example applies to as well?

• 18:30Ed Elson?

  Stock market.

• 18:30Speaker 04

  Stock market, right? Like, and so

• 18:32Ed Elson?

  I should just rephrase. How do you prevent insider trading?

• 18:35Speaker 04

  Insider trading, exactly. There's so many interesting things. So first of all, actually, weirdly enough, insider trading is not illegal in commodity derivatives. Yeah, because the farmers are trading on grain prices and obviously farmers have insider information on grain prices.

• 18:50Ed Elson?

  Okay.

• 18:50Speaker 04

  To be clear, to be clear, that said, we have it in our own rules.

• 18:53Ed Elson?

  Okay.

• 18:53Speaker 04

  Our designation is a designated contract market. It's like a legal designation. And what we are is a self-regulated organization. Think of it as a little bit of an extension of a government, right? We have our own set of rules.

• 19:02Ed Elson?

  Okay.

• 19:03Speaker 04

  And these rules are like, basically can go from civil prosecution all the way to criminal prosecution. And we have a rule against insider trading. We do have it, actually, Kalshi, but that's not because of the law. We impose the rule that you cannot trade on material, non-public information on prediction markets, on our prediction markets. So if you do, you're actually violating the law.

• 19:20Ed Elson?

  Okay.

• 19:21Speaker 04

  Because violating the rules of an SRO is violating the law.

• 19:23Ed Elson?

  This is fascinating.

• 19:24Speaker 04

  Yeah. So you violate the Kalshi rules, you're violating the law, and we can prosecute you. You can impose fines, all the way to criminal prosecution. You can be prosecuted by the CFTC. Basically, same way that if a Goldman trader commits insider trading, they'll be prosecuted by the SEC. So same thing.

• 19:37Ed Elson?

  Yeah.

• 19:37Speaker 04

  So from a legal perspective, it's the same thing. We establish that. Now, the question is like, how do you enforce against it?

• 19:42Ed Elson?

  Exactly.

• 19:44Speaker 04

  Same thing as the stock market, right? Like, if Elon has a product announcement, or actually, anyone at Tesla has an upcoming product announcement, and they call their cousin, and they say, hey, this is coming. You should load up on Tesla options. How does the New York Stock Exchange police against that? Right? They have actually a very good mechanism, and we have the same ones that we've built over the years. So We have, first of all, like we have surveillance systems that are constantly adjusting trading data and seeing weird artificial patterns, right? Like if someone is loading way out of the money, buying stuff that's trading at 10% and suddenly it moves to 90 the next day, those usually get flagged, especially if the transactions are large. They get flagged and they go to investigation. We have a whole investigation department that basically investigates who they are because we KYC people, we know who they are. We ask them questions, we know, it's like opening a brokerage account.

• 20:29Speaker 04

  So we have their SSN and so on. And then they can be escalated for an investigation where we figure out why did you place that trade and how did it come to fruition? Very similar to how insider trading is monitored on stocks. Is this perfect? No, but, but people do do insider trading on stocks. The most important thing to flag, when insider trading becomes vile and bad is when it's large. Like the larger, the more important it is to flag. Like if someone puts $10 on Tesla options because they had some, some of their cousin told them something, like is that going to be flagged? Probably not. Now, if that $10 turns into $20 million, that's a very different story. But also $20 million is much easier to flag.

• 21:06Ed Elson?

  You figured out the regulation. That's your big innovation. Exactly. And, you know, you, you described how when you were working at Goldman and these family offices, we want to make bets on the, on the election. I would bet that Goldman is looking at Calci right now and they're thinking, holy shit, they're about to take our entire trading business, or at least in, in that aspect of things where people want to make these sort of narrative driven bets. And why wouldn't they just do it on Calci? They don't need Goldman to bundle up this special options package for them. They can literally just bet on the story. And it's all because you guys figured out the regulation. How did you do that?

• 21:49Ed Elson?

  And what did you learn about the regulatory system? What, what about your process actually pushed this through?

