Monitor110
A New York start-up that set out to filter the internet's flood of information for investors
- Founded
- 2005
- Closed
- 2008
- Lifespan
- 3 years
- Total funding
- $20 million
- Country
- United States
- City
- New York
- Sector
- Fintech
- Founders
- Jeff Stewart, Roger Ehrenberg
- Investors
- DFJ, DFJ Gotham, Acadia
- At its peak
- More than 100 trial customers at more than 60 institutions in 2008
- Cause of closure
- Product problems
What did it do?
Monitor110 built a service for hedge funds and institutional investors that scanned blogs, news and other sources on the internet and filtered out information relevant to their portfolios and investment theses. The company launched its web-based portal in March 2008 and a research report service called Alphadesk in April 2008.
Why did it shut down?
Founded in 2005, the company delayed its launch while the first version was already working, in favour of a more powerful natural language processing version, and stayed away from customers for years. According to a later assessment by Roger Ehrenberg, a two-headed structure jointly run by the technology and business sides left decisions dragging on. Appearing on the front page of the Financial Times raised expectations, and a total of $20 million was raised, including an $11 million round in 2006; Ehrenberg wrote that this abundance made it easier for bad decisions to persist. Data quality, kept low by spam and duplicate content, sparked a strategy fight inside the company that lasted for months. In June 2008 a third of the staff were laid off, and when a funding round launched in May failed to close, the company ceased operations on 15 July 2008.
The story
The idea for Monitor110 came in early 2005 from Jeff Stewart, an entrepreneur who had already founded three companies. More valuable information was being published on the internet every day, and institutional investors were struggling to access it systematically. Stewart approached Roger Ehrenberg, an executive with a Wall Street background; Stewart took on technology and product, while Ehrenberg took charge of investment, human resources and client relationships. The New York-based company's long-term goal was to become a kind of Bloomberg for the web.
By mid-2005 the first version was working, but growing spam on the internet was spoiling the results. Rather than bring the product to market, the team decided to develop a more ambitious version based on natural language processing and statistical text analysis. Meanwhile the company appeared on the front page of the Financial Times, expectations rose, and a total of $20 million was raised from investors including DFJ, DFJ Gotham and Acadia.
According to Ehrenberg's candid later assessment, the abundance of money allowed the team to stay away from customers and persist with flawed decisions. The technology team was running the product on its own, while those close to customers wanted to build a smaller but clean data set from highly reputable sources. The argument went on for months and eroded both morale and the cash pile.
The web portal finally opened only in March 2008, the Alphadesk research service followed in April, and more than 100 trial customers were signed up at more than 60 institutions. In June 2008, however, a third of the staff were laid off, and reports emerged that the company had held sale talks with Reuters. The funding round launched in May failed to close in one of the toughest quarters for venture capital. CEO Brennan Carley announced that operations had ceased as of 15 July 2008.
Lessons for founders
- Delaying launch to perfect the product also delays customer feedback; put a working first version in front of demanding customers early.
- In companies jointly run by the technology and business sides, decide from the outset who has the final say; at Monitor110 that ambiguity dragged out the strategy fight for months.
- Raising more money than you need loosens discipline; large rounds raised without proof of revenue make it easier for a company to hide from the market.
Sources
- Monitor 110 Shuttered (Business Insider, 2008-07-17)
- Monitor110: A Post Mortem (Information Arbitrage (Roger Ehrenberg), 2008-07-18)
- Monitor110: A Post Mortem (Business Insider, 2008-07-19)
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