September 10, 2025 • 29 mins
What would the bond market look like if it were built today?
In this episode, I speak with Dylan Parker, CEO & Co-Founder of Moment, the operating system for fixed income that unifies trading, portfolio construction, and risk/compliance—and automates the workflows wealth platforms run every day. We dig into how fixed income finally went electronic, why half of bond trading still happens by phone or chat, and how Moment can build customized ladders in seconds instead of hours. We also unpack the (surprisingly big) after-tax edge in munis, and Dylan’s lessons from building automated credit trading at Citadel before raising a $36M Series B led by Index Ventures this summer.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
It's a huge financial market, over a$100,000,000,000,000 financial market.
(00:03):
But despite its size, it's traditionally laggedabout twenty to thirty years behind the global
stock market.
And it's really just been over the past tenyears when the fixed income market has come
online.
And so what we do here at Moment is we buildreally the full set of tools on top of that
(00:27):
core electronic trading infrastructure toenable people in the fixed income market to
trade bonds.
I knew literally nothing about the fixed incomemarket.
I started at Citadel.
My background was in statistics and math.
It was right at the time when the fixed incomemarket was undergoing this electronic trading
(00:49):
revolution, and Citadel had decided to enterthe space with its typical approach to highly
automated, highly algorithmic trading.
And by doing so, building automated tradingsystems, automated portfolio optimization
technology, you could genuinely make tradersnot like 25% more efficient or 50% more
(01:12):
efficient, but genuinely 25 to 50 times moreefficient.
And you could enable them to do things thatjust were never possible in the fixed income
market before.
And last time we chatted, you mentioned thatyou could tax loss harvest bonds.
So tell me about that.
How does that work?
(01:35):
So you just raised a $36,000,000 series b fromindex.
Congratulations.
Tell me about how that round came together, andtell me about the latest on Moment.
For context, Moment builds fixed income tradingportfolio management and risk and compliance
software.
And we started off serving primarily fintechs.
(01:58):
And that was really how business began andreally where we focused for almost the first
year and a half of the company.
And then it was really a little over a year agowhen we started winning RFPs for some of the
largest financial institutions in The U.
(02:19):
S.
After, call it, five or six of those when wetook a step back and we said, okay, it's time
to dramatically expand the team, dramaticallyexpand our engineering capacity.
And, we decided to raise a Series B.
And fortunately, the round came together prettyquickly and we ended up with amazing partners,
(02:40):
in Jan Hammer and the entire index team.
Explain that maybe as an eighth grader or ahigh schooler, what is it exactly that moment
does?
Yeah.
So fundamentally, we operate in the fixedincome market.
And so fixed income is a massive financialmarket.
It's also called the bond market, and it'sabout one and a half times larger than the
(03:04):
entire global stock market.
And it's totally critical to the functioning ofpretty much everything in the world from how we
build schools to how we build roads to howcompanies invest in massive data centers and so
on, bonds are absolutely critical.
And the fixed income market is the secondarymarket where people buy and sell bonds that are
(03:30):
issued by governments, by companies, and so on.
And so traditionally, despite the size of thismarket, and again, it's huge, it's a huge
financial market, over $100,000,000,000,000financial market.
But despite its size, it's traditionally laggedabout twenty to thirty years behind the global
(03:51):
stock market, the global options and futuresmarkets in terms of automation and electronic
trading.
And it's really just been over the past tenyears when the fixed income market has come
online.
And so what we do here at Moment is we buildreally the full set of tools on top of that
(04:13):
core electronic trading infrastructure toenable people in the fixed income market to
trade bonds, build portfolios of bonds and viewreally detailed analytics on their portfolios
in ways that, you know, have always been kindof standard in the equities market and many
(04:34):
other financial markets, but have just neverbeen possible in the bond market before.
You first started working with the fixed incomemarket when you were at Citadel.
Tell me about what you did at Citadel and whatyour experience was like there.
I knew literally nothing about the fixed incomemarket or really financial markets as a whole
(04:55):
when I started at Citadel.
My background was in statistics and math, and Ihad ended up joining Citadel, and that's
actually where I, I got to know one of my nowcofounders, Dean, very well because pretty much
completely by chance, we ended up as the twojunior members of the pretty much newly created
(05:18):
fixed income algo market making desk,specifically for corporate bonds and fixed
income ETFs.
And that was just a tremendous experience forus because it was right at the time when the
fixed income market was undergoing thiselectronic trading revolution and Citadel had
decided to enter the space with its typicalapproach to highly automated, highly
(05:46):
algorithmic trading.
And, that was something that really did notexist in full force in the fixed income market
prior to that.
So we got to work on a number of tremendouslyinteresting problems.
But most of all, what that experience showed uswas that it actually was possible to automate
(06:08):
the fixed income market.
And by doing so, building automated tradingsystems, automated portfolio optimization
technology, you could genuinely make tradersnot like 25% more efficient or 50% more
efficient, but genuinely 25 to 50 times moreefficient.
And you could enable them to do things thatjust were never possible in the fixed income
(06:31):
market before.
And that was completely critical for now thegenesis of Moment.
Bring it down to earth to pension funds,endowments, high net worth individuals.
How did they benefit from a more efficientfixed income market, and what problem are you
really trying to solve?