• 21:55Speaker 04

  It took a long time, like, because you need to imagine three years, all we're doing is regulation. I'm drafting law and policy and regulations all day, all night. Everyone around us was saying this is never gonna happen. Every single lawyer, I mean, when we first started the company, in one day we called 65 lawyers, all of them said, "No, it's not happening. This is stupid." Really? Yeah. And the CFT wasn't giving us any like, "Oh yeah, we're gonna do this." It was like mostly like, "Oh, here are all the issues with this thing." And we would go take these issues, fix them, and then there's more issues and more issues. It was like rocking through this desert. Right. You have no, no evidence whatsoever that the desert ends. Actually, all evidence is pointing that this desert is not gonna end. And we kept going, and I really think that was it. Like, I think a lot of it is actually you just have to stick it through, and it's a war of attrition, and you have to just like, keep pushing and keep your conviction. And what kept us convicted is like, "Look,

• 22:41Speaker 04

  we will stop when we get what we want, or we are proven wrong." And until we are proven wrong, like literally mathematically proven wrong, like, "Why shouldn't these markets not exist?" Yes. We'll keep going and see what happens.

• 22:54Speaker 04

  We'll be right back.

• 23:12Scott Galloway?

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• 23:57Scott Galloway?

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• 24:15Scott Galloway?

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• 26:38Ed Elson?

  We're back with first time founders. I want to move on to another topic.

• 26:43Speaker 04

  Yeah.

• 26:43Ed Elson?

  This has become super, super politicized because.

• 26:46Speaker 04

  Yeah, yeah, the odds are up.

• 26:48Ed Elson?

  Yes. And a lot of people are looking at the odds on Kalshi right now, which as of today, I think they're around 60%.

• 26:59Speaker 04

  60? Is it 60 right now?

• 27:00Ed Elson?

  Let me try.

• 27:03Speaker 04

  It was, I think, 60 a day or two ago. I thought it might have dropped to 58, I think.

• 27:07Ed Elson?

  59%.

• 27:08Speaker 04

  59, yeah.

• 27:09Ed Elson?

  59%. So a lot of people are saying that this is, one of the arguments in favor of this, which I don't fully agree with, is that this is an alternative to polls.

• 27:20Speaker 04

  Sure, sure.

• 27:20Ed Elson?

  Because it's more accurate than the polls because people are actually putting their money forward. You're drawing from the wisdom of crowds.

• 27:27Speaker 04

  Yeah.

• 27:28Ed Elson?

  My belief is that this is not necessarily the base truth.

• 27:35Speaker 04

  Sure.

• 27:35Ed Elson?

  Because one of the biases that I've noticed, which I saw you guys put your numbers out on your demographics, is 90% of the people on Kalshi are men.

• 27:44Speaker 04

  Yeah.

• 27:45Ed Elson?

  And so, you know, my view is baked into this is a level of bias that means that it can't just be the exact truth. Your points on my thoughts on that.

• 27:57Speaker 04

  Yeah, no, I think that's a great point. Let me address a few things, like, you know, and I kind of keep repeating this, and I know you know this, but it feels like general population doesn't understand this, like, market odds are pricing the probability of a candidate winning. That's not what polls do.

• 28:09Ed Elson?

  That's not what polls are, yeah.

• 28:10Speaker 04

  Like, if you're up two points on the polls, you're kind of, you're up more like 5 to 10% in prediction markets.

• 28:16Ed Elson?

  Right.

• 28:16Speaker 04

  And in odds. It's not the same thing, right? Like, 60% odds is not 60% in polling. If you're polling 60% up.

• 28:23Ed Elson?

  Yeah.

• 28:23Speaker 04

  You're, you're, you're like 90% chance of winning in a certain place. So I think people are overreacting to this in either case, like the Republican camp.

• 28:33Ed Elson?

  They're going crazy. This has been crazy online, this question.

• 28:36Speaker 04

  I know, it's been crazy. No, it's been crazy. I agree. Like, I think the Republicans are like kind of taking it as a strong sign of victory and the Democrats are taking it as a. Strong sign of like defeat and it's rigged and all but but like I'm telling everybody like calm down. First of all, this is a still a coin flip, it's slightly biased. And if it was in the sports context, like if Barcelona is slightly disfavored versus Real Madrid, Barcelona wins very often like, you know. So so that's one. Two, ten days is a very long time for these markets. Ten days ago, the odds were fifty one percent Kamala Harris. Now they're sixty, it moves. That's like the whole point is it moves and it's pricing in real time. So that that's kind of putting that out there. Now, I don't think sampling bias is a real thing in prediction markets, to be honest. I don't think so, and I I I I don't actually really agree with that.

• 29:20Speaker 04

  The basic point is actually, so fine, there are more men than women on Kashi, that is true, we we released that, we we said that publicly. Uh, ninety percent is men, ten percent is women, but amongst the women, like if you just see where women, what women are buying and betting, they're actually buying more Trump than Kamala. There is zero evidence right now that if we had fifty fifty women, that it would actually change. Actually, the the the Trump bias is slightly higher amongst women than it is amongst uh men.

