Almost two years into its life as an independent fintech firm, REDI is hitting its stride. The firm’s executing broker network, which stood at roughly 60 firms pre-Goldman spinoff, now includes north of 125, including all of the bulge brackets. It has more than doubled its employee base to 160, opened a new development, sales and support hub in Dallas, Texas and fully integrated Bank of America Merrill Lynch’s InstaQuote EMS, which REDI acquired as part of the broker’s investment in July 2013.
Chief executive officer Rishi Nangalia and chief technology officer Josh Schubkegel recently sat down withTradersto discuss where the firm’s been and where it’s headed. This is a continuationfrom Part 1 on Thursday.
TRADERS: Describe the differences between REDI and Goldman Sachs. REDI seems much different than when I met you at Goldman Sachs – more like a startup. What are you trying to achieve here?
NANGALIA: I would call us a mature startup because unlike a true startup, we can’t be cavalier about what we’re building and how we’re building it – we have 800 or so firms that rely on us each day as a core component of their investment infrastructure. Say, for instance, you make a purchase from Amazon and it takes you an extra three seconds to process – do you really care? Probably not. And what’s the value of that purchase? Maybe twenty bucks? A single transaction here could easily be several million dollars in notional value, and if we screw up the messaging and it takes a few extra seconds, that can have serious financial implications. So we have to be extremely institutionalized and meticulous with our product.
But with that being said, we’re very much trying to borrow from startups with our culture – everything from the way we dress, to the open office layout, to the level of transparency we employ in all aspects of our business. But the big aspect of a startup we’re looking to steal is the level of impact employees can have. A lot of people here left big firms to come to come to REDI, and a huge part of my pitch to them is ‘think about what you can accomplish here’. I think we’ve done a good job so far of empowering our people to lead and be creative, and it’s critical that we maintain it.
TRADERS: Is that true of most Fintech firms?
SCHUBKEGEL: I think the notion of ownership impact is a big one that companies like ours can offer. We have a very flat management structure and don’t let title get in the way of things. It’s all about where the best idea comes from. It could be the most junior person on the team. If that’s the best idea, you get the team to rally around it and you deliver on it. I think that’s a big part of what we’re trying to espouse.
NANGALIA: We’ve actually had instances where prospective joiners have been in the office on a day we’ve held one of our monthly town halls so had them sit in. And every one has left saying “wow, you guys give some serious amount of information out to the employees.” And that’s true. Every month we provide revenue information, discuss how we’re doing against our targets, talk about the challenges we face. Employees feel they can ask any question – there’s no gating process.
TRADERS: The theme of transparency seems to keep coming up in the marketplace and at REDI. How does the firm achieve this?
NANGALIA: From Day One, transparency has been one of the core tenets on which we’ve built the REDI business. Everything from the way we’ve laid out our office space to our firm-wide usage of wiki software to the monthly town halls has been in service of this goal. And we share. When we have wins we share. When we have losses we share. In fact, even though some people may think it’s a little bit gimmicky, I take a lot of pride in the performance evaluation system we use. Anybody can review anyone at any time.
TRADERS: So what’s next for REDI?
SCHUBKEGEL: One thing we talk a lot about is this notion of openness, not just in how we operate as a culture but openness from a technology perspective. While I wouldn’t go so far as to say it’s rare, I don’t think it’s the norm in the financial industry to see platforms that fully extend themselves through APIs, through services, through plug-in architectures, and so on. And we do, which makes it very easy for any third party – whether it’s a client or broker or another software vendor – to build, deploy and distribute their offering through us. That’s really the crux of our vision over the next couple of years, for REDI to not just be an EMS but to be the platform – essentially the ecosystem – that brings the entire financial industry together.
TRADERS: So you’re trying to offer clients choice but yet keep them as REDI clients?
SCHUBKEGEL: Think about it this way. Your average hedge fund typically starts small and may just need a trading platform, which REDIPlus excels at. But as they grow, they need a position management system. Then they need an accounting system and a risk management system. So does that mean they need to go out and spend seven figures on a system built for the Fidelity’s of the world? We don’t think so. We think they should be able to continue using the REDI system that they’re comfortable with, but then access the other components, all of which seamlessly integrate into their workflows, offered by our partners.
TRADERS: So REDI isn’t trying to be all things to all people?
NANGALIA: No single company, even the largest ones with billions of dollars of revenue, will be able to provide every client with every solution. And if they’re attempting to do it, it’s probably the lowest common denominator solution. Our goal is to do the things we do well, and have our vendor partners to do things they do well. And the buy side is saying basically saying the same thing. They want to hand off much of the non-core competency stuff they deal with to vendors, but they need everybody to play in the sandbox together. They cannot have a situation where they give things up only to find out their choices are restricted. We all have to work together, which I think is ultimately the direction this industry is moving to.