All posts by nancyhua

From High Frequency Trading to Silicon Valley

In 2012 I was on my noncompete (a paid vacation common in trading), and everyone expected me to go back into HFT after the year was up. When I started a tech company instead, people were surprised. The common response was, “Wait, your company’s not trading related at all?”

I traded in my East Village apartment, with its ambitious but empty yard where I never got around to having barbecues, for a Palo Alto Eichler, where we had many barbecues. My Ralph Lauren and Burberry dresses were replaced by Lululemon, so at any moment I could break into a jog or a 7 minute workout. My Stella McCartney vegan bags decayed at my dad’s house while I got my first car (electric) and started rock climbing. Instead of trading scandals on Squawk Box, I followed Elon Musk on Twitter.

High frequency trading is an exotic, shadowed land within the gated world of finance, and is the strangest place you can be, except for Silicon Valley. I was entering a complex tribe with unspoken castes and rites of passage – but I am from another secret tribe, with its own inscrutable numerology and hieroglyphics.

Silicon Valley surprised me:

1) Everyone is open.

Algorithmic trading works through intense secrecy. When an interviewer tries to evaluate you, they fully expect vague responses:

“How do your models work?”
“We capture edge using signals.”
“Do you add or remove liquidity?”
“It depends.”

After a few hours, they say, “Thanks for talking with us. We love what we learned about your approach,” and they mean it. You know that they know that you know the first rule of fight club. The best trading companies never let anyone know what they do, trade, or think – an algorithm sufficiently secret is indistinguishable from magic.

In contrast, everyone in the valley is amazingly open and helpful. People email me to ask for advice or intro’s, and we’ll talk about everything. Because two companies are rarely in direct competition, and the advantage your circle gains by sharing trumps whatever you could gain by hiding, Silicon Valley has developed an amazing culture of paying it forward. Everybody’s trying to conquer the same markets, and knows roughly what the space of ideas looks like, so sharing helps everyone. Around here, it’s execution over IP.

2) Valuation math is not intuitive.

When my friend asked me to invest, I asked, “What’s your company worth, like $100K?”
“No, it’s $6M.”
“Can’t I pay 3 developers $50K to make your product in a month?”
“That’s not how it works…”

I could build Snapchat in a week, but if I did, I would not have the user base of Snapchat. Same with WhatsApp – it’s worth an enormous multiple of what the app and architecture cost to build.

3) Money != success.

In trading, life was simple: PNL was all we talked about. Increasing this number was the goal. If we saw PNL underperforming, or the money eroding from a model that used to be our bread and butter, we knew we had to step it up to survive. In startups, the metrics for success are less clear, which makes it hazier to tell the difference between success and failure. One month, a startup has Hint in the refrigerator, dogs in the halls, and Friday hot tub parties. The next month, it’s selling all its Aeron chairs on Craigslist. Did the company suddenly tank? In HFT, yes- it would mean they were making money but then suddenly lost a ton of money in a few minutes due to a bug in its software. In SV, no- it probably means someone finally realized the company had died a year ago.


Lessons from algorithmic trading that have helped me in building Apptimize:

 1) Today’s future is not yesterday’s future.

While I was in trading from May 2007 to Jan 2012, several events happened that had never happened before: the collapse of the housing market, the financial crisis, the Fed’s repeated rounds of QE, etc. How are you going to backtest that? You know you’re in a scary regime that’s never been seen, which means there’s incredible opportunity, and the models have to handle it. Stuff changes under your feet and you have to run like the red queen just to stay put. You stay up at night adapting the models, because otherwise they’ll lose money in the morning. Predicting the future correctly is the first step to success; the next is making the right bet on your predictions.

Startups are the same way. Technology changes so fast that you have to work every advantage to its limit to compete. Innovate as fast as possible, invent things others believe to be impossible, and think what others haven’t thought of yet, because you’ll be swallowed by the current the moment it catches up.

2) Accept reality.

In trading, if the market tells you you’re wrong, you listen. No matter how smart you are, you can’t argue your way to victory: the market will take your money. If you’re underperforming, sometimes it means your connections are slow, but usually it means your models suck and you need to make new ones. You can lie to yourself, but you can’t lie to the market. All you can do is accept reality, and update your models to match.

 For startups, it’s human to invent excuses for everything. Even the most literal people suddenly get creative when confronted by unpleasant realities:

  • “Our users need our product; they’re not just doing it because they’re our friends.”

  • “We can’t show live demos, not because our demo is jury-rigged to work only on our special setup, but because we want to show a build of our SDK we haven’t released yet but will soon.”

