Nick Kokonas
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My First Million · How to find your arbitrage (from the guy who’s done it 3x) ft…
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What Is Strange House?
Strange House is a walk-through built to make a stranger feel five years old, not a restaurant and not a magic show. Nick Kokonas says there is no magician and no stage. It is closer to Disney's Haunted Mansion, with nothing haunted, and the point is a moment of awe between people who do not know each other. He and Nate Staniforth have been working on it for about three years.
He treats the building as the business. The Ray Kroc line he uses is that the company was never in hamburgers. It was in the location. This is not a rented Broadway theater. It is a room built for the piece, which is why almost nobody tries it. Sleep No More is the cousin: the play happens around you in a hotel, it is
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How Did Tock Finish a Buyer's Question List in Three Days?
Tock finished a buyer's list of 896 questions in three days because Nick Kokonas would not let the advisors set the pace. The COVID growth was not going to repeat at 200 percent, so he treated the sale window as the moment. Steve Bernacki, his CFO, and Jeff Kaplan, his COO, moved the list into a Google Doc, color-coded it, and assigned each question to someone who already knew the answer. The lawyers said four to six weeks. Kokonas said the dashboards could produce it in about two days. Four of them on a Zoom ran about $3,200 an hour, and the bankers wanted 3 to 4 percent.
The board hated skipping the bank. He still had control, so he offered to do the banker's job for 2 percent and to go u
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How Did Alinea Group Investors Get Paid?
Alinea Group investors were paid from the first year, not only when the group was sold. Nick Kokonas sold the group in 2023. From the 2005 opening until that sale, investors got a quarterly distribution, and at the exit they got 8 times the money they put in. He puts the whole return at about 27 or 28 times. Someone who put in $100,000 in 2005, into what looked like an art project, had about a quarter of a million back by 2019.
He used to say restaurants are a horrible business. He now calls that a skill issue. Alinea's first year did about $5 million in sales at a 7 or 8 percent margin, which felt like a downgrade from trading and a lot more work. At the peak the restaurant was doing about
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Why Do Magicians Stand Next to You?
Magicians stand next to you because trust follows the person looking at the same thing you are. Nick Kokonas took that from old magic books. Those books start with the effect, then the method, then the craft of how it is presented. Across a table, a line like "this is the best water in the world" sounds like a pitch. Step around to the guest's side and both of you are looking at the glass. From there you can signal for a refill, and their eyes cannot cover the water and the space behind you at the same time. You own that space.
Alinea used the same geometry in the dining room. Service stood on the diner's side of the table, and the waiter looked at the plate with the guest. A dish that look
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Why Did Alinea Publish Its Business Plan Before Opening?
Alinea published its business plan before opening so strangers could fix it and so future guests would already feel part of it. Nick Kokonas was reading restaurant how-to books, including Restaurant for Dummies, and they were not teaching him how to run the place, the same way options textbooks had not taught him how to trade. He built one spreadsheet, the Universal Restaurant Calculator. One tab, about 80 cells, and the cost of insurance is a single cell. He thinks the bar to opening is low, which is why so many restaurants fail. A good dinner party is enough to convince someone they can do it.
He put the plan on eGullet, a food forum whose archive is still up, and called the thread the Al
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Why Are Tuesday and Saturday Dinner Reservations the Same Price?
Tuesday and Saturday dinner reservations are the same price because restaurants still sell time as if every hour were worth the same. Nick Kokonas treats that as the reservation version of the old paper ticket. A guest walks up to the host stand, the phone rings, and the first words are that someone will be right with them. He calls the phone a middle finger, followed by a demand to prove you belong there.
OpenTable in 2005 sat between the guest and the restaurant, and that middle seat was its arbitrage. The software was dismal. His picture of it is a sweater shop. You point at the blue cashmere cardigan, and they tell you to guess which of the other 300 you are allowed to buy. Tock started
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Why Did Nick Kokonas Quit the Trading Floor?
