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FOMC Minutes Hint at 50bps Hike

Markets ended their 5 day winning streak but result season has so far been very positive. So where are markets heading since inflation is still high. Do the FOMC minutes give us any hint? Tony Nash, CEO of Complete Intelligence tells us.

This podcast is originally published at https://www.bfm.my/podcast/morning-run/market-watch/fomc-minutes-hint-at-50bps-hike

Transcript

BFM

This is a podcast from BFM 89 Nine. The business station BFM 89.9. It’s seven seven thursday the 18 August. And of course, you’re listening to the Morning Run together with Keith Kam and I’m Wong Shou Ning. Now. In about 30 minutes, we’ll be speaking to our own pie from Mong’s Hill Ventures on the Asian carbon market outlook, or the lack of one. But let’s recap how global markets closed yesterday.

BFM

Wasn’t such a good day for Wall Street. It ended a five day winning streak with the Dow down 0.5%. The SNP 500 down 0.7%. Net site was down 1.3%. All these follow the release of retail data and the Fed July meeting minutes earlier today. Asian markets, it was a bit mixed. Nikkei was up 1.2%. Hong Kong’s Hang Seng and Shanghai’s Composite were up 0.5%. Singapore’s STI was up 0.3%. Back home, the FBM KLCI was marginally lower, 0.4% down.

BFM

So for where markets are heading, we have on the line with this Tony Nash CEO of Complete intelligence. Good morning, Tony. Now, US stocks did dip last night, but we are still far higher than what we saw in June. Earning season show that four out of five companies are either meeting or beating street expectations. But does that matter? Or is the Fed still dictating market direction.

TN

Dynamics first is we’re in the last weeks of thinly traded summer equities in the States and Europe. And so you are seeing movement on not a lot of volume. So that’s one thing we really need to consider. The other is, yes, companies have reported fairly well, but the Fed really is what people are thinking about. And the Fed, if you want to know what’s in the Fed’s mind, they’ve really been looking at the University of Michigan survey quite a lot lately, which is kind of a mainstream economic item, but it’s a little bit obscure. But there’s some conflicting data there.

So if you look at the Michigan survey, they survey current financial condition of consumers and it’s as bad now as it was in, say, 2009. So the current financial condition for consumers is not great. And then when you look at inflation uncertainty, which is also what consumers look at or the University of Michigan looks at, is very high. It’s the highest it’s been since the 1980s. So the Fed is looking at those gauges and if you looked at the Fed notes that came out today, they were a little bit dovish.

They were leaning dovish, I’ll say I won’t say they were dovish, but they were leaning more dovish than people thought. So I think traders are looking more to the Fed their September meeting, what their intentions are, rather than any specific earnings call, although Walmart was a good call, and we’ll talk about that in a second, but there are some earnings that are coming through that are helping some portions of markets.

BFM

So, Tony, are you expecting a 75 basis point hike or maybe a 50 basis point hike because swaps now are indicating or at least increasing odds of that half point hike next month.

TN

I’m leaning towards a half point hike because we are seeing things slow down. I don’t necessarily think we’re going to be in a recession that’s at the depth that people are fearing. But consumers are laden down with worries, businesses are cutting staff and so on and so forth. So I think the Fed is likely going to slow down the rate of rise of rates,.

BFM

Meanwhile, all prices have come under pressure in last few days. Is it more due to demand destruction or increasing supply coming on stream and what sort of impact do you see going forward at least in the short term?

TN

It’s both actually. There has been demand destruction and people have slowed down some of their purchases because of demand destruction. But the SPR release in the US has really provided supply that has curbed some prices. And so if you look at year on year, US. Imports of crude are down 1.7 million barrels per day and US exports are up 1.5 million barrels per day. So that’s a gap of 3.2 million barrels a day that has been added to the market. So we’ll likely see crude trade in a range or the price will be capped until that SPR release stops, which is the end of October, which is coincidentally just before midterm elections here in the US.