  • “We’re going to beat the competition despite { an inferior product; an unimpressive team; a lack of funding; having no user base } because { we’ll out-execute on something else; we’re differentiated; the market is huge }.

This is not accepting reality. In order to win, you have to be honest and ruthless in admitting every weakness, because you can only correct the flaws you know you have.

3) Make your own bets.

Never believe what people say without examining it, especially if it’s about the future. People are wrong all the time. The ones who are right are too busy succeeding to tell you what to do. By the time the world knows where the market’s going, the money’s gone.

 Nobody knows exactly where the prize is, but if you have a good idea, you need to make big bets, and you need to obsess about the future – the future’s where everything happens. If you copy the people who have already done the legwork for you, you’ll always be eating their scraps. You can’t afford to follow. Ask questions. Bet your beliefs. Test your hypotheses. Rely on yourself.


There’s one thing that holds true across HFT and tech startups: it’s all about the talent. At Apptimize, our investors have often remarked we have one of the strongest teams they’ve ever seen. That lets me be confident no matter what: in trading or tech, NYC or SV, it’s about betting on the right people, and I’m all in on us.

 

 

 

Thanks to Lucas Baker for editing this and vetoing the boring post I was considering publishing instead.

Never Be Intimidated

apptimize.com/about makes me so happy!
apptimize.com/about makes me so happy!

After I introduced Lynn to my friend, she said he seemed intimidating.
“Really?! Why?”
“He’s a CS professor, the CEO of a successful startup, and is too busy to talk with anyone but you.”
“So?”
“…Maybe your power is that you’re not afraid of stuff.”

I was flattered to hear this but it’s not the whole story. I think I was never intimidated by intelligence or wealth, but once upon a time I was intimidated by physical beauty. Here’s how I realized one should never be intimidated, even by hot, rich geniuses:

I was an unkissed nerd for 16 years, then I had boyfriends for 4 years, and then I was single for years. During my senior year at MIT, which was the start of my 2nd phase of monkish devotion to knowledge, I went on 1 date. It was because he was the most beautiful human I’d ever seen in real life. The first time I saw him, he wasn’t wearing a shirt because he was ironing it. Yes, he went to Harvard. His suite mates were probably milling around- I have no idea. I remember I said, “Do you wax your chest because of swimming?” He had the grace to blush. “Mainly because I model.”

After verifying there were no pictures of him on the first Google results (his name is very ungoogleable. What were his parents thinking?), I forgot about him for a week. Then he asked me if I wanted “to hang out.” That night, I found that the shirtless pictures of him were on Facebook (this was many years ago and Facebook was not yet the first place one went to look at people).

That Friday, we walked around Harvard square. I found it hard to not stare at him, but I also evaded touch and felt anxious to be alone. Nothing happened. I can’t “date;” I’m incapable of romantic relationships that aren’t based on a monkish devotion to work. After the most awkward date this kid had ever been on, and the least awkward of the 5 dates I’d ever been on, I went back to East Campus and did a problem set while a black cat rattled my door and freshmen screamed on the thundering roller coaster in the courtyard.

I had expected the date to be really fun, but it wasn’t anything. I’d expected it to be more fun than being with a normal person because he was so much hotter than a normal person, and I realized this logic was wrong. I’m exceedingly grateful to him because it was actually the epiphany that he would ever consider dating *me* despite being so much hotter that allowed me to realize physical beauty doesn’t matter. For me, maturation has been a series of realizing what doesn’t matter.

Intelligence, beauty, and wealth used to seem like notable qualities, but now they’re commoditized by technology. Jesus and Buddha always said beauty and wealth didn’t matter, but for years I was reluctant to conclude intelligence was also irrelevant.

It was in high school that I realized I was in danger of dooming myself to unhappiness if I defined myself by my intelligence. Intelligence seems fundamentally different from beauty, right? Because it’s easier to use intelligence to create something… but it ultimately is just another commoditizable property. There will always be someone more beautiful or intelligent, and now technology elevates everyone to a high level. When headhunters were pimping me out to billionaires, “Her brain is huge and will make you a lot of money,” it was obvious intelligence has been commoditized.

A millennia ago, physical strength was actually useful and prized- the strongest dude was also the richest because he could bop you on the head and take your cow- but now physical strength is useless. Most modern men can run a marathon. One day science and technology will allow everyone will be as strong, healthy, smart, and beautiful as they wish. Technology made many crafts and skills obsolete because it commoditized fine motor skills. Technology is the great equalizer that commoditizes and equalizes everything, taking beauty, information, strength, and health, and giving it to everyone.

