Karan Sood

[Karan Sood @soodk]

1/
The largest financial market in the world isn’t stocks or bonds.
It’s derivatives. ~$600 trillion in size as this decade began.
6x world GDP. 3x global stocks and bonds combined.

That scale exists for one reason: utility.
Utility that is finally becoming accessible beyond institutions. For the rest of us. 🧵

(@BIS_org & @IMFNews).

[Karan Sood @soodk]

1/
Wall Street and Silicon Valley are often described as opposites.

One is slow, cautious, and rule-bound. The other is fast, disruptive, and impatient.

Having built my career in both, I’ve come to a very different conclusion: They are not opposites. They are complements.

2/
In January 2021, something strange happened.

A struggling video game retailer nearly broke a hedge fund…
…and almost took down a Silicon Valley startup at the same time.

3/
On one side:

Gabe Plotkin, founder of Melvin Capital.

A career built on understanding risk.
Betting against companies he believed were overvalued.

4/
On the other:

Vlad Tenev, founder of Robinhood.

A product built to democratize markets.
Commission-free trading.
Millions of new investors entering the system.

5/
Then came GameStop.

Retail traders coordinated online.
Short interest exceeded 100% of the float.

The price exploded ~30x in weeks.

A classic short squeeze—on steroids.

6/
For Melvin Capital, it was existential.
Losses > 50%.
A multi-billion dollar rescue.

7/
For Robinhood, the risk was different.
Not market losses—
but plumbing.

Clearinghouses demanded billions in collateral overnight.

They halted trading to survive.

8/
The narrative wrote itself:

Wall Street = villains
Silicon Valley = heroes

But reality was more interesting.

9/
This wasn’t a battle of good vs bad.
It was a collision between two systems built for different kinds of risk.

10/
Silicon Valley is optimized for:

• Speed
• Iteration
• Reversible mistakes

You can ship, learn, and try again.

11/
Wall Street is optimized for:

• Resilience
• Stability
• Irreversible consequences

Capital doesn’t reboot.
Trust doesn’t reset.

12/
When those two systems intersect without understanding each other…

You get friction.
You get outrage.
You get GameStop.

13/
Seen this way, GameStop wasn’t an anomaly.

It was a stress-test.

A preview of what happens when innovation outruns infrastructure.

14/
I don’t see this as an outsider.

I started on a derivatives trading desk in New York.
Then went to @ycombinator in Silicon Valley.

I’ve lived in both worlds.

15/
My co-founder @jeffchanginvest followed the same path.

The company we founded, @VestFinancial, exists because of that journey.

Because we came to a simple realization:
These worlds aren’t opposites.
They are complements.

16/
Wall Street taught us:
• Respect for risk
• Market structure matters
• Systems may break slowly, then all at once

17/
Silicon Valley taught us:
• Start from first principles
• Build what people actually want
• Move fast—but learn faster

18/
Each of these cultures also has blind spots.

Wall Street can optimize for distribution over utility.
Silicon Valley can underestimate regulation and consequence.

19/
The real work is synthesis.

Move fast where learning is cheap.
Move carefully where mistakes are expensive.

20/
The future of investing won’t be built by choosing sides.

It will be built by people who understand:
• Technology
• Markets
• Regulation
• Human behavior

21/
Wall Street and Silicon Valley are not rivals.

They are two halves of the same system.

And the most interesting things get built at the intersection.

Full essay:
https://t.co/2SDuruNNuZ

[Karan Sood @soodk]

@joahill You have been coaching us from that front row, @joahill. Much gratitude.

[Karan Sood @soodk]

20/
This is The Great Derivatization of Investment Products.
Decades in the making. And still early.

Read more at: https://t.co/SxIlAxFsjX

[Karan Sood @soodk]

1/
The largest financial market in the world isn’t stocks or bonds.
It’s derivatives. ~$600 trillion in size as this decade began.
6x world GDP. 3x global stocks and bonds combined.

That scale exists for one reason: utility.
Utility that is finally becoming accessible beyond institutions. For the rest of us. 🧵

(@BIS_org & @IMFNews).

[Karan Sood @soodk]

19/
What excites me most isn’t the growth—it’s the direction.

Derivatives are no longer hidden scaffolding.
They’re becoming the design language of modern investing.

And access is widening.