October 2017: The Consequence of Connections

Connections, it seems, pretty much trump everything else, both in life in general and across the capital markets. It’s only when humans feel isolated due to a lack of connectivity—which in extreme cases can manifest in a variety of dissociation disorders where subjects crave connections to things (like reality) and other people, but for one reason or another cannot establish them—that the importance of making and maintaining connections really hits home. 

Connections give rise to the establishment of communities, the viability of which are determined largely by the level of buy-in from their members, and in that sense, our industry is no different from any other. Technology, while critical to the normal functioning of most capital markets communities, is largely inconsequential to their members in terms of exactly how it works, as long as it does what it’s supposed to. It’s a bit like the engines on a passenger airliner. Are they important to the general well-being of the passengers? Yes. But do passengers care whether they are made by Rolls Royce, Pratt & Whitney or General Electric? Are they interested in their fan blade design and how much thrust each engine produces during climb out? Of course not. Those issues are inconsequential, as long as the engines do what they are supposed to and the aircraft gets them to their destination safely.

I recently had the opportunity to reconnect with Lee Olesky, co-founder and CEO of Tradeweb, after about 15 years of no contact. We first met in 2001 or 2002 when he was based in the UK, but that was it in terms of contact, until a week ago when we got together in Infopro Digital’s studio in London to look back at the seminal moments over the past two decades that the fixed-income trading platform has been in existence as a kind of celebration of the firm’s 20th birthday. One of the striking features of that conversation is the value Tradeweb places on what Olesky refers to as its “network.” According to Olesky, the premise upon which the business was founded and which has served it so well over the years is simple: It brings together buyers and sellers of similar products in a safe, ordered and transparent environment so that they can transact their business.

In that sense, it’s not unlike Amazon, he says, except it caters to the global fixed-income trading community. The crucial element of the firm’s business model is not its underlying technology, but the community that thrives as a result of it. Sure, the technology pulls everyone together, irrespective of their location, language and time zone, but it is the community and their buy-in that breathes life into the platform and renders it viable. So, as much as our industry is driven by technology, it’s even more so driven by communities using that technology to go about their business. And that, to my mind, will never change.