Kalshi's Tarek Mansour: Chaos by Design
In a Nutshell
Tarek Mansour built Kalshi to create a fully regulated prediction market exchange without ever pivoting, betting the company on winning regulatory approval for election contracts after years of CFTC opposition and legal battles. His paranoid, risk-averse approach balanced co-founder Lana's optimism, enabling them to maintain a flat, chaotic structure while navigating regulatory scrutiny, competitor Polymarket's rise, and public perception challenges around gambling versus trading. The core lesson is that asymmetric long-term bets, obsessive execution on fundamentals, and refusing to abandon the mission through variance and setbacks can produce outsized outcomes when the market finally opens.
These notes were generated by AI and may contain inaccuracies.
Tarek Mansour explains that Kalshi never pivoted. The vision was always to build the everything exchange for all different assets. They did not build Kalshi to build a company. They built a company to build Kalshi. The idea was so glaring that they felt they had to do it. Tarek says if he rerolled the dice he would probably just be a trader or risk manager rather than an entrepreneur.
Tarek describes a semi co-CEO relationship with Lana. He operates at the very high level strategy, thinking continuously about where the world is heading and where their rights to win exist. He stays extremely low in the details, including coding, marketing copy, and how the end consumer experiences the product. Lana handles the day-to-day running of the company. Tarek handles external matters including regulatory, policy, and fundraising.
They disagree a lot. Tarek says they disagree by design. They will always take the opposite side of the argument. He is the guy in the room who points out how a plan is going to fail when everyone is pumped. The continuous disagreement is a pattern that works for them because Kalshi is a complicated company that requires constant balancing between regulatory risk and innovation. The debate drives them toward the middle so they avoid oscillating between extremes.
Having two equally powerful co-founders prevents either from straying too far because people who report to them will not always tell the full truth due to different incentive structures. Tarek is the more conservative of the two and handles the regulatory side. Lana is faith-based and irrationally optimistic.
Tarek describes himself as a risk manager who is paranoid and thinks probabilistically about the world and all the things that could go wrong. This tension with Lana's optimism has led to all their decisions over time. For a company that must get regulatory matters right, his approach serves as the forcing function.
Tarek admits he is very bad at a lot of things and is a procrastinator who is disorganized. Lana orchestrates everything. He gets obsessive about certain things and learns them quickly. He is not naturally a good marketer but obsessed about it long enough to become effective.
Tarek grew up with a single mom in Lebanon after his dad left when he was six. Lebanon is volatile with lots of ups and downs. His mom was paranoid and a tiger mom who was intense and uncompromising. She sacrificed her career to ensure they were okay and wanted them to return to America and attend top schools. Her personal pride became tied to her kids' success. The bar was extremely high. Coming in second in sports was considered bad.
This created a hyper-competitive nature and the belief that there is always an answer. You bang your head against the wall and figure something out. Tarek does not believe in the dichotomy of things within and outside his control. He believes some people can bring more things into their control. As long as it does not break the laws of physics, things can probably be made to happen.
Tarek says he is making it up as he goes. He and Lana are entrepreneurially illiterate and have not read all the books or watched all the podcasts. He looks up to Elon Musk for extreme boldness and ability to attract talent. He admires Tony Hsieh for operational discipline and execution. He also observes how the Carlsons created brand aura around their company to attract talented people.
The company headquarters is in New York because it has stronger market fit with the talent needed for their mission of building the next generation exchange and fundamentally rebuilding Wall Street. Recruiting top 1% talent would have been harder in other locations.
Tarek and Lana have approximately 130 direct reports. Most of the company reports to the two of them. This structure is unusual because it is small, has zero hierarchy, and people report to both founders. Tarek acknowledges it is kind of chaotic but the benefit is continuous constant adaptability. The company can reorient and reassemble around the biggest challenges or opportunities with no friction.
He describes the organization as a complex system where organisms and cells are moving around. In an accelerating world, structure needs to be as adaptable as possible. He readjusts fundamentals every month or two rather than every three to four years.
