$10 MILLION PAYOUT TURNED INTO $10 BILLION COMPANY: STORY OF BLOOMBERG TERMINAL
The 1980s were the conception point for many tech giants, which would later on rule the field- whether it was Windows PC, Mac or Bloomberg Terminal. Now the latter’s name may not be as common to the general population, but in the financial market Bloomberg is the name to swear by. During the 80s the financial world had just started to be influenced by technology. Many new instruments like derivatives were introduced, which was a learning curve for all. But Bloomberg made sense of all of it and made the adaptation of technology easy for the market.
The financial market moves at lightning speed. And for almost four decades Bloomberg has been an essential part of that change and growth of Wallstreet and around the world. Its orange on black screen still holds the flavor of the ’80s, but in terms of adapting technology, Bloomberg has always been ahead of the curve- at the cutting edge of innovation, providing fast access to indispensable news, data and trading tools.
WALK OF FAME
It all began in 1981 when Micheal Bloomberg was laid off from his previous company Solomon Brothers, an investment bank, where he was a general partner. He was given $10 million as a severance package. Later he invested a portion of that to create the company that we know today. Micheal started the company during a recession, like a phoenix rising from ashes.
At that time Reuters was the big giant in the financial market industry and basically the founding father of the market data business. But Bloomberg’s unique take on customer needs, adding new tools to attract customers started to work its magic. Micheal Bloomberg’s company was growing faster than even his biggest competition- Reuters. And soon it became a ubiquitous part of WallStreet trading.
Finally, in 2007 Bloomberg overtook Reuters. To once again take the top place Thompson and Reuters merged and surpassed Bloomberg. But in 2012 Bloomberg took the lead once again and has held it ever since.
When, after a decade of serving as a mayor to New York City Micheal Bloomberg once again took the control of the company, he started refining various aspects and focusing on diversification. 75% of the profit margin comes from the terminal, whereas Bloomberg news generates less than 4% and to address that he reallocated the capital to increase profitability.
STAR TOOLS: MEETING CUSTOMER’S NEED
Now the question presents itself, what does Bloomberg provide that makes it so attractive to the consumers? The answer can be pretty descriptive or in one single line ‘Everything that an Investment banker, financial analyst, sales and trading professionals, equity research analyst, and basically anyone playing in the big leagues.’ Any and everyone who wants in on WallStreet needs a Bloomberg subscription.
Even though the Bloomberg terminal originally came with its own hardware, it is now a software-based service for PCs which can also be accessed through Mac and mobile devices. It opens doors to a dynamic network of information, people, and ideas.
Now let’s move on to the descriptive and fun parts which its customers swear by. Bloomberg deals on three fronts: data, news, analytics. This multifunctional platform contains a plethora of real-time financial data, including financial reports, real-time market prices and news, in-depth research reports, sophisticated analytics, communication tools, and whatnot. It provides customers with all the security documents in existence, a trading platform, and chatting programs.
Making the best use of technology’s many aspects- machine learning, natural language processing, etc- they monitor shifts in trading market data, which ultimately help predict future corporate decisions and price hikes. Bloomberg’s automated intelligence helps you find the exact niche for your specific research from the abundance of data from its database.
Bloomberg’s order and execution and management solution give customers a competitive advantage, creating a more efficient workflow. Its intuitive execution platform and predictive analytics provide both historical and real-time trading data. Basically, if you want to be the next big thing in finance, you need a Bloomberg subscription. It is an all-in-one solution for investing, asset management, and finance.
Being a student of business or finance in this rapidly changing economy, one needs every preparation tool one can get. So many universities started introducing the real world finance and WallStreet to the students with Bloomberg terminal. Bloomberg also offers a student digital subscription, giving them a real taste of trade and finance.
SHAPING THE WORLD MARKET AND MAKING HISTORY
When Bloomberg terminal started a new era for the financial market, the world took notice and was in awe. By making a one stop tool for data, analytics and news Bloomberg created history. That’s why a setup of the Bloomberg terminal took its rightful place in the ‘Tools of the Trade’ collection in the Silicon Valley’s Computer History Museum, which traces the history of financial technology.
But this is not the first museum appearance of Bloomberg terminal. In 2015, The Smithsonian’s National Museum of American History, displayed two terminal keyboards, as part of American Enterprise.
But what is even more awe inspiring is, this revolutionary part of the finance market is not only in history, it is a constant part of today’s market still leading the industry. Starting from a pre-internet era, Bloomberg is still the prominent figure in the market paving its way to the future.
BLOOMBERG STAYING AHEAD OF THE CURVE
No surprise that the company which gives financial advice to the whole world is flourishing, even during the pandemic. There is no reason for it to be otherwise. Because after hitting a slight sour spot at the beginning of the pandemic, the WallStreet is doing fine. In fact, one might think there is no real connection between the real street and WallStreet looking at the stock market hike. To put it in simple terms, the stock market isn’t the actual representation of the whole economy.
Even with all the top-notch qualities, Bloomberg has faced much criticism over the years due to its high prices. The $21,000-$25,000-a-year terminal has produced both billions and disapproval from the clients. So, WallStreet is tediously looking for ways to cut back on the terminal’s expenditure. And the company’s unwillingness to negotiate the price has contributed to that field. So, everyone is looking for a piece of the business or more accurately, to throw Bloomberg off from its dominant market position.
Because clients are actively looking for a less expensive alternative, competition has been welcomed open-armed by the market. Many competitors have risen over the years, some of Bloomberg’s old executives have become a competition. But none has become prominent enough. Multiple reasons factor into why the terminal stays ahead of the curve. One is because it’s popular and trusted. Every ‘big deal’ in the financial market is there, so if you want to be one, you need to be on the terminal. But the most significant reason is, it’s good at its services and there isn’t any good alternative.
The price is high, no doubt, but the incredible array of services assembled together by the terminal makes it the most powerful tool of a trader, which is quite hard to compete with. And one can’t ignore the fact that some of the customers who are frowning upon the prices are ones who are not using all aspects of the terminal. That is why many competitors have gone after the customers who use a subgroup of the terminal.
In 2015 a start-up called Symphony launched software which is an alternative to Bloomberg’s one of the most valued features, the chat program. Ever since the origination, they have gained quite a market. In 2019 the user counted to 430,000, making it the largest digital financial network in the world. The CEO David Gurle said, “We are making a dent in the Bloomberg fortress.” But still, its profitability fades compared to that of Bloomberg’s.
Over the years Bloomberg has successfully fended off many competitors, some looking for some specific niche of the market and some aiming for the crown. And Bloomberg has aged like fine wine over the process. Even so, if one asks ‘Can Symphony or any other company beat Bloomberg in the future?’ -there is no definite answer other than asking Paul the Octopus. But one thing is for certain, going head to head with Bloomberg is going to be one damn challenge.
By Maisha Farzana
