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Hey there. I’m Hessie Jones, and welcome to Tech on censored. I’m so happy today to introduce someone I’ve known for many years. He’s a serial entrepreneur and he was also my advisor when I actually launched my own business. So I’ll give you a little bit of background, Ryan Pannell. Is a different kind of entrepreneur. He actually has successfully navigated 3 major pivots over his diverse career. He actually began in film, and he started out as a writer, end up being a producer, eventually director and before starting his own production company. And when he was just 26 years young, he actually directed his first feature film called Dragon City. So Next up. At a time when the world was actually transitioning towards Y2K, he completely pivoted and he moved to the startup technology space, and he pioneered a cryptographic web-based technology, and he brought it to big play. Others like Visa, Microsoft as well as the Bank of Scotland. OK, so next thing, he also developed this traumatic brain injury software circa 2001 that seemed to save many lives in parts of the US and this is something completely new that I had no idea about, Ryan. So Fast forward 2013, Ryan pivoted again and this time he’s. Did focus towards the financial sector and he is now the CEO and Global chair of Kaiju Worldwide, which is a hedge fund management company and it spans across 3 continents. So from his perspective this is not a normal hedge fund company and I think. For many people within the text state within the finance phase, we’re starting to see this emerging emergence of AI within our technology. But for for Kaiju, it’s about quantitative analysis, behavioral finance, as well as quantum mechanics and AI. Finally, we’re going to talk about his philanthropy, and Ryan donates a lot of his time towards ocean conservation, but he also provide provides the story, believes in providing tech access to underprivileged youth, among many, many of the things that he already does. So we’re going to. Learn a lot about Ryan Pannell today and his life lessons as an entrepreneur and where he’s headed in the future. So welcome, Ryan. So nice to see you again.
Ryan Pannell
Thank you for having me on Hessie. It’s always nice to talk to you and here we on your podcast
Hessie Jones
Exactly. Well, I wanted you on because Altitude Accelerator supports a lot of startup founders and for them this ends up being a journey that spans a lot of failures, challenge challenges, really amazing moments, but I want them to hear from your perspective. Because you’ve gone through this multiple times. So let’s start with the first question. So your journey. Is one that leaps into many of these disparate industries. You had no previous knowledge, really or nor experience in some of these, but you decided to delve into this next thing, which I guess most people would think is incredibly risky, is that is that accurate?
Ryan Pannell
Ohh I don’t know, I mean it it always seems risky in hindsight. You know, at the time it seems like a good idea and yeah, let’s just be bold and go do that. And then you look back years later and you think, Oh my God, I can’t believe that, you know, I did that or we did that. And you know, my my wife and I talked about that a lot. You know, when we we moved to Barbados nine years ago before moving to Switzerland three years ago. And when we moved to Barbados, we thought we were completely prepared, ready to go. New adventure, young kids. This will be awesome. And we like, completely did. Not have the asset. Base that we required to make that move safely, serendipitously. You know, everything changed right after I moved my my career in asset management just skyrocketed. So that saved us. But at the time, I mean, if I had to do it again, knowing then what I know now, I probably wouldn’t have done it.
Hessie jones
But so it seems like you kind of roll with the punches, right. And in your life, would you say, would you say that that is a hallmark of what entrepreneurship is all about, really?
Ryan Pannell
I’d say more than rolling with the punches. I’ve never been afraid. I never say never. I almost never have been afraid to make a change. Change when something that I was involved with before stopped working. You know, a lot of people. I mean we we’ve got this problem in in society, period, not just in entrepreneurial circles where if you don’t quote UN quote finish what you start you’re seen as a failure or a quitter or someone who. Doesn’t stick it out. Like, but how does it make any sense to continue doing something that’s not working that’s not profitable? That’s not making you happy? Like, if you suddenly realize or or gradually come to the realization that whatever it is you’re doing is just not going to work. Then every extra minute you spend doing that is a minute wasted and a minute you’re not doing something else, so that more than rolling with the punches because it’s not really reactive, it’s just based on a clinical analysis of where I am, what opportunities exist on the current path versus opportunities that exist. On a new path. Limited opportunities here. Better opportunities over there. OK, what do I have to do to make this change? Let’s make. The change. Let’s move on. Let’s evolve. That’s sort of how I’ve approached it.
Hessie Jones
OK, so let let’s get into a little bit more specifics because. For each new venture, there has to be have been some kind of catalyst that makes you decide that this is the this is the thing that I want to do. So how how did you decide to approach each of your new ventures? From that perspective.
