Martin Shkreli on prison, beating Bloomberg, and being hated

**Auren Hoffman** (0:00)
Hello, fellow data nerds. Welcome to Summation, formerly known as World of DaaS. My guest today is Martin Shkreli. Martin is the founder of DL Software, the parent company of Godel Terminal, a Bloomberg competitor for financial data. He previously founded the biotech companies, Retrophin and Turing Pharmaceuticals, and the hedge fund MSMB Capital Management. Martin, welcome.

**Martin Shkreli** (0:23)
Hey, thanks a lot for having me.

**Auren Hoffman** (0:25)
Super excited to dive in. Talk us through why Bloomberg has been just so successful over the last 40 years.

**Martin Shkreli** (0:30)
So many people have an opinion on this. Everyone has a right to an opinion. The best opinions probably come from users, and users who have had a little more holistic view of Wall Street, whether they've managed a fund or they've been an investor in different software companies. If you take all of that and put it together, the simplest answer is they have a really good product. That's what people forget. The second really important answer, I don't know how much I should say about this, but having done a lot of industries, invested a lot of industries, start up in a bunch of industries, the fintech software industry is not as competitive as other industries.

**Auren Hoffman** (1:05)
What do you mean by the fintech software industry?

**Martin Shkreli** (1:08)
Financial information software. This is software that banks and hedge funds use.

**Auren Hoffman** (1:12)
The data that it's based on?

**Martin Shkreli** (1:14)
That sort of dovetails in a little bit. The reason I mention this is if you look at sort of the first part of the answer, which is, you know, why is it a good product?
There are four major terminals. We're trying to become the fifth, and we're trying to be the best of the fifth. We think we're going to do that. But of the four major terminals, only one of them has any sort of messaging system at all. Any kind of messaging. Mail, correct message, instant message, voice. The only one is Blooper. And that's why is that?

**Auren Hoffman** (1:39)
Because that's so obvious. You could code that up in a day.

**Martin Shkreli** (1:42)
It's a mix of different reasons. One of the major issues in software development in general, coming as an outsider, is the role of product and how companies canvas for what they do next. Product people, unless they've been in the seat, you really need people that have been in the seat. And then hedge funds and target investors, target customers of the space, they don't want to talk to you. They want to talk about stocks. They want to focus on other things. You have to be more jobsian than YCE in, in the sense that you have to sort of decide what they want. If you have been in the job, I spend most of the day on Wall Street. I know people who they spent their entire day just talking to people. There was a great lady on Wall Street, I won't say who, who was a very successful hedge fund manager.
She virtually just spent the whole day calling up people, including people like me, hardworking analysts and portfolio managers, and just, what do you like? She just basically was a fund-to-funds manager in this app. She cherry picked everyone's ideas, the people she talked to were good, she would invest more in that idea, and she would trade ideas. If you know Wall Street, it's an extremely social place. And venture capital and PE is the same. Everyone's chatting, everyone's networking. If you make a system that you want people to use for this industry, you have to include that social piece of it. Why didn't Faxit do it? Why didn't these other guys do it? I spend less time worrying about those questions. I spend more time, let's implement it. The first feature we made at Godel was that. And lo and behold, it was like the most popular thing. Everyone said, I love being able to interact with other investors. That gating mechanism of price is a good thing. Bloomberg's fairly exclusive in terms of its price point. Funny thing about Wall Street is $25,000 is not exclusive, but it is a gate. Almost any amount of money is a relatively good gate. Anything not a tiny amount, anything in the thousands of dollars, I think automatically, who's going to use that? Not only enterprises or very wealthy people. So I think the features are really great and a lot of competitors stopped at sort of a base case of features. Bloomberg just went a little further. I think that they haven't gone a lot further. The reason Bloomberg is ahead is they went a little further than those other three, but somebody could easily go a lot further. The trick though is it's a very big engineering task. Lots of data, lots of data maintenance, then procuring new forms of data that the street cares about and showing it to them, you still have to have, I think, and this is sort of the big debate in our office. Do you need the baselayer substrate of every bond, every stock, every CDS, every mortgage, every everything, every country, before you can then go to that next, okay, let's further what those other guys have done. My bet is yes. I get healthy debate from my coworkers that we should just make the killer feature. I'll give you a really good example of a startup that did that called Visible Alpha. Visible Alpha did one thing. This is why the financial information software industry is such a great space. Visible Alpha were a bunch of hedge fund people, and they said, you know what stinks about investing is that I want to know what Wall Street consensus is for Tesla car deliveries. There's no way to get that. If you go on Bloomberg, if you go on Facset, the best you can get is consensus for revenue, consensus for earnings, things like that. They made the product and they sold it to S&P Global for 500 million. I don't know if 20 million went to the company. That kind of ideation, quick turnaround, Wall Street uptake, the sales cycle on Wall Street is fantastic.