Ken Book, CEO and Founder of Fluid Markets, discusses his journey from Goldman Sachs to creating a company that makes KPIs tradable. Topics include working at Goldman Sachs during COVID, fractional ownership and crowdfunding investments, importance of capital and legal paperwork, challenges of retail investor attraction, and discovering the alternative data market.
Fluid Markets aims to make key performance indicators tradable by investors, tightening the relationship between alternative data and the market.
Fluid Markets offers a solution that helps investors better understand market expectations and make more informed trading decisions by providing a clear and certain market pricing for specific KPIs.
Deep dives
Ken's founder story and the vision of Fluid Markets
Ken Book, CEO and founder of Fluid Markets, shares his journey from a summer at Goldman Sachs to the creation of Fluid Markets. The company aims to make key performance indicators (KPIs) tradable by investors, tightening the relationship between alternative data and the market. Ken explains the inspiration behind his idea, which stemmed from his experience working in the Corporate Derivatives group at Goldman Sachs, where he looked at various types of securities and structured them. He realized the potential for investors to get exposure to specific areas of investment they're interested in, instead of investing in the entire company. This led to the initial idea of creating a structure that would allow investors to invest in YouTube revenue separately from Alphabet. After several iterations, Fluid Markets settled on a futures contract model that would offer exposure to specific KPIs like revenue and earnings per share (EPS). The company is currently in talks with futures exchanges and market makers to ensure sufficient liquidity and is targeting institutional asset managers and alternative data funds as potential natural users of their products.
The value of alternative data and its fit with Fluid Markets
Fluid Markets recognizes the importance of alternative data in predicting revenue, particularly in the context of funds and investors who spend significant resources on forecasting key KPIs. Alternative data, such as transaction data, location-based data, and satellite data, can provide insights into revenue trends. However, the correlation between revenue predictions and stock market movements is not always strong. Fluid Markets aims to bridge this gap by offering a product that directly correlates with the movement of specific KPIs, allowing investors to trade based on their predictions. This presents an opportunity for alternative data vendors to measure the value of their data sets and for funds to monetize their research efforts more effectively. By providing a clear and certain market pricing for specific KPIs, Fluid Markets offers a solution that helps investors better understand market expectations and make more informed trading decisions.
The challenges of launching a new futures market
Fluid Markets acknowledges the challenges of establishing a new futures market and building sufficient liquidity. While successful futures markets often take years to develop, the company recognizes the value of early adoption and the allure of potential mispricing for market participants. To ensure liquidity and market participation, Fluid Markets is in discussions with futures exchanges and market makers. They aim to partner with high-frequency trading firms experienced in equities and futures trading to provide initial liquidity. Additionally, they are actively engaging with potential hedgers and natural users, including funds that heavily rely on alternative data for revenue forecasting. By identifying early adopters and collaborating with market participants, Fluid Markets aims to establish a successful and robust marketplace for their futures contracts.
Getting involved with Fluid Markets
For those interested in supporting or learning more about Fluid Markets, they can visit fluidinvesting.com or directly reach out to Ken Book via email at ken@fluidinvesting.com. Fluid Markets is actively seeking institutional investors, particularly funds that utilize alternative data and focus on revenue forecasting. They are looking to build a client book and identify natural users who would benefit from their futures contracts that directly correlate to specific KPIs. The company welcomes contact to discuss potential partnerships, participation, and early bird rates on a case-by-case basis.
In this episode I speak to Ken Book, the CEO and Founder of Fluid Markets, a new company that is trying to make KPIs tradeable by investors.
In our conversation we walk through Ken’s founder story, from a summer at Goldman Sachs through Y Combinator on the path to realising his vision, which when achieved will make the relationship between alternative data and the markets a great deal tighter.
If you know of an alternative data story that needs to be heard on this podcast, please do get in touch.
DISCLAIMER
This podcast is an edited recording of an interview with Kenneth Book recorded in February 2024. The views and opinions expressed in this interview are those of Kenneth Book and Mark Fleming-Williams and do not necessarily reflect the official policy or position of either CFM or any of its affiliates. The information provided herein is general information only and does not constitute investment or other advice. Any statements regarding market events, future events or other similar statements constitute only subjective views, are based upon expectations or beliefs, involve inherent risks and uncertainties and should therefore not be relied on. Future evidence and actual results could differ materially from those set forth, contemplated by or underlying these statements. In light of these risks and uncertainties, there can be no assurance that these statements are or will prove to be accurate or complete in any way.