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CEOCFO CEOCFO Monthly Analyst |
"To print this page go to file and left click on print" HyperFeed Technologies – Supporting the unique needs of
individual and institutional investors Jim R. Porter Interview conducted by: Bio of CEO, Jim R. Porter has
been involved with the securities and futures industries since 1969. A former floor trader
and member of five principal exchanges, Mr. Porter has served as director on several
exchange boards. Prior to joining
HyperFeed® in 1997, he served as CEO of a large securities, futures and options clearing
firm and previously was an associate of a major derivatives trading firm. Mr. Porter has
degrees in both physics and astronomy, has served as an astrophysicist at the U.S. Naval
Research Laboratory and as a scientist in intelligence analysis for the Central
Intelligence Agency. Beginning with
its flagship datafeed, HyperFeed®, the Company applies advanced technologies to
the processing, delivery, distribution and display of financial market data. HyperFeed
takes a systems integration approach and offers customized solutions based upon the unique
needs of its clients. HyperFeed has its own suite of display applications for enterprises
and offers their ‘PC Quote’ product for consumers, in addition to being
compatible with a wide range of third-party software applications and development
platforms. HyperFeed's front- and back- end e-business solutions enable financial
institutions to offer bundled real- time market data and desktop applications via Internet
portals and Web sites. HyperFeed’s unparalleled data processing and throughput
capabilities provide clients with the mission-critical data required to achieve business
and profit objectives. Mr. Porter: “We
actually started out in the early 80’s as a firm that was involved with getting
information to the type of trader, in that particular case, that needed information
instantaneously because they were involved with trading depreciative products and were
involved in the arbitrage process. Therefore,
we really started at the very core of the business, which is getting information from the
exchanges and trading centers into the hands of the most sophisticated traders as quickly
and efficiently and as accessibly as possible. From there, we grew into a firm that began
to develop some applications that helped traders analyze their data and make decisions. Hence, many decisions support systems were built. CEOCFOinterviews: Could you tell us about any changes that
you’ve made over the past year with regards to sales and marketing? Mr.
Porter: “Back in late 1999, with the market focused on Internet companies we
looked at the possibility of spinning off our consumer business. We had adopted taking a
direction towards more focus on the institutional business as we began to see a niche for
us in that market place. CEOCFOinterviews: What technology enhancements allowed you to enter
the institutional market? Mr. Porter:
“The new technology we brought to the market place was a new level of compression to
get this massive amount of data which was growing at a massive rate into the hands of the
institutions that were struggling with problems with Band Width, and getting all of the
market information into their systems in an economical way. That really opened up another
new niche for us and began to change our focus to go after the institutional market, which
had a need for a better quality and a less expensive delivery system. The product we
started delivering in 1999 called HyperFeed 2000, which was a transition from the older
version of our Data Feed into today’s version which is a very streamlined and very
compressed data feed that delivers all of the data with less band width then any place
else than we’ve seen in the industry.” CEOCFOinterviews: Has your product pipeline been built through
research and development or acquisitions? Mr. Porter:
“Our product pipeline has really been built through a lot of our own R&D efforts.
During the most difficult times of the business, we’ve never taken our focus off the
need for R&D. Our name, HyperFeed Technology; shows that this really is a technology
company. CEOCFOinterviews: Can you tell us what areas of your company
you’ll be focusing on next for development? Mr. Porter:
“The areas we need to focus on are that we have a lot of products and we need more
resources in the marketing and sales area.” CEOCFOinterviews: Can you tell us what your plans are to revamp
sales and marketing? Mr. Porter:
“We’ve actually made a lot of those changes already. We changed the management
structure and the management of that area. We’ve been developing a new focus in that
area and the next focus will be in staffing up that area. It is a matter of resources and
resources become available, one of the areas we expect to see growing in the company next
up cycle is the market.” CEOCFOnterviews: Is most of the spending still on R&D or are
you transitioning that into marketing? Mr. Porter:
“As our revenues fluctuate in this recent market our budget for R&D hasn’t
changed, but if it does anything, it grows. We get a lot of R&D for the money. We
actually have, one of our development centers is in St. Petersburg, Russia and some really
attractive economies there. However, even more important, there is an incredible
opportunity to leverage the knowledge base that we have here in Chicago. We have not only
development skills here, we have developers that really understand our industry and really
understand our products. They in turn guide the efforts of the real sophisticated
development center like St. Petersburg to really direct and fine tune and hone those
capabilities into the higher quality product to service our customers. Therefore, it is a
big asset for us to be able to leverage our Chicago base development center with our
center in St. Petersburg.” CEOCFOinterviews: Is your product sold globally? Mr. Porter:
“We are really domestically focused because of resources. I would have to say that we
have a lot of resources in the United States, because North America is obviously a much
more available market to us at the present time. However, you will find our technology in
Korea, Israel and Brazil and we have a new part of our organization that is really
focusing on international business development. CEOCFOinterviews: Is your marketing and sales done with your own
sales team, or through partnering? Mr. Porter:
“We basically do most of our own sales and marketing, especially in the
business-to-business side, the institutional side of the market. On the consumer side of
the market, we do have some relationships, but we still rely on some of our own
PCQuote.com resources to market more to the consumer.” CEOCFOinterviews: What were the reasons for your recent selection
of AT&T as your web host? Mr.
