PEAK6's Jenny Just and Matt Hulsizer on 28+ years without a losing year, the Apex FinTech turnaround, and their new startup incubator

agents can now create and modify your Figma files with design system context in beta starting today. And our next guests are live here with us in the TBP Ultradome. Thank you so much for taking the time to join us. How are you doing? Please uh since this is your first time in the show, introduce yourself for everyone.

I am Jenny Jess, co-founder of Peak Six.

Yes. And I'm Matt Holizer. um Jenny's husband and also co-founder.

Fantastic. Take us back in time. I want to hear the founding story.

Founding story. Start.

Um we both grew up on the option trading floor, Chicago and New York.

And we were at an sort of an infamous options trading firm called Okconor Associates.

You were both at the same firm.

We were both at the same different cities. Yeah. So super lucky to be trained there. when they did their merger acquisition UBS.

Who was in Chicago?

I was.

Did you ever go to Series?

Oh, of course. Series is amazing. Yeah. Anyway, it's a bar.

Be kind of modern these days.

Oh, yeah. I worked at Citadel in college and that was the place where we'd go and hang out and they'd uh give you you'd order like a like a a rum and coke and it would just be a full glass. It was crazy. That's right.

A really good greasy sandwich to go with it. Yeah. Really good. Good fries.

Okay. So, you're in Chicago?

Yeah. So, we're in Chicago. Um we decide we started working together.

Yeah.

Um

what were you trading at the time?

Equity options. Both of us were

Equity Options.

Yeah. And then when they did the original Swiss Bank joint venture, we were part of the team that went to start the OTC.

Okay.

Derivative Desk. So there was just three of us. Um there's a gentleman from Goldman who came in. And so we're like, "Oh, this is cool. We're in our mid20s starting a business, you know, an entrepreneur." And when things started going really well and then UBS came in and they were moving to the East Coast,

we're like, well, we're not moving. He had actually just come from New York.

Yeah.

And my family's in the Midwest, so we're like, we're just we'll just do that thing again. Yeah.

So that thing was to partner with a bank. That was our plan A.

And

do over over-the-c counter derivatives.

Okay. weeds 28 and a half years later. We've still never done it,

but we did invest really early in tech and education. And so we c we created a proprietary options trading firm. Okay. Which is

28 and a half years old that has never had a losing year. Wow.

And it allowed us to self-fund Yeah.

all the things we've done since then.

And what's the secret to such an incredible run with no losing years? Is that risk management? Is that the particular uh strategy? Like how how does that come together? because I can't think of another investor who's ever done that.

It's unusual for sure. But

it's a secret.

Well, I think it tends to be about like our approach. Our approach was not to be smarter with our our algorithms. It was smarter with our business model. So, there are plenty of businesses that haven't had losing years in the last 29 years. tend to be technology firms

that are basically providing a service into the market which is the approach that we I mean we we

we talked about ourselves as uh

Wendy's or Walmart, Walgreens, right? We're merchandisers. We carry inventory and then deliver it to customers. We're not trying to take the the we're not disagreeing with customers. We're we're providing a service. Mhm. And then on the investment side, what is out further on the risk curve for you?

I mean, I think we've lost money in more ways than anyone you've ever had on this show.

Well, uh, collectively,

what is the nature of a of a of an investment that doesn't pan out? Is it just it's high risk and you know that going in or Yeah.

Yeah. Well, there's a wide range. Obviously, in our trading business, it's really systematic. Um, we have an amazing team. and we educate kids right out of school into our model. It's really rare that they would leave and be able to do the same thing because it is about the collective.

Um but interesting but we started a whole bunch of other businesses of course. So

Peak Six today based on what Eric was saying in your previous interview, it's a company of companies. Okay. So we have started or bought and turned around 15ish companies at this point

and primarily in the backend technology space in fintech definitely in insure techch which is relatively new to us and edutch. So um those are the biggest risks we're taking and then fast forward as we built those businesses over the years we started uh an investing side of the business which is quite large

because it's all AI stuff now

and we started early enough so it grew really fast. We have some doozies. I mean, I

I don't want to dwell on it.

Yeah. No, we'll refer we're this is this is a call back to your previous uh

person in 2008. We had uh it was a good year for us. Not because we were smart and short the market.

Yeah.

Jenny was like, "Things are confusing. We should be in cash." And we were. So, I was lucky.

Well, she was right. Like the market goes crazy and then we have a lot of cash. Everybody starts knocking on your door in the fall. And she's like, "Well, why don't we do something good for humanity? will do electric vehicles.