Board meetings are hazy with little structure. Kalshi is not super metrics-driven for decision-making, though they are very hardcore on risk metrics like customer margins. Conversations focus on what customers are saying, pockets of demand, where they can be first or most aggressive, and where they have a right to win. One or two key challenges tend to dominate.
Over the past 18 months, challenges shifted rapidly. After the election, focus was on proving the network effect engine would create a chain reaction and drive adoption of other products. This worked and compounded growth.
The next focus was proving the broker strategy worked. They wanted to become an infrastructure layer enabling brokers like traditional financial markets. After brokers became 80% of revenue, the priority shifted back to scaling the direct-to-consumer side. Brokers are now back to 10% of volume.
They moved through elections, sports, financials, consumer business, and B2B enterprise motion within about eight months. When reaching mainstream, society pushes back and demands clarity. Since January, regulatory positioning as a safe and responsible actor has been the number one priority.
Tarek strongly believes there needs to be at least one founder involved in any big meaty problems the company must get right.
Tarek Mansour explains that on major strategic issues, either he or co-founder Lu takes primary responsibility and faces scrutiny. He notes this may evolve as the company matures but currently views the CEO role as analogous to steering a ship at full speed while managing a persistent leak. He describes two organizational approaches: founders who stare at the hole constantly, or those who delegate it. The latter often leads to covering the problem temporarily with a rug, but the hole eventually sinks the ship.
In January, the major hole was differentiating regulated onshore prediction markets from unregulated offshore platforms like Polymarket. Kalshi had taken regulatory compliance seriously, but public awareness remained low. Significant progress has been made on industry reputation, though work continues to communicate that regulation is the right solution. Mansour draws a parallel to AI: the solution is not deceleration but adding appropriate guardrails, and figuring out how to communicate those guardrails effectively.
Mansour believes Polymarket's regulatory and marketing scrutiny is bad for Kalshi. He argues that competition is rarely a true company killer in large markets. Rather than moving in lockstep with competitors, Kalshi aims to zig when others zag. He believes in abundance and that companies should iterate, ship products, and find untapped markets rather than obsessing over direct competitors.
Kalshi has reached 95% US market share in sports and leads across the board. Though they started in 2018, the public relaunch came at the end of 2022, with the proper launch at the end of 2024 when election markets became available. Polymarket launched in 2019 without a license. Kalshi's dogmatic approach was to do things the right way. Two reasons drove this: practical necessity in financial services where cutting corners leads to bad outcomes, and a philosophical desire to build the next-generation New York Stock Exchange from within rather than offshore.
Once Kalshi received regulatory approval, trajectory became parabolic. The combination of long-term foundation building and superior product and growth execution enabled faster compounding. Mansour emphasizes that believing in a good market and building a solid foundation is worthwhile even during periods of slower visible growth.
From 2018 through the years before approval, the company faced CFTC opposition and government attempts to shut them down. The lowest period involved constant grief, false hope, and mirages of progress that proved false. The company never pivoted. The name Kalshi means everything in Arabic, reflecting the vision of building an exchange for all asset types. Mansour notes they built the company to build Kalshi, not the reverse. The idea was so compelling that he felt compelled to pursue it despite not originally aspiring to entrepreneurship.
Mansour references The Dip and Ben Horowitz's The Hard Thing About Hard Things, highlighting that the difficulty lies in the absence of external reassurance that things will improve. The number one risk is giving up. Both founders had moments of doubt, with Lu being more stubborn. Mansour believes that with a long enough time horizon, you either win or run out of money. He notes runway can usually be extended and pivots are possible, but giving up is the real killer. However, he cautions that founders should assess opportunity cost and consider whether the idea is truly worth the years of hardship. He distinguishes between pursuing an idea you're genuinely passionate about versus chasing the post-success narrative, which he views as a poor reason to continue.
