Guest post: Marty Betz, VP Technology
Today, YY and I attended ReadWriteWeb’s Real-Time Web Summit. It was held at the Computer History Museum in Mountain View, hosted by Marshall Kirkpatrick of ReadWriteWeb.com.
Like many conferences recently, they’d adopted a structure based on an open, spontaneous agenda which gets filled in by the participants during the first hour. It turns the meeting into a focused networking event that fosters exchange of technical questions and information between the attendees, and minimizes the time spent having one person speak at a large audience. This worked surprisingly well. It seems this is a natural evolution of conferences. Now that much of the information that was once delivered from a lectern can now be found online, meeting new people and discussing specific problems is where unique value is found. I’m always impressed by how many attendees are willing to put themselves out there and deliver a semi-impromptu presentation, or run a discussion.
The talks ranged widely, from protocols underlying real-time communication, to human factors associated with information processing, to data extraction and natural language filtering techniques. Of course, there was also a good share of “how do we monetize this” chitchat.
My initial observations are that, even though the crowd was self-selected for real-time web interest, there was healthy cynicism about it’s value. One talk was even titled “Why do you hate real-time…” On the other hand, there was a palpable sense that something important will emerge out of the web’s new, faster and denser information flows; we just can’t predict what it is yet.
The host, Marshall, started by proposing a spectrum on which ideas were organized based on whether they focused on person-person communication, person-machine communication, machine-to-person, etc.
Every hour had several different talks to choose from. I first dropped in on a talk about the service PubSubHubbub from Google, and then another about linguistic techniques for filtering twitter feeds. My next hour included discussion of structured information and tools for collecting and deriving structured entity relationships.
YY ran a great session on how to make use of the way the web changes, over the course of the day — and longer time periods. It raised questions about how can you distinguish the significant change patterns from the incidental ones? It evolved into discussions of when and how long “old” information remains valuable, and it gives valuable context to recent data. Others in the group talked about filtering highly noisy sources, the practical requirements and limits of human attention, questions of push vs. pull information delivery, and the frequency with which people can really ingest and make use of content streams.
I finished the conference attending two light afternoon talks. The first was on the importance of “emotion” in the value we attach to real-time content. There was animated conversation about how data you get from another specific individual can come with the baggage and the benefits of your immediate relationship and that person’s mood. Finally, I enjoyed a round table discussion of how soon “augmented reality” will become a reality.
Overall, I thought the conference was a great experience. As usual, the web continues to change year after year, and new problems arise, raising new opportunities. I am confident that the increase in real time data will, like other changes in the past, inspire FirstRain to find unique loads of derived value in the web.
We’ve seen a distinct increase in client interest in Governance over the last couple of months – probably as a result of the increased market volatility and risk. Looking at the pick up from a high level, we’re seeing four topic areas being requested and expanded – and they are requested by pension funds, by hedge funds trying to comply with their investor’s requirements and by companies wanting to remain on top of the investment communities requirements for their industry. The four areas are:
Corporate Governance: executive compensation, shareholder rights, board independence, proxy fights, and anti-takeover measures / by-laws changes.
Market Regulation: rule proposals and disclosures from the SEC, FASB, FINRA, NASDAQ, Department of the Treasury (US), and Internal Market and Services Commission (EU).
Regulatory Comment: from pensions, trade groups, financial firms, subject corporations, large investors, hedge funds and university endowments.
Environmental and Social Responsibility (ESR): United Nations Principles for Responsible Investment (UNPRI), country- and market-level environmental, social and governance oversight standards, and ethical divestiture risks.
All four are areas where we build out many topics (precision filters to serve up only the most relevant documents), research sources and continuously enrich the subject matter we pick up as the categories change in public opinion.
In addition, with the dramatic changes and exits at the top of the US banks, and the presidential candidates apparent outrage at the “excesses of executive compensation”, there is a great deal of focus on this area. And since I chair one compensation committee (RMBS) and sit on another (JDSU) it’s an area I personally pay a lot of attention to. The pundits are of course piling on – Gerald McEntee ‘s “Fundamentally Wrong” and RiskMetrics Group’s post have views from senators, lawyers, and governance advocates. My favorite callout is from an un-named Washington attorney calling the bailout terms “good governance coming through the federal backdoor.”
