Building a Perfect Team – NYT

I previously wrote a personal blog at ARHAIK.com from 2013 – 2019. The blog was intended more for my own writing and thought-processes than for a public audience. I occaisionally post content from ARHAIK.com to Conmodum.co’s “Of Interest” section. The below is from February 2016:

The below are excerpts taken from the first chapter of an extensive article in the New York Times magazine.  I have always been a student of capturing performance in organizations.  Some of the information in this article (I have only yet gone through Chapter One) goes against traditionally-accepted norms for building and managing teams.   My personal highlights are below.  Italicized words are directly copied from the NYT Magazine Article.

  • When building teams, does it matter the personality types involved?  If there were similar interest?  Motivated by similar rewards?  Google’s analysis showed that the team composition did not mater to the performance of the teams.  Differing mixes of personalities, ages, goals did not make a discernible difference to the effectiveness of any team.
  • Group norms, led by a strong leader but agreed to and embraced by all members is a hallmark of successful teams.
  • “As the researchers studied the groups, however, they noticed two behaviors that all the good teams generally shared. First, on the good teams, members spoke in roughly the same proportion, a phenomenon the researchers referred to as ‘‘equality in distribution of conversational turn-taking.’’ On some teams, everyone spoke during each task; on others, leadership shifted among teammates from assignment to assignment. But in each case, by the end of the day, everyone had spoken roughly the same amount. ‘‘As long as everyone got a chance to talk, the team did well,’’ Woolley said. ‘‘But if only one person or a small group spoke all the time, the collective intelligence declined.’’Second, the good teams all had high ‘‘average social sensitivity’’ — a fancy way of saying they were skilled at intuiting how others felt based on their tone of voice, their expressions and other nonverbal cues. One of the easiest ways to gauge social sensitivity is to show someone photos of people’s eyes and ask him or her to describe what the people are thinking or feeling — an exam known as the Reading the Mind in the Eyes test. People on the more successful teams in Woolley’s experiment scored above average on the Reading the Mind in the Eyes test. They seemed to know when someone was feeling upset or left out. People on the ineffective teams, in contrast, scored below average. They seemed, as a group, to have less sensitivity toward their colleagues.In other words, if you are given a choice between the serious-minded Team A or the free-flowing Team B, you should probably opt for Team B. Team A may be filled with smart people, all optimized for peak individual efficiency. But the group’s norms discourage equal speaking; there are few exchanges of the kind of personal information that lets teammates pick up on what people are feeling or leaving unsaid. There’s a good chance the members of Team A will continue to act like individuals once they come together, and there’s little to suggest that, as a group, they will become more collectively intelligent.In contrast, on Team B, people may speak over one another, go on tangents and socialize instead of remaining focused on the agenda. The team may seem inefficient to a casual observer. But all the team members speak as much as they need to. They are sensitive to one another’s moods and share personal stories and emotions. While Team B might not contain as many individual stars, the sum will be greater than its parts.”
  • Psychological safety, a feeling by each member that they were free to speak their mind and to be listened to, is one of the few behaviors found in almost all the successful groups.
  • “What Project Aristotle has taught people within Google is that no one wants to put on a ‘‘work face’’ when they get to the office. No one wants to leave part of their personality and inner life at home. But to be fully present at work, to feel ‘‘psychologically safe,’’ we must know that we can be free enough, sometimes, to share the things that scare us without fear of recriminations. We must be able to talk about what is messy or sad, to have hard conversations with colleagues who are driving us crazy. We can’t be focused just on efficiency. Rather, when we start the morning by collaborating with a team of engineers and then send emails to our marketing colleagues and then jump on a conference call, we want to know that those people really hear us. We want to know that work is more than just labor.“

Remote Workplace Culture (con’t)

I used to write regularly at ARHAIK.com (2013 – 2019) but no longer post there. I occasionally import a blog post from that site to Conmodum.co’s “Of Interest” page. The below is from Feb 20, 2017……

I expect I will write about this subject more often.  I have spent a lot of time reading and thinking about it, and as Visual Trading continues to add momentum and employees I will use this place as a means to flesh out my thinking.

As leader of remote teams, I have recognized the importance of following up and repeating myself for expectations.  Even small items like how to use a ticketing platform.  One of the teams implemented a new platform, and with any new platform there is a learning curve.  We tried a few features and functions (“F&F”), choosing to keep using a few and abandon some others.  With this baseline usage, we decided to add other F&F’s.  Like most new processes, we try things for a few weeks, share our thoughts, and determine whether to continue or abandon.

