Bad trades are part of the business

Yahoo

04-06-2025

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On this week's Trader Talk, host Kenny Polcari sits down with Atish Davda, CEO and cofounder of EquityZen, to discuss how average investors can gain access to pre-IPO shares in private tech companies. Davda explains how EquityZen connects shareholders, often early employees at high-growth startups, with accredited investors looking to buy in before an IPO. With private markets becoming increasingly important to diversified portfolios, Davda breaks down how the platform works, what makes a company investable, and how these trades differ from traditional public stock transactions. If you have ever wanted to own a slice of the next big tech company before Wall Street gets in, this episode offers a rare behind-the-scenes look at how that is possible.
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Trader Talk with Kenny Polcari on Yahoo Finance delivers expert analysis and actionable insights, empowering you to navigate market volatility and secure your financial future.
This post was written by Langston Sessoms.
Welcome to Trader Talk where we dish out the latest Wall Street buzz to keep your portfolio sizzling. I'm Kenny Polcari and I'm coming to you live once again from the iconic New York Stock Exchange, a place that I called home for many decades, but it still feels the pulse of capitalism, entrepreneurship, and freedom. Now let's takejump into my big take for the week. Let's get this straight. Every trader makes bad trades, not some, not rookies, everyone. The pros just recover faster because they don't waste time pretending that it didn't happen. A bad trade isn't a moral failure, it's a statistical certainty.You will misread setups. You will get chopped up by volatility. You will chase. You will hold too long. Welcome to the game. What separates the winners from losers isn't avoiding a bad trade, it's how they handle them. Most retail traders double down.They try to justify it. They revenge trade. They turn a paper cut into a gaping wound. Why? Ego, refusing to admit that they were wrong. But the pros, pros cut it. They log it. They learn from it, and then they move on without flinching.You don't blow up from bad trades, you blow up from not owning those bad trades. Discipline is what turns a mistake into a lesson. Denial is what turns it into a disaster. Bottom line, bad trades are just part of the business. You're not judged by how perfect you are, you're judged by how quickly you get back to the process. The market doesn't care if you're wrong. It cares if you keep being wrong the same way.OK, so now into my guests for the day. Now, joining us today is my new friend, Attis Dada, founder and CEO of Equity Zen, a groundbreaking platform that opens access to pre-IPO shares in some of the world's fastest growing private tech companies. Before launching equity Zen, Atti worked at algorithmic trading at AQR Capital and led product efforts at Amus, a digital marketing firm with a unique background that blends software engineering and.Finance, he's built equities then into a go to marketplace for for private tech investing, serving thousands of investors and completing hundreds of deals. Please welcome Attida. Atish. First of all, I got to tell you, it is such a pleasure having you here. I want to talk to you really quick because I think the audience will really appreciate this about your very first days at AQR Capital and when did thathappen?
Yeah, so this is 2008. I'm fresh out of college. Uh,
so that was September.
September, this is the fall. I remember this vividly. Uh, everything we've learned about markets, you know, in textbooks, you throw it out the window when you're seeing 4 or 5% swings in the S&P every single day, every single day. Lehman Brothers bank number 3, and where I used to work previously as an intern, uh, you know, people are questioning is it going to be around next week? So those, that's how my career started. Yeah, and I basically realized, you know, be very careful about drawing a line too far out, basically.
It was an exciting time for sure. Uh, you know, you would miss the Bear Stearns breakdown because that happened earlier in the year in March. And then it was that whole lemurs, and I was here on the floor during that whole kind of cycle, that whole event, when it happened, how it happened, the, you know, the, the, the anxiety in the markets. It was really a fascinating time to be here, but for someone that was just fresh out of college, still green, it had to be, it had to be really an eye-openingexperience.
It was visceral, not always in a bad way, I got to tell you the fact thatI didn't have the 123 years of, you know, low volatility days, just made it, OK, this is the normal. This is what happened and they're thrown into the fire. Thankfully there wasn't the actual, you know, reality and things did calm down eventually.
But talk about quickly because and this is going to take us into where you are now. But talk about quickly what your education was and what what brought you to HUR in the firstplace.
