TechCrunch Real-time Stream Event

A few days back (yes, I am a little behind on the blogging...) I had an opportunity to attend the TechCrunch Real-time Stream conference in Redwood City. The theme was the real-time web. And as usual, I volunteered my way in to avoid paying the $99 student price. This conference was spawned due the increasing popularity of many real-time web applications that are taking over our lives, namely Twitter among other things. I personally am not a huge Twitter fan, but it is gaining a huge following lately, with all the media attention in Iran, etc...


The real-time web does not revolve solely around Twitter however. Many startups are jumping at this opportunity to providing real-time data. Real-time search has attracted a whole slew of companies trying to dominate this niche. There are also a lot of startups like NetVibes and Seesmic which are trying to congregate all the real-time data from all the different social networks and showcase it in easy-to-use application. Over the course of the conference I would estimate hearing about 100 startup names, and those only represent the prominent ones in Silicon Valley. Who knows how many have actually entered this space. Ron Conway, a prominent venture capitalist who has been known to have invested in Google, PayPal, and other big successes has estimated the entire real-time web market to be worth about $5 billion.

My views: Unlike many, I do see a monetization opportunity here. However, I also see room for only a few prominent players, Twitter being one of them. Two reasons: First reason is that right now, I think real-time is vastly over-hyped with hundreds of startups in this space. This is going to produce a lot of clutter on the web, which I cannot imagine users handling. This in turn is going to reduce the hype and need of having real-time instant updates all the time, leaving room for only a few players to monetize this space sufficiently to stay in business.

Second reason is intellectual property. There is virtually no IP in this concept. I can see there being one in real-time search but that will converge with traditional search algorithms, which Google is leading. In other domains, the winners are going to be decided because of aggressive marketing, viral-ness of the software, and UI design. Users are not going to be switching between applications doing the same thing as that will be a hassle, so whoever gets them first will win.

All-in-all, I'm not too excited about this space, though I will be keeping tabs on how things progress.

Semantic Technology Conference 2009

Over the last two days, I spent my time at the Semantic Technology Conference 2009 in San Jose, CA. I was fortunate to be in the area and managed to get a free exhibit pass AND managed to get my manager to allow me to skip work. It was a fantastic opportunity to learn more about the emerging Semantic Web, network with the key visionaries in the area, and finally provide an answer to myself to a question that hasn't been clear lately: What value does the Semantic Web and related technologies provide to the end user in the short term and long term? I will try to provide a simple answer for now (as it is easy to get lost in the technical jargon out there): The world is becoming increasingly data-driven and your data is adding to this transformation. The Semantic Web is about making your data more valuable as this transformation to an information driven environment takes place. There it is. Simple.

I will be blogging more about my findings and thoughts in this area as time allows.

MIT/Stanford Venture Lab - Mobile Computing Event

Today, I tagged along with a good friend of mine at work to an event at Stanford University sponsored by the MIT/Stanford Venture Lab. We had just found about the event that very day and were disappointed to see it was sold out. But we went anyways and realized we could "volunteer" our way in. We signed up as volunteers and had access to a huge dinner and an event with valuable information and fantastic people! Our job was simply to collect and recycle all the plastic name tags at the end of the event. Not a bad deal.

It was related to the future of mobile computing from applications, mobile operating systems, hardware needs, and venture capital outlooks and business models -- http://www.vlab.org/article.html?aid=275. It was a great opportunity to network with developers, VCs, and some big corporate representatives including VP of Developer Marketing at Palm and Blackberry Director of Developer Relations at RIM. And not to mention the free food :)

I am looking forward to future VLAB events this summer!

When is the last time I read a book, out of pleasure?

I was thinking today as I went to bed... I have been at MIT for just about a year now, and I cannot recall the last time I read a book for the sheer pleasure of learning something that caught my eye. I mean I often surf the web and absorb the latest technology and business news, but a book is a whole other medium through which, a different type of knowledge and information is conveyed. It is hard to describe. I just know that I miss that experience, which I enjoyed in high school. That being said, I think I am going to pay a visit to the library and check out some some titles which I have been hearing a lot about but never gotten to reading: Outliers by Malcolm Gladwell, The Art of War by Sun Tzu, maybe some biographies, anything that makes me curious. The next time I go to bed, I'll make sure I have something next to me to read for 20-30 mins (or even longer, depending on my interest versus sleep deprivation).

