Ashton Kutcher and the quants
San Francisco tech conference highlights the Hollywood star's new gossip site plus a service that gives consumers low-cost access to pricey stock research.
SAN FRANCISCO (Fortune) -- The TechCrunch conference, like the blog that puts it on, is all about startups and the unabashed energy of the new. That means, of course, that some companies debuting at the three-day conference are more ready for prime time than others.
While the jokes in Ashton Kutcher's presentation about his newly-launched Hollywood gossip site Blah Girls (blahgirls.com) were lame, the site is not. Guided by three cartoon girls, the video-heavy site is "South Park" meets TMZ, except that you can ask the cartoons questions and get a (mostly canned) response.
All very interesting if you are: a fan of Ashton, a 12-year-old girl, or a company looking to embed a product within the online video. If you're in one of those demographics, the site is worth a look. But be prepared to be annoyed in the way that Kutcher's show "Punk'd" and most of his movies are annoying, with the obvious exception of "The Guardian" (kidding, it was horrible too, but a remake with Michael Phelps....)
One of the more interesting companies so far, albeit with a horrible name, is Quant the News. If you got your MBA at Columbia, you probably could hazard a guess about what this company is trying to do.
Started by a stock trading system guy, Brett Markinson, and an artificial intelligence whiz, Ben Goertzel, Quant the News's first product StockMood (stockmood.com) analyzes an aggregated feed of news from hundreds of sources to gauge the mood of coverage for companies and their stocks. The artificial intelligence algorithms cooked up by the team digest and then determine whether the news is overwhelmingly positive, neutral, or overwhelmingly negative. That conclusion is then mapped against share price.
So why do you care? You've heard the saying, "buy on the rumor, sell on the news." StockMood attempts to bring some science to that old saw.
If a stock rises based on overwhelming optimism, and continues to rise even in the face of bad news, there is statistically a good chance that the shares are poised for a drop. Conversely, overwhelming pessimism in the face of good news means the shares could be ready for a run.
Examples from StockMood's beta site of companies the service has determined are poised for a price drop because of a surfeit of optimism include FedEx (FDX, Fortune 500), Qualcomm (QCOM, Fortune 500) and Disney (DIS, Fortune 500). Dissed stocks that are due for a little love include Dell (DELL, Fortune 500), Procter & Gamble (PG, Fortune 500) and Broadcom (BRCM).
Tracking sentiment about a company is not something new. Both Reuters and Dow Jones offer raw-sentiment data to institutional investors and hedge fund customers for a boatload of money a year. The quants in these professional financial houses then plug that data into their trading models.
What StockMood is doing is that same kind of work for those investors who don't have PhDs in linear algebra, parsing the raw sentiment results gathered from the news into simple optimism and pessimism alerts that people can use to make investing decisions.
Is StockMood predictive? Which is to say, if you follow its lead will you make a lot of money in the market? The founders certainly think so, but it's also true that if it were such a crystal ball they would probably be selling it to hedge funds and mutual funds for big bucks rather than rolling out a consumer version. A "pro" version is something they could yet do. For now, it's an interesting data point for the investing enthusiast.
The company hasn't worked out the business model yet. When it launches in a public beta in a few months, there is likely to be a small subscription or a free version and a more detailed version that has a monthly price tag, say the founders. For now they're backed with $150,000 in angel money from Los Angeles-based entrepreneur Matt Coffin, who founded lowermybills.com and sold it to Experian, and Lagovent Ventures.
Finally, there is this from the Valley's king of the angel investors, Ron Conway. Conway has invested in some 500 companies in the last few decades, including Google, Facebook, Paypal and Ask Jeeves. When asked how he values early-stage startups today, here was his response: "Valuations for startups are between $3 and $5 million. Pick a number and get going. I don't waste any time on that."