Thank you for sharing — very interesting read. Seems like an exciting journey, even if it didn't fully pan out.
One question / comment: I struggle to understand the value proposition. I work at a global consulting firm that does a lot of private equity work. I have done hundreds if not thousands of expert calls. The cost of the calls is not a huge consideration. We barely look at the price.
$1-2k for a call, for 30 calls = $45k. This represents <10% of total project fees, and we directly charge these expenses to clients. On a $500M M&A deal, that's <0.01%.
Guidepoint and AlphaSights already have transcription features built in, and they a human factor: I can call them anytime from 8am to 11pm, and they can help me with anything (from changing sourcing priorities, to scheduling the calls, to revising the screener questions). If I email them, they almost always confirm receipt within 15 minutes.
Plato seems to be solving a problem that does not exist, in market that is not price sensitive.
Do you mind sharing a bit more your initial rationale?
Hi Michael. Thanks for reading! So the value prop was targeted towards investing firms and fundamental investors who are sensitive to cost, not towards consulting firms where expert calls would be absorbed into the cost of doing business. The info about Guidepoint and AlphaSights is interesting though. What sort of experts did they have empanelled? I'm trying to see if there's an overlap with the kind of experts we had in mind.
The other thing is that we planned to create a database of transcripts which would make industry and domain knowledge searchable, avoiding the need for calls. But from calls with clients and other people in the field, we understood that this wasn't a big value-add for most people though it was advertised by Tegus that way. The cost advantage was why most investors went with Tegus.
The investment thesis seems fundamentally flawed: this is not a cost sensitive market. To be clear, as consulting firms, we 100% pass through the cost expert calls to clients. It does not impact our margins. It is not a cost of doing business.
For our clients (the investment firms you mentioned), it represents <10% of total engagement fees. Generally, PE firms 1) are not cost sensitive and 2) if they're doing their own calls, they do far fewer calls (e.g., 5 calls vs the 30+ we do).
I think that's why you only got success with someone paying out of pocket.
Guidepoint and AlphaSights have thousands of experts, from every sector. It's a bit concerning that you would ask that. I think that's challenge #2: unless you can offer the same network of experts + be meaningfully better than GLG in some sort of way, it doesn't matter the discount. It's like launching a new social media: people won't join unless you have a network, but you can't have a network unless people join.
Finally, with Tegus, I believe they offer a much broader suite of market research tools. It's not just primary research: it's a 1-stop-shop for SEC filings, financial models, etc.
It's like CapIQ or Factiva (we use those too) + GLG.
To summarize:
1. the primary value prop of Plato seems to be that it's cheaper, in a market that is not price sensitive
2. you don't have the same network as GLG or anywhere close: it's a worse product, for a lower price, likely to frustrate any PE firm customer
3. it's a point solution for primary research only
Sorry, I missed this message. You are right on some of these points but let me just connect it with our context. We weren't targeting PE firms, and we were primarily interested in Indian firms focused on fundamental investing. There are about 30 Indian funds with an AUM of more than $100M, and with a 1% expense ratio, most other firms will be operating on a tight margin. So the market is pretty cost sensitive and the firms we spoke with said they would love to have access to costs at a lower cost (if not arranged through the brokers).
One of the problems seemed to be the utility of the information – firms were interested in alpha and vetting for that was tricky. We were more interested in beta/industry knowledge and building a searchable library for domain information. After this article was published, we had a conversation with a market leader in the expert call business in India, and he confirmed that a) the TAM was small b) firms usually need some guarantee of access to alpha.
> unless you can offer the same network of experts + be meaningfully better than GLG in some sort of way, it doesn't matter the discount. It's like launching a new social media: people won't join unless you have a network, but you can't have a network unless people join.
For sure. Agree with this point, and this is what we were trying to solve.
> Finally, with Tegus, I believe they offer a much broader suite of market research tools. It's not just primary research: it's a 1-stop-shop for SEC filings, financial models, etc.
While Tegus did expand into a broader suite later, by acquiring companies like BamSEC, they started out by exclusively focusing on primary research. Our plan was to take the same route.
I partially agree with what you have to say, that we were pitching a product that didn't have a clear advantage over existing players – but price sensitivity was definitely a key point among Indian fundamental investing firms. This might be very different from PE firms and US firms.
