First there was the botched Facebook IPO which caused alleged losses at some banks totaling $365 million. This was due to so called computer issues with the electronic stock exchange the NASDAQ. Apparently, computers used to drive the auctions were overwhelmed by order cancellations and updates in the opening moments of the IPO. Then there was Knight Capital, an American global financial services firm. In just 45 minutes, Knight Capital’s computers executed a series of automatic trades that were supposed to be spread out over days. The result: a $440 million LOSS– nearly four times the company’s yearly profit! Similarly, many people forget that just two years ago the world bore witness to the infamous “Flash Crash” when the Dow Jones Industrial Average plunged 1000 points in minutes because of high frequent “computerized trades.” These are just a few of the highly profiled computer glitch stories (a computer error halted trading for 95 minutes in Tokyo earlier this month).
So what does this mean for the next generation of Tech Innovators? Are we heading towards the likes of the “Terminator” or “AI (Artificial Intelligence)”, or have we just identified a new market for better software to address these issues? One thing is for sure, there is a void and a need. Let’s hope the next computer issue is less expensive.
* Lavell Malloy is a partner at Christian & Small and Co-Chair of the Technology and Emerging Growth Companies Practice Group.