Many investors in the financial markets rely onfixed income as a core part of their portfolio,
(06:58):
And that can range on one hand from basicallyevery bank, every pension fund, every insurance
company is doing liability driven investing tomake sure that they can meet the demands on the
capital that they have all the way to a retireewho's entering the decumulation phase of their
(07:19):
investment life cycle and they need predictableincome.
And for so long, these types of things havebeen a tremendous challenge for participants in
the fixed income market because it was really,really difficult to trade bonds.
It was basically done completely by hand overthe phone, over Bloomberg chat, etcetera.
(07:41):
The market was, generally speaking, not verytransparent.
As a result, not very efficient.
And oftentimes, what happens in not verytransparent and not very efficient markets is
that the least sophisticated users end upgetting the worst prices and the bad end of the
deal.
(08:01):
And then finally, it was just difficult tooperate in from a portfolio management
perspective.
And so with Moment, our core mission is to makeit unbelievably easy, efficient, and
transparent to trade and build portfolios ofbonds.
So what we do is we enable our customers,whether that's a financial advisor or whether
(08:25):
that's an asset manager or whether that's atreasury management platform or so on, to
access the fixed income market with bestexecution across every potential source of
liquidity as well as institutional gradetrading and portfolio management tools that
(08:46):
allow them to construct and manage portfoliosthat very precisely target their needs.
Maybe taking a step back, how is fixed incomepurchased today, whether it's by intermediaries
like RIAs or by high investors.
What's the practice today?
Still today, about half of trading volume isdone over the phone or over chat.
(09:11):
And even the vast majority of trading volumethat happens, quote, unquote, electronically is
often done by traders manually going through anumber of different exchanges websites to view
what is the available inventory here.
What are the available bonds over here?
How about over here?
(09:31):
What are those bonds trading at on this otherexchange and so on?
And so what we do at Moment and where westarted was by building what's called an
execution management system.
And basically what that means is we connect toa number of different exchanges essentially in
the fixed income market.
(09:51):
They're called alternative trading systems.
And we allow traders to automatically executeorders at the best available price across those
exchanges.
And oftentimes without ever having to click asingle button, the order gets submitted and
then automatically executed using our smartorder routing algorithms.
(10:12):
And that's really where the company gotstarted.
But then we took that a step further bybuilding a portfolio management system on top
of this core trading system.
And what that does is allow our customers toreally solve the fundamental problem they're
getting at when they're trading bonds, which isnot just how do I trade this bond, but how do I
(10:33):
build a portfolio of bonds?
And so using our software, a customer, forinstance, can just write, hey, I have this
client.
They live in New York City.
They make X dollars per year.
They're looking to invest $200,000 in a NewYork municipal bond ladder with these custom
(10:55):
tax characteristics, go do it for me, andgenerate a portfolio in a matter of five to ten
seconds that's customized to that customer withthose needs.
So maybe you could break it down even further.
So you have this New York retiree, and andthey're investing $200,000.
(11:16):
They're essentially trying to build out acertain annuity cash flow over the next ten to
fifteen years, why does there have to be atechnology that comes in and solves that
problem?
What's the inefficiency exactly?
It's just a hard problem to solve.
So I'll put it this way.
At any given time, there are probably about500,000 different bonds that are available in
(11:42):
the market that you could go buy right now.
And so the problem of, hey, you know, I wantthese cash flows over the next fifteen years.
I have this tax situation which lends itself tothis type of security.
Going and building a portfolio to do thatmanually, which is what many people do,
(12:04):
typically takes about one to two hours.
And so now with our platform, you can literallyjust type in, hey, here's the request from the
client.
Here's some information about them.
Go build the portfolio and go build it at thebest available price across all the different
exchanges.
And we allow you to do that in instead of twohours, five to ten seconds.
(12:30):
And last time we chatted, you mentioned thatyou could tax loss harvest bonds.
So tell me about that.
How does that work, and, you know, howpronounced are these benefits?
A number of people have done some prettyinteresting research on this.
In particular, AllianceBernstein published apaper about two years ago, doing a historical
(12:53):
look back on the benefits of tax lossharvesting in municipal bonds in particular.
But the long and short of it is, bonds areobviously less volatile than equities.
However, the great advantage that bonds havewhen it comes to tax loss harvesting that
equities do not have is that equities areperpetual securities and bonds are not
(13:16):
perpetual securities.
And the result of that is that when you taxloss harvest in equity, you basically took a
security that you bought at a high price.
You're now selling it at a low price, andyou're harvesting a tax loss there.
But you're also now investing in a comparablesecurity at a low price, and that security will
(13:39):
presumably appreciate over time.
And now you will have a capital gain that youwill have to pay taxes on.
And so really when you're doing tax lossharvesting in equities, it's not like you're
creating tax losses out of nowhere.
You're just kind of moving them aroundtemporally.
Whereas in fixed income, you can buy a bond, itmight sell off.
(14:02):
You sell that bond and you generate a tax loss.
And now you invest in a new fixed incomesecurity and say it's a municipal bond and the
income is tax free.
Eventually, what's going to happen is not thatthat bond matures and you sell it like you
would in equity, but the bond matures andyou've not created any new capital gain.
