Richard Rivlin had the idea for an automated, highly accurate vessel valuation system in the late 1990’s. But it was the financial crash of 2008 when the sudden withdrawal of brokers made valuations even tougher at the point they needed them most, that proved to be the catalyst for what was to become the highly disruptive VesselsValue.
With the strapline ‘accurate, instant, always,’ the advantages of Rivlin’s system has seen it make serious inroads into a previously opaque valuation industry, with over 1,000 leading banks, funds, owners, traders, commodity companies, brokers accountant and lawyers now signed up.
As a seasoned shipbroker Rivlin has disrupted from the inside out, developing a platform where data and advanced analytics marries deep domain expertise and recognises the enduring importance of trust and relationships in shipping.
With the business growing apace and a variety of new products about to come online VesselsValue has only just got started. I was interested to know what the view’s like from inside a disruptive digital business in shipping, where Rivlin thinks the future is taking us, and why.
I’m delighted he agreed to answer all those questions and more and becomes our latest Futurenaut.
Here’s what he told us.
Futurenautics: We’ve described VV as a highly disruptive business in the shipping/maritime industry, but for those who aren’t familiar with what you do, can you give us the elevator pitch?
Richard Rivlin: VesselsValue provides instant, accurate and unbiased data and analytics that can be accessed from anywhere in the world at any time. We have over 1,000 regular users including leading banks, funds, owners, traders, commodity companies, brokers, accountants and lawyers.
We launched in May 2011 providing instant vessel specific valuations, updated on a daily basis provided with full supporting information (time series, transactions, vessel specifications, fleet stats etc). Following strong customer demand we expanded to additional vessel types (i.e. Gas) and services including advanced vessel search and compare functionality (VV+), AIS vessel mapping (VV@) and recently advanced big data analytics (VVQ).
Our business has been growing at a rapid rate and we now employ over 40 people between London and the Isle of Wight.
Futurenautics: Data is key to your business. Where does it comes from, and how reliable is it?
Richard Rivlin: Accurate data is the cornerstone of everything we do. One of our mantras here is “garbage in, garbage out”, so we are sure to put a huge amount of resource behind the collection, collation, checking, inputting and continuous updating of our data.
To do this, we spent over 2 years prior to launch, developing our own proprietary database and now employ over 20 people in our Isle of Wight office who scour the world each and every day for all the various pieces of data we need. This is fully supported by real commercial understanding from our broker friends at Seasure Shipbroking and various others in the company with real market experience (including an ex VLGC captain and senior banker).
Additionally, we have commercial and friendly relationships with various other data providers (i.e. for AIS) and shipping market players (brokers, owners etc).
Futurenautics: We talk about learning algorithms and artificial intelligence as the next thing for shipping. Data is key for VV but are we right in saying that it’s the learning algorithms which are the real IP?
Richard Rivlin: The algorithms are nothing without the accurate data to work with, and the data is so large that it is incomprehensible without the algorithms to make sense of it. Our experience is that people want the analytics in an easy to understand and commercially relevant form.
They do not have the time or inclination to interrogate complex and often misleading data sources. Our algorithms are key to this, but so is our real world commercial understanding, and so is the source data. Therefore, our IP is our company, our technology, our data and our people
We value over 40,000 vessels each and every night, track over 60,000 minute by minute and calculate billions of data points every day.
Futurenautics: With such a revolutionary product there must have been ‘necessary’ failures along the way. How does a business balance those with the need to build trust from a potentially sceptical customer base? Has the VV attitude to experimentation and failure played a part in its success?
We are a development driven company. Creating new, commercially beneficial products is our life blood. As you would expect, some have been instant blockbusters while other have taken more time to be taken up by the market. Our ongoing challenge is to attempt to prioritise the most beneficial products, both in the short and long term.
This requires both listening to our clients’ needs but also taking risks and developing products that we believe in. To paraphrase Henry Ford, “if I asked the people what they wanted, they would have said a faster horse”. Experimentation and risk taking is critical to our creative process and business strategy.
