6 ms·

Not surprised at all. Anecdote: A friend and I used to run a website that tracked activist short sellers and their campaigns, and published all that informatio

Not surprised at all. Anecdote: A friend and I used to run a website that tracked activist short sellers and their campaigns, and published all that information as a nice centralized database basically. Hedge funds were, by far, the most interested in this - which was surprising to us, our original target audiences were auditors and legal firms. My impression from this experience is that the more successful hedge funds are just mass-ingesting data from everywhere they can, and somehow trying to make sense of it. It's totally an arms race too: Once one of them is ingesting data from a new source, everyone else has to start doing it as well lest they fall behind. It was significantly easier to convince new clients once we had a few clients already (very much like the FOMO people speak about when fundraising).

otoburb 9y ago
Did they scrape indiscriminately, or did they pay for access? I'm hoping it was the latter so you were able to keep the site self-sustaining for a while longer.
- wgerard 9y ago
  The info was gated behind a paid login, so thankfully we didn't have to worry too much about scrapers. We also set up a notification system when new campaigns came out, so they didn't have to long poll for new info. We actually did have quite a few people scraping our homepage for some reason (which was rarely, if ever, updated) but they were mostly other aggregators as well, not potential clients.
dsacco 9y ago
Did you keep up with that project or move on to something else? It's humorous to me that most people who end up selling data to hedge funds more or less "fall" into that industry by accident. Your story is exactly how it typically happens: you develop a new data-enabled product for one market, then a bunch of hedge funds find it and realize it's useful. Most companies pivot from their original market once they realize how lucrative selling data can be.
- wgerard 9y ago
  We moved on - my friend was in business school at the time, and thought that continuing on with the project would be detrimental to his job search (he was looking at joining a hedge fund). Yeah, it was a very sudden shift. We always knew they were potential customers, we just didn't realize how quickly they would take to the product (as opposed to legal firms which you can imagine are significantly more bureaucratic about such things).
  - whatok 9y ago
    Anything I've ever wanted (within a certain cost) has always been signed off immediately/practically did not require approval. It's very easy to sell a relatively cheap (compared to some of the other subscriptions sold to hedge funds) service to an organization that's extremely flat.
throwaway_80bf3 9y ago
How were you able to discern who "activist short sellers" were? Or was it simply speculation?
- wgerard 9y ago
  Basically, anyone who launched a public campaign qualifies. If you're just short selling without any related posts about why you're short, etc. you're not an activist short seller. It's ambiguous, no doubt, but actually pretty easy to discern in practice. There are a few big names that dominate the landscape, as well (e.g. Citron).
mandelbulb 9y ago
>Not surprised at all. Neither result would be surprising, that is why this issue requires research.
- wgerard 9y ago
  Actually, there's plenty reason to be surprised here since it flies in the face of the efficient market hypothesis a bit.
  - dsacco 9y ago
    To be fair, that's really only surprising to people who believe the strong EMH proposition is true. EMH is demonstrably false if you casually look at the returns of various funds over timespans measured in decades. The only way you can argue it isn't false is if you bend over backwards to redefine these firms as havens for insider trading or try to claim they're plausible as mere statistical outliers. Otherwise, the weaker postulate of EMH is sort of redundant. That's not to discredit Fama's work: we know far more now then we did back then, and it's legitimately useful as a theory of the relationship between market state and information asymmetry. But its utility has nothing to do with whether or not the market actually is efficient.
  - gowld 9y ago
    The efficient market hypothesis relies on the assumption that investors are doing research and that the ones who do the best research set the prices.
bckygldstn 9y ago
Automated data ingestion doesn't come for free. It's an ongoing effort to keep on top of new sources and schema changes, and the amount of effort scales with the number of sources. I'd guess that's the value you were providing for them.
- wgerard 9y ago
  Oh sure, no doubt. It makes sense to spend $10 a month on something if it saves you 10 hours of time and you can potentially make $10 million from it. I was mostly just surprised at how quick the process was. Hedge funds are much more afraid of missing out on something than they are of paying a monthly fee to someone. That might sound a bit silly (what business isn't afraid of missing out on something?), but that's definitely NOT the case in many other enterprise sales discussions.
  - kornish 9y ago
    Was that how much you were charging? One would naively assume that you could probably have charged a lot more given the amount at stake for the fund.
  - ikeboy 9y ago
    I hope you were charging at least $499/month, if not go read everything patio11 has ever written on pricing.
nostromo95 9y ago
How did you do pricing, if I might ask? Did you calculate the expected benefit of the data to funds, look at prices of similar data offerings, or etc.?
hxta98596 9y ago
I remember your website. I was at a hedge funds that used your service. I had a few conversations by email and by phone with your partner too (nice guy and went to a good MBA school if I remember). I understand why there were maybe bigger and better opportunities vs return on time needed to keep doing your activist short site going as it is quite niche. Are you involved in the space at all any more? For others reading here and in case curious, the hedge fund I was working at wasn't interested in paying for access to tracking of activist short campaign data for the short trade ideas themselves. There is little interest in copying or jumping onto another's trade like that. The real interest the hedge fund wants to get alerts and track these campaigns was to keep an eye on what other hedge funds are doing - it was more about competitor and industry colleague research than securities research.

