Andreessen Horowitz, Point72 Invest in Crowd-Sourced Quantopian

Re:Andreessen Horowitz, Point72 Invest in Crowd-Sourced Quan... by inthewoods on Monday November 14, 2016 @12:47PM (#12951656)

I'm a fan of Quantopian's product but I don't understand why anyone would invest this kind of money in their solution. They'd have to manage an enormous amount of money to have any reasonable growth. Add to this that the hedge fund world is consolidating, I just don't see the value. What's the out here? I think management fees are going to close to zero soon (if they are not there already).

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Re:Andreessen Horowitz, Point72 Invest in Crowd-Sourced Quan... by meritt on Monday November 14, 2016 @01:08PM (#12951859)

A) Recruit, hire, and train a handful of quants, pay them $250k/yr+ each, and hope they bring a positive edge to your algorithmic trading.

B) Award $10,000 to the winner(s) among hundreds of participants aggressively competing to solve the same problem as your expensive employees from A.

Which would you choose?

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Re:Andreessen Horowitz, Point72 Invest in Crowd-Sourced Quan... by inthewoods on Monday November 14, 2016 @02:42PM (#12952592)

You assume the outcome would be the same - I see no evidence to support that B > A. Given that A is the incumbent business model and form, B would have to be run for 5+ years to prove that there is anything there that can win consistently and also scale to the needs of the institutional investor.

Indeed, if you are a new fund starting out and seeking institutional money and are not coming from an established firm, you can expect to have to develop 3-5 years, minimum, of track record before anyone will generally invest in you. Given that any trader on this platform might disappear overnight, I don't see institutions rushing to put money into it.

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Re:Andreessen Horowitz, Point72 Invest in Crowd-Sourced Quan... by kevinali1 on Monday November 14, 2016 @02:53PM (#12952670)

Perhaps (just perhaps), Quantopian is gathering (or has gathered) the evidence that B > A. If so, this is a great investment.

Regarding institutional money, they have been around for a few years. I'm not sure about how long they've been running the competition, but they certainly have been running an asset management service for some time - and would have impeccable records regarding this.

In other words, there is a lot about Quantopian that we don't know and so it would be difficult to make a judgement call on the quality of AH's investment.

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Re:Andreessen Horowitz, Point72 Invest in Crowd-Sourced Quan... by inthewoods on Monday November 14, 2016 @02:58PM (#12952722)

My point is that I think it has a fundamental problem - if someone has a successful algo, they take it off the platform. Institutional money would be very leery (indeed, this isn't the first time this model has been tried).

So even if I'm confident in their overall model, based on, say, 5 years of track record, I'd still be concerned over algos just disappearing. Also, they've only been running their asset management business for a relatively short time via the investment capital from Cohen's fund.

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Re:Andreessen Horowitz, Point72 Invest in Crowd-Sourced Quan... by daveguy on Monday November 14, 2016 @08:49PM (#12954974)

I think when you submit an algorithm you give quantopian non exclusive rights to use it indefinitely. Even if you stop participating the best algorithms will still be used.

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Re:Andreessen Horowitz, Point72 Invest in Crowd-Sourced Quan... by daveguy on Monday November 14, 2016 @11:47PM (#12955657)

Update: looking at the FAQs that applies to contest submissions only. They state in the FAQ that all algorithms developed and evaluated on the site are by default owned by the developer. Entering the contests give them license to use.

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