Quantopian Fills Up the Tank
Quantopian announced this morning that they raised $15MM in equity financing, led by Bessemer with participation from Spark, Khosla, and Wicklow Capital. Rob Stavis from Bessemer has joined the board, whose prior experience in the world of finance will be very valuable to the company going forward.
Simultaneous to the funding announcement, the company is starting to talk about what they want to be when they grow up: a networked hedge fund. The company will raise capital to back the best performing algorithms inside the platform that choose to opt-in to the fund. It’s a great model that balances all parties interests well: quants get access to Wall St-grade trading workflow tools and easier access to capital, Quantopian makes money as the underlying quants become more successful with their algorithms, and investors in the fund get a wide diversity of ideas for systematic trading from Quantopian’s global audience. It’s an exciting idea; to be clear about expectations on timing, the fund is still very early in execution — essentially idea stage. The announcement of the fund model at this time send a clear signal to Quantopian’s community of quants about the long term plans of the business.
Quantopian is blossoming. The seamless develop-test-trade workflow is strong single-player value to a quant, and the community of quants helping each other and sharing code is great multiplayer value. With a strong balance sheet, Quantopian can now invest in building their community of emerging systematic trading managers into a larger fund.
I’m incredibly impressed with the progress Fawce, Jean, and the rest of the Quantopian team have made, and I count myself very lucky to have the opportunity to work with them.
Michael Carney from PandoDaily has good extended coverage on the financing.
Walker Percy in The Moviegoer (P. 17), written in 1960.
This was my anachronism of the day.
Tech Specs of a Paper Book:
Readable with any form of light
Very high contrast display
Requires no battery power
Depending on model, lasts anywhere from five to five thousand years or more
Immersive and non-distracting user interface
Offers a spatial layout for immediate access to random information
Conforms to the standardized “page number” spec for easy reference
Supports direct interaction via pen or highlighter
DRM-free for easy lending and resale
Standards-based system not controlled by any single corporation or entity
Crash-proof and immune to viruses (though vulnerable to some worms)
Easy to learn user-interface consistent across most manufacturers
Supports very large number of colors and also black and white images
Compatible with a wide variety of note taking systems
Technology that is new is not inherently better. Technology that is old and still widely used has by definition survived a healthy Darwinian process, to the benefit of all.
Secondary Technologies and “Why Now?”
After spending a good amount of time in VC, its only natural that you’ll hear the same idea pitched again years later. Or, in its extreme, you’ll hear an idea pitched in a market that is littered with the cracked hulls of failed startups in the past. When this happens, the skeptical mind asks “Why Now?” Why will this work today when so many others have failed in the past?
Sometimes the answer is as simple as “We are better.” Team matters… at the earliest stage of investing I’d argue it matters above all else. And so as an investor you have to decide whether you think this is the team to crack the code in a historically difficult market.
But sometimes, you can come up with an answer to “Why Now?” that’s far more rational and intellectually satisfying. In one of my favorite startup talks ever, Jawad Karim (the third co-founder of YouTube that people usually forget to include in crediting YouTube’s genesis story) explains the “Why Now?” of YouTube quite rationally. He uses an argument around secondary technology and how they were the necessary foundation for YouTube’s success where previously so many other companies had failed. The talk is long, so I’ve cued it up in YouTube directly to the part where he explains “Why Now?” and secondary technologies. If you have more time, I *highly* recommend you watch the whole video because it contains countless gems of internet lore and nostalgia, along with a good analysis of the commonalities of hypergrowth companies.
Also, Liz Gannes did a tl;dr of the video back in 2006, which is a nice summary… though her link to the video in her article is broken so use mine instead.
This talk is 8 years old so I consider this my #tbt for the day even if I wasn’t there.
Paraphrased from Ajax Penumbra 1969.
I strive to build this habit regularly. It’s a real challenge, one well worth enduring.
A quote from an NYT article on Apple Pay.
"Respect and Honor…" I will remember that phrase for a long time. It’s a death knell.
Q: So, unrelated question, but I’m just curious—- What was your reaction to THE SOCIAL NETWORK movie?
A:The zero-sum world it portrayed has nothing in common with the Silicon Valley I know, but I suspect it’s a pretty accurate portrayal of the dysfunctional relationships that dominate Hollywood.
from Peter Thiel’s AMA on Reddit.
That’s the single most unintuitive thing about startups: they are almost never zero-sum. Which means you have to stop thinking about competition and instead focus internally on your own strengths and weaknesses. It’s unlike nearly all games, simulations, and learning lessons we all play growing up.