Though it was discussed on an informal call, some off the team members are not using the new F&F’s.  I got frustrated once, but then realized that to fully implement usage, I am asking people to change their habits.  So I need to help them understand how to change their habits.  Merely demanding it is not enough.

How to help change habits?  Today when the first few support tickets rolled in, I told the team not to load them into the ticketing platform.  Once there were four tickets I grabbed the two team members who had not been using the new F&F’s and together we input the tickets using the new F&F’s.  I helped them see what we are doing and why I think it will work.  And I re-iterated their input on the F&F’s will be important when we review in a few weeks.

As I have monitored the ticketing platform today, I see the new F&F’s being used by all team members.  With a truly remote team, the ability to cajole usage by sitting next to someone is not there.  And “public” reminders via team chats are not great either.  So topic-specific training from the top down is now a part of my processes when we want to implement a new process or procedure.

PS – When I went to search for an image to tie into this post, I typed in “remote training”, which Google auto-filled as “remote training collar” and populated the search with electric shock dog collars.  I am not condoning the use of electric shock collars on team members (yet).  😉

The Real Layer-Zero & The Most Important Token: Power

In the next 5 years, distributed ledgers, or blockchains, will be widely adopted. This isn’t about “crypto” and its ups and downs; it’s about using secure, distributed ledgers to improve how we store and transfer value.

Here, I use “value” as a broad term. Some find value in sharing research among medical teams through zero-knowledge proofs, which validate outcomes without disclosing proprietary methods. Others find value in something called “Fartcoin.” Many popular use cases fall somewhere between these two extremes.

So what will have “value” now and in the future? For the next five years, it will be Data, the Networks that carry data, and the Power required to run the machines that handle and store the data.

Maybe the real Layer-Zero is the global power grid, and Power itself is the ultimate token.

The $2 Trillion Addressable Market

Those I have worked with over the last few years know my obsession with using tokenized High Quality Tokenized Assets (HQLA) as margin collateral and a means of settling trades. Broadly defined, HQLA is cash held at banks, cash that has direct access to a Sovereign’s Repo Window, or short-term Sovereign debt like T-Bills. 

🧠The opportunity to update current collateral processes is massive.There is approx $505 Billion in centralized clearinghouses as of Sept 30 2024. And ISDA’s December 31 2023 reporting of $1.4 Trillion collateral outstanding is mind-blowing. That’s approx $2 Trillion of cash and short term sovereign notes sitting in traditional vaults and moving on slow and costly rails. We can do better.

For financial institutions, asset managers, and corporates, tokenized collateral represents a bold step toward greater flexibility, cost savings, and efficiency. As the ecosystem matures, this could redefine how we view collateral management in both cleared and non-cleared markets.

The new US Administration’s recent Executive Order, Circle’s purchase of Hashnote & partnership with Digital Asset’s Canton Network, and conversations I have had with custodians and asset managers show me this massive market is finally attracting the attention it deserves.  Some thoughts below:

🔗 Why This Matters:
1️⃣ Increased Efficiency: Tokenized assets allow for near-instant settlement and real-time tracking, addressing operational delays in traditional collateral management.
2️⃣ Improved Use of Capital: When collateral can move 24/7, in seconds, at almost zero cost, less collateral will be needed to support open positions thereby unlocking more capital to be put to use.

3️⃣ Transparency & Security: Built on blockchain, tokenized assets offer unparalleled transparency and reduce counterparty risks through immutable records. We still need to get the right mix of transparency and privacy so that firms do not have to disclose their positions, but that is an easy, though not simple, build.

📜 Recent Developments:

  • ISDA’s Tokenized Collateral Model Provisions: I was fortunate to speak with ISDA’s Legal team in 2023 when they were thinking through adding Tokenized Assets to their Legal templates. Since then ISDA has adapted its 2016 Credit Support Annexes to allow for the inclusion of tokenized assets as “DLT Cash” or “DLT Securities.” This paves the way for their use in bi-lateral derivatives transactions.
  • Clearinghouse Adoption: Tokenized assets offer an opportunity for clearinghouses to modernize collateral frameworks, allowing participants to leverage digital assets while maintaining robust risk management. The major clearinghouses have been building and testing the use of blockchains and tokenized assets internally for years. However the lack of regulatory clarity (especially in the US) did not allow for a compliant commercial model to be built that mimics the current commercial models these clearinghouses are built upon. There are a number of HQLA tokenized asset business models that will now allow for commercial discussions with clearinghouses to begin in earnest.

🔮 The big questions: Are we ready to fully embrace this paradigm shift? With clear regulatory frameworks and ongoing collaboration, tokenized assets could revolutionize the future of collateral.