BFM

Okay Tony, let’s go back to the conversation early. So it was kind of mentioned which is consumer. So consumer stocks like Walmart and Home Depot reported better than expected profits. But on the flip side, Target numbers weren’t so positive. So help us make sense of this. I mean where is the consumer, US consumer? How do they feel? How are they doing?

TN

Yeah, I think a big part of that is expectations. So Walmart’s Q2 earnings, or the ones they came out with three months ago, they were really negative. They had overbought. They had overbought because of supply chain issues and a lot of other issues. Walmart has since laid off a bunch of headquarters staff, really cleaned up their supply chain issues. And so their report yesterday or two days ago was fantastic. Target’s report yesterday on a relative basis was pretty terrible because Target didn’t prepare markets as negatively three months ago. So markets were still relatively optimistic on Target. And then this morning it opened, I don’t know, 6% down or something and it recovered a lot of that loss but markets were relatively negative.

What’s interesting to note on retailers is this: retailers are pushing price hikes across to consumers. So you’ll see say a 10% rise in revenues or something on quarter for example, but only a 1% rise in volumes. So what that translates to is retailers are passing along price hikes to consumers. So for those retailers who have the power to pass along price hikes, they will do well. Those who can’t pass along price hikes, they will have a really hard time.

BFM

And then the tech heavy Nasdaq has jumped 23% from June’s lows, perhaps driven by cheaper valuations and optimism that growth is back in fashion with inflation in check. Are you like the street, which believes the story except for Intel, which is still underwater?

TN

Well, I wish growth was back in vogue. I mean, we can look at everything from, say, VC to Meta to see that there’s still a lot of skepticism around growth in tech and chip firms like, say, Micron, which are still way down compared to a few months ago. So Meta, as I mentioned, Meta is still underwater from June, and it’s trading about half the level it did a year ago. Amazon is up 40% from its June lows, which is huge, but it’s still down from a year ago.

Although things are in a relatively better place than they were a few months ago, they’re still down on year, and that’s really hurting. A number of the tech. Valuations still seem stretched. I think some things really need to play through the economy. And if you look, for example, at ad space with, say, Netflix soon to be offering ad based business model and a number of other kind of ad supply coming on the market, a lot of the tech plays like Meta and Twitter and other guys who are ad based models. They will have headwinds as they try to raise if they try to raise their revenue guidance.

BFM

All right, thank you for your time. That was Tony Nash, CEO of Complete Intelligence, warning us that growth may not still be invoked at the moment and that he’s expecting a 50 bps hike at the next FOMC meeting, actually, as opposed to 75 basis points because it looks like the US. Economy is beginning to slow.

BFM

Well, the Feds did say that they’re still committed to raising interest rates because, well, let’s face it 8.5%.

In a distance, big, far off distance by talking about us without cisco, which is actually the biggest maker of machines that run the Internet, did have a pretty good set of results for fourth quarter, and it beat street expectations and provided better than expected forecast for the coming year. Earnings were at $83 per share. Net income decreased, however, by 6% to $2.8 billion.

And revenue was at $13.1 billion, which was slightly higher than what analysts had been expecting. Cisco’s numbers generally topped estimates the company is still struggling to grow. The tech world is rapidly shifting to cloud and subscription software and away from buying physical boxes, which is what Cisco is known for. Right now, Cisco stock price is down 24% this year.

Yeah, but if you look at the street, right, I think that’s reflecting why the share price hasn’t done well. It’s somewhat mixed 14 buys, 16 holes, one sell. Consensus target price for the stock, $52.91. Close at 05:00 P.m. In us at 46.66. Now, something that we mentioned just a few seconds ago, it’s Target. Now, they released their second quarter results. Profits fell nearly 90% from a year ago. But I get the sense that the market is all about expectations, right? So if you guide early and you guide well, then the street doesn’t get disappointed. But it doesn’t remove the reality that your set of numbers are actually bad.

Yeah. They still have quite a huge backlog of stock inventory for them. What we are looking at is that there was deep markdowns on unwanted merchandise, which is now what everybody is worried about because eventually it’s going to bite them, right?

