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Wall Street is flush with precocious 20-somethings filled with the sense of their own shattering brilliance, but if old Street hands are right, three Harvard- and MIT-educated millennials who’ve never come within a state’s throw of a Friday night midtown Manhattan happy hour may be on the cusp of engineering a genuine revolution in financial technology. And they’ve arrived at this point, appropriately enough, because of a bet.

A couple of years ago, Daniel Nadler, 29, told his friend Peter Kruskall, 26, that it was possible to model equity markets to show that individual stocks move in highly predictable cyclical and seasonal patterns. Nadler, who is completing a Ph.D. in political economy at Harvard University, had recently taken up residency as a visiting scholar at the Boston Federal Reserve, where his work focuses on tracking the asset allocation strategies of the 300 largest U.S. institutional investment funds. Kruskall had graduated from the Massachusetts Institute of Technology with a masters in computer science and was employed, at the time, as a software engineer with Google.

The two, Nadler says, had become acquainted during Kruskall’s time at MIT over their shared interest in Zen Buddhism. Kruskall’s reply to Nadler’s claim about financial market modeling was very un-Zen-like. “He said, ‘That’s garbage,’” Nadler recalls.

A challenge was born. “I said to him, ‘Give me one model that I can test locally myself with programming, give me a day to test it, and if it works out well, we can go from there,’” says Kruskall.

Top to bottom: Peter Kruskall, Daniel Nadler,
& Brandon Liu of Kenshō Technologies

What the pair very quickly discovered was that there was no way for Kruskall to evaluate Nadler’s claims. It was difficult to get access to the data needed and, more importantly, the software to model markets simply didn’t exist for anyone outside the financial industry. More easily distracted minds might have given up there. But for Nadler and Kruskall, these two children of what Nadler terms “the Facebook effect” — the thriving culture of technological entrepreneurship that has emerged at Harvard and MIT in the wake of Mark Zuckerberg’s success — the aborted bet set them on a more ambitious path: Kruskall began to build out a software environment that would allow them to model and test Nadler's boast.