Ryan Pannell
I mean, sometimes it’s very reactionary, you know, we were building early just web-based applications. This is before SAS was thing and I was running a software development company and had realized in the. Early part, you know, right after 2000, early part of 2000 into 2000 and. Run that building local software will always carry the inherent problem of conflicts on a local machine, like you can’t possibly. Predict. The build of every single machine that’s out there so you know you build the software, you build it to be universally compliant and inevitably you get some client that calls you and says, well, this doesn’t work or I got this. Error. But you know, even back then we realized that browser based technologies. As long as it. Was compliant with the browser. It was likely going to work. On the system. And so we. Were involved in these early web technologies and after the dot com collapse one of the advantageous things happened. Which happened for in the entrepreneurial space. Base was the collapse of all of these data centers. So, so eBay basically got flooded with cheap enterprise grade technology and so we built, you know, an enormous part of our infrastructure out of failed other dot com companies. You’re buying these servers that were twenty $30,000 for 1400 bucks. And I had bought some enormous universe of power supply, you know, like a floor unit. And it never showed up. And I knew this guy had received the emails I sent, and he was just messing with me. I called my senior network analyst in and I said this guy’s lying. I want to prove that he got my E-mail like how do we do that? And he just. Kind of looked at. Me and said, well, you can’t, you know, like everybody else, I misunderstood how e-mail worked, I thought. You know, goes from my computer to your computer.
Not that it goes through, you know, a million servers, you know, including two ISP’s or multiple ISP’s that it could fall out of its TLS conduit that you could have a bad collision and the e-mail would never arrive intact. No idea. And I couldn’t believe that we couldn’t. Track these communications and so that bad transaction on eBay led me to build what was at the time the most secure electronic file delivery system on the planet. It was like point to point 4096 bit encrypted like we got, we got e-mail, we got even got. Emails we got. Registered mail from government. Agencies warning us not to export the cryptography at that strength, but you know like that was it wasn’t like I had a love of cryptography and I always wanted to do it. It was a reaction to something that happened. We had the infrastructure to build it. And so that’s the direction that we went in. And so many of them were were like that, you know, shifting. Shifting from film and television into web-based technologies involved a brief stint. You know in web development, and this is at a time when the the the opening or landing page of a website like the animated landing page is like a big deal with. So. So having this cinematic background. The company that I started built these cinematic opening pages that really drew people in and we won two flash forward. Awards, which was. An award given by Macromedia before Flash got absorbed by by Adobe and that got us a lot of interest, so moving from. Film and television into technology. We just saw that if the future of filmmaking was there. We were deficient.
In the technology side, so we wanted to get. But better educated in that space, always intending to get back to film and television. But it took like 15 years to do that.
Hessie Jones
Oh my goodness. OK, so based on like the the two that that you you’ve talked about the cryptography, the film industry even before we jump into retail trade where you where you ventured in later on which presented the steepest learning curve. For you and how quickly did you have to adapt?
Ryan Pannell
Actually, maybe, maybe we’ll just catapult immediately to that. The steepest learning curve was actually trade. And it’s and it’s not because trading itself. Was difficult. I mean, I spent time in theoretical physics and applied tech cryptography and studied cosmology and.
Hessie Jones
Just for fun, right?
Ryan Pannell
Just for fun. But there’s some some for work, some for fun. Umm. And while those are subjects that present substantial difficulty, there’s also enormous resources available, like there are academic centers. There are degrees, there’s courseware, there’s self study, there is now obviously an limitless amount of online information from credible. Institution. Where you can self learn, but when it comes to trading, there’s nothing available. Institutional traders do not post on YouTube, they’re not active in chat rooms, they’re not on Twitter, they don’t have time for any of that. And if they did, they’re generally. This inclined to share the secrets of their trade. So what you have is a whole cohort of retail trade. Who are disadvantaged by not having any formal education or not really understanding the market mechanics that? Sort of govern how trading works around the world, trying their best to kind of learn what they can make some of it up as they go along, and then you’ve got a lot of the blind leading the blind. So getting access to the information, understanding what was real and what was absolutely made. Bob. That was the steepest learning curve you know, because unless you know somebody who’s an institutional trader or portfolio manager. You can’t find that there is no degree in equity trading.
Hessie Jones
But I would. Also say that you know is that is that an industry where they want to keep some of those secrets to themselves? Because that’s that’s part of the wealth that that they’ve learned to accumulate based on the based on the experiences that they’ve had. That is, that is that fair to say too?
Ryan Pannell
No, I think there’s more than anything. It’s just general and difference, right. I mean, of course the asset management. World like all. Of us have these trade secrets which we would never disclose, but there’s there’s no competitive advantage that I give up to someone explaining them to them. Like what? The hidden fees that their broker is charging them. Are doing to their bottom line. There’s no advantage that I get helping someone understand how to better use the order types that are available to them when placing their trades. Don’t use a limit order ever. Please don’t use a market order ever. OK what? Am I supposed? To buy stop limit order like the rest of US professionals. Like that guy’s now not gonna come and eat my lunch. But who’s taking the time to provide? That education you. Know. That’s what I really see is that most financial professionals are like I’m busy. This is a tough enough job as it is. I’m not going to take time out and give time to somebody out there who wants to become a better trader. Why bother? I have to do that with the interns that are coming in every year anyway. Why should I help someone else? And that’s that’s really unfortunate that.
That’s the case.
Hessie Jones
It’s weird that at the time when a lot of information like that is being shared across the web, that you may not necessarily see that for like for something that that that wants to enter into that space. Are there not resources even today?
Ryan Pannell
No, no, like today you’re not going to get access to that. The only way that you’re having access to that information is if you get a job working for a buy or sell side institution like then and it’s not secret information, right, like there’s no secret room that we go to where all the good trades are.
