Can a couple of finance geeks save the world’s 45 trillion finance market? Well, alpha geeks Toby Segaren, author of “Programming Collective Intelligence” and Data Magnate at Metaweb Technologies, and his colleague Jesper Andersen, a specialist in data mining and social network analysis, are attempting to do just that. http://www.freerisk.org is a credit risk assessment tool in progress that could very well replace the oligopoly giants, like Moody’s and S&P. It is a simple idea, a platform that combines authoritative data, user generated data, algorithms, and a testing framework. It relies on open data (what is currently available, such as annual statements, filings, etc..) and is based on GAP and APIs that make statements, easier to read. The best part is that it allows you the opportunity to query the system across a diverse data set. While it is still in the prototype phase and therefore has a ways to go to aggragate all the information sources out there it could very well be the first transparent solution to solve one of the world’s largest economic structural issues.

AAA (triple A) is the highest credit rating a company can attain and it is a necessary requirement in raising capital. To get a rating you have to deal with one of the big three credit agencies. These oligopolies are powerful entities and gatekeepers and they have been a dominant force in making our financial system work. They have no legal requirement to report their methods of rating assignment. In fact, there is an inherent incentive for these agencies to give a higher rating because they know a company will pay more fees for the higher rating.

Lehman Brothers had a Moody’s credit rating of A2 (the second highest rating you can get). AIG had a AAA rating (the very highest). And Enron, even after their stock had tanked, and they were under investigation for accounting fraud, had the  high credit rating of Baa3.

With such low standards the systems to measure trust are clearly broken. The credit rating system based on “gaming” has created a moral outrage in our society that can not be ignored.

Our new emerging economy demands transparency, equality, and honest metrics. To ignor the power of the collective intelligence and the social media space it supports is futile.

Freerisk.org is one of the many innovative platforms that are being developed but one the investment community should take seriously. We all know there are more Enrons out there. But the idea the collective intelligence of the crowds could force them to be accountable through the scrutiny of a fairer credit system is rather appealing.

The Start of An Exciting Race

What appears to be the end, may really be a new beginning as these sailors in the Volvo Ocean race out of Boston soon discovered. In the race to the finish line sometimes we need to alter our course to stay in the race. There is the risk we could fall behind or the chance we could get a lift ahead. Whatever the case a better view is required “Right Away” !

On Thursday, May 21 I had the privilege to toast the 2009 Manitoba Women Entrepreneur Nominees. Here is my speech.

“Honoured Guests, ladies and gentlemen, friends and family, 2009 nominees. We have come together this evening as a business community to celebrate the achievements of 20 remarkable women entrepreneurs who have demonstrated what it takes to start, build and grow a business. Each one of these women is a success demonstrating the traits of:

• Resourcefulness,
• The ability to see problems as opportunities,
• An impatience with the status quo and traditional thinking,
• The capacity to get things done-often against all odds,
• An obsessive-or some would say irrational-drive to make vision a reality
• Perserverence-overcoming the insurmountable
• Resilience
• An unrelenting focus on results,
• And a need to make a “Big Impact”

This is the DNA of a Women Entrepreneur.

We are in a remarkable period of economic and societal transformation driven by a continuing stream of new technology. It is a new era, a breath taking moment in history, full of opportunity, of exhilarating energy and motivation, of hope and imagination. In this new world the woman entrepreneur plays a pivotal role as a builder and leading contributor to the creation of the new economy. Why?

By our very nature women entrepreneurs are catalysts for change. Embracing change and risk is part of our daily lives. We know how to build a company from the bottom up. How to identify an opportunity, create a plan, fuse soul with vision that attracts the right people, launch, and grow a profitable corporate entity. But most of all we understand what it takes to be an effective leader to get the job done.

Many of the old top down corporations are dying. They are poorly built, can not cope with change very easily, and they lack leadership. An article in the April issue of the Harvard Business Review says that our leading business schools are a fault for the current economic leadership crisis because they perpetuate a managerial theroy that for a company to be successful managers and shareholders need to be aligned at the hip and to ensure this, stock options need to be part of the compensation. This has created a breed of executives more interested in improving stock price than often making a necessary decision for the long term growth and profitability of the corporate entity. Well the days of the overpaid CEOs are done. The new economy is here and it is being built in part right here tonight.

Our new business world is interactive, social, transparent, and based on people. It is people coming together, united under a mission, who move mountains and generate profits. Leadership today is beyond IQ or emotional intelligence because it is based on the science of human interaction that encompasses empathy and tuning into the minds of our employees. You could call it a sort of neural WiFi bonding experience. It enables us to share and navigate our social world and detect someone else’s emotions and reproduce them. The new generation of leader persuades, empowers, collaborates and partners. Women entrepreneurs come naturally equipped with these qualities. It is who we are and what we do. And where there is good leadership there is profitability.

