DISQUS

A VC: It's Not The Data, It's The Flow

  • Ethan Bauley · 1 year ago
    What Umair is saying is: If you presuppose that a given service is solving a problem for users (and thus attracting interactions and creating data), you will maximize strategic advantage not by "building a data asset" (connoting "proprietary"), but by becoming the most desired collaboration partner within a network of complementary services (via open API, biz dev partners, data portability, etc)

    I think the value in being a "dumb pipe" (lol, really?) within a network of services is WILDLY underrated...

    The link to Umair's original piece is here:
    http://www.bubblegeneration.com/2008/01/data-is...
  • Philippe Bradley · 1 year ago
    yea, I guess I used the expression dumb pipe because it's something I picked up analysing strategy of ADSL providers - whether they should be 'dumb pipes' simply connecting your house to the Internut, or trying to sell you content as well. They tried various things along the way to avoid the low margins, highly competitive dumb pipe business - first walled gardens, then default portals, triple play (DSL, mobile, cable TV/IPTV), and the latest instance of the ugly beast is visible in UK ISP's installing Phorm to track their users' behaviour and target adverts at them ("fiendish pipe", I guess...). I think government lobbying and monopolistic tendencies are an alternative defence against the market pressuring you to get into the dumb pipe business.
  • Ethan Bauley · 1 year ago
    sure, i was not trying to specifically address your use of the term...

    for example i can think of twitter as a "dumb pipe" [don't hate, twitterati;
    just a figure of speech!!] because it is agnostic to the a) content and b)
    medium [SMS/Web/AIR/etc] of the data flowing through it

    (that's not too "dumb" ;-)
  • Soren Macbeth · 1 year ago
    One could even take this train of thought even further and say that allowing user to move their data easily could work as an incentive to build their "master social data graph" at any one particular web service.
  • Don Jones - VentureDeal · 1 year ago
    That makes sense to me - wherever people are most comfortable creating their identity(ies), they'll do it. However, if the value shifts to the flow between Socnets in some way, that could have a bad effect on the monetization value of the individual socnet.
  • Soren Macbeth · 1 year ago
    To say it another way: As long as you are on the path of information flow, it's possible to monetization that information. The more nodes and paths that you are connected to, the more opportunities you have to extract value.

    As Fred said, the information WILL flow around you if you try and restrict it. Ultimately, the more open you are to allowing data to move through your particular web service, the better off you will be in the long run.
  • jeremystein · 1 year ago
    what do you mean by "master social data graph"? are you referring to an aggregate of all of your online profiles (like friendfeed-- but instead it shows your connections as well)?
  • Soren Macbeth · 1 year ago
    I mean any type of data at all. However, since Fred's post was related to the Facebook / Google data sharing flap, I was just giving a relevant example of a data type.
  • gregory · 1 year ago
    seems all the walled-garden, proprietary data, control think is about niche advertising as a revenue model. if one hypothesized that this revenue model has severe limits, what kind of system, platform, service, would you build?

    i don't think we've seen it yet
  • fhwang · 1 year ago
    Another aspect that doesn't get discussed a lot: For a lot of social network users, migration to different social networks (with new social data created during that migration) is going to be natural, for various reasons that don't have much to do with which site has the best features.

    1. First adopter types that think it's cool to be in a certain space will leave social networks once the wrong people (teachers, parents, etc.) come in -- in NYC we see this happen with clubs and bars all the time.

    2. Friendship in real life isn't a binary on-or-off proposition, it's a relationship that decays without constant grooming, and that can be completely subjective. (You can ask two people independently if the other person is a friend, and get different answers.) That makes it profoundly awkward to un-friend people; it can actually be a lot easier to switch social networks entirely and start from scratch. This isn't the only reason you'd switch, but it offers a nice impetus if the friends you strongly care about start moving from Facebook to something else.

    3. Re-creating a friend relationship for some people is the most fun part of a social network -- since it's the activity that's closest to grooming a friendship in real life. I find that the longer I've been on a social network the less fun I have on it. Obviously that's counter to the very real social utility aspect of these sites: I have a lot of friends inviting me to see their band play, or to see their gallery opening, and FB is useful that way. But I'm not sure that the tension will be resolved any time soon.
  • Sylvain Carle · 1 year ago
    "Relationship decay" that's powerful, I don't know any social network that has this figured out. On the other hand, Xobni is the exact opposite for your social-network-in-outlook, surfacing relationships where there is activity. It just works better since it's implicit data (and therefore requires no additional efforts from the user).
  • Don Jones - VentureDeal · 1 year ago
    Since VentureDeal tracks the companies and people involved in transactions between VCs and tech startups, I'm following the data portability issue very closely. I think the value of the data is what you can enable your users to accomplish with it. Make your users smarter or better off in some meaningful, concrete way and you have a business that provides value. To me, it's the combination of the type of data AND the flow of it.
  • sanj · 1 year ago
    I had this realization yesterday when listening to the radio. It was some one-hit wonder. There was a time I thought *everyone* who ended up on the radio had it made in the shade.