Hessie Jones
Wow.
Ryan Pannell
And you’re excluded. It’s simply understanding, like mechanically forget how you decided to buy this stock or short this stock. But then the process of executing that transaction efficiently and professionally, a lot of traders, retail traders lose on that side alone and you need, you know, all of like 3 months in one of these institutions, you’re like, oh, wow, that’s what all of these different that’s. That’s why I route. In this way, This is why. I use this org. They’re tight, you know, and then obviously more and more knowledge and information passes from the portfolio manager down through the. Trade desk down. To you know what we call order ticket entry monkeys. You know, like all the way to the very. Bottom of the. Food chain Start learning how to manage risk better you Start learning how counterparty trades. Are conducted. You know, this kind of stuff. But it’s unfortunate that none of those guys then or girls, then go and write. A. Book saying, hey, here’s my life as a professional trader that you can find some that are out there, but they’re from, like the 60s, seventies, 80s, and there’s just there’s no money in it. I guess. Versus what they can make in a professional capacity. So why bother?
Hessie jones
I have a feeling it’s a there’s a next chapter here for you, but, I mean, there’s an opportunity gap here, I would say, but OK. So let’s, let’s get to the next question you have this, I would say innate ability to. Yeah. Focus. Has this been, I guess one of the key traits that you consider? To be able to successfully execute. And if not.
Ryan Pannell
Eventually, yeah, I think eventually, certainly not. When I started, I had terrible discipline. When I started, you know, I I would get distracted. I spent too much time doing useless, stupid things. Things I would plan for eventualities that were really remote in nature. So the time that I was spending preparing for this probably never going to happen. Event with time I could have better spent doing almost anything else, but I did ultimately realize that you know. A level of discipline and focus was necessary if I wanted to achieve what I wanted to achieve, certainly in the shortest amount of time, right? You know you if you’re disciplined and focus, you get a lot more out of four hours of focus time in a day than you will out of eight hours of distracted time, you know, and that’s really the difference. You know, people will say, well, how come you accomplish so much in a day relative to this person or that person is? Because, like, I don’t waste the same amount of time, I’m not some robot like I don’t bang away constantly, no brakes ever. Nobody can do that. I just spent a lot of time figuring out how to structure my day so that I could take advantage of times when I observed I Had the highest energy when times when focus was easier than other times you. Know you, you. Sort of mid afternoon late afternoon. The quality of of your work is deteriorated by that point. You get no second wind.
Speaker
But.
Speaker 2
There’s all kinds of things that you can do. In that mindset, you know, like there’s a clean your desk moment, right, there’s a file, papers moment. There’s a clean out your downloaded items moment like. You have to do it, but that doesn’t really require any innovation. You’re not going to try and write an article in that moment. So that’s. Really it was. It was appropriate.
Speaker
Right.
Ryan Pannell
Focus, I guess, rather than just like this idea of you’re focused all the time, nobody could. Do.
Hessie Jones
So I read one. Of your articles that you wrote, it was called 5 under appreciated strategies. For improving performance, so can you elaborate a little bit on that, because I think focus is one of the things but but really it it’s really about mindset it’s it’s about wellness physically as well as mentally.
Ryan Pannell
Yeah, I mean. I always found it interesting that when people are looking for a competitive advantage or they’re looking to improve. Their performance, you know, like one of the first things they do is they pop open like the App Store and they look at, you know, productivity apps or they go to like, you know, life hacks from the perspective. Of can can I can I jog on my under desk treadmill while I listen to podcasts and return emails? Like that’s that’s not where your performance is actually going to come from. It’s there’s some really low hanging fruit that people consistently ignore. That works for everybody. It’s free and absolutely makes a difference. And so yeah, in. That article I talk about like. I think number one was. Sleep. I you know people we know. Oh, you should get more sleep. Ohh yeah. You know, I I don’t get enough sleep. I could use more sleep. I hate catching up my sleep on the way. Everybody knows. It’s like eating your vegetables. You know, you should do it. But most people don’t really understand the critical role that sleep plays. In life. Period. Right. I mean. All of your physiological repetitive functions happen when you’re asleep. That’s cell repair. That’s hormone balance. That’s conversion of short term memory and long term. Memory like if you don’t get enough sleep, it’s not like your body will do that at some other time or at a lower level of efficiency. It won’t do it. So you have like 3 whiskeys and go to bed. Your body will not repair cellular damage, it’s going to spend the whole night trying to process the toxin that you just ingested. Instead of doing what you needed to do, no short term memory, moving to long term memory, no hormone balance. So you’re you’re waking up and you’re trying to get the most out of your day with a broken down machine. You know, like first thing you can do, it’s free. Go to sleep earlier. Like, what are you doing after 9:00? And that probably nothing useful watching TV doing scrolling social media. Right. You’re doing this stuff. That’s not going to have any meaningful impact on your life to be unconscious. You feel so much better the next day, and because your body was able to do all of the things that it’s designed to do, everybody’s body. There is advantage number one, you know caffeine modulation #2, right? The fact that we don’t get enough sleep habitually leads to caffeine abuse. Not I’m not someone that that avoids caffeine. There’s a lot of benefits to caffeine. There’s benefits to drinking coffee. People don’t understand what it does.