We’ve already see prior scandals like Enron and WorldCom leading to Sarbanes-Oxley and its ramifications for company governance. It seems unlikely this time around, with much broader repercussions, that today’s events won’t drive an ever more aggressive regulatory agenda from governments and shareholders, whomever gets elected.
Got email from a client last week really pleased with the information they had found on FirstRain to help them with a campaign.
Here’s the story: A small software company selling to a large energy utility. They sell software to help automate and improve customer communications.
In this case the sales team was doing a detailed business process analysis to show the utility how much money they could save by upgrading their customer communications, and how they would also improve their quality.
Friday afternoon – meeting with the CIO to present their findings. The CIO walks in, out of sorts, the company had just been in the news as losing customers because of their inability to invoice customers correctly (right in the sweet spot for this sale). On a break during the meeting the sales team looked for the news story – wanting to make sure they understood the severity of the issue and how to use it in their sales cycle. They looked on Google – not there – then on FirstRain – straight to the link and then able to use the research engine to understand the background.
The sales team is now using their additional knowledge to help the customer get on top of their billing issues quickly – and sent us an email saying “Thank you FirstRain”.
(the story is anonymous until they win the contract – then we can name them)
Regular readers of this blog may remember that the FirstRain team likes to take on physical challenges together – like last year’s AquaBike. Well this year (yesterday) ten of us completed the San Jose Rock And Roll Half Marathon and I am very proud of them all for taking it on and every one of them for completing the course.
It was a perfect day for it. The FirstRain team and 15,000 people lined up at 8am in downtown San Jose to try to conquer the distance each in our own way. Hats of to our controller Eugene who ran the race in 1 hour and 42 mins – we were still walking in the first half when we saw him running the last stretch and cheered him on from across the road. Also hats off to Ana, David and Dennis who did their best distances and times – very impressive.
A few of us walked it, some in more pain than others, and YY comically awarded me the “Stubborness” award for doggedly finishing with the slowest time of the team. After the race we retreated to BJs for much needed food, water and alcohol (purely for medicial purposes of course).
Next FirstRain race is a 7km in Delhi on November 1 – the Great Delhi Run. David is planning to be in Delhi that week anyway so he’s challenged a team from our Gurgaon office to run it with him. We’ll see how many sign up for it!
Now we have to decide what race we’ll chose for 2010 in California. Frankly I found the half ironman aquabike last year was easier to finish than the half marathon this year so I’ll be lobbying for something in the water next time.
Me leaning against the post for relief at the 9th mile marker
Guest author: Dave Frankel, VP Business Development
I am writing this post from my American Airlines flight over Rapid City, South Dakota right now – connected to the internet via GoGo wifi . While I am generally a creature of habit when I get on my flights to and from CA (which almost always includes catching up on sleep), this time I figured I would try something new to see if it would improve the experience. I must say – I am hooked. I’ve already updated my Facebook status, participated in an email thread pertaining to a partner meeting I have tomorrow, got up to date on football news, checked in with my family via instant messaging (interrupting homework time), AND learned everything I needed to know about the our in-flight movie “Son of Rambow”. Who knew life could be this good?
It is a nice respite from what has been going on in the industry over the past week and half. As I was explaining to our Silicon Valley colleagues (who agreed with Penny’s post last week about how the financial meltdown hasn’t quite registered yet in sunny CA), there has been a dark cloud hanging over NYC since Lehman went down. The market swings, the daily debates about the proposed bailout, the questions about how the institutional investment industry is going to rebound, and the opportunities opening up to research providers are all regular topics of conversation for us in FirstRain’s NY office and in the field.
The truth is, no one REALLY knows what is going to happen next to this industry. As one of our Board members pointed out yesterday, there is not a person alive on the buyside that has ever traded through a phenomenon remotely close to this. Brokerage relationships are quickly being shifted, the availability of broker produced research is now in question, and consolidation and increased regulation appears to be on the horizon for investment managers, especially hedge funds. What this means is anyone’s guess – pundits, hedge fund managers, and common folk alike. One point on which we all can agree however: the art of institutional investing is going to be IRREVOCABLY CHANGED when the dust settles.