Sure.

So, we are early.

Yeah.

So, we interview two different people at the time.

We're not investors at this point. We are traders. So, it's two different things. We are operators. I still don't know if we're in. We're just knuckleheads.

Yeah.

Okay.

We get two people.

We're going to interview the two companies at the time. Yeah. One is this PayPal guy who's trying to do it and the other is the guy who was the chief architect at BMW.

Yeah. The PayPal guy gets on the co on a call with us

with you.

With me,

just to be clear, the guy from this see where this is going.

Yes, you know where it's going.

I mean, if he's listen if he listens to this, he'll I don't know if he'll remember cuz I think he was stoned out of his mind. Okay.

It was the worst presentation I've ever heard.

Like this guy's never going to build a car.

It wasn't about cars. It was about It was about the the train.

He was talking about trains. trains from like electromagnetic trains also be useful. I was like,

"What the hell are we talking about?"

This is supposed to be a business investment. I want to hear the business pitch.

And the other person comes in buttoned up, right? German engineer.

Yep.

Amazing.

I've built these my entire career.

100%. We go with that person. And then 9 months later,

we find out that the one we invested in, when it rains, the cars catch on fire and explode.

Crazy.

Not a good one. Yeah, that's not a good bad downside. Yeah.

Yeah, that makes a lot of sense. I think a lot of investors have had to really come around to the the the other pattern of thinking. I know that's right some investors that uh I mean even on the other side I know I know an investor that passed on Tesla

but not uh but not because Elon was thinking too futuristic uh he was thinking well all the cars are going to be self-driving and no one's going to need a car anymore so if this guy's just building cars why should I invest in this and uh and of course the it was Tesla was going to be the one to do that but that was too hard to predict and it just gets very very hard when you think that far out so walk me through a deal that is in the wheelhouse house. Um, what's the structure? Are you looking for a particular vintage, an age, a size of like, you know, meat on the bones of the company? Um, and then what are you looking to do? Because there's when when you come into a new company, you can be transforming the business with AI. You can be uh focused on cost reduction, back office rationalization. Like there's so many different techniques that you can use to drive value.

Yeah. I'll I'll start maybe I'll start with peak six trials. So at its core, we're entrepreneurs, right? That's what we do. So we're comfortable with that risk. Ironically, it doesn't make us super comfortable doing venture because yeah, we're not doing it. Yeah. So we have to find really special people. We've been lucky in the universe of Peak Six to have some of those special people along the way. We just started something called Peak Six Trials, which is an think about entrepreneurship and residents.

We have

it's you know like previous accelerators

except for that we have the capital. It's already there. We have the resources, the tech resources for example, legal compliance, whatever it is already there.

And then we also have the customers. Yeah. Because of Apex FinTech solutions. So that's our back-end tech

powers. Got it.

40 million customers today. So end consumers were B2B.

Yeah.

So there's a unique opportunity for fintech and techch type of

young entrepreneurs who want to do something. That's how we want to make those bets.

Um that will go into our operating company. sure

scenario and then I know you want to talk about the investment side where we take what kind of what kind of investments we're looking for.

Yeah, sure.

Or even just the story of Apex. I'd love to know like how how that came into the portfolio, what the process was like. That's I can tell it's already going to be a good story.

Yeah. Uh so there was a public company called Pensson. Yeah.

We owned and operated a brokerage called Options House at the time. predates Wealthfront Betterment and Robin Hood, etc.

And that business custody, kept the assets right at at Pensson along with a million other customers, retail customers. Um,

so we're in 2012 at this point.

Yes. And we get a call from the CEO of the bank. This is the bank that holds our money. Calls on a Friday. He's like, "Hey, um, you guys have some money and could you lend us some money for a little bit?"

It would help us a lot.

Sure.

I'm like, "Let me think about I got to talk to Jenny."

Yeah.

She's like, "We got to That's not a good sign." Just

for your for your listeners or watch your viewers, if your bank calls you and asks to borrow more money, like that's trouble.

Yeah.

So, s uh Monday morning, we get a call from the SEC There's fraud, announced fraud at the uh at the clearing firm.

Wow.

And we want you to put $70 million into the business by Friday.

Wow.

Or we're going to liquidate everybody.

And that's everybody in the market. So, think pregeneration Robin Hood for context. All those names out there, those middle tier names besides the big names. Yeah. Options. Our firm was one of them. Sure.