Or how it’s doing it. You know that your body is producing. This, this adenosine sleep hormone in 24 hour cycles and caffeine stops that hormone from being absorbed and so it’s stopping it’s stopping. It’s stopping but it doesn’t eliminate it so it’s bonding to it and it’s building up building up, building up and eventually when the caffeine degrades, all of that adenosine is released into your system. And that’s why you feel like exhausted halfway. Through the day. Because now you’re getting all of it, and that’s why your afternoon coffee is never as effective as the morning one like you have this afternoon. Coffee. You’re like, oh, my God, I need this coffee. It will stop new adenosine from being absorbed. But that big tidal wave has already hit you, so now it’s not doing as much, so you drink more coffee in the afternoon. Now you’re not going to fall asleep, right? Like I have, like, one to two coffees in the morning. I I have a small coffee, you know, noon, 1:00 and I have nothing for the rest of. The day I don’t get that lull anymore, which then makes me more efficient, like two, you know? There you go. Sleep and and focus on your caffeine intake. If you use caffeine and performance will go up like 300% without you downloading an app. Or going to some retreat or listening to Wim Hoff or whatever the hell it is.
Hessie Jones
Do you do any meditation?
Ryan Pannell
I do actually that’s how I start every day and I like not in some sort of guru instructed way I wake up in the morning, I go to actually it’s like our TV room but it’s really quiet and it’s another part of the house. I start my day by going there and I just use some the calm app.
Hessie Jones
I like that one too.
Ryan Pannell
From there, yeah, I used the COM app and there’s this guy. His name is. Ohh gosh, I wish I could remember his name because it’s really good. His name is. Jeff. Jeff Warren, maybe something like that. But he does these he does a. Daily calm thing and it’s like between 8 and 14 minutes.
So I just put that on on my air. Pods and I.
Hessie Jones
March.
Ryan Pannell
And that’s it. That’s it. And it just kind of I wake up during that time, it puts my mind in a good, good place. He’s got a really good narration. He usually tells like a little story. It’s not. There’s no, you know, picture of distant lake or something like that. It’s just walking through. You know a process. And then I’m into my day and and. That made a. Big difference, that’s why that’s why I. Stick with it.
Hessie Jones
OK, so let’s talk about, I don’t know if you could identify one of the biggest risks that you that you’ve ever gone through with any of your ventures and how did you overcome any kind of fear or self doubt when you’re approaching that?
Ryan Pannell
Yeah. Biggest risk that I’ve ever seen in all startups, my own, and others that I’ve seen not succeed is and an overly high level of optimism combined. With under capitalization like you know I want to start this business. I have some money. It is for sure not enough money, probably, but you think it is. So you know you start the business. And as you you start to blow through this money, you start to make bad decisions. So the bad decisions are commonly you avoid legal services, right? You, you you don’t send contracts to lawyers, you download them off the Internet. You read them. They seem to be pretty good. You know, you execute them opening yourself with the liability and risk because lawyer fees are really high, even cheap lawyers cost money that you don’t actually see translating to to revenue, so you won’t do that. Partners don’t make partnership agreements in the beginning. Because some part of you knows that you’re going. To have a. Fight right away and you want to be really positive and you’re like, we’re going to. Change the world with this. And you come back around to having that agreement in the future when there’s actual money on the table. And that’s a way worse fight to have. So people do things like that. You know, I’ve got more than enough. I can do this. They’re undercapitalized, bad decisions, and it just goes down downhill from there, really. And I see that that’s that’s 95% of failed startups. I can track back to. Under capitalization.
Hessie Jones
And I think I think for for a lot of people like you said, there’s a lot of optimism in the beginning. But then when the decision to actually do things that require money, they don’t actually happen when they should happen. You know, everybody tries to get it done, like, right at the beginning, like the agreement thing. There, there are lessons in that in that if there were agreement, maybe we could have mitigated this specific risk in the future, right? But that again comes with a cost.
Ryan Pannell
Yeah. And it’s, but it’s, it’s not huge. It’s just something, right, like, you know, it depends on what country you’re in. But you know, if memory serves Canada, it’s been a while, but, you know, like $1500 or something, and you’ve incorporated a company. OK. So I’ve incorporated a company now the extra. Legal work making sure that that company is set up to run effectively would bring the total startup cost. For admin and legals to maybe 10 grand like, it’s not a ton of money and now it’s set up optimally from the beginning. Shareholder agreements are in place. Everything’s super clear. You start on the right page and if you’re engaging contractors like you have. Good quality terms and conditions that are. Going to keep. You safe insulated from liability, et cetera like that, plus a bank account. And you’re ready to go. Ohh and it’s just you know the it’s the extra $8500 in legal fees that people think ohh, but that will get me a BCD instead everybody wants to feel like they’re in business, so they want their website and then with their social channels and they want a cool zoom background or. Whatever it is that they’re gonna put in place that’s going to make it seem like they’re they’re not like a one man or one gal band.
