Considering he just sold a property he never made a penny off for a price tag in the six figures, Kevin Olson is feeling bittersweet.
The former muni bond trader-turned-investor advocate last month sold municipalbonds.com, a Web site he launched in 2000, to a 32-year-old Web entrepreneur. Neither Olson nor his buyer would disclose the price.
Olson, 48, tried to turn the site into a watchdog exposing egregious markups and inefficiency in the muni market.
After years of posturing for regulators' and investors' attention, he decided it is time to move on.
"I wish it would have been something that the industry had done more with," Olson said. "I wish that there had been more interest from the regulators or from the associations. They were very blunt about their no-interest."
The site, which Olson ran from San Francisco using his own money, offered a number of features meant to enhance transparency in the muni market.
He portrays the market as a mess of opaque pricing, unfair bids that are difficult to obtain, and brokers charging hefty fees on transactions that hardly cost them anything.
The site reported deals with wide bid-ask spreads - meaning bonds that brokers were selling at a big markup - and red-flagged spreads he identified as so gaping he believed they were potentially illegal.
Olson petitioned the Municipal Securities Rulemaking Board, the then-National Association of Securities Dealers, the Securities and Exchange Commission, and state regulators to do more for price transparency and fair bids.
He is not satisfied with the results. He thinks the muni market is in as bad shape now as it was when he first started reporting trades on his site. Now is the time for him to move along, Olsen said.
"Investors deserve more; they probably should get more," he said. "The way things are right now, what good am I doing?"
Olson sold the domain to Bhu Srinivasan, who owns a Web advertising business and plans dramatic changes to the site.
Srinivasan is not an investor advocate. He is a businessman. His hope is that by building a site educating retail investors, he can empower them to make their own decisions.
Srinivasan is founder and chief executive officer of Locale Media, a Stamford, Conn.-based company that sells local advertising on sites run by television networks, newspapers, and magazines.
Municipalbonds.com piqued Srinivasan's interest when he started looking to buy munis for his own portfolio in April. He said he has plenty of equity exposure through ownership of his business, and he was looking for safe, reliable income. Tax-exempt bonds made sense.
Srinivasan said he was struck by a paucity of muni sites friendly and understandable to retail investors.
The Internet offers a ton of information, prices, and news about stocks, but the municipal market - where retail investors buy and hold the majority of outstanding debt - remains murky, he said.
Srinivasan sees a lucrative opportunity for a site offering data on trades and new deals accessible to mom and pop investors.
"Our number-one priority is to educate retail investors," he said. "We're going to make municipal bonds as accessible from a data and information standpoint as what others have done with stocks."
His vision for the new site, which launches Jan. 21, is of a clearinghouse where regional broker-dealers and issuers can market directly to retail investors looking for information on munis.
This puts him in competition with sites like investinginbonds.com and muninetguide.com - even bondbuyer.com.
He plans to offer a dynamic daily yield curve he will formulate using trade data reported to the MSRB, plus a real-time data feed, archive data, and information broken down by state and by sector also from the MSRB.
Srinivasan hopes the site - which Olson never treated as a commercial venture - will make money through advertising and Web sponsorships, as well as marketing fees paid by brokers and issuers reaching investors through the site's platform.
He hopes the site can sign eight regional bond firm sponsorships, along with 50 state offering pages. He aims to sell sponsorships to regional bond dealers, brokers, and bond funds.
Srinivasan has used some of his Locale Media staff to work on ad sales and a team of three developers to beef up the site. Not being an expert on munis, he also said he hired a few advisers to help him understand the market better.
One market Srinivasan does understand is Web advertising, and he points to an interesting synergy between Locale Media and municipalbonds.com: marketing to wealthy zip codes.
Locale Media offers its clients the ability to target particular neighborhoods, home to wealthy potential customers, based on their Internet protocol addresses. This intersects nicely with marketing potential for municipalbonds.com, he said.
Muni brokers and issuers can benefit from targeting zip codes both through marketing to the wealthiest patches of the country and through accessing people who can benefit from tax exemptions by buying munis in the state where they live.
"We can reach hundreds of the top high-net-worth zip codes in California, Connecticut, and New York," he said. "If you want to reach the wealthiest zip codes in San Francisco and Los Angeles, we can do that. You're spending money in pockets where there's a lot of wealth."
Srinivasan is convinced demand for municipal bonds is in the early stages of a mighty upswing.
Google users searched for the phrase "municipal bonds" 165,000 times in December, well over double the monthly average of 74,000 over the past year.
Searches for nearly every related phrase - terms like "municipal bond yields" and "municipal bond market" - also have spiked, according to Google.
Srinivasan sees his new investment as a smart way to play this surge in interest. The first hit on Google after searching "municipal bond" is wikipedia.org. The second hit: municipalbonds.com.
Perhaps even more valuable, municipalbonds.com is at or near the top of the page for searches of "municipal bonds" when nearly any state name is added - for example, "North Dakota municipal bonds."
"As soon as you get a little bit of thawing, you're going to see [liquidity] gravitate toward municipal bonds," Srinivasan said. "It's just inevitable that municipal bonds are going to be a very attractive investment. ... It just takes a very good media company to bring it together."
