The Perfect Startup Pitch? An Algorithm Can Write the Model

GAIA RUBERA, ASSOCIATE PROFESSOR TEACHING SOCIAL MEDIA MARKETING, EXPLAINS THE EIGHT ALGORITHMS DEVELOPED ON THE BASIS OF 3 MILLION CONVERSATIONS ABOUT STARTUPS

The quarterly conference calls with financial analysts are important steps for a startup. It’s the event when the CEO sells its most precious product: the company itself. What analysts say ends up influencing the stock price. How can the CEO, in turn, influence analysts? Gaia Rubera, Paola Cillo and Francesco Balocco are trying to answer by using algorithms. They are applying to the financial analysts’ mindset the segmentation and targeting models that are traditionally used for consumers. The object of their study, still under way, are the startups launched in the United States between 2012-2014. Topic modeling is applied to both the conference calls between CEO and financial analysts and to other conferences involving these same analysts.

“Conference call transcripts are available on line”, says Gaia Rubera, Associate Professor of Marketing. “We have extracted and analyzed them. We have found out that three million conferences are converging on eight topics: innovation, finance, new markets, cost reduction, budget, legal, macroeconomic elements, and benefits. The investigation of analysts’ conferences allowed us to segment them according to their favorite topics”. Measuring the distance between the CEOs’ speeches and the analyst’s preferred topics allows to predict the recommendations that affect the stock price. “Once the CEO knows the analysts’ favorite topics, he can target his communication. Now we are developing an algorithm that outlines the best speech for the CEO according to the analysts’ calls. The same model can be applied to words and syntax of the conversations about the eight topics, meaning the algorithm could tell the CEO what to say and how to say it”.

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by Claudio Todesco