Let’s discuss: How do you see tokenized assets impacting collateral frameworks? Are you exploring their potential? Drop your thoughts below! 👇

#Blockchain #TokenizedAssets #Collateral #ISDA #Clearinghouses #Innovation #Finance

Pre-AI Thoughts on Machine Learning

I have used ARHAIK.com as a personal blog with the majority of writing taking place between 2016 and 2018. The below was posted March 14, 2016.

“You either tell the computers what to do, or the computers will tell you what to do.”

I first heard this line from Jesse Johnson, co-founder of oneZero Financial Systems, many years ago.  I see it proven correct time and time again.  It is why I allow my kids extra time on their tablets if they are on Code.org, or Tynker.com.  I believed it when Jesse said it, and I see it everyday, you either tell the computers what to do, or the computers will tell you what to do.  And I believe those who are succeeding now and will succeed in the future will be those who tell the computers what to do.  That does not mean you have to be a coder (though it helps).  It means you have to be able to understand how to make value out of the hardware and software and those people who can code.

Leaprate.com has an interview with the head of marketing for a brokerage firm that built their own sales/marketing/retention automation kit and now they are selling that to outside entities.  In reading the interview I noted how many time she referred to the “humans” who are acting on triggers which come from the “platform” (read as software).

Another company in the Margin Trading Products (“MTP”) industry gained a lot of visibility and value with their ability to onboard and retain a massive amount of clients and assets with a very small sales and retention staff.  Plus500 (LON: PLUS) was at one point worth more than $1 Billion GBP (approx $1.45 Billion USD).  The company had fewer than 200 employees; I had been told by a reporter in Tel Aviv there were just 86 total employees at the company’s height.

The company has been through a lot of corporate drama since it’s highest valuation in May 2015. The UK’s FCA halted their client on-boarding due to KYC/AML issues but has now been re-instated.  Corporate takeovers have been announced then abandoned.  And C-suite turnover has been high in the last three months.

But the real story is Plus500’s quiet rise to prominence and the lessons other industry firms are working to learn and implement.

Plus500’s business model kept the company focused on a business paradigm that had been all but abandoned in the previous 7 years.  Other brokerage firms had long ago given up the on proprietary trading platform and direct marketing as a business model.  Most brokerage firms were offering and promoting a commonly-shared trading platform; MetaQuotes’ MetaTrader4.  And brokerage firms focused on supporting independent Introducing Brokers (“IB’s”) as a primary means of sourcing clients.  With a common trading platform there was little to prevent a client from switching from Brokerage Firm A to Brokerage Firm B.  So the brokers were engaged in a market share war with the main differentiation being the price shown to clients, and any promotions given to land a client.  The average cost to acquire a user went down significantly, the time and costs to educate a user on how to use the trading platform went down, but the lifespan of a client went down as well since there was an increasing amount of clients lured away by competitors.

But Plus500 went the old school route.  They had a proprietary platform so that once clients learned to use the Plus500 platform, it would not be simple for clients to switch brokers as they would need to learn a new platform.  Plus500 also went after new traders, rather than compete with other firms for existing traders.  This is significant because it increased their costs per user acquisition, but it allowed Plus500 to target users who were not as price sensitive as existing clients.  So while price spreads at most brokerage firms were getting squeezed, Plus500 enjoyed considerably larger gross margins than their competitors.

Plus500 also run their advertising campaigns almost completely outside the lines that the MTP’s traditional brokerage firms use.  And I have not been able to determine where Plus500 advertises, nor what keywords they use.  I read and search multiple MTP industry websites and keywords every day.  Even using foreign VPN’s to access information on firms that do not cater to individuals who reside in the USA such as myself.  But never has a Plus500 banner or search result showed up on my screens.  And when I ask other industry executives these questions about Plus500, they seem to all have an “Ah-Hah!” moment.  They, too, realize that Plus500 is successfully sourcing new clients from non-typical sources.  The only information I have gained as to Plus500’s advertising is from the industry reporter who informed me Plus500’s advertising is wholly data-dependent, and targets the tangential prospects rather than the openly interested prospects.

Finally, Plus500 built and runs a sales / onboarding /  retention automation system that blows competitors out of the water.  Using a foreign VPN, I signed up for a demo account.  I do not know if they built their CRM completely from scratch, or if they used an existing CRM platform as a basis.  But the login they coded into their automation works!  Demo accounts that have a few successful traded get an auto-generated e-mail congratulating them and placing a simple Call-To-Action (“CTA”) in front of the demo user to open a live account.  The pattern of e-mails to my Inbox is not predictable (like most companies use).

