Entrepreneurship vs Quantitative Finance — an experiment

On June 14, 2018 I walked out of my hedge fund job for good. I had spent the past 3 years building technology as well as researching strategies for automated quantitative trading strategies. I had resigned 30 days prior to seek our other opportunities in the quantitative trading space, but I was hit a non-competition agreement.

In finance, non-competes are common. Companies are so worried about loosing intellectual property to competitors, that they will pay your entire salary for a period of time (in my case one year) to keep you from working for competitors.

A trading buddy of mine, Eric, has been arguing that entrepreneurship has better long term financial outcomes compared to finance. He argues that starting a business does not have to be risky if you pick conservative problems (vs trying to be the next Uber) and apply rationality and creativity to solving business problems. His view, and I am inclined to believe this or else I would not be testing this hypothesis, is that the 1–2 year outcome of working a high paying job (like finance) is better than starting out as an entrepreneur, however at the 5–10 year time horizon entrepreneurship outperforms.

Sounds pretty good to me, and I’ve got non-compete funding for the next year, so I’m going to give it a go. For the next year I’m going to try to bootstrap a profitable business, and I’ll document what I do here. My 1 year target is to have a monthly profit approaching $4000. My target 3year target is to have yearly profit around 500k with 100k annualized volatility. It’s important to me that my profit should not scale with my labor. Businesses where profits scale with labor (consulting for example) are not materially different to me from working in finance. I’m not shooting for a gigantic idea (so no ubers or unicorns) because those are riskier, and I am optimizing for low risk.

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