Yeah, look, you know, so quick background, I grew up in India. I moved here right before college. I studied anything thatContain numbers. So my education was computer engineering, finance, and mathematics. My joke is numbers make sense to me. Everything else is a bit of a question mark. So, so I went to AQR, which was a fantastic place for someone like me for systematic trading all about all about numbers. Uh, so I'm at AQR actually one of my first projects there was to take a pension fund strategy, $50 million minimum investment, typical investments, a couple $100 million and a longshore strategy, convert that into a long only mutual.Fund that mom with $2500 and a Vanguard account can access. So we didn't call it that back then, but this was the early days of Liquid Als. That was the, the, the, the little seed of diversifying, uh, democratizing access really to cold in my head in the early days of AQR.
That had to be, that had to be a phenomenal experience for a young man just out of college as they got into.
I used to joke that I could close my eyes. Someone would spin me around and whoever was pointing to had at least 2 more degrees than I did at AQR at AQR.And there was such a phenomenal place to learn, continue a sense of learning and academic freedom from the college days, but now in a professional setting. So I, I was there for a couple of years and I was in the thought selection side and, uh, they moved around quite a bit during that time. Yeah,
they movedaround quite a bit during that time. OK, so then from AQR we, youwent, yeah,
I went to an advertising company called Amus and really what I was doing at AQR was writing algorithms that would either buy.or sell stocks. Early days of Facebook advertising, they had just opened up the Facebook API. Advertising is not that different. You buy, hold or sell ads. And so I went to this company as a first employee. I built these trading models that effectively bid up, bid down, or held steady ads at prices at prices, a bids and budgets, and by doing that, large Fortune 500 companies were using a tool like this in order to, you know, effectively convert.Uh, clients into theirs. I get it
I,I, I, for me, that's amazing because that's a world unknown to me, right? I spent 40 years here. That's like a world unknown to me that I find absolutelyamazing.
We are bombarded by these ads all day long. I was fortunate enough to see the similarities between this world and that world and in the technology side and candidly, after spending a bit of time in finance and a bit of time in technology, what I realized is I really got to join the two together.
OK, so now that brings us to equity's end. So talk to us about, because I think this, I saw you on TV, uh, and which actually I immediately reached out to you because I said I got to talk to this guy. He's gonna come on this podcast because you got to tell us what equity Zen is and how the retail investor gets involved.
Yeah, exactly. So Eity Zen is a company that I co-founded with a couple of people, uh, zooming out. I used to work at a hedge fund. Now I'm working at a technology company. I'm not making the hedge funds salary anymore, but I've gotten the, these little pieces of paper, these.in a tech company, not just in the company I was working at, but a few others that I was moonlighting for just helping some buddies along. Some of those, you know, pieces of paper, some of those private shares ended up being worth something. I'm in my mid-20s, right? I'm in my mid-20s, not, not really making the hedge fund salary anymore. I'm looking for an engagement ring. This is a true story. Uh, I'm looking for an engagement ring. It turns out they will not take my piece of paper that my boss guarantees is worth a million dollars or in my case $100,000.Uh, I'm trying to convince them you can't buy a burger with you can't buy a house with it and you can't buy jewelry with it, and that was really the light bulb that went off for me, uh, that said, hey, look, if I had, you know, $10 million worth of stock, there's a ton of solutions. But if I have $50,000 worth of stock, which is a lot of money, it's a lot of money, and you, you know, there's just not that many solutions to what that was what has now become equities and we are a platform where shareholders.The private companies can sell their shares and investors who want to buy private company shares can, can buy them always with the blessing of the company.
OK, sothey could be, when you say in this case, when you say shareholders, you're not talking about the VC firm that's invested. You're talking about the employees that end up getting restricted shares, that's private shares that they can't really do anything with but are worthmoney.
These people are paper millionaires. Exactly right. We started off byUh, focusing exclusively on the little guy and gal that's, you know, that's, that's helping build the company, early investors wants
a little bit of monetization,
just a little bit. The whole idea is if you allow employees to sell, you know, they got a stack of monopoly money. If you make them sell two bills on top, it'll remind them, oh gosh, how many, what, what am I fighting for?
