SkyGrid Finds Gold In The Wisdom Of The Webs

By Carleen Hawn

If you’re like me, overwhelmed by the number of news sources you have to consume daily just to stay current (I confess to a love-hate relationship with my RSS reader), then Kevin Pomplun has a product for you: a news aggregator so clever, you don’t even have to read headlines to keep your finger on the pulse. Pomplun is the 26-year-old founder of Sunnyvale, Calif.-based SkyGrid.

Founded in 2005, SkyGrid emerges from stealth mode this week with a search tool that sifts through hundreds of web and mainstream media to show you just one thing: whether the balance of the news on a public company is good or bad, and how the “mood” is changing. Naturally, hedge fund managers are eating it up.

Here’s a dashboard screen shot, following a search for stories on Apple - click to enlarge:

At first glance, SkyGrid’s tool resembles a dense version of a Bloomberg news index. But look again. To the left of each entry, SkyGrid has color-coded the headlines for you. Positive stories on Apple are identified by a green icon; negative news stories are red; neutral news stories show white.

The visual cues mean that it takes just a second to comprehend the tone of more than 50 stories all at once, without reading a single word. For the really lazy, SkyGrid offers the good, bad and neutral “news sentiment” in percentages, at top left.

Google, Yahoo and Bloomberg are all fine aggregators of content but, “you’d have to read the 8,000 headlines in your [search] results to figure out what people are thinking [about Apple], ” says Pomplun. “We accelerate the ‘wisdom of crowds.’” News from traditional papers and wire services like The Wall Street Journal or CNET appear in SkyGrid’s left column. Content from blogs (including this one) appears in the middle.

Most impressive to me is the fever chart at right. It shows the linear development of news on a company. The places where the green and red lines cross are an investor’s “buy” or “sell” opportunities. Bloomberg has fever charts, but they show actual (meaning old!) stock performance, whereas SkyGrid displays patterns in the news that will impact stock performance. (In a December research paper, a Stanford economics professor suggested that SkyGrid’s sentiment search results are indicators of “large jumps in [stock] volatility.”)

SkyGrid’s presentation is deceptively simple, but it’s backed by some serious code — its algorithm vets the data for words as well as syntax. For example, the headline “Google Will Never Lose to Microsoft-Yahoo” is understood as a “positive” Google story despite the negative word “lose.” Interpreting syntax isn’t easy and SkyGrid has applied for a patent on the “sentiment algorithm,” plus seven other aspects of its search technology, including its web crawlers.

“I have been surprised at how fast [beta] customers have made Skygrid integrated into their systems, and in some cases, mission critical,” said Tim Draper, whose DFJ Frontier Fund funded SkyGrid’s first two venture rounds, with Esther Dyson, for a total of $2.25 million, in an email (Rakesh Mathur, an investor in GigaOM, also has invested in SkyGrid.) . “I also know that this will be a trial-and-error technology, and copycats will have trouble playing catch up.”

For now, SkyGrid’s search is limited to content on companies that are publicly traded on U.S. exchanges. But Pamplun plans to expand this. He has 30 subscribers already, each of whom pay $500 a month for the service. It’s not much, but SkyGrid lives cheap. The office is above a ToGo’s sandwich shop, across the tracks from Yahoo’s glitzy Sunnyvale base camp. Pomplun says he has dozens of financial institutions in the pipeline, and he expects to be profitable by 2009. Meanwhile, he is busy raising a third round of financing, which will close next month.

Comments

[Long-ShortGuy]

This is a fantastic idea, which will make hedge funds a ton more money than the monthly fee. I wonder how it compares to Monitor 110.