Mansour describes the life of a scaling CEO as lacking the traditional work-life balance. Entrepreneurs move from one desert to another, or from desert to storm. There is no final oasis. He works continuously, waking at 7 AM, arriving at the office by 8 AM, and leaving around 10 PM, with additional work at home. Weekends involve one dinner out and often office time on Saturday and Sunday. He does not mandate this for employees but believes founder behavior creates natural motivation. At 150 employees, the company is approaching Dunbar's number. Mansour notes they have kept support under 10 people through automation and questions how much the team will scale linearly versus through brand and marketing leverage.
Mansour attributes his attention to detail and perfectionism to his mother's influence and personal OCD tendencies. He emphasizes that results live in the last 10%. Marketing requires hitting a resonant frequency where small improvements yield dramatically better outcomes. Examples include real-time billboards in Times Square and LA that mirror the app experience exactly, requiring 20 iterations to perfect. Timing is critical: Messi partnership launched two days before his final game, Timothy Chalamet commercial ran 12 hours after the Knicks incident, and Giannis announcement came the day after his contract decision. AI video timing was also deliberate. He notes that counterparties like CNN and the New York Times have their own processes that must be navigated to achieve optimal timing.
Kalshi has no traditional head of marketing. CMO Allan handles scientific media buying with high ROI. The brand lead has no direct reports and focuses on creative execution, having previously run the Inverse Kramer Twitter account. This approach has worked for both consumer and institutional audiences, keeping Kalshi top of mind while maintaining robust institutional infrastructure.
Mansour notes that suing the CFTC was ultimately the right decision despite the political realities of such actions. He acknowledges that being legally correct is insufficient when political factors are involved.
A lot of things are political and depend on how the winds are shifting. The government is truly all-powerful and can just do things to private companies. By the time you hold the government accountable to something, you will probably be dead or the cost would be so ginormous. The government doesn't really incur any cost and is protected from any cost.
There is context around the election market push because Kalshi started trying before they even launched to the general public. In the end of 2021, they started talking to the government, saying they wanted to do this, explaining why it was going to work, that it was going to be the most accurate gauge, and how it was legal. The government initially said they would work with them. Month after month, they would not give it to them. Tarek had bet the entire company on the election market for the 2022 midterms. The board was ready for it. The government kept delaying until they pushed it after the midterms. They pocket vetoed it without saying no, just managing to politely delay enough that it did not happen.
This was heartbreaking. Kalshi started in 2018, got to 2021 excited about launching, got approval to launch, and then the election market got banned at the end of 2022. They launched with a very limited set of things that was going to be very hard to get the exchange running, but they were banned. They lost a lot of the team over it. A bunch of people left. They had to do a layoff.
There is a concept of expected outcome and outcome, and they are often not the same. There is variance in the outcome. The expected outcome is based on your decision-making where it should land, and then there is a bunch of variance in the world that pushes you in either direction. The world does not reward you for expected outcomes. They reward you for outcomes. Expected outcome is what you have control over, which is the work you do.
At that point, the coin flip landed against them and the entire world was saying wrong strategy, wrong execution. Tarek is a big Messi fan, and Argentina won the World Cup, which made him super happy. The day after Argentina won the World Cup, the French population wanted to kick out the French coach Deschamps, who is an absolute legend. He won them the prior World Cup, had an incredible performance, got them to the final of the next World Cup, and to the penalties. Penalties are a coin flip. The number of teams that made it past the group stage after having won a World Cup is basically trivial. It is very hard to go twice in a row.
Deschamps flipped the coin and it landed against him, and people wanted to sack him immediately. Kalshi lived through that same dynamic. People lost confidence and said they should pivot, that it was wrong strategy, wrong execution. They were not doing a good job. It is on the founders and it is fine to hold the fighters accountable.
The key learning is that the best poker players know when they are playing a good hand and are okay with the variance. They can lose a lot, but they stick to their game. They know that over time the variance is going to come back and with enough plays, they are going to win over time. You see this with Elon and with some founders that can take these extreme risks as long as they know their expected outcome and can intake the variance over time. There is a lot of alpha in there. Founders that have gone through that multiple times gain a certain level of confidence that is hard to describe. It is like they have gone through it and are okay with the fluctuations.
