Software firm finds success in a super-early entry to a hot market
Back when Louis Mendelsohn first started using artificial intelligence to predict what the global financial markets would do, no one had a Siri in their pocket or an Alexa in their living room.
Mendelsohn had founded his Wesley Chapel–based company, Market Technologies, in 1979. He began experimenting with AI in the late 1980s.
“At that time, people didn’t get it,” says his son Lane Mendelsohn, 38, now president of the company. “They were scared of computers still. It really didn’t take off, not because it wasn’t a good method but because people didn’t understand it.”
Fast-forward to today: Some 30,000 customers in 140 countries use the software to inform their investment and business decisions. The firm posted $7.56 million in revenue in 2016, $7.76 million in 2017, and is on track to hit $8 million for 2018. This year, Market Technologies was ranked No. 396 on the Business Observer's Top 500.
That slow-and-steady growth is in line with the firm’s overall approach to doing business. “For us, it’s not all about revenue,” says Mendelsohn. “There are things that we do that are more for the greater good of the company and our long-term vision. There are opportunities we evaluate that would be a nice jump in revenue, but that are not good for the culture of the company. Next year is our 40th anniversary, and the reason why we’re celebrating that is our long-term mentality. That may slow down growth, but it also means we’re going to be a 50-year-old company and even 100-year-old company one day.”
Case in point: The company pays 100% of medical, dental and vision insurance costs for its 55 employees, which costs it about $400,000 a year. “It would help the company be more profitable if we cut that expense out,” says Mendelsohn. “But our culture is important. But what that means, is we need to go out and generate more business to pay for that.”
Market Technologies uses things like digital marketing to introduce VantagePoint to potential customers. So if you’re looking at stock info on, say, CNBC’s website, you might see an ad for the software. Live presentations at conferences and other events coupled with media appearances also help get the word out. “Once someone understands that what we have is so different from what’s out there, they want to hear more about it,” says Mendelsohn.
Most of the information currently available about financial markets is based on the past, says Mendelsohn. VantagePoint looks forward, using AI to comb through data and find patterns to predict changes in the global financial markets in the next one to three days.
Market Technologies has invested more than $10 million in research and development during the past 10 years and plans to continue that kind of investment to stay on top of technology changes, which Mendelsohn says provides a cushion and barrier to entry for competitors. “For someone to try to replicate what we have,” he says, “they would have to have deep, deep pockets.”
The kind of AI the company uses is also more involved than what powers Alexa or Siri. “What we’re doing is deep machine learning, which is much more complex than simple speech pattern recognition,” says Mendelsohn. Virtual assistants are more about convenience, doing something a human could do but doing it faster. “What we’re doing is something that’s humanly impossible for a human to do,” he says.
‘There are opportunities we evaluate that would be a nice jump in revenue, but that are not good for the culture of the company.’ Lane Mendelsohn, Market Technologies
The software is also a tool, not a robot. “It tells a person what the market is likely to do,” says Mendelsohn. “We provide people with information that allows them to use their brains and experience and make intelligent decisions.”
Perseverance has been a key factor of the company’s success. “My dad never gave up, even when things were tough,” says Mendelsohn, who started working full time for his father’s company when he was still in high school. (Louis Mendelsohn, 70, still comes into the office daily but isn’t involved in day-to-day operations.) “There were people who said AI doesn’t work or that it was just a fad. In the hands of someone who’s not capable, it’s not going to do a whole lot. But if you give a very powerful tool to someone who can utilize it to the best of its ability, then it’s unbelievable.”
And now the company’s early adoption of AI also gives it an advantage over competitors just trying to get in the game. “Now AI is red hot,” says Mendelsohn. “But we’ve been in it the whole time, and we never backed away.”
Finding talent needed to help the business grow is always a challenge. The company attends job fairs and uses social media and word of mouth to locate potential candidates, with a focus on quality over quantity.
“We need people who are intelligent and have passion and integrity,” says Mendelsohn. “If there was one thing that would catapult our business, having more talent would definitely help. You name it, if someone has got the capability and skills, we probably have a need for it.” Specifically, says Mendelsohn, that includes marketing, R&D, sales and customer service departments.
When VantagePoint started out, it only predicted changes for commodities and future markets. It’s continued to add other financial markets over the years, getting into cryptocurrencies and cannabis stocks in 2017. But there are no plans to expand outside financial markets. “We have to keep our focus,” says Mendelsohn. “It’s very hard to be good at something; it’s even harder to be good at many things.”