SoundView Capital

Research is Finally Going Online

by

The research “business” has started shifting online in earnest. We noticed it back in August when the number of online followers of our work started to really grow. It’s hard to nail down the exact cause but it may have something to do with the iPhone/iPad/Facebook phenomenon. These three are now wildly popular, especially with the crowd we generally write for. But they are also technologically at odds with older proprietary systems like FactSet, Bloomberg, FirstCall, CapitalIQ, etc.

To be sure, the demographics of the online readership are more varied but it’s clear that many “institutional” readers are actively moving to open online sources for their information and research content. The old platforms will no doubt be around for a long time to come but will be eclipsed by these new channels. Interestingly, there are quite a few rules and regulations, which means that most of the traditional equity research providers will not be able to participate in what we call the “open professional” model of research. Time to get ready for the future.

We can’t say that we have led the way here at Research 2.0 but we have been experimenting since 2006. Until recently our core base of readers and clients remaining on traditional systems and we weren’t brave enough to move without them. We’ve envied other firms like RedMonk that took the initiative to build on an open research model early and make it a big success. But now we have the green light to move forward with the changes we have longed to make up for the past few years, and you’ll see that starting right now.

Here are a few things that are changing (and some that are not):

  • The R2 blog will become our primary publishing and client management platform: In the past the blog was a secondary platform for us and considered part of our “downstream” information flow. Over the years the power and flexibility of the open-source WordPress blog platform has simply outstripped the capabilities of all the expensive proprietary systems. [We wrote about this in the February 2007 R2 Monthly.] Our blog and email is now integrated so you may be reading this via an RSS reader or email and it’s all pushed from one place. We will still be supporting the old distribution platforms but they will now be “downstream.”
  • More links, more dynamic content: We will be producing more PDF documents and reports in 2011 but they will be surrounded with continuous updates and online links, especially inside investment-focused communities like Seeking Alpha and StockTwits. We will continue to build our own direct followers with email, Twitter, Quora, LinkedIn and Facebook pages.
  • We’re also likely to launch an “inside R2” collaboration platform for our clients to be better connected and able to support a more natural flow of information exchange.  This effort will start with a small beta of about a dozen clients in Q1 and expand to a larger, but still tightly controlled, community in Q2 based on what we learn.
  • Company-sponsored research: Our fact-based and independent research approach is perfect for smaller, under-followed or misunderstood companies in our coverage areas. We’ve signed up several companies that are willing to sponsor our coverage and that program will be expanding rapidly. Our first report – Harris & Harris: Survive to Thrive (PDF) (NASDAQ: TINY) was just released. We will also be providing research coverage to newly-public companies that want additional coverage and appreciate the open professional model. Lastly, there will be a few special cases where a small group of companies interested in an emerging theme, like connected-car, will help sponsor the research effort.
  • Themes driven by ecosystems: Rather than puff out too many words our themes will be driven by ecosystem coverage in our core areas like cloud computing, mobile Internet, RealVR, software, Internet businesses, and a few others. It provides thematic content with a stock-focused view.
  • More analysts: Eventually we believe more analysts will move over to the open professional model. Compensation levels at investment banks and broker dealers have made this very difficult but we may soon reach some kind of “grid parity” where talent can go where it belongs. We are already recruiting and hope to find at least one or two new additions this year to expand our coverage and drive the model. If you are interested please contact us.
  • Still free (mostly): We plan to continue to distribute our content for free. This will certainly be true for content published here and distributed by email. Sponsored content will all be freely available. There will be some things that will require a paid subscription to access but you can cross that line when you come to it. If you want to get free research updates please do so here.
  • Still “beyond the quarter”: You won’t build wealth by focusing on the short term. Would you have rather owned shares of Apple and Google for the last few years or traded them based on how the quarterly reports would be? There are a huge number of sources out there seeking to provide short-term trading insights based on news, speculation or technical factors. Our approach is focus instead on a one to five year period that incorporates future developments and then exploit big differences between prevailing market values and our own estimates of Intrinsic Value. Sometimes the gaps close in a week, sometimes a year but they almost always close and the returns are excellent.
  • Still the “research inside” respected brands: We agree with the “mesh model” of doing business and value our partnerships with organizations like GigaOM and Sharespost where we can provide some of our research to help support their platform. We provide R2 branded content inside some of their services and products. We’re open to doing more but IFF there is a a great fit.
  • Greater specialization and more individual brands: Our general audience for technology and investing is broad and has myriad special interests. We are creating and building research micro-brands like IPO Candy. There are two additional ideas on the drawing board for potential launch in 2011 if we can continue to build our research and production capacity. It may be early, but we expect there to be a move away from general purpose platforms like Twitter and iTunes to a greater number of very focused offerings.

We’re very excited about these changes and hope we can add more value to your efforts in 2011. Of course we are very eager to get any feedback you have along the way and are generally able to accomodate ideas and suggestions fairly quickly. You can use this form to share your comments with the team here.

[Disclosures: None.]

Related articles

Trackbacks