Mitch McConnell and his fellow Republican Senators are either smart as a fox, or dumb as the hens.  The fox is already in the henhouse.  The question is, who is the fox and who are the hens.

McConnell and fellow Republicans are grandstanding and violating their job’s duties and sworn oaths by not even allowing a vote on Obama’s proposed SCOTUS appointment.  And it is actions like this that cause ordinary Americans to be rightfully disgusted with politics and politicians.

So McConnell & Co. are giving reason for primary voters to push for Donald Trump to be the Republican party’s nominee.  If McConnell does not see and understand this, then he is the Hen and Trump is the Fox.

But if McConnell is being double-sneaky and believes that a Republican-dominated Senate can overpower Trump (* & **) , then he is at least thinking like a Fox.

* If Trump can win the general election

** If McConell and friends do not get steamrolled by the cult of personality that is Trump

Speaking of Trump, I would be remiss not to mention the complete disregard of the political rulebook that Trump is using to win.  Below is from Trump’s Instagram account yesterday.  Not an endorsement for the candidate, but an appreciation of the fact that Trump believes that winners write the history books and he will do whatever it takes to win.

A bit of a diversion from my usual subject matter, but this is one of the best video’s I have ever seen.  I have the video tucked away with a bookmark for just this day each year.  The characters (“Who all seen the leprechaun, say yeah!” – guy, “Magic Flute from my Irish ancestors” / traffic director – guy, “Crackhead got a hold of the wrong stuff” – lady) the the “amateur sketch”, the fact that a news station in Mobile, Alabama actually put this on air……it is just tremendously funny.

State Street Bank (NYSE: STT) announced another 360 layoffs today, mostly targeting “executives and senior staff”.  This news comes on top of the 600 staff laid off last fall.

Goldman Sachs, Credit Suisse, Morgan Stanley have all announced massive layoffs in the last few weeks and this trend will not abate.  There are a few reasons that come immediately to mind such as a slowing global economy, and increased regulations.  But I suspect there is another fundamental change; the decentralization that comes with improved technology and infrastructure.

The industry of financial services, with banks and brokers acting as middle men, will look very different in 20 years.  And the large, globally recognized names that have sat atop the world’s financial system for generations will not be needed.

Of course there will be a need for the functions those banks and brokers do.  Lending, executing and tracking trades of all kinds, managing assets, providing M&A advice are necessities for global trade to exist.  But the technologies and companies that are harnessing those technologies do not look anything like traditional banks and brokerage firms.

The role of M&A advisor is the safest of those functions but even that role has been changing.  Pres. Clinton and Congress effectively removed the Glass Steagall Act of 1933 by allowing commercial banks and investment banks (in this case Citibank and Travelers Insurance) to merge in 1999.  And the small boutique M&A advisors were crushed.  Commercial banks who had the ability to do the actual lending could now act as advisors too.  And they could use their balance sheets to set up equity trading operations to help make active markets for companies that went public.  But Dodd-Frank has changed that.  In the last 6 years there have been numerous success stories of M&A bankers starting small boutiques that offer advice only; no lending or market making needed.

The other financial intermediary roles (asset manager, lender, custody banking) are starting to look different than a guy in a suit with well-shined, cap toe shoes and a navy suit.  Those roles are being handled by coders who wear Atari t-shirts and ripped jeans, but who can build programs to better diversify a portfolio, or can match a lender’s profile with a borrower’s request (and run a full credit check) in seconds.  Betterment and Smartleaf for wealth management, Kabbage for peer to peer lending, Kantox for global FX transactions, etc.

In the Margin Trading Products (“MTP”) industry, bank wires were the norm for funding as recently as 2012.  Now most MTP brokers and online gaming companies receive the vast majority of client deposits and withdrawals via payment service providers (“PSP”) like Safecharge, Neteller, YuPaay, etc.  There are a few PSP’s that are large and stable, but that industry seems to birth a new PSP every few weeks.  As a MTP broker or online gaming company, you need to be able to connect and work with those new PSP’s very quickly.

So it is no surprise that the largest financial firms are laying off workers and seeing diminished market capitalization.  The benefits of scale that had been present in financial services for a long time are wearing off and the smaller, nimbler companies are taking advantage of that seismic change.

The future of financial services does not look much at all like the past; no need for a rearview mirror.

When I was first introduced to the Agile workflow philosophy, I was struck as how simple this framework was to use.  The below image breaks down the basic steps involved by anyone running multiple projects at a given time.  The workflow is considered a software development philosophy, but I use it for managing all my projects, and each individual project.

Any manager of projects or organizations should understand the basic principles of Agile development philosophies to see if and where they can be used in your project flow.

PS – Thanks ThinkStock by Getty Images….sorry I was too cheap to purchase.

….the computers will tell you what to do.”

I first heard this line from Jesse Johnson, co-founder of oneZero Financial Systems, many years ago.  I see it proven correct time and time again.  It is why I allow my kids extra time on their tablets if they are on Code.org, or Tynker.com.  I believed it when Jesse said it, and I see it everyday, you either tell the computers what to do, or the computers will tell you what to do.  And I believe those who are succeeding now and will succeed in the future will be those who tell the computers what to do.  That does not mean you have to be a coder (though it helps).  It means you have to be able to understand how to make value out of the hardware and software and those people who can code.

