Liveblogging The Smart Money of Crowds: Collaborative Investing Startups

I’m liveblogging notes from tonight’s MIT Enterprise Forum event on The Smart Money of Crowds: Collaborative Investing Startups.  This was not hard to organize, and I’m very happy with how the event turned out.

 

Panel Biographies

Roger Ehrenberg, Moderator, Managing Partner of IA Capital Partners, LLC

Roger Ehrenberg is Managing Partner of IA Capital Partners, LLC, his personal venture investing vehicle. IA has made 27 investments since 2004, principally in the areas of digital media and financial technology. IA`s portfolio companies include TheLadders.com, Mimeo.com, Clickable, Covestor, BlogTalkRadio, Buddy Media, Silicon Alley Insider and Stocktwits. Roger was also an original investor in Wallstrip (sold to CBS Interactive) and MyTrade (sold to Investools), sits on five Boards of Directors and advises the gaming company Genesis Interactive and the location-based messaging platform Socialight.

Prior to founding IA, Roger spent 18 years on Wall Street in Mergers & Acquisitions, Derivatives and Trading. Most recently, Roger was President and CEO of DB Advisors, the $6 billion multi-strategy hedge fund trading platform of Deutsche Bank. As head of derivatives businesses at both Citibank and Deutsche Bank, Roger`s teams twice won awards, securing Global Finance magazine`s `Interest Rate Deal of the Year` in 1998 and Institutional Investor magazine`s `Equity Derivative Deal of the Year` in 2000.

Roger has penned the popular business and technology blog Information Arbitrage since July 2006, and has had over 1 million readers since inception. He has also been interviewed broadly on topics ranging from hedge fund regulation and algorithmic trading to deep-web search and building vertical communities by The Financial Times, The Wall Street Journal, the BBC, NPR, Reuters, CNBC and many others.

Roger received his Bachelors in Business Administration from the University of Michigan/Ann Arbor, and his Masters of Business Administration from Columbia Business School. Roger is Trustee of the Little Red School House/Elisabeth Irwin High School and a Board Member of the Integrative Pediatrics Council. He lives in New York City with his wife Carin and two boys.

 

Divya Narendra, Founder and CEO, SumZero

Before founding SumZero, Divya was an Associate at Sowood Capital Management, a $3.5B multi-strategy hedge fund located in Boston, MA. At Sowood, Divya analyzed investment opportunities across the capital structure, spanning credit and equity. Prior to this, he was an analyst in the Mergers & Acquisitions Group at Credit Suisse Securities in NYC. In 2004, during his senior year at Harvard College, Divya co-founded ConnectU.com, an online social network dedicated to the university community, and predecessor of Facebook.

SumZero is the largest online community of professional investors worldwide, currently consisting of more than 1,200 analysts/PMs from nearly every well-known buyside fund. The site is free to use, but membership is by invitation-only. Each member lists 3 or more tickers for companies he/she has extensively researched. As such, an analyst can search for a company he is interested in and find the buyside analyst at another leading firm who has already spent months researching that name and initiate a dialogue. As a by-product, an analyst grows his network. SumZero also contains a fully searchable database of concise investment write-ups focussed on valuation. Though not required, only those members who contribute an idea can access the database. Please emaildivya@sumzero.com for more information and an invitation to join.

Stacy-Marie Ishmael, Writer, Financial Times Alphaville/Long Room

Stacy-Marie Ishmael is a New York-based writer and blogger for FT Alphaville, the Financial Times’ award-winning blog. Her responsibilities also include FT Alphaville`s Long Room, which is a “digital restaurant” where finance professionals are encouraged to share research and comment on the work of others. Stacy-Marie is actively involved in the development of the FT Alphaville platform and brand.

FT Alphaville is a Webby-award winning blog focused on global financial markets, with a team spanning London, Tokyo and New York. The Long Room, which was launched in October 2008, is a members-only extension of the main site, focusing on comment and analysis. Both FT Alphaville and the Long Room are free to readers (an FT subscription is not required to access content) and are supported primarily by display advertising opportunities on the site and in FT Alphaville`s email briefings. In the case of the Long Room, revenue is generated from the sponsorship of “digital tables”.

Phil Pearlman, Director, StockTwits

Phil Pearlman was a co-founder of Lumina Fund Management, a long/short equity hedge fund which focuses on behavioral and sentiment analysis to exploit under and overreactions in options markets. He is an expert in the area of market participant behavior and emotion and consults with professional investors employing strategies adapted from empirically validated psychological treatments to improve trading performance. Phil has developed a proprietary prescriptive model of investor experience which integrates empirically validated clinical models and behavioral finance. He is a contributor to Real Money, a paid service owned by TheStreet.com. He currently trades a private account in New York.

Phil is an investor in and director at StockTwits. He also makes angel investments in other social media based start ups and focuses on the relational and community aspects of online social networks. Phil earned a doctorate in clinical psychology from Argosy University in Washington DC.

Rikki Tahta, Co-Founder Covestor

Rikki Tahta has held a number of senior roles in Finance and Information Services. Previous start-ups include ARK Information (acquired by Thomson Financial), WebTrack (acquired by Jupiter Communications – later public on NASDAQ), Steelhead Systems (acquired by Merrill Lynch) and Bookpages (acquired by Amazon.com). Other positions include Chase Capital Partners (private equity) and Thomson Financial (Securities Data Corporation). Rikki lives in New York and loves fishing. Username: RikkiTahta

Covestor is a portfolio sharing service for proven self-investors and for those wishing to track them. Tens of thousands of self directed investors share their real trades and you can follow them live for free. Covestor is funded by New York based Union Square Ventures, Boston based Spark Capital and London based Amadeus Capital Partners. We also have a strategic investment from Independent News and Media Group.

