Flow diagram showing how Dysrupt Labs uses artificial intelligence to distill crowd forecasts into the Almanis Insight signal. Research shows crowds beat experts. Almanis Insight beats crowds.

Company profile

Company: Dysrupt Labs

Sector: Internet DaaS

Location: Melbourne

Profile: Dysrupt Labs is a research-focused private company working on re-engineering prediction markets. If final experiments are successful, the company will commercialise their product in 2019, targeting governments, hedge funds and banks.

Why R&D is needed

Dysrupt Labs formed to help organisations access collective intelligence, with a focus on market mechanisms for aggregating this intelligence. Applications include forecasting elections and other geo-political events. Founding partner and CEO Karl Mattingly, previously a senior banking professional in Australia and the US, was originally inspired by reading James Surowiecki's Wisdom of Crowds.

“The dataset is generated from human sensors and the unique way we bring all those humans together to predict the likelihood of a future event.”
— Karl Mattingly, CEO, Dysrupt Labs

Since inception in 2013, the Dysrupt Labs team have developed a human-centric platform that harnesses collective intelligence. The platform helps organisations access more accurate and timely forecasts compared to traditional forecasting methods.

“Prediction markets are accurate about 7 times in 10. If they are lucky, experts are right about 6 times out of 10. We have taken the prediction markets and using artificial intelligence have increased the accuracy from 7 to 8 times out of 10,” Mr Mattingly said.

Through collaboration with the Brain Mind and Markets Lab at the University of Melbourne, Dysrupt Labs has applied artificial intelligence (AI) to the dataset to increase accuracy. The platform has been built to use AI to identify when a poll or a survey or market is possibly wrong. AI takes out the emotion of the crowd to provide a more measured view of opinion.

Mr Mattingly says Dysrupt Labs analysed the 2016 US election using their platform. “The world said that Hillary was 87% more likely to be president the day before the election. Our AI said that she was 53% likely and that Trump's election was in the margin of error. In other words, AI predicted that it was a coin toss when the rest of the world said it was a landslide.”

To date the research carried out by Dysrupt Labs has been focused on re-engineering, re-imagining and re-conceiving existing prediction markets to improve forecasting accuracy. The company’s research also uses combinatorics, a mathematical theory relating to the likelihood of a combination of events happening.

The target market for commercialisation is government, hedge funds and banks. Governments can use this sort of intelligence for geo-political forecasting.

Hedge funds and banks can identify key drivers of interest rates, inflation rates, exchange rates and listed equities. The team is also exploring potential applications in medical research, disease and epidemic tracking.

Dysrupt Labs filed a joint patent in February 2018 with Murdoch Childrens' Research Institute at the Royal Childrens' Hospital in Melbourne.

How the Research and Development Tax Incentive Helps

Mr Mattingly says the R&DTI has been pivotal to their research and has kept Dysrupt Labs in Australia. Without the R&DTI program, the business would have relocated to the US.

A major benefit has been the ability to claim the tax incentive when the company is pre-revenue. The time and costs for research conducted by the Dysrupt Labs team far exceeded their expectations. Without the R&DTI program, the company could not have continued its research in Australia.

“If this program had not existed, I would have relocated to the US. The R&DTI program meant I was able to keep the business in Australia and grow the business in Australia.”
— Karl Mattingly, CEO, Dysrupt Labs

The R&DTI also allowed the Dysrupt Labs to build capability in Melbourne, including skills in financial software design, price formation in prediction markets and the detection of expert traders. The company has a team of 12 working on the platform, most of whom are mathematicians.

To gain entrance in to the R&DTI, Dysrupt Labs initially engaged The Compliance Group to help them apply for the program. This proved a successful way to quickly understand what the program was, how to apply and what was required to maintain appropriate records. Since then, the team has built in-house expertise and The Compliance Group assist in an auditor role.

“The R&DTI program has helped us survive an extra 2 years and now we will probably succeed rather than fail.”
— Karl Mattingly, CEO, Dysrupt Labs

RDTI Impact Facts

  • Enabled a globally competitive capability to be built in Melbourne rather than overseas.
  • Allowed the company to take the technology of prediction markets and increase the accuracy of predictions from being accurate 7 times out of 10, to being accurate 8 times out of 10.
  • Supported forecasting capabilities with potential public benefit applications like medical research and in tracking disease and epidemics.

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