Yeah. They’ll have to write it off. 22 buys on this top ten holes, no sales consensus. Target price for target $187.67. It closed at 05:00 PM. At 175. USD $34. But up next, we’ll be speaking to David Thio on DBKL’s new housing renovation rules. Stay tuned for that. BFM 89.9 you have been listening to.

Categories
Podcasts

Amidst Volatility, Boring is Good

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/us-fed-interest-rates-inflation-earnings-consumer-sentiment on June 9, 2022.

US markets remained volatile and on a downward trend as inflation concerns heightened. With that, the US consumer is beginning to feel the pinch of rising food and energy prices. What then does this mean for earnings in the coming quarters and has this been priced in? Our CEO and founder, Tony Nash answers these questions.

Show Notes

WSN: BFM 89 nine is seven o’ six Thursday the 9 June. And of course you’re listening to the morning run. I Wong Shou Ning together with Philip See. Let’s have a quick recap on how good global markets closed yesterday.

PS: US markets closed in the red. The Dow was down .8% SMP 500 down 1.1%, Nasdaq down zero. 7%. Whereas over in Asia it’s been a mixed bag. The Nikki was up 1%, Hong Sang up 2.2%. China composite up zero 7%. I think on the back of China easing a bit on the tech regulatory concerns. However, in Southeast Asia, Singapore is down 0.2%. FBM KLCI also down.

WSN: .1% so for some analysis on what’s moving markets, we speak to Tony Nash, CEO of Complete Intelligence. Good morning, Tony. Please help us understand what is happening in US markets because it is another red day today. Why are markets so choppy this Thursday?

TN: I think people are awaiting the CPI print what’s going to happen with the inflation announcement because that number really helps to indicate if the Fed will accelerate their plans of tightening. So if the CPI runs hot, then we’ll see them accelerate potentially. If it comes in as expected, then they’ll stick with the plan that they’ve got.

PS: So the plan is to 50 basis point hikes. If you see it move higher, are you talking about it hitting 75 or like extending it for a third 4th hike?

TN: If it’s higher, we could potentially see it hit 75 maybe in June or July. But certainly we’re looking at another hike in September that’s probable right now and then maybe a 25 basis point in November. So let’s say we saw come in at nine or something like that for a developed economy like the US. These are people who normally look at inflation, 1%, one and a half percent. So 9% inflation is just something that people have not seen for a long time. And so this is really damaging to people. Wages are not very flexible here. And so I’m sure from the Malaysian perspective, you see that it’s damaging people here in the US and it actually is because wages are not as flexible here as they are in other parts of the world. So if we see CPI come in high, then you would see the set accelerate. If it comes in at eight, let’s say less than 9%, they’ll stick with the plan they have. If it comes in lower, say seven-ish they’ll still stick with the plan they have and continue to fight inflation to get it down around 2%, maybe sometime in Q1 in 2023 or something.

WSN: Okay. So let’s stay on the topic of the US economy now. Bloomberg runs a model, runs different models actually, and they say that there’s a 25% chance of recession in the next twelve months, but a 75% chance by 2023. Do you share the same view but.

TN: A 25% chance of a recession is just a hedge. Right? I mean, that’s just saying maybe it’ll happen.

WSN: It’s a chicken call Tony. It’s like being chicken.

TN: So when you look at what a recession, two months or two quarters. Sorry. Of negative growth. Right. Well, we had a negative quarter of growth in the US, and Q one of 22. Will we have a negative quarter of growth this year? Unlikely. Or this quarter? I mean, it’s unlikely because of the reasons for negative growth in Q one are not the same reasons they would be this year or this quarter. Sorry. So going forward, I don’t necessarily think we’ll have a recession, but I think it will feel like a recession to a lot of people because over the last year, year and a half, we’ve had higher overhiring in a lot of industries like technology, overhiring where companies have been afraid they wouldn’t be able to get the talent they need. So they overhire people. They’ve paid people a lot of money. So sectors like tech will likely continue laying people off. They’ve already started, but they’ll likely reassess their wages as well as they realize that they don’t need as many people as they hired. And of course, there will be other effects if tech start laying people off more broadly. So we’ve already seen housing housing in the US.