    The reality is that it is everyone around them -- the delivery infrastructure industry (aka, the 'flow') that has it made.
  • Nico Lumma · 1 year ago
    all this discussion about platforms suddenly being "open" is really about who is the central hub, from which the other platforms and services can be connected. it is just like email back in the old days, once somebody registered with hotmail, aol oder gmx (in Germany), they were very unlikely to switch away from that email-provider since that email-address was used to register everywhere on the web. if plattforms now exchange some of our data to make it easier to connect to those platforms, they are really just trying to play a more pivotal role for their users.
  • sssrinivasan · 1 year ago
    I dont think feed aggregators cut it for defining what feels like "home". Networking sites give you a deep sense of belonging because of the nuanced Interactions - and feed aggregation pales in that respect.

    What if you took Xobni one step further and not just analyzed the data for relationship awareness, but enabled the Inbox to be a conduit rather than an endpoint? Of course, this would not work with an email Inbox because setting up the filters & forwards would not be scalable at all. But a different type of Rich Inbox, that operated in a networked environment where the user felt like they were managing all interactions across their "personal DNS". A muti-faceted identity based interaction experience would give us both the feeling of home as well as the feeling of instant community.
  • Chris Saad · 1 year ago
    Fred I am all for flow - I have written about it many times and Stowe and I talk about it at length.

    This, however, is not a flow issue. Flow is a user experience paradigm. But first the data must be accessible before it can flow. Facebook is happy to import all your RSS feeds into its news feed, but it wont allow you to access your news feed via RSS for 'security' reasons.

    Just like Microsoft Paint and Adobe Photoshop can share BMP files so that you can perform different features and functionalities on the same data, so too must applications on the web compete to become best-of-breed software manipulating user data - data the user has control of.

    We shouldn't be re'creating' our identities - we should be owning them. Our trusted apps just get to borrow them for a while.
  • Q dub · 1 year ago
    Your final point is extremely powerful:

    Social-networks are creating barriers to switching that have never existed in other domains of content. Don't like XYZ newspaper anymore? Buy a different one tomorrow, or view a different website and start generating pageviews elsewhere. Data-portability is important in bringing SNS back to the same level of competitiveness as other content sources.
  • Philippe Bradley · 1 year ago
    apples to oranges. you're not investing knowledge capital in your newspaper, hence the ease of switching (unless you count getting know the reporters, learning to spot their half-truths, coverups or biases - which I doubt many of us consciously do). Whereas you're investing a lot of intellectual capital in building a social network. Facebook is the service that helps you do that - there's nothing wrong with it keeping it in its own books, not making it public, though it's a pain in the ass for us consumers and I would rather it pick a side (see my comment below - either it's a portable data store - a dumb but secure pipe to wherever I want to add social relevance to a tool, or it's a value-added, funwall, photosharing, superpoking garden - being both, the walled garden, is a PITFA and I will look for more flexible alternatives to this situation (i.e. split responsibility - one site for my network data, and others for the garden stuff). sucks for them.
  • Q dub · 1 year ago
    Not sure if we're actually disagreeing here...

    You're right that users are more vested in the content they've created and it's harder to pick up and leave without portability. That's cause of why structurally, SNS's have enjoyed a lower degree of competition (or churn) than other most other content destinations. So portability can be seen as a return to normalcy in competitive dynamics.
  • davemc500hats · 1 year ago
    data is important, particularly coverage & depth.

    but ultimately it's apps & features, not data, that drive utility & viability.

    that, and revenue ;)
  • gregory · 1 year ago
    data is a shadow cast by desire ... new generation business have to be built around the desire .... data business are not much more than servers

    and umair haque is a spinmaster more than anything, as far as i can read
  • fredwilson · 1 year ago
    Well his spin works for me
  • Philippe Bradley · 1 year ago
    I reckon the reason Google Friend Connect only pulls your facebook contacts' name, photo and link to facebook account is that that is enough for it to build its own social network from (GFC as Google's move to build the largest social network ever hypothesis: http://tinyurl.com/5eg94o). So this (basic/foundation) data *is* important to it: who you are connected to. It's the basic unit of every social network; the rest can emerge around activity (i.e. as you use various GFC/opensocial apps with your contacts everywhere on the web). "foundation" data is, and has always been, name and an address (somewhere I can contact them - be that facebook, an email address, twitter, their myspace page, Disqus account, etc) and it is the basic portable data that I ask from a social network; the different services I port it into (be it Twitter, GFC, my email address book, whatever) can then do whatever funky things I signed up to them to do with my contacts.