Porter: “One reason for selecting AT&T as our web host was that we were
looking for the ability to focus on margins. We wanted to look at how we could contain our
cost and in addition to that, there is a lot of leverage to using a network like AT&T.
CEOCFOnterviews: How big is the institutional market and where do
you position yourself? Mr. Porter:
“It’s a huge market that has a lot of new concerns. One of the things that have
brought a lot of focus has been everything that is ranged from business failures among our
competitors to the events of September 11th that caused the market to decline
to cut back on a number of businesses and cost has become a very important factor. Therefore, people are looking at cost efficient
ways of getting better and better quality. CEOCFOinterviews: Can you detail the cost saving advantage of your
product? Mr. Porter:
“The cost savings that I am referring to is not created because we are lowering our
price. What is so attractive to our customers is that what you are doing is allowing them
to get more data with much less band width so there can be tremendous communication costs
savings. In addition, it’s possible to take a lot of other systems out of the middle
with our technology. Now, that does two things, it certainly gets rid of some middle costs
that have been built into the industry over a period of time. However, it does something
else, whenever you put systems in the middle you slow data down and there is that gates
that you have to get through and it builds latency into the delivery of the data, which is
really something that shouldn’t be done. CEOCFOinterviews: Does any other company offer a competitive
product to yours? Mr. Porter:
“No, we try to look at places where our competitor’s products are potentially a
problem to our clients so we’ve looked at solving those problems. A lot of times
you’ll find that a business has a hard time re-engineering because it has a tendency
to cannibalize their business, they’ve got to take a lot of systems out. You’ll
even find some quote vendors for example in our business that is still tied to hardware. You actually have to have their hardware to do a
unique thing in their business. Moreover, they may have very old hardware that hasn’t
been designed for a very long time and you would not have detected on the differences on
the delivery time back then, but now, in today’s world it’s a serious
limitation. CEOCFOnterviews: Where are you positioned in the institutional
market place currently? Mr.
Porter: “We’ve been servicing the institutional area but in a very small
niche and we’ve only seriously entered into the institutional market two years ago.
Therefore, we’re new to that and just coming on to the scene in a very serious way
now and it takes a long time for institutions to focus on that. CEOCFOinterviews: What is your revenue model? Mr. Porter:
“Our customers basically subscribe to services on a monthly basis, so it is recurring
revenue much the way a utility may be. As you use the service, you are charged on a
monthly basis. In addition, if you are redistributing the information it is on a per user
basis so a very attractive customer for us is one with a lot of customers that we can
redistribute our information to. It’s
obviously the more we can help them get that information to their customers in a cost
efficient way the more attractive we can be to them and a better service they can be to
their customers. Therefore, it’s a nice synergy between the two organizations, but it
is a subscription model. In fact, I am having
a hard time thinking of a single product that we would sell on a one-time basis.
CFO’s love that kind of model, because recurring revenue is what really keeps a
business alive.” CEOCFOinterviews: What do your customers generally spend on a
monthly basis? Mr. Porter:
On the consumer side it can range from as low as $9.95 a month for a particular
presentation of real time data all the way up to $10,000, $25,000 to $50,000 per month.
It’s a very broad range.” CEOCFOinterviews: Can we assume that it is much larger on the
institution side? Mr. Porter:
Yes, and I was actually referring from the bottom end of the consumer to not even the top
end of the institutional side.” CEOCFOinterviews: We can see why you would want to change your
focus to the institutional side then. Mr. Porter:
“You bet. The largest retail product is probably $3500 a month.” CEOCFOinterviews: Do you have the cash and credit available to
continue to build out your business? Mr.
Porter: “Actually, the business has been doing fine from a cash flow basis.
However, I would be the first to admit that we have felt the impact of the market decline,
but we did some repositioning of the firm and some downsizing during that time. We found
ourselves with a large support area without the customer who was largely what it is
designed for, the individual investor. Without having the individual investor around, a
lot of that has been downsized significantly. We adjusted the company during bad times, at
least close to the neutral side, and we are right at the area where our cash flow can now
begin to grow as we add additional business. CEOCFOnterviews: What kind of changes do you see adding quality
back in the market place today? Mr. Porter:
“When you begin to see the organizations acting more rationally, really focusing on
what is important to them and see the individual investor taking a more serious look at
investing, kind of dusting off some of the old rules, maybe pulling out the old check list
they used to use when they looked at their investments. Those are the sorts of things that
I think are adding the quality back into our market place today. CEOCFOnterviews: In closing, what would you like to say to your
current shareholders and potential investors? Mr. Porter:
“I think we’ve looked long and hard at where we want to be in the market place.
We want to be at the very base of the infrastructure of the business, the real foundation,
at the vital part of the infrastructure and that is getting information to the individual
and organizations in a cost efficient and flexible way. disclaimers |
