Proton Advisors

I am very excited to have recently joined the board of Marketcetera.  Several colleagues have asked why I joined the board, so here is what I found so compelling about Marketcetera:

First, the team at Marketcetera has come up with a platform that will revolutionize trading.  Early in my career I left IBM to join Instinet when I saw how it was changing the way the world trades by introducing the first ECN…  Automating the process of matching orders.  Radianz was a revolution in connectivity, providing a standard (outsourced) platform to connect to liquidity centers around the world.  What I see in Marketcetera is similarly game-changing.

Specifically, Marketcetera is doing two fundamental things that are significant:

1 – Marketcetera has built a Trading PLATFORM.  Until now, strategy driven traders had two choices:  They could either build an entire system from scratch, which means that they would have to recreate a lot of the “plumbing” that was not value-add.  Or they could buy a system from a vendor, spend a lot of time and money customizing and implementing that system, risk vendor lock-in, and share their proprietary trading strategies with the vendor.  Of course they would have to do it all again when they needed to update their strategy.

With the Marketcetera platform, all of the necessary infrastructure is built into the platform: real-time low latency market data processing, automated parsing of market data and FIX messages, complex event processing to support correlation of factors that lead to a trading decision, automated generation of FIX messages, order routing to deliver orders and receive execution notices, and a toolkit to build strategies in various scripting languages (java, python, ruby).  The trader can leverage this foundation and quickly build and deploy his strategy.

2 – By embracing open source, Marketcetera has made it much easier for traders to modify the platform to optimize it for their needs.  This can range from small changes that make a particular strategy easier to implement, to larger changes like addition of asset classes or other sources of data.  The general media focuses on the cost saving benefits of open source, and the advantages of a community that contributes (the “bazaar” model versus the “cathedral”.)  While these certainly apply, a much more subtle but profound benefit from the open source model is that it allows traders to be agile in response to changing markets, to protect their own intellectual property, and to retain a competitive advantage in their alpha generation.  Paradoxically, by building an open source platform, Marketcetera has enabled its users to protect their intellectual property better than any closed system would!

Fundamentally, Marketcetera has smashed the build versus buy conundrum.  Most funds don’t want to employ legions of programmers to build infrastructure, and the most talented programmers would prefer to focus their energy on implementing modern trading strategies, not re-writing the underlying plumbing needed to enable those strategies.  Marketcetera has made it possible to buy the building blocks, with the freedom to build precisely what you need to make your strategy sing.

That’s very cool.

That leads to my second reason for working with Marketcetera:  Thomas Edison once said “Genius is one percent inspiration and ninety-nine percent perspiration.”  Or as a friend of mine at a venture capital firm said:  “It’s all about execution, and more than anything we look for teams that can execute.”

When I met Graham Miller, Toli Kuznets, and Roy Agostino, I was impressed.  Not only have these guys come up with some great ideas, but they have the background (serious technical skills from Stanford, real-world experience in the trenches at Susquehanna and Jane Street) and discipline to execute.  Despite the media perception of entrepreneurs as wild-eyed visionaries with stars in their eyes, most successful entrepreneurs that I know have combined a real vision with the passion, focus, and ability to sweat the details.  “Three yards and a cloud dust.”  The Marketcetera team has a real professionalism, discipline, and work ethic that is unusual in an early stage company.  Their communications style is fact based, open, and direct, which is essential to having an effective relationship between a board and a management team.  Plus they are a real pleasure to work with!

A great idea and a top-notch team are critical to success, but I have also learned from experience that it is essential to have the right investors backing the team.  Marketcetera is backed by Shasta Ventures and Clarium Capital, and is very fortunate to have Ravi Mohan and Jack Selby on the board.  When I met with Ravi and Jack, the key points I wanted to get answered were:  Did they have a shared vision with the management team?  Did they have the financial resources to support the company adequately?  Did they have the personal backgrounds, skills, and behaviors to support the management team and help steer the company through its growth?  After several meetings and calls, I was convinced that this was a set of investors that truly had an aligned vision with the company and the ability to help its achieve its vision.

The last reason I joined the board of Marketcetera was because it is the kind of business where I believe I can make a contribution.  I have seen enough boards where directors lack the relevant experiences to add value.  I have had several opportunities to sit on corporate boards, and I have focused on those where I have directly relevant experience.  In the case of Marketcetera, they are in the right stage of their growth (up and running and ready to scale to a meaningful business), and with an industry focus (automation of core trading functions) where my experience and relationships can contribute.

So that’s why I have joined the board.  Like any early stage company, especially in the current economy, Marketcetera will have its challenges.  It has the right idea, the right team, and the right backers to be a huge success, and I hope that I can contribute to that success.