 

My notes

 

Roger:

I just spoke with a major ebroker. They’re not worried about trading volume, which is fine. They’re worried about durability, because they feel that their community is not loyal.

You remember stock message boards in the first dot-com wave. Problems of anonymity. Whole Foods CEO going online and bad-mouthing other peoples’ companies.

I spent 18 years on Wall Street at Citi/Deutsche. Left in 04 after running a hedge fund business for Deutsche

Stacy-Marie Ishmael.

Officially, she’s a credits market reporter for FT.  Unofficially she’s a web geek there.

Alphaville was viewed as the ‘badly behaved little brother’ of FT: their first blog. It was a response to perceived need for real-time interaction/dialogue.

Performed two functions: a) trendy (in 2006, everyone had to have a blog), and b) increased engagement.

Alphaville has 9 person team, based mainly in London. We do combination of reporting and commenting. We’re encouraged to have an opinion on financial stories.

When we launched, traditional FT readers were slow to respond. We got 2 comments/week. FT’s historic market were C-suite.

Brits much slower to take up social media. We had a lot of readers but minimal interaction.

Shortly after, we launched MarketsLive: a real-time chat every day at 11am ET between two senior market reporters. When this launched , we were the first. It made people realize that there were real people behind the concept of Alphaville. We got to a point of 420 comments per MarketsLive event, and quality of comments went up.

In late 80s, there was a well-known restaurant known as the Long Room, which attracted all the significant traders in the City.  That’s the origin of the name.

Today we feel that our main job is to moderate and edit, not write, because there’s so much quality content.

Divya, Sumzero

Our vision was to create a Wikipedia for investing, but focused on professional investors.

We wanted to be as universal as possible.

Most writing to date is on single-name credits

We launched a year ago.

1700 analysts are members

Even if you haven’t submitted a note, you can still see who has extensively researched a given company.

You can send a message to other analysts and start a dialogue.

This is the first way that analysts can communicate with one another about trades.

We have an earnings template which is searchable so you can run a screen based on buy-side consensus. We believe that’s much more valuable than sell-side consensus.

(Teten note: this reminds me of Novus, as well as some of the other competitors I blogged about earlier.)

Phil Pearlman, Stocktwits

A community built atop Twitter

We’re getting a lot of people, including amateur investors, professional investors

There’s a high correlation between people we see subjectively as being experienced, and the number of followers they have

We have 2 semantic tags: 1) Put $ in front of a ticker, or:

2) general market comment: $$ at beginning or end of tweet.

 

Certain stocks are very popular on certain days.

Finance websites usually have huge dropoff on weekends. So in response, we’ve set up programming on weekends, where professionals do Q&A.

We also have a discussion, Macrotwits, Sunday night. Our speaker will advance a global macro thesis and debate it.

Rikki Tahta, Covestor

Our goal is to democratize fund management. We don’t care about what you do ; we care about what you invest in.

(Teten note: I like his model, but I would never be a customer.  It’s like Marketocracy; there’s so much noise in the data that I’m very uncomfortable delegating my investing decisions to someone else’s etrade account.  Investing is not a democracy; it’s a game rigged in favor of the professionals.)

Most of the tools for investing are available free on the web.

BofA has even launched a free market trading platform.

In 2000, a big change in UK investment research : Marshall Wace led a movement towards ‘Alpha Networks': a focus on actionable ideas instead of just opinions. They then quantified who gave the best advice and allocated trading flows instead. This concept never took off in the US.

This was a complete disassociation between brand name of the institution. We said investment talent does not logically have to be inside a financial institution.

Our principals:

- Treat anyone as a fund manager. But, they have to be investing real money, which we verify. We also require full transparency, so you can’t selectively share your trades. We create a Morningstar tear sheet for individuals.

- Find best and invest alongside. Covestor replicates in your own account what other people are doing. Madoff is something of an inspiration: We think you should keep your money in your own account, and just take advice from others. This is like a distributed UMA. Our investors can treat their own account like a fund of funds.

- Benefits for investors. More choice, more control, more transparency. This is what big banks give people with $30m in assets. This is a better way to get active management

Roger

Does community matter?

Rikki

It matters less to us. Our focus is building an ability for an individual to invest with better resources than he would otherwise.

Divya

Credibility matters. We help people vet out their ideas.

Stacy

Community definitely matters.

Phil

We have people who make a lot of bold calls. 50% of the time they’re right.  We find out what they’re really like when they admit (or don’t admit) their mistakes). 

Divya

If you hold a position, you have strong incentive to publicize why you hold that position.  The guys who run their own funds are happy to discuss. The junior guys are nervous about ticking off their bosses.  The people at very large hedges (e.g., och-ziff) and large investment banks are more hesitant to talk about their positions. 

Phil

Ego

Rikki

People who are great performers but don’t communicate, don’t attract as many investors as those who can do both.  The former is a much bigger driver than the latter.  (Teten note: Jim Cramer is a far better performer than investor.)

Roger

Who gets into the community?

Stacy

We have very strict criteria for joining.  We independently verify that a person is who he says he is.  The person must be an active participant in the financial markets.  This ticks off a lot of Alphaville readers who did not qualify for entry into the Long Room.  There was a lot of angst over this among some readers.  We don’t allow people to discuss specific trades.  Most of the discussion is about sectors/macro issues.  So pumping and dumping don’t happen. 

Because people are anonymous, talent will out.  People decided whether to trust the source or not based on commentary. 

Rikki

The only hurdle is a $10,000 account.  We run rankings on 78 different criteria.  I learned this from Thomson: the more rankings the better.

Divya

Screening process is viewed positively.  They have to work at a reputable fund, or submit a quality writeup showing they fit in. 

Phil

We earlier built a vote up/vote down feature, but we found we didn’t need it.  The crowds made the picks for us.  We subjectively made picks of who we thought was most value-added.  The better people were building large followings. 

