Gold-i has been one of the most robust companies in the industry, having started its operations about nine years ago. Founded by Tom Higgins at the height of the financial crisis, the firm has been growing consistently over the years.
We had a chance for a frank conversation on the company’s growth and the challenges it has faced over the years. From scaling a business to delivering new products to market and exploring the future, Tom Higgins shared some insights as a highly experienced executive from the tech side of the trading world.
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It’s been nine years since Gold-i was founded. Can you share with us some insights on how you managed to scale your business?
We started a restructuring process this spring and the difference has been substantial. We started operating with the assumption that business is not going to keep coming to us consistently and that there will be increasing competition, so we have added to our sales and marketing teams. This approach allows a company to insulate itself from turbulent times and get much more reliable and quality earnings.
I’m a member of a CEOs group organised by a company called Vistage in our group of 16 CEOs, we are all gathered from different industries and we do not compete with each other. I’ve met CEOs of a few software businesses in different areas where there is more competition. We thought it would be interesting to see what the results would be if we incorporated the approach of a “normal” software industry firm into our operations at Gold-i.
We decided to take a much more marketing-led approach. Concentration on lead generation in the right areas and some qualification of the leads gets you a database that fits into your business model. We didn’t buy any leads, instead we focused on building our own database that gives us the ability to target the right people with the right product.
Do you think that this is part of the maturing of our industry?
Yes. As the margins for brokers and for software companies are being eroded to more “normal” levels, we need to work harder to capture revenues. I don’t think it’s a negative change, it’s just a change to maturity. The regulators haven’t made it any easier. They pushed the brokers to work harder in compliance and the whole value chain is getting squeezed.
Lower quality companies are dropping out due to their lack of ability to scale or simply because their product is not very good. Just like in any other industry, when we have a rapidly growing market, there is space for everyone, but when it’s a mature one - there isn’t.
So are we in the midst of the long awaited consolidation phase of the industry?
I think so, definitely. It’s been happening for some time in various sectors, like for example PBs and prime of primes, where we see a completely different set of players today when compared to 2-3 years ago. Changes will continue happening - we don’t see that many start-ups either because it’s difficult to start a company from scratch nowadays, especially a brokerage.
Since the height of the financial crisis when you launched, what has been the most challenging time for you over the period?
It has been an interesting journey since we started. As you go along the different phases of development of a company, you are faced with different pressures. At the beginning it is quite easy because you don’t have many costs as you don’t have that many employees.
You have virtually no policies or procedures in place and it’s really quick to do things. What you soon realise is that you can’t scale your operations - you can’t scale the support aspect of the business or the quality aspect without hiring more people.
Tom Higgins is taking part in the CEO Talk at the London Summit 2017: Preparing for Regulation, Eyeing Cryptocurrency. This is taking place on 15 November at 11.00-11.45.
You overcome the first hurdle by employing more people to manage some functions and set up an operating process. You then have increasing costs, while revenues take a while to catch up with your expenses. Typically companies face the first hurdle at about 5 people, then they get another one at around 20, when the same thing happens all over again.
You then get a hit after hiring even more people and another lag on revenues. Each time you get bigger, it takes a bit longer to recover.
At Gold-i, we got to a third hurdle at around 30 people, when we expanded into China and faced additional costs there. This is why we have implemented the latest changes to our sales and marketing approach, permitting us to build revenue pre-emptively. This is something that the CEOs group has helped me a lot with, because I knew about these hurdles that you get to once in a while. We managed to predict the latest one and managed it beforehand.
Let’s talk about your latest product updates. Where has your focus been in FX lately?
Like everybody in the industry, we have been doing lots of work on MT5. Our Visual Edge business intelligence and risk management system is now available for both MT4 and MT5. It enables clients to see their risk together across both platforms.
Since most industry players are not switching from one to the other, having both books in parallel is a useful feature for managing risk. We have also built the next generation of our Liquidity management platform, Matrix, with visualisation tools built into it.
What is the next area of expansion for Gold-i?
It definitely is Cryptocurrencies . We’ve been working with a number of exchanges and what we see so far is that they don’t know much about the financial world. They are all crypto experts, but they don’t understand trading. The good thing is that they learn quite quickly.
We launched our Crypto Switch a couple of weeks ago and there is already significant demand for it from brokers worldwide. Our Crypto Switch provides brokers using MetaTrader or any other platform with access to leading global Crypto Exchanges and Liquidity Providers for both pricing and trading. It gives brokers full control over pricing and execution and the choice of primary/secondary feeds or full aggregation.
We are aiming to be the leading Crypto technology provider in the industry and help brokers to maximise opportunities from the increasing demand for Crypto trading.
Is integrating your service with an exchange more difficult than with FX/CFDs?
Integration with exchanges is way more complex. The APIs they are using are not standardised like FIX, for example. Each exchange has its very own API and they still don’t quite understand the needs of the trading world. On a positive note, some of them are quite fluid in what they do and they will adapt their product to ours.