• 29:47Ed Elson?

  Interesting.

• 29:47Speaker 04

  So so does it definitely, like this is not a poll, by the way, this is not saying that more women are gonna vote for Trump than Kamala, not at all. That's not what this is saying. All that this is saying is I don't think this bias is really there.

• 29:58Ed Elson?

  So, you know, one of the issues with polling that has often happened is that Democrats, historically speaking, have been more down to pick up the phone and to answer the polling question.

• 30:12Speaker 04

  Sure, sure.

• 30:14Ed Elson?

  And Republicans, historically speaking, when they hear someone, hey, I'd like to ask you a few questions about the election, fuck off.

• 30:20Speaker 04

  Yeah.

• 30:20Ed Elson?

  So that's historically been what's happened, and that could totally change. Uh, the point being, there is a very specific and kind of weird bias baked into the polling, which means that you can't take it as base truth, which I think all of us already know. What I would say about Calci is that you mentioned that the women on Calci are actually more pro-Trump. I would bet that Calci is also attracting a certain type of woman. And the certain type of woman is probably more likely to bet Trump. Would be my guess, but again, that's total speculation. And my point being, both of these things are trying to draw the base truth out of what's happening.

• 31:01Speaker 04

  But it's biased, yeah.

• 31:02Ed Elson?

  They're biased in small, different ways. And so the idea that either is more accurate than the other, to me, isn't true.

• 31:10Speaker 04

  That is a fair point. And I think that there is a difference, though, and that's why that was my second point, actually. So first, I mean, that's kind of the face value. Maybe, maybe, maybe these women are actually more pro-Trump than they are pro-Cameroon. They want to buy more Trump. That's, that's possible.

• 31:22Ed Elson?

  Yeah.

• 31:22Speaker 04

  But, and that's important to understand, like, in polls, if that happens, it's done. You polled a bunch of people and you get the number and that's it. In markets, if the true value, if the fair value, the theoretical correct answer is 50, and there's weird flows that are biasing it to 60, arbitrageurs and traders that like making money. I hope that we can all agree that people in America, or really everywhere, like making money. Like, I hope, like, you know, I hope that, like, we, there's no disagreement about.

• 31:49Ed Elson?

  No, I don't, I don't care about money.

• 31:51Speaker 04

  People are greedy. Like, as long as you trust that people are greedy.

• 31:53Ed Elson?

  I love it.

• 31:54Speaker 04

  Like, people are studying these insanely obsessively. They study the polls, they study how the polls are being made, they study statements, they study historical data, they study the markets, they study other markets, like stocks and so on. Now, if, this is true, if we are really at 50/50 and the other's saying 60/40, there is a multi-10 million dollar incentive to bring it back. And we have institutional liquidity. We have institutional liquidity on the platform, like really smart money. It is there. It could be individuals that are really smart. I mean, we have Susquehanna on the platform, Sig, one of our main partners, that, you know, has been pricing and trading these things forever. We have other prop shops and hedge funds, some of the smartest people on earth. Like, you know, you can imagine all the names, they're not, Sig is public, the others didn't make it public.

• 32:38Ed Elson?

  Okay.

• 32:38Speaker 04

  But smart money brings back the prices to where it should be because there is incentive to do so. Like, it, it. Fine, there is a Trump bias in the flow. That is like what people consider to be the best type of flow for the citadels and Sasquahanas of the world, because they come and trade against it and bring the prices down. And these people are actually trading at a loss, at a negative expected value, and the market makers are trading at a positive expected value.

• 33:03Ed Elson?

  That makes a lot of sense. What I would say is that, you know, the stock market has a lot of liquidity and oftentimes, as we have seen in the past, the stock market can be wrong about things. People can be just sort of wrong and they can get things.

• 33:16Speaker 04

  Irrational, yeah.

• 33:16Ed Elson?

  They can be irrational. So that is my view on this, is that people are irrational, therefore polls are irrational, and therefore markets are irrational. And so this this debate over this one's true and this one isn't, to me, feels a little bit useless. And I guess the question that I would sort of wrap up this specific point to you with is, do you think that Kalshi should be replacing polling in some way?

• 33:42Speaker 04

  I think I need just liquidity and then the sort of irrational irrationalism of markets, which I agree with, by the way. So we are very liquid, actually.

• 33:48Ed Elson?

  By the way, could you just give us the statistics on how how much money has been wagered?

• 33:52Speaker 04

  It's different, by the way. So it's liquidity and people confuse this a bit with volume.