I'm not sure if we really disagree on anything here, but I feel the environment and context we were trying to solve the problem for was slightly different.
I really loved this article! Something I thought was interesting was how you went direct to the investment funds. There’s a secondary network (mostly for private investments) that’s done through outside consulting firms, who actually choose their vendors and conduct the calls.
I think this is a real secret sauce for the incumbents. Expert calls try to strike the balance between:
1. Getting enough detailed information from the expert to be useful
2. Not getting so much to subject the client to ethical or legal scrutiny
I imagine the second part is a big barrier to new entrants - if someone screws up, you can say “GLG monitored and didn’t flag any issues.” In a corporate environment, that’s a much safer space than “I hired a new startup that didn’t flag any issues.” For a McKinsey type firm, those compliance barriers are going to make it really hard unless you’re already connected (like say, being two brothers who are veterans in the industry).
That said, if you’re building a conglomerate of financial research with Market Sentiment: I wonder if you can be your own customer? It doesn’t seem such a jump to raise a fund with the assets you’re building - but maybe that’s a future article 😁
The trust in our ability to ensure compliance does seem like a part of the equation, but we could have solved for this if there seemed to be enough interest in our value prop. Our main problem was that we were trying to sell expert calls to understand market dynamics (which would be reusable) and the real value seemed to lie in alpha (which might not be confidential, but would surely have an expiry date).
Being our own customer was definitely a possibility! One of the main reasons we picked up the project was because of the opportunity to study and learn from expert conversations across industries and generate insightful reports... Would have been exciting if it took off. Raising a fund is a topic for another day haha. We've thought about it and tossed around ideas quite a bit.
What a journey...Good job 👏. The cloning in the title reminded me of the German company, Rocket Internet, founded by the Samwer brothers. They make clones of US companies in European markets and then sell to the original.
Thanks bro! We did stumble across the story of the Samwer brothers when we were halfway through the journey and even mused that we were doing something similar. What they did was quite impressive.
Thank you for sharing — very interesting read. Seems like an exciting journey, even if it didn't fully pan out.
One question / comment: I struggle to understand the value proposition. I work at a global consulting firm that does a lot of private equity work. I have done hundreds if not thousands of expert calls. The cost of the calls is not a huge consideration. We barely look at the price.
$1-2k for a call, for 30 calls = $45k. This represents <10% of total project fees, and we directly charge these expenses to clients. On a $500M M&A deal, that's <0.01%.
Guidepoint and AlphaSights already have transcription features built in, and they a human factor: I can call them anytime from 8am to 11pm, and they can help me with anything (from changing sourcing priorities, to scheduling the calls, to revising the screener questions). If I email them, they almost always confirm receipt within 15 minutes.
Plato seems to be solving a problem that does not exist, in market that is not price sensitive.
Do you mind sharing a bit more your initial rationale?
Hi Michael. Thanks for reading! So the value prop was targeted towards investing firms and fundamental investors who are sensitive to cost, not towards consulting firms where expert calls would be absorbed into the cost of doing business. The info about Guidepoint and AlphaSights is interesting though. What sort of experts did they have empanelled? I'm trying to see if there's an overlap with the kind of experts we had in mind.
The other thing is that we planned to create a database of transcripts which would make industry and domain knowledge searchable, avoiding the need for calls. But from calls with clients and other people in the field, we understood that this wasn't a big value-add for most people though it was advertised by Tegus that way. The cost advantage was why most investors went with Tegus.
A few thoughts:
The investment thesis seems fundamentally flawed: this is not a cost sensitive market. To be clear, as consulting firms, we 100% pass through the cost expert calls to clients. It does not impact our margins. It is not a cost of doing business.
For our clients (the investment firms you mentioned), it represents <10% of total engagement fees. Generally, PE firms 1) are not cost sensitive and 2) if they're doing their own calls, they do far fewer calls (e.g., 5 calls vs the 30+ we do).
I think that's why you only got success with someone paying out of pocket.
Guidepoint and AlphaSights have thousands of experts, from every sector. It's a bit concerning that you would ask that. I think that's challenge #2: unless you can offer the same network of experts + be meaningfully better than GLG in some sort of way, it doesn't matter the discount. It's like launching a new social media: people won't join unless you have a network, but you can't have a network unless people join.
