# The trading firm expanded before it built management systems Markdown copy of https://realalpha.app/s/the-trading-firm-expanded-before-it-built-management-systems/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy. - Speaker: [Nick Kokonas](https://realalpha.app/people/nick-kokonas/) · Nick Kokonas is an entrepreneur, options trader, restaurateur and software founder. · Built Chicago's Alinea Group and co-founded Tock, the restaurant reservations platform later acquired by American Express. - Host: [Shaan Puri](https://realalpha.app/people/shaan-puri/) · Co-host, My First Million · Sold Bebo to Twitch in 2019; co-founded the crypto newsletter Milk Road. - Show: My First Million - Episode: [How to find your arbitrage (from the guy who’s done it 3x)](https://realalpha.app/v/YdRLpWQARtA/), Oct 26, 2026 - Moment: 36:02 to 40:54 of the episode (5 min), playing on https://realalpha.app/s/the-trading-firm-expanded-before-it-built-management-systems/; the episode from there: https://realalpha.app/v/YdRLpWQARtA/?t=2162 ## Quote > “**we didn't know how to build** a layer of management and accounting and we're terrible at that” > — [Nick Kokonas](https://realalpha.app/people/nick-kokonas/) at [37:03](https://realalpha.app/v/YdRLpWQARtA/?t=2223) · My First Million ## Takeaways 1. A shrinking edge can make expansion tempting. 2. The firm lacked management and accounting systems for growth. 3. Nick left when the work stopped fitting his life. ## About this segment As the original arbitrage narrowed, the firm expanded into other markets without the management systems to support it. Falling volumes and personal costs helped Nick Kokonas decide to leave. From “How to find your arbitrage (from the guy who’s done it 3x)”, Oct 26, 2026. [Watch the full episode](https://realalpha.app/v/YdRLpWQARtA/) ## Transcript Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there. [36:13](https://realalpha.app/v/YdRLpWQARtA/?t=2173) Well, so the following year, you know, of course, any arbitrage is going to be a window that closes. and they close quickly or slowly, but they're always going to close. So the timescale of that kept getting shorter. Other people figured it out. We started adding computation onto it. What had happened is that some of the older partners in New York made so much money that year that they went, this is what I've been waiting for for 30 years. [36:37](https://realalpha.app/v/YdRLpWQARtA/?t=2197) I'm out. Yeah. And at that time we were taking, like we'd see like a small trading company that was distressed in Boston at the Boston Stock Exchange. We'd be like, how much do they need to like keep them in business okay next thing you know i'm on a plane to boston and some 30 year old dude with a computer is telling these guys who've been there for 40 years like here's how we're going to run your business now right that did not go well like you know what i mean like so there is over expansion not because of anything other than like oh yeah well we'll take what we've learned and we'll apply it to new things but we didn't know how to build a business we didn't know how to build a layer of management and accounting and we're terrible at that and some of the guys the following year made half of what they made in call it 2000 2001 so 2002 comes along trading [37:29](https://realalpha.app/v/YdRLpWQARtA/?t=2249) volumes go down we're not doing anything wrong we're just making a lot less money so a guy that made two million dollars you know he's making 50 grand when i met him and he makes two million it's like athletes or something now million feels and you get poverty yeah and then all of a sudden it's like they make 800 000 two years later and they're like yeah this is bullshit right and then you get the rock band syndrome you know where everyone's starting to you know get a little salty and all that but we're all super fortunate and i just got like i've said eight times in the beginning i was a terrible manager of people i probably still am and i just didn't enjoy it like i got to the point where i had run really hard for 10 years um my dad died in 01 i was very close with him 9 11 happens we had people that worked on wall street everyone was okay but [38:18](https://realalpha.app/v/YdRLpWQARtA/?t=2298) i definitely knew people who were not and i left that year going what am i doing like i need to dial dial this back and i wasn't a good parent i wasn't good husband i wasn't i just wasn't being a good person i go to dinner parties and i'm like can we just move shit along people like you know because it's like it just felt like there's not the trading floor yeah yeah i mean the world felt slow yeah and i grew up caddying i'm a lifelong golfer so all of a sudden i would find myself playing golf with ex-professional athletes who were in their 30s who were famous big time guys and they were like miserable and like they took golf way too seriously and they played for big money and i was like there's no edge like why are they gambling on golf like you know i don't understand what's going on i didn't consider myself a gambler i consider myself an arbitrageur [39:18](https://realalpha.app/v/YdRLpWQARtA/?t=2358) and i just looked at them and i got the nudge from the wife like hey you're you're not pleasant to be around and I'll all that. It wasn't really a nudge. It was a, you know, slap, you know, slap in the face to her credit, like, you know, and yeah. And I just remember one day going, waking up going, I think I'm out. Like, I think I need to like take a sabbatical. It sounds like I remember I called Keith and I was like, I think I need to take six months off. He's like, you don't get six months off. Like you want to take six months off and get paid. And meanwhile, the options group that you're building is not doing as well as the you know xyz you know i was like man what am i doing here you know like i i kind of figured something out i'm not enjoying it anymore i should quit and i and i did i walked into like a group and i and they were all infighting one morning and i was like guys [40:09](https://realalpha.app/v/YdRLpWQARtA/?t=2409) just so you know like this is my last week here and you're all getting paid out and some of you will get some equity and i'm gone and people are like what are you talking about like this is bizarre you know and in hindsight i probably didn't do a good job of of that in terms of like i was with my partners i was super communicative but like also like you can't go hey i might be leaving in the month right you know that's just not something you can do And so I did. [40:40](https://realalpha.app/v/YdRLpWQARtA/?t=2440) And, you know, we had a young son and now there's no game to play.