Bank On it Podcast: Episode #434 Christian Hauff from Quantitative Brokers
In this episode, the host John Siracusa from Bank On It Podcast - chats remotely with Christian Hauff, Co-founder & CEO of Quantitative Brokers. Quantitative Brokers is a financial technology company, which provides advanced algorithms and data-driven analytics to clients in the futures and US cash treasury markets. Listen to the full episode below:
EPISODE 434
John Siracusa [00:00:00] It's Showtime. You're listening to the bank on it show with John Siracusa.
Multiple Speakers [00:00:06] Hi, this is Sanjeev cultivar. This is Jack McDonald. This is Aaron Kaplan. This is Craig J. Lewis. This is Hamid Abbasi. This is Josh 5Live. This is John Hansell. This is an Iraq one. This is Dan Kimberly. This is the government of Syria. This is Hossein grandma. This is Christian Health from Quantitative Brokers (QB). And you're listening to the bank on it. Show with John Siracusa.
John Siracusa [00:00:28] Now, without further ado, your host. Here's Johnny. You're listening to the Baker Show, a podcast that I've been producing for over five years now. I'm your host, John Siracusa. Now I want to give a big thanks to my friends and open fan for continue supporting and sponsoring this show. This show is also supported by my podcast production company. If you're looking to jumpstart your podcast, mini-series or upgrade your podcast production, please visit us at ListenDeck.com. On this show, we get deep behind the stories of fintech founders and the ideas, methodology and investment strategies of top fintech VCs. So you, the audience, can hear directly from the people who are building and investing in the future of fintech. Together, we can hear through these interviews where fintech is today and where it's going tomorrow. If you're looking to build, partner or invest in fintech, this podcast is for you. And if you'd like to support us and like what you hear in today's interview, please feel free to give the show a five-star rating in the podcast application of your choice. You can also follow me on Twitter, Medium and LinkedIn @ John Siracusa. In today's episode, I chat with Christian Hoff, co-founder and CEO of Quantitative Brokers (QB). Quantitative Brokers (QB) is a financial technology company which provides advanced algorithms and data driven analytics to clients in the futures and U.S. cash treasury markets. So recording remotely with me today of Christian Hoff, Christian is a co-founder and CEO of Quantitative Brokers (QB). Christian, thanks for being here today.
Christian Hauff [00:02:08] My pleasure, John. Thanks for having me.
John Siracusa [00:02:10] My pleasure as well. So why don't we get started with what exactly is QB?
Christian Hauff [00:02:14] Yeah, let's start at the top. So Quantitative Brokers (QB), we're a leading provider of advanced execution algorithms or algos, which is focused on global futures and rates. Markets predominantly fake might be another way to describe that.
John Siracusa [00:02:32] Prior to going to Barclays or prior to Quantitative Brokers (QB), you were backpacking, is that right?
Christian Hauff [00:02:39] That's correct, yes. Like all Australians, sort of a rite of passage, we're usually finish university and you can buy a one way ticket, often buy a one way ticket to go to either the Northern Hemisphere, the United Kingdom or North America. And I chose to go through North America first. My friends and I lasted maybe about 10 months before we all ran out of money. And I then flew over to the U.K. and, like many Aussies, settled in London over there.
John Siracusa [00:03:13] It's very much like culture in Australia to do that.
Christian Hauff [00:03:16] I've had the benefit of living in the UK for four years and then the US for a much longer period of time. And each of these cultures have their own similar rites of passage. The UK has a gap year in which a lot of memories and experiences are forged before they go on to university and a lot of bonds with the U.S.. I believe my interpretation assessment is anyway that their college is a somewhat of the one to last their journey and exploration of new relationships, new environments and seeing the world. At the point of my university education, it was very typical in the early 90s for Australians to just go to their local university in the capital city if they were fortunate to already be living in a major city. And so you didn't really travel. I hadn't actually traveled very much at all until I took that journey over after graduating to the North America, to the U.S. directly after I finished exams, UN backpacking.
