Interview with Kalshi Founder: Don't Blindly Seek Startup Advice, I'm Not Good at Management

"The real competitors I value are others: Robinhood, CME, Coinbase, Interactive Brokers, major banks, and Zuckerberg, who is paying attention to the prediction market space."

Written by: Jordyn Holman, The New York Times
Compiled by: Luffy, Foresight News

Kalshi is much smaller than many people imagine. The company has 200 employees, most of whom work in an open office in Manhattan's meatpacking district, and it doesn't even occupy an entire floor of an office building.

However, Kalshi is now nearly ubiquitous alongside other prediction market platforms like Polymarket.

They are major sponsors of various sports events, and media organizations frequently cite their data in political and financial market reporting. Users can bet on the probabilities of various events occurring on these sites: the final score of a soccer match, the results of a new drug clinical trial, and what topics President Trump will mention in his speeches.

Founded in 2018 and officially opened to the public in 2021, Kalshi's founders are two recent graduates from MIT: CEO Tarek Mansour and COO Luana Lopes Lara. In May of this year, the company completed a new round of financing, reaching a valuation of $22 billion. Mansour grew up in Lebanon, while Lopes Lara hails from Brazil. According to Forbes, both are just 30 years old and have already become billionaires.

In the U.S., prediction markets are regulated by the Commodity Futures Trading Commission (CFTC) and can operate nationwide once approved. Gambling companies, on the other hand, must obtain licenses from each state individually, and the regulatory rules differ. A recent investigation by The New York Times revealed that the CFTC has recently reduced its workforce and relaxed enforcement, which has objectively boosted the development of the prediction market industry.

The rapid expansion of the industry has attracted a large number of investors and newcomers, including individuals with ties to the Trump family: Donald Trump Jr. is an investor in Polymarket and serves as a paid advisor to Kalshi. Mark Zuckerberg of the metaverse platform Meta is also interested in entering the prediction market space.

Some lawmakers and regulatory agencies believe that prediction markets are just a rebranded form of gambling. The industry also faces insider trading risks: in recent months, a U.S. soldier involved in capturing Venezuelan President Maduro placed bets on Polymarket regarding related events; a White House teleprompter operator placed bets on Kalshi regarding the content of Trump's speeches.

New York Attorney General Letitia James recently sued Kalshi, accusing it of operating illegally and circumventing state gambling regulations. Kalshi claims that the lawsuit is merely "political theater" and asserts that states do not have the authority to order the company to cease operations. This year, more than ten states have introduced regulatory bills targeting prediction markets.

In its last funding round disclosure, Kalshi stated that the platform's annual trading volume soared to $178 billion. In Mansour's view, a market that allows people to back their predictions with money has significant value, helping to "calibrate" (a term he frequently uses) this "information-overloaded but truth-deficient" world.

The following is the content of this interview, edited for clarity and brevity.

Tarek Mansour

Q: You once stated that one of Kalshi's visions is "financializing everything," which many consider to have a dystopian flavor. Why do you think this is a good thing?

I think people have taken that statement out of context. The appeal of prediction markets lies in their ability to transform subjective, emotional, and partisan debates into a mathematical, objective system with clear and transparent incentives. If you conduct thorough research, analyze rationally, and strive to uncover the truth, you are likely to profit; if your views are biased, detached from reality, and extreme, you are likely to lose money.

This market has a unique sense of order: you can clearly judge the motivations behind others' opinions. People participate in the game essentially to pursue the truth, with the goal of earning profits.

Q: Currently, a large number of users are participating in sports event trading. What is the proportion of sports-related trading volume compared to other categories on the platform?

Indeed, people are keen on trading sports events. Our users mostly enjoy mathematics, economics, and trading, and are enthusiastic about thinking about probabilities and various variables that influence event outcomes. Sports events are an excellent training ground for probability thinking.

Q: What are the specific figures?

Last year, sports-related trading accounted for about 95%, and now it's close to two-thirds. There are a vast number of sports events every week, but political events do not occur continuously. Sports trading provides ample liquidity for other categories like cryptocurrencies, politics, and macroeconomics, significantly boosting their growth rates.

Q: How is the political category developing currently?

The market size for major political events can reach $50 million to $100 million. As more participants join, the accuracy of market pricing has significantly improved, and expectations are more aligned with reality.

Q: Returning to the topic of "financializing everything," what are Kalshi's next plans?

Everything should be done in moderation. Kalshi supports reasonable regulation. We have always adhered to a compliant path. In the early days of our startup, we spent several years planning the categories to be launched and seeking federal licenses, which was a very difficult process. At that time, we were only 22 years old, and the first four years of our careers were spent collaborating with lawyers to push for the establishment of a regulatory framework in the industry.

Q: Are you satisfied with the current regulatory environment? Are there any loopholes in the regulatory system?

