Domeyard

PAM ALDRIDGE: My name is Pam Aldridge. I'm a partner at Domeyard currently. Domeyard is a startup based in Boston. We focus on high frequency trading.

We deploy capital in a variety of asset classes using quantitative models and low latency strategies. In a lot of high frequency firms, you definitely see a lot of computer scientists, a lot of physicists, mathematicians. Myself, I'm on the business side.

So you really get a diverse mix of all different backgrounds. It doesn't just have to be someone who studied finance or accounting. It's really all walks of life, and we actually don't require financial experience either-- so definitely a diverse group of people.

So Domeyard is a little bit different than other high frequency firms. Based off of our culture, I think first and foremost, we're a flat organization. So we try not to have any managerial titles, and we're all working together, all collaborating. Everyone feels like they have a equal voice. Also we build a lot of our technologies in-house.

So some of the other financial firms you'll see out there use a lot of third-party software. We try not to do that and like I said earlier, build as much as we can in-house. I think also our speed is definitely determinant of what makes us a little bit different. We're focused on low latency, which means you have to be extremely fast, and I think we do that really well.

So part of the reasoning behind us creating all of our technologies in-house was because of our team. We definitely have a lot of qualified individuals who can build fast technologies and do that really well. It's also very cost effective also, so we find that our operating costs are about 80% lower than other firms that we've seen just based off the fact that we're able to do most of what we do in-house. The advantages of our platform are, yes, speed but also just the human capital that we possess and the strategies that we're able to come up with. So I think it's a mix between both the quality of talent that we have at our firm and also the speed that we're able to deploy our strategies at.

MIT has been a great help in getting our business going. One of our three founding members went to university at MIT, and the other co-founder to classes at MIT also. We've been to a lot of career fairs here, and everyone at MIT has been so helpful in terms of reaching out and seeing if we need anything or if we need any connections. When we first started, we had zero connections or zero capital. And in the financial industry, that's a huge barrier to entry. So just being able to know certain people at MIT and then being able to put us in touch with some pretty important people was a great help.

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SPEAKER: So I'm Christina Qi, and I work at a company called Domeyard LP. So I actually did graduate from MIT back in 2013. And so as an introduction to the company, Domeyard is a hedge fund that is focused on high frequency trading. We are based in Boston's financial district right now, and actually we originated out of a dorm room at MIT, and also Harvard, which is why we got the name Domeyard-- MIT Dome and Harvard Yard.

So we started Domeyard at a very interesting time. It was sort of right when Flash Boys came out and your general public started learning more about what high frequency trading is. And so for us, it was great because we were able to tackle a lot of the bigger challenges that normally startup founders usually don't face until later on.

So we had to look at what are the impacts of our trades? What is the greater picture of what we're actually doing? And is it actually good for society?

So we had to really delve deep into those types of questions and figure out-- because HFT is actually a pretty broad realm. There's different types of trading you can do that are high frequency, and it's not necessarily-- some people call it front running, but they're different things. And so we had to figure out which parts of HFT are good and which parts are not so good, and just focus on the parts that are actually good for the world and continue doing that.

So far it's been good for our investors to hear us kind of talk about our approach with HFT. So they usually don't associate us with the traditional players in the realm today, which is good, and also the other factors that high frequency trading is actually still a pretty new field today. So I mean, the term, I believe, was coined around 2007, so it's still pretty new and it's in its infant stages. And so it's up to startups and smaller firms like us to kind of try and define the future of HFT and what it means to be a quantitative trader.

These days, finance is becoming more intertwined with technology, and so in most industries when you hear-- you know, there's the slogan, faster is better, in most industries. Like with your cell phones and stuff like that, to be even a millisecond or microsecond faster makes a huge difference with Google searches or other things like that. And so that's kind of the approach that we take.

We want to take more of a scientific approach to trading. So it's not as much based on rumors or gossip or things like that, or researching one specific company, but rather it's about using mathematical models, very deterministic algorithms to make our trades so that basically we're eliminating any amount of luck. You know, you can't make 20,000 lucky trades in a day, so there has to be a little bit of skill in doing that many trades every single day.

So many people, they'll ask us, well, what makes you different from all the other firms out there, especially the bigger firms with more people and many more resources, right? And so for us, the reason why we're able to get this far today, starting from a dorm room and then going from basically zero to eight digits in value within a year, was because we were able to focus on a part of the financial industry in which we would be one of the best in the world.

And so we know for a fact that we can't be the best at everything, but we do know that given our particular skill sets and our backgrounds and our experiences working at-- we've worked at Google, Apple, Microsoft, Goldman Sachs, Bain Capital-- those types of firms. Given our unique experiences in a variety of industries, we're able to focus on a particular part of HFT in which we would be one of the best in the world.

We don't get overwhelmed with too many-- there's a lot of distractions out there. There's a lot of other things that we could be doing, especially right now. There's a lot of great markets out there that we could be trading in, for instance. Everyone says, oh, you should be trading in China, for instance, because they're super volatile right now and the markets are kind of in a strange type of recession.

But for us, we try our best to focus on what we are currently doing now so that we're able to be one of the best players. And then after that we can start expanding our realm of influence, I guess.

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SPEAKER: Unlike other firms out there, we decided to build almost all of our technologies in-house. And the reason for doing so is, one, I guess most of the high frequency trading platforms out there are still brand new and not quite as developed as we'd like. And the second reason is it saves a lot of money, obviously.