(14:24):
And so the end result here is that whereas inequities, it's really a matter of deferring
capital gains.
In fixed income, you can take advantage ofcapital losses today without creating an
offsetting capital gain for the future.
So you have that true loss.
You also have these municipal tax benefitswhere you could oftentimes not pay federal and
(14:53):
oftentimes state tax as well on on your gains.
So these things these things really add up,especially if you assume that taxes will go up
in the future.
Exactly.
I mean, the amount of tax optimization you cando in the fixed income market, I'm obviously
biased, but I would say it's vastly more thanwhat you can do in the equities market because
(15:15):
you also have this structure of corporate bondsare taxed differently from municipal bonds,
which are taxed differently from treasurybonds.
It's as if buying Apple was taxed differentlythan buying Google versus buying Nvidia and so
on.
One of the hottest trends, if not the hottesttrends, is tax loss harvesting, this leverage
(15:39):
strategy and equities model in the equitiesmarket with AQR, Quantino, Parametric, firms
like that.
Is there a way to short a bond?
Yeah.
So you can absolutely short bonds.
Generally speaking, you cannot short municipalbonds, but you can short corporate bonds,
treasury bonds, and so on.
(16:00):
Do you see that, you know, in the next five,ten years becoming a trend alongside kind of
the equity tax loss harvesting?
It it is certainly possible.
You know, I I think along a lot of dimensions,and this is a recurring theme if you dig into
more and more topics in the fixed incomemarket.
The fixed income market in many ways is ten totwenty years behind the equities market,
(16:25):
potentially more.
And so the fixed income market first has toreally implement tax loss harvesting well.
And then I think there are a lot ofopportunities from there.
But, you know, there's still a lot of work tobe done to nail the basics.
When you double click on the second ordereffects of this, quote, unquote, retail
(16:46):
tailwinds in the equity markets, they thereason I put in quotes is it's really
$10,000,000 plus, high net worth, and you havethis estimated a 150,000,000,000,000 that's
going into into privates and alternatives.
The second order effect of that is what I thinkwe're gonna see a lot is much more catering
(17:08):
towards the taxable investor.
And if you think today the institutional marketis a 150,000,000,000,000 and the high net worth
market is a significantly lower than that,probably in the single digit trillions.
When you have this increase in the high networth market, you're gonna see a lot more
companies like Moment becoming instrumental inin the market and and start to get much more
(17:31):
market share versus just kind of being this funthing for for retail investors.
It's almost like a consumer.
You're gonna see much more serious businessescome about.
Couldn't agree more.
And funny enough, we come from theinstitutional market.
And so there was a natural question when wewere starting moment of, okay, should we just
(17:56):
go build software for huge institutions?
But why we ended up focusing on wealthmanagement was, you know, the way that we see
the future of the fixed income market is with alens of automation, that trading is going be
automated, portfolio management is going to beautomated, risk and compliance is going to be
(18:16):
automated.
And where that can deliver the greatest benefitis where the cardinality and size of the end
user population is very large.
Because if you're an institutional investormanaging 50 fixed income portfolios, okay,
that's hard to do manually, but that's doable.
(18:38):
If you're an asset manager managing 200,000fixed income portfolios for end investors or
you're a financial advisory firm managing10,000,000 fixed income portfolios for end
investors, That is simply impossible withoutautomation.
And so as weird as it may seem, I think wemight actually see the high net worth and
(19:05):
wealth management segment actually leapfrogsome of the institutional segment in terms of
automation and technology.
I had the CIO of Parametric, Tom Lee.
He manages $600,000,000,000, which is kindacrazy, but that's where they're putting all
their money.
And just to further strengthen your point isthe complexities.
(19:26):
It almost becomes infinitely more complex withmore use cases and more money and more
customers.
So there becomes more and more need forprocesses versus, to your point, you could
easily manually manage 20 customers.
Another trend that I think is very opportunehere is these RA roll ups.
It's same concept.
You have these mom and pop shops that are beingrolled up into these larger platforms, and now
(19:51):
you have thousands of accounts as well, and youneed some technological solution.
It becomes unworkable to really do everythingmanually.
Institutions are just being forced, for betteror worse, to operate at greater and greater
degrees of scale in terms of number ofaccounts, number of assets, number of advisers,
(20:11):
number of portfolio managers, etcetera.
And as that increasingly becomes the case, theneed for automation just continues to grow.
Wanna back up a little bit.
At Citadel, you and your cofounders worked atCitadel.
I think it's one of the most interestingcultures in finance.
Tell me about culturally what makes Citadel sogreat.
(20:35):
So I've I've never met Ken Griffin, but I'velearned a lot about him over, my time at
Citadel and since then as well.
And I I think that he is just an unbelievablyambitious person with an incredible degree of
(20:55):
relentlessness in pursuing that ambition.
And I think he built Citadel to be a placewhere culturally, operationally,
organizationally, and so on, if you are anincredibly ambitious person and you are really
relentless in pursuing that ambition, thatyou're never going to feel like you're hitting
(21:17):
your head up against the ceiling, that you arealways going to have more and more challenges
and more and more opportunities just thrustupon you.
And I think that makes for a really strongculture of people who are just excited to go do
things and feel incredibly empowered to go dothem as well.