Despite reports of surging ratings for CNBC, I am personally finding the most thought provoking insights and opinions coming from the following: 1) sources I have already previously vetted from the web, like the daily updates from my friend Keith McCullough at Research Edge, the Integrity Research blog, Paul Kedrosky or John Mauldin’s Outside the Box, 2) sources published on the web that are forwarded to me from people that I respect and trust like colleagues or friends, or 3) of course, stories from the deep web that I might not regularly follow but that I uncover throughout the day from FirstRain. As I sit here at 35,000 feet reflecting on this, I realize that I have not felt the need to pick up the WSJ once in the past few weeks, and I certainly cannot remember seeing anything new and provocative on broadcast news about the financial industry meltdown. And, dare I ask, has anyone come across any market moving sell side research on the topic in the past two weeks?
Back to my decision to connect to the web via in-flight wifi. I must say, having tried it, I can’t see myself going back to transcontinental flights without being connected. Sure, I had to alter a routine that was working for me (and I definitely didn’t catch any zzz’s), and I am not quite sure about how much the option will allow me to accomplish in the future, but I see that the change is coming whether or not I embrace it. It’s probably better to be figuring out how to make the technology work for me (maybe download Skype before the next trip) than to think it’s just going to be a passing fad.
Next time, however, someone remind me to pack another laptop battery – my computer died before I was able to finish this post. With new opportunities come new challenges I guess.
Exciting news for us this morning. We are announcing that Mergent has partnered with us as the source of business news into their Mergent Online information platform. Mergent provides a very rich information platform used by libraries, corporate and government functions and academic institutions and approached us to improve the quality of the business news they were providing their customers.
Our data feed version works well in a case like this. Our customer tells us the type of content they want – what companies and what topics the content should be categorized against – and we produce a high quality feed of links to the appropriate web documents which we continually update. This is a similar approach to the way we provide content to our partner Capital IQ and to other customers (who wish to remain nameless).
Obviously we are delighted with this partnership – and I admire management teams who have the vision and the courage to buy their company (as the Mergent team did when they bought it out from Xinhua Finance last year) so I am very pleased to be able to support them.
Here is the press release from this morning.
FIRSTRAIN PARTNERS WITH MERGENT TO DELIVER STREAMLINED WEB CONTENT THROUGH MERGENT ONLINE
Search-Driven Research Provides a Broader Perspective of Web Coverage
San Mateo, Calif., September 14, 2009 – FirstRain® today announced it has partnered with Mergent, Inc., to deliver unique web content through their market-leading Mergent Online platform. The FirstRain research engine will provide a continually updated data stream of high quality web results that will allow Mergent Online clients to quickly and efficiently discover web information that is essential to their research. This partnership represents an expanded data set of web sources, to include not only mainstream sources, but also differentiated and targeted content—such as industry journals and blogs.
FirstRain is the leader in identifying, extracting and analyzing qualitative information from the web on companies, business topics and markets for professional business users. The research engine technology allows users to be confident in the precision, relevancy and cleanliness of the content that is retrieved. FirstRain’s proprietary algorithms identify and extract content from a vast range of web sources from around the world. Categorization then identifies and creates relationships between companies and among business topics creating an ecosystem – a holistic approach to company research and monitoring. This allows FirstRain to provide comparative and meaningful analytics by highlighting trends and relationships from qualitative data.
“Our partnership with FirstRain significantly improves the qualitative intelligence we are able to provide by identifying content from a broad range of sources,” said John Pedernales, Mergent’s Executive Managing Director and Director of Equity Research. “Integrating results from FirstRain into our platform for academic, corporate, public and government libraries allows our clients to have a richer, more complete research experience. The business relevant content delivered by FirstRain complements our offering and empowers our clients to quickly and efficiently find information that is most relevant to their research.”
“We are delighted to have been selected by Mergent to power the business news capabilities on the Mergent Online platform,” said Penny Herscher, President and CEO of FirstRain. “This partnership takes advantage of FirstRain’s unique ability to deliver quality, new and interesting – and highly categorized – web information that provides value to users doing qualitative research in any information platform.”