Divya

if we hit our targets, we’re very monetizable.  Our content has tremendous value.  We could charge our members for access.  Set up section on website for outsiders to access our content for a fee.  We could license our content to SeekingAlpha for a fee. 

Phil

We view ourselves as a farm system.  We’re launching next week 2 premium products with two guys who are pros, and have built significant findings: Brian Shannon (technician) and Joe Donahue (hedge fund manager) .  Next product will be options product. 

In finance vertical, people will pay for information. 

Stacy

I work for a news organization..that itself is a problem.  We’re one of the few parts of the FT which is completely free.  You dont have to be a FT subscriber to get into Long Room.  This is a constant source of friction between editorial team and ad team.  We think being free is critical to our success in getting the community where it is.  We’re a loss leader.  We do sell advertising. 

Alphaville readers are much more sticky than FT.com readers.  Our uniques and repeat visits are very high.   We have people who are constantly updating RSS feeds. 

Rikki

We haven’t launched revenue model yet.  We’ll charge investors a management fee. 

 

Gary Mueller

Which B2B communities are making money now, besides your own?

Roger

Gerson Lehrman Group.  Revenues around $300m, valued at $1b by Silver Lake.  280,000 experts. 

Stacy

Bloomberg.  They own the major messaging system used on trading floors.  They were a community before people talked about communities.

Rikki

LinkedIn

Phil

Look at ResearchEdge in New Haven. 

Teten

How can users manipulate each of these sites; how are your users doing so now; and how are you defending?

Phil

We eliminated microcaps.

We also monitor the stream very closely and remove anything that smells funny.

Divya

We think reputation is the solution.  Other users can rate content.

Stacy

We allow people to use pseudonyms.  A certain analyst at a bank kept posting “CIT looks great today.”  We emailed him at his work address, and that put a stop to him doing that. 

We’re very strict on copyright and libel issues; as a news organization our awareness of those issues is high. 

Wachtler:

What sites do you recommend for discussion of macro issues?

Roger

Use disqus to track individual comment streams, which creates a community around a comment thread.

Phil

9pm Sundays: Gregor Macdonald discussion.    We squeeze a lot of meaning into 140 characters.

Stacy

Zerohedge came out of nowhere and has really taken off.  We’re sensitive to paranoid about whom we link to, since they can be thought of as sources.  Look on our website for links to blogs we think are most worth reading. 

 

5 Reasons You Need LOTS of Twitter Followers NOW

By most people’s standards, I’m doing very well on Twitter. TwitterGrader currently gives me a score of 100% and has me ranked #265 out of nearly 2 million users it has analyzed.

TwitterGraderScottAllen

TGAustin2

I’m adding an average of a little over 30 followers per day, and have had days where I’ve added almost 100 new followers (#FollowFriday has been very good to me lately – thanks to all have included me in their lists).

I could toss up a bunch of other metrics here to convince you, but let’s just suffice it to say that, more or less, I’m “doing everything right” (I’m sure a few people will argue one or two points with me, but whatever).

But I want more followers. LOTS more followers. And so do you.and here’s why:

1. Only a handful of your followers are actually paying attention.

Some of your followers are heavy Twitter users. Guess what? They’re following a ton of people, and the odds of them actually picking any one of your tweets out of the noise of the thousands of people they’re following is very slim. Others are light Twitter users, and the odds of them actually being online and seeing your tweets in a timely manner is fairly slim also.

Even with nearly 4,500 “true” followers, I typically find that any one given tweet of mine generates less than 10 reactions – a reply, a retweet, a click-through to my blog, etc. [Point of clarification: I’m talking about first-order reactions, i.e., from my immediate followers. The network effect is typically much higher – anywhere from 20 to as many as 300-400 actions in the extended network after the retweets.]

That’s 0.2%!

That is a worse response rate than Google AdWords. It’s a worse response rate than cold calling. Heck, it’s a worse response rate than junk mail!!!

I’m not saying that means it’s ineffective for the time/effort you put into it, because it’s a) free and b) not terribly time-consuming. Still, point is, the response rate sucks. You need larger numbers if you want significant action in response to your Twitter activity.

2. More followers = more visibility = more “true” followers.

I couldn’t care less about my follower count for its own sake. It’s not a “badge of honor”. But there’s a basic truth about social media that Clay Shirky wrote about way back in 2003 in Power Laws, Weblogs, and Inequality: the sources who get more attention tend to get way more attention.

There are several reasons for this:

For one thing, psychologically, those with more followers are perceived by many to be more authoritative.

For another, there are dozens of tools out there that rank sources based on follower count (or at least that’s one of the metrics). So tools like TwitterGrader, TwitterCounter’s Top 100 lists, Twitterholic and others give more visibility to those with more followers. More visibility = still more followers.

And finally, if you have more followers, there are more people re-tweeting your posts, replying to you, etc. So their networks are exposed to you and more likely to add you.

Does it actually work? Anecdotally, yes it does. I had something I had posted about several times, even asking people for re-tweets. I got several – almost 20, in fact, but it took like 5 posts to get those 20 re-tweets. I then asked my friend @PerryBelcher to re-tweet it for me. At the time, Perry had a little over 10x as many followers as I did. Perry got 10 re-tweets off his one post. Now that’s obviously not proportional, i.e., he doesn’t have as much average attention per user as I do, but that just proves my point as to why you need larger numbers.

3. Even if you’re currently B2B or in a narrow niche, you don’t know what the future holds.

For the past six years, I’ve worked social media almost entirely from a B2B perspective myself. Some of my clients have been B2C, and I’ve advised them on strategies that I never implemented myself because I didn’t see them as a fit. My latest project, however, is a B2C play to a very broad potential market. Simply put, I can serve that project much better the farther my reach/influence is. Certainly, stronger relationships create all kinds of opportunities, but I also just simply need to raise awareness.

