John Chenís Sybase sells the programs
that let us trade, use our mobile phones and send text messages. He
canít see a down side
KOWLOON-BORN JOHN CHEN'S Sybase, Inc is a leader in the
database and ďenterprise mobility infrastructureĒ industry. power
didnít know what those businesses were either, so Anthony Spaeth and
Tiffany Tang sat down with Chen to discuss his company and his work on
the Presidentís Export Council under George W Bush. Chen is also on the
boards of Walt Disney Co and Wells Fargo & Co.
Tell us about your business.
We have three lines of businesses and they kind of all complement each
other. The earliest, longest-running business of ours is on databases.
This is the kind of databases that you use for Wall Street trading and
we own more than 50 percent of all the trading systems around the
world. Governments use us a lot, hospitals use us a lot, equities and
You own the system itself?
No, we own the software that forms the whole platform that allows
people to trade. Think back about 25 years ago. People used all these
Sun workstations, but one major problem they had to overcome was that
when there was a trade in Singapore, and at the same time there was a
trade going on in London, they might conflict with each other. For
example, you have a 1,000 shares of Google, somebody bought it in
Singapore and somebody bought it in London, even a fraction of a second
later, how do they synchronize all that so that 2,000 shares of Google
didnít get sold? We make the software that eliminates those things. We
sell it to the Goldmans of the world, the CitiGroups of the world, they
use us as their platform.
So your market share for that type of software
is 50 percent?
On Wall Street. But this is not our main line of business. You and I
start a brokerage house. What do we do the first thing? The first thing
we do, I guess, is that we get customers. The next thing is you and I
will go out and buy a piece of hardware, it could be a Sun workstation,
an IBM mainframe, it could be an HP box. And the next thing you need is
to buy software from Sybase. Then we develop some other stuff that
makes our business more unique than others.
Is Bloomberg trading on your software?
Bloomberg rents on top of my software, so one of the things that I have
to accommodate in my system is things like Bloomberg feeds, Reuters
feeds, Thomson feeds. Weíre sitting in between the hardware and the
Bloombergs of the world. I donít provide market data, but I provide how
the market data is channeled to the individual user, such as a trader.
The other line of business is something we started seven
or eight years ago, that we also have a market-leading position in,
which is mobile middleware. A good example would be how these handheld
devices like the Microsoft PC, the HTC devices out here, or the HPI
pack, and lately the Apple iPhone and the Google Android, we do the
software that makes all of them talk to each other.
A little bit below the cloud. The cloud is actually the muscle of all
the computer resources. The software that links all those different
types of operating environments, we make those. Itís called mobile
middleware. For example Bluetooth: we provide probably the worldís most
usage of Bluetooth. All the Bluetooths are powered by a chip. The chips
from TI and Procomm use my software to provide Bluetooth. They are both
my customers and they buy a lot of software. Have you ever watched the
BASF commercial: ďWe donít make a lot of the products you buy; we make
a lot of the products you buy better.Ē Thatís our position in the
So trading systems, mobile middleware Ö
And then the last, latest and greatest is our mobile messaging
business. So we have about 700 or 750 operators around the world that
we link up. If youíre in China, youíre on a Chinese mobile phone
network and you want to send an SMS to your family in New York. Who
does the transport? Who picks that message up and sends it to your
familyís devices? Forty-five percent of all that traffic around the
world is done by us. So with China Mobile as an example, we connect all
the subscribers to 19 different country destinations, like Australia.
We pick that message up, we rout it through one of our network centers,
like Singapore. If Singapore has traffic congestions weíd rout it
through France or Virginia. This is the software that we develop,
deliver and operate. You can buy the services from us.
So youíre responsible for our outrageous SMS
First of all the prices are coming down, quite a bit. The volumes are
huge, we processed over 200 billion messages last year.About a year ago
we were at 100 billion messages and we own 45 percent of all the
business. If you are in Hong Kong, letís say youíre a CSL user and you
are texting to another CSL user, we donít get involved in that. Once
you go cross-network, though, you can be sitting next to each other
physically, but that message has to go through a third party. And the
third party is me.
How is the financial/economic crisis affecting
We just announced our 2008 results in Q4, and we had a record year in
2008 and the best quarter ever. In terms of revenue growth, 11 percent
year over year, so the company is doing extremely well. When I was
interviewed by CNBC not long ago, the interviewer introduced me by
saying: ďThis is one company thatís anti-gravity.Ē Whether it will last
forever we can discuss. Aside from selling the trading systems, we also
sell continuous software upgrades, you know, new features. One of the
things we did really well last year was whatís called analytics.
