Fred Wilson recently discussed the "Golden Triangle" of megatrends currently underway in the web/tech sector, namely mobile, social, and real-time. He then gave examples of the dominant mediums in each space, namely iPhone (mobile), Facebook (social), and Twitter (real-time), and suggested that a company who can manage to ride all three megatrends will be in excellent shape. Immediately, I thought of StockTwits.
StockTwits, for those of you who do not know, is a business started by Howard Lindzon in NYC, providing active traders with an opportunity to engage in late-breaking news, research, opinion, etc. on securities. Using the Twitter platform, StockTwits tracks messages according to ticker (e.g. $C for Citigroup), so that users tracking the stock have real-time information. The tool is fairly social, allowing communities around specifc stocks to host real-time conversations. Additionally, the tool is highly mobile, although an iPhone App has not been built just yet (Howard claims the site looks great on the iPhone to begin with). Coupled with readily available real-time market feeds, this tool is a powerful alternative to traditional professional tools, such as Bloomberg, Reuters 3000 Xtra, and Thomson ONE, by providing real-time news. The company was profiled in BusinessWeek back in February (take a look here).
I can tell you from experience in working on the market data side, that a tool like this will be a major winner, once it builds enough of a userbase to be relevant. About 5 years ago, I worked with a consulting outfit, attempting to analyze and lower market data spend across several investment banks. The process was arduous, involving lots of interviewing, data analysis, and comparison shopping. In the end, we found one common thread amongst nearly the entire userbase - Bloomberg was the product of choice, not because it was substantially better technologically or even mathematically than competitors (look at the Bloomberg VWAP calculation under a microscope, and you'll find a few minor discrepancies that have been caught by our friends at Reuters), but because of the messaging features and low-latency feeds (now, mostly via Bloomberg PhatPipe). Real time messaging is a critical tool for the sell-side, seeking to communicate with the buy-side who were all using Bloomberg terminals. Of course, this lead has eroded slightly, due to the multitude of free messaging tools out there (even 5 yrs ago, ICQ and AOL Messenger) and the standard transaction protocols (FIX messaging). The real-time, low-latency news and market data feeds were just as critical, particularly for algorithmic trading, in which a millisecond can make a difference. This is where the StockTwits platform can play...
Real-time sentiment is captured using StockTwits. With enough market traction, it can claim to hold the market conversation, something our friend Jeff Parker is trying to do with FirstCoverage. As Jeff and Howard know well, he who owns the market conversation can build all kinds of powerful sentiment tools that will be highly sought by market professionals and amateurs alike.
Fairly powerful story - don't you think?