Leaprate.com has an interview with the head of marketing for a brokerage firm that built their own sales/marketing/retention automation kit and now they are selling that to outside entities.  In reading the interview I noted how many time she referred to the “humans” who are acting on triggers which come from the “platform” (read as software).

Another company in the Margin Trading Products (“MTP”) industry gained a lot of visibility and value with their ability to onboard and retain a massive amount of clients and assets with a very small sales and retention staff.  Plus500 (LON: PLUS) was at one point worth more than $1 Billion GBP (approx $1.45 Billion USD).  The company had fewer than 200 employees; I had been told by a reporter in Tel Aviv there were just 86 total employees at the company’s height.

The company has been through a lot of corporate drama since it’s highest valuation in May 2015. The UK’s FCA halted their client on-boarding due to KYC/AML issues but has now been re-instated.  Corporate takeovers have been announced then abandoned.  And C-suite turnover has been high in the last three months.

But the real story is Plus500’s quiet rise to prominence and the lessons other industry firms are working to learn and implement.

Plus500’s business model kept the company focused on a business paradigm that had been all but abandoned in the previous 7 years.  Other brokerage firms had long ago given up the on proprietary trading platform and direct marketing as a business model.  Most brokerage firms were offering and promoting a commonly-shared trading platform; MetaQuotes’ MetaTrader4.  And brokerage firms focused on supporting independent Introducing Brokers (“IB’s”) as a primary means of sourcing clients.  With a common trading platform there was little to prevent a client from switching from Brokerage Firm A to Brokerage Firm B.  So the brokers were engaged in a market share war with the main differentiation being the price shown to clients, and any promotions given to land a client.  The average cost to acquire a user went down significantly, the time and costs to educate a user on how to use the trading platform went down, but the lifespan of a client went down as well since there was an increasing amount of clients lured away by competitors.

But Plus500 went the old school route.  They had a proprietary platform so that once clients learned to use the Plus500 platform, it would not be simple for clients to switch brokers as they would need to learn a new platform.  Plus500 also went after new traders, rather than compete with other firms for existing traders.  This is significant because it increased their costs per user acquisition, but it allowed Plus500 to target users who were not as price sensitive as existing clients.  So while price spreads at most brokerage firms were getting squeezed, Plus500 enjoyed considerably larger gross margins than their competitors.

Plus500 also run their advertising campaigns almost completely outside the lines that the MTP’s traditional brokerage firms use.  And I have not been able to determine where Plus500 advertises, nor what keywords they use.  I read and search multiple MTP industry websites and keywords every day.  Even using foreign VPN’s to access information on firms that do not cater to individuals who reside in the USA such as myself.  But never has a Plus500 banner or search result showed up on my screens.  And when I ask other industry executives these questions about Plus500, they seem to all have an “Ah-Hah!” moment.  They, too, realize that Plus500 is successfully sourcing new clients from non-typical sources.  The only information I have gained as to Plus500’s advertising is from the industry reporter who informed me Plus500’s advertising is wholly data-dependent, and targets the tangential prospects rather than the openly interested prospects.

Finally, Plus500 built and runs a sales / onboarding /  retention automation system that blows competitors out of the water.  Using a foreign VPN, I signed up for a demo account.  I do not know if they built their CRM completely from scratch, or if they used an existing CRM platform as a basis.  But the login they coded into their automation works!  Demo accounts that have a few successful traded get an auto-generated e-mail congratulating them and placing a simple Call-To-Action (“CTA”) in front of the demo user to open a live account.  The pattern of e-mails to my Inbox is not predictable (like most companies use).

The on-boarding process is what got Plus500 in trouble with the FCA.    Simply put, Plus500 did not require full documented KYC/AML documentation prior to allowing clients to start trading.  The requirement to complete all stages of KYC/AML paperwork was not needed until/unless a trader wanted to withdraw funds.  It is important to note that this practice cost Plus500 half it’s market cap when the FCA halted client on-boarding in the Plus500 UK subsidiary (Cyprus-based operations continued as normal).  Plus500 has since changed their on-boarding policies for UK clients and the company has regained much of it’s value.  But by allowing clients to deposit and start trading quickly, and by making it more complex to withdraw funds, Plus500 has been able to generate more revenues from each trader.  So while blatant disregard for KYC/AML rules is unacceptable, many companies are now working to make their on-boarding process as short and simple as can be allowed while maintaining the integrity of the process.

To bring this discussion back to my headline, Plus500 quickly built an extremely profitable MTP brokerage.  And a significant aspect of that growth was because the founders understood the possibilities of successful automation.  They told the computers what they wanted and allowed the computers to determine the most efficient processes, and the computers largely did the work.  Less than 100 employees and a $1.45 Billion USD market cap in just 5 years is quite a feat.

So do not expect me to be creating and managing sales and retention teams of 100 people around the globe any time soon.  You will find me sourcing coders and big-data specialists who can leverage the power of computing by telling the computer what to do.

This video appeared on unofficialnetworks.com (ski bum website) last week.  I was astonished that these public employees would put their lives on the line and do battle with a large mountain lion in this manner.  It is a rare occasion I am happy to have a “desk job”, but it seems better than having your boss tell you, “Go free that angry mountain lion.”