The on-boarding process is what got Plus500 in trouble with the FCA.    Simply put, Plus500 did not require full documented KYC/AML documentation prior to allowing clients to start trading.  The requirement to complete all stages of KYC/AML paperwork was not needed until/unless a trader wanted to withdraw funds.  It is important to note that this practice cost Plus500 half it’s market cap when the FCA halted client on-boarding in the Plus500 UK subsidiary (Cyprus-based operations continued as normal).  Plus500 has since changed their on-boarding policies for UK clients and the company has regained much of it’s value.  But by allowing clients to deposit and start trading quickly, and by making it more complex to withdraw funds, Plus500 has been able to generate more revenues from each trader.  So while blatant disregard for KYC/AML rules is unacceptable, many companies are now working to make their on-boarding process as short and simple as can be allowed while maintaining the integrity of the process.

To bring this discussion back to my headline, Plus500 quickly built an extremely profitable MTP brokerage.  And a significant aspect of that growth was because the founders understood the possibilities of successful automation.  They told the computers what they wanted and allowed the computers to determine the most efficient processes, and the computers largely did the work.  Less than 100 employees and a $1.45 Billion USD market cap in just 5 years is quite a feat.

So do not expect me to be creating and managing sales and retention teams of 100 people around the globe any time soon.  You will find me sourcing coders and big-data specialists who can leverage the power of computing by telling the computer what to do.

How Do You Know When To Hate?

I have used ARHAIK.com as a personal blog with the vast majority of writing taking place from 2016 – 2018. The below was from a post on April 7, 2016

The recent spate of state legislatures to enact, or attempt to enact discriminatory laws (North Carolina, Georgia, Mississippi) has me thinking about each of our differences and how it really effects others in your society.  Mississippi voters want to be able to discriminate based on their perception of another person, but what if they are wrong?  How do they know if someone is gay if that person does not specifically convey their sexual orientation?

Each of us has differences, and what can make those differences important is if the difference is visible or not, how deeply the difference effects you, and how deeply it can effects others (if visible or known).  I have come to think of it as a simple (but important), three axis chart.

X-Axis: Is your difference visible to others?  One of my ears is shaped slightly different than my other.  This is a minor difference that has been noticed by a minuscule fraction of a percent of people I have interacted with.  In fact it has never been mentioned to me, but I can see it in the mirror.  But some people’s differences are massively noticeable; an amputee, someone with facial burns, someone who chooses to dress outlandishly (or conservatively), or a gay couple who choose to show their love with public displays of affection.  This matters to the individual as it effects how others in society view each of us.  And that, in turn, has an effect on how we view ourselves.

Y-Axis: How a difference effects ourself.  My slightly and almost imperceptible difference in ear size effects me exactly zero.  I can not think of any event in my life that has been effected by the fact that my ears do not perfectly match.  But for someone who is gay, or of a certain religious belief, or someone who believes aliens reside on Earth…..their daily actions are effected by their difference.  The gay couple may choose not to go to a certain restaurant (or straight people may choose not to go to a certain part of town), the Buddhist may need to take time during the day to pray, and the people who believe aliens walk among us, well, not sure how they are effected but that must effect your day-to-day decision making.

Z-Axis: How other treat you due to any visible difference.  Maybe the alien-believer lives in a community in Northern Arizona where everybody believes aliens inhabit Earth.  That makes life a lot easier for the believers.  But what if the gay couple live in a small beach community in a state that just passed a pro-discrimination law?  Do they now avoid certain stores?  Will other citizens treat the gay couple differently now?  Do they need to uproot their lives and family and move to a different state?

But this raises two important questions….1) How do we know what any person’s difference(s) are unless they purposefully tell others?  If I showed you a picture of a conference I attended and stated that two people are gay and one transgender, I bet you could not pick those three out of the 28 people in the picture.  So for those who support the pro-discrimination laws, how do you who to discriminate against?  And what if you are wrong, are you opening yourself up to civil or legal complaints?

2) Why care what others’ differences are if you can not see them and they do not effect you?  You probably do not see the differences in my ears, and even if you looked real close, would that difference effect how you view and treat me?  What if I was a Buddhist?  What if I had a massive scar on my back (that you can not see unless we are at the beach) because I donated a kidney?  And for my fellow conference attendees who are either gay or transgender, if you can not see they are different than you, you could not purposefully discriminate against them, correct?

So what does it matter what one’s differences are so long as the person is not causing harm to you and your society?  The pro-discrimination crowd will tell you it is about religious liberty.  That their belief of something is so strong, that they can not accept it even in others.  That it is not good enough to live by one’s own creed and beliefs, but that one has the right to force one’s own belief on others.

