Focus on Product

The following memo was originally written and published in order to be distributed internally. We have included it here in its unedited form.

One of the questions members of my team often ask during their performance reviews is, “how do I get better?” This is a very good question. Whether you are a developer, researcher, trader or something else entirely, your compensation is directly correlated with your performance. If you are a high performing team member, you not only get paid more money, but you also position yourself to take on more important responsibilities in the future, thereby increasing the number of ways in which you can add value to the team. The cycle is virtuous, and everyone on the team benefits.

My answer to this question is very similar to the motto at Y Combinator, an early-stage startup accelerator: “Make Something People Want.” There is a lot of substance for us here, so let’s try to break it down.

On the one hand, the “People” in this motto can refer to our trading counterparties. All else equal, our counterparties want to be able to execute large order volumes within tight bid-ask spreads during all kinds of market conditions. As market makers and quantitative traders, we should acknowledge that our value and the money we earn stems from the liquidity we provide, and we should therefore strive to perform this service well.

On the other hand, the “People” in this motto can refer to ourselves. Perhaps one of the key differences between tech-driven market making companies, like ourselves, and other technology companies is that we are almost always our own end-users. We are the end-users of the network infrastructure we build. We are the end-users of the software we write. We are also the end-users of the machine learning pipelines we research and release. In our team, high performing people make things that people on our team want.

Exactly what people on the team want is almost besides the point. The important point, and I cannot emphasize this enough, is that if you want to get better, you must be product-oriented. No matter what your role is on the team, there is some tangible piece of technology that you can work on building and improving.

Why is being product-oriented so important?

One reason is that you maximize the return on your time. It is very easy in the quantitative trading industry to waste time. Several trading companies with very smart, hard-working people have failed because they spent their time on things that either did not matter or did not materialize. If you instead focus on building products, you are less likely to fall down that rabbit hole. The products you build are your deliverables. Your deliverables chart the path to meeting business objectives.

A second reason is that you more easily combine your efforts with other team members. Everyone works together on a single code base, building on each others’ work, making things better and better. Even failed products inform the direction of future work, and, if everyone publishes their work, two people are less likely to try the same thing the same way, fail twice, and waste time and effort.

If earning money were a convex optimization problem, a team of product-oriented people working together would be like applying stochastic gradient descent with a large batch size: every iteration is more likely to take a step in the “right” direction.

So, if you want to know how to get better, simply focus on building products. This means:

• If you are a developer, focus on building applications, test suites, and docs.
• If you are a researcher, focus on building quant trading libraries, machine learning pipelines, and data analysis libraries.
• If you are a trader, focus on building trade automation libraries, monitoring tools, and parameter optimization libraries.¹

If you are new to a particular role and you don’t know how to do any of the respective tasks above, then you should concentrate on learning how.² And, if you discover you are not yet skilled enough to make meaningful contributions, then you should concentrate on improving your skills until you are.

Notes: