Elliot Moss
That was Nat King Cole with Let There Be Love. Good morning this is Jazz Shapers here on Jazz FM. I am Elliot Moss, thank you very much for joining me. Jazz Shapers is the place where you can hear the very best of the people who are shaping the world of jazz, blues and soul and right alongside them every week I very luckily and craftily bring along someone who is shaping the world of business; we call them Business Shapers. I am really pleased to say my Business Shaper today is Jason Trost and Jason is the founder and CEO of Smarkets and they are a betting exchange and very clever too because you can bet against other people. That’s the key thing you are going to find out about very shortly. In addition to hearing from Jason you will also be hearing from our programme partners at Mishcon de Reya some words of advice for your business and then we’ve got the music and it’s a great mix today from the shapers of jazz, blues and soul; the one and only Dave Brubeck is there, Sarah McKenzie is too and so is this from the late, great Hugh Masekela.
Hugh Masekela with Grazing in the Grass. Jason Trost is my Business Shaper here on Jazz Shapers. He is the founder and CEO of Smarkets and as I said, they are a better exchange, you get to bet against other people, the odds keep changing based on all sorts of stuff. Before we go any further I think we need an explanation. Jason thank you firstly for joining me. Tell me in your own words what Smarkets is for those people who won’t have a clue?
Jason Trost
Okay, well first of all thank you for having me, it’s great to be here. Smarkets is a place where people can bet against each other. So it’s interesting because in any marketplace it generally drives the price down so if you think about going to a sole trader versus a marketplace if you think Ebay versus the Mall, usually you will get a much better deal with Ebay. The same is true in betting so we have market forces at place. You have people placing bets for something, people placing bets against something and ultimately the customer gets a better value. So that’s essentially what we do, we bring buyers and sellers of bets together and let the consumer place bets as they wish.
Elliot Moss
And for those people who are very sharp they will notice that you are definitely not from here, probably from North America, probably from America?
Jason Trost
I am a proud North American, the Southern part of North America. I am from America.
Elliot Moss
You are from America. How come you ended up setting up a business here and this business I believe is now going into its tenth year, is that right?
Jason Trost
Yes, it’s been quite a journey. The short answer is my co-founder was based here so my co-founder is one of my best friends from University, I went to North Western in Evanston in Illinois, and my co-founder was in London and said, ‘betting’s blowing up over here but the technology is not very good’ so I quit my job in New York City and moved over.
Elliot Moss
And you’ve done some interesting things. I mean this is, you know, as you look back our wonderful researchers that help me with these things, but there’s a pattern that emerges. You’ve been in the world of finance, you were in the world of private equity, you were in the global asset management division at UBS, you’ve been designing and implementing software, all sorts of stuff and it strikes me that if you hadn’t done all those things you would never have been able to get Smarkets off the ground? Is that probably true?
Jason Trost
Yeah it’s… my background is interesting in the sense that it wasn’t very prescriptive so all the jobs I had I kind of… they were opportunistic jobs and I didn’t set out you know when I was in high school, I didn’t grow up thinking I wanted to be in finance. When I started my university I thought I wanted to be a doctor but during university I didn’t like the science classes very much and ended up falling into computer science. When I graduated with my Degree in computer science I sort of had an inkling to do finance because when I was a kid I was a trader, I was a… we were very early users of prodigy. Prodigy was a pre-curser to the AOL world and one of the cool things about prodigy and this is when I was in fourth grade, probably late…
Elliot Moss
Fourth grade is… how old were you?
Jason Trost
I am like eight, nine I think.
Elliot Moss
Okay.
Jason Trost
Late 80s I would be placing trade, you know for a hundred bucks or something. Nothing substantial but I always liked the idea of like trying buying and selling of stocks and so when I graduated from university I became a trader. And that’s what kind of set me down this world of finance. I didn’t… I had no ambition to be in finance as such.
Elliot Moss
Stay with me to hear how the story unfolds for Jason Trost, my Business Shaper; he is the co-founder and CEO at Smarkets. Time for some more music, this is Astrud Gilberto with Take Me To Aruanda.
That was Astrud Gilberto with Take Me To Aruanda. Jason Trost is my Business Shaper today, co-founder of Smarkets, they are the betting exchange which means you can bet against other people if that’s the sort of thing that you like doing. Jason, so you started trading at the age of eight or nine, I sort of listened to that and go ‘oh that’s completely normal’ obviously I am talking here to a completely average young man in front of me. That then evolves into as you said, getting into the world of finance. The idea for this business though, tell me a little bit about how that came about because it sounded like that was a slight left and a right rather than a linear path?
