The New Gold Rush? Wall Street Wants Your Data
mattturck.com
The New Gold Rush? Wall Street Wants Your Data
1–10 of 55 posts
Re: The New Gold Rush? Wall Street Wants Your Data
#2Great article!! And i think it can probably be summed up with the sentence, unless your product has:
- a long history of data
- data that has low correlation to other available data sets
- a very small group of people who have access to this data( ie exclusive deals with a few funds)
Then its unlikely that you will be able to sell your data for any meaningful amount of money.
A few things the author wrote that I think deserve some attention.....
> You do hear the occasional story where a hedge fund paid a couple of millions a year to obtain a specific data set, and occasionally more. But there’s a reasonable chance that this type of price came with some kind of exclusive. Also, those contracts also probably have a limited shelf life, as the value of a data set decays over time, as per the above.
This is very true, almost certainly your data set is not worth millions a year to any specific fund. And if it is, its because you agreed to make your data set exclusive to a single fund.
Each data set requires its own special mess of tools for cleaning it, integrating it, figuring out how to generate a trading signal from it, putting it into production and then once its in production constantly monitoring it not only to verify the data is good, but to make sure it actually benefits the trading system.
I wrote this comment: https://news.ycombinator.com/item?id=13140352 a while ago and it got a very large number of up votes for what was essentially a rant that we're now drowing in data.
Hedge funds today share alot in common with AAA video games wrt to data. You used to be able to make a game with 2 people, then it was 10, then it was 50, then 100, now its 500+ for a AAA video game.
Hedge funds have the exact same issue due to the explosion of data. I know alot of funds that are skipping on data sets, due to lack of bandwidth to consume them all.
> First of all, unless it’s already commoditized, you probably don’t want to sell your data to the Bloombergs of the world.
Most hedge funds won't be your direct audience, they'll already have spent money to buy data from Bloomberg and Reuters. The few, say top 100, that might buy your data directly could be your market, but these funds don't exactly have huge sales teams ready to talk to you. Which means you need to hire someone who knows the landscape to sell your data. Your sales team might be the best group of 25 year old Stanford grads around but they aren't getting in the door of most quant funds without an introduction.
This is the website of one of the worlds most successful funds. https://www.rentec.com/Home.action?index=true
Re: The New Gold Rush? Wall Street Wants Your Data
#3> The good news is that hedge funds are not advertisers and don't care about particular individuals
This sounds disingenuous; it's not hard for the author or anyone else to imagine how Wall Street could use personally identifiable information, and the author claims to be at least somewhat sophisticated in the 'big data' field.
Also, it's an industry that has an incredible track record of fraud, even fixing the bedrock interest rates like Libor, prides itself on an anything-goes atmosphere, and disdains regulation.
Re: The New Gold Rush? Wall Street Wants Your Data
#4Great article!! And i think it can probably be summed up with the sentence, unless your product has: - a long history of data - data that has low correlation to other available data sets - a very small group of people who have access to this data( ie exclusive deals with a few funds) Then its unlikely that you will be able to sell your data for any meaningful amount of money. A few things the author wrote that I thin…
> i think it can probably be summed up with the sentence
Hmm ... for anyone reading it, the article covers a lot more than the specifications for selling your dataset.
Re: The New Gold Rush? Wall Street Wants Your Data
#5> "No man is better than a machine, and no machine is better than a man with a machine."
This concept also is popular in the military AI R&D world where the human-computer combination is called a 'centaur' (based on what I've read; I'm not of that world).
Re: The New Gold Rush? Wall Street Wants Your Data
#6> When I was at Bloomberg, I used to cringe when startup founders would show up in hoodies, essentially destroying their credibility before the meeting even started.
I understand you can't roll in looking like a slob but I have to think times have changed and the casually dressed founder wouldn't have a problem, even with Wall Street types.
The cultural differences b/t the two industries are pretty interesting though...
Re: The New Gold Rush? Wall Street Wants Your Data
#7> The good news is that hedge funds are not advertisers and don't care about particular individuals This sounds disingenuous; it's not hard for the author or anyone else to imagine how Wall Street could use personally identifiable information, and the author claims to be at least somewhat sophisticated in the 'big data' field. Also, it's an industry that has an incredible track record of fraud, even fixing the bedroc…
I could see them passing "insider consumer info" on black markets just like they pass insider information. How handy would it be for a life insurance company to know which of its customers is googling for "chest pain" or "$CANCER_TYPE symptoms". A car insurance company would love to know which drivers go to bars on saturday night, or which ones make it from point A to point B in suspiciously low amounts of time.
Wall street could creep into this by saying to either industry: "let our guys crunch the numbers and let us make book on what these rates should be...because market efficiency". It'll seem like a great idea at first, the data will be "anonymized" (except for when it's not, like when that guy pays a $5k to an analyst at the insurance company for the table mapping "anonymized" customer idns to ssns.
Suddenly hedge funds get really good at guessing which pools should be invested in, or which drivers should be packaged into the high-risk tier. A few years later there's a moderate scandal, a fine is levied equal to ~5% of the illicit gains made, meanwhile the funds have moved on to perpetuate their next round of fraud.
Re: The New Gold Rush? Wall Street Wants Your Data
#8> When I was at Bloomberg, I used to cringe when startup founders would show up in hoodies, essentially destroying their credibility before the meeting even started. I understand you can't roll in looking like a slob but I have to think times have changed and the casually dressed founder wouldn't have a problem, even with Wall Street types. The cultural differences b/t the two industries are pretty interesting though…
People dressed up in suits lose accountability to me. It's like they are over-compensating for something.
Re: The New Gold Rush? Wall Street Wants Your Data
#9> The good news is that hedge funds are not advertisers and don't care about particular individuals This sounds disingenuous; it's not hard for the author or anyone else to imagine how Wall Street could use personally identifiable information, and the author claims to be at least somewhat sophisticated in the 'big data' field. Also, it's an industry that has an incredible track record of fraud, even fixing the bedroc…
I could see them passing "insider consumer info" on black markets just like they pass insider information. How handy would it be for a life insurance company to know which of its customers is googling for "chest pain" or "$CANCER_TYPE symptoms". A car insurance company would love to know which drivers go to bars on saturday night, or which ones make it from point A to point B in suspiciously low amounts of time. Wall…
Also, learning information about individuals: Big clients, competitors, employees, critics, journalists, politicians, etc. etc.
Re: The New Gold Rush? Wall Street Wants Your Data
#10> The financial services world has its own strong identity, handles massive amounts of money, and will not necessarily be in awe of your cool startup. When I was at Bloomberg, I used to cringe when startup founders would show up in hoodies, essentially destroying their credibility before the meeting even started.
Who wants wall street awe? Who cares about credibility? Run a goddamn business, not a fan club. If you cared about image, you wouldn't talk about what people wear. It's completely irrelevant to why I'd use your product.