Concerning building trust, Shipping is traditionally quite conservative but also very loyal. We have proven ourselves with the products we have created and we continue to maintain this through only releasing the best and most commercially relevant products and services.
Futurenautics: Fragmentation and overcapacity in shipping is meeting destabilising change head on and there’s widespread acknowledgment that new strategic thinking is needed. What part does data-driven decision making have in shaping ‘Shipping 3.0’?
Richard Rivlin: Decisions in shipping (i.e. buy or sell, spot or tc, dry or wet, newbuild or second hand) have big implications on the long term fortunes of the decision makers and their respective companies, investors etc. This is particularly significant in difficult or volatile markets such as we have been experiencing over the last few years.
Advanced data and analytics that were not previously available are now providing forward thinking players very powerful sources of competitive advantage. For example, VesselsValue provides real-time information on ton mile demand (by route, region, vessel type and even cargo), net fleet growth, operating performance, congestion, short term over/undersupply by port/region, market values, DCF analysis and much more.
This information is being used by companies to identify opportunities, test ideas, optimise operations and ultimately perform to the best of its ability. It has also helped increase the transparency of the shipping market to lenders and outside investors which should lead to increased competition and efficiency in the provision of capital.
This availability of data and analytics has partly been driven by technological advancements (AIS satellites, Big Data processing techniques etc.), partly by entrepreneurs investing time and capital into these new areas, and partly by the rise of investment funds and large public companies that need and appreciate this information.
Futurenautics: There’s increasing talk about Big Data in shipping, but it’s mostly focussed on technical, engineering data. Do you think there’s less emphasis on ‘enterprise’ data and crowdsourced data? Are we underestimating the potential of both?
It’s been focused on technical and engineering because these are the people most suited to understanding the benefits. However, the investment, lending and ownership side has been increasingly demanding more data and analysis, much of which is dependent on Big Data processing techniques. We still very much think the value of this is underestimated by most of the shipping market but the recent progress in adoption of advanced analysis is very encouraging.
Shipping is traditionally quite conservative, but also very loyal.
Futurenautics: We’re looking at risk this issue and how technology is changing the way we approach it and evaluate it. How do you think the stochastic, predictive capabilities of bigger datasets and smarter algorithms might change the business of shipping—from asset values to usage based insurance and sales?
The ability to process large data sets and use algorithms to more accurately predict the future, more correctly, to identify the most probable outcomes in the future, is potentially of huge benefit to many different players in the industry. This is because uncertainty is risk and risk needs to be mitigated by lenders, owners, investors, insurers etc.
Through using data and analytics to better understand and quantify risk, there is the potential to reduce insurance premiums, reserve account requirements etc. For example, VesselsValue has been providing automated zone alerts for a number of banks that instantly inform them via e-mail when a vessel they have financed is near or has entered a sanctioned area.
Additionally, this data helps to open the shipping markets up to new players (lenders, investors, insurers etc.) as they were previously put off by the lack of transparency and data. For example, VesselsValue has been working with several commercial banks to use our extensive datasets (including daily valuations of the entire fleet, volatility, correlation etc) to accurately estimate risk analytics such as Probability of Default (PD), Loss Given Default (LGD), and Expected Loss (EL). This data is helping them to lend to owners that were outside of their traditional markets.
Advanced data and analytics that were not previously available are now providing forward thinking players very powerful sources of competitive advantage.
Futurenautics: You’re preparing to launch a new product – a Discounted Cash Flow Valuation. What does it do and why should we want it?
Richard Rivlin: The VV DCF module allows our customers to instantly calculate discounted cash flow (DCF / NPV) valuations for the circa 35,000 specific vessels that we currently cover. It is essentially a modelling tool that covers all the key inputs into these calculations (i.e. future charter rates, OPEX, discount rates, commissions, residual value, price inflation, survey costs etc).
