Taking It to the Street: Q&A With Marketcetera CEO Graham Miller

The key to a successful business plan often hinges on who gets there first with a market-revitalizing product. Being first may not guarantee instant success, but it certainly makes those that follow behind play catch-up.

Marketcetera’s Automated Trading Platform may prove to be just that key for Graham Miller, CEO and cofounder. Early last month, his company brought to market an open source trading platform for traders, hedge fund managers and brokers and dealers.

The idea for this trading platform grew from his dissatisfaction with available products he used during his 10 years of managing trading platforms and strategies for Wall Street hedge funds. Stanford University computer scientists Miller and CTO Toli Kuznets founded Marketcetera in 2006. Their unhappiness with the long implementation cycles and costly maintenance that proprietary automated trading software required led the two on a quest for a lighter-weight, more flexible replacement platform.

At a time when many in the finance sector were skeptical of open source, Marketcetera took a gamble that its Automated Trading Platform would lay the foundation for continued investments from what could be a run on a new approach.

“He has a wide-open field there. In the conventional wisdom, trading is falling off when in fact it is going through the roof. Trading companies are under growing pressure to reduce cost and lower transaction costs and still get stuff out to market pretty quickly. Open source is a terrific way for them to do this because they don’t have to bring in legions of people to do new coding when you want to offer a new product,” Ellen Carney, senior analyst of Technology Industry Strategy for Forrester Research, told the E-Commerce Times.

What It Does

It took Miller and Kuznets two years to develop what became a standards-based modular trading platform with open application programming interfaces (APIs) and support for multiple development languages. The software enables users to apply complex event processing with Esper (an event stream intelligence processor component) implemented as the Complex Event Processing (CEP) engine.

MarketCetera’s platform consists of three components. Photon is a visual graphic user interface (GUI) that controls and monitors trading activities. Marketcetera Trading Server (MTS) enables order routing and database management. Customized services include pricing logic and integration tools.

The product is available for free download here.

Viable Marketplace

The financial sector can expect to see more open source vendors arriving, according to Forrester’s Carney. The marketplace is starting to get enough buzz about open source.

“Even moving to Windows was a radical change for this particular environment. It is sort of the next logical step. I think you will see other companies start to follow. We named Marketcetera as a startup to watch in our 2009 market report. A lot financial institutions are looking at that report. I think he’s in a good place at a good time when you consider the pressures on the marketplace,” said Carney.

Open source is starting to overcome the hold established by proprietary products, she suggested. At many of these firms, even the IT department had Wall Street promises, and IT workers want to protect that legacy.

“An open source platform is going to have implications on your Wall Street bonus,” said Carney.

Company Close Up

“The Marketcetera Automated Trading Platform has the only open source automated trading platform available today. That means we have an application that can provide the basis for a modern trading applications for hedge funds. Any organization that has a professional trading arm to it can use our product to build out trading applications, specifically automated trading applications,” CEO Graham Miller told the E-Commerce Times.

As an open source offering, Marketcetera’s platform provides flexibility and control of the product while providing a solution that lacks any vendor lock-in with compelling total cost of ownership, according to Miller.

LinuxInsider recently spoke with Miller and Kuznets to discuss the trading platform concept.

LinuxInsider: Why isn’t there more of a stampede of open source vendors coming to the financial market?

Graham Miller:

We think it’s accelerating. The recent market shake-ups have caused acceleration in our market and our sales pipeline. We’ll see how it plays out in 2009.

LIN: What got you interested in this particular slice of the open source software market?


My cofounder (CTO Kuznets) and I were originally Stanford computer science guys, so we cut our teeth in Silicon Valley at several venture-backed start-ups and eventually moved over to Wall Street. Initially I moved over to build an automated trading system for equity options and kind of got hooked on the excitement of that industry. Over the course of six years or so, I built out a number of these trading systems and realized that there was a need for a platform to help build out these applications and that the open source approach really maximizes the flexibility that an organization can have with the product while minimizing time to market and maintaining the fast pace that is typical with the industry.

