The systems that allow military fighter jets to track the position of enemy planes were the inspiration for CyBerCorp, a US company which provides high-speed share tracking and trading.
It may seem a long, long way from military fighter jet defence systems that track the position of enemy planes to the world of online share trading - or on second thought, perhaps not - but for one Dubliner, spotting the potential similarities years ago has paid off handsomely.
Mr Philip Berber, the 40-yearold Irish founder and CEO of Austin, Texas-based CyBerCorp, now runs a technology and trading services company that has brought defence department technology to Wall Street and the NASDAQ.
The beneficiaries are online traders, particularly "day traders" who make their money by executing high-speed trades in response to daily fluctuations in high-risk stocks.
"We supply intelligent decision support for investment managers and traders," explains Mr Berber. According to the company, that support is now used by 600 traders in 50 trading rooms across the US, executing around 12,000,000 shares per day on NASDAQ, the New York Stock Exchange and the American Stock Exchange. CyBerCorp was recently valued at $100 million (€97.9 million) and pulls in $1.5 million in revenue monthly, says Mr Berber. In the past 12 months the workforce has grown from 30 to 90. Not bad for a company which has only been in existence since 1995.
CyBerCorp has generated much press and trade interest lately in the US because of the current interest in day trading. Such trading is a phenomenon born twice out of the Internet, which first, allows anyone to make the lightening-fast trades once available only to professional traders and second, has created the volatile, often astronomically-valued companies whose shares are the major fodder for day traders.
Mr Berber first got the notion for his company years ago while applying his marketing degree from UCD to a job in the British military. Following his B.Comm degree in 1979 he began working in Britain for Ford and later eye-care manufacturers Bausch & Lomb. Then the Ministry of Defence "were looking for someone to come in with a marketing background," he says, and he found himself watching systems design programmers develop specialised systems that enable fighter jet pilots to track the movements of another plane and avoid enemy fire.
Such systems are based upon formulas for digital signal processing and pattern recognition. They can take in information about the current position of a moving object - say, a plane or a missile - and, by applying a database of knowledge about speed, movement, and probability to the known factors, predict the likelihood of the object's trajectory. A key element of such programs is that a full analysis must be performed in fractions of a second. For fighter jet pilots, this enables them to evade or track an enemy jet.
But the turbo-speed ability to spot patterns and analyse data seemed to beg for other applications. "I became curious about whether it was feasible to apply this mathematical technique to a different squiggly line," says Mr Berber - perhaps the squiggly line of plotted data for the shares of a company on the stock market?
He mentioned it to the programmers. "They said, `Berber, are you mad? The Ministry of Defence is not interested in trading stocks and shares'," laughs Mr Berber. But eventually, he took the idea over to the United States, where he found others were already thinking of ways of applying what are now termed advanced predictive technologies in non-military contexts.
CyBerCorp (www.cybercorp.com) was born just as traders were taking to the recently-created World Wide Web, and now provides both the software for executing trades and an online trading room. Instead of predicting signals, says Mr Berber, the trading software analyses share information then gives what he terms red or green alerts to guide a trader to the best share offers.
"First of all we scan the entire universe of shares - about 10,000 stocks - in real time; every ticket, every offer," he says. "Then, we apply a series of filters. We filter out information and highlight what's interesting." The program then "hunts and seeks" the best price for a trade order amongst all the "electronic communications networks", or ECNs, the top-level networks used directly by market makers - the humans who buy and sell shares - to execute trades.
CyBerCorp has stirred up much trader interest with its newest service, CyberX, which lets users directly execute trades themselves without going through a market maker, the usual approach of online traders. CyBerCorp says this brings significant savings and higher margins to individuals, because the faster speed of execution means trades happen before any further price fluctuations in a share, and market makers don't shave off a commission for themselves. Thus, the interest of day traders in CyBerCorp, for whom speed counts for everything.
The other advantage of CyberX, says Mr Berber, is that it uses a browser but actually operates as a separate desktop application and can access trading information and execute a trade without having to use the Web. That means CyberX shouldn't be affected by the systems failures and Web slowdowns that have dogged online brokerages like e*Trade, but the service can be accessed via the Web.
However, CyberX isn't aimed at the small investor - while most online brokerages let investors open accounts with around $2,000, CyBerCorp requires $10,000 and is designed for the experienced trader.
While online trading has mainly been an American phenomenon, where one in four trades is now estimated to take place over the Web, analysts predict the boom will spread across the Atlantic.
"Europe is definitely on my horizon already," says Mr Berber, who was a finalist in 1998 for Ernst and Young's entrepreneur of the year award. "We're in discussion with some firms in London."
He says London rather than Dublin is the obvious location for a European office of CyBerCorp because that's where the markets are, but he says he is considering the possibility of opening a software development facility in Ireland.
However, he plans to stay in Austin, a city which has become one of several centres for technology companies in the States outside of Silicon Valley.
"To me, Austin is a bit like Dublin in the sunshine," he says, noting it is also the second-fastest growing city in the US. And, in true Irish-made-good fashion, he admits he keeps a tricolour on the porch - and also "on the rockery overlooking the hot-tub".
