How to Embrace the

“I-Factor” Necessary to Assure Startup Success

Sanjib Sahoo(@sahoosanj)

CTO tradeMONSTER Group

Embrace Failure. Eliminate Fear.

Create True value.

“For most people, the fear of losing $100 is more intense than the hope of gaining $150”

Blockbuster’s Demise?

Chicago is home to 34 Fortune 50052% of the Fortune 500 have disappeared since 2000

A Startup is born in Chicago every ~48 hours

About 75% of the startups fail.

~ 32 million total trades per day~6 billion total quotes per day

~10-12 billion total messages on busy days

Day = 6.5 hours

Trading Systems: Market Data/Day

Trades QuotesEquity 31,102,669 1,096,023,600

Option 902,370 4,519,638,000

Futures 792,112 30,412,934

Total 32,797,151 5,646,074,534

May 18, 2012, Nasdaq's system failed during the Facebook IPO and contributed to $500 million in losses

August 22, 2013: Nasdaq’s Security Information Processor (SIP) system had a software defect that caused a massive 3-hour trading halt throughout the industry

Recent Outages and Glitches

August 1, 2012 Knight Capital Group lost $461M from a software bug – Wall Street Journal

April 24, 2013 CBOE system failure halted trading in S&P500 options for 4 hours - NY Times

Wed, Jan 8, 2014 E*TRADE was down from 10:30am to 3pm – Wall Street Journal

Wed, Jan 8, 2014: Scottrade was down from 9:40am to 10:45am – Wall Street Journal

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Startup

tradeMONSTER: Went from a small Chicago startup to industry leader in 5 years.Mission: Making a difference in people’s lives. Empowering people to trade “Anywhere, Anytime.”

Ranked as the top 2 online trading company in the nation Many times first in the industry: disrupting the trading industry’s user experience with innovation. Growing 164% in revenue year over year in the last 4 years.

“In a city that is looking for its next big tech hit not named Groupon, tradeMONSTER might be the answer.” – Sun Times, Chicago

Calculated Risks Focus on Business value Focus on User Experience Ability to fail fast

Organizational

“ I-FACTOR”

Get Basics RightInstead Risk = Bad Assume Calculated Risk = Innovation= True Value->Success!(56% of projects in the industry fail to create value)

Cool technology does not cut it. Technology is a medium. Business value is key.

Failure should be accepted. There is no safe disruption, only varying risks and rewards.

Success can come with passion and belief. Understanding from a user’s perspective is critical.

Philosophies

The precursors!

Hiring Blended talent!

Creating the right culture. Creating a Fearless Organization!

Eliminate the Fear to Fail.

Changing outlook towards Failure 40% fail= 60% success

The failure to take on value-adding projects is worse than taking on projects that fail

Small failures provide great opportunities to learn

A focus on acquiring gains will lead to better results than a focus on avoiding losses

Failing fast and moving forward is a big win

Don’t try to preserve past investments, it delays value creation

Attitude is even more important than Ability

"Ability is what you're capable of doing. Motivation determines what you do. Attitude determines how well you do it."

Remember: You don’t hire innovators or entrepreneurs, you hire a spirit.

Focus on

@Communication is key

Create your X-Factor!

Be your own Leader The first task of leadership is to manage yourself well.

Growing own Leaders…Leaders grow leaders, not followers!

Foundation Phase Flat organization Hiring strategy Inclusive management style Tough love

Growth Phase Identify talent Acquire business knowledge Cross training Technical leadership (horizontal and vertical structure)

Optimization Phase Acceptance of leaders within team Conflict management Overall vision development People management

@ Connect with customers, Stakeholders, business peers, team, social and public mediaDisrupt traditional governance, think beyond and think of value creation. Engage in Innovation. Take measured risks. Focus on Value.Transform businesses with a data-driven model to create a competitive differentiator!

Creating I-factorProcess &Model

Take Risks. Innovate and add value! Fail Fast

-Having an Innovative idea is not enough.-Understand ROI and map innovation to a business case. -Map how the proposed innovation is going to

help in customer acquisition/customer retention

Evaluate business case for a competitive differentiator and creating value1

-Analytics/Data-Focus on User Experience. -Focus on Why: Have a mission!

Remember: Innovation is meaningless without generating true business value. You don’t just have an IT strategy, you have a winning strategy for your business.

-Reduce risk by testing the technology fit and capability. -Prototyping and Analysis helps.

Execute Proof of Concept2

Remember: Not every technology or product is right for every organization. Don’t jump for something cool, work on something that fits your goals.

revenue impact

Determine

competitive edge

define feasibility

Demonstrate revenue and business Value Analysis3

Innovation is a joint plan. At this stage, risks have been hedged, all stakeholders are aware and organization is staged to launch a disruptive project.

Initial release cycles focusing on framework and technology challenges

Focus on complex challenges first. Don’t wait too long!

Short 4-6 week development cycles to analyze risks/value

Create an agile development plan4

Remember: You can’t have an innovative idea for 2 years. You vet it constantly and change your approach if needed!

tradeMONSTER’s tech team was at technexus in the initial days…!

Analyze risk; fail fast and move forward

For new and emerging technologies (like mobile) and innovation, short cycles help to detect failure and minimize impact.

At every step (with short cycles) analyze overall impact and risk and value proposition. Balance risk and value. Value and governance.

5

Remember: Failing Fast is a big WIN. Innovation can be incremental.

Case Studies

Case 1 : Positive response to Open Source/Web 2.0 /Push Innovation

Business advantage was the platform to be built. Huge cost benefit with Open Source.

POC was built on non-mission critical media website.

Clear need of a platform our core business made the competitive advantage and ROI

Short development cycles of 8 releases in a span of 15 months.

Streaming frameworks on browser focused on first and then went ahead to plug in functionalities

99.99% Uptime

Case 2: Negative Cloud Adoption

Case 3: Positive Adoption of HTML5 Clear need for a competitive and compelling mobile

solution for future and existing customers

In Mobile tradeMONSTER was far behind its competitors (Customer Acquisition/Retention)

World’s Greatest Trading Platform for Options Traders, but very basic mobile trading solutions (SAS model)

With the advent of tablets replacing notebooks, missing out on revenue from trades from growing customer base and losing out on our vision “Anywhere, Anytime”

POC done on a non-mission critical project

Small development cycles built, focusing initially on framework challenges of HTML5, focused on performance, security, rendering, caching issues

“The new app reflects bleak future of PCs”

“A trading App that broke several myths”

Best Mobile Platform in North America 2013 “this is a terrific, comprehensive platform”.

08/2006optionMONSTER Media launches media/news portal: optionMONSTER.com

10/2008 tradeMONSTER launches trading platform

03/2010 tradeMONSTER ranked ‘Best for Options Traders’ by BARRON’S

02/2013 tradeMONSTER launches new mobile platform (HMTL5), Ranked #2 Overall in North America

08/2005: optionMONSTER Holdings, Inc. incorporated (now: tradeMONSTER Group, Inc.)

03/2014Ranked #1 in Options trading 5 years in a row and 2nd in overall ranking of online brokers by BARRON’S

Revenue

Accounts

164%

264%

Small Startup to Industry Leader “Ain’t no mountain high enough”

Make a choice! Be Breakfast or Have Breakfast

Create your Organizational I-factor or be dead.Technology is a medium. Business value is key.

Eliminate fear to fail.

Take a Chance. Make a Difference.

Sanjib Sahoo CTO, tradeMONSTER

@sahoosanj

Sanjib Sahoo , tradeMONSTER