When you take away everything that the robots are going to do for us and allow us to be, when we’re all genius supermen, what will be left for us to identify ourselves by? If you put your identity next to beauty, you’ll feel worthless when beauty is commoditized by technology because anyone can purchase your identity. If money is an important part of your identity, you’ll bemoan the fact there’s always someone richer and scuff the wheel of your Tesla every time someone mentions Bill Gates. Instead of forming my identity in a way that allows technology to erode it, I want to form it such that technology would enhance it.

Now when I meet someone with intelligence, beauty, or wealth, which is basically everyone in the post-singularity society of Silicon Valley, I automatically delete those qualities from my perception of their Real Identity. I still recognize intelligence, etc. as a property they possess, but I don’t define them by it. I try to define people by their ambitions, creativity, drive, perspective, attitude, inspirations… that soft gushy core inside the genius billionaire playboy. Love, values, interests, goals. Not where they went to school, how good they look in Lululemon, or how many Lamborghini’s they drive, because eventually we’ll all be downloading MIT OCW straight into our brains using Matrix-style optogenetics tech, have enhanced cyborg bodies, and harvest infinite energy from asteroids so that resource constraints become a purely theoretical problem.

What do you view as the most important aspect of your identity?

How to Not Waste Your Life

Tired of your career? Lost and confused about your next move and unmotivated on your current path? You’re not alone. The only mystery intriguing to modern man is modern man himself: a terrifying labyrinth that often leads nowhere interesting.

In theory, through our every action, we’re constantly continuously deciding our private interpretations of the meaning of life. In reality, humans rely on cached thoughts to avoid decisions. You can easily go your whole life without making a deliberate, researched choice. Big decisions are painful and difficult, so we avoid them unless the default becomes more painful than the agonizing confusion of deciding. Why deviate from what you’re “supposed to do” when you’re already outperforming most humans that ever lived?

People on Quora ask, “I’m 20 or 30-something and don’t know what to do because I haven’t found my passion yet. What is my passion?” As first-world youth, we’re not responsible for anything beyond our own enjoyment, so we think we should simply find a passion and then do that forever. People who excel do seem passionate. Steve Jobs is dogmatic about design; Rowling wrote doggedly for years while waitressing. Leaders and founders are passionate. How do we be like that? What is the meaning of life!?

“Make something people want.”

That is Y Combinator’s motto, and I think that is the meaning of life. Note that it doesn’t say anything about passion. “Make something” is fundamental – people whose work doesn’t result in creation feel they’re wasting their lives. So is “people want” – if no one wants your hand-knitted cat sculptures, you’ll also feel  life is a waste. “Make something” and “people want” are two things I knew before Y Combinator. The unspoken middle is where I learned something new: “people,” as in “OTHER people.”

Most of my life was spent not thinking about other people. I’m an only child, and my primary motivation throughout the first 27 years of my life was very individualistic – I wanted to challenge myself, increase my understanding of nature, prove my own awesomeness, etc. I imagined that if I could live life wandering through a forest of libraries by day, deriving all the secrets of reality by night, I’d be satisfied.

The change came slowly, but one day, I realized that my motivations towards being the best were self absorbed. I imagined being the best trader in the world, and realized I would feel like my life had been a waste of time. I imagined being the smartest person in the world – making scientific discoveries, writing treatises on Proust; winning Nobel prizes; listening to my ex-boyfriend Ryan Gosling beg for a mold of my body so he could always remember how hot I am – and I felt nothing. Was I just not imagining it correctly? Was there some art, like chess or painting, so pure it would make me happy? My conclusion was “No.” I looked at the people who are the absolute best at what they do and, although I admire them, being them doesn’t feel like something I want.

The key to passion and having a useful, non-wasted life is to look beyond yourself. Selfishness and self-searching, what we do to “find ourselves,” hinder us from getting what we want.

Startups are about other people, and successful startups are one of the more selfless things in existence. It’s not about what you want, it’s about your users. Make something OTHER PEOPLE want, however different they are from you. Be passionate about your users, not yourself. (Even in the “startup of you”.)

I no longer think of Superposition Nancy as the main way of motivating myself. It doesn’t seem ambitious enough. I changed my reference frame from Superposition Nancy to Superposition All-Humans-Now-and-Forever. How do I act to make sure we humans collectively outperform our superposition fate? How do we change the fate of mankind? All the things I could do easily would move the needle very little for humanity at large. Money (look at the trillions of dollars the US prints and spends) is nothing compared to an invention like the light bulb, or the Internet, or the kind of thought leadership that came from Martin Luther or the founding fathers.

