Commoditizing Secret Sauce

Everyone has verbal tics that irritate them. I often wonder how many people have literally been driven insane by misuse of the word literally (or, in my US editor's case, its subsequent redefinition to an intrinsic oxymoron), and I know that every time I have to hear the word ‘sleeps', I'm another step closer to a plethora of chronic feels.

Financial technology is full of these linguistic quirks that can drive people up the wall. I had lunch with a friend on Christmas Eve, who now works in product marketing for a software firm, and we spent a good 15 minutes banding buzzwords back and forth, such as ‘core competency', ‘bringing down cap-ex to help with op-ex', and that most loathed of American phrases, ‘reach out'. For any fellow journalists working in his sector, I'll take full responsibility for the new, supercharged press releases you'll be receiving, and I'm deeply sorry.

There is one phrase that I've been hearing lately, though, which strikes a particularly discordant note with my internal lexicon, and that's ‘commoditizing secret sauce'. It is, frankly, vendor speak at its very worst, a conglomeration of catchy words with a sales-y vibe, that will make most people cringe painfully.

Misdirection
It's also misleading in its nonsensical nature. If secret sauce is commoditized, then by its very definition, it's no longer secret sauce. Unique access to technology and algorithms is one thing, but you can't very well dress it up as proprietary competitive differentiation when it's sold to multiple people. It's the same principle as labelling everything as amazing─if all things are above average, then above average, by necessity, becomes the new average. One great example of this was a press release that I saw recently, advertising high-frequency trading (HFT) workstations for sale at a couple of grand a pop. HFT relies on far more than lots of RAM and support for eight monitors, as anyone with any experience of the market will tell you. This made a relatively high-powered workstation sound like the Second Coming of Christ.

This has always been the modus operandi for marketing departments, of course. Hyperbole and supercilious superlatives sell, in the absence of sex. And it's not like the punters are unaware, either. Ask bank executives about big data and the most common response, by far, is that they don't believe in big data. Push further and the next most common response is that it's a word used to sell them things they don't necessarily need. Indeed, in a recent interview with a senior technologist at a US tier-one bank, I actually felt the need to apologize before bringing up the topic, being so used to sighs and eye rolls when it's mentioned.

If secret sauce is commoditized, then by its very definition, it's no longer secret sauce. Unique access to technology and algorithms is one thing, but you can't very well dress it up as proprietary competitive differentiation when it's sold to multiple people.

Tech Trends
The fact is that we're entering an era which is decidedly not driven by technology, at least not in the same way that the past few years have been, when it comes to capital markets. The buy side, outside of your Blackrocks, your Citadels and other enormous enterprises, are largely eschewing technology subsidization and maintenance in favor of tech-less environments, the capabilities for which are accorded, ironically, by advanced technology. On the sell side, constant drives towards budgetary dieting are resulting in rationalization and removal on the tech front, a natural slimming-down effect from the pre-crisis bloat years.

In these times, it's incumbent on technology providers to claim, ever loudly, that a failure to buy the product is a barren road to catastrophe. Even people like ourselves at Waters aren't entirely blameless, as we'll cheerfully latch on to popular trends for our conference programs, and ruthlessly employ jargonal neologisms and cliché to populate the agenda.

But let's not fog up the landscape more than we need to. Financial technology is a complex, changing area that isn't necessarily served well by the kind of Lingua Flotsam usually employed by those involved in it. This is an era of austerity, after all, and if my recent conversations are anything to go by, patience with verbal opulence is wearing thinner these days.