Comments on: Weather Derivatives Provider WeatherBill Takes $12.5 Million More

By: Steve E

Steve E — Wed, 17 Oct 2007 21:32:04 +0000

Regarding Enron written all over it…

Yes, Enron were one of the first (if not the first) to trade in weather but it’s now a very active market with many participants.

Energy companies, clothing companies, air con manufacturers, golf courses, ski resorts, agriculture, insurers, banks, brokers, car insurers, holiday companies and even ice cream manufacturers have all participated in weather markets at some point over the last few years.

Temperature, rainfall, wind, snow, all can be used as measures and triggers.

There have been other online markets for this but Weatherbill seems to have got it right by aiming it at the businesses who really need to manage these risks rather than trying to get the big traders playing.

This was perhaps the one market Enron played in that was truely viable. Much more viable than trying to trade bandwidth etc (although there is a possibility there…).

By: Steve Ballmer

Steve Ballmer — Wed, 17 Oct 2007 20:00:02 +0000

Murder_rate_in_Jersey.com
where you bet on what the murder rate is in Jersey each week, is that next?

http://fakesteveballmer.blogspot.com

By: Tom Riley

Tom Riley — Wed, 17 Oct 2007 18:58:22 +0000

As the manager of a small business, this looks like a perfect technology solution to weather related problems. By simply estimating my lost profit for certain events (for example, try to deliver pizza in Seattle when it snows 1/4 of an inch!), I can very quickly and easily hedge than loss. This is what web-based solutions should be doing: taking functionality that only made sense of large businesses (in terms of time, attention, and expertise), and making them accessible to all businesses.
I am having issues actually using the site in either Firefox or IE, so I have complaints. (Can anyone at Weatherbill get their quote service to produce a quote?)
But this is is a real service for real businesses: some of the initial comments appear to miss this point.

By: Matt

Matt — Wed, 17 Oct 2007 18:25:39 +0000

How many times is this title going to change? Grr.

By: QL

QL — Wed, 17 Oct 2007 18:21:22 +0000

This has “Enron” written all over it.

By: FakeMA

FakeMA — Wed, 17 Oct 2007 18:16:19 +0000

WTF

By: JP

JP — Wed, 17 Oct 2007 18:08:52 +0000

CBOT/CBOE could put these guys out of business in a week.

By: Buddy

Buddy — Wed, 17 Oct 2007 17:55:40 +0000

I never heard from that before. Really interesting

By: Mark

Mark — Wed, 17 Oct 2007 17:25:57 +0000

This is perhaps brilliant - what an interesting way to apply the concept of insurance - paying a little bit along the way in case a ‘big bit’ is needed - I’m impressed. This is a fantastic example of new thinking coming from new possibilities.

By: gilltots

gilltots — Wed, 17 Oct 2007 16:43:57 +0000

does the beta come with $1 million and articles of incorporation?? if it does, sign me up!

By: P. G.

P. G. — Wed, 17 Oct 2007 16:20:26 +0000

They definitely have a good market. It ultimately boils down to how splified they make the process for individual customers.

By: Mark Hendrickson

Mark Hendrickson — Wed, 17 Oct 2007 16:16:27 +0000

Also, for anyone wondering why we had two posts up about this story, that’s because Duncan and I reported on it independently by accident. I guess you could say we both find the weather very interesting.

By: Mark Hendrickson

Mark Hendrickson — Wed, 17 Oct 2007 16:13:42 +0000

Our apologies for misleading everyone into thinking Weatherbill enables people to gamble the weather as if it were a casino game. The service is meant rather to provide insurance for companies that could be aversely affected by fluctuations in the weather.

Weatherbill’s CEO informs us that only companies with a net worth of at least $1 million can participate due to regulations of the Commodity Futures Trading Commission. He also says that Weatherbill is the first service to ever provide access to hedges on the weather (online or otherwise).

By: Andrew

Andrew — Wed, 17 Oct 2007 15:55:46 +0000

I wonder if citigroup will sue them for sort of copying their logo

By: Is WeatherBill doing well, really?? | Midas Oracle .ORG

Is WeatherBill doing well, really?? | Midas Oracle .ORG — Wed, 17 Oct 2007 15:46:15 +0000

[...] two– blog posts on it, today (Wednesday, October 17, 2007). Here’s the first one, which basically says that two VCs have just poured $12,5 million dollars in it. Good for them. The second blog post, written by another TechCrunch writer, and which has been [...]

By: ahhh

ahhh — Wed, 17 Oct 2007 15:40:52 +0000

Maybe insurance is too old fashion for techcrunch readers to understand. I mean there’s an actual business there!

By: Steve E

Steve E — Wed, 17 Oct 2007 15:31:44 +0000

This is betting against the weather in the form of risk management. Weather Derivatives have been around for years. This could do really well in my opinion. Good move getting Barney Schauble on board as well, he’s well respected in the weather risk management markets and runs a proper risk capacity provider.

Chicago Merc Exchange trades weather derivatives and has done for a while now, they’re legitimate risk management tools.

Now, who’s going to provide an online Catastrophe Bond market…???

By: Tom

Tom — Wed, 17 Oct 2007 15:29:04 +0000

After trying some wagers, it seems most of the odds are against you if you check local weather. So betting on a day to go above a certain temperature, the only way I could makemoney is if the temperature that day went a whole degree over what weather.com predicted. Which is reasonable I guess if you like gambling or think weather.com is that far off 4 days from now.

A good meteorologist could make a lot of money if he predicted a big hurricane forming before it got into everyone’s system.

By: Deals and Coupons

Deals and Coupons — Wed, 17 Oct 2007 15:14:23 +0000

I’m confused!

By: Interesting Bet: WeatherBill Takes $12.5 Million »TechAddress

Interesting Bet: WeatherBill Takes $12.5 Million »TechAddress — Wed, 17 Oct 2007 14:30:10 +0000

[...] Bet: WeatherBill Takes $12.5 Million Series BSource:Techcrunch2007-10-17 [...]

By: Andrew

Andrew — Wed, 17 Oct 2007 14:26:09 +0000

I’m confused with this whole US betting thing… I thought online betting was illegal?

Can someone please clarify (or point me to an article that does) the following:

- Are people in the US allowed to gamble online?
- How does this relate to gambling sites not based in the US?

thanks!

By: GG

GG — Wed, 17 Oct 2007 14:20:55 +0000

WeatherBill isn’t gambling. According to WeatherBill’s FAQ page, “If you are an eligible buyer, you are entering into a legal and binding Contract with WeatherBill when you purchase a Weather Contract. WeatherBill contracts are commodity contracts intended to be used as risk-management instruments that can help buyers manage financial risk tied to the weather.”

It’s also not insurance. With insurance you need proof of loss. With WeatherBill, that is, derivatives, you just need bad weather to get paid.

By: boon

boon — Wed, 17 Oct 2007 13:36:29 +0000

This is the most bizarre shit I’ve heard of in a while.

By: Serge

Serge — Wed, 17 Oct 2007 13:25:02 +0000

Seems like many small businesses will have a problem: they must have assets greater than $1M due to investment/exchange rules in U.S.

By: Thinker

Thinker — Wed, 17 Oct 2007 13:15:44 +0000

@2 Well if you think this is dumb…try Chicago mercantile exchange..they trade on orange juice and guess what POLLUTION. BTw, they trade weather too. So in essence its not a unique idea. But I guess the peer to peer leg may just be. However as I posted back I don’t know if placing bets online is legal in US.
Also, Weather plays an important role in commodities such as Crude Oil. I work for Nymex so I kinda know that.