There is effectively no new mortgage applications going through on that in the US. So the Fed’s target for housing has kind of been achieved really quickly, actually. But it doesn’t necessarily mean there’s a recession. So things will feel like there’s a recession. But I’m not sure we’ll necessarily technically be in a recession.

PS: So let’s just build on your feelings, Tony, and translate this macro numbers to earnings. What is your expectation in terms of quarter two earnings? Do you expect them to be substantially weaker and how will that translate into equity markets?

TN: Absolutely, yes. Definitely substantially weaker. I mean, look at what happened to say, Walmart and Target a couple of weeks ago when they announced their earnings, they were way down. Why? Because they had way overbought inventory and they had bought the wrong inventory. Okay. So they’re paying for that now and they’re going to have to discount to get rid of that inventory. Right. I think people in a lot of industries because of supply chain issues, they’ve overbought things. And in the meantime, preferences and markets have moved on. So they’ve overbought things and they’re going to have to get rid of a lot of inventory. I think Target and Walmart got out there very early to be able to have their equity price hit hard early. But other companies will come out in second quarter and they’ll admit the same thing. So we’ll see margins really compressed. And because of that, we’ll start to see people announce more layoffs because again, during COVID, investors were very charitable to executive teams, meaning they were telling the executive, look, just stay open, just survive as a company, do whatever you have to. Right now, we’ve got markets that are normalizing.

Investors are being more scrutinizing as they should. They’re saying, look, markets are normalizing. You have to perform like an executive team should perform. You have to perform like a company should perform. So investors and markets are going to be harder on companies in Q two.

WSN: But Tony, does this then mean that when I look at the S&P 500 index, which is probably the broadest barometer of the US economy, it’s down 13 point 65% on the year to date basis. Can we expect further weakness or has this already been priced in?

TN: I don’t think it’s been priced in necessarily. I don’t necessarily think we’re going to see another 13% down, but we always hear that things are priced in. And then when events happen, we find out they’re not priced in. I don’t think it’s priced in. I think there’s more pain to come because people are realizing that they’re basically overpaying for the price of equity. Right. In a company. And so we’re going to see pressure put on valuations, and that’s going to hurt a lot, especially in tech. So we’ve already seen pressure put on valuations in tech. And you saw companies like Facebook who are just throwing off cash still and their valuation is compressed because people have just woken up and said, look, it shouldn’t be valued at that. Right. So we’re going to see that more and more, especially in tech, but also in other sectors.

WSN: So where should we hide, Tony? Will it still be in the commodity space? I mean, oil is up 2 and a half percent this morning.

TN: At where oil is. WCI is trading at 122 right now. Brent is north of that. So it’s possible that we see another 20% rise in crude, but it’s really thin air where it is now. So I think crude price really depends on the supply side. And so can OPEC pump more? Not much. Will things in Russia resolve? Maybe probably in third quarter or something like that. Right. So we really have to look at what are central banks doing? They’re trying to ratchet down demand. Right. And so if they can successfully ratchet down demand, then that will have an impact on true prices.

PS: Tony, I would love to get your view because you’ve seen a different vantage, especially in emerging markets, particularly Southeast Asia. If you saw recently WorldBank has scaled its forecast on global growth and has even highlighted the asphalt is very much vulnerable to stack flat, even recessionary pressures. What’s your view? What’s your advantage in terms of investment in EM markets, especially in Southeast Asia?