And then what we've built so far has been much better than what's currently on the market today. So for instance, if something goes wrong with our platform, I'm able to go into my cell phone and literally kill all the trades that are happening right now. So it's for a variety of reasons, but obviously what's important is that we have to hire the best people in the world to do something like this. So we do hire people with very, very specific skill sets coming from, usually, major technology companies, and also people from other high frequency trading firms who have had specific experiences building order management systems or data feed handlers-- things like that.

So we co-locate our servers next to the exchanges matching engines in a variety of different locations. So you get your typical near Chicago, New Jersey, and New York, Toronto, Singapore. So a variety of locations around the world. And then we're still in the midst of co-locating as well in some other locations.

So the reason why we do that is so-- of course, the speed is really, really important. And so you get data from the exchanges at a much faster rate. And then I guess what's also important is that you have to be able to process the data really quickly, especially if you're receiving raw data. You have to be able to clean it up really fast and find signals in that data and be able to react really quickly. So just being co-located there isn't quite enough. You have to be able to internally have really solid technologies to generate great signals to trade in the marketplace.

These days, we're pretty much almost at zero. It's as fast as it's going to get. The latency is as low as it's going to get for quite a while now. And so what is important for a lot of firms today is actually being one of the smartest, as well as one of the fastest.

So you can't just have a bunch of fast strategies and win that way anymore. It's more about can you have great technologies to be fast and also be smart with a lot of things? And then there's a little bit of optimization involved because sometimes having sophisticated strategies slows down. It actually increases the latency. And so we have to be able to figure out what is the optimal-- should we be the fastest or should be less fast but a little bit more sophisticated?

And so right now we're kind of-- I mean, we're pretty much we're capable of being one of the fastest. I'll say that. But at the same time, we do focus on a lot of sophisticated strategies as well.

Optimization does change a lot, actually. In fact, we revise our strategies pretty often, I would say. So it does change depending on not just the daily market conditions, but also between different markets. So depending on where you're trading, what the rules are, what the regulations are, and also how sophisticated those exchanges are. We have to be very specific and tailor each strategy towards specific conditions that happen every day.

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CHRISTINA QI: The MIT Startup Exchange has been a huge help towards our company through different events. So they've hosted, for instance, the R&D conference where we exhibited last November, I believe. And through that event, for instance, we were able to meet a variety of potential clients, as well as people who we could potentially partner with.

And so one instance was actually for our series A that we raced a couple of years ago. The lead investor for the series A, his company is actually an MIT ILP member. And so what are the chances, right? And we actually met through the MIT community, which is really cool. And he had graduated from MIT 30, 40 years ago maybe.

But it's just awesome that groups like this are able to connect entrepreneurs today with people who were entrepreneurs maybe 30, 40 years ago. And for that person who invested in our series A, he had started his hedge fund from scratch a long time ago. And someone had helped him out. And so it was almost like he was giving back by helping us out in return. So we really appreciated pretty much everything that the MIT community has done for us.

For us, we are interested in finding individuals and companies who we could partner with in the future, whether that's related to high frequency trading or related to the future of the financial industry. We'd love to open a dialogue with people who are interested and just discuss. And so you're definitely-- anyone is welcome to visit our website and also connect with us through LinkedIn or other social media networks. And we'll be in touch.

We started out from a dorm room at MIT and also over at Harvard. And we were really fortunate in that we grew from zero to eight digits in less than a year in terms of our value. And we actually started off with nothing.

So most companies who start these hedge funds, usually they branch off of a really large firm. And they have all these resources and connections and money. But we actually had none of them at the beginning. So we got very lucky and were able to utilize a lot of the resources that we did have to try and establish ourselves at the very beginning.

And so we actually closed multiple rounds of funding within 18 months of incorporation. The most recent round was a series B. It was closed last year, so in 2014 at some point.

And let's see. And then now, today, our investors, they include a variety of different people in the financial and tech world. So, for instance, one of the CEOs of the largest quant funds in the world today is one of our clients as well as, let's see, a CEO of a global consulting firm, one of the biggest fintech investors in the world, some of the pioneers of China's internet industry as well.

And, unfortunately, I can't mention any names. But you can kind of get a sense of who these people are. And so we've been really fortunate in terms of the funding. And I think, today, we're just looking to establish more of these types of connections.

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SPEAKER: Domeyard is unique in that we have a flat managerial structure. So what that means is that all of our full time employees-- as of today, their titles are just partner. So we have 50-year-old partners and we have partners who are 25 years old.

And what's great is that, for instance, the founders sit next to the interns. We have a very open office space. And the goal is so that everyone can contribute their ideas openly, regardless of age or experience or their prior background.

We were inspired by a variety of different startups that kind of have a more, I guess, flatter culture, and the reason why is because in finance today, most financial firms are as hierarchical as it gets. So they're very top down organizations in which a lot of the decisions come from management. But in our organization, we realize that everyone plays a critical role.

In fact, we've hired a lot of people who are much more experienced and much-- just incredibly brilliant at what they do. And so it's only fair that they're able to-- that their ideas are valued just as much as those of the ideas of the founders and the ideas of the other people who joined before them. So that's the reason why.

And because of this structure, we're able to attract a lot of employees who normally wouldn't start off at-- normally wouldn't transition from tech to finance, for instance, because if they were going into finance they would be an analyst or an associate, whereas here they would be called a partner and we would treat them very, very nicely so-- [LAUGHS]

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