Here’s another example of management turnover signalling structural changes coming in a company. The WSJ reported on Saturday that Clear Channel, the largest radio and outdoor advertising company in the US, is planning to lay off 7% of its workforce, or 1500 people. It’s behind its competitors in doing a restructuring because of the 18 month battle to take the company private which finally failed in July 2008 – but clearly management knew major layoffs were coming and started leaving.
This chart shows the detectable management departures for just the last 6 months (we pick them up from the web even though they are not announced) and compares Clear Channel with its media competitors.
My team were prepping me for a talk I am giving at NYSSA next week, and gave me some great statistics on why it is now so important to incorporate the web into your research process. For anyone who needs to get up-to-date, relevant information on business topics, if you don’t have an application to make the web practical you’re missing significant information. In fact, based on our analysis of the web results database we run, 12% of the content is on alternative sources like blogs, trade journals, transcripts etc. but then, when you focus it on business topics and companies, clean it up, de-dupe it, age it (only look at new content) and remove irrelevant documents an astonishing 27% is from alternative sources.
That means if you don’t have an application like FirstRain, you are probably missing more than a quarter of the content that impacts your business. Wow.
12% of total web content is alternative
I sat in on a great panel at the Web 2.0 Summit yesterday. We had executives from the health care, legal and media spaces discussing The Challenges Faced by Traditional Industries Embracing a Web 2.0 World.
I discussed FirstRain’s perspective on what we’ve seen in the financial services world. In this world the challenge in adopting a Web 2.0 platform like ours — which we’re seeing big momentum on — is working past the strong cultural bias toward established, authoritative content providers to consider Web 2.0.
Our clients typically believe that the Wall Street Journal, Financial Times, New York Times and sell-side research will cover the majority of the qualitative information that they need to know every day. Our client is also typically risk averse about their research process. It’s worked for them in many cases for 20+ years and they don’t want to change. So it takes time and effort to get them to open up to the fact that there is relevant, original, useful, and unique alternative research coming out of user-generated sources like blogs.
I also talked about the level of junk on the web and how our system removes it through a series of processes, both human and automated. My fundamental belief is that the buyside demands very high quality and that is a key to our making our customers successful.
As a panel we also talked about what had surprised us selling Web2.0 services to our traditional customers and where we thought the world was going. I discussed both the level of service our customers require, and the coming era of transparency. Both mean that we need to have a very hands on support process for our customers so that their FirstRain usage is configured both to their topic needs, and that they don’t miss anything that impacts their investment strategy.
The other panelists were all interesting, but the one I found most interesting was the GM of a Thomson division called FindLaw.com. This is a service that helps consumers find lawyers, and the most challenging thing Chris Kibarian talked about was getting lawyers to go on line. Lawyers are an inherantly conservative group and often not very tech savvy so he was very amusing describing what they go through to bring up web sites for law firms. The consumer is much more online typically than the lawyer and they’ve been delighted to see the rapid adoption of services like video and social networking within their clients web sites.
All in all – a good experience.
Per Technorati’s State of the Blogosphere Day 1 report – some fascinating statistics on who is blogging. It’s not the teenage unemployed geeks or housewives writing about their kids that the press sometimes imagines. It’s a business relevant, earning group, which is why blogs are rising so rapidly in importance as a source of news and the new wave of publishing – citizen journalism.
Did you know:
There are now a million blog posts a day – This is a huge source set of information
80% of bloggers write about brands and products – This is business relevant information
58% of bloggers are over 35 years old – The writers are mature, not kids
56% employed full time – And they are professional
51% make more than $75K/yr – And they are relatively wealthy!
And this is why the majority of our customers want us to bring blogs to the front of their FirstRain data.
I posted on Greenlight Capital and David Einhorn’s shorting of Lehman months back – David has been shorting Lehman for a long time based on his team’s analysis of the risk underlying Lehman’s business. He did what he thought was right and stuck to his guns despite being attacked by Erin Callan -then CFO of Lehman – and being made a poster child of the short sellers by the New York Times in June of this year.
After writing and researching that post my interest was piqued and so I read David’s book “Fooling Some of the People All of the Time“. It’s a bit wonky but provides a thorough, and thoughtful look into the research that goes behind the great short calls. I’m not talking about rumor driven shorting, I’m talking about months of fundamental research to model out a company’s business and study the discrepancies between what management is saying (and the stock is valuing) vs. what is really happening in the financials and the market of the company.
Given our business is about enabling our users to use the web as a broad, deep research base I love to read about the value of fundamental research to a portfolio manager.