TN: Yeah, in Southeast Asia. I mean, look, in Southeast Asia, sadly, Myanmar is going to have the toughest time for the next year or two, right? I mean, we all know the political issues there. I love Myanmar, but it’s going to continue to have the toughest time, I think of the say more developed Southeast Asian countries. I think Thailand is going to continue to have a hard time Partly because of supply chain issues. It’s kind of intermediate point and if supply chains continue to stay strained and tourism continues to be relatively slow in Asia I think Thailand is going to continue to have a tough time. I think places like Malaysia, Philippines, Vietnam, I think they’re in a better position and I don’t know that you’ll necessarily get excessive gains in those markets But I think there’s more stability and more same maturity and leadership in those markets. So if I were to look to Southeast Asia on, say, a country play, that’s where I would look. I would be really careful to look at things like excessive consumption, these sorts of things. I think for the next year or so we’re going to be looking at real stables.

What do people need to live a really boring life because we’ve had this super exciting roller coaster for the past two years and we need to get back to normal and we need to look at what are people going to consume Just to have a normal day in, day out life.

PS: Boring life then.

WSN: Yeah, boring is good.

TN: I love that. Yeah, we all need a little more of that.

WSN: Thank you so much for your time. That was Tony Nash, CEO of Complete Intelligence, saying borrowing is good, we need to get back to normality which means that what investors should be focusing on Perhaps consumer staples Versus consumer discretionary and going back to core fundamentals. Looking at valuations, I think you hit.

PS: The nail on the head core fundamentals because I think investors have given companies the past throughout the pandemic most scrutiny now whether the question will be this will show dispersion and earnings variance between those high earners and low performers Will be a big question Mark as there’s more scrutiny about how you perform in this normal, boring time.

WSN: Stay tuned. That BFM 89.9.

Categories
QuickHit

How Bain uses alternative data and AI to solve business biggest problems

Here's how Bain uses alternative data and AI to solve business biggest problems

Richard Lichtenstein of Bain & Company joins us this week to talk about advanced analytics. What is it actually and how can companies and private equity firms use this to make better business decisions? He also shares some B2C and B2B examples and use cases. Also, what are some common barriers for companies to incorporate advanced analytics to their toolset?

 

Richard Lichtenstein is an expert partner at Bain & Company in New York. He has been at Bain for 17 years and he leads their efforts around advanced analytics and private equity. To get in touch with Richard, please email him at Richard.Lichtenstein@bain.com.

 

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This QuickHit episode was recorded on September 10, 2021.

 

The views and opinions expressed in this Here’s how Bain uses alternative data and AI to solve businesses’ biggest problems QuickHit episode are those of the guest and do not necessarily reflect the official policy or position of Complete Intelligence. Any contents provided by our guest are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

Show Notes

 

TS: For people that might not be familiar with advanced analytics or what that entails, can you kind of give us an overview of what this encompasses?

 

RL: At Bain & Company, we have a team of over 50 people that thinks about just how can we use advanced analytics to serve private equity? And so what do all these people do?

 

Well, we’ve got a bunch of people scouring the world trying to find the latest and greatest and interesting data sources that we can use. And those could be B2B or B2C. And I can talk more about what those are. Right.

 

Then we have teams of data cleaners, because sometimes those data sources are really messy on credit card data, and they specialize in cleaning them and making them usable for analysis.

 

Then we have a group of data scientists who are building Python libraries that they can use to take that data and run fairly sophisticated analysis on these over and over again. So these might be looking at retention by cohort or customer lifetime value or understanding switching behavior and things of that nature.

 

Then we have a group that takes that output and builds ways to automatically turn that in slides or into tableau so that we can get that in front of clients quickly in a form that brings out the insights.

 

And then lastly, we have some people who just help other people at Bain figure out how to use all this stuff. We get about over a thousand requests a year from teams trying to figure out which tools should I use? Which data source should I use? Et cetera. And so we just have to help them figure out how to do it.

 

TS: Can you give us some of your use cases, maybe go into a little bit more detail?

 

RL: Yeah, of course. So in a way, it’s quite different for B2B and B2C, but both of them have a lot of good advanced analytics examples. If we start with B2C, in that environment, there’s a number of interesting alternative data sets that we leverage, things like credit card data, things like e-receipt data. These show us what people are buying online. Sometimes what people are buying in store, where they go. But it goes beyond some of the traditional data sources, like Nielsen and IRI, and actually shows you what customers are doing. What happens at the customer level. And that allows you to learn some really interesting things.

