We are all familiar with the Wall Street stereotype. Asset management is a cutthroat industry relentlessly competing to chase alpha.
As an asset manager, Pagaya Investments is driven by opportunities to create value for clients. As a company built on Artificial Intelligence, the “how” of managing money is unique. Artificial Intelligence “AI” or machine learning is not just changing the way asset managers make money, but it is also changing the internal operations of asset managers.
In the digital age, will we value collaboration over competition? The Research Teams at traditional asset managers are competitive and don’t compare notes. In contrast, the AI community is open and supportive. For example, Pagaya researchers communicate with their colleagues at other firms and across industries to build on innovation.
The leadership practices at Pagaya are a reflection of a greater paradigm shift in the new economy. Business thought leaders have been remunerating on the benefits of collaboration to solve complex problems and new thought leadership is emerging. Academics refer to Collaborative Problem Solving (“CPS”) in academic research and tout the benefit of teaching these skills at the University level. In 2018, the term “coopetition” emerged in the business lexicon to describe the benefits competitors gain from cooperating with competitors.
The asset management space is evolving in more ways than one. Pagaya employs state-of-the-art technologies and next-generation predictive models to investigate big data and deliver quant-based capabilities to inform investment decision making. “We are operating in a new world with new and alternative data sources. The availability of data provides new opportunities to create value. It is our responsibility to manage the data to identify and capitalize on opportunities.” said Pagaya’s Head of Research, Asaf Nurick.
Artificial intelligence requires the composition of algorithms to test hypotheses and produce desired outcomes. Success requires a culture of innovation and experimentation. This process is best repeated through a culture of collaboration. Researchers at Pagaya are encouraged to challenge each other and offer alternative hypotheses.
There is a myth in AI that decisions are generated by robots. A lesser myth is that all data scientists are cerebral and analytical in thought. Pagaya recruits top talent in the AI space and has found the brightest researchers are both creative and collaborative. This means researchers are not isolated and working on computers all day (neither literal nor figurative “robots”). Researchers meet to collaborate, hypothesize, and support each other in testing algorithms for desired results. When a hypothesis is revised it is seen as a refinement rather than a failure.
Pagaya is a growing firm and the Research and Development Team is growing in parallel. “We have a careful and deliberate process for recruiting to maintain the integrity of our culture of collaboration,” said Nurick. Pagaya may compete for talent from the best and brightest pool of innovative candidates on the cutting-edge of the industry, but thriving at Pagaya requires more than raw talent. It requires the ability to innovate and collaborate in a group setting. At Pagaya, the new economy is here and collaboration is in the firm’s DNA.
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