That's right.That's right. It'll create actually more loyalty, I think, right, if they're able to, if they're able to.Not all of it, just some of it. OK, so, so then let's talk about it because now I'm up, I, like I said, I spent 40 years down here serving the institutional community. Now I, I flipped to the high net worth retail side of the business. And this is why it was so interesting to me the day that I saw you on TV because I talked to clients all day long that say, how can I get access to. And, and, and I had a conversation that day and then you come on the TV and I, I jumped out of the church. I have to have this guy on this.
Podcast. So exactly what you said, Kenny, is what we're hearing from so many clients. Look, when, you know, back in the day, private markets were only the purview of institutional investors, right? So the
JoeQub could not get, could
not get access. And you know what, there were good reasons for that. What, what's happened over the last 15 years and equity has been around for 13 years and we've led the charge on this as we've said there is a way to allow responsible access.To the private market. And so what equities then does is we work with the company. We work with the shareholder that wants to sell, and we open up access with the company's blessing to accredited investors with the company's blessing who want to buy as little as $5000 or millions of dollars and everything in between. But
OK, so, so talk to me. Is there an active market or it's very, very, the market's wide. The bids and offers are wide like this.
Some are very narrow. This will not surprise anyone, kind of like public markets. There's a small number of names that are extremely liquid and the bid ask is right next to each other. And then there's a long tail of companies that until they kind of become, you know, come to the zeitgeist, the bid ask is wide, and what we see and because equities then at this point serves 750,000 households, half of whom are wealthy, 10% of whom are actually ultra wealthy.And what we've realized is we can provide liquidity at the $10 million level. We can also provide liquidity at the $10,000 level and across the entire spectrum we're doing it with the company kind of saying, you know what equity and you can get on our cap table. You can then have effectively like an, like, like a street name, like an ETF. You can then manage who has access to it under your name. OK,
so hold thatthought because we're gonna come right back after, after this marketing piece.OK, wait, so let's get back to that because I'm fascinated with this. If, if the, first of all, start like this, do you have to go out and find these private companies and bring them onto your platform? Or are there companies out there saying, look, we're available todo this.
Yeah, look, in the early days, we were knocking on companies' doors and saying, here's who we are introducing ourselves. Give me an
example of the companies.
Yeah, so back in the Spotify is a perfect example of this. Spotify was a company where everyone that I looked around, you know, I, I was working in the technology industry was using Spotify.They're moving off from Pandora. They were moving off from, uh, you know, literally using devices back then. And what we saw was, well, there's a lot of folks that actually want to invest in this company. We had someone call us up and say, I just threw my daughter's Sweet 16. Everyone is using Spotify. I don't invest in this thing. I'm not allowed to. What's what's going on? And so we went to Spotify and we said, hey, look, we've got about 3000 people who want to invest. That's a lot of money when you pull it all together. 100%. And we, we said, hey, do you have any shareholders that are looking for some liquidity?And we actually had about 12 to 13 shareholders at the time who had already signed up. We wanted to see what the company wanted to say. The company says, Oh, I don't think anyone's looking for liquidity. We said, Well would it surprise you that I've got a dozen folks who who used to work in your company or work in your company now who are candidly afraid to tell their boss that, hey, look, I love this company. I want to stay here for a while. I just want to go buy a house.
I want to pay offa loan I need some liquidity because to your point, you can't take those restricted shares and go to the bank and say lend me $500,000 again. You
you
can't
do it, can't do it.So we went to Spotify in that case and we said, hey, look, uh, here's everything. We're going to do everything on the up and up and we, we helped them with hundreds and hundreds of trades before Spotify officially went public, we had helped over 1000 people access that private stock right before it went public. And by the way, Spotify is a great example also because what happens in IPOs is that companies pop and the first time a public investor allowed gets to touch it, all the, so much of the juice.Has already been teased by a whole lot of other people.
100%.100%. Wait, so I, I gotta ask you a question. So how many names are on your, in your portfolio? If I go to equity Zen, is, is it like going shopping? There's a bunch of names that appear up on the screen and say, here's all the opportunities?
