pepegaQuant

Jane Street made ~$40B in 2025 with 3,500 employees, a ~2x from the year before. At ~65-70% profit margin, that's $8M profit / employee, the highest for a 1000+ ppl company. High-frequency trading continues to be the most efficient money making engine. I want to share an old story about my Jane Street interview in 2014. Jane Street was known for hiring a lot of math, physics and CS olympiad winners from top universities and putting them through many rounds - including, for trading roles, a gauntlet of mental math. It was my 6th interview and my final round and I recall being asked "What is the next day after today in DD/MM/YYYY where all the digits are unique?" They'd toy with you and say "You can use a pencil and paper, if you want" but you knew that was an instant no. Painstakingly and as quickly as I could, I came to an answer. "How confident are you that this is correct on a 0-1 probability scale?" the interviewer said. "0.95", I blurted out, not fully knowing how to answer that. "Are you sure?" After thinking harder for a few more seconds, I realized I could've flipped the digits around to get a closer date. I gave the interviewer my answer. It was correct. "0.95 huh?" he chuckled. That's when I knew I failed. Note: fwiw, other companies that come close in efficiency are - Tether ($90M+ profit/emp) - Hyperliquid ($80M+ profit/emp) and on revenue: - Valve ($50M/emp) - OnlyFans ($37M/emp) - Craigslist ($14M/emp) - Anthropic ($12M/emp, run rate) - OpenAI ($8M/emp, run rate) For comparison, Nvidia is very efficient at scale and is $4.4M/emp.

[ ZOOMER ] CRYPTO FIRM PARADIGM TO EXPAND INTO AI, ROBOTICS WITH NEW FUND: WSJ

WSJ Headline: OpenAI Wants Federal Backstop for New Investments What was actually said by OpenAI CFO Sarah Friar: Friar: "And so this is where we're looking for an ecosystem of banks, private equity, maybe even governmental... the ways governments can come to bear." WSJ: "Meaning like a federal subsidy or something?" Friar: "First of all, the backstop, the guarantee that allows the financing to happen. That can really drop the cost of the financing, but also increase the loan to value, so the amount of debt that you can take on top of an equity portion." WSJ: "So some federal backstop for chip investment." Friar: "Exactly, and I think we're seeing that, I think the US government in particular has been incredibly forward-leaning, has really understood that AI is almost a national strategic asset, and that we really need to be thoughtful when we think about competition with, for example, China. Are we doing all the right things to grow our AI ecosystem as fast as possible." WSJ: "Are you talking to the White House about how to further formalize that kind of backstop?" Friar: "We're always being brought in by the White House to give our point of view as an expert on what's happening in the sector, for sure." WSJ: "Is there something in the works that's tangible?" Friar: "Nothing, nope, no, I love you Sarah, but nothing to announce, nothing that's going on right now." So, basically, OpenAI mentioned they'd (obviously) be open to some form of potential government financing arrangement in which the government backstops loans made to OpenAI, after first naming banks and private equity. "Banks, private equity, maybe even governmental..." And then the WSJ reporter repeatedly hounds OpenAI's CFO about whether the White House is actively engaging with OpenAI on some form of financing (to which the answer was no). It's almost as if a few years ago the White House doled out hundreds of billions to the green energy industry... Is it really that unreasonable for OpenAI to at least be exploring some government involvement in AI? The actual more important quote from OpenAI's Friar today was that OpenAI's gross margins are "very good software margins", which implies 75%+ as opposed to the 50% or below that's been rumored. But of course this doesn't make nearly the headline...

What did you learn today?