Jason Trost
Yes so I had no interest in betting whatsoever. It is largely illegal in the United States so you know, I never did it as a kid or never did it as an adult either for that matter. What really got me into this space was I was and still am very much into politics. I follow political news like crazy, you know, mainly American political news but I am also…
Elliot Moss
There’s not much going on at the moment, you must be really bored. I mean I think we need to invent some news.
Jason Trost
I am obsessed with Brexit so I know all the Brexit gossip.
Elliot Moss
And we are not obsessed with Trump at all either. I mean there is nothing interesting either side of the pond really.
Jason Trost
Donald Trump is that…
Elliot Moss
So sorry, you are absolutely a fan of politics?
Jason Trost
Yeah so I am a huge vociferous reader of political news and then being a trader I came across this website that let you trade the outcome of the President election. This is back in 2004 and this, you know, I was and before all this as soon as I saw it I thought it was the coolest thing I had ever seen where you can combine electronic trading, you know when I was a trader I traded these stocks that I knew nothing about you know, some logging company in Oregon. When I was trading I was obsessed with the numbers, you know, is it going to go up, is it going to go down, who’s buying, who’s selling, but I didn’t care too much about the underlying asset that I was trading but after I saw this website I realised you could trade the outcome of events and indeed outcome of events that I cared about so not only could you have the electronic, the fun of the electronic trading but you could participate in something that you might have an opinion about, or care about. And that’s kind of… that’s what got me down this path towards sports betting. So the key interest was political betting and I still am keenly, keenly interested in political betting but the reason we do sports betting is because that’s the biggest application of event trading but Smarkets really at its core were trying to become an event trading platform so you could think of London Soccer Exchange for trading events or Nazec for trading events not Ladbrokes 2.0 or Bet365 2.0, we view ourselves like a financial exchange that has future events.
Elliot Moss
Now to create this kind of exchange, to build a business and now you have quite a few people working for you in different countries, who speak different languages and so on and so forth, that takes a bit of doing to go from the idea and many of us have good ideas. How did you get it over the line, the start line that is?
Jason Trost
The short answer is lots and lots and lots and lots of hard work and time and you know, it was, I think for Smarkets as you said, is on year ten right now and for this first seven years it was lots of graft and so I think, I think a lot of times people, founders of companies but I think the short truth is that often times founders are crazy people and I had this crazy idea that event trading should be very big in the future and that traditional sports betting companies are doing it wrong so most traditional sports betting companies are entertainment companies and I think of what we do as finance. And so this combination of sports betting is a massive market it’s… the traditional incumbents treat it like entertainment and betting on events is very important and so I was so obsessed with that idea that it, it pushed me to go through all the hard times. Of which there were a lot of hard times.
Elliot Moss
Stay with me to find out much more about the graft that Jason refers to, that’s Jason Trost, my co-founder and Business Shaper today; co-founder of Smarkets that is. That’s coming up in a couple of minutes but before that some words of advice for your business from our programme partners at Mishcon de Reya.
You are listening to Jazz Shapers here in 2018. I think we are in year seven, started up back in 2012 and going great guns I think. I am very lucky I get to meet people who are shaping the world of business who founders of businesses and if you have missed any of the previous shows go into iTunes, put in the words ‘Jazz’ and ‘Shapers’ you can find us there. Or if you are flying with British Airways in the near future, that’s another destination for you. Jason Trost is my Business Shaper today; he is co-founder and CEO of Smarkets, they are a betting exchange and Jason we were talking about the eight or nine year old that was into trading, you then move and you do various interesting jobs in finance, no surprise there in a way and then you have this little epiphany and its about events and its about politics and yes the application is big in terms of other places but in reality the nub of the thought comes from ‘wouldn’t it be great to kind of have a position on whether X President or X Person is going to win the presidency or not’. Those, you mention it was hard graft, were there any times in those early years when you just thought ‘this is not worth it, I am doing’?
Jason Trost
Very many times yeah.
Elliot Moss
And what kept you going then if that was the case?
Jason Trost
Well you know, I don’t want to over simplify it but I think it’s that kind of craziness that kind of single mindedness that kind of keeps you going. It’s that idea of you know, I was right at the beginning, I am still right now, do I have the energy and the time and the money to make it through to the other side but I was always convinced there was another side. I knew that you know, there’s the laws of gravity that can prohibit you from getting to the other side but for, for all sorts of reasons I, I kept pushing.