LIN: How is your Automated Trading Platform different from previous projects that you’ve done?

Toli Kuznets:

I think the difference in what we are building today is a platform product, where previously what we were building were automated trading products. The commonalities and the differences between those was a key part in understanding what the Marketcetera product needed to do. So the initial platforms were designed to solve a particular problem. We realized that every time you would write a new strategy you had to start from scratch. This is why we decided to start Marketcetera to make it as a platform to enable people to write all these strategies faster. So we are a lot more standards-based with a lot of emphasis on making the platform more flexible and easier to extend and easier get going so people could write their strategies a lot faster.

LIN: What practical steps were necessary to get this platform idea moving forward?


We built out the kernel of the platform and approached a couple of angel investors who have experience on Wall Street and understand the needs of trading organizations. We went to them with a fairly basic business plan, which was to build out this platform product. We raised a small seed round based on that kernel of the product.

LIN: How much effort did it take to go from concept to a real open source company?


Over the course of the next year and a half or so, Toli and I worked on the open source product, and did a small amount of consulting and other work to pay the bills a little bit. But then at some point we realized in order to build this out to an organization that we wanted, we needed to bring in some heavy-hitter investors to raise a larger sum of money and really start to build our team and the product and get all the things like the service organization and the support that marketing entails and all those things that are important.

LIN: How widespread has the use of pre-release versions of your platform been?


We released the product fairly early on and have been supporting our customers using the platform for a little over one year. Organizations have been using the platform. Version 1.0 is really our first generally available system that we feel good about promoting as a full version of the platform.

LIN: What were some of the major challenges you and Kuznets faced in getting to the 1.0 release?


One of the major ones is we faced was a fair number of naysayers in the world of finance that kept telling us that financial institutions are secretive and that they’re not interested in open source and sharing and they are worried about this and worried about that. We had a fairly uphill battle over this with a number of people, including potential investors, potential customers, potential partners and journalists even. Going through some of the Microsoft doubt arguments against open source, there was a lot of education we had to do along the way.

LIN: Besides the naysayers, what other hurdles got in your way?


The core of any company is its employees and its people, so we spent a lot of time and effort making sure that we get the right people and that we’re evaluating them appropriately before we bring them on board, and then making sure that they stay key after coming on board. This has been an ongoing challenge.

LIN: Describe the size of your company at this point.


We are still fairly small with less than 50 people. We have a sizable engineering department. We have support and professional services in place. We have a marketing team that is doing a phenomenal job on a shoestring budget. We have all the pieces in place right now to build out a successful commercial open source business.

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Why the Real Estate Industry Should Embrace the Cloud

The increased adoption of cloud computing over the past decade has enabled businesses across industries to meet their growing technology needs while efficiently gaining access to exciting new tools.

However, not every industry has kept up with the evolution of cloud technologies brought forth by digital transformation. A prime example is the real estate industry. Overall, the real estate sector has been slow to digitize operations and move to the cloud; leaving agents, brokers and their clients underserved.

Cloud computing can cover a lot of ground, with both infrastructure-as-a-service and software-as-a service availability. There is great potential for the real estate industry’s future in both areas.

When properly implemented, cloud computing accelerates the innovation and digitization of real estate services, bringing new apps and tools to the market more quickly. This also adds even more value to the buying and selling experience for agents, brokers and consumers alike.

While the cloud offers much potential for the real estate industry, it is important for companies to have an informed idea of what they want to accomplish before moving some or all their IT functions to the cloud. Don’t just jump on the cloud bandwagon; instead, determine what goals you want to achieve by moving to the cloud and develop a plan for an orderly transition.

If a company’s cloud infrastructure ends up looking exactly like its previous on-premises setup, it’s probably not taking advantage of all the benefits the cloud can offer. Real estate companies moving to the cloud need to think strategically about adding value through the transition.