And relative to my goals, I’m practically starting from scratch. I want to have 10-15 times my current follower count on my personal account, and I’m starting from square one on the account I set up for that project, @AmerGuitarAcad.

Regardless of what your current job or business is, what does the future hold for you? And when suddenly you do find yourself in a position of needing a much larger network, do you want to be starting from scratch? Or already have a head start?

As Harvey Mackay says, “Dig your well before you’re thirsty.”

4. The celebrities are coming! The celebrities are coming!

Take a look at the Twitterholic Top 100. Everyone on there is a celebrity. Even if you don’t recognize their name, trust me, they are. They’re either a blogging celebrity, an author, a TV personality, a technology CEO or something. These people already have huge other platforms from which to announce their Twitter presence and rapidly grow their follower count. For example, my uncle, David Allen (@GTDGuy), has been on Twitter barely six weeks and already has about 175,000 followers.

The more celebrities show up on Twitter, the harder and harder it will get for you to reap the benefits described in #2 above. Three months ago, the Twitterholic list looked completely different. I mean, consider this: @GuyKawasaki and @Scobleizer don’t even make the cut any more.

The window of opportunity is narrowing rapidly. If you want to be on the high side of that power curve, you need to get there NOW!

5. It doesn’t cost anything to have followers.

The incremental cost of adding one more follower is $0.00. Not only that, there’s zero (or near-zero) time cost. You can rapidly grow your follower count in just 15-20 minutes a day. Now sure, you may have to follow more people to grow your follower count rapidly, and they may create more noise in your Twitter stream, but there are tools like TweetDeck that will help you manage that (just create a “high attention” group of people whose tweets you absolutely don’t want to miss).

There’s simply no downside, that I can see. By all means, if you think there is, say so in the comments below.

So of course this begs the question:

“How do I get LOTS of followers?”<
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If you’re interested in getting new followers at the rate of 20-30 a day, here’s what I’ve done that has achieved that:

  1. Create value for your followers by sharing excellent content – a mix of your own and from others.
  2. Follow new people “organically” by adding people who send you @ messages, people on the other half of a conversation with the people you’re already following, etc.
  3. Promote others on #FollowFriday. If you’ve done #1, many of the people you promote will reciprocate and promote you.
  4. Participate in hashtag chats as a way of meeting new people, some of whom may follow you.
  5. Use Twitter recommendation engines like Mr. Tweet and TwitterGrader to find relevant new people to follow. Again, many of them will reciprocate and follow you back.
  6. Promote your Twitter ID on your blog, social networking sites, your email signature, business cards, etc.

For many people, those practices will get them all the followers they think they would ever want. But as I said, I’m interested in accelerating even beyond that.

So I’ve been studying the practices of Twitter users who are not celebrities (or at least internet celebrities), and I’ve found one person in particular who really seems to know what he’s doing: Richard Bryda, aka @BigRichB.

Rich has over 75,000 followers. That makes him the most-followed non-celebrity on Twitter. And he built that following all since last November, entirely on Twitter, i.e., no blog, no YouTube videos, no TV/radio show, etc. I’ve been watching him the past few months, and what he’s accomplished is nothing short of amazing. I’ve also had the chance to meet him in person, visit with him, and talk about what he’s been doing. Simply put, he has devoted the past few months to scientifically researching how to get more followers on Twitter.

This past weekend, Rich launched his info-product, Brute Force Twitter, which spells out over a dozen tactics he has developed for rapidly growing your follower count. I can tell you I personally won’t use every single one of these, but only one of them is a technique I’ve ever used myself, and even then, not to full effect. The rest of them, I never would have thought of.

I could spill the beans and tell you these techniques, but hey – that would be enormously disrespectful of the intellectual property Rich has spent countless hours developing over the past few months. And besides, if everybody had access to these techniques, you (and I) couldn’t use them to get on the steep side of that curve, right? ;-)

This is NOT a “how to get rich on Twitter” scheme. This is about helping you get more followers to support your business model on Twitter, whatever it may be.

Rich is offering his system for just $97. If you’d like to learn along with me how to get not just 20-30 followers a day, but dozens or even hundreds, you can get more information or order now.

Apr. 7 MIT Enterprise Forum NY event: Collaborative Investing Startups

I look forward to attending a MIT Enterprise Forum of New York panel on April 7, 5-8pm, titled, “The Smart Money of Crowds: Collaborative Investing Startups”. We are fortunate to have as our moderator Roger Ehrenber of http://informationarbitrage.com .  Our speakers are the CEOs or managers of SumZero, Financial Times Alphaville/Long Room , StockTwits, and Covestor. Incidentally, SumZero was just featured in FINAlternatives

If you can’t attend the event in person, you can follow the conversation via Twitter hashtag MIT0407.  For an introduction to how to use Twitter hashtags, see http://www.wildapricot.com/blogs/newsblog/archive/2008/03/11/an-introduction-to-twitter-hashtags.aspx .

Register here.

Among the issues we will discuss:  

  • What is the quantitative track records of these services in increasing investment returns? Comment on the studies showing that individual investors underperform indices (on average), and individual investor groups underperform individual investors acting alone.
  • How do collaborative investors determine membership criteria for their services?
  • How do these firms handle reputation management: rating of contributors and contributions; minimization of gaming and spam; and compliance issues?
  • What are the business models used by these firms? (ads, subscription, using investment information)
  • What is the value proposition?
  • How do these startups increase returns? Do they provide investors with valuable data? With access to insights from other investors? Are they educational? Do they help with trade execution?

