Beating the Odds – Susquehanna International – Jeff Yass
Besides, who can resist him? Yass might be thin and bald and pale and quiet, but he came up with a system for making hundreds of thousands of dollars betting on the ponies. He hosts poker tournaments in his company’s offices, and used to walk around the trading floor on slow afternoons at Susquehanna offering a thousand dollars to anyone who could guess a number between one and 1,000 that he had selected, according to a former trader who beat the thousand-to-one odds and guessed right. (Through its attorney, the company denies this.) Once, Yass offered his golf caddie a ridiculous amount of money (company lore has it at one million bucks) if said caddie could make a hole in one. Yass clearly decided, a long time ago, that he was going to have fun getting rich — and then more fun spending his dough.
YASS STARTED SUSQUEHANNA, for all intents and purposes, in his dorm room at SUNY Binghamton. It was 1975. Yass played poker there with friends, mostly middle-class Jewish kids from Queens (like Yass) or Brooklyn. They skipped class and went to the racetrack. But Yass’s crowd wasn’t like other college kids. They were science geeks — Yass himself majored in math and economics. The poker and betting on horses was cool and fun, but much more than that. The prism of probability and game theory and risk-taking could be applied to practically everything, Yass decided. It was all about finding edge, how one thing plays against another. About figuring out the better way. Traders at Susquehanna joke about looking for edge from the moment of first light, with the decision of which side of bed to get out of. Though it’s not really a joke. June Binney, who befriended Yass as a student at Binghamton, would hang out and marvel: “They really believed there were rational decisions for anything that came their way.”
Self-styled intellectuals with a taste for cards and ponies: They didn’t have much money — some came from summers spent bussing and waiting on tables at the Concord Hotel, a sprawling resort in the Catskill Mountains 90 miles northwest of New York. But they bet to win. Yass studied the Racing Form in the student union. Other students reportedly gave him money to wager at the track, to risk as he saw fit because his game-theory approach worked. Yass’s thesis for an economics course, “An Econometric Analysis of Horse Racing,” was published in Gambling Times magazine. His approach was simple: Make something supposedly built on chance rational. Turn the odds in your favor. Figure out the edge.
It wasn’t purely about money. Jeff Yass’s senior thesis concerned the social value of stock options. (He received a B+.) Jory Weitz, now a film producer in Hollywood, lived on the same floor as Yass: “With a mind like his, you have to be brave and step outside the box, to be stimulated. He was that kind of guy.”