My guest this week is Brad Katsuyama, the founder of the IEX exchange and protagonist of Michael Lewis’s famous book Flash Boys, which chronicled the role of high frequency trading in markets. This conversation was yet another reminder of how complicated markets can be, and that very few participants know all aspects of the process well. Brad and I get deep into the history behind his company, and the ways in which markets and exchanges have evolved, better or worse. One of my favorite parts of this conversation was our exploration of entrepreneurship. Brad’s whole story is one that entrepreneurs will appreciate, and is full of lessons for those aspiring to start their own business. Please enjoy my conversation with Brad Katsuyama For more episodes go to InvestorFieldGuide.com/podcast. To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag Books Referenced Flash Boys: A Wall Street Revolt Show Notes 2:10 – (First Question) Brad’s original discovery of a latency problem in trading stocks 12:51 – how the business model of the NASDAQ and exchanges and how it may surprise people 14:16 – The edge that exchanges are now monetizing 16:46 – How Brad went from finding a solution to his current firm 20:18 – Types of high frequency traders that there are 24:33 – The formation of IEX 27:56 – Funding IEX 30:48 – What happens to the initial funding 32:30 – Describe what IEX is as it was sold to early buy side investors 34:31 – Explaining the concept of a speedbump 38:18 – Pitching companies so they will be listed on their index 40:37 – Explains maker-taker fees 44:47 – The sources of revenue for IEX vs traditional exchanges 46:53 – Most memorable meeting Brad has had in establishing IEX 49:39 – How did he do this with young kids? 52:38 – Has the pool of potential profits that high-frequency trading firms can earn gone down 53:53 – What has Brad most excited about the future in terms of helping the buyside 55:17 – What was it like to see Brad’s venture get turned into a best-selling book. (Flash Boys: A Wall Street Revolt) 59:00 – Biggest thing that Brad has learned 1:00:56 – What would Brad do if he couldn’t work in the investing world. 1:02:25 - Kindest thing anyone has done for Brad Learn More For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag

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“What did the council decide on item 42?” — answered with the speaker and the moment.