May 27, 2015
Hedgechatter is a software service that brings forward the social chatter online for investors to use as an indicator for stock options. Before Hedgechatter, no one placed the vast pool of information found online in one place. There also wasn’t an application that analyzed these social cues in order to give the user real-time insight into the general consensus about a particular stock.
Back in 2009 James Ross was working with an international VoIP company that took traffic down from the US over to Latin America. They had one particular client, a sports lounge and casino in Costa Rica, whose phone call data packet caught his eye. What he noticed was that there was a small subset of people that would call in 15-20 minutes before a game, place their bets, and win every. single. time. It was at that moment that Ross had an epiphany. If that information existed in a public space, he could find a way to capitalize it. This was the first seed planted towards what would later become Hedgechatter.
Ross confesses that he and his partners had no previous experience in the financial industry. Reminiscing a time when he both gained and lost everything he had traded in the market within one year. It was in fact their failed attempts at playing the stock game that lead these founders to believe there had to be a better way.
Traditionally, 5-10 years ago, when making trading decisions people would analyze two data sets: Fundamental Data and Technical Data. While that’s all well and good, these two data sets only deliver information AFTER the action has already happened. Hedgechatter adds a third indicator into the mix.
While listening to 3.6 million chatter messages on social media, Hedgechatter picks up cues and uses predictive analytics to detect stock market opportunities. This essentially gives the user an edge in their decision-making process, allowing them to be proactive instead of reactive. How effective is this? Between October 2013 and December 2014, Hedgechatter’s CTO Ben Benoy put the software to the test. During that time, the S&P500 had a 22.6% gain, The Hedge Fund industry as a whole had a 5.5% gain, and Benoy had a 167% gain. You can read more about his trade history here.
Hedgechatter was the winner of the Reader’s Choice poll at the Tech Cocktail Dallas Showcase back in April. According to Ross, when he and his partners first started pitching their idea, 90% of people told them it couldn’t be done because it had never been done before. We caught up with Ross to find out more about his experience with startup life and his company so far:
What’s the hardest lesson you’ve learned starting up?
Raising capital is a very long and time-consuming process.
How do you keep your team motivated?
Stay focused on the big picture. It makes the small wins feel better and helps take the sting out of the losses along the journey.
What common startup advice do you disagree with?
1) That founders shouldn’t pay themselves or that they should pay themselves very little.
If a founder can’t pay rent or afford to eat, he/she isn’t going to be doing the startup very long
2) Any advice coming from someone who hasn’t actually implemented it themselves.
People LOVE to give advice, or more accurately, LOVE to hear themselves talk. I once had someone suggest we change our model to XYZ strategy. I asked why and he said, “it would be a good fit”. I asked if he had done this strategy before in a production environment and he said, “no.” I asked where he learned of this strategy and he said, “I read it in a magazine.” Advice without substance = talk.
Best entrepreneurship book?
Think and Grow Rich. It’s a perfect blueprint on how the brain needs to think to make everything else work. There really isn’t one source with all the answers but this book helps you figure it out.
Why should we use your product?
If you’re trading in the markets you’ll need a competitive advantage, we’re the only company that offers this.
Image Credit: Flickr/Wally Gobetz
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