By the time these pages reach IR offices around the world in February, if information industry scuttlebutt proves correct, Microsoft will be well into its massive, $100 mn promotion of its revamped Microsoft Network online entertainment and information network. Included in the push should be the unveiling of an enhanced Microsoft Investor online trading and investment service.
It’s getting crowded out there in cyberville, nowhere more so than in the burgeoning market for online brokerage and financial information services. Besides Microsoft, players such as Data Broadcasting Corp, Quote.com, Security APL, Quicken Financial Network, a host of Web services sponsored by brokerage firms, and still others like Nasdaq’s Web site, are all clamoring for the attention of investors.They all want affluent online literates with ample investment portfolios to choose them as their primary provider of market information, usually as a means either of holding your trading account or selling your upscale presence to advertisers.
A growing audience would naturally be expected to attract more competing offerings. By year’s end, pundits say, some 1.2 mn investors worldwide will be using online brokerages to manage their portfolios, up from about 800,000 at the end of 1996. And millions more will be pointing their Web browsers – or have them pointed automatically – to track stock prices and gather information and advice. But with two-ton elephant Microsoft always hungry for dominance, can a host of smaller fries keep up?
Mark Torrance, for one, professes not to be overly worried. To the early pioneer in the online stock market information game, he says, goes user loyalty and market share. That gives the flexibility to invest in added-value services that spell differentiation from the pack. And that’s where the IRO comes in.
But first, some background. Mark Torrance’s story is basically one of a smart guy going commercial. In 1993, at just 24 and still a graduate student at Massachussets Institute of Technology’s artificial intelligence lab, Torrance wrote the software to launch the MIT Experimental Stock Market Service, the first automated Web service that took stock market share prices and put them into graph form. Without any marketing effort, the service became popular with serious Web enthusiasts, and a handful of companies linked their IR-geared home pages to Torrance’s site at MIT.
The idea came to Torrance, as is often the case, from personal observation. Married earlier that year, Torrance’s wife was given a $5,000 gift by her father, both to send the newlyweds on their journey and to promote investing skills. Via a broker family friend, the money went into a well-known mutual fund, and promptly stagnated just as the bull market was in full throttle. Of course the broker collected his commission.
‘The experience was an eye opener,’ recalls Torrance, now based in Cupertino, California. ‘I realized that the individual investor’s perception of the market is often determined by a lack of access to information. The individual assumes the professional broker is an expert simply because he has the information on call. I realized this was a question of changing perceptions to change expectations, and I thought the Web was the perfect vehicle to address that.’
Gauging and altering perceptions is an intellectual challenge Torrance has spent a significant amount of time pursuing. His graduate thesis at MIT focused on using natural language commands to manage robots, which someday could open up a vast new realm of, say, factory-floor artificial intelligence-empowered robotics managed by rank-and-file workers. ‘The robot’s perception of the world is different from a person’s, and my work was about how to map the differences between the two.’
Torrance, the son of a Methodist preacher, had earlier completed an undergraduate interdisciplinary program at Stanford called Symbolic Systems, which combined computer science, linguistics, philosophy and psychology. These days, Torrance sometimes ministers as a lay preacher, occasionally lecturing on the relationship between spirituality and the Internet.
One might have predicted that Torrance was headed toward a life of esoteric academic research and high-brow pontificating, had the mutual fund disappointment – and later, irate university officials – not intervened.
‘When I started the site at MIT, I simply took market information available in the public domain and filtered it through graphing software I wrote. From there, it took on a life of its own,’ Torrance explains. ‘As I watched the usage figures and realized the demand for it, I thought, I must be on to something here.’
And he wasn’t the only one to see the service’s impact. Competitive services sprang to life. MIT AI Lab administrators, on whose server the service then resided, meanwhile grew tired of the cyber traffic jams caused by steadily increasing numbers of Web users accessing the site. They asked Torrance to remove it from their computers, and hence Stockmaster.com was born as a commercial venture.
Stockmaster (www.stockmaster.com) provides free stock graphing of virtually all US-traded equities and mutual funds. Type in a company or fund name or symbol, and within a few seconds a 12-month performance chart is displayed. Stock prices are graphed against the S&P 500 trend line. Also, a fast link to Hoover’s Online company information site gives Stockmaster users a quick way to gather a basic overview of a company.
Stockmaster contracts with S&P Comstock, a leading provider of market quotes, which feeds the data stream via satellite into a server in suburban Boston. Soon, historical data and market indexes, in graph form, will be added. Due to market regulations, current stock price reports are delayed by 15-20 minutes.
Also on the development agenda, Torrance says, are subscription-based services for individuals. These include customized portfolio tracking, comparative reports and a news alert feature which will automatically send an e-mail flash if a specific stock’s price changes by, say, 10 percent in a trading session.
By the end of August 1996, some 160,000 individual graphs on specific stocks were being produced each day. By the end of December, that number had jumped to 350,000 daily. Torrance estimates that those numbers equate to some 500,000 individuals using the service on a regular basis. For the end-user, the basic stock prices and graphing remain free, with Stockmaster reaping revenues from selling online ad space.
Significantly, more than half of those individuals come to Stockmaster.com not from a commercial Internet access provider (such as America Online or one of the numerous regional services) but from within hundreds of corporate intranets (private, closed-door corporate networks housed within the Internet). Those corporations want to give their employees a fast way to track their stock prices and those of competitors, and linking them to Stockmaster.com saves them the expense of maintaining their own stock price capability.
‘So far, we’ve been focused entirely on providing information to the individual investor,’ Torrance says. ‘But the market is forcing us to rethink our mission.’
IROs, perk up. This is where you come in. With the likes of Microsoft and others battling for Web traffic, Torrance says his challenge is to find ways to add value to the original concept while maintaining the simplicity of it all.
One strategy is to position Stockmaster as something of an information gateway between investor and company. The service now offers a menu of fee-based services through which it can pump customized pages back to a corporate intranet (perhaps a daily roster of prices and comparative graphs of leading competitors) or to a company’s publicly available, IR-geared Website.
Another option is to have Stockmaster update your company’s stock price once a minute to display on your Web site, for example. Also, Stockmaster offers an automated feedback mechanism to routinely monitor shifting investor sentiment. Each stock graph page carries a survey at the bottom, asking for the user’s outlook on that stock, ranging from ‘strongly negative’ to ‘strongly positive.’ For a fee, Stockmaster will tabulate the responses and e-mail the results back to an IR office at the end of each trading day.
Like politicians who track daily polls to see how this morning’s Senate speech plays after the evening news, IROs might soon find themselves with a new tool to taste market reaction beyond Wall Street. Except Stockmaster’s poll will tell not just what the market did, but what it might do.
Still, for all the new features he’s adding, Torrance finds himself looking over his shoulder more than ever. ‘When I started this, I pretty much had it all to myself. Does it bother me that Microsoft wants to be big in this arena? Yes and no,’ Torrance says. ‘Complacency is no longer an option. This isn’t an academic exercise any more. That’s probably a good thing. It keeps me moving. My goal right now is to keep adding new features that people want. I want them to keep coming back every day. And definitely not to someone else.’
