Flash Boys by Michael Lewis is a great book about the world of high frequency trading and how it has impacted the world of stock trading. If you have not yet read you really should. One of the heroes of the book is Brad Katsuyama, the founder of the Investors Exchange (IEX). Katsuyama founded IEX because of the unfair advantages that big banks and high frequency traders had through having high-speed networks and how they use this speed to take advantage of this information through “dark pools”. Katsuyama used his business acumen and desire for a fair market place to shed light on common business practices that many people made lots of money on but few people understood. Katsuyama had the moral compass to realize that setting up a trading exchange that made a level playing field for all stock traders was more important than turning a blind eye to what was going on in Wall Street even he was making millions a year. Telling the truth and shedding light on unfair practices created a new product on Wall Street that is gaining traction and helping save billions of dollars for investors like you and me. Now that’s the truth setting you free!
There is a lot to be said for business (and in life) about being transparent. One of our favorite phrases that we use with our clients is that when you are working with potential partners or investors you need to “open the kimono”. There are limits to how much you need to open up about – remember what you wore at the high school prom? – but when it comes to your business you need to be as forthright as possible. As a business owner, it is important to be able to look your customers in the eye and let them know that you are focused on providing them with the highest quality service. In our practice at AcceleratingCFO, we let our clients know upfront that we do not receive any incentives from any vendors that we bring to them. The reason is that we want our clients to know that we are looking out for their best interests when we refer a software vendor to them and not looking to pad our bottom line at their expense. This is the right thing to do and we want to associate ourselves with companies that are the best in their field, not the ones that make us a little richer in the short term.
Being truthful is important in both your personal and professional lives. It’s not easy at times and it will not always help your pocketbook, but you will gain your customer’s loyalty and a good night’s sleep by being honest with everyone you deal with. In extreme cases like IEX you can create an entire new product line and revolutionize an industry that was not willing to change their long-standing practices. However, as Gandhi points out, by being transparent to your business partners and customers you will be able to provide the highest level of service to those around you and help you achieve your company’s mission. And what better cause is there than the reason that you started your business in the first place?
The Prophets of Profit