 

 


 

 BIOGRAPHIES OF OUR SPEAKERS

 Roger Ehrenberg

Managing Partner of IA Capital Partners, LLC

 Roger Ehrenberg is Managing Partner of IA Capital Partners, LLC, his personal venture investing vehicle. IA has made 27 investments since 2004, principally in the areas of digital media and financial technology. IA`s portfolio companies include TheLadders.com, Mimeo.com, Clickable, Covestor, BlogTalkRadio, Buddy Media, Silicon Alley Insider and Stocktwits. Roger was also an original investor in Wallstrip (sold to CBS Interactive) and MyTrade (sold to Investools), sits on five Boards of Directors and advises the gaming company Genesis Interactive and the location-based messaging platform Socialight.

 Prior to founding IA, Roger spent 18 years on Wall Street in Mergers & Acquisitions, Derivatives and Trading. Most recently, Roger was President and CEO of DB Advisors, the $6 billion multi-strategy hedge fund trading platform of Deutsche Bank. As head of derivatives businesses at both Citibank and Deutsche Bank, Roger`s teams twice won awards, securing Global Finance magazine`s `Interest Rate Deal of the Year` in 1998 and Institutional Investor magazine`s `Equity Derivative Deal of the Year` in 2000.

 Roger has penned the popular business and technology blog Information Arbitrage since July 2006, and has had over 1 million readers since inception. He has also been interviewed broadly on topics ranging from hedge fund regulation and algorithmic trading to deep-web search and building vertical communities by The Financial Times, The Wall Street Journal, the BBC, NPR, Reuters, CNBC and many others.

 Roger received his Bachelors in Business Administration from the University of Michigan/Ann Arbor, and his Masters of Business Administration from Columbia Business School. Roger is Trustee of the Little Red School House/Elisabeth Irwin High School and a Board Member of the Integrative Pediatrics Council. He lives in New York City with his wife Carin and two boys.

 Divya Narendra

Founder and CEO, SumZero

 Before founding SumZero, Divya was an Associate at Sowood Capital Management, a $3.5B multi-strategy hedge fund located in Boston, MA. At Sowood, Divya analyzed investment opportunities across the capital structure, spanning credit and equity. Prior to this, he was an analyst in the Mergers & Acquisitions Group at Credit Suisse Securities in NYC. In 2004, during his senior year at Harvard College, Divya co-founded ConnectU.com, an online social network dedicated to the university community, and predecessor of Facebook.

 SumZero is the largest online community of professional investors worldwide, currently consisting of more than 1,200 analysts/PMs from nearly every well-known buyside fund. The site is free to use, but membership is by invitation-only. Each member lists 3 or more tickers for companies he/she has extensively researched. As such, an analyst can search for a company he is interested in and find the buyside analyst at another leading firm who has already spent months researching that name and initiate a dialogue. As a by-product, an analyst grows his network. SumZero also contains a fully searchable database of concise investment write-ups focussed on valuation. Though not required, only those members who contribute an idea can access the database. Please email divya@sumzero.com for more information and an invitation to join.         

 Stacy-Marie Ishmael

Writer, Financial Times Alphaville/Long Room 

 Stacy-Marie Ishmael is a New York-based writer and blogger for FT Alphaville, the Financial Times’ award-winning blog. Her responsibilities also include FT Alphaville`s Long Room, which is a “digital restaurant” where finance professionals are encouraged to share research and comment on the work of others. Stacy-Marie is actively involved in the development of the FT Alphaville platform and brand.

 FT Alphaville is a Webby-award winning blog focused on global financial markets, with a team spanning London, Tokyo and New York. The Long Room, which was launched in October 2008, is a members-only extension of the main site, focusing on comment and analysis. Both FT Alphaville and the Long Room are free to readers (an FT subscription is not required to access content) and are supported primarily by display advertising opportunities on the site and in FT Alphaville`s email briefings. In the case of the Long Room, revenue is generated from the sponsorship of “digital tables”.

  

Howard Lindzon

StockTwits Founder

 Born in Toronto, live in Phoenix with a loyal wife (11 years, 12.5 in Canadian), two awesome kids and a dachshund. Schools – University of Western Ontario, Arizona State University, American Graduate School of International Management (Thunderbird). I currently manage a hedge fund and have done so since June of 1998. The fund has evolved into a long only fund with approximately 50 percent in equities and 50 percent in private investments. In the Summer of 2006, I created Wallstrip and with the help of Adam Elend, Jeff Marks, Lindsay Campbell and a hard working crew we have created over 300 shows. In May 2007, Wallstrip was purchased by CBS and I continue to work with CBS and Wallstrip today. I am a partner in two other funds calledKnight`s Bridge Capital Partners .

 Stocktwits is a social, stock microblogging service. StockTwits is an open, community-powered idea and information service for investments. Users can eavesdrop on traders and investors, or contribute to the conversation and build their reputation as savvy market wizards. The service takes financial related data – using Twitter as the content production platform – and structures it by stock, user, reputation, etc.      

  

Rikki Tahta

Co-Founder Covestor

 Rikki Tahta has held a number of senior roles in Finance and Information Services. Previous start-ups include ARK Information (acquired by Thomson Financial), WebTrack (acquired by Jupiter Communications – later public on NASDAQ), Steelhead Systems (acquired by Merrill Lynch) and Bookpages (acquired by Amazon.com). Other positions include Chase Capital Partners (private equity) and Thomson Financial (Securities Data Corporation). Rikki lives in New York and loves fishing. Username: RikkiTahta

 Covestor is a portfolio sharing service for proven self-investors and for those wishing to track them. Tens of thousands of self directed investors share their real trades and you can follow them live for free. Covestor is funded by New York based Union Square Ventures, Boston based Spark Capital and London based Amadeus Capital Partners. We also have a strategic investment from Independent News and Media Group.

 Register here.

