Kristin Myers: And joining us now over Zoom is Tom Sosnoff, founder and CEO at Lossdog.
So, Tom, take us back to the floor of the Cboe. That's the Chicago Board Options Exchange, for anyone that doesn't know.
The year is 1981. What was the job that you had back then, and what did you learn standing in that pit that you still use to this day?
Tom Sosnoff: Well, you know, you're taking me in the Wayback Machine, when dinosaurs roamed the Earth.
But I walked on the floor in 1981, and I honestly did not leave for 20 years.
It felt like the last frontier of raw capitalism.
At the time, I wasn't even sure what entrepreneurship was, but I just loved the energy on the floor.
And I stayed there for, you know, 20 years trading the S&P 100 at the time. This was actually before there was a 500.
So we traded the S&P 100, and I learned everything.
I learned a lot about the business that I think we still use today, and all the technology that we built and all the teachings that we do.
Kristin Myers: Okay. So, as you mentioned, you were at Cboe for 20 years, and then you left the floor to essentially build software, which is not exactly the obvious move, you know, back in 1999 for a floor trader.
So what did you see when you made that transition?
Tom Sosnoff: You know, I felt like the exchanges were going to be automated and go fully electronic, which is actually what happened.
But I didn't want to be the last person to make that move. I kind of wanted to be the first person.
So I was not a technologist at all. I was literally a pit trader.
And I surrounded myself with really strong technologists, and we ended up building an amazing piece of software, thinkorswim, which is still today probably the most actively used platform in the world.
We sold it. We were a public company. We sold it to TD Ameritrade, and then TD Ameritrade was eventually bought out by Schwab.
And now it is still, to this day, virtually the same platform and used by, you know, Schwab traders all over the world.
And it's just, you know, it's a pretty amazing piece of technology.
And, you know, we built it 26 years ago. Crazy.
Kristin Myers: And that's not the only company.
So you had two: tastytrade, also thinkorswim.
Basic idea here: give regular people what the professionals have.
And that seems to be the same creed that you keep going back to repeatedly when you're building out these companies.
Why is that the idea that is centered, that you essentially build all of these companies around?
Tom Sosnoff: Well, you know, at the time we weren't thinking, you know, I mean, in hindsight, I go back now and say we kind of democratized derivatives for the average retail investor.
But I don't think that that's what we were thinking at the time.
We had just, you know, we thought, hey, we love this space. We're very passionate about this industry.
And we see people moving towards strategic investing.
And so we wanted to build technology that they could use.
And I think our first build was thinkorswim, which was all technology-based.
Our second build was content-driven, which was tastytrade, and then we added technology on top of that.
And so I think what we've been trying to do all along is just kind of, you know, what's missing?
What do we want to see this industry transform into, or at least transition into?
And I think that's kind of, you know, we weren't trying to solve a problem. We were trying to build a vision.
Kristin Myers: So I want to ask, why then did you decide to build a third company? Why Lossdog?
Tom Sosnoff: Well, first of all, A, I have no hobbies, so I needed something to do.
And B, I just love, you know, thinkorswim had, let's say, 500, 600 employees. Tasty had 350 employees.
And I love going back to that room of, you know, 15 or 20 people and just cranking out incredible technology.
And Lossdog right now is a really amazing platform for optimizing your career and your portfolio.
And it's getting, you know, AI has allowed us to do things we could never even imagine doing in the past.
And it's just incredible stuff.
And then we're also about to launch our second platform, which is called One Lucky Dog, which we're launching in about three weeks, which is all just ideas.
It's endless ideas, and we're just super excited about the kind of stuff we can build.
And I think it's going to have a little bit, it's going to be a transformational moment in the markets for, like, a third time.
And, I mean, we'll see. I don't know.
But I feel really good about the technology we're building.
Kristin Myers: Okay. So we're going to get into that in just a second.
But first, I have to ask you about the name Lossdog.
It is unusual because this company is supposed to help people build wealth.
So why the name Lossdog?
And I love One Lucky Dog as well, in addition to that.
Tom Sosnoff: Well, One Lucky Dog was easy. We've been saving that name, and, you know, that's our ideas platform.
But Lossdog, well, I do a lot of live speaking events all over the world.
And for the last 25 years, we've probably done 500 or 600 live events all over.
And one time I was doing an event in Atlanta, and in the green room downstairs of this theater, they had a poster that had a picture of this lost cat.
It was this kind of mangy cat that had signs up, and its owners were looking for it.
But it was all, you know, it said dirty and cold and hungry and all this kind of stuff.
And it just always stuck with me.
I tried to buy it from the owners of the theater. They wouldn't sell it to me.
And eventually the artist sold me a copy.
And I said, if we ever start another company after tasty, I'm going to call it Lossdog after this lost cat poster.
And that's where the name came from.
Kristin Myers: Inspiration truly is everywhere.
Okay, so let's get into the platform.
Now, your site says that it gives somebody their exact market salary, and salary data is usually a range, though.
So how do you get this very specific and single number?
Tom Sosnoff: It's really interesting.
