What will I Save by using Molecule?

We frequently get questions asking how our pricing model works, especially as compared to other vendors in the ETRM/CTRM industry. In answering the question "What will I Save?", we first need to understand the pricing model for legacy (or on-premise) software.

Legacy Systems

Typically, with on-premise (or even single-tenant cloud) software like an ETRM, pricing has three components:

  • Perpetual License Fee
  • Annual Maintenance
  • Services (i.e., installation)

For a mid-size ETRM/CTRM customer, let's say the license fee is $1m on a 4-year contract. This is the most negotiable part of the contract because 1) it's not where the real money is paid and 2) the underlying variable cost (what it costs to send you the software) is essentially $0.

The annual maintenance fee, however, is where the margin gets real. Annual maintenance is often 20% of the standard pre-negotiation license fee. So, $200k/year in this example. This is less negotiable because this money pays for the development team. We've also heard of this as "the money that pays for new features and bug fixes," which makes our sales team go crazy.

Services – now here's where the major cost lies. On a greenfield ETRM/CTRM implementation, services can start at several hundred thousand dollars. However, implementations typically go into the millions, or even tens of millions (not because they're budgeted that way, but because they quietly end up ballooning in scope and time). The cost is unbounded – and from what we've seen, services is typically 75% of the total cost to the customer of an ETRM/CTRM installation. (CTRMCenter has an article on this, here). This is the case for numerous good and bad reasons. But, from our perspective, the most important reason is that because of a time-and-expense billing schedule, vendors are not incentivized to keep billing for services low.

Molecule

Molecule is different. In general, users pay a single package price, plus applicable sales tax. That's it. The price includes implementation, "paying for new features," the license fee, etc.

We have a minor fee schedule for a handful of things like new users, custom reports, and re-configuration of the application – but most of our customers never pay any additional fees.

Package prices are calculated, on purpose, to be roughly equivalent to the 4-year amortized license fee + maintenance fees of another ETRM/CTRM. This takes into account that license fees are often heavily discounted for smaller customers – but the point is, we're not aiming for the lowest license fees in the industry.

What users just don't pay for with Molecule is implementation. We take on the risk of new implementations knowing that the payoff for our customers (and for us) is enormous. We are aggressive about bounding the total cost and time of the implementation – because we are incentivized to do so. We do things like:

  • Assigning an expert project manager on Day 1
  • Avoiding implementation-related travel, if at all possible
  • Figuring out what "success" means for the customer, and keeping laser-focused on that goal
  • Building tooling for our Customer Success (support & implementation) team, so that they can get their job done more quickly

This is how we create the most value. We believe that implementation costs, in Six Sigma terms, are waste (muda, mura, and/or muri). Our customers don't benefit from paying tons of money for implementation, and neither does our enterprise value.

Summary

Basically, our customers pay industry-standard software fees – but end up saving 75% of the total cost of an ETRM/CTRM because we don't charge for implementation.

Ion + Allegro = Clarity

Last week, Ion Trading announced the acquisition of Allegro. This puts nearly all of the $10m+ revenue, all-in-one CTRM/ETRM solutions under one roof. By my estimate, 60% of the market is now served by Ion products: OpenLink Endur, RightAngle, Triple Point CommodityXL, Aspect DSC, and now Allegro Horizon. Of the largest vendors, only Eka, Brady, and possibly FIS are left.

We're now on our 4th Ion acquisition (or dozenth, or more, if we look outside ETRM) -- and we have the playbook data to guess at the company's direction.

What does this mean for a customer getting into the market? A few things:

  • If you need an all-in-one, on-premise or hosted solution, and you absolutely must check all the boxes on an RFP, buy the solution that Ion prescribes.
  • If you only have one specific, focused need (for example, behind-the-citygate gas scheduling), one of the other 90+ legacy vendors will work.
  • However, if total cost of ownership, modern tech, and an innovative delivery model are more important than a huge feature list, look at the handful of larger new entrants (including us). We can fulfill the important parts of an ETRM/CTRM (like forward/option valuation, connections to exchanges, and VaR) and connect with other systems that specialize where we don’t (such as invoicing, GL, or another ETRM).

We’re thrilled to see all of the large, legacy vendors pulled under one roof. It makes the “us vs. them” story we’ve been telling since 2012 so much clearer. Molecule was founded because we believed ETRMs were way harder than they needed to be - from setup, to retirement, and every way in between. At every implementation we witnessed, customer employees were running around, busy and angry, every day, for months -- or even years.

We designed Molecule not to be that way. From the beginning, our goals have been: 1) easy-to-use, modern technology, 2) unparalleled service, and 3) no implementation fees.