Yeah, look, we offer single name investments. We offer people the ability to invest in individual companies. We also offer basket products. A lot of financial advisors, you know, first the client comes to us and they talk to the financial advisor.About it. What a financial advisor is telling us is, hey, Atti, my client's putting in a couple 100,000 through your platform. I don't know who you guys are. Let's, let's talk. Let's, you know, let's connect. Um, and by doing that, what we're doing is two things. One, we're learning more about all the other clients a financial advisor has. And two, we're learning, hey, financial advisors sometimes have a tough time recommending individual stocks, especially without a ton of information. So what they want to do is say, do you have like an ETF? My client wants to invest in AI. Do you have like an AI fund?Or something they can invest in. Of course we do. And so that's the second offering we have is basket products for folks to say, I can't tell scale AI from data breaks from Glean AI, but I would like to bet on the tide that's rising, not no individual
boats. OK, but clarify that. Maybe I misunderstood. You don't have a publicly traded ETF.
No, these are private funds. OK,
so just so to clear it up, because when I hear the word ETF, I think of a publicly traded ETF. That's not what you have. You just have private funds that you've created.Basket. That's right.OK.
We're providing diversified access in private funds to qualified investors. Minimum investment, minimum investment as little as $10,000. Individual stocks, $5000 minimums if people want in any situation, we conduct the trades through the company and now equity Zen has now facilitated similar trades in almost 500 companies. We've done about 45, almost 50,000 of these transactions.
And what happens if there's a name that is not in your portfolio? Can I call you up and say,Can you get
me access? Absolutely. We've got order books on the demand side the same way that we've got order books on the supply side and exactly to your point earlier, Kenny, that's how we know that hey, you know what, the Brasco is, is closing in on this name. There's something going on here where there's a lot more awareness of this company, uh.And there's a lot more folks that have been around in this company for a while that are looking for liquidity. OK,
so, so two things. First, you and I need to make a date off, off camera because we have, I have to, I have to bring this to, to my, to my wealth management firm because it is absolutely an area of the market that, uh, you know, we're starting to dip our toes into it. We've got a couple of relationships, but they seem, they don't seem to be asLiquid maybe is, right? At least that's my sense. I guess we'll have a conversation. But the other part of this is talk about how you, how is it priced in terms of, how's it marked to market? How does it, how does somebody know what it'sworth?
Yeah. So one of the things that equities and provides is an estimated mark on these names. These are not publicly traded names. That's right.
Makes it difficult. You can't
just look up a ticker. But what we do is, uh, any time there's any event, any sort of price setting event we updated, and at the same time, if there's any sort of market activity that tells us, hey, look, recent trades have been having 10-20% higher than where you bought in, hey, that's just one more input into us letting you mark to market your position. OK,
butso that may not happen, that may happen every two months.That's not gonna happen daily. So, so for instance, if, if an investor gets in, here's the mark, here's the price. So that's your mark, and that, that's the mark that stays there until it's updated. It could be next week, could be 2 months, could be 3 months from now. It could be. But at the moment, that's my price. Uh,
that's your price until there's some sort of thattakes.
So if I call you up and I want to sell it.Yeah, that's not necessarily the price
though. That's not necessarily the price. What we do is we try to provide a price that is representative of where the market is actually right.
And can somebody who gets in, they buy it, say 6 months from now they're going, I want out. Can they, they can come back to you to sell it.
