20VC: Kalshi's $1BN Raise, the Polymarket Feud, and the Battle to Replace Traditional Media
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
Tarek Mansour, Co-Founder and CEO of Kalshi, joins the podcast fresh off their monumental $1 billion fundraise at an $11 billion valuation, plus exclusive partnerships with CNN and CNBC. (00:20) This episode dives deep into the prediction markets revolution, exploring how Kalshi is transforming from a niche financial product into mainstream media through their "ChatGPT moment" during the 2024 election. (00:08) Mansour discusses the fierce rivalry with Polymarket, the three-year legal battle against the government, and why he believes everyone is an expert on something - making prediction markets more democratic than traditional Wall Street trading. (22:10)
- Core themes include the democratization of financial markets, the power of resilience in entrepreneurship, and building regulated-first businesses in highly competitive spaces.
Speakers
Tarek Mansour
Co-Founder and CEO of Kalshi, the leader in prediction markets that recently raised $1 billion at an $11 billion valuation from top-tier investors including Sequoia, a16z, General Catalyst, IVP, and Meritech. Mansour has led the company through a three-year legal battle with the government to establish regulated prediction markets in the US, positioning Kalshi as one of the fastest-growing companies in America outside of AI.
Key Takeaways
Regulatory-First Approach Wins Long-Term
Mansour emphasizes that in financial services, the only way to build something lasting and mainstream is to work with regulators from day one. (33:13) While competitors like FTX took shortcuts and eventually collapsed, Kalshi spent three years getting regulated and fighting legal battles, even when it seemed "unsexy" compared to offshore alternatives. This approach required enormous resilience - they lost team members twice when the government blocked their election markets, but ultimately won their lawsuit in October 2024. The lesson: stay true to your high-conviction approach regardless of external pressure or seemingly faster alternatives.
Build Product and Marketing Muscle Simultaneously
One of Mansour's biggest regrets was being "too product-driven for too long," believing they needed to perfect the product before focusing on marketing and brand building. (34:08) He learned that marketing and growth aren't switches you turn on once ready - they're muscles that need to be developed alongside product development. The traditional YC advice of "build a great product, then people will come" is incomplete in today's environment where technology building has become easier but attention is harder to capture.
Democratize Financial Markets Through Relatable Content
Traditional financial markets are "rigged for Wall Street against Main Street" because average people can't compete with hedge funds on stock movements. (21:31) However, prediction markets level the playing field by focusing on topics where everyone can be an expert - politics, sports, culture, current events. (23:10) Mansour's core belief is that "everyone is an expert on something," whether it's following politics for decades or being passionate about specific sports. This creates opportunities for regular people to participate in financial markets where they're not facing information asymmetry against Wall Street professionals.
Competition Drives Industry Excellence
The fierce rivalry between Kalshi and Polymarket isn't just spectacle - it's essential for industry growth. (13:12) Mansour draws parallels to Messi vs. Ronaldo and Brady vs. Manning, noting that rivalries push competitors beyond their perceived limits. Without Polymarket, Kalshi wouldn't have pushed their marketing and product as hard, and vice versa. (13:58) Early evangelists of prediction markets are the real winners, seeing their niche corner of the internet grow into a massive industry. True industries are born when there are meaningful rivalries that elevate all players.
Resilience Trumps Intelligence in Entrepreneurship
When reflecting on what made Kalshi successful, Mansour credits resilience above intelligence or strategy. (16:49) The company endured multiple devastating setbacks, including losing three funding anchors and having their election markets blocked by the government twice, causing significant team departures. (18:28) During the lowest moments, Mansour called his mother crying, feeling physical pain and hopelessness. But their commitment to "will something into existence" through sheer determination ultimately paid off, teaching that you truly can achieve ambitious goals through unwavering persistence.
Statistics & Facts
- Kalshi is potentially the fastest growing company in America outside of AI this year, with Anthropic being one of the few companies growing faster. (04:40)
- Out of every 100 prediction market users, only 1-2 are actual traders, while the remaining 98-99 users are getting informed about the world and using it as a form of news and media. (23:32)
- Kalshi currently employs just over 100 people despite their massive growth and billion-dollar valuation, indicating their lean operational structure. (42:01)