So, over the next few weeks, to celebrate the consolidation of the ETRM/CTRM software products with which we've seen customers struggle, we’re running a new campaign called “Don't Fight.” It celebrates the new vs. the old, legacy software models vs. 21st-century ones, and, most importantly, the way enterprise software should be: frictionless.

Keep your eyes peeled for some "Don't Fight" fun from the Molecule marketing team!

Happy 2019!

This time last year, Molecule had just moved into a new office, and our team was preparing for what promised to be another big year of company growth. 2018 did not fail to deliver. We did not fail to deliver. It’s always great to look back at the plans you had for a year and see how well you did. Here’s what we expected from 2018.

So what actually happened?

When 2018 began, we had been serving exchange-trading customers for several years, with some exposure to bilateral markets. Our team in Houston consisted of a handful of developers and a small support/implementation team.

In January, Paul Kaisharis joined our team as SVP Software Engineering. We also welcomed new hires to our dev and sales teams. Molecule now has a team of 16 – developers, project managers, implementation & support analysts, team leads, and more – supporting trading in bilateral crude, gas, chemicals, and electricity markets. Our deal volume has risen significantly, as has the diversity of our user count.

Our development team has stayed busy with many software updates, 24 in total. Here’s an overview of our software update process. We use this to push updates live approximately every two weeks -- with more stringent QA testing than typically seen in the industry.

  • Connectivity to multiple ISOs for downloading a variety of products
  • Custom fields on trades
  • The ability to use an IR curve to mark options
  • The ability to batch generate reports/invoices/etc.
  • A new P&L feature, currently in Beta, for YTD/MTD/QTD leg-level P&Ls
  • APIs for uploading trades, additional filters, and more
  • Improvements for bilateral trading, such as better options support, strike interpolation, and VaR
  • Lots of new FCM reconciliation functionality, including supporting new banks, multi-bank reconciliation, and the ability to generate trades from a statement
  • Many performance improvements, such as our “fast lane” for exchange-trading customers, UI-related performance improvements, and chunking for large uploads.

The team (primarily Sameer and Dustin) attended several conferences. You may have spotted them at E-World (Germany), Platts Digital Commodities Summit (US), ComRisk (UK), ETOT (UK), or FIA (US). Sameer spoke at several of them, and the team led workshops at ComRisk and ETOT -- all focused on risk management and the cloud.

In Q4, we launched a new logo and website. If you follow Molecule on LinkedIn, you may have noticed the animated version of our logo. Please follow the Molecule LinkedIn page for industry news, company announcements, and tech tips.

Throughout our changes over the past year, we’ve remained committed to our core values. To that end, we were proud to have signed the Amicus Brief fighting against prejudicial immigration policy. This policy issue is a critical one to Molecule and our customers, because diversity is simply a given in our industry — and it’s core to what we believe about America, our home. We took a stand because it’s that important to us, and we hope to see a change for the better in the years to come.

We’ve gotten lots of great feedback on our product, and our roadmap, as well – and 2019 has lots more to come. We’ve had/are having many conversations with customers about our roadmap, but here are some highlights:

  • A specific focus on boiling down common issues/requests – and fixing small usability issues, system-wide. First up are the Trade entry process and the Trades screen.
  • Finishing our v2 API – which should allow for much faster, more granular interactions with Molecule.
  • Reworking our Confirms workflow. We’ve received lots of feedback on our v1 features, and now have a good sense of what would work well for most companies.
  • Clearer, more flexible decomposition of spreads & swaps, and less-noisy support for hourly power.
  • Continuing work on our physical logistics features.

With that, we wish you and yours a happy, safe, healthy, and wonderful 2019!

P.S. By the way, another awesome highlight is that three(!!!) of us got engaged in 2018.

Things Are Looking A Little Different Around Here

If you’ve been watching us, you’ll notice a few things have changed around our website. Specifically, we overhauled the information architecture to help users answers their questions about Molecule more quickly. Now, you’ll find specific use cases informed by how our customers use Molecule today, directly on the home page.

More work, however, was our long-developed update to our logo and branding! When we launched Molecule in 2012, we had literally no code and no customers, but a strong vision of where we wanted to go. Since then, the many users of our platform have expressed clear preferences of where Molecule should go next: physical logistics/scheduling, and easy connectivity with upstream and downstream systems.