Elliot Moss
And where do you think that grit has come from? Is this anything to do with your upbringing in particular or did you have an easy time because sometimes people tell me ‘there was great adversity, I had this relationship with so and so’ and other times it’s just like ‘nope it’s totally inherent.
Jason Trost
I don’t know, I would like to think I learned a lot of lessons from wrestling. Wrestling was my main sport as a kid, I was captain of the high school wrestling team but I was never a natural…
Elliot Moss
I’ve got to be nice to you is what you are saying otherwise we could end up… there could be a kerfuffle.
Jason Trost
All wrestlers are nice people. My brother was the one that got the athletic gene but I got the kind of the, the competitive gene and so, so my main sport was wrestling and it’s, it’s much bigger in the United States than it is in the UK but wrestling is a very, very tough sport. It’s not like basketball or football or even, you know, American football or soccer. It’s a competitive sport, you get your head pushed into the mat, you know, it’s… there’s so much pain involved in wrestling and I think a lot of my lessons that taught me lessons of adversity, pushing through, I got my butt kicked in front of all my friends and family many, many times and it kind of teaches you toughness in a way that other sports don’t teach you I think.
Elliot Moss
And in terms of the way you hire people. Are you looking for people in your image or are you saying…
Jason Trost
I wrestle them.
Elliot Moss
You wrestle them, you say, ‘listen the interview is going to take a slightly strange turn here, we are actually, here’s a mat, here’s your kit…’
Jason Trost
I want to see how tough you are. I am going to push your head into the mat and we are going to see how you respond.
Elliot Moss
This is the secret you see, this is the thing you have never exposed before but now you are right here doing it for me. But seriously those people, is there that grit that you look for regardless of technical competence regardless of intellect?
Jason Trost
No I don’t because I don’t think you want that many gritty people in the company. I want intellectually curious people. The personality type that I want the most is that person that when they discover a problem that they don’t know anything about, they don’t stop and they keep going until they learn how to do it. So a lot of times in technology there is a new language or technique that you don’t know and I want to hire the people that teach themselves these things. So we just did a big sponsorship at the Jockey Club. I have a guy running you know, half a million dollar sponsorship, half a million pound sponsorship that has no experience doing sponsorships and he is probably scared about that chance because he is thinking ‘I don’t have any experience doing this’ and… but what I like people to do is just jump into it, wrap your arms around it and learn as much as you can about that. So that’s the personality type I look for the most.
Elliot Moss
And in terms of those people, how would they talk about you if you are a fan of intellectual curiosity and as you said, you like the mixture. What are they going to say about Jason the leader?
Jason Trost
Well I think they know I am tough, I think they know I can be hard on people but they also know I am humane about it. You know, I don’t, I don’t have an expectation that people won’t make mistakes. I try to push people hard so they know I am competitive but I think they think I am competitive but fair.
Elliot Moss
Stay with me for my competitive but fair and I am saying nice things here because he’s a wrestler and I don’t want to get on the wrong side of Jason. That’s Jason Trost my Business Shaper today, co-founder, as I said earlier and CEO of Smarkets. Time for some more music, it is Mr Dave Brubeck as promised with Unsquare Dance.
That was Dave Brubeck with Unsquare Dance. I am with Jason Trost my Business Shaper today and we have been talking about people and have been talking about team. You’ve grown your team dramatically, you’ve taken investment, the business has changed – it is no longer the brainchild of the twenty seven or whatever how old you were at the time that you did it – it’s mature business now, does it require you to behave differently or is it just in the natural course of time you know what you are doing?
Jason Trost
Absolutely, I am constantly trying to change the type of leader I am. I would say you know, up until fifty people I was quite directly involved with everybody.
Elliot Moss
Now how many is it?
Jason Trost
We are about a hundred and five now. Give or take.
Elliot Moss
And split locations as well?
Jason Trost
Yeah so we have three offices in Los Angeles, London and Malta. You know just like everybody needs to evolve their own career and learn new skills, I have to learn new skills as the CEO so I am spending a lot more time working on trying to teach the next generation of leaders with Smarkets so that’s been a big thing that I have been trying to do internally. So trying to find those engineers or those business people that have potential leadership skills and kind of work with them to teach them the skills that I know and I am trying to figure out how to go from a hundred person business to a thousand person business which obviously has lots of challenges but the nuts and bolts of it I have never done that before so I have to learn what’s required to grow the business as well.
Elliot Moss
I imagine you’ve learned a little bit along the way from the people that have invested in your business and I know that you’ve got some interesting investors, I mean, Passion Capital is in there, Deutsche Telekom, Venture Funds – these are big well known investors in your world. Passion Capital is backed by Eileen Burbidge, you know, there is real gravitas to these people. Do they help you? Or is it…
Jason Trost
Absolutely.
