<story><title>Can the Bloomberg Terminal be &quot;Toppled&quot;?</title><url>http://mattturck.com/2014/03/19/can-the-bloomberg-terminal-be-toppled/</url></story><parent_chain><item><author>squigs25</author><text>This IS the reason capital IQ started. They&amp;#x27;ve done reasonably well.&lt;p&gt;There are a couple reasons why it&amp;#x27;s really difficult to disrupt this industry:&lt;p&gt;1) An mvp won&amp;#x27;t cut it. If I&amp;#x27;m a trader with 300MM in my pocket, then I need access to information. All information.&lt;p&gt;2)Reliability. Traders need a highly reliable connection. No room for error. A great counter example is Reuters. I worked on a support desk where I had both Reuters and Bloomberg (at a cost of something insane, probably close to 100k&amp;#x2F;yr). I imagine that when a major pricing error occurred on any exchange, I would find out within 30 seconds to a minute. Despite all its resources, Reuters proved time and again to have pricing issues. Connecting to hundreds of exchanges with thousands of securities is difficult. When you start to go outside of the US, there&amp;#x27;s some really bizarre logic. Bloomberg was incredibly reliable on the other hand, and their support team responds to issues within minutes.&lt;p&gt;2) Network effects. Bloomberg messenger is the way to communicate in finance. Also, Bloomberg leverages its network to constantly monitor prices, so pricing problems are discovered REALLY quickly. It&amp;#x27;s kind of like open-sourcing security pricing monitoring.&lt;p&gt;3) Reputation. Even if you create a perfect replica of Bloomberg, would I stake my clients money on your track record? Even with a good track record, why would I not trust Bloomberg when it&amp;#x27;s the de facto standard?&lt;p&gt;4) IP? not sure about this one, but I imagine there are a lot of features baked into Bloomberg with legal protection.&lt;p&gt;5) The cost is insignificant for most of wall street.&lt;p&gt;Funny story: on a whim I interviewed with capital IQ while I was in college. They asked me to design an interface that would allow people to access financial information quickly. Having never used or seen Bloomberg, I immediately started describing a system of keyboard shortcuts, to which my interviewer responded that I was basically just describing Bloomberg terminal. Didn&amp;#x27;t get the job.</text></item></parent_chain><comment><author>mcfunley</author><text>&amp;gt; Didn&amp;#x27;t get the job.&lt;p&gt;You dodged a bullet. I worked for CIQ from 2003-2007, it was not such a great time. (I recently reminisced a bit here: &lt;a href=&quot;http://mcfunley.com/manual-delivery&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;mcfunley.com&amp;#x2F;manual-delivery&lt;/a&gt;)&lt;p&gt;At one point I was offered a job with Bloomberg that I didn&amp;#x27;t wind up taking. In my last interview with a director, he described an experience he had rewriting quite a bit of the Bloomberg terminal as a modern (for the time anyway) Windows app as some kind of skunkworks project. He said he was nearly fired for this. His superiors explained to him very slowly that although the terminal looks like obvious insanity to a tech person, it&amp;#x27;s embedded in the culture in finance. People like it in part because it&amp;#x27;s insane. It&amp;#x27;s hard to attack this with modern methods.&lt;p&gt;One other giant stinking reason it&amp;#x27;s really hard to innovate here is data. All of these companies are vertically integrated. CIQ, for example, is (or was back then, anyway) a tiny shim of a crappy tech company in New York and thousands and thousands of people doing data collection in India. The data is the product. Initially CIQ was just the website, and they bought their data from competitors. As they became successful their competitors shut them down and they had to scramble to replicate datasets by themselves.</text></comment>