Finally, with Tegus, I believe they offer a much broader suite of market research tools. It's not just primary research: it's a 1-stop-shop for SEC filings, financial models, etc.
It's like CapIQ or Factiva (we use those too) + GLG.
To summarize:
1. the primary value prop of Plato seems to be that it's cheaper, in a market that is not price sensitive
2. you don't have the same network as GLG or anywhere close: it's a worse product, for a lower price, likely to frustrate any PE firm customer
3. it's a point solution for primary research only
Feels like Plato was doomed from day 1.
Just my opinion. And open to your thoughts!
Have a great weekend :)
Hi Michael,
Sorry, I missed this message. You are right on some of these points but let me just connect it with our context. We weren't targeting PE firms, and we were primarily interested in Indian firms focused on fundamental investing. There are about 30 Indian funds with an AUM of more than $100M, and with a 1% expense ratio, most other firms will be operating on a tight margin. So the market is pretty cost sensitive and the firms we spoke with said they would love to have access to costs at a lower cost (if not arranged through the brokers).
One of the problems seemed to be the utility of the information – firms were interested in alpha and vetting for that was tricky. We were more interested in beta/industry knowledge and building a searchable library for domain information. After this article was published, we had a conversation with a market leader in the expert call business in India, and he confirmed that a) the TAM was small b) firms usually need some guarantee of access to alpha.
> unless you can offer the same network of experts + be meaningfully better than GLG in some sort of way, it doesn't matter the discount. It's like launching a new social media: people won't join unless you have a network, but you can't have a network unless people join.
For sure. Agree with this point, and this is what we were trying to solve.
> Finally, with Tegus, I believe they offer a much broader suite of market research tools. It's not just primary research: it's a 1-stop-shop for SEC filings, financial models, etc.
While Tegus did expand into a broader suite later, by acquiring companies like BamSEC, they started out by exclusively focusing on primary research. Our plan was to take the same route.
I partially agree with what you have to say, that we were pitching a product that didn't have a clear advantage over existing players – but price sensitivity was definitely a key point among Indian fundamental investing firms. This might be very different from PE firms and US firms.
I'm not sure if we really disagree on anything here, but I feel the environment and context we were trying to solve the problem for was slightly different.
I really loved this article! Something I thought was interesting was how you went direct to the investment funds. There’s a secondary network (mostly for private investments) that’s done through outside consulting firms, who actually choose their vendors and conduct the calls.
I think this is a real secret sauce for the incumbents. Expert calls try to strike the balance between:
1. Getting enough detailed information from the expert to be useful
2. Not getting so much to subject the client to ethical or legal scrutiny
I imagine the second part is a big barrier to new entrants - if someone screws up, you can say “GLG monitored and didn’t flag any issues.” In a corporate environment, that’s a much safer space than “I hired a new startup that didn’t flag any issues.” For a McKinsey type firm, those compliance barriers are going to make it really hard unless you’re already connected (like say, being two brothers who are veterans in the industry).
That said, if you’re building a conglomerate of financial research with Market Sentiment: I wonder if you can be your own customer? It doesn’t seem such a jump to raise a fund with the assets you’re building - but maybe that’s a future article 😁
The trust in our ability to ensure compliance does seem like a part of the equation, but we could have solved for this if there seemed to be enough interest in our value prop. Our main problem was that we were trying to sell expert calls to understand market dynamics (which would be reusable) and the real value seemed to lie in alpha (which might not be confidential, but would surely have an expiry date).
Being our own customer was definitely a possibility! One of the main reasons we picked up the project was because of the opportunity to study and learn from expert conversations across industries and generate insightful reports... Would have been exciting if it took off. Raising a fund is a topic for another day haha. We've thought about it and tossed around ideas quite a bit.
What a journey...Good job 👏. The cloning in the title reminded me of the German company, Rocket Internet, founded by the Samwer brothers. They make clones of US companies in European markets and then sell to the original.
Thanks bro! We did stumble across the story of the Samwer brothers when we were halfway through the journey and even mused that we were doing something similar. What they did was quite impressive.