“I’ve never really had a job,” says Prashant Bhuyan ’96, an investment technology entrepreneur and data scientist whose latest project puts him squarely in the middle of the booming data revolution and budding artificial intelligence space.
As co-founder and CEO of Alpha Modus, a New York City-based financial technology startup, Bhuyan and his team use cognitive computing to find alpha—a way to measure performance on a risk-adjusted basis—in unstructured data such as natural language.
With the goal of working to reprice investment advice, Alpha Modus packages actionable insights into investment technologies that they lease to asset managers, pension funds and broker-dealers.
Though Bhuyan notes that he “has had his share of cataclysmic failures early on,” the now successful entrepreneur trusted his sense of curiosity and co-founded not only Alpha Modus, but also an algorithmic trading firm as well as a consulting company that solves problems through the use of what he calls “collective intelligence.”
For Bhuyan, that instinct to embrace curiosity was instilled at a very early age during his tenure as a Shipley student—a “lifer,” who attended the school from first through 12th grade. “Shipley prepared me,” says Bhuyan, “and pushed me to follow my curiosity, and that’s exactly what I did. I followed my curiosity.”
Now, Bhuyan calls his time at Shipley “a golden era” and says he feels so fortunate to have attended the School. “Looking back, the sacrifice my parents made as Indian immigrants coming to a new country and then sending their son to Shipley is a great gift that I’ve come to appreciate more and more,” he says. “My memory of Shipley improves with age.”
Throughout his time at Shipley, Bhuyan recalls teachers like Dr. Tony Morinelli who injected life lessons into everyday conversations. “The idea that you have to learn how to learn, and keep learning no matter what—that’s Shipley,” says Bhuyan. Bhuyan adds, "In a world that is constantly changing due to technology, a vocational mindset can lead to obsolescence. The best way I know to stay relevant is to constantly ask new questions and learn new things."
That philosophy, defined at Shipley, has served Bhuyan well far beyond, first at Hamilton College and then in an apprenticeship with a veteran floor specialist and market maker, where he learned about market structure and became captivated by the idea of how automation of the human market maker would fundamentally change the way markets function.
Leveraging Collective Intelligence
About 10 years ago, a major change in market structure (called Regulation National Market System) spurred Bhuyan to dive into the problem of building an automated market maker. “The goal of the regulation was to modernize equities markets,” says Bhuyan. “In reality, this regulation actually fragmented the market structure. Suddenly, a stock that used to only trade at the New York Stock Exchange now traded on a dozen different exchanges. This fragmentation created a lot of opportunity.”
To build his automated market-making system, Bhuyan leveraged resources like GitHub, Skype, and TeamViewer and attracted smart people from all around the world to help him solve complex problems by posting interesting questions online.
Eventually, Bhuyan and his college friend Adam Kelly assembled an on-demand workforce of nearly 100 highly skilled data scientists and engineers from all over the world that worked in integrated teams around the clock.
“Amazingly,” says Bhuyan, “teams of three or four formed and endured over the span of the last decade, despite the fact that team members never met each other face to face.”
Once Bhuyan realized he could solve problems with both time and cost efficiency, he began to apply the processes he calls "collective intelligence" to help solve others’ problems.
“Everything has been an evolution,” says Bhuyan. "Collective intelligence is fundamental to all of my ventures."
Making Sense of Unstructured Data
Now, much of Bhuyan’s time is devoted to his most recent venture, Alpha Modus, a company that, as Bhuyan explains, “leverages collective human intelligence and artificial intelligence to make sense of market complexity caused by the explosion in unstructured data."
“Investment advice is seriously overpriced,” says Bhuyan, “According to IBM, 90 percent of the world's data has been created in the last two years and most of this data is unstructured in the form of text, tweets, news, blogs, video and images.”
Bhuyan goes on to say, “There is so much data being created that people have cognitive dissonance. In other words, human intelligence is not enough to make well-informed investment decisions and most of the industry hasn't adapted to the new paradigm.”
Recently, Bhuyan and his team have made amazing strides by partnering with technology giant IBM.
Bhuyan's experimentation with unstructured data started five years ago when Bhuyan and Kelly were on the floor of the New York Stock Exchange discussing market-on-close imbalance indications with floor brokers. “For ages, these brokers would informally relay imbalance indications to customers over the phone all day long,” says Bhuyan. “I wanted to know why these imbalance indications, a distinctly human process, were still so popular.” (Imbalances are an indication of “buy interest” versus “sell interest” matched at the close of a day of trading.)
That curiosity led Bhuyan and Kelly to try to find out by working with floor brokers to build a voice-recognition-based data capture system to collect and analyze the data. Bhuyan notes that he was surprised to find that these imbalances could help predict the direction of the market, “But the bigger realization was that we could find alpha in natural language,” he says.
Working with Watson
Then in 2011, Bhuyan saw the televised trivia battle between IBM’s supercomputer Watson and Jeopardy champions and began to dream about purchasing a Watson for his company so that he could analyze natural language to predict markets.
Fast forward to 2015 and Bhuyan is living a dream where Alpha Modus has been using Watson in a variety of ways, such as analyzing the sentiment behind market-related tweets and studying the tone of public company executive earnings calls.
In fact, Bhuyan and Alpha Modus won an IBM Beacon Award for Best New Application on Cloud by an Entrepreneur and Bhuyan was featured in a national TV commercial where he and Watson exchange pithy dialogue. Most recently, Bhuyan was honored as a “Wild Duck” by IBM, an honor given to partners that think differently
Now familiar with the capabilities of Watson and artificial intelligence, Bhuyan believes, “Technologies like Watson will soon be ubiquitous, like electricity. Companies like IBM will be giant cloud computing utility companies supplying powerful technologies like Watson to the world.”
Staying Relevant with Creativity
When Bhuyan examines where Watson and cognitive technology fit into his business and, moreover, into the world, he refers back to his early learning at Shipley.
“Ultimately, the key differentiator isn't Watson,” he says, “It's all about asking good questions and coming up with creative use cases... Dr Morinelli used to say reason separates man from animal... in the age of artificial intelligence it's imagination that separates man from machine."
"Creativity and imagination are what's going to keep us relevant in the age of artificial intelligence,” says Bhuyan, “Places like Shipley foster this kind of thinking.”
Thanks to Shipley, he says, “I’m able to look at things a little differently.”