Pokémon Go became the biggest mobile game in U.S. history in nine days. Yet, its significance goes beyond the popularity of the game. Pokémon Go provides a glimpse into a future of augmented reality. The game’s popularity could signal the onset of a new era that blends together both the real-and-virtual world. It provides businesses with innovative ways to attract clients. Restaurants have already found ways to leverage Pokémon Go to level up sales. In the tech industry, we often talk about how cloud computing enables innovation and growth. Pokémon Go is a tremendous example of how cloud computing can enable innovation and viral growth.
Unlike traditional games, Pokémon Go fuses the the digital world with the real world. Players walk around searching for Pokémon, characters also referred to as “Pocket Monsters”. Pokémon have been found all over. They are most likely in your neighborhood. They are at many popular tourist spots. A recent citing of a Pokémon in Central Park led to a stampede of people hoping to capture it.
Today, one typically pays investment managers a percentage of assets under management. What if, instead, we pay investment managers for performance? That is the vision of startup Alpha Modus. Alpha Modus has developed new investment tools that leverage cognitive cloud capabilities from IBM Watson to help investment professionals beat the market. The experience of this almost two-year-old company exemplifies how one can rapidly realize business value using the cloud.
Alpha Modus was on stage at the IBM Interconnect 2016 opening keynote. The startup believes that we should pay investment professionals for performance, or alpha. What is alpha? Alpha measures investment performance relative to a market index. An investment with a positive alpha has outperformed the market.
Investment managers seek alpha but, over the past few decades, fewer and fewer have realized it. According to research by Larry Swedroe and Andrew Berkin in their book, “The Incredible Shrinking Alpha”, roughly 20% of active managers generated alpha 20 years ago. Today, however, only 2% achieve statistically significant alpha. Considering those statistics, the investment management industry is ripe for disruption. (more…)