How Belarussian startup EXP(capital) profits from something difficult even to copy
Company EXP(capital) is very young, even by the standards of Belarusian IT. It appeared in the spring of 2012 without commotion, despite the fact that co-founder and CEO Viktor Prokopenya had been one of the most successful entrepreneurs in the country, as co-owner of Viaden Media. By January of 2014, EXP (capital) topped the ratings of Belorusian IT startups.
The company develops software for financial markets. With its help client companies – exchanges, banks, broker-dealers, hedge-funds – form their share prices, currencies and other financial instruments.
The executive director of EXP(capital), Konstantin Razumovsky, explains: “We make complex software. The ‘trick’ is not in the program itself, but what users receive with its help. The main function of our products is to create a good price on financial instruments in accordance with several criteria. We develop a liquidity aggregator, which collects all prices from different platforms into one system. The code forms its own price based on the data obtained from all leading platforms, the current position of the client and the forecast for the next few milliseconds. Post-trade analysis shows how good the established price is, whether it would earn money for our clients, how to increase profits, reduce costs, etc.”
The first version of the software was already available in late 2012. The company says it has helped its customers turn hundreds of billions of dollars to their advantage. Co-founder and technical director Yuri Gushchin explains the rapid pace of development of a strong team of experts unhindered by a need for superficial “beauty”, since their product is not intended for mass consumption.
The company’s products are already working in data centers in New York, London, Moscow and Chicago. There are plans to “teach” them to work in all financial markets with all the tools. The management of EXP(capital) assumes that the company has about 50 competitors worldwide. This does not frighten them, in spite of the volatility of the financial space.
“It’s a battle of intellects – and we are interested,” says Konstantin Razumovsky. Algorithms inherent in our products are based on different methods from different areas of science – mathematics, physics, artificial intelligence. Technical implementations are complex and non-standard. The product works on the original “iron”: Together with the product, we design the ideal hardware platform on which it will work.
“Clearly, this combines ready-made elements, but in such a way that before us no one combined. This is the difficulty: We use software and hardware solutions and algorithms that have not been previously tested. In this regard, we are very dependent on key people, the authors of ideas.
The question of the theoretical limit:
All developments used in products of the company EXP(capital) are created by their employees, even “rewriting” Java and modifying compilers. According to Yuri Gushchin, much attention is devoted in the company to research the creation of something entirely new: “It is the question of the theoretical limit – we verify diverse concepts.” At the same time the technical director points out that a new software or hardware solution need not be complicated. It may be something completely simple, but not obvious, that leads to a break-through in the altered approach.
Yuri gives an example: “One of the essential requirements for us is to provide ultra-low latency transmission over LAN data. Ordinarily, this requires very expensive switching equipment, starting at $30,000. But even this does not ensure zero delay. We decided that we shouldn’t have any switching equipment. No network equipment – no delay. It imposes definite requirements on servers and computer equipment, but reduces cost and simplifies the system. It is a simple solution, but difficult to conceive.
This is not the only solution designed to minimize time-consuming processes, not visible to the eye. EXP(capital) managers repeatedly point out that on the financial market, there is a battle not only for thousandths or millionths of a second, but for nanoseconds and even picoseconds. Searching for solutions to save microseconds is justified to obtain an advantage over competitors.
In spite of the simplicity of some solutions, developers don’t rush to call the product itself simple. On the contrary, the technical director assures that the complexity of the product can be considered its main defense. A special system protects against unauthorized access, and “our product is difficult to exploit, let alone to steal.”
The office of EXP(capital) is located in the center of Minsk, on International street. At 11 a.m. it is still quiet and uncrowded there. Staff may observe flexible schedules or choose to work at home. The executive director says this is common practice. The focus is on results, not on the process.
Cross-functionality and Self-organization:
By mastering agile and Scrum methodologies, EXP(capital) achieves unmatched development and adaptability to rapid market changes. These principles include the collaboration of self-organizing cross-functional teams and development by motivated, trusted individuals. Konstantin explains: “Cross-functionality means that we have assembled a team from all the specialties needed to create a complete solution, not purely a team of programmers. Self-organization empowers people to decide for themselves how best to do their job. The overall direction and purpose are established. They have a lot of freedom and a lot of responsibility, which are not passed onto someone else.”
The best brains of the country:
Initially, EXP(capital) employed only 10 people. Today, there are about 40. The management unanimously says they are the best brains of the country, many of them personally invited by he founders. A quarter of the technicians have advanced degrees. “It’s not just programmers”, says Konstantin Razumovsky. “Due to the knowledge and skills in various fields – physics, chemistry, biology, mathematics – people find those metaphors, those approaches that help to solve very complex problems. We have a man who became a PhD in biophysics. Now he works in a group of researchers involved in writing complex algorithms that work in our product.”
Konstantin himself is the only certified Scrum-coach in Belarus, one of the first in the world who speaks Russian. Yuri Gushchin participated in developing major products for the governments of Belarus and Russia, BBC, National Olympic Committee, Beltelecom and Belpochta, as well as some large international IT companies. Yuri participated in developing the MPEG-4 standard and the Java platform. He also created an algorithm to recognize sleep cycles using a mobile phone.
The EXP(capital) team does not seem to fit either stereotype, of specialists at the top of their fields who are no longer young or of wunderkind geeks. Most of them are about 30 years old. The technical director is confident that even in the rapidly evolving IT industry it is possible to reach the professional ceiling in 5 – 7 years.
“Here I am the oldest – born in 1973”, says Yuri Gushchin. “In reality, I have really worked at IT since 1987. There are specialists who not only watch, for example, what Java is now but actively interact with the developers who know where it will develop. Moreover, some of them are involved in the creation of what others will know tomorrow. In such cases, curiosity becomes a sort of professional boredom: everything is understood, the future is known many steps ahead. These people tend to be interested in technology to satisfy their curiosity.”
“We invite and drive, watch and show”, he continues, “and we understand where everything is good, and where else we need to dig. We are currently researching some very complex things that just do not apply to consumer-level applications. They are closer to the level of the Hadron Collider – and less is not interesting.
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