• 33:56Ed Elson?

  Okay.

• 33:56Speaker 04

  Liquidity is how much you can take at a point in time without moving the price a lot. How robust is the pricing and how much you can take? On cash, you can take multimillion dollars without moving the price at all. It doesn't move it. The price won't move. So if you take multimillion dollar position, the price won't move.

• 34:09Ed Elson?

  Wow.

• 34:09Speaker 04

  You can take up to a hundred million dollars.

• 34:11Ed Elson?

  Which is reflective, by the way, of how much money is.

• 34:14Speaker 04

  Yeah, yeah, yeah. But also how much the liquidity providers, this institutional market makers, that makes a difference between like a small betting market versus like a stock market.

• 34:22Ed Elson?

  Yeah.

• 34:22Speaker 04

  You can take up to a hundred million and it won't move the price by more than one to two cents. Hundred million. So it's very hard to move the prices. You need like tens of millions and the impact will be very marginal. So that's one. Two, I have never said, by the way, these markets are always accurate, nothing else. We can't we can't say what the future holds, right? That doesn't make any sense. But what I can say is these markets are more accurate than alternatives, and I do stand by that.

• 34:47Ed Elson?

  Okay.

• 34:47Speaker 04

  Right? Like, if you look at the mean error of our forecast to everything else, we've been the most accurate on inflation forecast, better than the Bloomberg Economist survey, a variety of other surveys.

• 34:55Ed Elson?

  Really?

• 34:55Speaker 04

  Yeah. Fed interest rate decisions, climate and weather, even earthquakes.

• 35:01Speaker 04

  That doesn't mean we can forecast earthquakes. That's a crazy statement. I'm not making that statement at all. But the alternative is like you hear a pundit on the news or like you hear someone saying something crazy because they want to get some press or whatever. But now you have a mechanism to like, hey, if you have some information about this, come put it to market and get paid for it. And then we get an accurate price from that. But these should not replace polls. They're doing something different. This is an additional source of data. I, I, I keep saying more truth.

• 35:24Ed Elson?

  Yes.

• 35:24Speaker 04

  I don't say exclusive truth or like we're the only truth. No, we're not like, like, like more truth, just, just.

• 35:30Ed Elson?

  Hundred percent.

• 35:31Speaker 04

  Get informed. Look at the markets. Look at polls. Maybe don't look at all the crazy videos on TikTok like it's misinformation left and right, right? Like if he, but I don't think they should replace polls. I, I, they're doing something different. Polls are important. And by the way, these markets rely on polls.

• 35:44Ed Elson?

  Right. Yeah, that's how they're informing their bets.

• 35:46Speaker 04

  Yeah, like how are traders, like traders, a lot of, I don't know of any traders that doesn't have polling in their methodology.

• 35:51Ed Elson?

  Let's talk about the business itself. How does Calci make money? How has this worked out for you as an actual business?

• 35:58Speaker 04

  Yeah. So it's again, I kind of one of the distinctions I drawn. So we're in exchange. So our business model is like New York Stock Exchange or CME. We take transaction fees, like trading fees.

• 36:05Ed Elson?

  Yeah.

• 36:05Speaker 04

  So you do a few thousand dollars, we take one to two percent in fees. So we take 20 bucks on that transaction. That's how we make money. Over time, I think we have a lot of requests for our data, like people want to pull data and more granular data. But for now, we're making it open source. We want everyone to have it. It's part of the mission. We're not charging for it. And specifically on the election, we're not charging fees right now. We just want to have, like, we want to promote.

• 36:24Ed Elson?

  Get everyone in there.

• 36:25Speaker 04

  We want to get everyone in there. We want, we want the market to do their thing, no kind of barriers, fully efficient and so on. And we're also actually, we, we pay back the interest. We don't take the interest ourselves. I don't believe in making money off of people's interest. So if you deposit money on Calci.

• 36:38Ed Elson?

  Yeah.

• 36:39Speaker 04

  Both your cash, but also your open bets. So if you buy, like if you put a position on Kamala or Trump right now.

• 36:44Ed Elson?

  Yeah.

• 36:44Speaker 04

  That bet will pay you 4.1% annualized variable interest.

• 36:48Ed Elson?

  Oh, wow. Okay.

• 36:48Speaker 04

  As it's outstanding. And it's cool because if your position goes up, goes up in price, like if you bought at 50% and then now it's 60%.

• 36:54Ed Elson?

  Yeah.

• 36:55Speaker 04

  You get paid on the marked up position.

• 36:57Ed Elson?

  Wow, okay.

