In his 2001 book, Bloomberg by Bloomberg, Michael
Bloomberg set out the greatest challenge facing the company he
famously founded in 1982 with a $10 million severance check
from Salomon Brothers: fighting the stultifying effects
of success, the paralyzing result of growth, the debilitating
cancer of entrenchment. Today as
Bloomberg LP sits atop the $26 billion financial data
industry with annual revenue in excess of $8.3 billion, heading
off a growing army of aggressive, nimble start-ups may be
Daniel Nadler, 30, started Kensho Technologies in early
2013 as he was completing his Ph.D. in economics at Harvard
University. Nadlers co-founder, Peter Kruskall, 27,
worked as a programmer at Google before the launch. Together
they have developed a suite of browser-based tools that use
Google-grade technology to allow financial professionals to
perform the type of complex, multicondition analysis of
large-scale data sets that until now has been the province of
an elite band of hedge fund firms. Say you want to investigate
the effect of political unrest in the Middle East on global
defense stocks when oil is above $100 a barrel. Kensho promises
a world where you can feed this question into a Google-like
natural-language search field and an answer will return,
fully charted, within seconds (see also
Website Seasonal Odds Is Betting Big on Market
writes a column for Institutional Investor,
puts his firms technology spend at $300,000.
If you leverage consumer IT, the cost of doing things
becomes very low, he notes. Kensho has already attracted
$9 million in seed funding, with notable venture capital firms
Accel Partners, Google Ventures and New Enterprise Associates
among the earliest investors. The Johnson family, which founded
Fidelity Investments and continues to run the company with a 49
percent shareholding today, also has invested in Kensho. Former
Bloomberg enterprise business head Stanley Young joined the
advisory board in November; Adam Broun, former chief
information officer at Credit Suisse, became the firms
head of business development at about the same time.
This type of innovation has the potential to transform
the way financial research is conducted, Broun says.
Another firm generating interest is Estimize, which
27-year-old Leigh Drogen started in 2011 after serving an
apprenticeship as a quant at Geller Capital Management, a White
Plains, New Yorkbased hedge fund firm. Operating out of a
five-man corner room in WeWork, a shared work space for
start-ups in Lower Manhattan, Estimize has used cheap, widely
available software to build a tool that aggregates and
publishes estimates of standard U.S. company performance
metrics crowdsourced from an open community of equity analysts.
The big market data companies already have data sets that serve
that need, but Estimize has a much bigger contributor pool.
Drogen says more than 6,000 portfolio managers and researchers
look at Estimize data today. With $1.4 million in venture
capital to date, the firm has inked deals with four large
quantitative hedge fund firms.
I/B/E/S, the most widely quoted company estimate database,
is owned by Thomson Reuters, but Drogen has Bloomberg, which
leads the market in macroeconomic estimates, well within his
sights. Itll take us four to five years to disrupt
I/B/E/S, but well knock this thing out of the park in six
months, Drogen predicts.
Restless, ambitious and possessed of seemingly inexhaustible
reserves of verbal energy, Drogen and Nadler are exactly the
type of fast-thinking young men that Mike Bloomberg himself
might have befriended and started a company with in 1982.
Instead, they are now taking on the incumbent, and, according
to Nadler, the innovations seen in the consumer world mean that
technology is firmly on their side.
The Race to Topple Bloomberg.
Aaron Timms on Twitter at @aarontimms.