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David Hall (Linkedin) is the Co-Founder of Tapaas and former Principal Architect across numerous financial institutions including Westpac, Macquarie Bank and Citigroup. David made his way into the industry through a unique opportunity at Salomon Brothers, an organisation that had a lasting impact on David. Twenty years later, and many runs on the board with institutions as a financial systems architect, David now runs his own business – Tapaas.
Tapaas is an analytics platform that accelerates profit from insights for finance markets enterprises. The platform provides analytical power to growing companies, that was only previously available to the premier financial institutions that David used to work for.
Disclaimer: Go Markets is a derivatives broker and Jordan Michaelides is the managing director of Neuralle Media. All opinions expressed by Jordan and podcast guests are solely their own and do not reflect the opinions of Go Markets, an AFSL license holder. This podcast is for informational purposes only and should not be relied upon as a basis for financial decisions nor as an indication of future performance. Clients of go markets may hold positions in the derivatives mentioned. A financial services guide and product disclosure statement for our products are available at the www.gomarkets.com website.
Jordan Michaelides: In this episode we spoke with David Hall. David is the cofounder of Tapaas, and former principle architects across numerous financial institutions including Westpac, Macquarie Bank and Citi group. David made his way into the industry with the unique opportunity at Salomon brothers, an organization that had a lasting impact on David and his career. 20 years later, and many runs on the board with institutions as a financial systems architect, David now runs his own business, Tapaas.
Tapaas is an analytics platform that accelerates profit from insights for financial market enterprises, primarily through allowing them to analyze their risk. The platform provides analytical power to growing companies that was only really available to the premier financial institutions that David used to work for. David has a fascinating background and life experience. We covered a vast array of topics including what he misses about America and loves about Australia, his father and lessons learned from him, his experience traveling as an expat, particularly in Japan, financial innovation organizations like Salomon Brothers, Tappas and its work with the retail brokers, and then principles for applying risks and technology in this business. If you enjoyed this episode, do subscribe on your podcast app and consider sharing this one with a friend that you think may enjoy it. With that all being said, let’s get into the episode with David Hall.
David, thank you for joining me on your Friday. I’ve heard it’s a nice cold day up in Sydney and surprisingly a very warm one down here in Melbourne. First question I’ve got to ask, and I think we were chatting about this beforehand, what do you miss the most about the United States?
David Hall: That’s an interesting question because, actually, what I find is when I go back to the States, it’s what I miss about Australia that affects me the most, and that is, I just love coffee, and when you go back to the States you kind of suffer with things like Starbucks, so I always go hunting for a proper cafe if I can find one.
Jordan Michaelides: Whereabouts did you grow up in America?
David Hall: I grew up in the suburbs of Washington DC, just outside the Nation’s Capitol.
Jordan Michaelides: When I send through the notes, I really like to understand lessons that were imparted onto people so we get a real idea as to who they are. Typically, it’s from their parents, it may be something that’s direct or indirect. You noted your dad worked for the US Government for both senators and congressmen, I’m curious as to what particular lesson he imparted on you when you were young.
David Hall: As I said, he worked for senators and Congressman, and, the amazing thing about politicians is how they get to know people. They remember you, they remember your name and things like that. My dad, even though he worked with some really important people, he always made sure that he would spend time with the average guy, you know, the cashier at the local shop, and just ask them, how was their day, what’s their name, get to know a bit about them and make them feel like somebody actually cared. The lesson I took away from that is that even though we have really busy lives, we need to always take time to get to know each other and help people out.
Jordan Michaelides: What was his job?
David Hall: A couple of jobs, but, they would be either the legislative assistant or the administrative assistant. Back in the day I remember he would come home from work in the evening with a briefcase full of letters from the constituents. He was the guy that if you wrote to your Congressman with a need or a complaint, my dad was the guy who would read it and then basically determine how the Congressman respond or dictate the responses.
