Martin Shkreli Talks About Why Godel Terminal Is Better Than Bloomberg Terminal

Thanks a lot for having me. Super excited to dive in. Why Bloomberg has been just so successful over the last 40 years? So many people have an opinion on this. Everyone has a right to an opinion. The best opinions probably come from users, and users who have had a little bit more holistic view of Wall Street, whether they've managed a fund or they've been an investor in different software companies. If you take all of that and put it together, the simplest answer is they have a really good product. That's kind of what people forget. The second really important answer, I don't know how much I should say about this, but having done a lot of industries, invested in a lot of industries, started up in a bunch of industries, a fintech software industry is not as competitive as other industries.

Financial information software. This is software that banks and hedge funds use. The data that it's based on. That sort of dovetails in a little bit. The reason I mentioned this is if you look at sort of the first part of the answer, which is, you know, why is it a good product? There are four major terminals. We're trying to become the fifth, and we're trying to be the best of the fifth. We think we're going to do that. But of the four major terminals, only one of them has any sort of messaging system at all. Any kind of messaging: mail, direct message, instant message, voice. The only one is Bloomberg.

It's a mix of different reasons. One of the major issues in software development in general, coming as an outsider, is the role of product and how companies canvas for what they do next. Product people, unless they've been in the seat, you really need people that have been in the seat. And then hedge funds and target customers of the space, they don't want to talk to you. They want to talk about stocks. They want to focus on other things. You have to be more Jobsian than YC-in, in the sense that you have to sort of decide what they want. If you have been in the job, I spent most of the day on Wall Street. I know people who spent their entire day just talking to people. There was a great lady on Wall Street, I won't say who, who was a very successful hedge fund manager. She virtually just spent the whole day calling up people, including people like me, hardworking analysts and portfolio managers, and just, what do you like? She just basically was a fund of funds manager and she cherry-picked everyone's ideas. The people she talked to were good, she would invest more in that idea, and she would trade ideas. If you know Wall Street, it's an extremely social place, and venture capital and PE is the same. Everyone's chatting, everyone's networking. If you make a system that you want people to use for this industry, you have to include that social piece of it.

I spend less time worrying about these questions and I spend more time, let's implement it. The first feature we made in that was that, and lo and behold, it was like the most popular thing. Everyone said, I love being able to interact with other investors. That gating mechanism of price is a good thing. Bloomberg's fairly exclusive in terms of its price point. Funny thing about Wall Street is $25,000 is not exclusive, but it is a gate. Almost any amount of money is a relatively good gate. Anything not a tiny amount, anything in the thousands of dollars, I think automatically, who's going to use that? Only enterprises or very wealthy people. So I think that the features are really great, and a lot of competitors stopped at sort of a base case of features. Bloomberg just went a little further. I think that they haven't gone a lot further. The reason Bloomberg is ahead is they went a little further than those other three, but somebody could easily go a lot further. The trick, though, is it's a very big engineering task. Lots of data, lots of data maintenance, then procuring new forms of data that the street cares about and showing it to them. You know, you still have to have, I think, and this is sort of the big debate in our office, do you need the base layer substrate of every bond, every stock, every CDS, every mortgage, every everything, every country, before you can then go to that next, okay, let's further what those other guys have done? My bet is yes. I get healthy debate from my coworkers that we should just make the killer feature. I'll give you a really good example of a startup that did that. It's called Visible Alpha. Visible Alpha did one thing. This is why the financial information software industry is such a great space. Visible Alpha were a bunch of hedge fund people, and they said, you know what stinks about investing is that I want to know what Wall Street consensus is for Tesla car deliveries. There's no way to get that. If you go on Bloomberg, if you go on FactSet, the best you can get is consensus for revenue, consensus for earnings, things like that. They made the product and they sold it to S&P Global for 500 million. I don't know if 20 million went to the company. That kind of ideation, quick turnaround, Wall Street uptake, the sales cycle on Wall Street is fantastic. They love buying stuff.

You're always right. So, you know, Netflix, I love Netflix. I pay 20 bucks a month for it. They have obviously lots of people that pay 20 bucks a month for Netflix. They can aggregate content across all of those people. They have the weirdest stuff on there that I would never use. They have all these odd documentaries, like the craziest things, right? They have to cater to everyone's taste, a little bit of everyone's taste that's out there. I assume Bloomberg is similar. Most of the data sets they have, like probably by most, like 98% of data sets, like an individual Bloomberg user would never use any of those, right? But that one data set they really need, Bloomberg needs to have to keep that person happy. So far it's been just having the few more data sets than the rivals. They're sort of a lazy company. They don't do tons of innovation, but they do stay a step ahead of the rest. It takes years for Bloomberg to launch a new product. It's kind of sad.