What The Virtual Handshake Is All About – Media, Business, People

Following a random link on Twitter, I discovered this cool visualization tool called Wordle. We’ve all seen tag clouds by this point. This just adds a nice artistic element to it. I ran The Virtual Handshake Blog through it and loved what it came up with:

TVHWordle

Click the image to see a larger view or go create your own Wordle.

Grouply closes series A round, including $2m in new money

I’m happy to report exclusively that Grouply, the innovative ‘group reader’ startup I previously profiled, just closed a Series A round, including $2 million in new money.  They now support over 1.3 million groups and 700,000 users.  (Disclosure: I am on their Advisory Board).

The round was led by O’Reilly AlphaTech Ventures.  It was oversubscribed, i.e., more investors were interested in investing than they could support in the round.  This is particularly impressive in light of the global economic slowdown and increasing government desire to reduce incentives to invest in innovation.

In December, Grouply released version 3.5, which includes support for Google Groups, building on their historic support for Yahoo Groups.  Yahoo Groups serves 110 million users and 8 million groups; Google Groups is about one-fourth the size of Yahoo Groups. 

The development timeframe for Grouply from here is clear: become the tool of choice for power administrators, and replicate all the functionality of Yahoo/Google Groups, such that they become the preferred groups platform.  Also, given the renewed focus of all startups (excluding Twitter, for not much longer) on monetization, you can assume they’ll be soon introducing advertising on Grouply. 

Today, most of Grouply’s users join as a result of an invitation they received from an existing Grouply user.  One of Grouply’s strengths, and weaknesses, is its viral model. This has allowed them to hit significant scale with a tiny team (6 full-time people). 

One challenge of the viral model is that Grouply — like Facebook, MySpace, LinkedIn, and virtually all “social sites” — offers users the ability to invite people they are “connected to” to join the site.  Most services, with a few deservedly ostracized exceptions, require users to click several buttons before any invites can be sent.  Grouply had some initial hiccups as a result of people accidentally inviting people they did not intend to invite, and has since made the disclosure process emphatically clear.

 

Thinking Systemically About the Impending Death of Twitter Auto-DMs

OKIGiveUp

Well, I made it official today. I threw in the towel and turned off my auto-welcome DMs (direct messages) I had set up using TweetLater. I’ve had a lot to say on the subject of auto-DMs, and I’ll sum it all up in another post at some point. But for now, I just want to lament the fact that it’s not the general principle of auto-DMs that is bringing about their demise, but the abuse of them by so many people.

Despite the mainstreaming of social media, it’s obvious a lot of people still don’t get it. It’s not for lack of trying. For example, here’s the advice TweetLater gives on their site about auto-DMs:

Best Practise: The message should not be about you, it should be about your follower and your future interaction with your follower.

Write a very simple welcome message. If you really want folks to unfollow you, then try and sell them something with this first welcome message. Very few people like that. Be careful even if you’re giving away something for free. The purpose of this message is to say hello and welcome. Most people take a dim view of you when you do any kind of self-promotion with this message. If your message smells remotely like, "Hi, thanks for the follow, now buy my stuff or do something that will benefit me or check out how cool I am," then you really are misusing this welcome message. Don’t send what you wouldn’t like to receive from others.

SocialToo had similar advice on their service. But despite their best efforts, it was abused. SocialToo made the move today to end their auto-DM service. For all you anti-auto-DM fanatics, read Jesse’s post closely. It’s clear he’s not happy about having to end the service – in fact, it’s why he started SocialToo:

For Twitter, as my followers grew, I wanted to show the gesture of at least following those people back that were showing interest in me. It was the least I could do, even if I could not pay attention to each and every one. (We’re working on that second problem)

I began by manually following those that followed me, and when my numbers were still small I would even message them, some times privately, some times publicly to thank them for their interest in me. This became a repetitive process for me, and therefore I wrote a script, and eventually an entire service which became SocialToo.com, around this.

This is exactly why I’ve said before that auto-DMs are not necessarily inauthentic. That’s not the issue – it’s that people abused it. Classic Tragedy of the Commons:

“a dilemma in which multiple individuals acting independently in their own self-interest can ultimately destroy a shared limited resource even where it is clear that it is not in anyone’s long term interest for this to happen.” (Wikipedia)

In this case, the shared limited resource is the collective attention and goodwill of the community. And a bunch of people “acting independently in their own self-interest” abused the system:

Based on my statistics, while a small percent of you are using auto-DMs for legitimate business reasons (for instance, sending instructions to followers if you are doing an online promotion that includes following the Twitter user as part of the promotion), over one-third of you sending automated DMs have some sort of URL in your message to followers. The remaining majority is just sending simple thank you’s, which while I think are truly genuine, are now being ignored by most people that receive them. (SocialToo)

C’est la vie. Thing is, ending auto-DMs is a band-aid. The real problem – people not understanding the right time and place to promote themselves – remains the same. We’ve taken away a tool, not addressed the real issue. Another classic system archetype: Shifting the Burden. Where will it pop up next?

Managing Multiple Twitter Accounts

3247followers

All kidding aside, I do actually have two Twitter accounts, and I know some who have more. It’s actually becoming fairly common to have a personal account covering a wide variety of topics and one or more additional accounts for specialized niche topics that might not be of interest to your main audience.

For example, @ScottAllen is my main account, but in my new role as Director of Online Marketing for American Guitar Academy, I’ve also set up @AmerGuitarAcad. On that account, I talk pretty much exclusively about guitar. I also have it synchronized with AmericanGuitarAcademy at Blip.fm, where I play and comment on some of my favorite guitar and bass music. While some of my followers might enjoy that, it would be overload for most of them.

Another good example of this would be something like a local coffee shop. The owner might set up an account for the business that just talked about upcoming events at the coffee shop and maybe some occasional posts about coffee or other topics that might be of interest to customers. Then on a personal account they could cover their broader range of personal interests.

