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Penguin Press, 2014

MIT Institute Data, Systems, SocietyMIT Media LaboratoryUN Secretary General World Economic ForumGoogle, AT&T, Telefonica

Ant, Alibaba, Tencent, Bejing, Colombia, Estonia

Copyright alex pentland 2016, all rights reserved

15 years ago half of

the world had never

made a phone call

Today 80% own a phone

THE BIG STORY: LIFE HAS BECOME DIGITAL

• New sources of data

• New ways to use data

• Smarter Trading

• Smarter Organizations

• Future of Finance

Circus-Circus (MGM)

Wynn (WYNN)

Mirage (MGM)

Fashion Mall

Caesar’s Mall

Sands Expo

LV Conv. Ctr

Venetian (LVS)

▸ actionable fundamental information for over 200 public

companies and hundreds of thousands of locations forgovernments and private businesses - every day.

▸ We provide the buy-side with an unparalleled depth of insight into

real-time socio-economic trends independent of credit card or

POS transactions.

▸ Our US and European products are updated weekly and currently

cover 200+ tickers with data beginning on 8/1/2015:

▿ ConsumerStreams: daily customer visits by ticker▿ IndustrialStreams: daily hours worked, visits, and other

metrics by ticker

▿ ConsumerForecasts: weekly estimates by ticker; out-of-

sample average absolute error of 1.1%

▸ What would you like to measure?

Thasos

ConsumerStreams & IndustrialStreams

ProductsTicker coverage for selected GICS industries

Air freight & logistics FDX, UPS

Airlines AAL, ALK, DAL, HA, JBLU, LUV, +4 more

Auto manufacturing facilities & dealerships F, FCAU, GM, HMC, HOG, TM, TSLA, +3 more

Building products MAS, OC

Construction, farm machinery, & heavy trucks CAT, DE, PCAR, WAB

Consumer 100+ US tickers; 22 European tickers

Electronic equipment & instruments ARW, AVT, ETN

Industrial machinery DOV, FLS, KMT, PH, PII

Office services & supplies KNL, MLHR

Trading companies & distributors BECN, FAST, GWW, HDS, MSM, WCC

Trucking CAR, HTZ, JBHT, KNX, SWFT, UHAL, WERN

CONFIDENTIAL Contact sales@thasosgroup.com to learn more

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• New sources of data

• New ways to use data

• Smarter Trading

• Smarter Organizations

• Future of Finance

networks not nodesLittle Red Dresses

Diabetes

No Credit

Alchoholism

new ways of credit scoringFinancial Well-BeingForaging (Mobility) Traces

Low Risk

HighRisk

PLoS One 2015, Singh, Bozkaya, Pentland

ALMOST 50% IMPROVEMENT

DISTILLEDANALYTICS

Copyright alex pentland 2016

small business credit analytics

DISTILLEDANALYTICS Copyright alex pentland 2016

11

influence model

s1 s2

s1 0.8 0.2

s2 0.2 0.8

4.53 4.54 4.55 4.56 4.57 4.58 4.59 4.6 4.61

x 105

4.53

4.54

4.55

4.56

4.57

4.58

4.59

4.6

4.61

x 105

nz = 11228155

Threshold =0.95Real Time Community Analysis

• A snapshot of the money network• Every “block” represents a sub-

community, containing 1 to several hundred correlated accounts

• Some groups had NO internal direct money transfer!

• We detect the entire “hidden network” around a single fraudulent account

• We can give a profiling, or “credit score” to unknown account, based on their network correlation

• Created with extremely low amount of historical data in near real-time

Bitcoin Fraud

De-anonymization (“Identity merging”)

ENDOR.com

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WHO WILL TAKE A LOAN?

13

1805

136

CANDIDATES 1805

270CONVERTED

CURRENT

X 2 increase in number of loans

ENDOR.com

ENDOR.com

• New sources of data

• New ways to use data

• Smarter Trading

• Smarter Organizations

• Future of Finance

eToro: social learning and

financial performance

strategy flow in eTorofinancial social network

Copyright 2013 Alex Pentland Harvard Biz Review 2013 Pentland

network tuning

Y. Altshuler, A. PentlandCopyright 2015 Alex Pentland

• New sources of data

• New ways to use data

• Smarter Trading

• Smarter Organizations

• Future of Finance

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How does human networked intelligence function?

Copyright 2016 Alex Pentland

Harvard Business Review McKinsey Prize,

Academy of Management

Breakthrough Idea of the YearCopyright alex pentland 2015, all rights reserved

idea flow in companies

• Results

–High potentials talk to more people

–High potentials are more central

– Increased e-mail communication has a negative effect on productivity.

• Why Exploration Matters

– Talking to more people gives you a broader perspective.

– Higher centrality means that you’re the first to discover new

– information and in a better position to access it.

Metric 10% Increase in Exploration Yields

Potential 6.8% Increase

Productivity 10.4% Increase

Increasing idea flow

Copyright 2015 Alex Pentland, all rights reserved

making organizations smarter

16.5 % improvement in mean

14.0 % improvement in std

28.8 % improvement in sharpe-like ratio

adjodha, noriega, pentlandCopyright 2016 Alex Pentland

EVERYONE

BEST PERSON

29% Better

• New sources of data

• New ways to use data

• Smarter Trading

• Smarter Organizations

• Future of Finance

a new paradigm for

computing

Always encrypted

Decentralized, owner control

Open Platform

Data is exposed

Trusted 3rd Party

Walled gardens

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trust.mit.edu MIT INTERNET TRUST CONSORTIUM

this enables safe, easy data sharing! leaky security

Output

Password

and encryptionComputation

Copyright alex pentland 2016, all rights reserved

FIREWALL

trusted identity and personastransparent, incorruptable

Output

SecureIdentity

Blockchain

Computation

Fast Compute (without verification)

Verify Computation

Bro

adca

st Masked

Tran

scri

pt

Rew

ard/Pen

alize

On-chain

Off-chainCopyright alex pentland 2016, all rights reserved

encrypted, transparent, incorruptable

Output

SecureIdentity

Blockchain

Encrypted

Computation

Fast Compute (without verification)

Verify Computation

Bro

adca

st Masked

Tran

scri

pt

Rew

ard/Pen

alize

On-chain

Off-chainCopyright alex pentland 2016, all rights reserved Copyright 2016 Alex Pentland

WeChat for the rest of the world:

invisible banking

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tradecoin

the worlds’ first digital reserve currency

two new books @ visionaryfuture.com

Alex Pentland pentland@mit.edu