One of the most powerful parts of the model is the conversion of index/generic charter rates and OPEX’s into vessel specific rates (for example high quality vessels of the same type and age earn more and cost less to run than their lower quality counterparts, hence why they cost more to buy). The model will also allow for “with charter”, bareboat and other more complex valuations.
The model works by using VV’s own heavily researched assumptions to give a daily updated vessel specific DCF valuation for each specific vessel (with ability to group up to portfolio, create alerts etc). These are the VV qualified DCF values and are providing insight into the long term value of the vessel, which is especially interesting when compared to the current market value (i.e. giving buy / sell signals).
However, the model is built in such a way that the client can overwrite our assumptions with their own company or project specific data to give customised DCF values. In summary, DCF will give both headline long term values for vessels that can be used as a counterpoint to the current market value, while also providing a very powerful modelling tool (with cash flow analysis etc).
Futurenautics: SMAC—social, mobile, analytics and cloud—is a buzz acronym at the moment. Does it apply for Vessels Value, and how should it apply for other maritime companies?
Richard Rivlin: Over 40% open our weekly email on their mobile phone and we’re finding more and more people asking questions over social media (such as LinkedIn, Twitter or via our blog). So much so that we’ve recently added in a live chat functionality whereby you can talk to VV staff directly. Everyone from directors, marketers, valuation analysts and researchers are online answering questions. I would encourage any company to engage more with its audience and social allows for creativity, a personal voice and direct communication with each person
Futurenautics: Stephen Hawking and others have issued warnings about artificial intelligence, while Ray Kurzweil at Google predicts conscious machines by 2029. Is the logical conclusion that VV will end up enslaving humanity, or is your people’s view of AI shaped differently? Can we approach AI in a way that harnesses its benefits whilst mitigating its drawbacks?
Richard Rivlin: We value over 40,000 vessels each and every night, track over 60,000 minute by minute and calculate billions of data points every day. Only several years ago this would have taken days to process and we now can do it in a matter of minutes. This is only possible through the technological development of both hardware and software. AI is just a natural progression of this rapid advancement.
We are not worried about machines taking over the world. Indeed, we are excited about self-thinking machines helping repetitive jobs, particularly in the areas of data collection and confirmation. We have our own in house data centre on the Isle of Wight that has desks for 40 people. All their work cannot currently be automated as it requires critical thought and judgment calls that are well beyond the logical constraints of computer code. AI could potentially overcome these issues, vastly improving and accelerating data collection and validation. This will provide significant benefit to the industry, the world, our business and our employees. We like tech!
Futurenautics: Some analysts argue that it takes at least 5 years of data before it can be properly operationalised. VV started up in 2011, does that mean we’ll see more powerful products coming online from you in the next couple of years? Give us an idea what they might look like.
Richard Rivlin: We developed in high secrecy for 2 years before releasing the first version onto the market. We have continually released new products and improved the existing ones. Obviously, as time goes on and we collect and analyse more data, hire more people and create new alliances, we will be able to provide better and more extensive services.
Many of our new products are highly confidential, but keep an eye out for expansion into the offshore sector and some very innovative chartering tools coming soon.
Futurenautics: What advice would you give to someone with a killer technology idea for the maritime market?
Richard Rivlin: Come and talk to us!!!
Futurenautics: What will be the next major technology disruption in shipping? Who will it most affect?
Richard Rivlin: We will be releasing it in a few months, currently it’s in confidential development.
Futurenautics: What was the last piece of technology—consumer, industrial or professional—which made you say “Wow!”?
Richard Rivlin: Uber, three clicks and you’re home. They have eliminated the ballast voyage, bringing cheaper taxis and instant service. Truly a great disruptive player, they entered an established industry and gave everyone what they wanted.
Richard Rivlin is the Founder and CEO of VesselsValue. Visit them at www.vesselsvalue.com
Images courtesy © VesselsValue/Getty Images/Wikimedia Commons
This article appeared in the April 2015 issue of Futurenautics.
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