John Siracusa [00:04:22] So right afterwards, what did you do right away? Like, what was your first job
Christian Hauff [00:04:26] when we traveled across North America? We actually only had work entitlements in Canada. And so when we were traveling through North America, we could do odd a handy jobs for cash. But one cash source was actually doing pharmaceutical trials. So my friends and I had studied human physiology is some of our subjects at university and had some comfort with the concept of laboratory trials. And so we did do seminars in our journey and it was a bit embarrassing to disclose the spread. It was. It was very fortunate because that would take you in. Sometimes you were in these facilities for a week or two. That's shelter, that's entertainment. It's food and then they pay you at the time felt like a significant sum at the end of the study, and you may have just had the placebo say everything worked out just great. But other than hospitality, jobs and things like that, certainly across Canada, when I got to the UK, it was probably a little lost as to what I wanted to do. It was the dot com boom late 90s and I really had a passion for actually sports management. And so I ended up approaching one of the local rugby clubs in London and getting a job. I think it worked for free for the first couple of weeks to secure that job, and it was really more in accounting and bookkeeping initially and then just showing up and being eager to help out in a club environment. I quickly got opportunities in other areas, which included some in marketing for the rugby club. And then on the side, there was a little bit of technology support as we had some basic network and computer systems that always needed a little bit of assistance. So that was my initial first job in the UK before I changed career paths.
John Siracusa [00:06:38] So interesting. You know, when I laughed when you said that everything turned out fine after doing clinical trials, I mean, that's just kind of funny. Like, do you feel that having clinical trials and those maybe placebos and drugs may have affected, you think today? Yeah, that's what I was laughing at.
Christian Hauff [00:06:56] The one funny story was so as with two other friends. We were in this trial and I could justify it. It was for Parkinson's disease, my dear late grandmother had suffered from that, so I was like, Okay, this is contributing and beneficial to helping out in that dreadful disease. And so we got separated or you go in and you get given the placebo or the real medication. And later that afternoon, there's beautiful facilities that they put you in that pool tables and video games and all sorts of recreational things for you to do. So I'm just with my friends because it turns out that a lot of rehabilitating people coming out of incarceration and things like that are often in these programs coming into these studies as well. We didn't know that, but got to know many of them throughout the trials. So now we're playing pool, and a couple of my friends are probably better than I am. But on this particular occasion, I was just feeling so smooth and just really steady, and everything was just got a little bit slow motion and the bulls were hitting just such sweet contact and into the pockets. And it was not long after I realized, Hey, I must be on the real drug here because I just feel like I've got incredible control, so I've got to win that night anyway.
John Siracusa [00:08:23] And you know, you don't take the medications until today right
Christian Hauff [00:08:25] now, and I know that
John Siracusa [00:08:28] that's good. Thank you for sharing. That's funny. So, so, so then you joined Barclays.
Christian Hauff [00:08:36] Yes. So I had been sort of at a crossroads and certainly saw various friends, other Australians, Kiwis that were doing well, doing much better than I was at least and enjoying their careers with either banks or big accounting firms and others were also working in technology. And to me, I had already had some experience and exposure to that, but I started to really get curious about learning more about technology. The dotcom boom was only continuing to gain more attention and right place right time. The banks this is by this stage 1998, the banks were having a real brain drain or a talent drain. Perhaps it's similar to today where the talent that they were traditionally bringing in was going to these dot.coms, where they were getting into equity options, programs and allocations. And so what the banks investment banks started doing is ratcheting up and sweetening their grad programs, graduate programs, and I got word of this and that there were some that were referred to as it graduate programs. And to me, that sounded like great. Wow, how amazing I could get to learn technology that would put me through these educational programs. Plus, I get to learn about banking. I get to work for a large, well established bank brands and entities. And so I applied to believe a new investment bank at that stage. Barclays Capital Bob Diamond did just come in to run and establish. And I remember showing up there was both exams and then there was interviews. And I remember talking to some of the other applicants in the waiting rooms outside the exams and interviews, and most had a Ph.D. or a masters, and they were from Oxford or Cambridge or already had work experience, a big bank or accounting firm. So it's a bit intimidating. But I think that's where having traveled and just enjoying the experience and the opportunities, I was just there to give it my best and and see what would happen. And so anyway, long story short, they then did give me a phone call and say, yeah, batting one from one. I took up that opportunity and started not long thereafter, and that was a two year commitment started in the beginning of '99. And that's really what then accelerated my journey to where I am today.
