Nicole Kagan: Empowering Kalshi Through Research

**Danny Moses** (0:02)
Welcome to the On The Tape Podcast. I'm your host Danny Moses, and today I am thrilled to welcome Nicole Kagan, Head of Research at Kalshi to the pod.
As most of you know, Kalshi is a sponsor of the On The Tape Podcast, and every week I give out a few event contracts that I'm looking at and trading. Well, if you were wondering how those contracts end up on Kalshi's platform, look no further than my guest today. Nicole, welcome to On The Tape.

**Nicole Kagan** (0:25)
Thank you so much for having me, Danny.

**Danny Moses** (0:27)
All right, let's start with your background. It's pretty impressive. And what led you to jump from Bridgewater to Kalshi to start the research?

**Nicole Kagan** (0:35)
Well, first of all, that's very nice by way of brief background. So I went to college in the States, graduated. First job out of college was at Bridgewater Associates. So I was a macro investor there. I worked on short rates. So trying to figure out how the central bank was going to set interest rates and where they would be in three months, six months, nine months a year. And I worked mostly on emerging markets and then I moved to work more and develop markets. But in my time in emerging markets, I think the thing you quite quickly realize is that the central bank of many countries is just not independent of the government. And so we're in a situation, this was a few years ago, where in Turkey we were focusing on where the short rate path would be. Inflation was 85% and interest rates, I think, at the time were at like 8%.
They were very, very low and way too low to control the inflation crisis that they were having at the time. And so we were all sitting around and we were like, well, we have a view on whether Erdogan is going to win the next election. But what Erdogan is going to tell the central bank to do, we don't have any of you on. We're not sure if he's going to keep rates depressed, if he's going to raise them to 30% tomorrow. We have no real insight into that. And so what we'd like to take a position on is whether or not he's going to win. But you couldn't at the time take that direct position, you had to take it through a set of proxies. And so I always had this question in my mind of, well, why can't you just take the direct position that you want to hedge out or that you have a view on? Why do you have to do it in such a complicated, such a proxied and such an expensive way, where actually in eventuality, you're subject to a lot of the market noise?
I left Bridgewater after some time there, I thought I was going to become a professor of economics. I went to Oxford, I did all the PhD coursework, and then I decided, actually, I really quite like this idea of being back in the real world. And at the time that I was deciding to leave Oxford, the opportunity came up at Kalshi to come on board and work on writing the contracts. So actually, the event contracts that underlie the rules for all of our markets. And I was like, well, wow, that's actually very interesting because this idea that I've been sitting on for years now seems to be coming to life. And I would love to be a part of that. And so that's how I ended up at Kalshi. And then a few months after I joined, we started our research function, which I'm really privileged, I think, to be able to lead now.

**Danny Moses** (2:39)
That's perfect timing. So let's talk about the process for the rules writing, the certification and the process for idea generation. Maybe comes from a client, maybe comes in-house, how that kind of works.

**Nicole Kagan** (2:52)
So we actually source ideas from here, there, and everywhere is how I would put it. So we have suggestions coming through internally and then suggestions that we source externally. So internally, we have a team that's effectively, I would say for better or for worse, chronically online and they're constantly looking through the relevant happenings in the world. They're constantly recommending things to our markets team that they would be interested in listing. And that's coming from both our team, but also our partners that are also recommending contracts to us for things that they would like to focus on or to spotlight or to feature that they think that we don't currently have. And then externally, we're sourcing recommendations from users through our Discord server, through our ideas page and channel. And then also just more broadly by observing what's happening in the world around us. And so let's say we get an idea.