First I think locally, about the debt I owe to my parents who sacrificed to make my  life possible. Then I think about the debt I owe my community, for making me safe. Then I think back farther: back to the inventors of electricity, of books. I’m sure Gutenberg could have spent his days drinking and loafing instead of inventing the printing press. Because he didn’t, all of us benefit tremendously from his work in ways we can never repay. When I’m sitting at home thinking, “I should lie in bed and re-watch the Matrix and eat pizza and swipe around on Tinder,” then I think about how Gutenberg will punch me in the face in the afterlife. I want to repay some of what I owe all these people, who got off their butts and did something that elevated the rest of mankind, whose genius and labor keeps me safe and snug in bed at night. My parents could’ve raised me by leaving me alone with a TV and boxes of cereal. But they gave me the right food and taught me to be healthy; they took me to the library and taught me to learn. How do you repay something like that? You can’t, but you can try.

Everything we have is because of someone who rose above their self-absorption. I wouldn’t exist if it weren’t for people who valued adding something to the world above their own comfort. So when I’m not working, I feel a crushing sense of guilt. If I’m not helping out someone else, somewhere down the line, then I’m failing. Think of the people who are long dead, and those who might never be born. Look at the people around you, and the people on the other side of the earth. Do we leave the earth as if we’d never existed, or do we leave it better?

Ironically, in startups as in life, focusing on others lets you can gain the most for yourself. You learn the most, do the most, grow the most. So if you want to be awesome and productive, join a startup. Make something other people want.

Not unrelatedly, this is exactly what we at Apptimize are doing. What we’ve shown publicly is the tip of the iceberg and we’re looking for the missing members of our band! So, we want to meet the best frontend, iOS, Android, and backend engineers you know. We’re very picky, because it’s so important that we believe in our team, and believe that together we’re going somewhere worth going. By the grace of our Robot Invader friends, our office is on the Mountain View Googleplex, our board game collection is famed throughout the industry, and our technology is not too shabby either. Our investors and users uniformly say, “I’ve never seen anything like this before.” We’re excited to be on this adventure together!

So, if you want to be part of a team working on something that affects a lot of people, invents new technologies, believes innovation, science, ideas, and culture can move the needle where material wealth cannot, and are frighteningly ambitious about where we’re going, then message me at nancy at apptimize dot com.

The Apptimize team minus Dustin, who's traveling!
The Apptimize team minus Dustin, who’s traveling!
Our Dustin!
Our Dustin!

PS. If you can guess our hack house wifi password, we will fly you out for a visit, plus I will tell you the rest of the plot of HPMOR. The network is chaoslegion. Hint: What house am I?

Thanks to Lucas Baker for reading a draft of this post.

YCombinator Summer 2013

The first day we all talked about our startups was called “prototype day” and presented as “a 2 minute way to introduce yourselves to your batch mates, talk a little about your startups, and tell each other what you could help with. Don’t stress about it at all, guys!” I made 4 slides with 5 words total, went up there and told our batch mates they should use our product if they had an app, and that although I used to be in HFT they shouldn’t ask me for investment advice.
When I sat down, PG said, “I’m going to say it again- don’t talk too fast.”
Geoff Ralston added, “And don’t drift off without a conclusion.”

After everyone was done, PG said, “You guys should notice that you guys, like investors, favor the serious startups that talk about revenue.”
I was like, “I thought this was a way to introduce ourselves, not a mock pitch towards investors! Why did everyone else clearly spend a ton of time on their presentations and assume their target audience wasn’t their fellow batch mates! Don’t they have companies to run!”
At the bar later, my drunk batch mate came up and said, “Hey, you did good, you rolled with the punches.” At that moment, I decided to win YC.
“What does ‘winning YC’ mean?” Jeremy asked.
“We’ll figure it out!”

A few days later, this resolution disappeared into the swamp of my mind along with everything that wasn’t frantically fighting to surface. There was so much shit happening that demo day nauseously oscillated between seeming ages away and then sickeningly almost upon us. Part of me had believed that if we got into YCombinator, all of our problems would be solved. Spoiler: this didn’t happen. While there were office hours where in a moment of intense optimism one might muse, “Should we be charging each user $400 or do more marketing and charge each one $10?” conversations with users that revealed they had no idea what 90% of your product did would quickly smack us down into realizing we didn’t have the luxury to discuss these types of problems.