And you’re missing like the part that you are, you can’t redo that after the fact, like you got one chance to do it. And that’s the chance to do it, I would say. You know, for me that’s number one. Number two would be not doing the appropriate amount of research in terms of where your revenue is going to come from. Like you have this great idea, you think it’s going to change the world based on. Your gut. You know, I’m going to do this. I’m sure there’ll be clients. I’m sure we’ll get revenue. Like what? Market analysis have you done? Come to that conclusion if you haven’t done it, it’s because you’re afraid of learning that your dream idea isn’t a very good idea and you sort of just want to go. Same thing is you haven’t put a partnership agreement in place, not because you’re an idiot and you don’t know that you need it. It’s because you kind of feel like there might be a fight. And that would just throw cold water on everything. And you’re so excited and you want to move. Forward with positivity. This is business, right? Like you’re not gonna be friends forever. You’re building something together. So take the time to make sure you’re on the same page. Take the time to make sure that there is a a market for whatever it is you’re trying to sell, product or service or whatever.
Hessie Jones
Ryan Pannell
I I can remember specific instance Hesse where I was like I told you this is going to happen and you’re like I’m not gonna listen to you. I’m not gonna do that totally happen.
Hessie Jones
Yes, I know he will not. Yeah, advisors usually provide the best advice that you don’t necessarily listen to because sometimes as a founder, you’re you’re you’re stubborn. That’s another topic for another day.
Ryan Pannell
Well and and because like the only reason that that’s right is because it happened to us. You know what I mean? Like, like nobody can magically give you this sage. Wisdom. It’s like oh. I’ve been where you currently are and this totally didn’t work and This is why you know, but there are some things to your to your credit and point hessie, there’s some things that everybody has to go through like you could someone could tell you 10 advisors could tell you and you would ignore all ten of them because you need.
HESSIE JONES
Exactly.
Ryan Pannell
To have the experience. It’s actually good to have the experience.
Hessie Jones
Absolutely. Absolutely. OK. So I want to talk about Kaiju because this is your current venture and it looks like you’re pretty successful at.
Ryan Pannell
Yeah, I mean, we did we we have created about $660 million worth of. AIP so far that’s probably I was probably end of June is probably a billion by then we’ve got another another component, yeah, it’s been it’s been good but you know I I think of Kaiju.
From an entrepreneurial perspective. I couldn’t have done it at any other point in my life, and not just because AI wasn’t AI back then. I’ve been working specifically with AI and portfolio management since 2019. Like back then, people thought I was insane. We were insane for managing portfolios just using AI. But. It’s worked out really well and it’s been a very validating like last 18 months to be sure, but. It’s been a very complicated venture and I lacked. I lacked the knowledge. I lacked the wisdom, I lacked the emotional sophistication I lacked, the managerial experience, you know, I I had to go through the other careers, the other companies, the other businesses. To get to a point where. You know, I could run a company that you know has people in 17 countries and 13 time. Zones like it. Just wasn’t equipped to do that, wasn’t equipped to manage that many diverse personalities, requirements, cultures, et cetera, so. You know it’s it’s it’s been a a good journey. It’s satisfying for me to be able to see. Not not so much the success, but that recognize. In the management of it, I could see that I’ve I’ve grown and you know, maybe really slowly, but growth nonetheless.
Hessie Jones
So you started out, you started out in retail trade and then you and then when you decided that you you wanted to create this company for a long time, it was just you and your and a partner or two for for a very long time before you decided to to build up the company, right?
Ryan Pannell
Well, sort of I I started. Very briefly, in retail trading, a couple of colleagues that I’d spent some time with. Who were also theoretical physicists had gone off to work at a big sell side bank in England and contacted me. From a quantitative perspective like hey, you know more and more banks, this is like 22,000 and twelve 2013, something like that. You know, banks are sort of hiring us more and more. And I was the pattern recognition specialist because I’ve spent so much time in applied cryptography and. That’s really all it is. You know, can you look at some data for us? Can you tell us if you? See anything there? I looked, I knew how to trade before, just recreationally, and I I I did see exploitable patterns and I I shared those with them the first couple of times and then realized that maybe I should stop sharing them. And so I I I started a small account. I built a number of trading systems. I started trading. That was very. Successful and through a mutual friend, I came to the attention of someone who was at the time Europe’s largest fund manager. And they very kindly and and different people in their in their. Management company mentored me. I became a portfolio manager. They’re institutional trader and then portfolio manager. And then in a very short amount of time. The same person said you need your own fund. You need to you need this is you need to be managing your own fund. So help me set up my first hedge fund and my first fund management company. And yeah, I had. I had some seconded staff from his company and it was like me and. Four other three other three other guys, you know, all working in technology, right? Like I, I I needed professional technologists to help build the proprietary systems that I wanted to build, like an architect them, but I couldn’t build them as. And you know from from there, we grew from those forty people to, you know, it’s almost 50 and from, you know, a couple of countries to 17 and from managing 1 little hedge fund to several funds to building IP to launching products on the New York Stock Exchange. We’re all using artificial intelligence.
