2019 In Review

Molecule is always evolving, and it’s really fun for us to look backwards every so often, just to see how far we’ve come. It’s easy for us to forget all the cool new features we’ve added over the course of 525,600 minutes. Hopefully, our work made your daily work just a little bit easier!

Here are some of the things we made this year:

New Trades Screen

After lots of customer feedback and tons of research & development, we launched a new Trades screen. On it, you can now pick the columns you want to see, sort and filter, create saved views for different types of trades, and much more.

It looks fantastic, too — and performs like crazy. Underlying it is a brand new front-end framework and an awesome grid that we plan to continue upgrading. If you don’t have access to it already, just ask your Admin.

New API

Our new v2 API began rolling out last year, and we completed the rollout late this year. Using it, users can do a million and one things, including:

  • Connect Molecule to Excel PowerQuery or Microsoft PowerBI for powerful, even mobile analytics.
  • Stitch another system to Molecule to send or retrieve trades, market data, valuations, or even VaR details.
  • Set up your master data in Molecule, and manage it.
  • Get pretty much any data out of Molecule you want.

Moreover, our new screens (like the Trades screen) use it, too — so we’ll be adding new features to it and improving it all the time. If you haven’t used it yet, documentation for our new API is at https://developer.molecule.io. (The documentation password can be obtained from our CS team.)

VaR out of Beta/Backtest

Our long-maturing VaR finally came out of Beta this year. It’s stable, it’s been running on multiple different portfolios for months, and it’s FAST. We also rolled out a visual backtest — to prove that it’s generally right.

Much Better Hourly (and sub-hourly) Power Model

Molecule began with a focus on power and then expanded to other commodities. This year, we upgraded our power capabilities to better model hourly (and even 15-minute) power — without shoving hours into product names, but by attaching intervals to contract dates system-wide and across all major integrations.

We rolled out the first of the power upgrades at the end of December, and plan to have all accounts migrated to our new model by the end of Q1 2020.

Self-Administration

A common customer request is to bypass our Customer Success team and allow users to self-manage things like master data and user access. We rolled out the first of the screens to manage this — our new Counterparties screen — this year. We plan to add much more in terms of self-administration capability in 2020.

Consumable & Inventory Trades, Logistics Preview

Early in 2019, we began sharing our physical logistics preview. We’ve been taking on board lots of great feedback—to iterate on it so that we get it right. New enhancements now include “consumable” trades, for things like transportation, RECs, RINs, and “inventory” assets, which allow for multiple buckets of inventory valued in a custom way.

Wrap Up

We made a whole lot more — over 550 improvements, big and small, to Molecule this year. All while improving reliability to 99.98% (less than 1 hour of unscheduled downtime), and improving general performance as well.

We’re equally excited about the things we have planned for next year: from single sign-on, to user-feedback-driven upgrades for many of our screens, and even more features related to self-administration and quality assurance.

Thank you for using Molecule (or just following our progress). We hope we’ll blow your socks off next year.

Love,
The Molecule Team

What We Value

Today, we're launching a campaign that's been in the works for some time. I'm super proud of it because it speaks precisely to what we, at Molecule, do. We're calling it "What we Value Runs the World."

Here's what we mean by that:

  • Molecule (our software) values, like, everything. It's handles commodities you've never even heard of, like terephthalic acid – and instruments that are hard to grok, like an option on a cal strip of off-peak power monthlies. We've valued power plants and wind farms, and we are evaluating NGL and battery storage models.
  • What our customers trade represents (and sometimes literally is) the infrastructure of the world. It's how we get electricity to our homes. It's how our automobiles run. It's the least-understood, most important set of assets in our civilization.
  • Our customers mean a lot to us – obviously, we use their input to shape our product. But we also value them and their opinions and needs. They, in turn, run the infrastructure that runs the world. More importantly, we value our customers' time. We want them to go home early, so they don't always have to run the world. (I know this sounds trite, but it's what we believe – and from my perspective, not every company in our industry feels the same way.)
  • We're really proud of our employees, contractors, and the values we share. Our people and our software embody those values – and they help the people, who run the infrastructure, that...you get the idea.

So WWVRTW, as we've taken to calling it, is a quadruple entendre! Our new campaign features real people we know – and highlights all the weird and wonderful things Molecule (our software, our team, and our company) values. We hope you love it as much as we do.

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.