SUMA Venture Capitalist Roundtable

I am on the board of the Sloan Undergradute Management Association (SUMA) at MIT. I am organizing an event, the SUMA Venture Capitalist Roundtable, taking place on April 27th, at 7:00PM in Room 3-442 @ MIT. The goal of the event is to invite five venture capitalists from diverse industries and backgrounds to educate MIT students on the inner-workings of VC firms. Namely, this will involve educating MIT students on how a VC firm works, what are the different roles played by individuals in a VC firm, how firms value start-up opportunities, etc... The Roundtable discussion will also be followed by a brief networking session. For the entrepreneurs in the crowd, this is a great opportunity to network and ask for advice on taking your idea to the next level! The industries being represented at the Roundtable include IT, Energy, Cleantech, and Biotechnology. For the finance gurus, this is a fantastic opportunity to explore what it is like to work for a VC firm and potentially secure a job for the summer!

I would like to thank the following individuals for volunteering their time to come to MIT and educate MIT students about venture capitalism:

- Frank Andrasco, Partner, Egan Capital
- Graham Brooks, Senior Associate, 406 Ventures
- Gautam Gupta, Associate, General Catalyst
- Jhanavi Pathak, Business Associate, Romulus Capital
- Praveen Sahay, Managing Director, WAVE Equity Partners

I am eagerly looking forward to this event and encourage other students in the Cambridge area to come join us in room 3-442 @ MIT on April 27th, 7:00PM!

Swing trading on biotech

A friend of mine introduced me to something called momentum trading (also called swing trading) today and it is a pretty interesting concept. So for a quick background, there are two types of trading: swing and trend. Trend is when you are hoping that a stock would go in one direction, either up or down, over a period of time. Swing is when you are hoping the stock will just oscillate in both directions and not really go anywhere. Hence, in bear and bull market extremes, it is wiser to use a trend strategy since the stocks will tend to follow a directional trend. The key challenge with swing trading is to accurately define the market when it is going “nowhere.” This is tough.

However, an industry that came to my mind immediately after hearing this was biotechnology. I have noticed that several biotech company stocks either oscillate continuously or stay near the baseline, going “nowhere.” The reason being that many biotech companies are in the clinical trials and research phase for 5-10 years before releasing their drug. That being said, I wonder if the swing trading approach would work more often than not for the biotech industry…

From basketball to random walk theory

I was watching the 76ers game the other day and heard something in the background commentary that caught my attention. Something along the lines of… the probability of an NBA player of making a shot does not depend on whether he made the shot before that. That claim basically said the “hot hand” was irrelevant when betting on whether a player would make their next shot. To me, that claim seemed like total crap. Apparently, upon researching this a little further after the game, I learned that there was a study done on the 76ers regarding this issue which concluded that there was no correlation between past shots’ influence on future shots.

I realized that this theory was also related to the random walk theory, originally proposed Burton Malkiel in 1973 to explain stock price fluctuation in financial markets. This really got me interested. I’m not going to go into much detail but basically what this theory suggested (based on a coin flipping experiment conducted by Malkiel) is that the fluctuation in stock prices are completely random due to the efficiency of the market.

Though some economists continue to believe in this theory to this day, I feel that there are three things fundamentally wrong with this claim:

1. Efficiency of market – there is a subtle claim in Malkiel’s theory which is that stock prices fluctuate randomly “due to the efficiency of the market.” But is the market completely efficient? I don’t believe so. You have government intervention bailing out the banks, time-lags, and significant human involvement (though many things are now becoming algorithmic driven), all three of which contribute to inefficiencies. Thus, Malkiel’s theory has some holes in its assumptions.
2. Market vs. Individual stocks – this is akin to the difference between the entire NBA vs. an individual player on the court. From what I understand, Malkiel’s theory applies to the NBA (the market), and so does the shot percentages research conducted with no correlation. But Statistics 101 says averaging data, and drawing more and more general correlations masks individualized data, which might give a whole new story. Perhaps random walk theory can suggest predicting market movement is impossible as it is random, but it cannot say predicting an individual stock’s movement is random. Similarly, the research on basketball shots combined data from the NBA and hence can apply to the NBA but not the Kobe Bryant’s or Michael Jordan’s of the world.
3. Present Day Wall Street – present day Wall Street makes the money on the individual stock, the individual player. And the trillions of dollars to be made in the financial industry clearly shed light on the fact that trades are not random. Otherwise, people would not be in this industry. There is clearly intelligence involved in using the large amounts of data, sorting out the relevant bits, and drawing conclusions – betting on IPOs, arbitrage trading, momentum trading are relevant examples. Though there is always an element of uncertainty and luck, it doesn’t govern the process but instead just plays a role.
   

The 76ers won that game 98-92.

Taking advantage of over-hyped IPOs

So I was reading about startup IPOs – when a company first offers company stock to the public – the other day. This process has some interesting points: first, I’ve noticed that many of these companies try to create massive amounts of hype prior to their IPO to attract many buyers, making the stock price increase rapidly in the initial phases. But when I looked at the data of many of the stock prices six months later, most of them decreased back down do an equilibrium point with market forces kicking in.

There are several reasons why this could have occurred: once the company declares itself public, it is mandated to share its future vision, finances, and all other sorts of data, making the company vulnerable to all types of financial calculations and estimates from traders globally. This naturally allows the market to dictate the price, rather than external influences that over-hype the stock initially. Another reason, which is less subtle, is that the management team, investors, and founders usually agree to a clause which prevents them from selling any of their equity for six months after the IPO. This prevents any startup founder or high stake holder to sell their entire stock, giving the company a horrible image in the market. But after six months, more often than not, several founders and high-stake holders invariably sell part of their stock, liquidating some of their assets, allowing them to gain more financial security. Since any stake-holder selling their stock after an IPO is a bad signal, the trend mentioned above may potentially help lower market estimates of the stock’s worth.

But now, the key question is: despite the above trends, why do buyers continue to purchase stock in the very beginning of the IPO, when the stock is severely over-hyped? Wouldn’t it be wiser to short sell the stock in the initial week and make money off the equilibration phase that takes place over the next few months? And THEN, if the company shows promise, buy the stock after the equilibration price is attained?

Would love to hear your thoughts.

Wall Street and MIT

One in every three people I meet at MIT are into finance in some way or the other. Some are in market research and investment banking and others are in sales and trading... seems like making big bucks on Wall Street is the central goal for many MIT undergrads. And working at JP Morgan, Goldman, and hedge funds seem like the "hot" things to do over the summer.

I come from a background of high-tech and am fascinated by next-generation web technologies, nanotechnology, AI, and the fusion of neuroscience and computers. Frankly, I have never really considered finance as potential career path. I did write some business plans and financial statements back in high school and also participated in virtual stock market games, but didn't seem to find enough time to devote to learning the ins and outs of the financial industry at that time.

Regardless of my background, however, I feel that I should make best use of this opportunity and culture and learn more about finance and how engineering can be applied to this industry. Who knows, I might get really into this stuff? And worst case, these concepts are essential to know anyways, no matter what industry I go into.

My Story with Powerset

Ever heard of Powerset? It is a private startup I have been following for several months now. It has come up with potentially disruptive search technology based on natural language processing. This basically means that their search engine has more advanced capabilities to actually unlock the meaning encoded in ordinary human language. This seems several steps ahead of mere keyword search which Google offers. In fact, recently Powerset launched a test drive of their search technology based on Wikipedia articles. Check it out at www.powerset.com.

Anyways, in addition to Powerset's technological innovations, its team has captured my interest as well, namely its Founder & CTO, Barney Pell. I have managed to schedule a meeting with him in mid-August 2008 to discuss the future of Powerset and any advice he has for students like me planning to enter the business & technology industry. Ever since, I have been counting down days to the meeting with great anticipation. I can't wait!!