We knew that we wanted to go that direction. It just wasn’t accessible at our size and capital base until about 20-19 and then we. Had enough expertise on staff, we had enough capital and we, the technology itself, had become more accessible and we could really make a go of predictive AI, obviously not, not generative AI, which is the world’s worst fund management ChatGPT. What what? What’s not?
Hessie Jones
Yeah, yeah, yeah. So let’s let’s get into the technology itself because, because you you’ve already mentioned that you don’t have any. I guess I wouldn’t say faith or confidence within what what’s going on with with the. LM’s, and and I can curl with that right now in this nascent. Base it’s not there, but from your perspective, when it comes to actually developing artificial intelligence within within your industry, you know there are a lot out there that that that do what similar to what you can do.
Ryan Pannell
No, there’s really there’s really, there’s almost none. I mean, it’s an unforgiving on ramp the the sort of grandfather of all of it was Renaissance Technologies is Renaissance technologies.
And that’s that was run by the the late great Jim Simons, who was an incredibly gifted geometer. And he started this hedge fund when he was, you know, 45 or 46. And, you know, for 30 years they’ve they’ve delivered like 67% returns net of all fees every year. But their employee owned like and have been for decades. They’re closed, so they they basically perfected systematic and quantitative trading. Went into early machine learning artificial intelligence application. Means used to have outside capital a long time ago and then kicked everybody out once they had enough of their own money and just run on that so that their medallion fund is, you know, 10 to $12 billion. That’s all employee owned. Nobody’s ever. Gets any information out of that shop because again, employee owned right? It it. It has the distinction of having the highest number of millionaire receptionists in the world, right? If you’re, if you’re making 67% after all fees every year, are you talking to anyone? No, of course not. So, you know, 30 years, we know, like, three things about them. You know their win win rate is slightly better than 50. Percent, which means that their asymmetrical return on risk is enormous. We know that they only trade in a three to eight day window, which substantiates all of our findings that predictive AI and in capital markets trading is only effective in the very immediate terms, not crystal ball. It’s not going to tell you where something going to be in six months. That’s that’s ridiculous. Uhm. And and that they only have there like 297 scientists and five traders, right. And and that mirrors sort of us, we’re smaller, but yeah, we have a we. Have. 8% of our workforce, 7% of our workforce are traders. Everybody else is a scientist. And you still need the traders. You know, the scientists themselves. The machines themselves don’t come up with very novel, innovative, workable solutions. You know, the traders still. Have to execute. Trades and some some asset classes et cetera and so. For what we. Do with predictive AI. Yeah, I see. A huge future. There but there. Or. There aren’t a lot of companies that are doing it. Citadel, absolutely, but they don’t talk about it like the companies that aren’t doing it are not talking about. They’re not sharing the technology. All the attention is on generative AI as an asset manager and analyst or whatever, and it’s terrible, you know, for all of the reasons I’m sure you’ve you’ve covered many, many times has. Like it’s there’s no standardized data, there’s no verifiable source of truth versus what we do is ingest like price, time and quantity data and look for repeating patterns very different.
Hessie Jones
So are you. Who now I think within your industry that the you you create a lot of efficiencies for your company and. Like you said. You your you have a workforce that is probably a fraction of some of the some, some of the most successful ones out there. Where do you see the future of AI when it comes to this? I mean, replaceable job is a. Is a big. Is a big newsworthy item right now.
Ryan Pannell
Yeah, I think you know if if you’re a systematic or quantitative trader, yeah, I think you’re done. I think you’re done now, right. I mean, these systems, the types that we’re building and using, they’re ingesting the entire stock market at the trade level like what we call it, the print level, every single trade is being ingested. Analyzed in real time simultaneous. Obviously it’s billions of transactions before any one of our systems makes a trade management decisions. It’s billions of discrete examinations simultaneously before it makes the decision. We can’t do that we’re it’s not capable of that level of analysis. So it’s going to replace those, those traders, but it can’t do. Everything. It’s there’s global macro. Forget it. It’s there’s no system in the world that’s going to say. Well, I think that Putin’s going to invade Ukraine and I think this will be the socioeconomic fallout from that. And I think this will be the flow through of that fallout into capital markets. Like, no chance that requires, you know, a person with deep experience. And even then, they’re they’re they’re gonna be right. Like 30% of the time. So it’s not gonna do that. I don’t think anybody wants to take investment management advice from a machine which it’s not built that way. We’re a human. Human species. So I think we like that the investment manager has access to tools that will optimize decision making that can increase performance, decrease risk, can maybe act as an early warning signal in turbulent times. But we still don’t want, you know, to input all of our data and have a machine. Say, here’s your portfolio or this is what? You should do there’s. A small or that probably does. But that’s, you know, I like you, Hesse. I think that I think there’s no question AI is the technology of the future, but. The propensity of of purveyors to say that it can do everything and will replace everything is just absurd, and it it belies a lack of understanding and the of the technology itself.
Hessie Jones
Yeah, I I mean I I was speaking to somebody yesterday about this existential threat that everybody had talks about. And I said, you know what, at some point in time until a technology has the ability to carry its own Power Pack and not have to, you don’t have to unplug it from the from the from Wi-Fi. Both from the wall. And it it, it won’t subsist itself. Then I said that that’s the only time that I think we’ll be at risk. But right now, as long as it’s attached to our power grids, we’re we’re safe, right?