It is hard to believe that a year has passed since my management team assisted me in wheeling the large crate which housed the Women Entrepreneur Award back to our office. At the time I had a bit of an epiphany feeling a desire to contribute back in some way. Joining me tonight along with my daughter Sarah, are some grade 11 and 12 students from Balmoral Hall School (my old Alma Matter where I once served as School Captain. ‘Believe, Achieve, Succeed’ this is the school motto that continues today). These young women are looking forward to hearing the stories and sharing the successes of this year’s nominees – and maybe one day one of them will be up here to accept an award.

To the Nominees: This is your night to celebrate who you are and what you have achieved with your family, friends and colleagues and with those of us in the larger community who support and congratulate you.

Ladies and gentlemen please rise and raise your glasses in a toast to the 2009 Manitoba Women Entreprenur Award Nominees.”

Imagine our existence explained by a single algorithm responsible for the rules of physics and everything else, that boils down to a simple computational process of a few lines of code? Touted by some as a Google Killer, Wolfram Alpha is a new “computational knowledge engine” designed to connect searchers with exact information by combining natural language processing and the web’s vast amount of organized and computable data.

Wolfram Alpha is the brainchild of Stephen Wolfram, a British born scientific genius who at the age of 15 years published his first paper, and at 20 years obtained his PHD in theoretic physics from CalTech. By late 1981 he set out to explore the origin of complexity. His book “A New Kind of Science” is the result of his extraordinary discovery – a discovery some say as profound a discovery as the concept of gravity.

“A New Kind of Science” is a 1200 page encyclopedia chalk full of computer experiments, diagrams, photographs, and even seashells, but its findings are extraordinary. Stephen Wolfram discovered how systems by their very nature break down but that from the chaos order is created. In determining search results Wolfram Alpha thinks about all the computations that people might think about or would want to do and then identifies ways that those computations could be strung together to delivery relevancy. Wolfram Alpha offers a type of hybrid search experience between Google and Wikipedia.

Search to date has largely been based on words and phrases and algorithms created by Google and the other search engines to filter out the junk on the web. Sometimes the process works but other times we want more, and because of this search can be frustrating. With Wolfram Alpha search is not limited to answers to questions already asked. It understands the question and using math it quantifies knowledge in an understandable format to answer certain questions. But you need to know how to use it. For example if you want the answer to how to configure a particular wireless router you could get an immediate response from Wolfram Alpha without the 500 pages of commercial websites that Google would return with the same inputted search. You would still however go to Google to search what local movie theatre was showing Star Wars.

It is very early in the launch so it is difficult to determine how searchers will respond to Wolfram Alpha. As with any semantic approach to indexing the world’s data this is an continuing project of immense proportions. On the surface though, it looks like Wolfram Alpha is a niche type search alternative that will appeal to certain groups like students, researchers, lawyers or analysts. Where the technology will take off will be in the hands of mashup experts. In fact, this little search engine ‘wanna be’ has at its core a very saleable technological asset that could be the answer to the growing consumer need for a more verticalized approach to search.

Hmm…wonder who will buy it?

14.6 million small to medium sized businesses are bracing to triple their web marketing budget according to Borrell & Associates in a recent report entitled: “Main Street Goes Interactive”. While these companies have traditionally spent their advertising dollars in the Yellow Pages, Direct Mail or Coupons, they now realize they receive better, more cost-effective, immediate, and measurable results online. In fact the report says that this group invests 11% of their advertising dollars online, up from 4% three years ago. The report also indicates that local interactive marketing budgets will rise from 8% in 2008 to 18% in 2013. Unfortunately online display advertising is not popular and has seen a decline in spend of 54%.

At PCM Interactive we have seen these research trends to be true as clients have most definitely gravitated to technology-supported marketing initiatives such as web site reengineering, search marketing and customer database marketing.

Google Ad Words has been an enormous hit with this group as well, especially in these tough economic times. You pay only when someone is interested in your product or service and clicks on your ad. You can control your budget for each day, and create custom ads and landing pages for different searches. The flexibility and instant ROI is what makes it attractive.

So, with the majority of searches online its pretty tough for the old Yellow Pages to compete. Yellow Pages Publishers have, in varying degrees tried to stay in the game with online directory versions but these sites for the most part are still cumbersome for the searcher who is looking for relevancy and speed. The Yellow Pages used to be where people went to when they needed a service. Now that same searcher is going to Google (72%) and other search engines.

However, Google is not the end all and be all in search. There is still lots of room for innovation in the online space. In fact recent advances in semantic search provide alternatives to Google that are mind boggling. We are moving very quickly into Web 3.0 and as such more players are in the game trying to figure out how to filter the web. It reminds me of the old gold rush days with some guy handing out flyers and yelling; “Figure out how to filter the web and you too could be Rich!”

Well until we get there there’s some panning that needs to go on first.