Jordan Michaelides: I noted here that when you think about what you wanted to be as a kid, you loved rock and roll and, I guess, you thought you’d grow up to be a rock star like most kids think. With that influence of your dad and the work that he did in that field, why not politics?
David Hall: Well, one of the memories I have of childhood is that every four years, because of the election cycle in the US, the night before the first Tuesday in November, the entire office staff would be over at our house wondering whether they were going to have a job the next morning or not, and I thought, I don’t want to work in an industry where you could possibly get pitched out once every four years.
Jordan Michaelides: I can imagine it’s pretty turbulent in that regard. What’s the earliest memory of your childhood? I noted you spoke about playing with your dog and walking in the woods. Which woods were you thinking about in particular?
David Hall: In the suburbs where we lived, there was a national park kind of area, it’s a creek that flows into Washington DC and you could ride your bicycle from out in the forest all the way into this city following it. It was quite amazing, quite beautiful.
Jordan Michaelides: What’s it called?
David Hall: Rock Creek Park.
Jordan Michaelides: Now thinking about your early career, and obviously we spoke about that political element before, I noted here that you studied at the University Of Maryland, you studied business accounting. I did accounting, banking and finance, I’m curious does accounting differ much to business accounting or is it sort of the same thing?
David Hall: The primary focus of the accounting degree was ultimately to become a CPA or a certified public accountants where you could work at a big firm and audit large fortune 500 companies and that sort of thing. It did have a bit of a technology involved because back in that day, that was when people were first starting to think about using computers for accounting.
Jordan Michaelides: And so you entered the commercial world at PWC and went on to Salomon brothers. I know that in your notes you spoke about how much the world was business was changing and how technology was becoming such an important element here, particularly probably at your time at Salomon. I’ve noted you spoke really highly of Salomon, but I’m curious, how did you sort of fall into the world of finance tech in particular?
David Hall: Fall is probably a good point. Working at PWC, an advisory business, you are measured on how heavily utilized you are, so, as soon as you saw yourself finishing a project, you would want it to be shopping around for your next one if you are wise. You could wait to have somebody come and pick you for their project, some random event, or you could hunt around. My specialty at the time was implementing these very large mainframe general ledgers. We would work for companies such as Freddie Mac, which is probably infamous now because of the GFC, I worked on implementing a general ledger there. Imagine trying to come up with the account numbering scheme for one of the biggest financial institutions in the United States, account numbers matter because if you make a mess of them it’s going to be quite impossible to produce meaningful reports.
When that project was finishing, I spoke to a friend who was in New York and I just asked him if there was anything that required my skills that he knew about. The day after that I got a call from his boss asking me if I wanted to move to Tokyo, Japan.
I was engaged at the time, we were going to get married within a couple of months and basically two weeks after the wedding we packed up everything and flew to. This was 1991, and that was actually the last time I lived in the United States. So, I flew away for a one year project and destiny has taken me a lot of different places since then. Salomon Brothers was the customer.
Jordan Michaelides: You seemed, at PWC, to be working on a lot of, like you said, general ledgers. Simulations for banks is what I assumed it was. It’s curious that you went to Japan then, it must’ve been quite exciting. How long did you live there?
David Hall: I lived in Japan for eight years. It was an amazing experience. After being there for the one year project and having gone through the experience of adjusting to their culture and learning the language and learning to survive, it seemed a bit silly to just turn around and go straight back home.
The other thing is that Salomon brothers is an amazing company and the environment you come into when you arrive there… back in the day, imagine, not everybody even had PCs, and in Salomon’s we had these things called Sun Microsystems. They were like super computers on everybody’s desk because these guys knew the value of technology in finance. When an opportunity came to then start working on a subsequent project, which was far more interesting, and finance focused than a general ledger, I raised my hand and they hired me to stay there.
Jordan Michaelides: I noticed here, you were very impressed with the way that Salomon brothers ran itself. I’m curious as to what you think created that sort of that innovative environment. Why do you think they were more ahead than say a JP Morgan or Goldman Sachs at the time?
