Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Possible Bloomberg 'slayer,' but CEO resists label

New messaging system for financials

A month away from the debut of Symphony's instant messaging system, CEO David Gurle plays down talk that his company could be the one to topple "The Bloomberg."

"I don't think so," Gurle (pronounced gehr-LAY), told CNBC. "You know, we are not building a Bloomberg terminal. We are building a communication platform."

Symphony's platform is backed by $66 million from 14 blue chip financial firms, including Goldman Sachs, JPMorgan Chase, Citadel and BNY Mellon. Gurle said he is lucky in that his investors are also his clients, as their input helped shape the service.

"We know what they want and how they use the products," he said. "So from that perspective it was very helpful. What they want us to do is to simplify the way they communicate internally and externally."

Still, some speculate the firms are expecting Symphony to do more than simplify the way they communicate, and that they want the company to build a more private and less expensive alternative to the Bloomberg or Reuters services they use.

For example, Bloomberg's service is rich with proprietary data and analytics. This justifies its hefty annual price tag of close to $20,000 per subscription.

For most users though, the most popular Bloomberg function is its instant messaging system.

Avoiding the prying eyes

Wladimir Bulgar | Getty Images

Wall Street firms could cut hundreds of millions in costs by identifying subscribers who primarily use the messaging service, canceling their subscriptions and replacing them with a much less expensive platform like Symphony, which according to Gurle, will have a two-tier pricing structure.

Symphony's professional subscription will be offered at $10 a month, half the enterprise-level subscription fee, he said.

Symphony's backers also may want to protect against possible monitoring. In May 2013, Bloomberg's then-Editor-in-Chief Matthew Winkler apologized for unauthorized snooping by some reporters of clients' login histories and other proprietary data.

A Bloomberg representative declined comment Friday.

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With Symphony, this can't happen … yet.

Fifty companies are using the system now, and Symphony is planning a "soft launch" on Monday, with a formal rollout in September. When the messaging system makes its formal debut, users within a single corporation will be able to see if one of their co-workers is logged in, Symphony said. A feature allowing them to see if another Symphony user who works at a different firm is online will be added later.

'The power of Symphony'

While there is a lot of buzz about Symphony shaking up Bloomberg's grip on the financial services industry, Gurle said Symphony's primary goal is to provide three things to clients: a directory of contacts throughout the Symphony system, a system that allows the banks to be fully compliant with the mandates set by regulators around the globe and an integrated communication experience.

"Imagine that you are working on a project to finance the next round of a company," said Gurle. "And this requires legal documentation, the pitch deck and lots of interaction around those documentations. Now you could do this through email, but it's back and forth attachments, sending them, downloading them, working on them, annotating them and sending them back.

"With Symphony you can just do this on one container in a much simpler way, and therefore cutting through all this red tape of back and forth communications and then making everything in real time. So that's really what the power of Symphony is."

Along with its instant messaging and open application system, Symphony provides a streamlined way for companies to remain compliant with two critical regulatory requirements—document retention and user activity logs. Gurle points out that many of the financial companies use several different messaging systems, and not all of them have built-in infrastructures to maintain the records regulators require.

This means companies spend more money to comply with regulator requests, something they would not have to do with Symphony.

"Any exchange of communication has to be recorded and then has to be made available in a retention system," Gurle said of Symphony. "And then (the) retention system has to provide the logs so that regulators can analyze them if there is an inquiry."

That means regulators will have records of where users logged in or logged out, when they changed their profile pictures, the time and date they added photos, or sent messages or favorited a tweet.

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The New York Department of Financial Services recently contacted Symphony about these issues. Gurle said the company had constructive talks with the regulator, who wanted to know about Symphony's record keeping.

"So (they asked) do we record the conversations—that's very important." Gurle said. "Do we enable in this secure messaging system a way (that) could prevent the recording of these conversations? And we have also our capacity to have an open-source platform and in one from another, does the open-source use of Symphony prevent Symphony from recording the messages? So some of these are some of the questions that they asked."

An eye to the future

Gurle who founded Symphony—the Palo Alto, California-based firm was previously named Perzo— had previous stints as the vice president of corporate strategy at Avaya, and as vice president and general manager at Skype for Business. He also worked at Thomson Reuters, and Microsoft. In his current position, he remains focused on providing the type of secure experience his clients expect and need in an age rife with data breaches.

"So what we have done is encrypt data before actually it leaves your computer," he said about the security that wraps each of Symphony's instant messages. "We call this the 'entrant encryption.' And this enables the data to be decrypted only by the recipient of that data, so while the data is in transit—or while the data is at rest when it is stored into a server—it's not possible to decrypt the data and read what's going on."

Gurle said that as far as he knows, Symphony is the only instant messaging service that has this encryption feature, which might be the reason the company is fielding requests for information from firms outside of the financial services field.

"As the news kind of broke out, we have seen lots of inbound requests from other industries," Gurle said of the reports about coming launch. "The legal industry, accounting, health care, some government agencies, some school systems have reached out to us."

Symphony has also attracted the attention of investors beyond the 14 financial firms, though Gurle played down reports the company is in talks for a second round of financing. He said Symphony is "still OK" from a financial perspective.

What he and the 120 people who work for him are concentrating on now is the September launch, which will feature the company's clients talking about the service and a free download for those who want to try out the product on their PC. Android and iPhone versions of the systems are slated to be introduced in December.

As for an initial public offering, he said that is an option, but a future one that will depend on market conditions. But before the firm goes public, Gurle said he wants Symphony to reach a critical level of momentum.

"There is a book called the 'Tipping Point,'" he said, referring to the Malcolm Gladwell best-seller. "I read it, and my conclusion was that for any given market, whether it's a market of 100 or 100 million people, it's about one-third of that market you need to really work hard to get to in order to reach the tipping point."

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So this means Symphony is seeking capture a little less than 500,000 of the 1.6 million potential users in the capital markets space of finance, and/or 2 million of the 6 million potential users in the financial industry.

Beyond reaching a critical number of users, Gurle expects Symphony to expand its offerings in coming years, when he expects it will no longer be solely an instant messaging system.

"Actually I see Symphony to be a workflow platform, and instant messaging service is the foundation, because it brings together human beings because we interact with each other. So that's the community piece," he said.

"And then obviously we communicate with each other. But that automatically generates work, right? Either we consume work through this platform or we create work through this platform. So imagine you could bring the different workflow elements into this platform and therefore make yourself more streamlined and successful. That's really what we are going to do."

Disclosure: CNBC is a competitor of Bloomberg in reporting and distributing business news on the Web and on television.