So what we did was we kind of used the same model that we used to figure out option prices.
So we did, like, our own variation of Black-Scholes.
You know, what we're really good at is building derivative pricing models.
And so one of the things you can do with options is, once you figure out kind of what implied volatility is, you can back into, like, a theoretical value.
And so we decided that we would do the same thing for careers and jobs by using a ton of data that's out there, both government data.
And we downloaded, you know, tens of millions of resumes and everything.
And depending on where you are, where you went to school, what your career is, we're able to back into, like, a synthetic volatility curve, and we're able to figure out kind of a theoretical number.
And you're right. Obviously, it's not exact, and it depends on a bunch of different things, but it's pretty damn good.
And the reason for coming up with this theoretical number was so that we could show people what they're leaving on the table.
There's this huge wealth gap in America, and there's a huge wealth gap all over the world.
And the only way to close the wealth gap, it's not something that you can regulate. It's not something that you can normalize other than through information, context, or education.
So what we decided to do was to create essentially that context and give people their real number so that they actually know what they're leaving on the table over a 20-, 30-, 40-year career, which might be, you know, a minimum of $2 million, could be as high as $15 or $20 million.
And that's how you close the wealth gap.
You give people information and context about what they're really worth.
And that was kind of the genesis behind it.
Kristin Myers: I absolutely love this because we talk so much to people about their salaries and how to negotiate.
But to your point, information is the missing piece of the puzzle that a lot of folks have when they're trying to figure out their salaries and how much they're going to be able to make.
Not just today, but it impacts how much you're going to be making five, 10, 20 years from now.
Okay. So walk me through this then.
I'm on the site. I upload my portfolio. I upload my resume.
What exactly comes back to me?
Tom Sosnoff: Two things.
If you upload your resume, a number comes back to you, a number of what you're worth, and then also how much money that equates to over a lifetime, depending on your age and whatever.
It shows you how much money you're potentially leaving on the table by not, you know, having the information you need to really negotiate from strength.
That's number one.
And then you upload your portfolio, and you do that real easy.
We use a company called SnapTrade. They're connected to every brokerage firm, so it's super easy to upload your portfolio.
When you upload your portfolio, we give you all these insane optimization tools.
And we do it, by the way, everything is free.
So we don't charge for anything.
Everything is free. All the tokens, everything. We do it. It's all goodwill. It's goodwill on our part.
And once we have your portfolio uploaded, we show you different ways to improve the basis on your portfolio.
And we also show you all these crazy tools, like from correlation tools to AI tools and building a portfolio, to different beta tools.
And we give you all this information about all these companies that already exist inside your portfolio.
It's just a wealth of information I don't think anybody has ever put together in a platform that we don't even charge for.
And it's just all designed to help people get more out of their portfolios and get more out of their career.
Kristin Myers: Okay, so to that point, because it sounds like so much information, and it is two sides of the coin, right?
So on the one hand, we have our salaries, our careers that we're dealing with.
And then on the other, we actually have what we're doing inside of our investment portfolios, how we are trading, the decisions that we are making.
So let's go first with the salary and then move into the trading bit.
How would you suggest that we best, you know, I get that information back, how would I best leverage that to do what you were saying, which is essentially eventually close that wealth gap?
How do I become wealthier with some of this information that I received from Lossdog?
Tom Sosnoff: Well, the challenge that most people have when they go through interviews or when they're talking to, you know, the firms that they work for, it is very hard to ask for something if you don't have information.
If you're not holding a piece of paper or if you haven't read kind of, you know, if you don't have data to support, if you don't have the numbers or data to support your argument, it is very difficult to ask for something.
If you have information showing, you know, how much the job that you're going after, what it pays, what it pays for in your city, what people that have comparable resumes to you, what they make.
If you have all that information at your fingertips, you are essentially shooting from strength.
And you are, you know, articulating your case with real numbers.
It's a very strong case.
And in most situations, employers, and I'm somebody that employs a lot of people, employers never want to risk losing somebody.
It is way too expensive to retrain somebody with all the localized know-how and nuanced know-how they have for whatever the position is that you're already in.
So nobody wants to lose anybody over a few thousand dollars or over a few dollars, whatever it may be.
So just being armed with all that context and all that information, it's just an incredibly valuable tool that people don't currently have.
And that's how we would use it.
Kristin Myers: And what about the trading side of it?
How would you say that, you know, an investor or retail investor could leverage some of that information, make use of some of the tools that's available to essentially either help them trade better, trade smarter?
What can they do with some of that information inside of their own portfolio?
Tom Sosnoff: So we create two things.
First, like I mentioned, we're about to launch a platform which is just ideas.
And the ideas platform is not like any other social platform that's ever been built.
We're not trying to say, "Hey, listen to this person," or, "Listen to this idea, listen to this strategy," and that kind of stuff.
We're just showing people where there's a lot of noise and thus there's a lot of opportunity.
And maybe there's certain things that are happening out there that you just didn't realize were happening.
And that's what we're going to expose people to, like hundreds of thousands of different ideas.
And we think that's what's missing in the current marketplace.
That's one thing.