Our new branding reflects this while keeping to our core mission of easily, reliably managing risk for commodities portfolios. To talk more about the concept, here’s our designer, Jay Jimenea:

Exchange, transfer, flow, connectedness. Those are some of the concepts we wanted to reflect in our new logo. Those concepts represent motion, and there’s a ton of motion in Molecule. So many trades flow through Molecule on a daily basis, and with physical logistics and scheduling on the horizon, even more data will flow through the application. In addition, Molecule is becoming increasingly interconnected with upstream and downstream enterprise systems via our APIs. We thought we should capture this in the logo. While the methane logo provided a nice chemical icon to represent commodities, it did not visually capture the activity that transpires within Molecule. At quick glance, that logo could represent a chemical engineering firm if not for the word “software.” So, how could we visually capture motion and other desired concepts while maintaining the characteristics we liked from the previous design?

We achieved motion by using a pair of red tracks to form the letter “M” in the negative space between them. The nodes on the tracks are intended to represent points similar to what you might see on routes in map applications, train routes, or circuits on a circuit board. Each node is either a start or an end point. This creates a bidirectional movement between the nodes, guiding the eye back and forth between them. There’s movement created when just looking at the “M.” The nodes are also not far in appearance from the atoms in the methane icon.

Molecule is a software company that prides itself on simplicity for our users. Molecule’s UI removes the extraneous so users can focus on what they care about without distraction. Just like our application, we felt that we could remove from the logo as well. The word “software” was something we could remove if tech was represented elsewhere. The absence of “software” streamlines the design by removing clutter, and the circuit-like appearance of the “M” icon is undeniably a technology statement. That attribute is more than sufficient in reflecting the tech space and, in turn, software.

Molecule is bold in its messaging and aspirations, yet sensitive to human factors in its usability. The acute angles and sharp points of the new icon reflect the bold and aggressive attitude of the company, while the rounded nodes reflect Molecule’s sensible side. The connected “M” and “O” in the typeface was something we did like about the prior logo. It was the one quality that reflected motion, so we wanted to keep that posture intact. Plus, this strengthens the connectedness concept. The same bold lines and sharp angles from the new icon are mirrored in the “M” to extend the attitude into the Gotham typeface. (Sameer likes to call this the Vampire M.) The stylized “O” looks like an eye with its hawkish brow, further complementing the bold stance.

Gotham has been Molecule’s selected typeface from the beginning, and it continues to be. The font will not change in the Molecule application, marketing materials, or website. Gotham Black’s thick lines and wide curves continue to accompany our bold messaging and sensible style all at the same time. We love it.

We also still love our methane icon. We love it so much that it has also been updated for continued use. The new icon takes on a more simplified look, with removed outlines and updated shaping. The outlines were often lost when seen at smaller dimensions, so in the spirit of simplifying, they were removed. The icon will not take center stage as it used to, but it will continue to be seen throughout Molecule’s visual marketing.

Every angle and edge in the new logo is intentional and sculpted to convey exactly what Molecule is. We hope you like it!"

We’re proud of where we’ve come as a company, and we’re proud of our new design. We would love to hear your feedback and thoughts about the new look and feel, so please don’t hesitate to contact us at info@molecule.io.

The Amicus Brief

This is a sad week for America.

Last year, Molecule proudly joined over 150 tech companies in filing an amicus brief against the executive order that essentially restricts immigration and travel along religious and ethnic lines. This issue hits at the heart of what Molecule, as a company, stands for and against. Protesting the Order demonstrates our commitment to doing right by our employees and our customers.

When we established our core values, we committed to embodying them and using them to guide our actions and decisions. The executive order flies in the face of several of our values. We don’t want to be one of those organizations that says they have values, but then does nothing with them except putting them on a website and handing out a poster to new employees (please note: our values are on our website, and you can read them here). Our core values mandate that we take action against the executive order.

Our team embraces diversity. This isn’t just a motherhood-and-apple-pie value for us. Diversity strengthens our product and our productivity -- thus strengthening the company’s bottom line. Through diverse experiences and points of view, we improve our UI/UX to make beautiful (and the best) software. It helps us spot creative solutions to difficult challenges.

We hire the best Molecules and strive to be world-class. We want to employ the absolute best, regardless of gender, sexual orientation, religious beliefs, nation of origin, and several other factors. The executive order will restrict our ability to create the best software and deliver the best solutions to our customers.

Amazingly talented individuals make up the Molecule team, and our customers are incredibly smart. Our team is composed of people born in the US and in other countries. Some of us are immigrants, children of immigrants, and grandchildren of immigrants. Some of us are married to immigrants. The same is true for our customers. We defend their freedom to work to create the life they want.

Our employees, customers, and community should know that we will stand up for them. We remain committed to defending everyone’s right to “sit at the table” -- except those who flout the law and those who promote hate and fear.

Fighting immigration policy that discriminates along religious, ethnic, and other arbitrary lines is the f-ing right thing to do. Molecule is committed to doing the right thing, regardless of politics or popularity. We will continue to stand up for what’s right, for decency, and for tolerance.