They're all going to go.

Yeah.

So, 13 days later, we bought it.

Amazing.

Yeah. Announced fraud and all. That's wild. Yeah. Yeah. I've heard a number of these stories of like turning around a company when there is fraud. I mean Strauss Zelnik sort of did this with Take Two is a fantastic turnaround of that business. Uh it feels like an incredible cultural challenge to actually not just clean up the legal documents and make this SEC happy with whatever happened. It's actually a cultural problem sometimes that led the company down that path. That's right.

Uh how are you thinking about cultural development generally? I feel like when I when I dig into different funds, there's fascinatingly different approaches. You know, the the the Ray Dalia is recording everything. There's like so many different But you mentioned that like when you train a new grad, they come out with skills that are uniquely uh just uh synergistic with the rest of the firm. And so, how do you think about uh the cultural values that you want to instill in the next generation? they are um they are critical

really difficult in times of COVID and changing work from home and all those things and as we continue to build new companies right so

um

you know at our firm that's over 28 years old they are ingrained it is um

a sense of urgency it's a work ethic like it's it's just high and even when the market is telling you you know we ought to be different or nicer or something like people are so engaged It's it's really fun to be in the markets. So, it makes that easy.

Um it's fun to be part of an entrepreneurial culture. Yeah. So, that makes that easy. So, how do I

And if you don't fit it actually they weed out pretty quickly. We've had that benefit over the years. But every time we take on a new company, uh it is it is a challenge for us to try and integrate or have them stand in their own culture, which is also fine with us, right? So if we we sit at the top and we have CEOs of each of these businesses, they are dependent quite a bit on the the peak six core because it's it's facilitating the financial stuff. It's facilitating the HR stuff.

And if they want to sort of ignore that and not join the club,

it's it's it's a hard road because we've figured out such a rhythm. When you get in the rhythm, it makes each the acceleration go so much faster. The leverage we get with our people, with the culture is just really exponential.

Yeah. Some people refer to it as like you stress, the good type of stress. Like it's a stressful scenario, but it gives you energy. It doesn't actually drain you. And I feel like if people get, you know, the runner's high. So running is very stressful for some people, but for some people it's it's invigorating. Uh, and I feel like if if you know being in the market at a tumultuous time gives you more energy during that day, uh, that's something where you'll probably thrive.

Yeah, I was going to say taking risk. Yeah. Right. Starting as traders and becoming operators and then investors like at its core that that that trading that heart and soul of trading and taking risk every day, all day, getting used to it, that isn't in everybody's DNA.

Um,

it is part of the reason why we like poker so much. We're trying trying to teach a million girls and women to play poker solely to get these male-dominated areas for the women to feel more welcome. But you have to be able to take that risk every day.

And that and the organization thrives on it. Yeah. Right. It's a little scary.

I know like 10 amazing female venture investors and they're all incredible poker players. Never sit down with them. They would absolutely smoke me.

Well, the funny thing is I didn't play all these years. Yeah. When I started to play in 2019, it was a conversation we had. It was about our daughter, etc. But I realized I was like, "Wait, I've been playing poker my whole career." Sure. I just didn't know it.

Yeah.

It's the closest thing I'd ever seen to options trading. Yeah.

So I was like, "Wait, is this what's missing?" Because if we get who cares how

people come into the puzzle, what the more differentiated their backgrounds are for us, right? If you look at 1997 and

he and I were partners. That's what, by the way, we weren't married at the time. We were together 10 years before we did. go making that decision. That was a highly unusual decision to me.

Chased me.

I love it. I love it.

You wish.

Uh, what are you looking for in a CEO? If I want to come work for you and and work for one of your portfolio companies, what does it take to make it as a CEO?

I don't think there's any like there's no one thing. There's no prescriptive formula. The number one thing we've learned because we've look we've dealt with thousands of employees, CEOs, etc. invested in I don't know hundreds not thousands of businesses.

Yeah.

Self-awareness is probably the most important thing because what's going to it can get you in trouble if you think you're really smart like you

you better be really smart. What's p poker teaches you a lot of that. That's a good call back there for you. the uh

the

self-awareness like you control effort, you control attitude. Those two things you really do control like so hard work, right? You're going to be positive optimist

but awareness like like hey we're the best.

Yeah.

You know, by the way, these other people aren't that good. Like you should think about it like constantly questioning where you're at and being humble.

