Richard Craib - Crowd-Sourced Alpha with Numerai (S7E28)
Episode publishedPodcast: Flirting with ModelsFlirting with Models
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Hey, everyone. Corey here. Thanks for tuning into another episode of flirting with models. If you're enjoying the show, I'd greatly appreciate it if you take a moment to rate, review, and most importantly, with a friend. Word-of-mouth is how this podcast grows. And if you'd like to learn more about Newfound's platform of return stacked mutual funds, ETFs, and model portfolios, head over to returnstacks.com. Now on with the show. Alright, Rich. Are you ready?
Yeah.
Alright. Three, two, one. Let's jam. Hello, and welcome, everyone. I'm Corey Hofstein, and this is Flirting with Models, the podcast that pulls back the curtain to discover the human factor behind the quantitative strategy.
Corey Hofstein is the cofounder and chief investment officer of Newfound Research. Due to industry regulations, he will discuss any of Newfound Research's funds on this podcast. All opinions expressed by podcast participants are solely their own opinion and do not reflect the opinion of Newfound Research. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Newfound Research may maintain positions and securities discussed in this podcast. For more information, visit thinknewfound.com.
Today, I'm speaking with Richard Craib, the CEO and founder of NumeraI. If you've heard of NumeraI before and thought of it as an interesting experiment at the intersection of data science and crypto, it's worth updating that mental model. Over the last few years, NumeraI has quietly grown from roughly 60,000,000 in assets to over 600,000,000,000. JP Morgan has invested and secured 500,000,000 in capacity. And Numerai recently raised the series C at a $500,000,000 valuation led by top university endowments. This is no longer a toy project. It is a real institutional scale market neutral hedge
Yeah, it is good to be here.
Before we dive into the specifics of Numerai, maybe we can start with a bit of your background and you can tell us a little about your journey, what drew you towards math, machine learning and ultimately this idea of building a hedge fund that is powered by crowdsourced models.
I guess when I was eight years old, my dad gave me stock to track. I would watch the stocks move and it's very seductive. There's something very strange about finance where you can see there's all this volatility, but somehow it's very hard to do well. So you see your stock goes up 20% in a single day on a good earnings announcement, but then you look, wait, who's the best investor in the world? And, oh, their return is actually below 20% a year, Warren Buffett or something. So there's like this interesting thing. I just started thinking about it as a kid early. I decided, well, I should try t
I know you got a lot of your early start looking at things like Kaggle. You can explain what that is in a minute. And you had this inspiration from RENTECH, but the state of machine learning early on in your career, call it pre 2010 was very different than it looked today. It was, I think the word you used in our pre call was quote grim. Maybe you can share a little about like what was the state of the art of machine learning back in the 2000s? I have my own view, doing a computer science major back then, all the things we talked about is so different than we have today. What was missing? And
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