John Siracusa [00:11:27] When did you meet your co-founder, Robert?
Christian Hauff [00:11:29] So Robert and I met not long after joining Bank of America, so I was at Barclays Capital. Then through until 2005, I got transferred. During the graduate program, I got transferred to Chicago to help out the futures business with the development of a proprietary order routing platform. And I knew nothing about either, but I was super into. Resulted in that opportunity and also to get to travel, go to Chicago and come back to Chicago, I'd been there before in 96 and got to see a Michael Jordan game, which is that's another good story. But then ultimately I moved to New York 2001 and then in 2005 went over to Bank of America in New York and was hired by a gentleman by the name of Russ Stevens, who's gone on to greater successes himself. And at the time, he had a vision that resonated with me about expanding algorithmic execution from equities across asset classes. So he went on a big recruitment drive. I was part of that recruitment. Another person of many was Robert. And about two weeks after I joined and a week before Robert joined, Ross unfortunately left the firm. Hmm. And that put us in a commonly shared situation. There was probably three or four of us that all banded together or shared a bond as a result of that unexpected development. I think it was unexpected for us to, to be fair. And I think to everyone's credit, we all stuck it out and continued and and it was amazing. Experience as a result of it was three years, 2005 to 2008 that it was a Bank of America. I really only started working close to actually working with Rob in late 2006 2007. Definitely. I'd taken on a role heading up the electronic equity derivatives efforts at Bank of America. That was after the unexpected changes that occurred with Russell's departure. Rob was in quantitative strategies appropriately. So this is the Robert M. grin. For those that are listening, the al-Muqrin creates optimal execution model. And he and I started to work together a little bit on equity derivatives and smart order routing and some of the delta hedging elements of that, maybe for the internal traders. And then as opportunities present themselves internally, I had a strong desire to get back towards futures, which was another set of derivatives, but they were under the fig umbrella. And fortunately, I was supported in helping to provide an initiative around algorithmic execution and futures as well. Over in that side of the bank and I encouraged Rob to join me and see if he'd be interested in that project, an initiative. And he was. And so we got to work together on sort of road mapping, exploring that concept with the business and the customer base. And I took Rob out to meet with clients firsthand and witness the demand and the interest. And again, the reinforcement of that. These clients were very happy and and saw the value of agency execution models in equities. But they didn't have anyone providing it for them in these other asset classes, futures being one case and they they didn't want to have to build one themselves. Looking at Robert in the room, can you build it for us or help us solve this problem? You've you've helped solve it for equities. So I think that's what laid part of the ID Foundation. Then unfortunately again, circumstances, world crises, we always seem to have. The financial crisis of 08 started knocking on the door and this was 07, and you could feel in the bank that things were starting to tighten and initiatives were starting to be questioned and suspended. Obviously, you know where this is going that that led to ultimately that conversation of this initiative is not on anymore. We're going back just to core operations. And long story short, I ended up leaving the bank as a result of the financial crisis unfolded, as did many others great people that I worked with. And I remember having this conversation with Rob when I kind of knew my time was up and he was visibly frustrated and disappointed. Not so much of my departure, but about the fact that he couldn't get to pursue what he thought was quite a compelling and interesting problem set to work on. And I do recall making the comment at a future point that if you feel passionately about it as much as I do, then there's still a way to get. This done and to do this, he was like, well, how would that be? And I said, Well, we can do it ourselves.
John Siracusa [00:17:05] How do you get your first funding? Yeah.
