It's just data

Alternative data is the hot topic and Deloitte recently wrote about how it is just going to be up and to the right for growth and spending. At the end of the day, alternative isn’t alternative once enough people use it. In financial services, it’s only alternative if they are selling alpha. But most data vendors want to be beta.

Beta is consistent revenue. Alpha is choppy. Here today, gone tomorrow. So many hot data companies of the past are gone now. Remember 7park which Vista acquired? Some have transformed from alpha to beta. That’s the true goal of the founders of these companies if they want to build a big company. Selling alpha is hard. It’s not sustainable. And if the data or alpha was that good, then why would the data vendor sell it?

I think alternative data is just new datasets, or its alternative because a vendor is typically selling to one customer type, but now if they sell to a new vertical its alternative. Take storage pricing data. I have met a vendor that can give you the price of storage units at almost all storage unit providers around the country daily. Part web scraping, part storage unit providers pushing prices to them. In the storage unit world, they are a normal data and analytics provider. But in financial services, for hedge funds, they are an alternative data provider. Naturally, it’s a helpful dataset for anyone publicly investing in the storage unit public companies. I would argue, this isn’t really an alternative data vendor and the vendor themselves had no idea what “alt data” was.

Lets move away from calling it alternative data. It’s emerging data or it’s really just data.