Henry Schwartz, Trade Alert
“Stick with it!”
BACKGROUND
Henry Schwartz founded Trade Alert, a financial services firm in New York City in 2005. Henry currently has four employees. An entrepreneur from a young age, he delivered newspapers and sold candy, chewing tobacco and fireworks from his junior high school locker. Henry also had a business printing T-shirts while attending college. Trade Alert uses proprietary software to process high-speed market data and notify subscribers of market activity relevant to their business in real-time. Their tools are used by top Wall Street firms to supplement in-house systems and fill a significant need for a growing number of sales and trading professionals involved in electronic markets. Henry has traded on several US and European exchanges and led trading and development teams at The Hull Group, Salomon Brothers, Bear Stearns and Banc of America Securities. He and his partner William Sterling bring 30 years experience in derivatives trading and technology from exchange floors and small proprietary operations to the largest derivative desks on Wall Street. Together they bring unique insight into the challenges and demands presented by today’s automated and fragmented markets, key to the innovative and efficient tools Trade Alert provides.
2021 Update: Trade Alert was acquired in 2020 by Cboe Global Markets, Inc. Henry's current position is Senior Director, Head of Product Intelligence
INTERVIEW
Q: What was your initial startup cost and source of funding?
A: Savings of $150K.
Q: How long until there was a positive cash flow?
A: One year.
Q: Did you use a business plan?
A: Yes, but I morphed it a little bit. It was good to have the plan to get started although it was a lot of work.
Q: What is the vision of the company and the community you serve? What came first, the problem or the solution?
A: The problem exists. We provide information tools to the stock market professionals who are facing an increasingly electronic and fragmented securities market. While we are currently focused on options and stock trading, we know our tool could work for futures, currencies, and energy. Our tool brings real-time data processing to the individual investor in a cost effective manner.
Q: What is the passion that it fills for you personally?
A: Addressing a challenging need with a very smart approach. I like being involved in markets and providing powerful tools for others to utilize in trading.
Q: What was the genesis of the idea?
A: The “idea” was the outgrowth of an existing idea that was never fully realized on a smaller scale, but made sense when serving hundreds of clients.
Q: Where do you see yourself and your company in 10 years?
A: Not here. Hopefully Trade Alert will be sold off and I’ll be doing something else.
Q: What is your biggest challenge? Looking back now, is there anything you wish you had done differently?
A: Not only prioritizing which ideas to pursue, but tactically selecting which strategies and activities would lead to the highest returns. It’s extremely important to select the best things to work on that move the idea forward. With so many things to do on your mind, the challenge is focusing on one idea and starting it off well before moving onto the next idea. It has to be the best thing for you to work on at the moment. At the previous companies where I worked, I learned how not to hire people. I suggest hiring people smarter than you. The cash flow at Trade Alert hasn’t been much of a problem due to my initial upfront investment. While liberating, being held fully responsible for my own actions, can be challenging at times.
Q: What is your biggest reward? What aspects of ownership are the most rewarding? Were there any unexpected rewards? Any regrets?
A: Not needing to answer to any other investors. I don’t have to please anyone but myself. An unexpected reward has been the direct appreciation I get from our clients. Having control has been a big reward. Being able to do what you want without it being solely about the money; the money will come eventually, but it is not the focus of everything I work on at Trade Alert. When I worked for other companies, it was always about money all the time. Having the freedom to make my own choices and pursue whatever I want is a big reward. One of my regrets would be that I should have started my business ten years ago, but it never seemed like it was the right time to leave my job. I realize now I could have created the circumstances to make this happen sooner.
Q: Are there one or two things you can attribute your success to? Was it luck, timing, someone who helped you, etc.?
A: I hooked up with a key software developer. By having a solid team on board with the basics of the idea, the team was able to understand where the company was starting and could see the incremental progress as it slowly evolved. I was committed to progress and strived to make Trade Alert as good as I knew it could be. Being able to determine the market need for your idea and then adapt your idea as necessary. I picked a market I knew very well after 15 years. I knew the market I was going into better than anyone. I think you are at a big disadvantage when you go into a market you know nothing about.
Q: How do you attract and retain the best employees? What is the most important attribute you look for?
A: I always look for the smartest people I can find as well as people I want to work with. I look for others who are passionate for the idea and understand how our clients are using our solution to help them do their job better. Empowering employees allows them to get better at their jobs.
Q: What training and resources would you recommend? Do you recommend an MBA?
A: Although I do have an MBA, I wouldn’t recommend it. An MBA should not be pursued until you have clarified your vision as far as what you want to do. I was fortunate that my employer paid for it. I’m a believer in spending time with peers in similar situations. Having someone to talk to about what you are going through has helped tremendously. This idea extends to having advisors to help you. My friend Dave, a very successful entrepreneur, was in a young entrepreneur’s network which worked very well for him. It’s helpful to seek access to people you can consult with. They’ll help you develop new ideas and introduce you to others who will become important to your success. The quality of your network will, in a large part, determine your success. For example, use only trusted recommendations and find a good accountant.
Q: What is your slogan to live by or what might it say on your tombstone?
A: “Stick with it,” whether running marathons or in business, success is inevitable if you stick it out. I’ve learned it’s the only way to get there. There are no short cuts.
2021 Follow-up Questions
You built Trade Alert from nothing to sell it 15 years later without investors. Looking back, was there anything you would have done differently?
On the sale of Trade Alert: How did you find a buyer (or did they find you)? Are you glad you hired a consultant to assist you in the sale?
What other applications for your technology would you like to see realized?
As of 2021, All of the major markets are at all-time highs. What role do you feel technology has played?
How is Reddit's r/wallstreetbets/ upsetting the eco-system for investors?
If I had $100k to invest today, how would you suggest I invest it?