Christian Hauff [00:17:08] So that was the journey, I'm sure. Yeah, I sort of say this quite reflectively and openly that I know for me personally, this is not necessarily a reflection of Rob's, but certainly for me, I would say I was grossly naive, somewhat greedy, certainly had an ego. And I think those three things all got turned upside down in a good way as a result of this funding process and our baptism into launching a company which we'd never done before either of us. Our very first funding meeting, which we thought was going to be a funding rating, we went in to see a close contact of Rob's, who had his own successful business. We were very excited about the idea and how we were going to do it and who was going to use it. And he said, Right guys, so what's your pre-money? And we said, Oh, we don't have any money. That's why we're coming to see you. And he and I were. What's your money valuation? And we're like, What? What's that? And I think he laughed, like you did any and literally called time out and said, All right, guys, come on. I need to explain to you before you go out and meet people like me and other objects finding the mechanisms of investment. So it was baptism by fire. We learned very quickly on the job. We also got professional help in some legal advisors, which took us from zero to hero in terms of at least being able to talk the talk and knowing where we stood in terms of valuation. Now this was a financial crisis and we got a term sheet on the table, not with that first party, but with another. And from there, we started progressing to the more transaction documents that financial crisis seemed to. At least my recollection is it was like a roller coaster. I just had one crater after another months apart and one country falling over the next country. And we had not just one, but two time sheets basically fall or fail on us, and then we put markets in place. And apparently that's unprecedented on one. We managed to do it twice. That was very challenging and took us. There was then a year of no income and the world looking increasingly darker the longer that time went on. And I will also say I'd had my first daughter in that time period and my wife was pregnant with our second. So to say I was under some pressure is an understatement. Long story short on the successful funding, there were some other parties that we'd been talking to that we were going to use for various aspects of our operations and should had this conversation maybe a lot earlier, but rang one of those partners and the founder of that business and told him how disappointed I was and we were about yet another investment falling over. He'd tracked the first one and he just said, Well, would you mind if I took a look at the investment? Of course, the answer was not at all. It resulted in basically taking that same transaction that we'd already negotiated, and he took it and funded us. And away we went.
John Siracusa [00:20:34] You were born in Australia.
Christian Hauff [00:20:36] Yeah, that's correct. Born in Brisbane, Queensland, Australia.
John Siracusa [00:20:39] Awesome. And so from that time to, you know, when you were born to where you are today, do you remember the best piece of advice you ever received and from who?
Christian Hauff [00:20:48] I would say that I've maybe had two good pieces of advice. I think the first is you can learn something from everybody. Hmm. Doesn't matter who they are, what role or function or sex or orientation, how they speak or look. There's some wisdom in each and every person that you have the fortune of meeting. You just have to listen and ask. I fundamentally believe in that. And then the second piece of advice rings really true to obviously this interaction and your podcast and the stories just told after that first failed time sheet, I was distraught. I never thought it would come crashing down the way it had, and already it felt stressful and tense how long it had taken. And that was nothing compared to how long it eventually took. But I remember calling the legal adviser and confiding in him when he said, like, this is really atypical and not usual. And I was down and I said, What do we do? What do I do? Some. Searching asking him for divine intervention, if he did, he snapped back and just said, you never give up. You pick yourself up and you crawl and you climb and scratch forwards. And until someone puts a bullet in your head, you continue to do that. And even if they put that bullet in your head, you see if you can just dig your fingernail in and scratch and claw a little bit further. And that's how you have to treat every setback, and I've never forgotten that. And I guess the message there is tenacity, and I feel like we have persisted through many dark pockets and setbacks to the point now that I truly feel less daunted by various setbacks because I know we can, we can solve it. It may not be obvious right here and now, but it's ultimately everything is solvable
John Siracusa [00:22:54] now that we're coming towards the end of the interview. I want to leave off on a final point, like if you could spend a day with anyone ever better alive, who would it be and why would you want to spend it with that person?
Christian Hauff [00:23:04] I'm going to be a bit alternative here and creative. I would also like to use that wish to meet someone that I haven't or hasn't been born yet. Hmm. Reflecting on that question, my interests always looking forward. And so and I'm not going to go quantum physics here. But if I could eventually mate say my grandchildren and great grandchildren at an older age, I'd be fascinated about the future and what the world looks like and how this pandemic is going to play out that way or other things will evolve. I value both wisdom and also that genetic heritage, and I'd be fascinated to see be able to interact with them and maybe share some of these experiences. Maybe they'll be listening to our podcast right now.
