In the eye of some entrepreneurs and venture capitalists, the Bloomberg terminal is a bit of an anomaly, perhaps even an anachronism. In the era of free information on the Internet and open source Big Data tools, here’s a business that makes billions every year charging its users to access data that it generally obtains from third parties, as well as the tools to analyze it. You’ll hear the occasional jab at its interface as reminiscent of the 1980s. And at a time of accelerating “unbundling” across many industries, including financial services, the Bloomberg terminal is the ultimate “bundling” play: one product, one price, which means that that the average user uses only a small percentage of the terminal’s 30,000+ functions. Yet, 320,000 people around the world pay about $20,000 a year to use it.

If you think that this sounds like a perfect opportunity for disruption or “unbundling” at the hand of nimble, aggressive startups, you’re not alone. I spent four years at Bloomberg Ventures, and this was a topic that I heard debated countless times before, during and after my tenure there. Most recent example: a well written article in Institutional Investor a few weeks ago declared the start of “ The Race to Topple Bloomberg “, with a separate article highlighting my friends at Estimize and Kensho as startups that “ Take Aim at Bloomberg “.

Yet, over the years, the terminal has seen its fair share of would be disruptors come and go. Every now and then, a new wave of financial data startups seems to be appearing, attempting to build businesses that, overtly or not, compete with some parts of the Bloomberg terminal. Soon enough, however, those companies seem to disappear, through failure, pivot or acquisition.

What gives? And where are the opportunities for financial data startups?

Frontal assault: good luck

To start, Bloomberg is not exactly your run-of-the-mill, lazy incumbent. Perhaps I drank too much of the Kool-Aid while I was there, but I left the company very impressed. Bloomberg, which was itself a startup not that long ago, comes armed with a powerful brand, deep pockets, a fiercely competitive culture, a product that results from billions of dollars of R&D investment over the years, and a technology platform that basically never goes down or even slows down, supported by generally excellent customer service.

But great incumbents have been disrupted before. So there is perhaps another set of less immediately apparent reasons why the terminal has so far been very resilient to disruption by startups:

1. It is protected by strong network effects. One surprisingly misunderstood reason to the long term success of the Bloomberg terminal is that, beyond the data and analytics, it is fundamentally a network. In fact, it was probably the first ever social network, long before the term was coined. Although some believe that its cachet as a status symbol is starting to erode , “the Bloomberg” (as it is often called) has been for decades the way you communicate with other finance professionals (for legitimate or not so legitimate reasons). In its relevant target market, everyone is on it and uses it all day to communicate with colleagues, clients and partners. Web based services (Facebook, Dropbox, Gmail), often banned in financial services companies, haven’t made much of a dent in that, at least for desktop communication.

2. It is an aggregation of niche products. In the world of financial data, there is enough specificity to each asset class (and subsegment thereof) that you need to build a substantially different product for each, which requires deep expertise, as well as a huge amount of effort and money, to address a comparatively small user base (sometimes just a few tens of thousands of people around the world). Bloomberg started with fixed income data and over many years, used its considerable cash flow to gradually conquer other classes (still a work in progress, to this day). So disrupting the Bloomberg is not as “easy” as coming up with a great one-size-fits-all product. It would take immense amounts of venture capital money to build a direct competitor across all those niches.

3. It’s not “just” a technology play. Providing financial data at scale is not a pure technology play, so it is not a matter of coming up with radically better technology to aggregate and display data, either. At this stage at least, there is a whole web of human processes, relationships and contracts with underlying data providers that has been put on place over many years.

4. It’s a mission critical product. This is a key point. In the financial world, data is used to make gigantic bets, so total accuracy and reliability is an absolute must – which makes people cautious when experimenting with new products, particularly built by a startup.

The Bloomberg terminal business may face macro headwinds, as described in the Institutional Investor piece (dwindling of the number of relevant jobs on Wall Street and a global shift from desktop data to data feeds). However, as a result of the above, I don’t see the Bloomberg terminal being entirely “toppled” by any one given startup anytime soon, and I think even competing directly with any of its key functionalities (unbundling) is a tall order for startups, even with access to large amount of VC money. Not that it can’t be done – I just think there are lower hanging fruits out there and some real benefit to position away from the Bloomberg.

Where are the opportunities in financial data?

While I don’t see much opportunity for startups to build a Bloomberg terminal replacement (or a a replacement to Thomson Reuters or Factset, to be clear), I think there are fertile grounds “around” and “below” the terminal – meaning in areas where the company is unlikely to want to go.

Specifically, I believe there are going to be ongoing opportunities to apply some of the quintessential internet concepts and processes (networks, crowdsourcing, etc) as well as new-ish technology (Big Data) to the world of financial data, including:

1. Finance networks/communities. Like the Bloomberg terminal did, some of the more interesting “adjacent” plays opportunities will marry data, tools and community. Historically, capital markets haven’t seen much of a sharing culture (lots of nuances here, I know), which is in part due to the nature of finance investing itself – however, it’s going to be interesting to see how, at least in certain areas, that culture will evolve as digital natives rise in the ranks of their organizations. Beyond early entrants Stocktwits and Covestor (which generally target a more casual audience), examples of such professional communities include SumZero, initially for Buy Side analysts but now wider, and more recently Quantopian, an algorithmic trading community where scientifically educated people and other quant types share strategies and algorithms. Early stage startup ThinkNum thinks financial models should be shared and wants to the “Github” for financial models. What else can be shared?

2. App stores. The app store model is an interesting way of leveraging the expertise of a “crowd” of specialized third party developers (Bloomberg launched its own a couple of years ago). OpenFin, for example, provides infrastructure to enable the deployment of in-house app stores, addressing the necessary compliance, security and inter-operability requirements (having data flow from one tool to the other). A combination of an in-house app store infrastructure with some best of breed applications (say, a ChartIQ, which provides HTML5 financial charts, including technical analysis tools) is an interesting approach to target the portion of the market “below” the terminal, as companies that cannot afford a full on terminal infrastructure could pick and choose the apps they need and have them work in their environment.

3. Crowdsourced data. From Estimize (which crowdsources analyst estimates) to Premise (which crowdsources macroeconomic data through an army of people around the world equipped with mobile phones), a whole new way of capturing financial data has emerged. Quandl, a financial data search engine, has aggregated over 8 million financial and economic datasets through both web crawling and crowdsourced, community contributions. Once such a data platform has been built, could third party developers add analytic and visualization tools on top, essentially resulting in a crowdsourced “terminal” of sorts that would be reliable enough, at least for non mission critical, non real time use cases?

4. Big Data “insights”: Extracting signal from data is obviously the end game here, and interesting startups are heavily focused on those opportunities, from Dataminr (social data analytics for Wall Street) to Kensho (which is working on “bringing the intelligent assistant revolution to finance”). In terms of market positioning, it is unclear to which extent those technologies compete with the Bloomberg terminal (which, for example, has been very active on the social data front), or potentially complete it.

The big question facing entrepreneurs and VCs alike is how to scale those businesses and turn them into billion dollar companies in a context where solidly entrenched platforms have a stronghold on arguably the juiciest part of the market. But overall I believe that we’re only going to see more startups going after financial data opportunities, with potential for some serious wins – I’m excited to see how it all evolves.