Analytics is where our customers get a sea of data and try to make some
sense out of risks, credit, compliance reporting. You know, the
government wants to see compliance reporting in real time now. Traders
now have to send a request to the compliance desk to get clearance
before they can trade. We actually sell the system.
How many trading desks have been lost in the
past six months?
We donít deal with trading desks, we deal with trading systems.
Still, if a company goes out of business Ö
Our business is mostly tied to volume. The more volume, the better off
we are, because we deal with data capacity, and we deal with analyzing
massive amount of data, so the more data you generate, the more
business intelligence you want. If you look at the volume in the last
four months, when we had a meltdown, as long as we had trades Ė whether
itís trades up or down Ė the volume is very high.
We understand that in a bad market, if you are
working on commission, youíre going to get a commission whether itís
going up or down. But if tradersí desks are empty, wouldnít the volume
have to go down?
No, you donít need the trader at all. More and more shares are traded
over the ECN network because of program trade. Look at the trade volume
at the end of last year, when all the hedge funds unloaded, they
unloaded everything that moves, some of them for tax year loss, some of
them basically didnít want to take anymore risks. They moved money into
treasury, to bonds, to corporate bonds. When these things happen Ė Iím
not suggesting that weíre immune completely to the downturn Ė what Iím
suggesting is because of the kind of services and software we provide,
our programs are a very timely solution. We just sent out a brochure to
all the trading companies, banks and insurance companies, brokerage
houses and stock exchanges, we now have a software to identify
counter-party risks, which is the number one issue that the government
is fighting. Not that we can solve the problem, we just identify for
you. This is the biggest issue now on Wall Street, itís, ďI didnít do
anything wrong, but the people that I trade with, that I either provide
the funds for, or expected funds from, are doing something wrong.Ē Once
you unplugged Lehman Brothers, the whole thing just collapsed because
itís not just Lehman. Lehman does a lot of trades with Barclay, and
Lehman does a lot of trade with Nomura, thatís why both of those
companies now pick up part of the Lehman load. The volume didnít go
away because Nomura volume went up, and Barclay volume went up. Data
volume never slopes down, Mooreís Law applies here. Every 18, 24 months
we see more volumes, doubled volumes, everywhere, not only on Wall
Street trading, but even Visa credit cards for that matter. Our society
is obsessed with data volumes.
And in your other two lines, mobile middleware
and mobile messages?
Mobile middleware is tied to the handset volume.
So that could slow with the recession?
As long as you find new way of using the handsets, no.
Which people are Ö
Every minute. Today there are about a little less than a billion smart
phones out there. There are about 3.5 billion mobile phones out there,
so thatís enough critical mass for us to build more applications. The
kind of a home run weíre looking for will be the enterprise uses,
devices used day-to-day for doing business. When that happens, this
market is going to explode. Our third business, mobile messaging, grows
The trick for us is the whole concept of so-called mobile commerce,
where youíre paying everything using a device, it carries all your
credit card information. Ten years ago everyone started buying stuff on
the Internet and e-commerce was born. Think about the mobile version of
that. We just installed an application in Austria where you walk up to
a parking meter, and then you SMS the number on the meter, and then you
go to your meeting.
Say the meeting rungs long, youíll get an SMS message from the parking
meter that says youíre out of time, would you like to top up? You say
yes, and they charge your account, it shows up on your phone bill. The
examples go on and on, you can imagine how that could affect all of us
We are sitting in the right spot to benefit from it, because we
transport the messages.
Letís talk foreign affairs. You were co-chair of
the Secure Borders and Open Doors Advisory Committee and on the
Presidentís Export Council under George W Bush. We have a new Secretary
of State who already promises a new, broader relationship with China.
What do you think of that?
I was a little disappointed that in [US Treasury
Secretary Timothy] Geithnerís confirmation hearing he indicated
that in no uncertain term he believes China is a currency manipulator.
Iím not going to comment on whether I think he is right or wrong, I
think thatís much bigger than me, although I see very little upside for
the United States to make that statement.
But thatís a continuation of [former Treasury Secretary] Henry Paulson and
the Bush administration.
Well itís a little different. First of all, full disclosure, obviously
I am Republican [laughs]. But when we
were working with the administration, Hank never declared China as a
manipulator. Hank said if things didnít change, we may be forced to
reckon with that issue. He still didnít say China is a manipulator.
Very, very different messages.
So we start off from an interesting footing. I think the Chinese
government is sophisticated enough to understand that what you see in
the press is not necessarily what is really transpiring, and I hope
thatís the case.