Yeah. Is is is self-awareness around intelligence uh the main uh flaw for CEOs or or are there CEOs that are overconfident in their deal making ability and their emotional intelligence and their managerial ability and their ability to public speak and do there's so many different things. The CEO is a bundle of traits. I I I feel like intelligence is obviously super important and making good strategic decisions, executing, but there's so much else that goes into actually running a company.

I wouldn't say I would not say lack of confidence is not necessarily an an issue. Yeah. Overconfidence is disaster.

Interesting. Interesting.

You get yourself in a lot of trouble because you know for sure that this is going to happen. And when it doesn't,

you you're in a you're in a world of hurt that happens. So, so what are the signs that you're looking for to sus out if someone is self-actualized in that way? Aware of their their flaws, aware of their strengths, their weaknesses. How are you interrogating that in an interview?

We hate interviews.

Okay. How do you recruit that?

Um, it's hard. It's hard. We've actually tried to build tech over the years. We've done all different things to try and figure it out. um we try and have without being inefficient as long of a process as we can

um to see somebody. So if we can

okay

get a student in December

for two two weeks during their break and see them or we have a women's trading experience that's eight weeks in the summer. Anytime we get

an extension of time if we can I mean the CEOs is is the hardest. We they often come from within for us.

Sure.

Now some of our CEOs did not. Yeah. Um but it is what our hit ratio I think on just cold interview making it right I think is really hard. So then of course it's connections and recommendations and all those things because you don't know all of the different pieces of the puzzle.

I think people get snowed all the time.

Yeah. Do you have a a bright line between uh deal team, operating team like those who evaluate a great company to join the portfolio versus those who will be going and operating the businesses?

We have a very very small evaluating team.

Okay.

Like this is the thing.

Okay.

No, we have some really smart there's some lawyers and some analysts in there. Yeah.

But um at the end of the day, so we don't have outside money.

Sure. So it's it's ours and then our part our employees who have become partners over the years. So that's who we're investing on behalf

and um so but we are looking for any guidance. We are just we know we're not the smartest, right? That's what trading does for you. It humbles you really quickly. So

how do we connect? How do we partner with great people on the outside and then with the best people internally to make a decision? But we're also willing we're willing to take probably more risk on average I would say with some of these investments. I mean, we're not, you know, on the energy side or on the power side or on that that that infrastructure side for us is new and but we started early and we try and get smart and try and be surrounded by

I want to get to energy. That sounds fascinating. I want to first ask about sourcing. Are are you close with a lot of investment banks or are you cold calling people saying I want to buy the company like if you're into the deal team? Uh where are the ideas coming from? Mhm.

Yeah. I'd say the good ones come from interpersonal

relations. Sure.

Which is why like in the age of AI and everything's going to be automated, everything like this really matters. Showing up in a studio, we're you'll hopefully send us, you know, you'll say, "Hey, I have an idea for you guys."

That's what And vice versa, huh?

Yeah. Of course. Of course.

That I would say that's 99% of our

99% of it. And but it's worked pretty well.

That's so interesting. I mean, yeah, we we we we talked to investors across the category. There's some that are doing tons of outbound. They have a price for every company in their CRM. They have an army of deal associates that are getting out there pounding the pavement. There's other folks who Yeah, just wildly different strategies. It's fascinating.

Well, for being a very quiet firm for a very long time,

um

it didn't allow us to have what we now realize we probably should have been doing for a while is building those relationships. But it's been quick coming out, like coming out um and building those relationships and figuring out how to make it work. We're more mature doing it. We know what we're looking for. Um

we made a [ __ ] ton of mistakes. So like,

you know, it's it's easy to start. You know, they're not they're not perfect, but they rhyme with the past, right? So, um we're we're good at we're good at saying no. Yeah, I would say.

Yeah. Uh let's talk about the energy side. What's interesting there, it's a very broad category. We talked to a founder yesterday who's refining uranium to go into nuclear power plants that won't come online for five years on the good side. Then at the same time, we talked to uh you know Chase Lock Miller from Crusoe. He's building data center putting up power plants today. Uh there's so many other pieces of infrastructure, so many the supply chain is so complicated. Where is the opportunity?

You want to go ahead? Um, we like Crusoe. We're investors in Cruso. Really? Oh, yeah. No way. Oh, yeah. That's amazing.

We've got a lot of investments. Okay. Okay. And I like what is interesting in energy is

it tends to be there. There's some individuals or individual companies that are doing some stuff that's that we see as transformational. So, everybody's very worried about energy.

Yeah.