(21:42):
Ken Griffin least publicly claims that his maincompetitive advantage is recruiting and people.
How much did you experience that at Citadel?
And also, how much of having a strong cultureis also about weeding out bad players?
So or those that can't keep up.
Is that a necessary component, or are you ableto build a strong culture while also
(22:03):
accommodating for lower performers?
The biggest thing is you just wanna hireincredible performers, and different companies
are willing to make different trade offs onthis.
But I think the end result that Citadelrecognizes that I think is absolutely true is
that small teams of genuinely incredible peoplecan massively outperform huge teams of good
(22:30):
people.
And so applying that to startups and momentnow, especially for us where the opportunities
for us to go after vastly outstrip our abilityto go after them right now and the resources on
the engineering side, on the implementationside, on the sales side, and so on that we have
(22:53):
to go after them.
It is so tempting to lower your bar and say, wejust need to get people in the door because if
I go build this feature, we can go serve thiscustomer.
And I know that if I just hire solid people, wewill be able to go build this feature and we
will be able to go serve this customer.
(23:13):
And that becomes incredibly tempting.
But I think what is so critical and what wereally try to stick by at moment is just you
cannot sell out for the short term and let yourtalent bar drop because that is a dangerous,
dangerous cycle.
And you end up in really difficult situationsas well where you could impact the team quite a
(23:38):
bit culturally if you end up in a situationwhere you've hired a number of people who are
not truly incredible.
And so I think the most important place tofocus on when you're trying to build an
incredible team is that first hiring step.
And no matter how tempting it is, like, justnot lowering your lowering your bar there, even
(24:01):
if you have to go build five features, you havefive customers who are willing to pay you
$5,000,000 each to go do it.
You have to anticipate your hiring needs aheadof time so that you're never in a place of
extreme desperation.
And from a feature set, I love the quote, buildhalf a product, not a half house product.
That's Jason Fried from thirty seven Signal.
(24:21):
So resist the urge to do anything that's notworld class.
Just give one part of the feature, and peoplewill grovel and complain about, you know, this
feature that they want, but have the disciplineto not release things that are just not world
class.
At the end of the day, especially if you arebuilding mission critical financial
(24:42):
infrastructure, your most important currency isthe trust that you build with your customers.
And there is, for better or worse, depending onwho you are, a long history of software vendors
in the financial markets not delivering on whatthey say that they're going to deliver.
(25:04):
And so what's really, really critical for us iswhen we say we are going to do something on
this timeline and when we say that to acustomer, that is exactly what happens.
And sometimes that means under promising versuswhat our most aggressive estimate is.
But at the end of the day, that is the mostimportant thing for us maintaining that trust
(25:29):
with our customers because that's what causesthem to come back to us again and again and ask
us to do more and more and more for them.
Given that you are operating in the financialspace and trust is such a big factor, are you
less go go fast and break things and more kindof get it right from the first time versus,
(25:52):
say, like an AI note taking app or consumerproduct?
Is that something that you consciously thinkabout, like version making sure that you get it
right on the first time?
100%.
There is no room for error.
And so when something goes into production, wehave to be incredibly confident that nothing is
(26:15):
going to break and everything is going tofunction as it is supposed to function.
And I think to some extent, the idea that youcannot also move fast is a bit of a false
dichotomy because you can still learn a lot andspend a ton of time talking to customers and
(26:36):
building designs with them and buildingprototypes with them and so on that allow you
to iterate and learn really fast.
But when it comes time to ship a feature toproduction, that has to be absolutely ironclad.
Maybe you could tell me a little about who yourcustomers are and who are the end customers.
(26:56):
So tell me exactly who you serve directly andwho do they serve.
Yeah, so we typically serve large wealthmanagement institutions.
And so examples of that are LPL Financial,which is a $2,000,000,000,000 broker dealer and
Hightower Advisors, which is a $300,000,000,000RIA aggregator.
(27:19):
And so we serve a number of different functionswithin them, ranging from their trading team
and their traders to their asset managementteams that manage portfolios internally for
their end customers.
But at the end of the day, their end customersare individuals who are looking to have stable
(27:42):
income, predictable returns, oftentimesretirees who are in the deep decumulation phase
of their investment life cycle and are just ina position where they want to be able to rely
on predictable returns and predictable incomefrom their portfolio, which obviously naturally
(28:02):
lends itself to fixed income.
What would you like our listeners to know aboutyou, about Moment, or anything else you'd like
to share?
So the number one thing I would love for peopleto know is that we are hiring, and we are
looking for incredible people to join us acrosspretty much every function ranging from,
(28:22):
obviously, engineering to product to design toour forward deployed implementation teams to
finance and marketing and sales.
And so we are just, as as I said before, we arejust so bought into the notion that small teams
of incredible people can just massivelyoutperform huge teams of mediocre people, and
(28:49):
we are looking for more incredible people tojoin our team today.
I think the caliber of our team is the numberone thing that myself and my cofounders are
most proud of here, and we are really, reallylooking to find more people like the people
we've brought on today to join us on the nextten years of our journey.
(29:12):
Well, I'm gonna keep my job, but I'm very soldon Moment, and, I would love any opportunity to
invest in a company.