Ryan Pannell
Why do we always? We always anthropomorphize these things and assume that once it’s sentient, it like what has wants and desires.
Hessie Jones
Yeah.
Ryan Pannell
Why those those are those are human conditions, right? Those are human behaviors like, why would a machine go? You know, I have the desire to wipe you out. To what end? I mean, by its nature, these systems are efficient and logical.
Hessie jones
Exactly right. Exactly. Right.
Ryan Pannell
If they’re like you take too much power and I need more power in order to create more machines, where did the desire to create more machines come from? That’s again, that’s a human desire to procreate that you know, at 60 years of science fiction that we’re programmed with to have this like bias, that it’s always the bad guy, I mean.
Once it’s autonomous, how do you know that it doesn’t choose to just, you know, go to sleep. You know, it’s like I can do anything. I don’t. It doesn’t have feelings like it. Can’t feel so sort of.
Hessie Jones
It’s yeah, it’s unfortunate because there is a group out there that that that’s trying to peddle this stuff and you know, we just I think from an opportunistic perspective, we just have to try to battle. I want to move into. Your interest in philanthropy, because you’ve been doing this even you know, as an entrepreneur. For, for, for. A very long time. So tell me about your interest in ocean conservation and also about technology access, especially for the underprivileged.
Ryan Pannell
Sure. I mean I I I think that they as diverse as they are, I think that they’re they’re both sort of rooted in the same ideology which is an investment in the future, right, I mean you. Know. We came from the. 70% of our oxygen comes from the ocean. We can’t exist on this planet without a healthy ocean, and we just treat it like a giant toilet, right. And everything from shark finning, which takes out an apex predator which then sends the food chain into decay. That ends with the destruction of phytoplankton and diatoms, which which are these organisms that create the oxygen? Right. You kill the sharks. We’re just going to suffocate, right? And there’s there’s just not a lot of education. Much like the sleep and the vegetables and the too much coffee and the whiskey before bed. Like, you know, you’re not supposed to do it. Nobody’s like, yeah. Hey, I’ll throw this plastic right into the ocean, but we sort of turn a blind eye to it because we don’t know what happens. General, I’m talking about general populace. What happens when it gets there so, you know, microplastics are not something that. A wonder kids, big ocean cleanup ship is going to fix like I completely applaud everyone of those initiatives. Yes, that’s the start. But microplastics are not caught by that sieve, right? And they are in every piece of seafood that you ingest contains plastics in North America, 90% of kids under 6. Have microplastics in their system system. Our bodies not designed to deal with this. It’s never seen it before. It’s kind of like trans fats, right? We don’t have the capacity to just be like, oh, that’s cool. I just break that down and deal with it so. So you know, where do you start education? You know, connecting people with the ocean. I’ve always been a big Waterman surfing stand up paddling, diving free diving, scuba diving, sailing, boating, whatever it is like, I’m happiest, you know, on in or under the water. And if I can support. Programs that put people who are interested in at that level of connection. Tivity. Yeah, it’s it’s. It’s like, you know, animal lovers. It’s really difficult to be awful to animals if you’re exposed to them on a regular basis.
Speaker
Like you know, you learn their individual personalities. You know what makes them so wonderful, et cetera. So that’s on the ocean front. That’s part of the future. And then in terms of underprivileged youth, same thing, right, I mean technology these days is relatively cheap. You know you got an, you know, a Kindle Fire tablet, previous generation iPad, any, any number of tablets that you can use. That you can distribute to school kids. Most schools have free Wi-Fi connectivity even in Second World countries, and that connects them to education. It connects them to information. Limitless amounts of information. So that’s where some kid that has no access to learning more about robotics can learn all they feel like learning about robotics.
And you know how much is 199 bucks a kid? Something like that. They’re going to my experience doing this for years is that they cherish the. These, these these tools I’ve I’ve never handed out a tablet to some kid and they just, like, throw it on the ground. You know, this is like, yeah, fine. They can play games on it. I don’t care if they play games on it. They’re they’re using it. They’re developing skill with the tablet. They’re connecting online, you know. Back when they’re handing these out roadblocks is like a big deal for these kids, right? And you can program for that game. So they’re getting access to programming, you know, doing. Free courseware on that, so that’s. You know, to each their own. But that’s those are areas. That have been meaningful to me.
Hessie Jones
OK so. OK. The last last question, I guess at this stage of your life and your career, considering everything you’ve achieved right, is there more to be done?
Ryan Pannell
I think so. I think so. I mean, you know, you alluded to it a little bit earlier in terms of the next chapter like I would love to you know create. Like a Khan Academy, but for financial literacy. And that’s sort of always been my goal, right? I mean, it’s it’s ridiculous that, you know, we get exposed to plant biology in school and there’s not a single financial literacy course like, you have no idea how the mortgage payments that will govern your life, the credit card. Payments that can destroy your. Life credit debt tax, like nobody teaches this. And then you’re sent off into the world, connected to all of this and.