Whatever happens with the war, we don't have any thoughts on that.

Yeah. Yeah.

But assuming that things are peaceful like, hey, is it going to be nuclear? or is it going to be

solar?

Solar, etc. Um, geothermal is really interesting. So, we're big investors in a company called Fervo based in Utah. It's um

your your viewers should look it up. It's uh it's transformational and it's a it's today.

So, it's built they're going to deliver

I don't know 500 megs in

Wow. That's a 2027.

Wow.

That's enough for That's the average metac campus right now.

Okay. And remember, it's fracking. traditional

drilling,

but not in traditional areas. Okay. So, think more remote areas.

Sure.

Are there side effects? It's unclear. I don't think there are necessarily, but maybe there could be some seismic.

Um,

but like that's super interesting. And the people who are doing that, like by the way, there's plenty of heat down there. It doesn't heat the planet. There's a bunch of physics around that. We're not physicists, but it won't make the planet hotter.

Yeah. Because net zero.

Um, so that's a good one. I think there's another company in Utah that we like a lot. we were talking to him earlier is Taurus energy

and that is what effectively what you saw in cloud

uh compute is cloud energy and so Taurus is a

it's basically a it's a flywheel business like actually a flywheel

okay literal fly a literal flywheel except it weighs about 3500 lb power

okay

but it spins remember the issue with power is that it's

everybody draws at the same time if you're snow basin in Utah and you draw on power to run your tram at the same time that everybody's hey by the way uh open AI is going to run one of their

sure sure

uh you know one of their loops then you're going to end up drawing tons of power and that's expensive for the grid

so what

Nate has done and his team at at Taurus is sol they're a balancer

the load balancer

it's the load balance and you realize there's actually quite a bit of power

um how you actually balance the power is is the hard part and he's solved it and so they are operating uh operating ing today. Um, we talked to him earlier. He's he's in a bunch of different states and he's he's coming to a state near you.

Yeah. I love it. Uh, well, tell me more about Peak Six Trials. Where can people get started? How do people apply or or join? How does this work?

So, peak6trials.com. Okay.

And we're looking for entrepreneurs who have ideas. Cool. And everything else is sort of there. You don't have to go and raise money. You have to spend time doing that. Think about the things that

where your specialty is is your idea. Yeah. Right. This is this is a place with AI like we can do a bunch of stuff around you.

Yeah.

And interestingly like with Apex, right? We have these 40 million customers. They might want your product

and if they don't want your product that's also really good news. So we short circuit all these things that take to say like is this a good idea or not? You don't have to worry about the capital. You don't have to worry about paying your rent. We actually pay you salary. No way. Yeah. So, um, it's really nicely packaged for someone. I wish we had it at the time. It would have made me feel better. Yeah.

Um, maybe we were better off cuz

we took so much risk. You never know. But the balance here is we want the people who bring the ideas and we help support and build it ultimately to own the majority of thing, not for us to own the majority of things. So, the the the the way we've structured the deals are really creative, I think, and different than the marketplace has seen so far. So um finding those people right those young entrepreneurs or they may not be so young entrepreneurs they can be anywhere but it's really I mean I think it's super broad yeah

what the fintech sort of space is like everything's money every large

CPG company who has a bunch of customers there's some money product that exists or could exist in that ecosystem so there's a lot of ideas I think that are out there we're going to pick

12 to 15 for the first year and we're going to see what we can do and see what we can pump through.

That's great. Last question. What's the best way? I'm terrible at poker. What's the best way for me to learn and get better?

Well, we have amazing teachers around the country, which is kind of crazy. We're like at 28 teachers. We have taught at like 360 companies. So, you can actually bring us to your company. Really? The banks, the technology firms, the law firms.

I think they might like it. I think these

It's been wild how people have picked it up, right? Cuz first of all, we're not playing for money. actually teaching because these are people who know nothing

but um

you know 94%

of poker players on the planet are men so yes it's really extreme so I mean after a couple hundred years of this game coming around it's probably time for women

to be doing this um we're in 70 countries we're in ro rural villages in Kenya for example so

we are super quick turnkey events best events that are on on the

poker power.comour.com. I love it. Well, thank you both for taking the time to come chat with us. Uh we will close the show here on this camera. Leave us five stars on Apple Podcast and Spotify. Uh we'll be live tomorrow at 11:00 a.m. Pacific sharp. Uh sign up for our newsletter at tbpn.com and we'll see you tomorrow. Goodbye. Thank you.