Elliot Moss
I mean they are not just passive investors I imagine?
Jason Trost
No Passion in particular, they are all start up people so the three of them, Robert, Eileen and Stefan, they all have a very good start up background so Robert is on our Board and he used to work at QXL which was a public list company and has tonnes of experience, he was CFO for them. Eileen was an early Ebay and Apple employee and Stefan was involved with Last.fm and Ricardo which was an online auction site similar to Ebay and so all three of them have been amazing entrepreneur experience and have been very helpful along the way.
Elliot Moss
What’s been the most important thing that they have given you do you think in the time that they have been involved with the business?
Jason Trost
Well because they all have start up experience they gave me license to make mistakes and so there were many, many dark years in the Smarkets history, you know, we didn’t have very much revenue, we were seven employees, we were struggling, we were going up against big, well-funded competitors and they never panicked you know, even when things were really bad, they never panicked and they would say ‘it’s okay, this is part of start-up life’ and they were very supportive with that.
Elliot Moss
Stay with me for my final chat with Jason today. Plus we will be playing a track from the vocalist Sarah McKenzie. That’s coming up in just a moment.
The lovely voice of Sarah McKenzie with One Jealous Moon. I have Jason Trost with me just for a few more minutes and I am going to try and use them really smartly. Jason you talk about the business growth and you talk about the bumps and all that stuff. Is the money important to you in all this? I mean your revenues are looking good, they are much better than they were obviously a few years ago but does the revenue bother you? Does your personal wealth bother you? I mean these things are important but how important are they to you?
Jason Trost
Yeah I mean I would be lying if I said you know the money doesn’t have some importance because you know, it enables you to do things but in that vein the money is more important because it enables you to build a meaningful business and so the fact that we have been so profitable the last few years has given us a pool of cash that I can invest to help bring this idea of event markets to the main stream and so the success in the business is more important because it enables us to get to the next level.
Elliot Moss
And you personally, is your journey about just making this, as you said, a thousand people, a hundred people, a X hundred million pound business or a unicorn or whatever you want to be or is it about stopping at a certain point? When you feel comfortable that you’ve, you know, done enough?
Jason Trost
No I am extremely ambitious and I want to you know, I think the challenge of working on a globally interesting adventurous tech company is such a big opportunity for myself and for Smarkets that I want to get into other industries, I don’t want to just do betting or event trading, I want to do other industries within Smarkets and so I am really excited to… after we start to make bigger inroads into betting, to start looking at another industry.
Elliot Moss
Like what for example?
Jason Trost
Like fintech in general, so insurance or something I’ve been thinking a lot about and there is a lot of similarities between sports betting and insurance, you might not think that but they are both binary options at the end of the day. Traditional banking, other traditional finance… some areas like that.
Elliot Moss
Well watch this space then. It’s been really nice talking to you, thank you.
Jason Trost
Thank you very much.
Elliot Moss
Thank you for not putting me in a headlock, that’s always appreciated right from the get go because you know, you look quite stocky over there. Might give me a run for my money. Just before I let you go Jason, what’s your song choice and why have you chosen it?
Jason Trost
My song choice is Rose Rouge by Santroman. I don’t know if this is on your notes but I used to be a disc jockey.
Elliot Moss
I didn’t know that.
Jason Trost
At university and this is the song that I used for my outro song.
Elliot Moss
People will suffer. I wasn’t informed. How old were you when you were…
Jason Trost
In Uryonn in Chicago.
Elliot Moss
Oh go on give me… how did you introduce the programme. Let’s here that?
Jason Trost
I don’t, to be honest, I can’t remember but this was my outro song and I had a political talk show at 1.00am on Tuesdays.
Elliot Moss
The four people that listened were very grateful to you.
Jason Trost
Yes I had a call in show and I had some nutters call in, it was good fun.
Elliot Moss
So this is the outro.
Jason Trost
Yes.
Elliot Moss
So we are going back in time. Here it is for you. Thank you Jason.
Jason Trost
Thank you.
That was Rose Rouge from Santroman; the song choice of my Business Shaper today Jason Trost. We found out he was a DJ amongst other things. Loving people with intellectual curiosity, important to him. Competitive nature which started when he was a wrestler way back when in America and that belief as an optimist that he always thought that there was light at the end of the tunnel. Really, really good stuff. Stay with us here on Jazz FM because there is lots more jazz, soul and blues right through the day.