Sotypically it's really hard to get that liquidity unless the underlying company goes public. One of the things equity then has unless there's somebody else that wants to buy it.Uh, even if somebody else wants to buy, the company doesn't want to be a publicly traded company. That's why what Equities has provided the company with is basically an arm's length ability to say, equities and we know you, we trust you. You can get on our cap table. You manage within this SPV that's on the cap table. You manage who actually has the piece of the stock, like the fractional share, you manage that. And so with that.Trust we've earned the trust of almost 500 of these companies and I think Kennedy, one other thing that's worth calling out here a couple months ago, less than 2 months ago actually, Larry Fink at BlackRock actually added private markets into the model portfolio. They got a lot of press at the time and it's a big deal because all of a sudden you have retail investors who have 0% allocation,
100%, which is, I listen, I, I'm, I'm experiencing that.Right now at sleep so we, we've got clients that are looking for ways to access the private markets. You know, there are some very specific names, right? SpaceX, everyone, right? But, but if there's a platform that I can bring to them and say, look, here's the platform. Here's what we can help you do in that space, uh, with the help of equity. Yeah,
that's exactly right. And I think just one more thing I'd like to point out in terms of the why now.It's gonna, you know, I think 3 years from now, uh, Markro and Apoo CEO said, you know, a few years from now we're not going to talk about private equity and public equity. People are just going to hold equity and some of it's going to be public, some of it's going to be private. That line between the IPO is blurring. I think one of the things equity then is bringing to the table was responsible access to investors with the ability to say.If you want to invest in this company, there's certain things you have to qualify for. But if you qualify for them, if you understand the risks you're taking, if you're a buy and hold investor, then you can actually do this.
Arethere, would you, would you say that you, equity Zen hasA handful of competitors in the spaceor
no? Oh, the private markets have been around. I mean, equities did not invent
this. No, no, I know they didn't, but, but are there others competitors that, that, that are doing exactly the same thing. They have access. They have all
that stuff. Absolutely. There's, there's about, you know, 3 or 4 names that have, you know, all of us peers have been operating in this space. Uh, the key thing to point out, and I think this is a question every single client that's considering entering this market should.Ask is this transaction approved by the company, and I think equities and has established itself, uh, our brand, our, our, our ethos as a company that is a issuer friendly and B, uh, something that the issuers will, you know, you asked earlier, 1 out of 3 shareholders are referrals to us. It's companies saying, hey, look, I've got a small, I, I've got a VP of marketing. They're fantastic. They want liquidity, but we, we're not gonna be able to meet their compensation.Requirements in this case, can you please help them get liquidity? So we're getting referrals from the company. If your broker can't say that, then you should really do your research before you enter. Yeah, right. But,
but even just to be clear, if that, if that person comes to you, say I'm that person and I come to you, I'm trying to monetize a little piece of it. Just because I come to you doesn't necessarily mean I'm going to be able to make that monetize that sale today, tomorrow, next week. It might take a month, 2 months. It might, it might neverhappen.
That's true.
Correct, as long as right, OK.
I, you know, I think one way to think about this market is even though it says public, you know, private equity, it's closer to the real estate housing market than it is public stocks in terms of liquidity, and I think I found people find it easier to conceptualize, yeah, it might take me a month to sell my house at a price I'm happy with. That's
right. Correct. Listen, I really, really appreciated this conversation and I look forward to visiting you again 3 or 4 months. We're gonna talk about how it's changed. If it's changed, we're gonna get this.I, I'm gonna tell you, I'm gonna take this interview after we do it and I'm gonna use it as kind of a marketing piece for us to show people what this opportunity potentiallyis.
And you and I need to set that day to talk more about this offline. We
absolutely do, and we should do it over dinner one night.
That sounds great.
All right, listen, hold on one second. So you know I end every podcast with the rest because I like to cook. So today I'm giving you this lemon roasted feta chicken. You just need to savor this whole thing. It's a simple yet delicious dish featuring juice.skin on chicken thighs roasted to golden perfection alongside tender potatoes, sweet onions, and garlic, marinated in a zesty blend of lemon juice, olive oil, and oregano, then finished with a creamy, softened feta. This one pan meal bursts with Mediterranean flair, paired with a steamed green vegetable, it's effortless, crowd pleasing dinner that's as comforting as it is flavorful. And hey, if you want my take on it, you can scan the QR code.That's on the screen for the full recipe, you'll thank me later. Look, that's a wrap for today's trader Talk, but the conversation keeps going. You can subscribe on Apple Podcasts, Spotify, or Amazon Music or wherever you get your podcasts. You got questions, you want, you want me to talk about? Email us attradertalk@yahoo Inc.com because we are listening. Until next time, stay sharp, stay disciplined, and stay in touch. Take good care.
This content was not intended to be financial advice and should not be used as a substitute for professional financial services.