But can that be the case?  Is that a valid way to view society?  Or do they believe in that only when they are in the majority?  Because those who are pro-discrimination and back laws to allow them to discriminate based on their beliefs are likely to change their tune if those they discriminate against were to gain the majority.

Operation Chokepoint 0.1

I have used ARHAIK.com as a personal blog for a number of years. Much of the writing was from 2016 – 2018. The below post is from Feb 2018. I wish I had coined the term Operation Chokepoint at that time.

In another example of how global regulators are using lessons learned from the retail FX & CFD industry, more and more financial institutions are cutting off crypto exchanges (and all crypto service providers) from banking access.  There seems to be few formal rules that are forcing banks to take these step, but there is clearly a behind-the-scenes push.

Similar to CFD’s being outlawed in the US, but Eligible Contract Participants having access to “Total Return Swaps“, retail investors are being restricted from cryptocurrencies, but ECP’s still have easy access.

But I wonder is it just the volatility of cryptocurency trading that is causing concern to regulators?  Is it the fact that they can not easily point to intrinsic value in many ICO’s?  Is it the Anti-Money Laundering aspect?

Tangentially…..there is a bit of a catch 22 going on.  If and as more merchants start to accept cryptocurrency as a form of payment, volatility will drop and intrinsic value will be easier to define.  But cutting off fiat to crypto conversion will slow this acceptance rate due to reduced supply of buyers who have crypto to use in purchases.

As for the AML…I get it.  Crypto’s are real tough to follow and to identify; they are designed that way.  But so is cash.  So if the regulators overarching goal is control of money flow and knowledge of transaction participant ID’s….then they will keep pushing for fewer and fewer, globally connected institutions.  And that is what I do not want to see.

Strategy vs Planning

I used ARHAIK.com as a personal blog for a time. Some posts from as far back as 2016 seem worth sharing here. The below is from Jan 4 2023

Strategic Planning. Many organizations engage in strategic planning at the end of each calendar year but I dislike the term “strategic planning” because “strategy” and “planning” are very different processes for an organization. Let’s define, differentiate, and get these separate processes sorted.

A “strategy” for an organization is the theory of why the organization should be competing in a certain market, and how this organization will compete in that market space. Strategy is not a guaranteed outcome; it is dependent on your ability to execute as you desire AND the marketplace’s acceptance of your business model to solve their needs. The strategy for a new plumbing service may be to use on-call, independent, licensed plumbers who drive company vans that are fully equipped with every conceivable piece, part and tool that could be used in a home repair. This way the repair job can be guaranteed to be resolved with a single visit by the plumber. The plumbing company drive this value proposition as part of their marketing and processes they implement to win market share.

“Planning” is a process by which an organization controls how it will use resources. The company controls the expenditure of resources to accomplish a demonstrable outcome. In the plumbing case above, the company needs to plan its purchase of vehicles equipped with the ability to carry a wide variety of parts and tools. The company needs to plan its inventory management process so it never runs out of a tool or part by logging each tool and part with a barcode that is scanned when used and automatically restocked when the van returns from the job. The company needs to plan for how to get in touch with the independent contractors each time a service call comes in.

Planning is far more comfortable to do for managers. Planning is a process by which you know in advance what the outcome will be (the vans will be fully stocked each time they leave the lot. Planning is the process to compare radio systems and go through a RFQ process with 4 providers to get the best deal.

Strategy can provoke angst and worry. You can not be sure your chosen strategy will work as you expect. Other plumbing firms may offer a monthly service plan that satisfies the customer base more so that your ability to resolve issues with one visit. Your compensation plan for the independent plumbers may fail to get enough to sign up as part of your labor force.

Determining strategy is critical for organization leaders. And the better they can articulate strategy, the easier they will be able to raise funding, hire talent, and run their business. But strategy is does not have a guaranteed outcome. Planning is what happens after strategy is determined so that the organization can execute the chosen strategy. Let’s not confuse strategy with planning. And let’s skip the “strategic planning”

Blockchain’s Killer Use Case

This report and subsequent interview with Peter Johnson of Brevan Howard Ventures highlights the rise of stablecoins. I work for Circle, the purveyor of USDC, EURC, and our Digital Dollar infrastructure offerings so I may be a bit biased, but the proof is hard to deny. Stablecoins are replacing many forms of transmission of value, especially US Dollars. It reiterates Circle’s mission statement:

Circle is a global financial technology company helping money move at internet speed. Our mission is to raise global economic prosperity through the frictionless exchange of value.