We just passed through our half year point at FirstRain and I brought the whole US company together here in San Mateo this week. My purpose was two fold – first for training on the new research engine, how to sell it, where to sell it, and what’s coming next – and second team building across the company and some celebration for the success we are already seeing with the new research engine – just a few weeks into it’s beta.
The second purpose was by far the most interesting and fun. I wanted to team build both at a professional level by working problems together and also at a personal level to develop stronger relationships between people who work in different offices and across different time zones. So Sunday was family bonding, Monday was training and planning, Tuesday was everyone team building.
Here’s an overview of the agenda – it really worked well.
Sunday afternoon – Bar-be-que at my house for all employees with families and swim gear. Food, wine, beer, music, swimming, teenage life guard, dogs overeating – everyone had fun.
Monday all day – Sales training
Each rep – present on 1H results, Q3 pipeline, key learnings, top 3 accounts
Marketing – training on market segments and how to work our value in each segment
R&D – next 90 days of product enhancements
Discussion – deep dive on a key capability sales needs and R&D is developing – ensure they are on the same page
Monday afternoon – Ops planning (separate from sales)
Ops team (R&D and analytics) working through near term and long term product and IP plans
Tuesday morning – Everyone together
1H review – financial results, major milestone – releasing the research engine
Problem solving #1 – teams of 2 – each speak uninterrupted to the other for 3 minutes about what is challenging right now
Problem solving #2 – group into teams of 6 – share what each heard – pull out the top 3-4 challenges we face right now
Problem solving #3 – new teams of 6 – chose 2 challenges to solve – bring back the solution
Long term technology and product vision – passionate and interactive discussion about where FirstRain is headed
Tuesday afternoon – Treasure Hunt in San Francisco
Tuesday evening – Dinner at Fior d’Italia – and awards
The whole session was great fun but the best part was the problem solving exercises. Everyone threw themselves passionately in and not only was it important to hear the challenges people are facing but it was also terrific to hear the ideas and solutions the teams came up with for some of our more pervasive challenges.
And the treasure hunt in San Francisco was absolutely fantastic. We broke up into 5 teams – each team was given a set of clues to solve and a map of the area – we did the hunt in North Beach. It was run by Mr Treasure Hunt and it was much, much better than any of us had imagined it would be. The clues were mentally challenging and winning took strategy and the willingness to hoof it fast around the city. Now maybe I enjoyed it so much not only because of the team building but also because my team won and brought all the right answers back 30 mins ahead of the nearest team – but I did have some big brains on my team (not including me)!
Finally dinner at Fior – the oldest Italian restaurant in the US (hard to believe it is in San Francisco and not New York or Boston but it is). We had created awards and plaques for all everyone who had worked so hard to bring the research engine out in June and made it such a hot product for us. Great fun, and much wine, for all.
I sat on a panel today at NIRI (conference for IR) today in Fort Lauderdale and the topic was the changing role of the sell-side analyst. My fellow panelists represented the differing viewpoints of independent research – and a client – but the consensus was the same. The sell-side is going through radical change.
The problem started 30 years ago with commission deregulation – the day when how much a broker was paid to trade a share of stock was no longer regulated. As you can see from Rick Hanley’s chart here — the price of a trade has dropped continuously. Trading volume and investment banking were the two sources of funding for sell-side research — for the first the price per trade has plummeted, for the second Elliot Spitzer put up a wall between IB and research — and so the business model of traditional sell-side research within the big broker dealers is broken.
The net result is, unlike in the internet bubble when sell-side analysts were rock stars, now many of them have left and either gone into the buy-side or have set up their own research firms (or retired). Howard Penney from Research Edge talked about their new independent research model – clients just subscribe to research – no trading. Rick Hanley talked about his new service for management access (and how they partner with us) and Tom Digenan from UBS was the sole representative of the customer side. I was the lone techy (in a service intensive group) but rounded out the picture with the rapidly changing toolsets that are available.
In the end after much discussion and many questions from the IR professionals on how to use the sell-side it became clear that sell-side research is here to stay – but – and this is the but of change – it’s only one piece of the puzzle and is no longer the exclusive way to get to management – so IR has to learn to work with the other independent research and technology providers.