With that caveat, there are tremendous benefits for real estate companies that move to the cloud.

More Data, More Power

A seemingly immense obstacle real estate companies face is the daunting task of implementing cloud-supportive infrastructure. But the truth is that real estate companies don’t have to plan, build, or operate their own data centers.

Instead, the cloud infrastructure providers can set up and maintain the infrastructure while real estate companies focus on what they do best: selling properties, serving customers, and equipping agents and brokers with the best tools to help them do their jobs.

Cloud infrastructure also offers real estate companies the computing power to run modern tools like data analytics and artificial intelligence. These technologies can help real estate companies find new customers, identify people likely to be interested in buying or selling their homes, and match customers to the best real estate agents to service their needs.

Real estate organizations often have access to huge amounts of market and customer data. However, the sheer volume of data makes it difficult to capitalize on. With cloud computing, real estate companies can gain access to the massive computing power needed to crunch the data, while paying only for the time they use that infrastructure.

Mobility and Disaster Recovery Solutions

Another benefit of storing data in the cloud is that it’s accessible from various devices, which is a boon for the growing mobile workforce. Agents, brokers, and home buyers and sellers are increasingly using smartphones and tablets to get work done remotely. The cloud is much more flexible, accessible, and secure than being tethered to a physical hard drive or on-premises server.

Furthermore, companies that transition to the cloud don’t have to build and maintain a remote disaster recovery site, which can be labor-intensive and time-consuming. Instead, critical data in the cloud automatically fails over to a secondary site in the event of a disaster. All that is required to access data in the cloud — anytime, from multiple devices, anywhere — is a solid internet connection.

Budget-Conscious Security

Major cloud infrastructure providers have a security track record that most real estate companies can’t compete with. They have huge teams of security professionals and the best available security technologies, policies, procedures, and controls to protect the information on their servers and data centers 24/7 with little or no human intervention.

Cloud security measures also support regulatory compliance and establish authentication rules for users and devices. This high level of data security is particularly important in the real estate industry, with customers sharing banking and other personal data during what’s often the largest financial transaction of their lives.

Customers want their real estate transactions to be as secure as possible, and cloud infrastructure providers offer that higher level of protection.

Creating an Open Ecosystem

On the software-as-a-service side, the cloud is the perfect way to host multiple apps and software tools that improve agents and broker productivity. One way to approach this is through the development of a real estate app store that includes a range of software, including CRM tools, lead generation software, open house apps and productivity tools, with everything hosted in the cloud.

In doing so, this creates an open ecosystem, where agents and brokers have a choice of software tools to use, including some apps developed in-house and others from third-party partners. The cloud enables an open ecosystem in which agents and brokers simply decide which apps they want to use from a menu of options available. This provides flexibility while also empowering personal choice and customized solutions for home buying and selling and beyond.

Convenience Is the New Normal

The Covid-19 pandemic has forced real estate companies to conduct more business remotely, with documents shared online. Some firms have been moving a greater number of transaction steps to the virtual realm, using cloud-based services to host and gather documents and collect signatures.

While some customers will continue to demand face-to-face contact with agents and brokers, a significant number will embrace the convenience of a mostly online, cloud-based approach.

The industry is already seeing great benefits from cloud computing. Expect many more advantages to reveal themselves as the industry continues to digitize its operations.

Too often, we see that the failure to innovate today equates to playing catch-up tomorrow. The benefits of cloud technologies for real estate services professionals are clear, and the obstacles of price and infrastructure are entirely surmountable.

Business and information technology leaders in this industry must look beyond outdated legacy systems and begin embracing the cloud — now.

Rizwan Akhtar is executive vice president, chief technology officer of business technology, at Realogy. Akhtar holds an M.S. in Computer Science from the University of South Asia and an MBA from the University of Phoenix.

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