We borrowed this from Andy Grove from the title of his book published last year.

Since we operate in a highly competitive industry, our three-year experience in the CBOE Hybrid environment has taught us a few valuable lessons. But first here is what Andy Grove says:

“Only the Paranoid Survive: Book Preface

Sooner or later, something fundamental in your business world will change.

I'm often credited with the motto, "Only the paranoid survive." I have no idea when I first said this, but the fact remains that, when it comes to business, I believe in the value of paranoia. Business success contains the seeds of its own destruction. The more successful you are, the more people want a chunk of your business and then another chunk and then another until there is nothing left. I believe that the prime responsibility of a manager is to guard constantly against other people's attacks and to inculcate this guardian attitude in the people under his or her management.

The things I tend to be paranoid about vary. I worry about products getting screwed up, and I worry about products getting introduced prematurely. I worry about factories not performing well, and I worry about having too many factories. I worry about hiring the right people, and I worry about morale slacking off.

And, of course, I worry about competitors. I worry about other people figuring out how to do what we do better or cheaper, and displacing us with our customers.”

What is true for the bigger players is true for the smaller ones. Intellectual property is not only a thing for lawyers to get richer at the expense of their customers. We specifically tailor software for our customers in an industry that redefines itself every 2 years. Customers who participate in our user groups go through a lengthy process to come up with the best way to capture edge, and we follow their recommendations to design software that gives them that edge. These same customers do not expect their immediate competition that is using other systems to get the same “edge”. So because of that, we tend to protect our software with licenses but more importantly we are careful about possible affiliation of customers to our direct competition. We have, in the past, experienced several situations where the software we designed was reproduced by some of our competition, and as a result has resulting in making some feature common in the market place.

As we know, markets are not efficient; otherwise none of us would be making a dime. The same goes for software. Price doesn’t equate value. What one company comes up with, if translated into great software, is not a commodity. It will definitely become one with time, but it is somewhat arrogant to think that all software companies are created equal, and that there is no secret in the new feature of one system. I take it that those who thinks that way probably feel that their natural trading genius supersedes the software they are using, that they have some acute flair that other don’t have. Obviously, in our age, that couldn’t be further from the truth.

Lionel Girardin