John Siracusa [00:23:53] You went to a Michael Jordan game and you said that was an interesting story. Do you mind sharing with us stories?
Christian Hauff [00:23:58] Yeah, I'd love to. Yeah. So we were backpacking, not on much money. This is later in our 10 month journey. We get to Chicago. This is full 1996, and we're in Chicago, where avid basketball fans who is in Michael Jordan's at his peak, they've just won the Championship from the 95 96 season. And there's an exhibition game on that next night. So we drive past the arena and it's sold out. But we go to the ticket booth. They have standing tickets, $20. I mean, that was a stretch for us, but we're like $20 great. We got to see a Jordan game. It's the exhibition game. It's Milwaukee vs. the Bulls. The next day's game day. It's all we can think about. We are the first people through the door into the united center and we are as proud Aussies. We have an Aussie flag. Luke Longley is with the Chicago Bulls. We go into the arena and we try to go down low like they're like night guys. You get to go up to your seats. We're like, we don't have seats. I woke up to standing section, which is literally the nosebleeds against lights. So we're standing right up the back in our section. There's no one in the arena. The bulls come out and warm up. We just decide we will cheer every time Luke gets the ball and he's doing layups and free throws, whatever. And at one stage he stops and he kind of puts his hand up to his eyes because the lights are pretty bright down on the court and looks up and we were cheering and waving. There's still only like 100 people in the arena by this stage. It's two hours before the game and he walks over to the security guard and then the security guard comes up towards us or climbs all the way up the stadium. Come and get us. We think we're in trouble and the guy goes, Hey, you're Luke's friends, and we're like, Yeah, and he wants you to come down with me, so just follow me. They escorted us down onto the court, the sideline of the court, and Luke comes over and he pulls over the team manager or whoever the chaperon is for the bulls and says, Hey, I want you to meet my friends from back home, and we'd never met Luke in our life. He's just totally going with the play here to see what he can do for us. He's like, Yeah, they've come all the way over. They come to watch me. I went to school with these guys, mates of their brothers, whatever, but they've got these really bad seeds. Can we get them? Can we sort out something? Can we get them close down to me by the game? We get all excited, but we're told you've got to get back to your section like you had some photos with us. In the meantime, Pippen's there. Steve Kerr, Dennis Rodman. Everyone's on the court, but Jordan isn't. Mm hmm. He warms up separately in the corridors. Doesn't come out in the court, so we get back up to our standing section and the game starts like plays, unfortunately really badly. But we're cheering and wondering when we're going to get cool to go down anyway by about three quarters of the way through the game. They come up to us. Luke's, I think, been either dragged or fouled out by that stage, but we get escorted down to all the way down towards the court. A game is close and then his these long haired, scruffy looking Aussie guys getting escorted Dan and set two rows behind the bench bulls bench now looks like sitting off, so he's turned around. He's kind of talking to us over the top of the first row and everyone's looking at us well, felt like they were looking at us. And so it felt like, yeah, we were all of a sudden celebrities. Jordan, they're calling Phil Jackson's calling time outs. It's right in front of us. Unfortunately, this is not the time of iPhones. So we had like one basic Kodak camera, which some very poor photos, selfies that we do have some evidence that that actually happened. He actually said he'd call us for an after party that that night or the next night. We didn't have phones. We gave him a landline at where we lived. We think he called there, but the girl didn't know who it was and hung up on him. And anyway, but we were very happy with that story, and God bless Luc for giving us that experience.
John Siracusa [00:28:37] Thank you for sharing that, and thank you so much for your time today.
Christian Hauff [00:28:40] My pleasure. Thanks, John.
John Siracusa [00:28:44] Now, that was a great interview, I want to personally thank Christian for being a guest on my show and open fan for sponsoring, but more importantly, I want to thank you the audience, because if it wasn't for you, we wouldn't exist. And although this show is over, I look forward to seeing you Thursday morning while we're releasing my remotely recorded interview with Gaurav Sharma from Capitalize. See you all soon.
Voice Over [00:29:08] It's over, Jenny, it's over.