But on the Lossdog software, when you upload your portfolio, the fascinating thing that we've done is we're showing people where there are holes in their portfolio, as opposed to telling them.
We're not necessarily telling you what to do.
We're just showing you, hey, you know what? You have this portfolio and you can improve your basis by, for example, writing some calls against the stocks that you own.
And you can improve your portfolio by, you know, maybe it's 200 basis points, maybe it's 600 basis points.
Then we show people, hey, you know what? You're taking a lot of outlier risk, like outside of a two- or three-standard-deviation move in the market, because you don't know how concentrated your portfolio actually is.
So we're going to give you some context around your outlier risk.
And then on other sides, we also show you, hey, you know what? You have a lot of concentration risk. You're using too much buying power relative to your net liq.
I mean, we do all the things that active portfolio managers and that, like, RIAs, the best hedge fund managers in the world, the best prop traders in the world would actually look at.
We're giving this to individual investors as just something to overlay on top of their portfolios.
And it's just really cool to have in your back pocket.
It's articulation. It's context.
Kristin Myers: So I want to ask you, because research has been done from Stanford, from MIT, that essentially found that retail traders, when they got into options trading, they didn't do that well.
They paid more money relative to the volatility.
And there's a lot of folks that have come out as a counterargument to democratizing access, right, inside of the markets, that a lot of retail investors are actually losing their money.
Now, you've spent, you know, over two decades making trading easier for ordinary people.
I want to put that to you.
Do you think that that's making them better off, or do you think it's actually making it easier for them to lose their money?
Tom Sosnoff: No, I think that is a very conflicted argument.
In fact, I would argue that the second that you give your money to somebody else to manage for you, you have already conceded, and that the rest of your financial life is going to be beholden to somebody else, and you don't have the control or the understanding to do something about it.
So I would argue that the people that are making that argument, it is completely unfair and it's actually very untruthful.
I don't believe that active investors should be measured against a standardized benchmark.
If you want to have passive investors measure themselves against the S&P or whatever else, or let's say active fund managers measure themselves against the S&P, that's fine.
But for active investors, they should be measuring themselves against a multiple of returns against risk-free rates.
And the advantages of active trading and active participating in the markets is so much more than just a return.
It's about decision-making. It's about probabilistic outcomes and understanding what risk is.
It's about understanding market structure. It's about the speed at which you make decisions and which your brain processes everything.
And the idea that any of that has a negative long-term impact is ridiculous, because people that are fast, people that make fast decisions, and people that make decisions based on real risk and probabilistic outcomes do much better in life and build much more wealth.
And you can't develop that skill set letting somebody else make all your financial decisions for you.
So I would take anybody that puts that argument out there to task.
And, you know, I'd debate that for hours, days, weeks, years, whatever it is.
I think it's a misguided argument that's just a research-based argument to support the passive case.
And I don't blame them for wanting to support that case because it's 65 to 75, you know, brain-dead basis points a year for these firms, and they don't want to give up that revenue.
But that's not where the future is of the current market structure, and that's not where the future is of self-directed investing.
Kristin Myers: And everyone that is watching can see some of your tweets.
One of them said, "I quit passive investing and it made me rich."
I want to ask you about another philosophy that you have, excuse me, which is "trade small, trade often."
Can you talk us through that philosophy?
Tom Sosnoff: Yeah, sure.
That's the basis of what we do.
Essentially, the foundation of everything we do is built around the law of large numbers.
And the law of large numbers says that, you know, if you do something once, the outcome once, twice, 10 times, 100 times, you know, the outcome is still in jeopardy.
But if you do something a few thousand times and you have, you know, real probabilities in your favor, now, real probabilities, remember options are strategic.
So there are real probabilities.
It's a very dynamic space.
It's not like buying or selling stocks or futures or prediction markets or something like that.
The strategic side of options is, you know, you can sell an out-of-the-money option.
And if the statistical probability of success is 80%, then it's 80%.
But if you do it a thousand times, it really is 80%.
If you do it two times, it could come out anywhere.
So our whole philosophy with trading and active participation in markets is trade small.
That will define your risk.
And trade often.
And that will give you the expected probability of success that you are going after.
Kristin Myers: A lot of little swings.
So I want to quickly, very quickly, ask you in, like, 30 seconds.
You've sold two companies previously.
I'm curious to know, with Lossdog, if you would ever consider taking that one public, potentially ringing the big bell behind us.
Tom Sosnoff: Well, we've been public. We've taken two companies public.
One was on the Nasdaq and one was in London. We were a FTSE 100 company.
I would love to someday ring the bell at the New York Stock Exchange. It would be a dream.
But I don't think about things in those terms.
Like, I just want to make Lossdog and One Lucky Dog and all the stuff we're building right now into something really special, because I want my legacy to be that he was a really good entrepreneur.
And, you know, that's all that matters to me.
So I really hope that we get to that point.
I hope the writing's on the wall, let's put it that way.
But I don't know, and we'll see what happens.
Kristin Myers: Thank you so much.
Tom Sosnoff, founder and CEO of Lossdog.