What's interesting, I think their margins are much higher than people think. While they spend a lot of money on data, I think they are resting more comfortably than, you know, it might seem. Netflix has more competition in some ways, and they have got to stay more ahead, I think so. And the margins are a little bit lower, maybe even quite a bit lower. You have one of the things there that's really interesting. Netflix probably has this to some extent, too. Bloomberg is very tough on licensing. This is kind of like our opportunity. People kind of hate the company but love it at the same time. They have this two-year agreement that's very vigorous. They don't tell you, hey, your two years is up for renewal. If you have 10 licenses, you pay them 250 a year, and your hedge fund shrinks a little bit, you want eight licenses now. I mean, you're out of luck. It's not AWS. And that just locks them into some very weird dynamics. We're trying to change that a little bit. Where one of our machines, we have this really crazy AI, it's a vector search in essence for tick data. Nobody's ever made anything like it. It has to run on 8X H100s. This is a very, very, very expensive product. In fact, Bloomberg really couldn't afford to do it without a new line item. They don't want a new line item because if you're paying 25K, you say, well, wait, there's more stuff I'm not getting this, right? We told one hedge fund, if we wanted this for your entire firm, it would cost 7 million bucks over maybe two or 300 people. They can't innovate in some ways because of that. They have a price point, and when you lock yourself into one price point, Netflix has this, too, where they're hoping you watch as much content as possible. You know, on Bloomberg, some people don't use it, some people are locked into their system. Goldman might have 10,500 licenses that they're not using. You have these numbers games that sort of help. If all of them were using the maximum computer and the maximum data possible, I think Bloomberg would have to raise its price.

Yeah, add-ins, right.

That's what's interesting. Quants don't use Bloomberg. Venture doesn't use Bloomberg. You know, so Bloomberg missed the two biggest trends in Wall Street history. In the '90s, the quants started to emerge. They needed data, they needed software, they needed all the stuff that wasn't available. They built it themselves. They would have loved to use Bloomberg instead. Unfortunately, they dropped the ball. Mike ran for mayor, he didn't tell you where his priorities were. They just missed that wave. Then the second biggest wave was the rise of privates. I worked for a tiger cub hedge fund. I had this disagreement with my boss that we should do privates, and that, you know, companies like Facebook and so forth were probably worth investing in even though they were private. And, you know, he complained about the liquidity and the issues like that, which made sense. But the rest of the street started embracing privates, and it became this huge, huge field, and VCs. You know, the biggest VCs back in the day were a billion dollars. Now, they'll do a billion-dollar check. It's a really crazy industry, and PitchBook sort of came in to fix that, as did some other guys, Crunchbase, Preqin, others, to embrace the sort of private companies. They're still not great solutions there. We're working kind of hard on that. So I think they're this comfortable lumbering company, but you do have to be really creative. I think that's where like Visible Alpha did a killer job. You still can't get that data, I think, on Bloomberg. S&P did a great job of buying them. And there's other things like that. So we're working on both building that base layer substrate where somebody could use it for their day-to-day and replace their Bloomberg, but also the new killer features where they say, okay, this is not available anywhere else. I need this.

I'm certainly well aware of it, and guys like software engineers come work here, and they're brilliant guys, they're great at software engineering more than they are at business. They say, oh Martin, you know, you can snap your fingers and get a million customers. I say, that's not how it works. You know, I like being well known. It helps a little bit. Where it really, really, really helps is this stage of the company where it's depressed. Early stage recruiting. Recruiting for sure. Palmer Luckey and I have had some great conversations on that, where you get the true believers. That's really helpful, and they really want to work hard because they like you. They're coming to the company because they like what you talk about and they like how you do things, and you're really seeing eye to eye. What's really depressing about a software startup is you work really hard, you build software, and you have $63,000 in, and you're just banging your head against the wall. How are we going to break out? And what's amazing about DL is we've been, I wouldn't say profitable, but very close to break even since we started this product. What's amazing about that is I can kind of titrate my noise level on the product based on that. Whereas if you wanted to compete with Bloomberg, what I would do, if I wasn't who I am, for better or worse, mostly better, I would put my head down, I'd raise like $25 million, put my head down for two years, and not release a peep until two years passed. That's not really a viable approach for a lot of entrepreneurs. You're supposed to iterate, I think, in software. And if you pop open the product two years from now and nobody likes it, then you lost the opportunity to sort of course correct. There are so many graves littered with people who took that second approach because they didn't get the customer feedback. They spent six months developing such an important thing that no one really cared about. And so having some sort of market reaction is helpful. It's kind of like the old school entrepreneurs, where you don't start the company unless you know who your first ten customers are going to be. And that's not at all how things are done today. Like you go boldly into the unknown. And thankfully most of the startups in this space are people who did it. There's a company called Rogo. It was a guy who worked at one of our customers, and I think they've done relatively well. When you have that experience, it helps a lot that you can get your first couple of customers. In my case, it could be phone calls I make to enterprises, or it could be social media. That's kind of the other thing, is like we started off as almost like a prosumer product. And now because we've gotten that initial revenue from our very loyal prosumers, we can now approach enterprise and do price increases and start to think about, you know, a different TAM and a different market size.

Talking to like companies like S&P Global or others, they've even started talking about acquisitions. They said, why are you guys special? I said, it's just one reason. We have great software engineers and everything. We have great product people. We have all the stuff that's really well done, but there's one thing that sets us apart truly, which is that we actually do invest ourselves a little bit. And I almost want every engineer to come here and have a little portfolio, whether it's on Robinhood or whatever. I'm at the point where I was like, if you come in here and you don't, I'll give you money. I want you to trade because one of our front end guys, he was a tremendous front end engineer who's never invested in his life. And he's addicted to investing now. And he's like become from 10x to 100x because he now knows like what he's coding. And yeah, you've got to be like, you should be thinking as an investor. You should be thinking, okay, I bought this random company because I think it's undervalued. Great. Okay, here's my assumptions on it. Then maybe things change. It goes up and it changes a way where it's no longer undervalued. Now you think it's overvalued. You have to have some sort of interval of relooking at that. Get everyone in the organization all the way through thinking like an investor because that's who your customer is.