Nick Kokonas quit the floor because the window was closing and he did not like who he had become. Every arbitrage shuts, fast or slow. After the huge year, older partners in New York took the money and left. The firm then tried to drop the same method onto other shops, including a distressed firm in Boston, where a man around 30 told people who had been there 40 years how the floor would run. That did not go well. They did not know how to build managers or an accounting layer. Around 2002, volumes fell. A man who made $50,000 when they met later made $2 million, then $800,000 two years after that, and got angry about it. Kokonas calls it rock-band syndrome. He was a bad manager, and he had s
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What Did Nick Kokonas's Father Say About Boats, Women, and Drugs?
Nick Kokonas's father told him no boats, no women, and no drugs. The line came after Kokonas drove a multi-million-dollar check to the IRS out to the house and put it in his father's hands. The biggest check he had written before that was about $3,000. His father had grown up in a grocery store, in a Greek family shaped by the Depression, and the first question was whether the trading was legal.
Told that it was, he said it would not last. Put the money away. No boats, no women, no drugs. Then pay the tax. He called the payment a patriotic duty, the reason the grandparents had come and the reason they had sacrificed. Kokonas had hoped for a little relief on the bill. What he got was dinner.
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Why Did Nick Kokonas Shut Down a Risk-free Trade?
Nick Kokonas shut the trade down because it worked too well. The exchange was owned by the broker groups, and they would not run fiber under the pits, so he paid the union crew in cases of Jameson to pull the line. He says he can admit that now. Think of apples at $3 on one side of a pond and a buyer paying $5 on the other. The first session made a couple hundred thousand dollars with zero market risk.
That was the danger. A $2 million day of picking the banks' pockets would have been the last day, because the people who could kill the trade would notice. His crew had spent about seven months building it. He turned it off anyway, then asked for a pilot so the same gap could be used quietly
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Why Is Every Arbitrage About Time?
Nick Kokonas says every arbitrage is about the timescale. He turned down podcasts for about three years, then said yes to this one so he could say that. The trading floor made it obvious. A paper order took 30 to 40 seconds to go out and come back, and the firms making huge money were the ones shrinking that delay. He was a capable trader, not a genius.
The hedge he wanted was between Nasdaq-100 ETFs in New York, including the triple Qs, and the Nasdaq futures in Chicago. Buy the ETFs, sell the futures, lock a small profit, but only if the two pits can talk. A direct line from inside the Chicago pit would beat Goldman Sachs by about 20 seconds, because Goldman still moved the order by phone
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Why Is Expertise a Trap?
Nick Kokonas says expertise is a trap because comfort is how you get passed. Once the money is good and you know the work, a younger person with fresher eyes will break the convention you now defend. The expert is the target. The move is to quit before that happens and go find the next thing, even though quitting gets slower with age and a success makes it expensive to start over and lose money for a while.
He keeps a small figure of Sisyphus on his desk, the same kind of object his father kept. The push is the work. He had left the restaurant business, then walked past an empty space and felt the pull to build a wine bar. Everything in him said not to do it. That was the reason to do it. I
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Why Did Nick Kokonas Offer to Pay His Own Boss?
Nick Kokonas offered to pay a floor trader for the chance to work for him, because that trader was the only person in the pit who could teach what he was after. The man had studied quantitative finance at the University of Chicago, worked at Chicago Research and Trading, and quit when the firm kept him off the floor for being too much of a quant. He was trading very small, with a programmable calculator, and he had just hired a clerk.
Kokonas told him to ignore that hire. He said he would pay to work for him. The odd offer got the trader's attention. The pay that came back was about $250 a week, which Kokonas thinks would be illegal now. Six months later he had a basic sense of how to make
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What Does All Talk, No Action Mean?
Nick Kokonas says all talk, no action is what AT&A means in his house. His wife uses the phrase on him. She will issue an AT&A the way a cop issues a ticket, and she used it on the property where this conversation is happening.
They had treated the place as a North Star for about 30 years, coming back a couple of times a year since 1995 or 1996. Three years before this talk they rented a house nearby, the property was for sale, and he watched the listing video over and over, including the shot of a canoe in the pond. She asked whether he was going to pull the trigger or stay all talk. He put in a very low bid. They called in 15 minutes and accepted it with no counter.
The fast yes scared h
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What Did Nick Kokonas Tell Napa Grape Growers?
Nick Kokonas keynoted the Napa Valley Grape Growers Association last spring after telling the group they had the wrong person. He knows almost nothing about grape growing and is still learning. The growers called him the only optimist left.
