Why One Of The Most Successful Quant Funds Decided To Create Its Own Video Game

Tracy Alloway (0:09)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:14)

And I'm Joe Weisenthal.

Tracy Alloway (0:15)

So Joe, I think we have to come clean about this particular episode.

Joe Weisenthal (0:19)

We do have to come clean. Before we get into the discussion, there's a big, what is it, 800 pound gorilla in the room that we have to address.

Tracy Alloway (0:29)

Yeah, so the gorilla is that last week, we recorded an amazing podcast all about technology and its role in finance and the broader world. And then we were hit by our own technological snafu.

Joe Weisenthal (0:44)

That's right. So we recorded the greatest episode in the history of the entire podcast.

It was amazing, one of a kind, the kind of conversation that you dream of. And then unfortunately, the audio was bad and the entire thing was ruined.

Tracy Alloway (1:01)

Yes, something happened with the computer. The computer said, no, we're still trying to figure out what the exact issue was, but we learned an important lesson about the pitfalls of technology, which gives us an excuse to have our guest come on and try to have the conversation all over again.

So here we go.

Joe Weisenthal (1:22)

And since this episode is kind of about the relationship between technology and finance, we can at least pretend that there's some lesson here in what happened to us that's relevant to the episode. But really, like, I wasn't really exaggerated when I said it was a great conversation, and it would have been so hard to...

It would have been very hard to try to replicate that or to try to pretend we were just doing it again for the first time. So just in the spirit of honesty and recreating spontaneity, we wanted to get it out of the way and be honest with our listeners that this is a take two of that conversation.

Tracy Alloway (1:58)

Who knows, maybe it will be even better the second time around. The important thing is we learned a lesson about backup systems and tech. All right, so here goes.

Joe Weisenthal (2:09)

But we can't now pretend to do our shtick where we don't know what we're like, what are we going to talk about this time? Because that would really be contrived after that interview.

Tracy Alloway (2:16)

No, I wasn't going to. OK, I'm going to just bring our guest on. Our guest for today, for the second time, is Alfred Spector. He is the chief technology officer of Two Sigma. He's also a former engineer at Google, and he was also at IBM for a very long time.

He's an extremely well-known name in the realm of technology and also in quant-driven finance, and he's been nice enough to join us yet again on Odd Lots. So thank you, Alfred. Really appreciate it.

Alfred Spector (2:48)

It's my pleasure to be here. And by the way, the probability that there's a failure in a technology system is somehow proportional to the seniority of the person that's involved. So if we ever give a demo to, like, a really senior person, it's much more likely to fail.

I'm afraid I engendered the failure.

Joe Weisenthal (3:04)

No, not at all. But, you know, Tracy introduced you as, you know, the CTO at Two Sigma. You don't seem like a guy who's very busy or anything. So I'm sure it was very easy for you to reschedule your time and just come back in for a second day.

Alfred Spector (3:17)

Very easy, indeed.

Joe Weisenthal (3:20)

But, no, seriously, thank you very much. Thank you very much for coming back in and recreating last week.

The way we started our conversation last week and really the first thing we discussed is that your firm, Two Sigma, it's a very well-known quantitative hedge fund, is known for having a game. You've created a video game and created a competition for people all around the world to come and design programs to master the game. So tell us, what is this game that you have people do and why do you have people try to beat it?

Alfred Spector (3:59)

So a couple of years ago, we introduced a game, a programming competition game, where first we within the company and then eventually members of the general public got a chance to write computer programs that would try to win some strategy game. So in fact, it isn't really a game of people, but it's a game of programming, where you program something to try to win.

The game was really successful internally and excited our engineers and got them to think really deeply about algorithms and about how to structure situations in game theoretic ways. And we decided to launch it thinking that it would attract many programmers that would then hear about Two Sigma. Some of them might actually decide they want to work with us.