David Hall: You might get into some serious arguments as to who was ahead *laughs* I think, well, these are organizations that truly understood risk. They understood that there’s no way to make substantial gains without taking on some amount of risk, but, there’s also no way to retain those gains without managing that risk. That’s what they’ve done for over a hundred years and when technology came along I think they just realized that was going to be part of the game.
Jordan Michaelides: You said before you, you oved from America and you haven’t been back since. Now you live in Australia, in Sydney. On your notes you spoke about how while your wife and you were living in Japan when she had the opportunity to go do some work in Australia. You came to visit, you fell in love with Australia and you know, happily ever after, you still live here now. What particularly about Australia do you love? Why did you not want to go back to either Japan or America?
David Hall: There’s an amazing culture here that is a confluence of kind of European, Asian and middle Eastern. In America, in New York especially, they think of themselves as the melting pot and I guess they are, but I think Australia a melting pot of a different flavour.
What I really like in Australia is, it feels to me, like your local cafe, your local shops and so on are run by proprietors who actually own the place and care. It hasn’t been completely overrun by franchises and strip malls. It still has that sort of feeling to it and I hope it stays.
Jordan Michaelides: I think there’s certain elements of the Australian culture which make that sort of stuff very hard. I remember watching a documentary recently about why Starbucks failed in Australia, and it’s always interesting to me that it goes back to that egalitarian culture where people don’t like the big end of town. They much prefer smaller players or people that they can relate to. I don’t know why that is. I think it’s that myth of the fair go that we exhibit in Australia.
About that melting pot, on my other podcast I was interviewing a guest who’s a demographer and he was speaking about how everyone claims they’re the most culturally diverse place in the world, particularly places like New York, London, etc., but I think Melbourne and Sydney well and truly have everyone else sorted. I think New York has 16% of their population is born overseas, whereas in Melbourne and Sydney it’s, it’s getting about 50% now, and the diverse array of people as well. I think if you look at an index of the different nationalities, I think Australia smashes everyone else out of the park. It’s interesting, more than anything.
I’ve seen all sorts of different cultures where, and you would’ve seen it as well, I love Japan, I’ve been to Japan twice than last 18 months. My partner and I were actually planning on getting married over there because we wanted to get married overseas. I don’t know why, we just loved Japan, but their culture is very homogenous and, it’s very, very different. Every one of those cultures has its own benefits I think.
Jumping into to your career in the space that you’re in now, you have worked extensively across the technical side of financial systems. I’m not going to list all the roles, but in summary you’ve worked front and back of house across companies like Macquarie Group, Westpac, City Group, Salomon Brothers as well. And then of course in Australia, America and Japan. Now, the audience listening may have an idea as to what you actually do, but, for the novices first listening to this space of FinTech systems and what they actually are and how they run, can give us like a quick two minute brief on to what you actually do and what these systems are.
David Hall: What I actually do is a well kept secret people use to say *laughs*. Much of that time my role was architect. Going back to the PWC days, I came into this industry with a business background but also a smattering of technology and computing, and, what I found was these organizations were hiring people who had computer science degrees, who really understood technology, did not necessarily understand business. So, my role has always been really getting to understand and empathize and listen and learn about what it is that these business people need, but at the same time truly understand what are the capabilities and the constraints of technology of the day. Also budgetary constraints, policy constraints, security, disaster recovery. I mean, you think about, there are many, many dimensions to making sure that a system is going to be fit for purpose and also deliver the desired final outcome that somebody is asking for.
I guess I’m, if you’re really thinking about there are so many aspects to finance, you could be looking at trying to improve somebody’s experience; one of the projects I worked on at City Group, what they were trying to do was effectively provide somebody a the credit approval for a mortgage loan within 60 seconds of them pushing ‘go’. Imagine this, you have filled out and completed a mortgage loan application which includes things like your employment history, your bank account details, a valuation from an appraiser of your house and lots of different things. But once you’d actually put all this stuff together and sort of push, go and uploaded it to come back to you with an answer in 60 seconds. That’s an aspect of the business where you’re trying to think how could we win new business and change people’s experience at dealing with the bank from something like waiting weeks and weeks.
