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Theme that emerged in this week’s email is … companies are starting to realize their internal data has significant value outside their organization.
Quote:
“The ‘easy and obvious’ wins have been captured, and ahead are more complex problems to solve with data and technology.” - Jason Derise
News Articles
Podcasts
Cool Charts
A Word From Our Sponsor: Datos
Final Thoughts (Back To School)
#1 – Jason Derise’s The Data Score published A 3-Part Series: Thriving Across the Worlds of Finance, Business, Data and Technology. August 2023.
My Take: The first of a three-part series. The three parts:
Framing the problem: why silos are not viable anymore.
What goes wrong when the worlds collide?
How to break down the silos and align around outcomes
The world is rapidly changing around us, and it is proving difficult to keep up, much less lead. There is a ton of pressure on investors to tell their LPs how they are using all this new data (AI, ML, Alt Data, LLMs, etc). The answer can’t be “nothing”.
More data. More tools. Unclear expectations. Unclear benefits. It seems the MVdP (minimally viable data products) are those that can deliver, with confidence, new insights for decision-makers to put into their existing mosaic of inputs. From here, builders of data products can develop trust become an integral part of the decision-making process. (Click for Part 2)
#2 – Doug Laney published Your Vogue New Subsidiary: A Data Company. August 2023.
My Take: Creating a separate “DataCo” to externally monetize internal company data is a huge value opportunity for many companies. These companies would possess three characteristics:
It administers all or a portion of the data assets of its parent company.
It operates as an independent entity from its parent company.
Its main goal is to maximize the utility of the parent company's data.
This is huge potential and I like the list of examples of companies that have created “DataCos” to help realize the external value of their internal data.
I have gone through this exercise with many companies and feel like a major benefit of just going through the steps is to get internal data organized and allows companies to get a sense of how and why the data can be of value.
#3 – Seattle Data Guy’s Is Everyone's Data Infrastructure A Mess?. August 2023.
My Take: Yes. The author goes into some detail on inaccurate data, multiple data sources, data source changes, data models, etc. Even the best systems have many points of potential failure. Overviews such as this one are great for real world examples of how people work with data (spoiler: most people a winging it & holding things together with the data equivalent of duct tape & rubber bands).
BONUS 1: GAO calls for enhanced oversite of blockchain, alternative data. August 2023. “GAO also suggested that banking regulators and the ‘communicate the appropriate use of alternative data in the underwriting process with banks that engage in third-party relationships with fintech lenders.’”
BONUS 2: Doug Laney’s So You’ve Got Customer, Vendor and Employee Relationship Management But Not Data Relationship Management?. August 2023. “Data Relationship Management is the process of capturing the details of all the relationships around the usage of data to drive a firm’s continued growth in knowledge.”
What else I am reading:
McKinsey’s The economic potential of generative AI. June 2023.
Handbook of Alternative Data in Finance, Volume I. July 2023. Highlighting this title, but still on my “to read” list.
Zuboff’s The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power. January 2019. Summer reading … big book, slowly making my way through it.
Data Engineering Weekly. I read this weekly.
Gartner’s How CDAOs Can Lead Upskilling Initiatives in Data Science & Machine Learning. December 2022.
Source: Magis’ Decision Making with External Data. August 2023.
My Take: This is Alex Izydorczyk’s talk at Domino Data Lab’s Rev4 Conference. Good background on hedge funds and how they use data (traditional & alternative data). This is the big question: how do decision-makers actually use this data to make better decisions. Good overview with real-world examples. I am further convinced that clear owners of good quality datasets will generate value.
Highlights (32-minute run time):
Minute 01:30 – Alex’s talk begins, some background
Minute 03:30 – background on hedge fund space & data (discretionary vs quant)
Minute 08:20 – satellite image example
Minute 09:45 – consumer transaction example
Minute 12:15 – alternative data use in other industries, beyond hedge funds
Minute 15:00 – challenges in compliance & privacy issues; pricing
Minute 17:20 – switching to AI issues
Minute 23:00 – maybe the HFs were on to something … understanding external data has real value
Minute 25:45 – where to start? Some basic suggestions
Minute 29:00 – Q&A (start with business problem, then introduce data … not start with data)
BONUS 1: Another talk from Alex via Goanna Capital Panel Series (starts at minute 09:00) … “the role of data teams at HFs identify the what is and help the PM decide what to do about it”.
BONUS 2: One more from Alex … a podcast interview with Alejandro Cremades: He Raised $62.9M To Make The World’s Economic Data Transparent
Source: EDM Council’s DataCo: Independent Data Organizations Maximizing the Value of Data. July 2023.
Check this out … this is a good one!
41-pages & worth a close review.
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Back to school.
In the next week I’ll be taking three of my kids to college & getting our 4th started in his sophomore year in high school. Emotional rollercoaster time of year!
My friend Moses Sternstein did a great job summarizing some recent trends in the world of college. What happens when Universities run the Treasury playbook?. Subscribe to his Random Walk newsletter. It’s worth reading.
College has been top-of-mind for me lately as I will continue to be knee-deep in the college scene for the next 5-7 years.
My thoughts as a parent of college-aged kids.
Everyone in my socioeconomic group seems to send their kids to college. The kids almost all at least start college. Generally, 98%+ of the kids that graduate from my kid’s high school start college the following Fall. I don’t recall seeing statistics about how many of those high school grads have earned a college degree four years later, but my guess is MUCH lower than the 98%+ that start.
My parents gave me the opportunity to go to college. I don’t remember not attending being an option. So despite my skepticism & frustration with the current process, college is something we strongly encourage our kids to do. I will report back in 5-10 years on how this goes.
The admission process feels broken. Prestigious universities are turning down >90% of the kids that apply. Far more than <10% of the applicants are qualified. Any process of deciding which kids get selected will be scrutinized & none will be deemed “fair”. The primary message I sent my kids was to not tie your ego to an admissions officer’s decision. This is tough when you want them to stretch and aspire to that “right” school, knowing it is mostly a lottery system.
The tuition is criminal. I am amazed how easily kids are loaned money. Any system that lends an 18-year old $100k+ should be outlawed. Why spend (borrow) $40-80k annually for four years to become a teacher (for example) where your starting salary will be $40-50k and max salary likely never much higher than $100k? What kind of a system is that? Sure, the math may make sense for the top-end earners, but even then, it seems like a terrible burden to put on their shoulders at such an early stage of life. And no matter how clearly you explain to an 18-year-old about the pain of a monthly loan payment, they won’t really understand until they are out on their own.
The business of college. Paying for your kid’s college is likely the second biggest investment you’ll make after buying a house. Yet, these schools are not businesses. They are not run like businesses. The huge investments made in recent years are mostly in administration and perks, not the education. Don’t expect the level communication or customer service that you’d see from a traditional business. This has been frustrating for me as a “customer”.
So as we see these schools scrambling desperately to get into the richest athletic conferences, keep in mind this is all a money & status game masked as higher learning. And we’ll keep encouraging our kids to follow this path.
What I’m watching. It will be interesting as the children born during the baby bust of 2008-2010 become college age. More than a few of these schools won’t survive. My bet is the big public institutions will be best positioned. The smaller, well-endowed private universities may shrink enrollment, masked as “tightening our standards”. The brand name academic powerhouses will continue to thrive because of huge endowments and parent’s perennial willingness to increase the odds of their kids success (and get a big chip in the parental status game). Small schools with declining enrollment will simply disappear, much to the chagrin of alumni & the local college town.
From the Back to School movie (featuring Rodney Dangerfield & a young Robert Downey Jr.) … this is generally my expression when I see the bills: