Thinknum's Simple Plan: Use Alternative Data To Change The World

By Jim Probasco

Justin Zhen and Gregory Ugwi, co-founders of Thinknum have figured out how to aggregate a massive amount of what they call alternative data from the Internet and make it available to professional investors, hedge funds, even corporations to drive business and investing decisions in a unique and powerful way.

Zhen spoke with Benzinga about Thinknum, describing the alternative data and how it can be useful to investors and companies alike.

Benzinga: How did Thinknum come into being?

Justin Zhen: I used to work at a hedge fund. My business partner, Gregory, used to work at Goldman Sachs. We actually both met in college.

We saw how difficult it was for professionals to access the type of data that’s available on the Internet. People were getting paid to go to websites and gather the data manually. It would take a couple of days.

We saw how much data was out there that could provide value to investors and others. We saw the pain points. So we quit our jobs and launched Thinknum. We’ve only been doing this for a little over a year.

So, Thinknum is a platform?

Right. Our technology indexes alternative data off the Internet for professional investors. The type of data we index is unique. Traditionally investors evaluate companies by looking at market data, corporate filings, P/E ratios, things like that.

The data we aggregate is from the data trails companies leave behind when they go on the Internet. Our technology monitors these data trails and provides unique insights into companies in real time.

How is this type of data different from the traditional data used by investors?

Take a company like Home Depot for example. With Thinknum I can quickly pull up Home Depot store locations on a map and then overlay it with locations of a competitor such as Lowes. Then I can connect this information to demographic data such as median household income by county.

With this I can determine where income is going up and which of these two companies will benefit from that because they have more stores in or near that area.

We can look at unemployment rates and see which restaurant chains are going to lose business. We can look at weather data and if it rained a lot this past quarter which companies will benefit and which will be hurt by that.

So, you’re pulling in publicly available data, aggregating and combining data sets to learn how a company can be competitive?

Sort of, with one slight correction. Although the data we collect is public, it is impossible to access in the way we present it. You would have to write code to access it.

For example, let’s say you wanted a list of all Home Depot stores. You can do it for your ZIP code but you can’t do it for the whole country without typing in every ZIP code. This is why we use technology to do the aggregating for us.

Who is Thinknum for?

Our customers are professional investors and corporations. We started with long-short hedge funds. We also work with quant funds. Those guys have a need for as much data as possible. And we work with investment banks that obviously need to do a lot of research

Finally, we work with corporations. We track a lot of data on different companies. We help corporations track data on themselves and on their competitors.

Companies don’t necessarily track their own data?

That is correct. We have access to a lot of data that companies themselves do not collect.

For example, in the consumer retail space, Michael Kors manufactures handbags, clothing and so forth. We track Michael Kors products through different retailers such as Macy’s, Nordstrom and others. Our data can show, for example, current prices for certain products at various retailer websites.

Maybe Michael Kors wants to know what the average discount is for its products on a daily basis. That’s not information that Kors has. They don’t know the price a given retailer puts on their products.

We aggregate the data and make it available. Then, if prices are going down, maybe it’s time for a style change. Products and pricing are important to manufacturers.

How does Thinknum monetize?

We charge professional investors, hedge funds and corporations to access the Thinknum platform. We also have group plans and an API available. All subscribers get access to all information.

We also have a platform for individual or retail investors. This is completely open to the public. Individual investors can use that platform and get Wall Street analysis for free.

There’s a really powerful value when something is open and available out there. We believe we can use this free area to collect all these insights in one place. It could change the world.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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