Marc Chaikin is something of a computing pioneer on Wall Street. He founded Bomar Securities in 1989 and developed the first real-time analytics workstation for stock traders and portfolio managers. Instinet Corp. acquired Bomar in 1992, and the Bomar workstation evolved into Instinet's Research and Analytics workstation. Chaikin also has developed popular analytics designed to help traders predict the price movement of securities. A former SVP and director at Instinet, today Chaikin is managing partner at Chaikin Stock Research, a start-up that provides self-directed investors with simple tools to help guide their investment decisions. Senior Editor Melanie Rodier spoke with Chaikin about his new company's use of cloud computing and how the cloud is transforming data delivery.
WS&T: What are you currently working on at Chaikin Stock Research?
CHAIKIN: Both young and old investors are disenchanted with the advice they're getting. Our value proposition is driven by a whole generation of self-directed investors who have taken control of their financial destiny. The problem is that no one is providing them with the simple decision-making tools to make investment decisions. We provide tools delivered in a simple graphic interface, distilling complex tools into something easy for the layman, enabling investors to make better investment decisions.
Our tools involve a model that reflects the potential of stock over the next six to 12 months. It's a sophisticated quantitative model looking at earnings past, present and future; technical analysis; and sentiment indicators. It distills them all into a simple display. We're also looking at a powerful sentiment scoring system that will bring to the individual investor new technology offered to institutional investors.
CHAIKIN: We see a big trend toward the use of smartphones to get information and transact through online brokerage accounts. ... But no one is giving investors tools over smartphones to help make investment decisions. We will be partnering with online brokerages and also reaching investors through regional brokerages. We will provide a workstation solution delivered via the cloud to regional brokers themselves as an enterprisewide solution, in addition to providing individual access to investors -- first through the iPhone, then the Android, then the BlackBerry.
We are currently using the FlexiSphere Cloud Laboratory to develop an iPhone application to deliver the capabilities of a full-fledged trading and market data information terminal to self-directed individual investors via their smartphones. We're using the cloud to both host the application -- some of the software -- and tap into third-party data resources [to which] FlexiSphere is giving us access. We're using it as our back-end infrastructure, without the up-front expense.
WS&T: Why are you starting with Apple's iPhone? Is it because of its broader adoption among young consumers?
CHAIKIN: Yes, but the iPhone also has huge adoption among 60-somethings. Both they and the young see it as a way to avoid sitting at a desk. Through its graphical interface, the iPhone gives us much more navigation that is intuitive. It's really a user interface.
WS&T: What do you think of the iPad?
CHAIKIN: It's interesting, particularly from a research point of view. We'll provide investors with decision-making tools, but also research tools to generate new ideas. ... We can do that on a smartphone, but I like the iPad's larger screen platform, which enables the user to do a bit more in terms of research.
WS&T: How do you define "cloud computing"?
CHAIKIN: It's a logical extension of a hosted solution from the late '90s, when Web sites were proliferating and people needed communications lines without having to worry about security. To me, cloud is an infrastructure capability that enables start-ups to focus primarily on market development as opposed to infrastructure and communications links. It's a way to rent computer capability, technology management and communications links on an as-needed basis as opposed to up-front expenditures on initial funding rounds.
WS&T: FlexiSphere CEO Tom Saleh says security in a virtual world can be superior to security in a physical space. He points out that virtualized services in a cloud can't be physically interfered with by someone who is not in the data center. Besides security, what concerns did you have when you started looking at cloud computing?
CHAIKIN: One reservation we had was whether a cloud computing company was going to take enough time to learn our business and provide a well-architected solution to enable us to grow. The pitfalls are to make sure the cloud company understands your product requirements, that the architecture is appropriate for our needs and that the company commits to service agreements. FlexiSphere is focused on financial applications to the exclusion of generic cloud offerings, which made it very appealing.
WS&T: What is the biggest benefit of cloud computing for you?
CHAIKIN: It gives us the ability to get to market much quicker, as we don't have to focus on back-end architecture and build-out as we would if we weren't using a cloud. It's a way to cut down on the expenditure needed if you're targeting the public as a user base. We're using it as our back-end infrastructure. ... By using the cloud you can target your technical resources toward product development.
I was involved in online brokerages in the late 1990s, and before then sold an analytics workstation to Instinet. In both those efforts there were huge expenditures -- servers, routers, etc. -- and huge infrastructure requirements for technical people to supervise. We're not concerned with any of that in this effort as FlexiSphere has the ability to provide us with a scalable solution.
If you contrast the old and the new ways of doing things, in the old world, you were competing with [only] Reuters, Bloomberg, etc. In the new world there are hundreds of people you're competing with every day. You have to have the ability to respond from a product point of view. Being able to focus on product development and marketing as opposed to technical infrastructure and support staff is a huge benefit. Also, having our whole infrastructure and security separate from product development has been viewed very positively by investors.