In the moment, it was not making sense. But now in the rearview mirror, after 2022 happened, their answer at the time was that they had to reset and do something else. They wanted to build Kalshi and could not do it without the election markets. They were going to try again. They went back to the board and said they were going to try again. Everyone thought they were delusional. They tried until the end of another year, until the end of 2023, and then they got a rejection.
It went from a low to a lower. They were in the room asking what to do again. It was a roller coaster. They decided this time they would sue them. When they got the email that said no, right away the decision was made to sue. That summer they figured they were probably going to get a no again, so they should start preparing the lawsuit.
They started talking to the board. They had a lot of conversation with Alfred and Michael, who was at the board at the time. When Tarek first pitched Alfred on suing, Alfred said it was a crazy idea. They were a tiny startup. Even if they won, they were probably going to incur significant costs and probably going to lose. Alfred was right. They were probably going to lose. Coming from their size, even bigger companies never win against the government. The government has all power over you. They are your own regulator. Suing them is going to mean they are going to kill you.
Tarek was super dogmatic and was battling it. He would oscillate all the time, thinking this is crazy and they are going to come after them personally. CEOs are going to love this because Tarek oscillates all the time on stuff like that. He hid his oscillation as much as he could, but it definitely showed up. It is okay because it is hard to have the right answer. It is so complicated.
Tarek was still oscillating the night before they were going to file. She went so hard and said they should just do it, that they were wasting time. Everyone else in the room had this missionary feeling that they came so far and should just go full on war and bet everything.
In Tarek's poker head, there was probably a 20% chance this would work and a 1% chance. It was so hard to prize but he thought through all of it. Alpha was right in many ways. They could kill them because they could essentially yank the clearing house from under them and kill the company. They would die maybe even before they even got the result, which was a risk. They could do death by a thousand paper cuts and start doing a bunch of things to them. But if it did work, the outcome was so big and the expected value seemed pretty attractive actually. Even with low percentage odds of success, the outcome was so big. It was an asymmetric bet, a big one. They bet the farm and said let's see what happens. No plan B.
The timing was extremely good on winning. The litigator Yakov Roth led this. Tarek picked him because he is extremely smart. The thing that Tarek felt he was really good at was that he had a missionary quality where this man wakes up in the morning and thinks about how to put the federal government in check. In the summer of 2024, Yakov called Tarek and Tarek got really anxious. He thought the court hearing came. Tarek told him to never call him again until the decision, only text, because in the 10 seconds where Tarek had to pick up the phone, his heart dropped.
Tarek was sitting at his desk with Rainer, one of their engineers, sitting next to him. Yakov's name popped up on the phone. Tarek's entire body felt paralyzed. He picked up the phone and asked why he was calling, and then Yakov said they won. Tarek does not remember after that. They were throwing chairs out in the office. They basically destroyed the office. It was unbelievable.
In that year they suffered so much. The competitor was probably getting the brand. They were staying true to their strategy and were going to stick to it. The government was yanking the clearing house from under them. There was enforcement action after the other. They were finding random things to just create actions against them. Audits that usually take 10 days were taking nine months. It was truly painful. The whole warfare thing truly happened and they made their life miserable. Not just the company, but they owned personally. It was kind of this intimidation tactic up until you cave, up until you are so exhausted.
It was vindicating. It was nice. They finally had the opportunity to win for the first time.
Tarek knew this was going to work. It did not work like way better than he thought in the first few days. All things, you have to build emotion and you have to build a brand. You win and then you are like let's launch it, and then nothing happens. The time they won this case was three and a half weeks before the election. The timing was random. You have to get it sometime. Tony says sometimes you need luck. Tarek thinks part of it is that they took risk and they took five or six years of expanding that luck surface area.
After they started compounding, it started working even better than imagined. It takes time. Everything takes time. In those three and a half weeks, they had three and a half weeks to make this go mainstream. Everybody was in the office. Tarek would shower maybe once every four days. He did not care about anything. This was his shot. They worked so hard in those four weeks. It was slow but then it started upticking and then the machine started going and when it started going it was beautiful. Tarek's 21-year-old son and all his friends use Kalshi.