I think what you guys are doing I thinkinvestors are probably underpricing the size of
your market, and I'm really excited about whatyou guys are doing and, you know, look forward
to continuing the conversation live.
I really appreciate it.
Thanks for having
(29:33):
Thanks for listening to my conversation.
If you enjoyed this episode, please share witha friend.
This helps us grow.
Also provides the very best feedback when wereview the episode's analytics.
Thank you for your support.
It's a huge financial market, over a$100,000,000,000,000 financial market.
(00:03):
But despite its size, it's traditionally laggedabout twenty to thirty years behind the global
stock market.
And it's really just been over the past tenyears when the fixed income market has come
online.
And so what we do here at Moment is we buildreally the full set of tools on top of that
(00:27):
core electronic trading infrastructure toenable people in the fixed income market to
trade bonds.
I knew literally nothing about the fixed incomemarket.
I started at Citadel.
My background was in statistics and math.
It was right at the time when the fixed incomemarket was undergoing this electronic trading
(00:49):
revolution, and Citadel had decided to enterthe space with its typical approach to highly
automated, highly algorithmic trading.
And by doing so, building automated tradingsystems, automated portfolio optimization
technology, you could genuinely make tradersnot like 25% more efficient or 50% more
(01:12):
efficient, but genuinely 25 to 50 times moreefficient.
And you could enable them to do things thatjust were never possible in the fixed income
market before.
And last time we chatted, you mentioned thatyou could tax loss harvest bonds.
So tell me about that.
How does that work?
(01:35):
So you just raised a $36,000,000 series b fromindex.
Congratulations.
Tell me about how that round came together, andtell me about the latest on Moment.
For context, Moment builds fixed income tradingportfolio management and risk and compliance
software.
And we started off serving primarily fintechs.
(01:58):
And that was really how business began andreally where we focused for almost the first
year and a half of the company.
And then it was really a little over a year agowhen we started winning RFPs for some of the
largest financial institutions in The U.
(02:19):
S.
After, call it, five or six of those when wetook a step back and we said, okay, it's time
to dramatically expand the team, dramaticallyexpand our engineering capacity.
And, we decided to raise a Series B.
And fortunately, the round came together prettyquickly and we ended up with amazing partners,
(02:40):
in Jan Hammer and the entire index team.
Explain that maybe as an eighth grader or ahigh schooler, what is it exactly that moment
does?
Yeah.
So fundamentally, we operate in the fixedincome market.
And so fixed income is a massive financialmarket.
It's also called the bond market, and it'sabout one and a half times larger than the
(03:04):
entire global stock market.
And it's totally critical to the functioning ofpretty much everything in the world from how we
build schools to how we build roads to howcompanies invest in massive data centers and so
on, bonds are absolutely critical.
And the fixed income market is the secondarymarket where people buy and sell bonds that are
(03:30):
issued by governments, by companies, and so on.
And so traditionally, despite the size of thismarket, and again, it's huge, it's a huge
financial market, over $100,000,000,000,000financial market.
But despite its size, it's traditionally laggedabout twenty to thirty years behind the global
(03:51):
stock market, the global options and futuresmarkets in terms of automation and electronic
trading.
And it's really just been over the past tenyears when the fixed income market has come
online.
And so what we do here at Moment is we buildreally the full set of tools on top of that
(04:13):
core electronic trading infrastructure toenable people in the fixed income market to
trade bonds, build portfolios of bonds and viewreally detailed analytics on their portfolios
in ways that, you know, have always been kindof standard in the equities market and many
(04:34):
other financial markets, but have just neverbeen possible in the bond market before.
You first started working with the fixed incomemarket when you were at Citadel.
Tell me about what you did at Citadel and whatyour experience was like there.
I knew literally nothing about the fixed incomemarket or really financial markets as a whole
(04:55):
when I started at Citadel.
My background was in statistics and math, and Ihad ended up joining Citadel, and that's
actually where I, I got to know one of my nowcofounders, Dean, very well because pretty much
completely by chance, we ended up as the twojunior members of the pretty much newly created
(05:18):
fixed income algo market making desk,specifically for corporate bonds and fixed
income ETFs.
And that was just a tremendous experience forus because it was right at the time when the
fixed income market was undergoing thiselectronic trading revolution and Citadel had
decided to enter the space with its typicalapproach to highly automated, highly
(05:46):
algorithmic trading.
And, that was something that really did notexist in full force in the fixed income market
prior to that.
So we got to work on a number of tremendouslyinteresting problems.
But most of all, what that experience showed uswas that it actually was possible to automate
(06:08):
the fixed income market.
And by doing so, building automated tradingsystems, automated portfolio optimization
technology, you could genuinely make tradersnot like 25% more efficient or 50% more
efficient, but genuinely 25 to 50 times moreefficient.
And you could enable them to do things thatjust were never possible in the fixed income
(06:31):
market before.
And that was completely critical for now thegenesis of Moment.
Bring it down to earth to pension funds,endowments, high net worth individuals.
How did they benefit from a more efficientfixed income market, and what problem are you
really trying to solve?
Many investors in the financial markets rely onfixed income as a core part of their portfolio,
(06:58):
And that can range on one hand from basicallyevery bank, every pension fund, every insurance
company is doing liability driven investing tomake sure that they can meet the demands on the
capital that they have all the way to a retireewho's entering the decumulation phase of their
(07:19):
investment life cycle and they need predictableincome.