The key is that there’s no deception. Be open about the multiple accounts. Occasionally explain what your other accounts are for and invite those who are interested to follow your other accounts. You can even re-tweet from one account to another if you think it’s relevant to the followers of your other account.

What you don’t want to do is pretend it’s different people, e.g.:

I’m loving the music @AmerGuitarAcad is playing.go have a listen if you like great guitar music.

What I actually posted instead was:

Speaking of my other Twitter acct, if you like great guitar/bass music you can follow @AmerGuitarAcad here or at Blip.fm: http://is.gd/kiMj

So how do you manage multiple Twitter accounts?

That’s a great question. Obviously, logging in and out of them frequently in your browser would be time-consuming, not to mention the possible confusion of posting on the wrong account. Even if you use a Twitter client rather than the web, if you use any third-party applications like Mr. Tweet or TwitterGrader, you’ll have to deal with which account you’re logged into in your browser.

My solution is that I use different browsers for each account. I do my main account on Google Chrome (my main browser) and my American Guitar Academy account on Firefox. I also use TweetDeck as the client for my main account. It’s not ideal, but it works for now.

A couple of sites have started building tools for managing multiple Twitter accounts:

HootSuite (formerly BrightKit) allows you to read and post to multiple accounts in a single unified interface. Conceptually it’s great, but I find their design is too spread out. A lot of information comes across my Twitter account – I need higher information density on-screen. This would probably work fine for fairly low-volume, but the people with fairly low volume probably aren’t the people with multiple accounts who need a tool like this.

TweetLater just announced their Professional version, which includes their TweetCOCKPIT, a dashboard for managing all your Twitter accounts. It includes some incredibly useful features like:

  • Including or excluding only certain parts of certain accounts (timeline, replies, DMs),
  • Setting the number of tweets for each part (e.g., max 10 tweets from account "X", 5 DMs from account "Y", 15 tweets and 15 DMs from account "Z", etc.)
  • Pulling in tweets that contain certain keywords regardless of whether you follow the tweeter or not.
  • Take a tweet from one account and retweet it on one, some, or all your Twitter accounts with one click.
  • Respond literally within seconds of someone tweeting about your brand name, or about any of the keywords you monitor.
  • Reply to all the tweeters mentioned in a tweet. No more copying and pasting of @names.

It’s pretty good – quite a few more features and better use of screen real estate than HootSuite. But:

  • It still can’t make use of my whole screen if I want to, plus a good 20% of the screen vertically is taken up with their freakin’ logo!
  • It doesn’t refresh automatically, so it still doesn’t have the immediacy of a desktop client like TweetDeck or Twhirl.

Also, it’s not free (you can try it free for 72 hours). The regular subscription price will be about $30 a month, but if you order before 3/21, you can lock it in at $19.97 per month. If it does the job well, I think it’s worth it. It’s not there for me yet, but I’ll keep my eye on it. A few things would make it worth it:

  • No TweetLater logo/branding on the cockpit.
  • Give me the option of a third and fourth column if my screen size/resolution will support it.
  • Allow exclusion of keywords in their search, e.g., I want “guitar” but not “guitar hero”.
  • An Ajax or Flash interface that automatically pulls updates.
  • A way to pull up the previous tweets that fit the criteria that I might have missed. I want an “older tweets” link.

Actually, TweetDeck is probably closer to being what I want. All they’d need to do is add multiple account support. A dropdown list to switch between them would be fine – I don’t need to see tweets from multiple accounts at once. The screen layout, groups and searches would need to be separate for each account. I’d be happy with that.

Are you using multiple Twitter accounts? How do you manage it? What tools do you use?

UPDATE:

Since I posted, I’ve discovered or had people recommend the following tools for managing multiple accounts:

Also, I’ve been told that you can open multiple instances of Twhirl for different accounts.

And here’s a cool video on using NetVibes to manage multiple accounts:

I’ll post an update next week after I’ve had a chance to try out some of these other tools myself.

Standard Answer Soft Launches Open Beta

SAlogo One of the companies I serve on the advisory board of, Standard Answer, has entered open beta and is gearing up for launch at SXSW Interactive. So I thought I’d take this opportunity to tell a little about the site and why I thought it was cool enough to get involved, when there’s already a sea of YASNS (Yet Another Social Networking Service) out there. It’s a little rough around the edges still, but I think we’re doing something that’s compelling enough for members to spend some of their time there and marketers to spend some of their budget there.

At first glance, Standard Answer could easily appear to be just another social networking service. It’s built around one of the most popular activities in social networking sites like MySpace and Facebook: asking and answering questions of your friends.

We built Standard Answer with the idea of taking this popular activity and 1) making a better experience for users, 2) allowing users to use those questions as the basis for building community, 3) creating a better channel for advertisers and 4) building a really, really cool dataset that’s never been seen before.

So let’s look at how Standard Answer accomplishes each of these objectives.

Better Q&A

Do you ever get tired of answering the same questions over and over again? With Standard Answer, you don’t have to any more. Your “standard answers” are saved, so when someone sends you a new quiz, the questions you’ve already answered can be automatically answered for you. Of course, you’re always allowed to change your mind, and Standard Answer even keeps a history of how you’ve changed your answers over time.

Do you ever take a multiple-choice quiz and the answer you want to give isn’t on the list? No more! With Standard Answer you can add your own answers to the multiple-choice questions.

Standard Answer also does everything it can to help standardize the data, such as looking for similar questions when you enter a question, so as to prevent duplicates. What’s the point of having 100 different people ask “What’s your favorite color?” and having each one have a different set of possible responses?

Building Community

This is where the rubber really hits the road with Standard Answer. One of the problems with most existing social networking sites is that the data is unstructured. You can only do simple text searches to find who you’re looking for. For example, the “pivots”, or hyperlinks on interests, favorite books/movies, etc., in MySpace and Facebook only allow you to find the people who share that one interest.

