Doing the Legwork for Investors
Alpha Hat Co-Founder Richard Lai On Making It Easy to Quantify the Impact of Events
Data is at the core of this FinTech evolution, and is the oxygen of financial services. Financial data has compounding potential, leveraged effectively, to transform the industry and create new assets and value for institutions and consumers alike. FinTech startups sit at the helm of this investable opportunity. In this series, we sit down with five FinTech Sandbox alumni to dig into their development processes, best practices, and thoughts on the open data movement.
How were Chipotle’s revenues affected by Hurricane Harvey? How did Amazon’s acquisition of Whole Foods impact their foot traffic? How much time are people spending on Netflix or Hulu on a daily basis?
There are a lot of solutions on the market today that allow users to analyze market data. But for FinTech Sandbox alumni Richard Lai, co-founder of Alpha Hat, that’s not enough. How can institutional investors and analysts gain new perspectives from rich datasets that were never previously available to them?
According to Richard, what will drive the field of fintech forward is extracting more value out of the data for users by making it easy to answer targeted, specific questions — like the ones above — about particular companies or sectors. We sat down with Richard to chat about how a recent pivot is helping Alpha Hat find product-market fit, what he’s doing to grow the company, and the rise of alternative data.
Tell us a bit about Alpha Hat.
Richard: We tell stories with data. We deliver unique insights to portfolio managers and investment analysts using alternative datasets. Our goal is to empower investors with actionable information that they can’t get from traditional datasets. We do this by unlocking the value of billions of data points using our proprietary visualization and analytics platform.
What milestones really made a difference to the growth of your company?
Richard: It’s an interesting time. We recently changed our business quite a bit. FinTech Sandbox helped us pivot quickly by making it easier test ideas and move onto new ones based on feedback and data.
Our big milestones are based around getting into the market, testing the product, and understanding if there’s a fit for our product. We’ve been able to adapt our business model and process to fit what the market actually wants. That’s driving the big changes we’re making now, which I’d rather do now than a year from now. We’re learning quickly and improving fast.
What strategies will you implement over the next year to continue the growth of your business?
Richard: For us, it’s an overall strategy of nailing our messaging strategy around our core value prop of making investors more intelligent and arming them with actionable insights. We’ve learned that investors want specific answers delivered to them without having to do all of the legwork. We need to do more of the work for them. It’s not enough for a solution today to just analyze data — we need to bring out more value in the data for our customers.
That’s been our key goal, to find out what the market wants. No one needs another tool. Investors want differentiated insights and new perspectives.
APIs are evolving as an industry standard. How do you leverage these interfaces in the development of your product?
Richard: We use a lot of APIs that data providers have made available through Sandbox, such as FactSet and Thomson Reuters. That’s enabled us to move a lot more quickly. We also ingest a lot of alternative data through APIs from a range of vendors. Our job is to take all of these datasets and make sense of them for our investor clients.
What does the future of the open data movement look like?
Richard: That’s what will be really interesting. So much data is becoming available. We pull in a lot of “alternative data” like credit card transactions, geolocation data, etc. Real-time insights into consumer behavior and companies are extremely valuable, and provide a powerful opportunity for people to understand how the world is changing.
In the past, most investors saw the world in terms of quarterly updates. Now, it’s faster — you can get updated data weekly, daily, and now in near real-time. The level of detail we can get in data today is really remarkable and I think we’re just at the tip of the iceberg at harnessing data to its full potential in the investment community.
Stay on the lookout for more interviews on growth with some of FinTech Sandbox’s most interesting founders as part of the series. While you wait for the next interview, you can read some of our past interviews with edtech founders and some of Boston’s coolest alcohol companies.
There’s more! Part 2 of 5 of this “The New Faces of Fintech” series coming soon.
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