And for so long, these types of things havebeen a tremendous challenge for participants in
the fixed income market because it was really,really difficult to trade bonds.
It was basically done completely by hand overthe phone, over Bloomberg chat, etcetera.
(07:41):
The market was, generally speaking, not verytransparent.
As a result, not very efficient.
And oftentimes, what happens in not verytransparent and not very efficient markets is
that the least sophisticated users end upgetting the worst prices and the bad end of the
deal.
(08:01):
And then finally, it was just difficult tooperate in from a portfolio management
perspective.
And so with Moment, our core mission is to makeit unbelievably easy, efficient, and
transparent to trade and build portfolios ofbonds.
So what we do is we enable our customers,whether that's a financial advisor or whether
(08:25):
that's an asset manager or whether that's atreasury management platform or so on, to
access the fixed income market with bestexecution across every potential source of
liquidity as well as institutional gradetrading and portfolio management tools that
(08:46):
allow them to construct and manage portfoliosthat very precisely target their needs.
Maybe taking a step back, how is fixed incomepurchased today, whether it's by intermediaries
like RIAs or by high investors.
What's the practice today?
Still today, about half of trading volume isdone over the phone or over chat.
(09:11):
And even the vast majority of trading volumethat happens, quote, unquote, electronically is
often done by traders manually going through anumber of different exchanges websites to view
what is the available inventory here.
What are the available bonds over here?
How about over here?
(09:31):
What are those bonds trading at on this otherexchange and so on?
And so what we do at Moment and where westarted was by building what's called an
execution management system.
And basically what that means is we connect toa number of different exchanges essentially in
the fixed income market.
(09:51):
They're called alternative trading systems.
And we allow traders to automatically executeorders at the best available price across those
exchanges.
And oftentimes without ever having to click asingle button, the order gets submitted and
then automatically executed using our smartorder routing algorithms.
(10:12):
And that's really where the company gotstarted.
But then we took that a step further bybuilding a portfolio management system on top
of this core trading system.
And what that does is allow our customers toreally solve the fundamental problem they're
getting at when they're trading bonds, which isnot just how do I trade this bond, but how do I
(10:33):
build a portfolio of bonds?
And so using our software, a customer, forinstance, can just write, hey, I have this
client.
They live in New York City.
They make X dollars per year.
They're looking to invest $200,000 in a NewYork municipal bond ladder with these custom
(10:55):
tax characteristics, go do it for me, andgenerate a portfolio in a matter of five to ten
seconds that's customized to that customer withthose needs.
So maybe you could break it down even further.
So you have this New York retiree, and andthey're investing $200,000.
(11:16):
They're essentially trying to build out acertain annuity cash flow over the next ten to
fifteen years, why does there have to be atechnology that comes in and solves that
problem?
What's the inefficiency exactly?
It's just a hard problem to solve.
So I'll put it this way.
At any given time, there are probably about500,000 different bonds that are available in
(11:42):
the market that you could go buy right now.
And so the problem of, hey, you know, I wantthese cash flows over the next fifteen years.
I have this tax situation which lends itself tothis type of security.
Going and building a portfolio to do thatmanually, which is what many people do,
(12:04):
typically takes about one to two hours.
And so now with our platform, you can literallyjust type in, hey, here's the request from the
client.
Here's some information about them.
Go build the portfolio and go build it at thebest available price across all the different
exchanges.
And we allow you to do that in instead of twohours, five to ten seconds.
(12:30):
And last time we chatted, you mentioned thatyou could tax loss harvest bonds.
So tell me about that.
How does that work, and, you know, howpronounced are these benefits?
A number of people have done some prettyinteresting research on this.
In particular, AllianceBernstein published apaper about two years ago, doing a historical
(12:53):
look back on the benefits of tax lossharvesting in municipal bonds in particular.
But the long and short of it is, bonds areobviously less volatile than equities.
However, the great advantage that bonds havewhen it comes to tax loss harvesting that
equities do not have is that equities areperpetual securities and bonds are not
(13:16):
perpetual securities.
And the result of that is that when you taxloss harvest in equity, you basically took a
security that you bought at a high price.
You're now selling it at a low price, andyou're harvesting a tax loss there.
But you're also now investing in a comparablesecurity at a low price, and that security will
(13:39):
presumably appreciate over time.
And now you will have a capital gain that youwill have to pay taxes on.
And so really when you're doing tax lossharvesting in equities, it's not like you're
creating tax losses out of nowhere.
You're just kind of moving them aroundtemporally.
Whereas in fixed income, you can buy a bond, itmight sell off.
(14:02):
You sell that bond and you generate a tax loss.
And now you invest in a new fixed incomesecurity and say it's a municipal bond and the
income is tax free.
Eventually, what's going to happen is not thatthat bond matures and you sell it like you
would in equity, but the bond matures andyou've not created any new capital gain.
(14:24):
And so the end result here is that whereas inequities, it's really a matter of deferring
capital gains.
In fixed income, you can take advantage ofcapital losses today without creating an
offsetting capital gain for the future.
So you have that true loss.