As long as there is innovation and new things, there will always be gaps in regulation at any time. If regulation were perfect, new things would not emerge in this country.

Q: I want to ask about the rumors of tension between you and Polymarket founder Shayne Coplan; could you share the real situation?

Everyone is always eager to see competition among peers. But this is not direct competition. The real competitors I value are others: Robinhood, the Chicago Mercantile Exchange (CME), Coinbase, Interactive Brokers, major banks, and Zuckerberg, who is paying attention to the prediction market space. Competing with these players excites me.

The differences between us and Polymarket are fundamentally ideological.

Q: What are the specific differences?

The core difference lies in the development path. Choosing between compliant operation or unregulated wild growth. I believe Polymarket has not established a solid market risk control baseline, which is not good for them in the long run, nor for the entire industry.

Q: How can you convince the outside world that the regulatory rules Kalshi is promoting truly stand on the side of user interests?

The continuous growth of the industry itself is a testament to trust; users are willing to entrust their funds to us. If people's interests are harmed and they no longer trust the platform, they will naturally stop using it and warn those around them.

Q: Is trading volume on the platform highly concentrated among a few traders?

I don't have exact percentage data, but the distribution of trading volume is indeed uneven. Some users trade sporadically each month; some treat trading as a hobby or side job, while others are full-time participants, known as super forecasters. Super forecasters sift through vast amounts of information. This group may account for less than 2%, yet contributes 70% to 80% of the trading volume.

Our most accurate inflation forecaster is just an ordinary person from Kansas; the top ten political forecasters also come from various backgrounds, with no Wall Street elite background, many of whom are blue-collar workers, which is quite interesting.

Q: What measures does Kalshi take to prevent insider trading?

First, all users must complete identity verification, allowing the platform to know the real identities of traders and quickly trace back any abnormal trades. Second, we have built a system comparable to the New York Stock Exchange that automatically flags suspicious trading patterns. Third, we implement a comprehensive transparency mechanism, making all trading data publicly available.

This matter has both pros and cons. The downside is that everyone can see the trading records; once there is an anomaly, people will immediately question the existence of insider trading; the benefit lies precisely here: abnormal behavior will be monitored by everyone. If someone wants to engage in insider trading, it would be equivalent to committing a crime in plain sight.

Insider trading is very subtle. In a sense, insider information can make market prices more efficient. But we firmly prohibit insider trading because it undermines fairness and ultimately deters ordinary traders.

Some economists have suggested that insider trading can enhance predictive accuracy, which would make everyone trust market conclusions even more. But fairness is our top priority.

Q: The company is expanding rapidly. How do you balance external affairs while focusing on company building?

Luana and I work at a high intensity, often working weekends; there is always time to squeeze out. When the business stabilizes, many affairs can be standardized and handed over to the team. She is responsible for internal operations, while I mainly handle external affairs, and this model works well.

Kalshi adopts a highly flat structure, facilitating efficient project advancement. There are very few management levels, preventing managers from taking credit for frontline employees' achievements. Doers are the team leaders, creating a sense of urgency and intrinsic motivation.

Q: Where does your management style come from?

Lebanese people generally have a strong adaptability, and the local environment is full of uncertainties. This upbringing made me realize that the world itself is full of variables.

Currently, the field of artificial intelligence is experiencing new changes almost every two weeks, and the environment is changing rapidly. Corporate organizational structures must adapt to this pace. Therefore, we deliberately avoid rigid hierarchical structures. Whether facing significant challenges or new opportunities, the team can flexibly reorganize and collaborate.

Q: Continuing on the topic of your upbringing, what is the most important advice your parents gave you?

My mother always told me: always give 120% effort and strive for excellence. The difference in the final results often lies in that last 20% of effort.

Quick Q&A Section

Q: Which recent trade on Kalshi caught your attention?

A: Contracts related to computing power prices.

Q: What is your favorite question to ask job candidates during interviews?

A: What do you think of Elon Musk?

Q: What is your most contrarian viewpoint?

A: I believe the success of any great company does not primarily depend on its executives.

Q: Do you consider yourself a manager?

A: No, I am not good at managing others.

Q: What is the most recent question you asked artificial intelligence?

A: I asked ChatGPT about the probability of the Democratic Party winning the 2028 midterm elections; now AI can access Kalshi's data for simulations.

Q: What is the worst advice young entrepreneurs are most likely to hear?

A: Many people will advise entrepreneurs to gather all kinds of advice. But there is no universal formula for entrepreneurship. People overly rely on others' opinions; at the same time, many are eager to point out others' flaws to gain a sense of superiority, but most advice is not valuable.

Q: What advice would you give to young entrepreneurs?

A: Don't take my words as gospel. Within a controllable range, be as bold as possible in trial and error and take risks.

Q: What is the best advice regarding meetings?

A: If you can avoid a meeting, do so.

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