There are similar impulses between trading and gambling. Tarek thinks about the policy aspects a lot and cares about that. His paranoid brain does not want people to get hurt. With all technologies, people inevitably get hurt. They will use it in a bad way. This is true for Airbnb.
At some point you are going to build something very big, especially in consumer, and when it truly hits mainstream you are going to get haters. There is going to be a bucket of society that is going to be worried because they do not understand it or they do not get it. They are worried about the risks. A lot of people do not see the point of AI. Why lose our jobs over something that can do our homework better. Tarek thinks they are missing the point obviously, but you need to educate that part of society.
Then you have incumbents because inevitably if you go mainstream, you are going to be taking it from someone. Those incumbents will go very hard after you. When the taxis went after Uber, they did not go after them saying their margins are threatened. They said it is unsafe and kids are getting hurt and kidnapped. Airbnb was the same thing with the hotels. They would find one case of one person that had a very terrible bad experience or something really horrible happened and they would blow it up in the New York Times. The press likes scandals and drama.
For Kalshi, the easy low-hanging fruit is to call it gambling. Pretty much all trading products that have ever come to society have come through a fight of them being called gambling. Grain futures were actually legalized with the Supreme Court decision in the 1900s. Futures, a boring commodity futures market at the time, the states were suing. The farmers were 20 and 18. The age to trade futures is 18. At the time there was nothing else. This was the primary mechanism of speculation. That is what everybody was doing. The claim at the time was that this is gambling and we should basically regulate as gambling and not as a financial market. The Supreme Court said speculation does look like gambling because it does. But there is a price discovery aspect to this where you are on an open transparent exchange where people are trading against each other that makes it a financial market and that is why it needs to be regulated as a financial market.
There are a few things that are very important. One is the incentive structure in the model. Tarek does not gamble. He does not really like gambling. He likes trading. Gambling is a business model where the revenue of the company is equal to the customer's losses. Over time, you block the winners. They do not want the smart mathematically oriented people that are doing research. They want the people that continuously lose. Those people, they give them promos to come back and that is how you create these addictions. They cannot really solve the problem of addiction because the revenues are equal to the losses. Over time, you have to increase the losses. You have to create those types of behaviors or at least not throttle them too much.
The losses do not go to Kalshi. That is the beauty of a derivatives market. Kalshi takes a 1% fee whether somebody loses or not. So when someone is exhibiting bad patterns, those losses are going to someone else. Kalshi has all the incentive in the world to basically throttle them and figure out how to get it right.
In a casino, they try to block the card sharks. But in Kalshi's world there are a lot of card sharks betting against people who are going on a gut feel. That is absolutely right. It depends on the incentive structure. Tarek wants smart trading. He wants to incentivize people to do research because the more liquid, the better the forecast, the more truthful the forecast, the more people look at it, the more the top of funnel increases. Tarek wants the smart traders, which is a very different structure from the casino, where you do not want the smart behavior. You want just the excessive money losing, continuously money losing behavior.
Not everybody wins on Kalshi. Not everybody wins in the stock market. Not everybody wins in the options market. Not everybody wins in athletic competitions. Not everybody wins in competitive environments and highly competitive environments. It is a highly competitive activity in nature. Inevitably there is going to be some people that win and win more. How many people win the NBA finals or how many people win the Champions League. It is a small percentage of participants.
Everybody can win. It is a fair neutral platform. Tarek's incentive is to give as many tools as possible for people to do the right thing and do research. What Kalshi does really well is take this issue of excessive behaviors pretty seriously. For example, in the 18 to 20 bucket, Tarek thinks the data does not show dramatically different behaviors but society tends to be worried about that. They add a lot more throttling to the accounts. You cannot basically lose too much in excess. They add throttling and start asking for additional verification that makes it so there is a lot of friction for you to keep going. The reason they do that is because the positive sides of this, when Tarek asks the parents and the mom question and their 25-year-old is trading on Kalshi, what they get excited about is that they are actually getting smarter about the future. They are smarter about the world because the alternative is they are spending time on Instagram and social media where it is extremists and all the hate and constant brain rot.