You also have these municipal tax benefitswhere you could oftentimes not pay federal and
(14:53):
oftentimes state tax as well on on your gains.
So these things these things really add up,especially if you assume that taxes will go up
in the future.
Exactly.
I mean, the amount of tax optimization you cando in the fixed income market, I'm obviously
biased, but I would say it's vastly more thanwhat you can do in the equities market because
(15:15):
you also have this structure of corporate bondsare taxed differently from municipal bonds,
which are taxed differently from treasurybonds.
It's as if buying Apple was taxed differentlythan buying Google versus buying Nvidia and so
on.
One of the hottest trends, if not the hottesttrends, is tax loss harvesting, this leverage
(15:39):
strategy and equities model in the equitiesmarket with AQR, Quantino, Parametric, firms
like that.
Is there a way to short a bond?
Yeah.
So you can absolutely short bonds.
Generally speaking, you cannot short municipalbonds, but you can short corporate bonds,
treasury bonds, and so on.
(16:00):
Do you see that, you know, in the next five,ten years becoming a trend alongside kind of
the equity tax loss harvesting?
It it is certainly possible.
You know, I I think along a lot of dimensions,and this is a recurring theme if you dig into
more and more topics in the fixed incomemarket.
The fixed income market in many ways is ten totwenty years behind the equities market,
(16:25):
potentially more.
And so the fixed income market first has toreally implement tax loss harvesting well.
And then I think there are a lot ofopportunities from there.
But, you know, there's still a lot of work tobe done to nail the basics.
When you double click on the second ordereffects of this, quote, unquote, retail
(16:46):
tailwinds in the equity markets, they thereason I put in quotes is it's really
$10,000,000 plus, high net worth, and you havethis estimated a 150,000,000,000,000 that's
going into into privates and alternatives.
The second order effect of that is what I thinkwe're gonna see a lot is much more catering
(17:08):
towards the taxable investor.
And if you think today the institutional marketis a 150,000,000,000,000 and the high net worth
market is a significantly lower than that,probably in the single digit trillions.
When you have this increase in the high networth market, you're gonna see a lot more
companies like Moment becoming instrumental inin the market and and start to get much more
(17:31):
market share versus just kind of being this funthing for for retail investors.
It's almost like a consumer.
You're gonna see much more serious businessescome about.
Couldn't agree more.
And funny enough, we come from theinstitutional market.
And so there was a natural question when wewere starting moment of, okay, should we just
(17:56):
go build software for huge institutions?
But why we ended up focusing on wealthmanagement was, you know, the way that we see
the future of the fixed income market is with alens of automation, that trading is going be
automated, portfolio management is going to beautomated, risk and compliance is going to be
(18:16):
automated.
And where that can deliver the greatest benefitis where the cardinality and size of the end
user population is very large.
Because if you're an institutional investormanaging 50 fixed income portfolios, okay,
that's hard to do manually, but that's doable.
(18:38):
If you're an asset manager managing 200,000fixed income portfolios for end investors or
you're a financial advisory firm managing10,000,000 fixed income portfolios for end
investors, That is simply impossible withoutautomation.
And so as weird as it may seem, I think wemight actually see the high net worth and
(19:05):
wealth management segment actually leapfrogsome of the institutional segment in terms of
automation and technology.
I had the CIO of Parametric, Tom Lee.
He manages $600,000,000,000, which is kindacrazy, but that's where they're putting all
their money.
And just to further strengthen your point isthe complexities.
(19:26):
It almost becomes infinitely more complex withmore use cases and more money and more
customers.
So there becomes more and more need forprocesses versus, to your point, you could
easily manually manage 20 customers.
Another trend that I think is very opportunehere is these RA roll ups.
It's same concept.
You have these mom and pop shops that are beingrolled up into these larger platforms, and now
(19:51):
you have thousands of accounts as well, and youneed some technological solution.
It becomes unworkable to really do everythingmanually.
Institutions are just being forced, for betteror worse, to operate at greater and greater
degrees of scale in terms of number ofaccounts, number of assets, number of advisers,
(20:11):
number of portfolio managers, etcetera.
And as that increasingly becomes the case, theneed for automation just continues to grow.
Wanna back up a little bit.
At Citadel, you and your cofounders worked atCitadel.
I think it's one of the most interestingcultures in finance.
Tell me about culturally what makes Citadel sogreat.
(20:35):
So I've I've never met Ken Griffin, but I'velearned a lot about him over, my time at
Citadel and since then as well.
And I I think that he is just an unbelievablyambitious person with an incredible degree of
(20:55):
relentlessness in pursuing that ambition.
And I think he built Citadel to be a placewhere culturally, operationally,
organizationally, and so on, if you are anincredibly ambitious person and you are really
relentless in pursuing that ambition, thatyou're never going to feel like you're hitting
(21:17):
your head up against the ceiling, that you arealways going to have more and more challenges
and more and more opportunities just thrustupon you.
And I think that makes for a really strongculture of people who are just excited to go do
things and feel incredibly empowered to go dothem as well.
(21:42):
Ken Griffin least publicly claims that his maincompetitive advantage is recruiting and people.
How much did you experience that at Citadel?
And also, how much of having a strong cultureis also about weeding out bad players?
So or those that can't keep up.