And, TODAY, I learned something that seriously made me fall of my chair. Microsoft just acquired Powerset. Wow! A company that I have been following for months with excitement has, within a day, transformed from an independent self-sustaining entity to another division within the Microsoft Live Search team...though I can definitely see advantages of making this acquisition (the abundance of resources Live Search offers, for one) I am afraid that Powerset's dynamic start-up culture and independent thinking may be compromised in the process.

More fascinating to me, however, is how fast things can change in the world of business, especially in the business of technology where the tech governs the marketplace! I will continue to follow Powerset and am keen to see how it progresses from today onwards. Plus, this will provide me with interesting talking points with Mr. Pell in August :)

IPTV and Consumer-Controlled Advertising

Recently, I came across a video where I saw Vint Cerf, VP and Chief Internet Evangelist at Google, talk about the future of IPTV and consumer-controlled advertising. I was intrigued to learn what he had to say.



Essentially, the whole idea of consumers initiating the entire advertising experience and the technology automatically being there to facilitate consumer's curiosity about a product they see is something new. Today, we are bombarded with links, banners, and all sorts of ads that don't really apply to our lives. We have habitually learned to ignore them, so even when they MIGHT help us find what we are looking for, we subconsciously choose to ignore them based on past experience. So the first step is to make ads seem as either relevant or not-clutter in the eyes of consumers. Product placement achieves this by embedding the ads INTO what we consider "important" and as a result, the ads were no longer seen as mere clutter. This way, we don't simply ignore them. Cerf's insights go one step further: in addition to us not ignoring them, we will also see these product placement ads as reliable entry points into the consumer shopping realm. We will be able to take our initial reactions of "Oh that laptop is nice..." or "Cool mp3 player" to the next level by seeing the specs, price ranges, and customer reviews, etc... simply with a press of a button (or touch to the screen!) And the best part is WE will initiate the entire process, and in the future, technology will be set in place to facilitate this.

With technologies like TIVO and consumers simply fast-forwarding through ads in online videos, product placement is becoming more and more popular. Fusing this concept with the seamless touch-screen based human-computer interaction could completely change the way consumers interact with advertising.

Google Is Great!

I am so excited to hear Google’s announcement yesterday inviting high schoolers like me to participate in this. See details here - http://code.google.com/opensource/ghop/2007-8/

Having self-learnt LAMP architecture during my 9th grade, I wish Google had initiated this contest three years back. Nevertheless, I am going to submit some very exciting stuff I’ve done recently.

Though I wish that Google gave rewards in the form of their stock rather than cash.

This is just awesome!

Why are top US schools not increasing their admitted student pool?

I am applying to most top schools this winter and have also attended receptions by all these schools in the bay area over the last 4 months. As I absorbed their great presentations and networked with the admission officers, it became clear to me that the volume of applicants to these schools has been steadily increasing over the past few years. In addition to US applicants, it appears that the rapid increase in economies in India and China is also driving significant increases in international applicants as well. Bottom line – it is increasingly getting more competitive for anyone to get into these colleges. With many colleges opting for the common app, this situation is likely to worsen further.

But what is not clear to me at all is whether it is smart for all these colleges to maintain the similar size of incoming student pool with negligible increases over the years. In my wisdom, business 101 has taught me that a greater demand (number of students applying) for a particular service warrants expansion in supply (number of students admitted).

I am noticing that this unmet demand is being accommodated by fresh investments into the education sector in developing economies like India and China – over there, government and private sectors are funding new universities every day. Recently, I met a friend of mine who has decided to pursue medicine in India because he feels that quality of education there is comparable to that in US while being less expensive. If this trend continues unchecked, I fear that today’s top schools could potentially get marginalized 15-20 years down the line.

I wish that the top US schools get more creative by satisfying the increased demands of applications. While increasing the enrollment of students (like Princeton has done this year) will be the simplest, I can understand that many schools have their own constraints. But still, there exist many other creative options. I have many ideas and would welcome inputs from others as well.

Though I know that this thought process would not benefit me as I am entering college next year, but I definitely wish that this chain of thoughts helps the incoming classes over the next few years.