The Founding Fathers of Big Data – Thomson Reuters
By Charles W. Stryker
The first group of Founding Fathers of Big Data were entrepreneurs of the mid nineteenth century who exhibited exceptional creativity to go along with unique market conditions. In my last blog we looked back at the beginning of the business credit information industry. D&B, originally known as The Mercantile Agency, used innovations like the typewriter and carbon paper to capitalize on the rapid national expansion of business throughout the U.S.
New companies were being formed driven by the Westward Expansion of the U.S. through industrial events such as the opening of the Erie Canal and the California Gold Rush.
The completion of the Erie Canal in 1825, “spurred the first great westward movement of American settlers, gave access to the rich land and resources west of the Appalachians and made New York the preeminent commercial city in the United States. Within 15 years of the Canal’s opening, New York was the busiest port in America, moving tonnages greater than Boston, Baltimore and New Orleans combined.” *
Further, the California Gold Rush began on January 24, 1848, when gold was found by James W. Marshall. Once the news of the discovery reached the East it started a migration of 300,000 people who wanted to find their own fortune. With the migration came a commercial infrastructure that demanded business ventures and credit reporting requirements.
So businesses needed an honest intermediary to make a statement about the reputation and quality of these new businesses. During this time period, businesses typically operated at a local level only. They would get an assessment of the credit worthiness of a business just from walking by the building and talking to the owner. Or, they would talk to mutual acquaintances about past experiences. The D&B solution provided a trusted information source that enabled companies to expand their business interests beyond the local level and hence throughout the U.S.
While D&B was setting the scene for a 175 year success story, another of the Big Data Founding Fathers was making his mark in Europe. While the environments were distinctly different, the success factors were the same.
The next Founding Father for our review is Julius Reuter, the founder of Reuters News Service and currently the world’s leading news aggregator, Thomson Reuters. As with D&B, Reuters is a story of a technological solution to a business challenge – Reuters has not just survived for 175 years, the company has ascended to the top of its competitive space.
When we look at the two central drivers that underlie both success stories, a consistent theme emerges. First, there is a technology explosion that these entrepreneurs recognized could provide an initial competitive advantage amid dynamic market conditions. Second, the confluence of technological innovation coupled with dramatically changing market conditions created a perfect environment for the entrepreneur to capitalize on a business opportunity. Because the Founding Fathers are first, these entrepreneurs tend to spawn natural monopolies that can last for hundreds of years.
Julius Reuter’s story was similar to the D&B story because he started his company at a time when technology was becoming available that would enable his business to advance ahead of any competition. In Reuter’s case, he realized that society had an appetite for owning stock equities. There was a desire by investors to own and trade equities on many stock exchanges. People in London thought there were good opportunities in continental Europe; therefore, they wanted to see current quotes on either the Paris Bourse or, the oldest stock exchange in the world, the Amsterdam Bourse. Conversely, people in continental Europe thought there were opportunities not to be missed on the London Stock Exchange.
The problem with servicing these intercontinental equity trading opportunities was time. It took days to get stock closing prices because typically the closing prices were passed using the mail boat system that sometimes took days to get a few miles. The technology for delivering the information that allowed people to effectively buy and sell equities didn’t exist. Julius Reuter realized that international stock trading was a growing trend and that by improving the delivery time of critical stock pricing data, he could dominate the business of disseminating stock quotes.
Reuter earned his place as a Founding Father of Big Data when he developed the solution to allow timely distribution of financial news and stock prices between London and continental Europe. His solution was to use the recently established telegraph network to carry stock information. To complete the link between London and Europe, Reuter himself invested in the cable project that spanned the English Channel.
Like D&B with the critical edge of being the first to collect reliable credit information in the context of a huge market expansion, Reuters was the first to overcome a technological challenge at a time when there was a rapidly expanding appetite for current stock market information. These are the two key aspects that characterize a true Founding Father of Big Data: technological solutions for an information service while capitalizing on a rapidly changing market environment.
Next time, we will address the contribution to the Founding Fathers group by Associated Press.