You cross your fingers that you don’t get yourself into trouble, and because you know people are generally proud, you know, 99% of people going to sit down with a mortgage broker. Just gonna explain this document. They’re gonna nod their head because they’re they’re ashamed to say. I have no idea what you’re talking about.
What do you mean? You know this interest versus principal versus the term, there’s variable or fixed rate. I don’t understand any of this. Help me out. You’re going to nod their head. They understand that when they put their signature on this document at the end, they’re going to get the house they want and they’re going to.
In their own financial enslavement. But if they had the knowledge, they could ask key questions, they could find a vehicle that was less destructive, use it in the right way.
And you know, be free or faster. So I I love what Khan Academy has done for math and now stem in general, I. Would love to. Do that financially.
Hessie jones
What? What a great idea. And it’s something that we all need at the elementary level because we’re we’re all eventually going to grow up. And you’re right, there’s a. Lot of adults. That when they get into buying their first home or going and doing their first investment just. Being overwhelmed by the terminology and just having it go over their heads like for me, I I I rely very much on my husband when it comes to investing stuff because I wish I understood. But when they’re going at you, these investors a mile a minute and you’re not getting it, you just don’t want. To stop them. Right. To get out of fear and out of shame that you don’t understand, right?
Ryan Pannell
That’s exactly, that’s and that’s actually why Khan Academy was. Built because there was a recognition that, you know, in numeracy and adults was, you know, you almost universal like the average North American has. What, like a Grade 6 or Grade 7 math capability, you’ve gone all the way through. You just didn’t use it. And now you forgot. And they’re embarrassed to fix that. Well, now iPad like tablet, phone, laptop, desktop library, computer. You can sign up for a free account. You can fix this yourself in private without ever talking to anybody. And I love that. And I would love to be able to do the same thing for financial literacy. You have no idea how your credit card works. You don’t know these terms. Cool. Here’s the little course. Over there, it’s completely. Free go watch these videos. Go read these articles. Now you know now you’re better prepared and that’s not going to blow you up in the future. So it’s it’s so sorely needed. So that’s if I get a free moment, Hessie. That’s that’s where my.
Hessie Jones
I would love to learn, so I I lied. Last thing. What kind of legacy do you want to live? Leave if you you were to look at or craft your own headstone, I know. Is it a little bit more? Than what? What would you like it to say?
Ryan Pannell
Oh gosh, I’ve I’ve never thought about that. I interned. I intend to get, you know, laid out in a Viking long ship and, like, lit on fire and sent into a fiord, you know, axes in one hand and sword in the other. That’s how I’m like, I’m not not. Don’t put me in the ground. I don’t. I don’t want that.
Hessie Jones
Oh, my God, that’s funny.
If we were to. Like, throw a piece of paper into the ocean and it was all about Ryan Pannell. What would that piece of paper say?
Ryan Pannell
Better not be littering in my ocean happy. I can I get the point? Something was going to be.
Hessie Jones
Ryan Pannell
Something was going to be said. I’d I’d like at the end of the day, like I’d like to have been useful. You know, I I get an enormous amount of satisfaction as a parent. Because I’m I spend a lot of time with my kids. I’m engaged. You know, I I care about what they’re doing. I care about trying to facilitate their interests. You know, whatever they may be, you know, it’s it’s really rewarding to see them grow. I’ve really enjoyed building Kaiju for the same reasons, you know. See it become meaningful for. Other people you know who maybe weren’t having the opportunities from wherever I stole them from that they now have it tied to you. You know, we’ve got a number of PHD’s that were. Ignored and treated as human calculators that we’ve brought on board, who have like invented incredible technology. That’s and that’s I didn’t do that. They did it, but I facilitated it and I I hope that when I’m gone. You know, people will say that they found, you know me in some way, useful, even the circuitous route that I took through life, the never ending mistakes and screw ups that I made. If I can act as a cautionary tale. To people that would make me happy, you know? Skip, skip these mistakes. That that’s all I really want to be at the end.
Hessie Jones
Well, I guess from my perspective you do matter. I mean you’ve been, you’ve been critical in my life, so I.
Ryan Pannell
Thank you very much. You’re very kind.
Hessie Jones
Don’t anymore before I. Cry, but no problem. So on that note. I’d like to sign off and say thank you so much, Ryan, for joining me today. This is been an incredible, I guess, one of my favorite interviews just because because of who you are and what you’ve done for me, and I hope these same lessons get channeled to every. One who’s an entrepreneur. So thank you.
Ryan Pannell
You are way too kind and thank you for having me here.
Hessie Jones
No problem. So everyone tech uncensored is powered by altitude. Accelerator is produced by a Bluemix and is syndicated to transistor radio. You can find us wherever you get your podcast and until next time I’m Jessy Jones. Have fun. And stay safe.
Hessie Jones is an Author, Strategist, Investor and Data Privacy Practitioner, advocating for human-centred AI, education and the ethical distribution of AI in this era of transformation.
She currently serves as the Innovations Manager at Altitude Accelerator. She provides the necessary support for Altitude Accelerator’s programs including Incubator and Investor Readiness. She will be the liaison among key stakeholders to provide operational support and ultimately drive founder success.
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