Pre-YC, I’d wondered, “I’ve read pg’s essays. I can emulate him somewhat in my brain. Do I really need to give him 7% of my company so I can talk w him for 20 minutes about my company, which I’ve thought about a lot more than he has?” Yes, yes I did.  He really is that good. PG actually loves you and wants your startup to do well and is undyingly optimistic that it can succeed despite whatever dumb thing you’re doing. He cares about founders and developers and that’s the reason he’s doing it. Every time I’ve posted to hacker news, he’s emailed accusing me of gaming his algorithms: that’s passion. He’s a fountain of secret data no one else knows and is a genius when it comes to knowing what different groups of people like VC’s or users want. After YC ended, I was talking with pg, “How did you know x would happen?” and he was like, “Duh, I’ve seen more than 520 startups.”

Some people you talk with about your startup and it’s obvious they don’t care about you and aren’t really thinking and are just saying whatever knee-jerk thing the first google hit would say. The YC partners aren’t like that. They are excited / terrified for you and think about your situation. Each partner has their thing they’re amazing at. They’ll walk through your product with you and tell you where it sucks. Our main guy Geoff Ralston told me what to say to different leads. Mike Seibel and Ammon told me about their AB testing dramas. Sam Altman gave me his number and coached me through meetings. Kevin Hale user tested Apptimize and told us exactly what to fix. I still have screenshots of our first iteration that we were so proud of and now find quaint. It’s amazing to have some of the best and most well connected people in the world look at your disgusting fetus of a product and tell you their real opinion.

This summer, my brain was remolded into Apptimize CEO-shape. I started dreaming about Apptimize. Apptimize became the reason I was cutting my nails and working out. My whole life I’d viewed running as extremely boring but now I run 7 or 8 miles every time because it’s an incredibly efficient form of exercise for Apptimize. Apptimize lets me do anything, no matter how boring or painful. Every piece of food I eat is an energy source directed towards Apptimize productivity. Everything I do is because I did linear algebra in my brain and decided the vectors were sufficiently aligned in an Apptimize-beneficial direction compared to the other choices to merit incorporating. Every product, app, technology I see exists in the context of Apptimize and my first reaction is generally how much better it’s going to be once we get our Apptimize mitts on it.

Although these shoes "look gay," as my fellow batchmate informed me, my knees start to hurt after mile 5 so I wanted to try them out. Let me know if you have running tips!
Although these shoes “look gay,” as my fellow batchmate informed me, my knees start to hurt after mile 5 so I wanted to try them out. Let me know if you have running tips!

A week before demo day, we had the office hours with Paul Graham where you talk about your demo day outline and he yells at you while wiggling his toes. “Why are you going on and on about product features? You’re certain to cause vc’s to immediately start checking their email.” Despite this help, our rehearsal day speech was insanely bad. PG said, “I only remember 1 factoid from this demo,” before immediately proving he didn’t even remember it accurately (although Jessica did).

I have better UX now- I guess that’s another thing I learned at YC. Demo day was about having UX optimized for a particular kind of user that you don’t normally engage with- a herd of top venture capitalists. PG is a genius at demo day UX design. Every normal person is extremely bad at it (How could any normal person possibly be good at it?). Our presentations were sooo bad before PG got his hands on them. For example, I assumed VC’s wanted to know what our product did. Our product is complicated and technical with numerous benefits and applications which features I spent minutes giving examples of. PG put a stop to that and patiently listened to 10 iterations of our demo until it was pounded into something memorable. We learned to emulate PG better, which was good because we kept changing stuff until the last minute. On demo day, PG (and everyone) was seeing 20% of our presentation for the first time. Luckily, it worked out! He said our demos were “significantly improved even from yesterday.” More than 100 kick-ass investors came up to me and asked about investing, including MC Hammer who also followed me on twitter, meaning now a significant percent of my followers are celebrities named MC Hammer.

Hammer approved the posting of this photo.
Hammer approved the posting of this photo.

We almost didn’t apply to YCombinator because 7% sounded like way too much of my company to give away to a bunch of people whose blogs I already read. I felt I could get the benefit of the advice in other, cheaper ways than giving them a chunk of my company. Like, I already knew a lot of YCombinator alums from MIT so I was already quasi part of the network anyway, right? Wrong! The network is amazing. When we were going through a confusing situation, I emailed a few companies who’d gone through something similar asking for a quick phone call, and it didn’t matter that they were running companies worth hundreds of millions or billions- they called to give me the real story behind what went down.

A month after YCombinator ended, I missed everyone so much I ordered the hoodie and iPhone case and other schwag that I generally eschew. The bonds coalesce after the program ends- we all felt like we didn’t get to know each other well enough during YCombinator because there was so much going on, but now we chat online and meet up in Palo Alto. I feel so inspired every time I talk with my batch mates. If you have an entrepreneurial bone in your body, apply here. YCombinator is awesome and easily worth it.

PG and Nancy at YC