 

So, for example, we’ve done some work recently with a fast food restaurant chain. And they’re trying to figure out why are we losing share? We were able to see well among people who are going to your restaurant less often or stopped going, a lot of them were going to Chick-Fil-A. And this isn’t a restaurant that sells chicken. So they hadn’t really thought of them as a competitor. But they are. And that was news to them. Or we did similar work for a coffee chain, and they thought they were losing to McDonald’s on the low-end for coffee. But it turned out, actually, that Starbucks was also a threat to them on the high-end. That help them to figure out strategy. But for private equity investor in these companies, it tells them a lot about the business and where to go.

 

TS: You wrote a piece last year on like Wayfair and how they used advanced analytics to understand that it was like on the precipice of rapid growth. So what kind of other data or companies using to better understand their market?

 

RL: Yeah. The Wayfair analysis was really quite interesting. So it’s a great example here. So that’s. And in that case, it was understanding the customer behavior that we were seeing. This was early in COVID, right before the huge spike that we all know now happened. And we were just seeing people coming to Wayfair for the first time. We had never been there before, buying stuff. We were seeing people coming back with great retention. And we were able to observe these kinds of customer metrics at completely outside in.

 

And that gave our client confidence to make an investment there. One of the other ways we can use analytics there. So we’re working with, you know, another company that’s in a similar space. And so one of the things you can see with this data is because you can see what people are actually buying, you can see what they’re buying from the competition.

 

So, for example, you could see what are customers who like to shop on Wayfair buying at Overstock or buying a Target or IKEA. And then you could say, Well, if you’re Wayfairer, you then say, well, maybe we need to stock those products. Right. So maybe we should think of adding them. Or maybe we had a stock out on that product for a little bit. And that cost us a business. And so we need to think about our inventory.

 

And so you can quickly. You can quickly think about your customers differently. At the same time if you’re a brand, obviously, you can use this data to get much better analytics than you ever could about who’s buying your products. Because previously, if you’re a brand and you’re selling online, you don’t know anything about your customers. And now you can start to understand loyalty and things like that.

 

TS: Have you found any big issues for companies using advanced analytics like it’s hard to access data. It seems fairly sophisticated. So is there a barrier to understanding this kind of data and how it’s presented?

 

RL: Yeah. I mean, I would say it’s not really for the faint of heart in terms of diving into advanced analytics. If you’re an individual company or an individual private equity firm, it’s hard to really dive in to the degree that we have for a few reasons.

 

One is there’s a lot of data sources out there. If you go to one of these conferences, there are hundreds of these sources out there, and then there’s more even if you don’t even go to these conferences, right. There’s a lot of sources. It’s hard to figure out which ones are good, which ones really have sufficient sample size and data quality. And these sources also come and go.

 

Sometimes you might have a source that you really like, and sometimes they disappear or the quality degrades. And what have you. And so you need to maintain a rotating stable of sources. And you need to think a lot about sourcing them. And again, we have people whose job is just to figure that out, which is hard for an individual company to do. And then you also need armies of people to figure out how to use the data in productive ways.

 

Again, at Bain, we’ve set all that up, but there is a high fixed cost associated with it. And so I think it’s a little self-serving. But I think my view would be that if you’re a firm and you want to get your feet wet in this kind of data, you’re better off partnering with a company like us, like Bain & Company or someone else who’s already got all this figured out and see what insights are possible. What can I really learn doing this? How can this help me make smarter business or investing decisions?

 

And then once you’ve figured that out, then sort of and you got a narrower focus, then figure out how can you get that on a recurring date? Get a feed of that on a recurring basis versus trying to start from scratch.

 

TS: Right. That absolutely makes sense. Did you have anything else that you wanted to add to give us any broader scope of your company?