<story><title>Can the Bloomberg Terminal be &quot;Toppled&quot;?</title><url>http://mattturck.com/2014/03/19/can-the-bloomberg-terminal-be-toppled/</url></story><parent_chain><item><author>squigs25</author><text>This IS the reason capital IQ started. They&amp;#x27;ve done reasonably well.&lt;p&gt;There are a couple reasons why it&amp;#x27;s really difficult to disrupt this industry:&lt;p&gt;1) An mvp won&amp;#x27;t cut it. If I&amp;#x27;m a trader with 300MM in my pocket, then I need access to information. All information.&lt;p&gt;2)Reliability. Traders need a highly reliable connection. No room for error. A great counter example is Reuters. I worked on a support desk where I had both Reuters and Bloomberg (at a cost of something insane, probably close to 100k&amp;#x2F;yr). I imagine that when a major pricing error occurred on any exchange, I would find out within 30 seconds to a minute. Despite all its resources, Reuters proved time and again to have pricing issues. Connecting to hundreds of exchanges with thousands of securities is difficult. When you start to go outside of the US, there&amp;#x27;s some really bizarre logic. Bloomberg was incredibly reliable on the other hand, and their support team responds to issues within minutes.&lt;p&gt;2) Network effects. Bloomberg messenger is the way to communicate in finance. Also, Bloomberg leverages its network to constantly monitor prices, so pricing problems are discovered REALLY quickly. It&amp;#x27;s kind of like open-sourcing security pricing monitoring.&lt;p&gt;3) Reputation. Even if you create a perfect replica of Bloomberg, would I stake my clients money on your track record? Even with a good track record, why would I not trust Bloomberg when it&amp;#x27;s the de facto standard?&lt;p&gt;4) IP? not sure about this one, but I imagine there are a lot of features baked into Bloomberg with legal protection.&lt;p&gt;5) The cost is insignificant for most of wall street.&lt;p&gt;Funny story: on a whim I interviewed with capital IQ while I was in college. They asked me to design an interface that would allow people to access financial information quickly. Having never used or seen Bloomberg, I immediately started describing a system of keyboard shortcuts, to which my interviewer responded that I was basically just describing Bloomberg terminal. Didn&amp;#x27;t get the job.</text></item></parent_chain><comment><author>cmbaus</author><text>Not all Bloomberg users are traders though, and that&amp;#x27;s where I would try to challenge them. I worked on software for many years that was used side by side with Bloomberg. Many of our customers were Bloomberg customers as well -- although our software was a bit more niche and we didn&amp;#x27;t hit the heights that Bloomberg did. But when I doubted if we were in the right business, I would look over to Bloomberg and convince myself that the money was there for the right products.&lt;p&gt;While Bloomberg has almost any conceivable piece of data in real time, what they were missing was presentation. For instance, if you wanted to make a presentation to your board which demonstrated your value as a money manager, you&amp;#x27;d have to leave Bloomberg to do it. That&amp;#x27;s how we were able to share space with them. But I&amp;#x27;ve heard rumors they are moving in this direction now.&lt;p&gt;I also agree with the author that the data is really the lynch pin. Some commonly used data can be very expensive to acquire if you are able to get it at all. For instance try finding out what stocks and weights make up the Russell 2000 index (and then legally redistribute that data). We were fortunate in that we got in the business when data vendors were willing to negotiate with small software vendors. And much of the value we offered was in those accumulated contracts.&lt;p&gt;Once those contracts are in place it is very difficult for either side to cancel them without pissing off their customers. For instance a couple years ago FactSet and Morningstar got into a spat and FactSet&amp;#x27;s contract to provide Morningstar data wasn&amp;#x27;t renewed. All hell broke loose on both sides. They made a deal. Data is pretty big chasm for a startup to cross. And users are particular about what data vendors they use, even for nearly equivalent products.&lt;p&gt;There have been some reasonable exits in the financial software business that don&amp;#x27;t get much play in the Valley. For instance BlackDiamond sold their reporting package (again presentation) to Advent in San Francisco for about $70million and eVestment has been taking on investment and growing like crazy. But neither of those companies competed head to head with Bloomberg&amp;#x27;s core business. But they are big enough markets that I could see Bloomberg wanting to grow into them.&lt;p&gt;In general, if you want a slice of the market that Bloomberg is in, I don&amp;#x27;t think it would easy to do it head on over data. You have to outflank them where they are weak, and hope to chip away at their mindshare that way.</text></comment>