Posted Thursday, January 5, 2023 12:00 am
By Shaun Ryan
For businesses that are not mega-corporations, a fluctuating marketplace can be a source of great suspense. That’s because an unpredictable downturn in price can prove devastating, especially in manufacturing or in agriculture, where crops must be planted far in advance of any reliable financial forecast.
But there is an answer: derivatives trading. It safeguards the producer against unmanageable losses. For the investor, it’s a gamble made in hopes of an eventual payoff.
For this process to play out, however, there must be a marketplace or exchange, a neutral place that makes the trade possible. And, unless a business is extremely large, it can’t get a seat at the table.
Enter Outcome Trading, the brainchild of Steven Hertzberg and Peter Harrigan. The former is an aerospace engineer by education with three decades of experience in launching startups. The latter is a financial expert with 35 years of experience.
Outcome Trading makes it possible for investors to trade in derivatives for these smaller concerns, thereby insulating them against falling prices.
“We are the exchange,” said Hertzberg. “We simply facilitate all of this.”
The company’s income is derived from fees it charges for facilitating these transactions, where regulations allow.
The idea for Outcome Trading originated in 2013 in San Francisco. Hertzberg began to attend meetups with a dozen or so others, most of them working in technology. These informal meetings of like-minded people broached a number of topics. In these discussions, Hertzberg and Harrigan began to see the potential in derivatives trading. Though the size of the individual businesses to be traded was small, the market as a whole was gargantuan — in the quadrillions of dollars.
The men shopped their idea to venture capital firms in Silicon Valley but found these companies didn’t understand finance. In Chicago and New York, they approached financial firms but found these companies didn’t understand the concept being proposed.
“We were like in no man’s land for several years,” said Hertzberg.
They spent those years developing their idea. A key component was the creation of Grey Swan Digital, a company that created the technical platform that would help realize two of the main goals: making the trades extremely easy for investors and making representation inexpensive for producers.
Due to embedded intelligence, the technology does all the hard work. Potential investors need only draw a line on a chart to determine desired earnings and how much risk is acceptable. It is so easy, virtually anyone can do it.
“What you draw on that curve is what you’re going to get,” Hertzberg said. “I don’t need to know anything. I don’t need to know any jargon or anything about derivatives trading. I just need to know price and how much I’m going to get if it goes to that price.”
Hertzberg and Harrigan maintain a YouTube channel with a number of related videos, but for the beginner who simply wants to understand how the process works, the best place to start is perhaps at youtube.com/watch?v=Rv33tmfFEF8.
In two minutes, the viewer can become a derivatives trader. It’s literally that easy.
Hertzberg is a native of Southern California. He was educated at Purdue University and even before earning his bachelor’s degree was already working on the development of the Apache helicopter. He went on to launch 13 startups across a spectrum of industries and eventually found his way to San Francisco, which was where things were happening in the tech industry.
He credits Raghu Misra, co-founder of the link, with inspiring him to move his family across the country to Nocatee.
“I’ve been virtual for 25 years; COVID didn’t change my life at all,” Hertzberg said. “But when I found this place, I was here in November (2021) trying to scope out where I was going to move my kids. I wanted to be close to the beach, and I had to have good schools for my kids.”
He found all he was seeking in this area, but the last piece in the puzzle fell into place on the last day of his visit to the area, a Saturday when Misra showed him around the link, a co-working space and incubator at 425 Town Plaza Ave., Ponte Vedra.
It was the right fit, and today Hertzberg has a dedicated desk at the facility.
To learn more about Outcome Trading, go to OutcomeTrading.org or twitter.com/outcometrading.