Say you’re about to get married, the next thing you’re going to want to do is buy house and this a big dream. If you find your dream house and then you’ve got to sit there and wait for weeks for your bank to come back and tell you whether you’re going to get the money that’s not good. Banks aren’t all bad, a lot of the things we do in technology is to try and improve people’s experience with them.
Jordan Michaelides: It was interesting on some of the notes you mentioned about, I was thinking about how our audience can learn, you know, there’s obviously exchanges and brokers that are listening but also traders. One of the interesting notes you had when I asked what can traders learn from them and how the house approaches risk was just how they view risk. I mean, one of the things, and obviously it’s sort of tied into the work you do is big houses know that you cannot manage risk if you cannot measure it, and it reminds me of, is it Peter Drucker, “what gets measured gets managed”. I love that quote. One of those things that people can learn from this space is that yes, technology, you may be cautious of it, you may have an opinion on it, but the reality is it allows you to do things that in the past were not really possible. That draws me to the lessons learned in your own career and I’m specifically thinking about your career as a technical architect. What stands out to you is the biggest insight from your time in the industry?
David Hall: As an architect, you’ve got to try and balance all of these various constraints. You know, there’s some desired outcome, but there are also constraints and technology problems and things you’ve got to overcome. A couple of main things: There’s a lot of people involved, each of them has a different perspective and also a different interests. So there may be the business leader who is trying to come up with a new product and get it to market as fast as they can and as cheap as he can, then there’s also the risk manager who’s concerned about if this product takes off, what’s the impact going to be on our balance sheet, then there’s the security officers who want to be sure that we’re not creating a new opportunity for some sort of threat or somebody to break into our systems. And all these things have to be balanced.
One of the things I learned when I was living in Japan was a technique that they call ‘Nemawashi’, and this is basically the art of establishing consensus among a diverse group of people while always letting them save face. In Japan you would never a big business meeting where you throw some big controversial sort of issue that could potentially embarrass one of the executives around the table or put them in a tough spot. You always made sure that if there was something, a big decision had to be made or a compromise, any of this, that you go and visit each one of them individually, privately. In Japan usually there’s a lot of alcohol involved in these type of meetings, you want to make sure that they are on your side before you get into the big meeting. It’s not a technical insight, let’s say, but it is certainly important to try to get success in technology endeavours and projects.
Jordan Michaelides: It sounds like it’s the ability to communicate with an audience and make sure that everyone’s on board because at the end of the day, you’ve got to convince a whole bunch of people that this is the right thing to do. I found that so funny reading that and thinking, yeah, the amount of drinking that would have to be involved before that big meeting, which is so typical of Japanese culture. Then again, you also learn the techniques of lean and agile, where in the west we write on a bunch of post-it notes, whack it on the board, and all of a sudden we’re doing a scrum. It’s always interesting to see how those little things are imparted on us along the way.
David Hall: Our current strategy required to get something done in large enterprise might not be the same strategy as launching a start-up and coming up with an idea. We did spend a fair bit of time white boarding and forecasting and that sort of thing, but really nothing really happens until you start building a solution and getting it in people’s hands, so, the idea of the lean startup is to rapidly as possible find ways that you can take this hypothesis that you have that we understand a problem, we found a solution to it, we’re going to actually get the solution in people’s hands and get feedback on it and potentially pivot if it fails, turn and then rapidly learn and come back and iterate. It’s basically a philosophy we follow at Tappas with our company.
Jordan Michaelides: Now, on Tappas, I think on the website it’s known as an analytics platform as a service. Primarily you guys are focused on real time insights for clients, building platforms, offering a platform that people can use to plug-in all their different feeds and manage their exposures. I know that you’re primarily focused on FX retail brokers at the moment, why that space in particular?