• 36:57Speaker 04

  So you have no opportunity cost. We're paying you your interest based on your kind of outstanding bets and positions on Calci.

• 37:03Ed Elson?

  And the expenses, is it an expensive thing to run?

• 37:06Speaker 04

  Yeah, regulatory, I mean, we have to think of building the New York Stock Exchange from scratch. So we run a clearinghouse. We have one of the handful of clearinghouses in the US that can, you know, really move money and clear derivatives exchange. We have the surveillance systems, you know, a lot of very, very heavy infrastructure that took years to build, so it's, it is expensive to run. It's a lot of upfront costs, but the marginal costs are very low. That, so it's business, it is very hard business to get into and get the flywheel running for the marketplace, but once it does, it's a very profitable business because the unit economics, the, the marginal expense is very low. It's AWS.

• 37:37Ed Elson?

  And you have some significant competitors, but from my understanding, no competitors that have been approved in the US. What is the competition?

• 37:47Speaker 04

  So I mean, like, look, there's always been, so there's like offshore, like polymarkets offshore, unregulated crypto-based prediction market.

• 37:55Ed Elson?

  Oh, it's crypto-based, I didn't know that.

• 37:57Speaker 04

  Yeah, yeah, they actually did get an enforcement action from the CFC two years ago, so they're not allowed to cater to US. And there, there are a lot, like, a lot of others similar to polymarkets. What I would say is don't trust the volume on these sites, because it's not actually true. There's a lot of wash trading, so it's a lot of bots, fake bots just trading against each other, but it's not economics. Like, I give you a hundred, you give me back a hundred.

• 38:15Ed Elson?

  And is that because they haven't verified their customers, whereas you have?

• 38:18Speaker 04

  But yeah, it's, it's like, there's no KYC, you don't know who's trading, it's not reported to the government. We can't do that type of thing, but like, it's like, I give you a hundred, you give me back a hundred, that's called wash.

• 38:26Ed Elson?

  Yeah.

• 38:27Speaker 04

  Which is like, not real trading, and so, but the volume just went up by 200. So imagine we do that 10,000 times, 100,000 times a day with bots, suddenly the volume is very large, but it's not real. So that's why we, we always say like, trust the one that's safe, regulated, trusted. And we're only Americans, we don't have foreign kind of participation for now.

• 38:44Ed Elson?

  Yeah.

• 38:44Speaker 04

  We're just only Americans and so on. Look, honestly, competition is good. It's more, more, like, I always think, like, more people being educated about these markets is a good thing.

• 38:53Ed Elson?

  Yeah.

• 38:53Speaker 04

  I believe the regulated approach is the only approach, that's what I believe. I, that's a strong belief, we firmly hold the company. The last thing I always say is like, I always worry a little bit about the unregulated doing something bad. And I always worry about nascent asset classes, like, I always try to advocate, like, trust the regulated actors and less the unregulated actors, and I hope the unregulated actors come and get regulated and do it the right way.

• 39:13Ed Elson?

  Yes.

• 39:14Speaker 04

  So that people can trust this asset class, because

• 39:15Ed Elson?

  Hundred percent.

• 39:16Speaker 04

  Things can go wrong in unregulated venues, and, and when they do, people don't blame the unregulated venue, regulators blame the asset class.

• 39:24Ed Elson?

  We'll be right back.

• 39:36Speaker 00

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• 41:13Ed Elson?

  We're back with first-time founders. I want to shift gears to your personal journey as an entrepreneur. Tell us about a little bit about your background. Like, what inspired you to get into this? You mentioned you worked at Goldman, you went to MIT. What sort of led up to Calshi in your life?

• 41:29Speaker 04

  It's interesting because both Michael Vonder and I had like very similar backgrounds. So I was born in Al Ittihad, grew up in Lebanon.

• 41:36Speaker 04

  Luana grew up in Brazil. We were both math geeks in school, going to MIT.

• 41:40Ed Elson?

  So you and your, this is your co-founder Luana Lopez.

• 41:42Speaker 04

  Laura, yes.

• 41:43Ed Elson?

  And, and you met, you met at MIT?

• 41:45Speaker 04

  Yeah, so we met at MIT. It was kind of like, we were both math geeks. We like love getting into MIT. That was the place for math geeks. And then we both kind of love finance, but we, we didn't, we weren't like the type that was, you know how like there's a persona was like the entrepreneur, the person that's always building products. I want to be kind of like, we weren't that. Yeah, we, we didn't have that. Like we weren't reading books or listening to podcasts. I think I, I was firmly convinced that I was going to be a trader. I was going to be at, like, I loved working at Citadel. Citadel was amazing. It's incredible. But it was one of those things that the idea was just wouldn't like let go, basically. It was just like, the idea was so kind of like constant in the back of our minds.