Is that a necessary component, or are you ableto build a strong culture while also
(22:03):
accommodating for lower performers?
The biggest thing is you just wanna hireincredible performers, and different companies
are willing to make different trade offs onthis.
But I think the end result that Citadelrecognizes that I think is absolutely true is
that small teams of genuinely incredible peoplecan massively outperform huge teams of good
(22:30):
people.
And so applying that to startups and momentnow, especially for us where the opportunities
for us to go after vastly outstrip our abilityto go after them right now and the resources on
the engineering side, on the implementationside, on the sales side, and so on that we have
(22:53):
to go after them.
It is so tempting to lower your bar and say, wejust need to get people in the door because if
I go build this feature, we can go serve thiscustomer.
And I know that if I just hire solid people, wewill be able to go build this feature and we
will be able to go serve this customer.
(23:13):
And that becomes incredibly tempting.
But I think what is so critical and what wereally try to stick by at moment is just you
cannot sell out for the short term and let yourtalent bar drop because that is a dangerous,
dangerous cycle.
And you end up in really difficult situationsas well where you could impact the team quite a
(23:38):
bit culturally if you end up in a situationwhere you've hired a number of people who are
not truly incredible.
And so I think the most important place tofocus on when you're trying to build an
incredible team is that first hiring step.
And no matter how tempting it is, like, justnot lowering your lowering your bar there, even
(24:01):
if you have to go build five features, you havefive customers who are willing to pay you
$5,000,000 each to go do it.
You have to anticipate your hiring needs aheadof time so that you're never in a place of
extreme desperation.
And from a feature set, I love the quote, buildhalf a product, not a half house product.
That's Jason Fried from thirty seven Signal.
(24:21):
So resist the urge to do anything that's notworld class.
Just give one part of the feature, and peoplewill grovel and complain about, you know, this
feature that they want, but have the disciplineto not release things that are just not world
class.
At the end of the day, especially if you arebuilding mission critical financial
(24:42):
infrastructure, your most important currency isthe trust that you build with your customers.
And there is, for better or worse, depending onwho you are, a long history of software vendors
in the financial markets not delivering on whatthey say that they're going to deliver.
(25:04):
And so what's really, really critical for us iswhen we say we are going to do something on
this timeline and when we say that to acustomer, that is exactly what happens.
And sometimes that means under promising versuswhat our most aggressive estimate is.
But at the end of the day, that is the mostimportant thing for us maintaining that trust
(25:29):
with our customers because that's what causesthem to come back to us again and again and ask
us to do more and more and more for them.
Given that you are operating in the financialspace and trust is such a big factor, are you
less go go fast and break things and more kindof get it right from the first time versus,
(25:52):
say, like an AI note taking app or consumerproduct?
Is that something that you consciously thinkabout, like version making sure that you get it
right on the first time?
100%.
There is no room for error.
And so when something goes into production, wehave to be incredibly confident that nothing is
(26:15):
going to break and everything is going tofunction as it is supposed to function.
And I think to some extent, the idea that youcannot also move fast is a bit of a false
dichotomy because you can still learn a lot andspend a ton of time talking to customers and
(26:36):
building designs with them and buildingprototypes with them and so on that allow you
to iterate and learn really fast.
But when it comes time to ship a feature toproduction, that has to be absolutely ironclad.
Maybe you could tell me a little about who yourcustomers are and who are the end customers.
(26:56):
So tell me exactly who you serve directly andwho do they serve.
Yeah, so we typically serve large wealthmanagement institutions.
And so examples of that are LPL Financial,which is a $2,000,000,000,000 broker dealer and
Hightower Advisors, which is a $300,000,000,000RIA aggregator.
(27:19):
And so we serve a number of different functionswithin them, ranging from their trading team
and their traders to their asset managementteams that manage portfolios internally for
their end customers.
But at the end of the day, their end customersare individuals who are looking to have stable
(27:42):
income, predictable returns, oftentimesretirees who are in the deep decumulation phase
of their investment life cycle and are just ina position where they want to be able to rely
on predictable returns and predictable incomefrom their portfolio, which obviously naturally
(28:02):
lends itself to fixed income.
What would you like our listeners to know aboutyou, about Moment, or anything else you'd like
to share?
So the number one thing I would love for peopleto know is that we are hiring, and we are
looking for incredible people to join us acrosspretty much every function ranging from,
(28:22):
obviously, engineering to product to design toour forward deployed implementation teams to
finance and marketing and sales.
And so we are just, as as I said before, we arejust so bought into the notion that small teams
of incredible people can just massivelyoutperform huge teams of mediocre people, and
(28:49):
we are looking for more incredible people tojoin our team today.
I think the caliber of our team is the numberone thing that myself and my cofounders are
most proud of here, and we are really, reallylooking to find more people like the people
we've brought on today to join us on the nextten years of our journey.
(29:12):
Well, I'm gonna keep my job, but I'm very soldon Moment, and, I would love any opportunity to
invest in a company.
I think what you guys are doing I thinkinvestors are probably underpricing the size of
your market, and I'm really excited about whatyou guys are doing and, you know, look forward
to continuing the conversation live.
I really appreciate it.
Thanks for having
(29:33):
Thanks for listening to my conversation.
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