David Hall: Well, the idea of coming up with something like a platform as a service is really a cloud concept. We saw when we were starting the company, we knew from our experience working in institutional banks, in that trading space, the power of big data analytics and the power of taking tons of historical data and applying mathematical models and quant models and doing what we call back testing, hypothesizing back testing, proving out these things, and then finally releasing that algorithm into the real world, they’ll start trading or something like that. We knew of course, that to do this required tremendous compute resources, a team of really brilliant people, lots of money. At banks like Citi, Macquarie Bank, we had that, but Tom and I thought when we started the company, surely there’s a need in the marketplace where there are organizations out there who could benefit from this same kind of capability but could never pull together the millions of dollars required to front up the team and buy the computers and all that.
So, what we thought would be the solution was to build something, we’d offer it as a service, a cloud hosted subscription monthly model, then medium size companies would be able to apply this to their business problems. At the same time, I was working in FX at Westpac, Tom got to do some consulting at a company called AxiTrader. It was mainly more IT strategy type of activity, but was noticing these retail brokers are processing tons of data, huge volumes, lots of ticks, lots of trades, with, let’s say relatively less technology capability than we would have in a big bank like Westpac or Citi. That’s where the light bulb came on and we thought this could be an opportunity if we built a system that does the analytics, the streaming data, risk management, that there’d be an opportunity, and there definitely it seems to be.
Jordan Michaelides: We were chatting about it before, the industry was, and I think you had this really funny video on your website, where, people speak about how a lot of the industry was using spreadsheets for so many years. I think about my time in the industry five years ago and that was best practice. You’d pull a feed, whack it on a spreadsheet, marry it up with a few different sums of different orders and then all of a sudden you’re balancing your book, which is hilarious, but the fact that you couldn’t do it in real time was quite scary.
David Hall: I must say, I came out of my first sales meeting with an FX broker, almost stunned at the revelation that they were using Excel sheets and this copy/paste method to effectively try and get a picture of their risk and exposure when I knew this risk and exposure was changing every second.
Jordan Michaelides: What was that first sales meeting like? Did it awaken them as to how big a deal this was, or how useful this tool could be?
David Hall: Honestly, what I found to be the strongest sales tool is the experience of a catastrophic event at a broker *laughs*. Sorry for laughing, it’s really not funny. I imagine the life of an insurance salesman is probably the same and the way you’re coming out and saying, look, pay any of these premiums, and people say they can use that money for something else until they experienced that kind of catastrophic event, then they say, Oh, I really wish I’d, thought about that insurance policy, or, I wish I’d thought about that risk management system that could have notified me of this ballooning issue. Actually, in that first meeting they had already had the catastrophic event because the reason that they were reaching out to us looking for a solution in that they had lost, I would say, the equivalent of 10 years of our fee in one day. I think it’s sort of like driving your car, not everybody who drives has had a catastrophic car accident, right, but we all know that could happen.
Jordan Michaelides: Now, we’ve got to jump into some short sharp questions, but one of the things I wanted to know, and I think this is important, is understanding from an 80-20 perspective, what are the 20% of things that truly matter? We spoke about ignoring specific languages, fads etc. What are your general principles for applying a solution to a finance business? What are the things that seem most crucial to you in?
David Hall: In our current space there’s quite a long list, but I’d say speed and accuracy and why that is, is that, whether it is a dealer looking at a risk management system or whether it’s an algorithm that’s making decisions, the data that they’re using to make these decisions has to be accurate, otherwise, clearly the decision is going to be wrong and there’s chance for catastrophic loss. The other thing is, you know, accurate isn’t good enough because data changes, reality changes rapidly over time and so timely is also incredibly key. Where we invest a tremendous amount of time, whether it’s, you know, programming in Python or some very specialized language we use for time series data analytics languages called Q, we spend a tremendous amount of time on the accuracy of data, making sure that all of our data feeds have automatic recovery and integrity checking.