• 42:23Speaker 04

  And it was like pulling us to it slowly. It kept on popping up, right? Like, like it's, in some ways the idea pulled us into building the company rather than the vice versa. Like we're looking for an idea. It's like the idea just kind of pushed us. And we kind of loved it. It's like this, this beautiful notion of what if you can apply markets to price the future?

• 42:40Ed Elson?

  Yeah.

• 42:41Speaker 04

  Right? Like, like we price anything now. Why don't we price our future, right? Like imagine we can ask questions like, will GDP go up if Trump gets elected? Will GDP go up if Kamala gets elected? And you can have a market-based pricing for that.

• 42:53Ed Elson?

  Let the market tell you, yeah.

• 42:54Speaker 04

  Market truth, right? And that was the elegance of it. And we really liked that. And so slowly, we basically just kind of got dragged into it. And then we're like, all right, we're going to have to build this company now because we would regret not doing so.

• 43:05Ed Elson?

  It's almost like there are some ideas that are so obvious that they have to get done. Like if it, I feel like if it wasn't going to be you,

• 43:14Speaker 04

  It was going to be someone else.

• 43:14Ed Elson?

  Someone else was going to do it. And it's so interesting to me that the hurdle was the regulation. And you wanted to be a trader. You clearly have a massive math brain. I doubt you're doing any math these days.

• 43:25Speaker 04

  Not anymore. Well, we do some. I mean, we hired people that are a lot smarter than us, which is, which is.

• 43:32Ed Elson?

  Helpful.

• 43:33Speaker 04

  Which is helpful, yeah, yeah. We do less, we do less for sure. I, we were making jokes this week, actually, like.

• 43:40Speaker 04

  I've slowed down. I was I was better at math before.

• 43:43Ed Elson?

  Out of practice.

• 43:44Speaker 04

  Out of practice.

• 43:45Ed Elson?

  I'm sure you're good at lobbying now.

• 43:46Speaker 04

  Yeah, yeah, but better. Yeah, yeah. I mean, not, you know, but like engaging regulators and politics. Definitely better, but yeah.

• 43:53Ed Elson?

  I I would like to hear a little bit about that. I mean, first, let's let's talk about maybe fundraising. I mean, you've you've had huge success in fundraising. You've got some very big name investors. What would you say makes you a good fundraiser? And what are the qualities of a founder who can go out and raise a lot of money?

• 44:10Speaker 04

  I I think I'm a good fundraiser in some ways, but I like there are better fundraisers for sure. But I think like I build relationships with people. I don't play a lot of games. I'm very honest and transparent upfront.

• 44:19Ed Elson?

  Yeah.

• 44:19Speaker 04

  And I've always kind of had that approach to to to raising money. And I explain to people like, hey, this is a long journey. This is a company I'm committed to and we want to build long term. And I I think a lot of investors kind of appreciate that because they're used to the games and the kind of. So I just usually build a relationship with people I kind of like. And I talk to them about the business and and I I really genuinely consider it as a two sided interview. It's like, do I like this person? Do I think they get what we're trying to build? Do I? And I think like all things, it's a bit like dating. And you have to be convinced that what you have is valuable, you know, and and I never meant to claim like cash sheet is going to be. I I hate these claims like and all founders do that like we are going to be.

• 44:57Ed Elson?

  We're the next Apple.

• 44:57Speaker 04

  Yeah, we're next. I'm going to be a hundred billion dollar company. Like, I don't know that, right? Like, I I don't say that. There's a lot of things that have to go right for us to get there. But what I do say is it has the potential to. And I do think so. Like, I think we have the potential to be a hundred billion dollar company. And if things go our way, that's the size of the town. That's the potential opportunity. Will that happen or not? I don't know. I can't say for sure, but I will work as hard. I mean, I've shown how hard I'm willing to work and how hard I'm going to sacrifice.

• 45:22Ed Elson?

  Yeah.

• 45:22Speaker 04

  To make it happen.

• 45:23Ed Elson?

  Yeah.

• 45:23Speaker 04

  And I think a lot of people appreciate that.

• 45:25Ed Elson?