They get addicted to that of course but they cannot lose all their money on it. Tarek thinks they are losing a lot more. They can lose their brain. Tarek thinks sometimes he is losing his brain on that. But the point is they are spending time getting smarter about the world, which is the whole premise of what they are building. This is going to be the ultimate antidote to a lot of the polarization and extremism we are seeing because these calibrated well-reasoned takes are not getting rewarded on social media, but they get rewarded in prediction markets. That trains people over time to get a little bit smarter. Tarek wanted it to be a tool for that especially for younger people rather than a tool where people are losing all their money and doing excessive behaviors.
There are easy ways to do that which is you can cap how much people are doing. You can throttle these accounts. One of the things Kalshi does very well, better than even some of the financial brokers or traditional brokers, is they self-regulate. They do not just do what regulation requires them to do. They go above and beyond because Tarek thinks about all the risk. Minors are obviously banned and they do KYC. The way that minors access all these platforms is they use their parents' IDs. One of the things they created is a parent portal where moms and parents can give their ID and tell them do not let anyone else use it. That solves 95% of the issue.
Tarek thinks they are doing a great job and the numbers show that the percentage of people that show these signs of these patterns of excessive behaviors or are losing excessively or losing in general on Kalshi is actually lower than options trading and lower than any active trading of stocks. If you buy a stock and hold it for five years, it is investing. But if you are trading it on a daily basis, 75 to 80% of people lose. Tarek thinks people have not come to terms that there are irresponsible behaviors in all these markets and the way to do it is you have to figure out how to flag these behaviors and basically get better at throttling them.
One piece of advice is to really question really hard why you are doing it. If it is not for the company itself, the thing that you are hoping to get is probably not really there, which is a glamorous life. Tarek never found it the least bit glamorous. It is obviously financially rewarding at some point after there are many ways to do that these days. The option cost is very high. You can join a fast growing company. There are so many ways to do that. The monetary reward just feels like risk-adjusted is probably a stupid move. If you adjust also for lifestyle and amount of pain, it gets pretty unattractive.
If Tarek's little brother comes to him and says he wants to start a company, Tarek just says why. He pushes back. Why. Explain what it is like. If the answer is I want to be my own boss, Tarek says you are not really your own. You have got a board. You work for all your employees. You work for everyone, your users. If you are a good CEO, you
If you are a good CEO, you basically work for everybody. The sense of freedom that comes with the role is not real in any way. The CEO is the least free, and the more the company grows, the less free the CEO becomes.
There is a strong belief that a company, product, and marketing must be true to the founder. Building something that is not aligned with who you are makes the process very difficult. When you meet the founder or CEO of a big company, it becomes clear that the company reflects their personality. The office and culture match the founder. People often try to figure out the right ways to do things rather than being themselves.
Be yourself, everyone else is taken.
The host thanks Tarek Mansour for appearing on the podcast and congratulates him on his success. This marks the second time the host has met Mansour, describing him as a gem.
Mansour is highly mission-driven. He had a clear vision of how he wanted to see the world change, and the company was built as a vehicle to accomplish that mission. This approach mirrors how HubSpot began, where the founders wanted to shift marketing from outbound to inbound and created a company to execute that idea. The original focus was an idea, not a company. Mansour is described as very obsessive and mission-driven.
Many founders today focus on winning Twitter for the day and make short-term decisions. In contrast, Kalshi and SpaceX made significant foundational bets, remained patient, and were rewarded when those bets paid off. More founders could benefit from adopting this patient, long-term approach.
Mansour has a unique relationship with his co-founder Lana. Lana is the organized one and very risk-seeking, while Mansour is more scattered and risk-averse. This dynamic is the opposite of what the host initially expected. The partnership works well because the two complement each other, creating a 1 plus 1 equals 3 effect. The host compares this to his own relationship with Darmsh, noting how complementary the two are.
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