But one of the things we learned in researching The Virtual Handshake is that one of the best ways to build strong relationships is through the discovery of multiplexity, or in plain English, finding out what you have in common with people. Similarly, if you want to meet new people with whom you have good odds of building strong relationships, then seeking out people who share several common interests is one of the best ways to do that.

So let’s say you want to connect with, say, other people in Austin who love sushi and sci-fi, or people around the world who are fans of both American Idol and American Beauty. Or whatever. Doesn’t matter whether it’s serious or silly. Standard Answer gives you a way to make those connections quickly.

And what’s really cool is that you can either save those searches for your own personal use, to reach out to people one-to-one, or you can create a community around that search and help others with that combination of interests and attitudes connect with each other. We think this will be really compelling for both social and business applications.

Better Advertising Channel

Standard Answer won’t be filled with boring banner advertising. Social media is showing us that companies/brands need to join the conversation. Standard Answer allows them to do that in a fun, interactive way.

What we offer advertisers is sponsored questions, e.g., “Do you prefer Coke or Pepsi?” Guess what. Our early results show that people love answering these simple, one-off questions in the Standard Answer context, whereas they might be hesitant about responding to longer marketing surveys. Brands are a part of our lives, and people actually enjoy answering questions about them if done correctly. For example, people are loving answering the question I posted: What’s your favorite Doritos flavor? At the moment it’s a toss-up between Nacho Cheese and Cool Ranch. Of course, I want to meet the other person who said Fiery Habanero besides me (see how it works?).

Interesting Data

Now this is where I think this thing gets really fun. Just think of the massive data set we build with this. Without ever putting anyone through a painfully long survey, we’re gathering an amazing amount of not just demographic information, but psychographic information, i.e., info about attitudes, beliefs and behaviors.

I can tell you that when I talked social network researcher danah boyd into joining the advisory board, she said there was one condition: “I get to get my hands on the data.” So it’s in good hands. Who knows what she’ll find? :-)

One thing we’re going to look for is interesting correlations in the data that have maybe never been discovered. Maybe we discover something trivially fascinating, like that geeks prefer maple syrup on their pancakes, but suits prefer honey. Or maybe we find that Lexus drinkers prefer Coke, while BMW drinkers prefer Pepsi. Those companies might like to know that, don’t you think?

Of course, we will never sell personally identifiable data to companies. But we will make aggregate data available, for a fee. And while we may not have the volume of data of, say, Facebook any time soon, the quality will be much higher.

I’m excited to be a part of Standard Answer and watch its launch.

Want to learn more? You can…

Composing Music Collaboratively

Sites for posting and sharing music have democratized the music business to the point where any aspiring artist or band can get their music heard. The downside, of course, is with so much music freely available, full-time musicians are finding it more difficult to make a living. The NY Times has written a state of the industry piece, “Songs from the Heart of a Marketing Plan,” about how more musicians are creating tunes designed for licensing in commercials and movies, rather than taking chances on developing a unique identity.

There is another exciting, and growing, upside to music sharing on the web ? the ability for musicians to collaborate online, with others around the world to create new sounds, songs and even bands. I heard the creators of Indaba speak recently. Founded by a pair of modest early 20-somethings, Indaba has put together an easy to use and compelling site for posting tracks – a bass and drums groove; a piano and voice demo, etc; – and inviting others to layer on more sounds – guitar, a better voice, electronic percussion – to build music across borders. Now that the site has become more intensely useful with online track editing and project management, contests with the Berklee College of Music, plus negotiation over copyright use, it’s gained thousands of users and support of artists such as Third Eye Blind who are allowing musicians to remix their basic tracks even before their album comes out.

Then there’s Share My Lyrics, which is encouraging people to post complete lyrics or just snippets, get feedback on their skills, write lyrics together and sell them.

Music could be the easiest art form to create collaboratively online, given the way one person can layer a musical concept on top of the framework of other people’s tracks within minutes. But the same concept can be applied to any art form that can be digitized – manipulated digital photography, video, fiction, poetry, even dance – with the right editing tools. See NPR Radio’s Jan.5 story on wovels- novels on which readers vote an direction for next weeks’ chapter installment and DanceForms for PC-based dance choreography software that no doubt can be translated to a Web 2.0 platform.

Outsell report: Social Media in Scientific, Technical and Medical Information Part 1: Social Networking

I enjoyed reading Outsell’s new report on Social Media in Scientific, Technical and Medical Information Part 1: Social Networking.

The most useful aspect of the report is that it includes the most extensive list I’ve seen of gated professional online networks. A trend I’ve been following for a long time (and worked on while running Circle of Experts) is gated online communities for professionals. If you want to know where scientists, businesspeople, doctors, etc., are congregating online, this report can give you guidance. For another (free) list and more information on this topic, see http://leadernetworks.com/.

The report does have some holes:
– It does not discuss the millions of small online communities on the Yahoo Groups, Google Groups, etc. platforms.
– It does not include Albourne Village, the leading online community for the hedge fund/private equity sector.
– It lists only a few expert network companies in which the client pays, but omits the largest ones: Gerson Lehrman, Vista Research, Evalueserve, etc. For a longer list of expert network companies (and also great advice if you’re seeking consulting opportunities/a job), see 8 Steps to Running a Diversified Job Search on the Web.

The most insightful point in the report is that it observes the very conspicuous lack of trade associations. You would think that the industry trade associations would be aggressively building online communities for their members, but there are surprisingly few examples. There is a business opportunity in helping associations to go on-line, before they become disintermediated.

(Disclosure: Outsell recently listed Evalueserve as the fastest-growing Market Research, Reports & Services (MRRS) company globally, in a separate report.)