The first thing we do with data that comes in is real time reconciliation. Before we would modify the position that we’re displaying on our screen, we typically would match the trade from two different sources. For example, you get the feed from the MetaTrader or servers and you get a feed from liquidity provider from a bridge and you make sure that they all agree before you even display that data. You need to do this in less than a second even though you’re getting a thousand updates per second, potentially.
The other part is just don’t ignore the edge cases, and what edge cases are… in the technology world we talk about the happy path, and that is, when somebody sits down and explains to you how a certain process should work, they say this is how I want the system, this is the process, I want the system to be able to handle, that’s kind of the happy path. That’s what expected but oftentimes what happens is people do things that are totally unexpected. We call these edge cases because they’re kind of out there on the edge. The problem with edge cases is they tend to happen, especially in the FX world, where the systems run 24 hours a day, they always tend happen at three o’clock in the morning *laughs* We have this philosophy that says “don’t call me at the beach”, and the point is I want to be sure that I’ve designed my software in such a way that if one of these edge cases happens, or if a network link fails for a little while or a system goes down or reboots and comes back up, the system is just going to come back up on its own, the connections are going to re-establish and the data starts feeding, the thing recovers on its own and that way you don’t get woken up at three o’clock in the morning.
Jordan Michaelides: That sort of stuff is always really important. I can think of numerous examples where that’s happened. Even for the pro traders or retail traders that are listening, thinking about ridiculous examples are managing for that risk is so important. You never know.
We’re going to jump into these short, fast questions. The first one I have for you is, what are your morning and evening routines?
David Hall: The morning routine usually starts around 6am. I’ve got a big dog, and she has got incredible energy and she needs to be out into the field running hard in the morning. I should be running hard as well, that’d be good, but, at least go for a walk. We walk a couple of kilometres. It’s a great time where the mobile phone doesn’t come because it might be raining or something, and I don’t want to ruin the phone, I just leave everything in the house and go out and it’s basically clear mind time in the morning.
Jordan Michaelides: Interesting. And for the evening, how do you decompress at night?
David Hall: Just trying to remember if I do. Hmm. Usually there’s a break, with our business I’ve got people in Europe to talk to, here in Australia we do get the jump on the rest of the world because of our morning, we’re the first ones in on Monday. But you know, in the evening I usually there’s a break, I have some dinner with the family and then, you know, once it gets quiet I’m back to potentially a couple of Skypes and things with people in the UK and then eventually just collapsed with exhaustion *laughs*.
Jordan Michaelides: Now, if you had to gift a book to our audience, what would it be?
David Hall: I’m sort of a tech geek at heart and I also like people, and I read a book ages ago called Peopleware. It’s a book about dealing with people who are software developers and programmers and what life is like in the world of creative process is like software development. It’s really quite interesting on just treat people and how to give people enough space to do the work they need to do.
Jordan Michaelides: I had here, and this is probably the most interesting answer you gave back on these short fast questions was, what quote do you live by or think of often? I’m curious as to what your thoughts are there.
David Hall: When I used to work for Macquarie Bank, Alan Moss was the CEO there and at our new directors dinner he said that nothing of real interest was ever achieved by just one person. He was telling us that you need to work together as teams, collaborate, put together something of people with diverse backgrounds and diverse skills if you really want to achieve something amazing. I always think about that in anything we’re doing, I think, how do I get more people involved?
Jordan Michaelides: I did really like that quote. Now, last request for you, where can people find Tappas through the internet and social media?
David Hall: Sure. On Twitter it’s @Tapaaslabs, and our website is tapaas.com
Jordan Michaelides: I’d suggest for brokers and anyone’s still managing things via a spreadsheet, definitely go check out the website. It’s been an absolute pleasure having you on. I think I’ve learned a lot. Very interesting to hear about your background of course, and thank you so much for giving up some time on your Friday.
David Hall: My pleasure indeed. Thank you, Jordan.
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