Research is Finally Going Online

by Kris_Tuttle on January 13, 2011

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.]

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