otoburb 9y ago

Did they scrape indiscriminately, or did they pay for access? I'm hoping it was the latter so you were able to keep the site self-sustaining for a while longer.

wgerard 9y ago
The info was gated behind a paid login, so thankfully we didn't have to worry too much about scrapers. We also set up a notification system when new campaigns came out, so they didn't have to long poll for new info. We actually did have quite a few people scraping our homepage for some reason (which was rarely, if ever, updated) but they were mostly other aggregators as well, not potential clients.

dsacco 9y ago

Did you keep up with that project or move on to something else? It's humorous to me that most people who end up selling data to hedge funds more or less "fall" into that industry by accident. Your story is exactly how it typically happens: you develop a new data-enabled product for one market, then a bunch of hedge funds find it and realize it's useful. Most companies pivot from their original market once they realize how lucrative selling data can be.

wgerard 9y ago
We moved on - my friend was in business school at the time, and thought that continuing on with the project would be detrimental to his job search (he was looking at joining a hedge fund). Yeah, it was a very sudden shift. We always knew they were potential customers, we just didn't realize how quickly they would take to the product (as opposed to legal firms which you can imagine are significantly more bureaucratic about such things).
- whatok 9y ago
  Anything I've ever wanted (within a certain cost) has always been signed off immediately/practically did not require approval. It's very easy to sell a relatively cheap (compared to some of the other subscriptions sold to hedge funds) service to an organization that's extremely flat.

throwaway_80bf3 9y ago

How were you able to discern who "activist short sellers" were? Or was it simply speculation?

wgerard 9y ago
Basically, anyone who launched a public campaign qualifies. If you're just short selling without any related posts about why you're short, etc. you're not an activist short seller. It's ambiguous, no doubt, but actually pretty easy to discern in practice. There are a few big names that dominate the landscape, as well (e.g. Citron).

mandelbulb 9y ago

>Not surprised at all. Neither result would be surprising, that is why this issue requires research.

wgerard 9y ago
Actually, there's plenty reason to be surprised here since it flies in the face of the efficient market hypothesis a bit.
- dsacco 9y ago
  To be fair, that's really only surprising to people who believe the strong EMH proposition is true. EMH is demonstrably false if you casually look at the returns of various funds over timespans measured in decades. The only way you can argue it isn't false is if you bend over backwards to redefine these firms as havens for insider trading or try to claim they're plausible as mere statistical outliers. Otherwise, the weaker postulate of EMH is sort of redundant. That's not to discredit Fama's work: we know far more now then we did back then, and it's legitimately useful as a theory of the relationship between market state and information asymmetry. But its utility has nothing to do with whether or not the market actually is efficient.
- gowld 9y ago
  The efficient market hypothesis relies on the assumption that investors are doing research and that the ones who do the best research set the prices.

bckygldstn 9y ago

Automated data ingestion doesn't come for free. It's an ongoing effort to keep on top of new sources and schema changes, and the amount of effort scales with the number of sources. I'd guess that's the value you were providing for them.

wgerard 9y ago
Oh sure, no doubt. It makes sense to spend $10 a month on something if it saves you 10 hours of time and you can potentially make $10 million from it. I was mostly just surprised at how quick the process was. Hedge funds are much more afraid of missing out on something than they are of paying a monthly fee to someone. That might sound a bit silly (what business isn't afraid of missing out on something?), but that's definitely NOT the case in many other enterprise sales discussions.
- kornish 9y ago
  Was that how much you were charging? One would naively assume that you could probably have charged a lot more given the amount at stake for the fund.
- ikeboy 9y ago
  I hope you were charging at least $499/month, if not go read everything patio11 has ever written on pricing.

nostromo95 9y ago

How did you do pricing, if I might ask? Did you calculate the expected benefit of the data to funds, look at prices of similar data offerings, or etc.?

hxta98596 9y ago

I remember your website. I was at a hedge funds that used your service. I had a few conversations by email and by phone with your partner too (nice guy and went to a good MBA school if I remember). I understand why there were maybe bigger and better opportunities vs return on time needed to keep doing your activist short site going as it is quite niche. Are you involved in the space at all any more? For others reading here and in case curious, the hedge fund I was working at wasn't interested in paying for access to tracking of activist short campaign data for the short trade ideas themselves. There is little interest in copying or jumping onto another's trade like that. The real interest the hedge fund wants to get alerts and track these campaigns was to keep an eye on what other hedge funds are doing - it was more about competitor and industry colleague research than securities research.