  It gets to the basics of just negotiating, right? And it sounds like that you are, what you are is an incredibly skilled negotiator. And you've kind of proven that through getting this through in your dealings in DC. And what I have found in negotiating is that it it does all start with kind of your initial position, which is like, how confident am I in myself and in in in the product that I'm trying to sell? So you mentioned like a two sided.

• 45:55Speaker 04

  Yeah.

• 45:55Ed Elson?

  A two sided thing. It's like, this is where I stand. This is what I'm looking for.

• 46:00Speaker 04

  Yeah.

• 46:00Ed Elson?

  And this is what I'd like to get from you. That's my position.

• 46:04Speaker 04

  Yeah.

• 46:04Ed Elson?

  And it sounds like you're very, very. Confident about that. And I think the question is for people who want to get good at that. Where do you get that confidence from? Like, what do you sort of hype yourself up before you go into a meeting? How do you sort of walk into the room and say, yep, this is who I am and I'll be unapologetic about it?

• 46:23Speaker 04

  I'm always like interested. People like, like around me say like, hey, where'd you get the confidence from? But like, I always like, it always rings a bell. I'm like, I, I, I have long periods of lack of confidence. Like I, you know what I mean? Like, it's like, I have a lot of insecurities in a variety of different ways. And um, maybe I've gotten tougher over time. Like, people don't see it as much. But people like over assume how confident founders are and how it feels on the inside. Like,

• 46:48Ed Elson?

  Right.

• 46:48Speaker 04

  I think I've, I've, I've really taught myself a few things. We've gotten punched down and beat down so many times. The press loves us at some point and the press hates us at other points. And, and everything that happens at the company is always your fault. And everything that happens at the company is always because you're a legend. Like, anything good you get congratulated for and everything that you get rewarded for. And then you realize actually, it's not like, I didn't do anything in the last two months. Like, all the work was actually the day in, day out of like chop wood, carry water, chop wood, carry water.

• 47:17Ed Elson?

  Yeah.

• 47:17Speaker 04

  So, so I realized like, actually like, less things are in my control than I think are in my control. Or that people think so. Two, I think um, I genuinely try to start loving the process. I really do. Like, I, I now, like, I'm trying not to love too much the attention and not to hate too much the, the bad times. I'm trying to just like like my job and like my work. And um, I would say that the last one is, it's a bit of absurdity of life. Like, don't take yourself too seriously.

• 47:43Ed Elson?

  Yes.

• 47:44Speaker 04

  You know, it's like, I'm not a legend. I'm not, I think I'm a pretty good founder. I think I work. And the reason is not because I'm this mythical genius. I like work really, really hard. I really do. Anyone around me knows how hard I work. And how much I'm willing to sacrifice. I'm reasonably smart. Like, you know, I, I, neither a genius nor, but I, you know, and, and that's because I've, partly because of one. And, and I've worked on my EQ over time. Like, I, and I like engaging with people and meeting people and so on. And so, but number one is by far and large the most important. That's it. I just work really hard.

• 48:11Ed Elson?

  Yeah.

• 48:11Speaker 04

  And I, and if you really understand why, where the success or lack of success comes from, then you're like, it doesn't get to your head.

• 48:18Ed Elson?

  A hundred percent.

• 48:19Speaker 04

  Yeah.

• 48:20Ed Elson?

  I'd love to know as, as you are. You're becoming more and more famous.

• 48:25Speaker 04

  Yeah.

• 48:25Ed Elson?

  The company is special. I mean, this company is everywhere. And, you know, when this episode airs, it'll be a few days before the election. I will bet that you or Kalshi are going to be just somehow in the crosshairs of all of the political craziness that is going to happen. And maybe it's already happening to you. Do you read the comments? Do you read what people say about you? I mean, I know there have been these articles that have been saying Kalshi is a problem. Do you read those? Like, what do you think about when the public starts talking about you?

• 49:03Speaker 04

  I don't really read anymore.

• 49:05Ed Elson?

  You don't read?

• 49:05Speaker 04

  I don't really read the press. I read, I barely, like, people call me like, oh, sometimes they call me about my own quotes. And I'm like, I don't even remember saying that. Like, I really like, so it happens. Look, I think the way I view it, and Luana, the co-founder, is very good at this. If you're long-term oriented, there's going to be ups and downs in the short term. It's a bit like a stock, but it all stabilizes over time. And so be long-term oriented, so you don't worry too much about the short term, whether good or bad. Like, don't be too happy about the good and be too worried about the bad. But then the second thing is actually do good.

• 49:37Ed Elson?

  Yeah.