They wanted his why. He is planting grapes, building a wine bar in town, and he bought property while everyone else was selling. The talk opened with a hope to learn from the room, not a lecture for Randy Dunn or the people who started 30 or 40 years ago. Smiles followed. The room had expected a new rich software guy to claim the tasting rooms were doing great. The point instead was 30 years up and to the right, plus an assumption that prices would never
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Why Is Intensity the Strategy?
Nick Kokonas says intensity is the strategy because winners do not know a secret he missed and they do not hold a magic formula. They apply a greater level of intensity to a pretty visible strategy he could have seen. He spent a lot of his life searching for the better way, the better strategy, the hack, the shortcut. Intensity almost changes the strategy over time, and a wrong move shows up as really wrong.
He opened 110 seats for every day for the next two weeks and sold all 110. In the kitchen he said they were doing 110 every day for the next two weeks, got an okay, and knew they would make it happen. The other person walked off. In hindsight he had not aligned the incentives and had no
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Why Did Alinea Start With an Empty Table?
Nick Kokonas built the opening of Alinea on the concert Stop Making Sense. David Byrne walks out alone with a boombox, starts playing guitar, and the stage fills in around him. He then wears a bigger and bigger suit, so stagecraft makes him look smaller as the world around him grows. The meal was built to open the same way, on an empty stage.
Fancy restaurants cover a bad table with a tablecloth and lay out 18 different forks and knives. The pile is stressful for anyone who is not a 19th century French aristocrat, and a server still reprimands a guest over the fish fork. Alinea wanted tables worth seeing and feeling, and none of the silverware routine. A guest arrives to a bare table. Somet
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Why Do Great Songwriters Throw Out Most Songs?
Nick Kokonas says everything is grind: a great songwriter writes songs every day and throws out 98 percent of them, and while a song finished overnight might happen once in a while, most people are Picasso and grind out a lot of bad work to reach something great. The people who do that grind are the ones worth finding.
In a loft in Chicago, a member of Wilco was writing a song that was honestly not good. He comes in every day and has to write two or three songs every week, or he will not have 12 good ones at the end of the year.
Chris Rock's advice to a young comedian with two shows, one at seven and one at nine, is to write jokes every morning. The money is made in the day and only collec
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How Often Should a Busy Restaurant Change Prices?
Nick Kokonas says a busy restaurant should change its prices every day, every hour, or every minute. Owners who print a menu once a quarter stay stuck on the old price, and on a packed Wednesday the staff sends guests to a rival down the street.
Uber had the right idea and the worst name. Surge pricing drew real trouble because of the word. On New Year's Eve, people called it gouging. Higher pay was the point: more money gets more drivers on the road so supply rises to meet demand. Drop surge and call it dynamic.
The gap is still open across the economy, even after a sale for hundreds of millions. He believes geofenced pricing, localized and variable prices for time-slotted businesses, wil
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Why Did Nick Kokonas Erase College From His Resume?
Nick Kokonas erased college from his resume so a firm would hire him as a runner at the Chicago Mercantile Exchange for $5 and 25 cents an hour. His goal was to be trading in a year, and the way in was access to the arena.
Orders traveled as paper. Someone called a broker, the broker called the floor, and a runner walked the ticket fast, since running was not allowed, then held it up for a broker who read it, shouted it into the pit, traded it, and handed it back. The loop took about 30 to 40 seconds. He faked the resume in the wrong direction to land the runner job. The floor was about 30 octagons and opaque enough that intelligence did not reveal how it worked. After a short time running
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How Do You Know You Are Taking Enough Risk?
Nick Kokonas knows he is taking enough risk when a morning feels close to throwing up and he has not thrown up yet. He is motivated by fear of not living up to the possibilities. Waking up feeling great means the risk is too low. Waking up throwing up means the risk is too high. The aim is a tingle of uncomfortableness, and the original word for the feeling is nausea. The line stayed as a check on whether he was still learning and still pushing the edge of what the possibilities are.
Keith Goggin, a good friend and former business partner, gave him the line while they traded in the 90s and early aughts. They held a ridiculous short position on Plug Power, and the company still exists. Kokon