We’re in sales training all day today and Keith McCullough of Research Edge came to talk to the sales team about the “tectonic shift” that is happening in investment research today and why he loves our service.
He gave us two terrific concepts that apply to our role in the shift.
1. “the edge is in the question – what question you ask and when you ask it”. It’s no longer speed, it’s no longer whisper, it’s about having the rigorous research process that you ask the question at the right time. FirstRain in the process stimulates continuous, valuable questions.
2. “the internet is the disintermediator”. He thinks there is a generational change happening. Technology is dramatically changing the way people get information. Why did Obama beat the Clintons? (whatever your politics Obama took a new, tactical, technology driven approach). It’s Google vs. the ad agencies – the old style is “coming down” and whole industries are being rebuilt – and Wall St is one of them.
Very inspiring stuff for our sales people. Keith is one of the very high performers on the street – well known for his performance – so he has great credibility with my team. He told them they are selling a hot product, on the leading edge, creating a market as the industry goes through radical change – heady stuff.
Our system has been picking up an interesting counter-cyclical trend on an investment approach that has been buffered from the credit crunch recently – Sharia or Islamic compliant investing.
This is a practise that started in Malaysia three decades ago and it has been growing as the assets available have been growing in the Middle Eastern oil rich nations. New funds are being started – like the first of several new sharia-compliant hedge funds being started by Dubai based Millennium . As Reuters reports
The S&P global shariah index returned 3.61 percent in the second quarter, while the equivalent world index fell by 1.49 percent.
Banking stocks have been hammered by the credit crunch and exposure to the U.S. mortgage market. But as Islamic law prohibits the paying of interest, shariah investors — most from Gulf states which are reaping the benefit of record oil prices — cannot hold such stocks and have therefore been immune.
We track topics for our clients – which means finding documents that match their interests – and one of the hot tech topics is “cloud computing”. We call ourselves a SaaS – software as a service – application.
I was interested to see a thought provoking blog post in my daily report today on the difference between cloud computing and SaaS, but like many blog posts it got me thinking but didn’t help me answer the question about how FirstRain fits.
The premise of the post is based on a Gartner report which says that the basic difference between the two is massive scalability. But that doesn’t make pragmatic sense to me. Where do you draw the line between scalable, and massively scalable and does it mean anything practical in today’s world of apps with hundreds to millions of users?
I think the difference may lie in security. KMWorld’s recent article “Cloud computing and the issue of privacy” concludes that the heart of the issue is where the customer’s data resides and how security is handled. On the one hand you have professional apps like Salesforce – and FirstRain – that use a SaaS business model (subscription), manage massively scalable data centers and store user confidential data on their systems, on the other you have the consumer apps.
Professional apps are paranoid about security – our customer’s data is incredibly sensitive (we store user’s portfolios of stocks and their investment themes – Salesforce stores the customer base and business pipeline) and so we have extensive processes to control the security of the data. Without it we would not deserve our customer’s trust.
In contrast, Facebook and Google are relatively speaking pretty loose about security. From the KMWorld article
“I’m a trusting soul, but I have worked in and around online systems for more than 30 years. I have sitting not 10 feet from me a person who can write a script and suck content from any system to which she can get or has access. Privacy just like security is only as good as its weakest link.”
I agree. I won’t let my team use Google desktop search – I have friends who won’t use Firefox – Facebook has stumbled several times already on privacy. The more you know about the weak links in security the more you know the public apps are not secure.
So I like security as the heart of the difference. Cloud computing implies a massively scalable off-site compute environment – I agree. But SaaS implies a professional app with all the attendant security and service that implies.
We have a client who is CMO of a large enterprise software company – and he and his team’s use of FirstRain is an excellent example of the power of the web as a database for corporate decision making.
In this case we have build a model of the company and it’s ecosystem that includes
- the company itself
- each of it’s major competitors
- important industry trends (like business models and delivery mechanisms) and standards
- all web sources – both differentiated like blogs and industry media, plus the commodity like PR and news wires – effectively organizing all possible sources of information
- industry events
- industry trade shows
- companies of personal interest to the executives (you never know what someone will want to track)
The result is a rich intelligence system for the team that not only
a) finds them interesting information about their market and their competitors that they would have missed that impacts their product decisions, and
b) categorizes all information so it is useful, easily accessible and stored for historical review, but
c) also helps them shine in front of their peers because of the information they have at their finger tips when debating decisions.
And we have a happy customer which is what we care about.