• 49:37Speaker 04

  I really believe in that. Like, it's like, look, honestly, I was working at Citadel. I think I might have been actually richer if I stayed at Citadel. I mean, maybe now it's compared, like, you know my point. Like, it's cash, you get paid a lot at Citadel. Like, frankly, it's insane now. Like, the things I'm hearing are truly insane. So like, yeah, I'm not doing this out of pro bono. Like, I want to make money and so on. But I really genuinely want these markets to exist and I want to do good. And so as long as we're doing the right things day in, day out, I believe that there's going to be mean reversion. Like, when people overestimate us, it's going to come down and be what it actually is. And when people think it's worse than what they should be thinking, I think it's going to remain revert. So I believe that.

• 50:15Ed Elson?

  My favorite. Saying from Scott, he has a quote that he always says, which I love, which is, nothing is ever as good or as bad as it seems.

• 50:23Speaker 04

  It's so true. And I actually repeated this, there's this, you know, this Chinese proverb or story about the Chinese farmer.

• 50:29Ed Elson?

  Oh, I know, but tell it.

• 50:31Speaker 04

  I say, I say it a lot to the company multiple times, which is like, you know, so there's a Chinese farmer in a village, he's a farmer in China and like, so, you know, he had this horse that he really loved and the horse basically disappears, it just like flees. So the village comes on and is like, hey, like, you know, oh my God, it's so unfortunate, so sorry to hear the news. And he's like, you know, his answer is like, I don't know, we'll see. And the next day, the horse comes back with a flock of horses. And it's like, wow, now this dude is like, you know, rich and he has a flock of horses. And again, they come back, the farmers come in, he's like, how fortunate, you're so lucky. Like, it's crazy. Life loves you and, you know, God loves you. I don't know, we'll see. His son next day is riding one of the horses, falls, gets, you know, injured, same thing. I don't

• 51:12Speaker 04

  know, we'll see. They come in unfortunate and so on. Next day, China goes to war, all the young people are get, you know, drafted into war, his son is injured, so he doesn't get drafted into war. You're the luckiest man alive. You're so fortunate. And it ends with this kind of like, you know, he smirks and he's like, I don't know, we'll see. And I always say like, I don't know, we'll see. Like, you know, like, just, just chop wood, carry water, do the, do the work day in, day out, and, and, and we'll see what happens.

• 51:35Ed Elson?

  That is a great place to end. Do you have a prediction for the election? That's what people really want to know. I'd love to get it from you just before we wrap up. You don't have to say who's going to win unless you're down. I'd love to hear if you, you are the, the, the expert on prediction markets. What's your prediction for this election?

• 51:56Speaker 04

  It's funny because a lot of people are asking me this question now, but I, well, the answer is like.

• 51:58Ed Elson?

  You're the guy, you're the guy now.

• 52:00Speaker 04

  I don't have any different, like, I just want to say, I'm, I'm still a regular dude when it comes to this. Like, you know, if I trade on cash, I may be, I may lose money, you know, I can't trade because I run the exchange, I'm legally not allowed to trade, but I don't know if I'll make, I'd be that good at, at doing this. So. I think trust the markets, that's the whole point, right? And get informed. Like, I think, look at the markets, look at the polls. I think the markets are accurate gauge. Sixty percent doesn't mean a hundred percent. Uh, but I think right now sixty percent seems to be what fair value is. And that doesn't-

• 52:29Ed Elson?

  You've got your money on track.

• 52:31Speaker 04

  I, I, I don't have my-

• 52:32Ed Elson?

  Not your personal-

• 52:32Speaker 04

  But I really think trust the market. But no, but I, I think ten days is long. It's gonna move a lot.

• 52:36Ed Elson?

  Yes.

• 52:37Speaker 04

  Whether up or down, but it does move. We've seen this. People are so short term driven right now. It's like, oh, my God. But like you see tomorrow, it moves and moves and moves. Uh, so it's a very long day. Ten days is a very long time. Um, and, and two, I, I really think sixty, forty is, is close to a coin flip. It really is. So, so what, what you should take from these markets, it's a very tight race.

• 52:56Ed Elson?

  Tarek Mansour is the CEO and co-founder of Kalshi, a regulated exchange and prediction market. This was awesome. I'm really happy you came in and thank you for doing this for me.

• 53:05Speaker 04

  Yeah, well, this was really fun. Thanks for having me.

• 53:11Ed Elson?

  Our producer is Claire Miller. Our associate producer is Alison Weiss and our engineer is Benjamin Spencer. Thank you for listening to First Time Founders from the Vox Media Podcast Network. Tune in tomorrow for Prof you Markets.