 

RL: Yeah. The one other thing I might mention, it’s easy to get. And I mean, I just fell into this trap. It’s easy to get sucked into the B2C examples because they’re so enticing and easy to under stand. But I do think there is a lot of exciting work and B2B that we see. And so just to give a couple of quick examples.

 

One, I think is around people analytics. So that’s an area that’s really come a long way in the last few years. And there’s a lot you can do outside and to understand at a company who works there, what those people do, what’s their turnover and how does that change? And that’s actually enabled a lot of interesting insights. Just to give an example that we did a recent diligence on a software company that served, did a complex sort of B2B type of software.

 

And the company we looked at was cloud native, and there was a legacy software provider in the space who had been there forever and was slowly developing cloud functionality.

 

And there was a big question of, well, how fast are they going to catch up? At the moment the cloud native company was ahead. But obviously, the question is could they maintain advantage forever? And so we just looked at the people data, and we saw that our target, the cloud company had a hundred people there and software engineers doing R&D, and the legacy company had 200 people doing it. And so I mean, you sort of figure, well, if one company’s got 200 people and one’s got 100, the 200 person, and it’s going to catch up at some point.

 

TS: Right.

 

RL: And I don’t know if it’s in a year or two years, but certainly within the holding period, you have to worry about them reaching parody. And that was not a super complicated insight, but one that had a big impact on thinking about the investment. And if you bought the company, what kind of investment in R&D is required? Just an example.

 

TS: I was actually I was looking at your site. What is the founder’s mentality?

 

RL: So that’s a great question. I mean, I will admit, I’m not the expert on founder’s mentality. That was a book that Jimmy Allen wrote. That’s a great book. And if you can get him on your show, he’s far more articulate on this than I am.

 

But the idea of the founder’s mentality is that, you know, founders can bring a certain sort of secret sauce to their companies and create a dynamic and innovative culture. And that once they leave, sometimes that dynamism can erode and things can become more bureaucratic and ossified. And it can be harder for companies to innovate.

 

And I think that that is actually, it’s interesting you mention that because this is actually something that’s come up in some of the work that I’ve been doing. One of the ways you can apply this data is in sourcing. So you can help a fund scan the ocean of companies out there and find, you know, of the millions and millions of companies, here’s a sector that’s interesting. And here’s a sub sector. And then within that here are companies that meet our specific thesis and so forth.

 

One type of thesis that we see sometimes is they’re interested in companies that are still led by the original founder or sometimes they’re interested in companies where the founders just left very recently. And there is an opportunity to think about the culture in a different way.

 

And we’ve actually built some tools that allow you to look at which companies have founders that have just recently left right. And that was something that at least the fund that we worked with on that, that was very exciting as they look for opportunities. So anyway, that’s the concept. And that’s at least how it fits into my world.

 

TS: I got it. It seems very interesting. And did you have anything else? We’re going to wrap this up here in a minute. So did you have anything else you wanted to add?

 

RL: No. I mean, I think we covered the main point. The main thing I would just say to people who are thinking about this is the world of alternative data is really exciting. And the insights that are possible today that just we’re not possible even a year ago.

 

So it’s really moving fast. We’re signing a new data source practically every month, at least. So it’s great. But it’s also very complicated and tricky and hard to navigate. And again, it sounds self serving. But we strongly recommend that if you’re waiting into this for the first time, you talk to people like us at Bain & Company to really understand specifically how this stuff can help, because often it’s hard to sort of just talk to a data provider. And then from that conversation, really figure out if they’re going to be the right fit. So anyway, we’re here to help, of course.

 

TS: If people want to contact you, how would they go about contacting you or.

 

RL: Sure. I mean, I’m happy to have someone reach out to me. I’m certainly here to talk to anyone who wants to think about this, how they can use alternative data. It’s Richard.Lichtenstein@bain.com is an easy way to get in touch with me. And I’m happy to talk to anyone again who wants to think about this stuff.

 

So thanks for the time, Tracy. Really appreciate it. And hope somebody out there who sees this gives me a call.

 

TS: Absolutely. Thanks again, Richard. We really appreciate everything you’ve shared with us today.

 

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