It was also clear the sell-side is not being careful enough of their company relationships. One of the IROs in the audience (who is IRO for a major cosmetics company) told me she is so frustrated with the sell-side she is ready to cut them out. Her complaint is that she can’t get the meetings she wants, with the investors she wants, through the sell-side because, at the 11th hour, they will swap out the institutions she wants her CEO and CFO to meet with and swap in their highest trading clients: the hedge funds.
There is clearly a role for unbiased management access now.
The FirstRain application keeps growing in functionality and today we have announced yet another way you can get to it. We’ve announced our integration with RMS – research management systems.
Todays RMS platforms organize research for the user. Sorting their sell-side research, independent research, internal research etc. into a file folder type of application making it easy to find based on what document is about. Now our research can now be organized and retrieved in the same way.
We have announced our ability to integrate into any RMS platform today – and specifically partnerships with Code:Red and Wall Street On Demand. In both cases, our research results and reports are provided already automatically categorized (tagged) by both the companies they are about and the investment topics they’re about so they easily integrate into the user’s RMS workflow.
The approach we’ve taken is a little different in each case though – as a result of what workflow the end user wants.
In the case of Code:Red we provide an XML feed of our research but we have also integrated our user interface embedded into the Code:Red UI. This means a user can pull up windows into FirstRain – looking at company data, competitor data, management data etc. and they are linked to the companies or topics the user has up in Code:Red system. If the user updates the company in Code:Red, the FirstRain windows also update. All very efficient – and this is the way FirstRain is also integrated into the FactSet Marquee platform today.
In the case of Wall Street On Demand, we provide an XML feed of research results, again pre-tagged by company and topic, which is integrated straight into the end user’s platform so the results show up natively instead of in a FirstRain window. WSOD builds platforms for their client partners and our results are available to our mutual customers. This approach of taking the FirstRain results and using them natively within the end platform is similar to the way FirstRain results are integrated into the Capital IQ platform today.
Both workflows greatly increase the efficiency for the user if the user wants to use RMS as the primary way to organize and access research.
We did these integrations at the request of several end users. Many firms want RMS to work. They want help sorting through the firehose of research they see every day and having it automatically categorized so they can find it easily saves them time, no question. Many users use their email systems today – Outlook or Lotus Notes – and so we are very interested to get involved in helping users find a better way. These partnerships are an important step forward for us, our partners and our mutual customers.
Your average search engine user has the patience of a toddler – they expect to leverage one or a few keywords to get the answer they are expecting and they’ll only try once or twice before giving up. If the results are bad, they’re not likely to try again – you’ve lost a user, or customer.
This is a hard problem to solve when the user is a senior professional looking for business information about a competitor – or the market trend behind a stock’s movement.
FirstRain is all about only the highest quality, high precision results for professional users and a critical piece of our system behind our results is our rich Metadata library. To put it simply, Metadata is data about data; for us, it’s the information architecture that captures what the documents in our system are about – and they can be about any number of concepts drawn from the thousands we’ve modeled. They can be literal (this is about Apple Computer) or they can be crossed by any number of building blocks (this is about layoffs at Motorola in Illinois).
The base layer of FirstRain is the categorization engine that identifies and tags what an article is about – a company, a market trend, an event. Since these tags determine what users see when doing research in our system (and remember – no patience with poor results), the rules that go into identifying them need to be spot on. For example, it’s necessary to ensure a new video game launch from a company like Electronic Arts is tagged appropriately, but a blog about how to reach new levels in one of their games is ignored. A single web document may have any number of tags reflecting the content in it. The article about Electronic Arts could also mention other relevant information about competitors and partners, as well as trends like video game sales; and it’s important to identify and tag each appropriate facet.
But just tagging the data to the right topics is only half the magic. Imagine what you can do if you can also analyze the frequencies of the Metadata. Keep in mind we have millions of documents in FirstRain, each containing numerous tags telling us what it’s about and where it’s from. Go back to the Electronic Arts example: FirstRain can identify the number of times EA is mentioned in conjunction with any related topic, such as new products, or any other company. We highlight spikes in these counts for our users and so show up emerging trends in number of mentions above or below their competition. These counts can give great insight into what a company is doing, or is about to do.
By treating the Metadata as a database in itself, and analyzing it for spikes and patterns we can identify emerging trends for users that they simply could not see from even the highest quality individual search results.