    The networks should be competing on the basis of differentiation between the value-added services that they provide me and my social network (work collaboration, social leisure, hyperefficient communication, knowledge mining, whatever) - NOT on possession of basic data (who it is that I'm related to). Is that what you meant about flow vs. data, Fred? I see it more as a tools versus raw materials difference; capital versus service; food versus human being; oxygen versus cell type (neuron, muscle, insulin producing, fat storage, etc).

    ----
    as for revenue, I don't see why both data store and 'flow' can't exist in the economy, just like farmers and urbanites. I need a "primary producer" service to hold my relationship data (names and addresses), and then I need all these value added services (food processing, restaurants, delivery, etc). Both are useful and if an economy develops correctly around all this, we will price the two different services as we value them, and both could/should be revenue generating (but the "tertiary sector" services may have much better margins). But I'd rather Facebook hurried the hell up and picked a side! Heading for the 'home run' of total vertical integration of its value chain seems like a stupidly ambitious/pigheaded thing to do when your workmaterial isn't food, wood, gold, silicon, but data (so easily stolen by scrapers without you ever noticing!). Same story for music labels. duh.
  • Robert Seidman · 1 year ago
    I'm guessing if you ask your kids, it's neither the data nor the flow and that it doesn't matter to them one little bit.

    For the time being, and probably years to come this exercise is largely mental masturbation for the digerati. The discussion about how to value Facebook, MySpace, etc in light of this topic is the more interesting. but I'm sure we'll hear plenty about that in the months to come.
  • Deva Hazarika · 1 year ago
    Excellent post. One comment, though: "So the point is this. Social web services need not fear data portability. They need to fear others providing a better experience." - while I agree with that in a big picture sense, I think that social web services can give themselves more time to improve their experience by limiting the portability of data. The more portable the data is, the easier it is for the provider with the better experience to shift the flow over to their site.
  • efliv · 1 year ago
    This fits nicely with the way I've always thought about Facebook. It's not so much a technology but a willingness, a willingness of it's users to fork over their social network to a third party. However, once people are wiling to give up their info to one site, they won't think so long when forking it over to the next. Whether the user re-enters the data or the new service scrapes it from FB doesn't really matter. It's what you do with the data that matters. I think Facebook broke that mental hurdle for most people and is riding the wave but, like globalization, once the cat's out of the bag you can't put it back in. Also like cats, the willingness of people can be difficult to herd.

    (One might argue that friendster or MySpace broke the barrier first. To that I say, whatever happened to the former and that the latter groups people around common interests and personal, fantasy posturing, while Facebook has gathered a more accurate picture of the graph, i.e. people's real world associations. Too bad for them, they won't be able to hold onto it.)
  • johndodds · 1 year ago
    I think your statement "If they stop providing that value to me, then it will be easy to move on." gets to the heart of the data portability argument because I'd question just how easy/convenient it is to move on. If it were, then surely we'd all sign up and load our graph onto every new social network that came along and wait to see which ones achieved traction and provided value?

    Seems to me there's a strong case for each of us to control our own "data" (be that our graph, our transactions, our needs etc) in our own location and provide customised rss feeds to every application/network with which we choose to interact. If the individual decides where and in what form their data flows, then the incentive for the recipient to provide "a better experience" will be crystalised and they will react.
  • Iz Derdik · 1 year ago
    You say that "They might still have your data but they won't have you. " I think that is exactly why people *do* need to care about Data Portability. If someone provides a better service, I'm sure people would love to move on to it but only if they could take their data with them. I think a more accurate sentence might be "They still have my data so they still have me *sigh* "
  • zachlandes · 1 year ago
    Could someone please explain the following quote to me?
    "Imagine what happens if our Twitter Follow cloud and its Track filtering enable us to nail up and down connections in real time over XMPP. Oh wait, I can do that right now."
    I am not up on the terminology in this and feel very out of the loop right now! Thanks guys!
  • Steven Kane · 1 year ago
    with apologies and genuflections to seth godin and others:

    i think while the technologies and tools -- and jargon -- have evolved, in some cases even radically, the core concepts about data-driven businesses have not changed and probably never will

    and i think there are massive differences between what matters to consumers who use (or don't use) a service or product and what matters to entrepreneurs and businesses trying build scalable and fruitful data-driven business models on top of those services and products

    to consumers, i think its all about:

    1) features

    what can i do with the service or product

    2) interfaces

    how easy or difficult is it for me to what i want to do? how intuitive or obscure is the service or product to use?

    as for entrepreneurs and business owners, i don't think either ownership or flow matter one hoot (unless that is just updated jargon for what i am about to say). i can name many new and old mega-successful businesses that have neither (e.g. experian, abacus, gamesville, etc.). what is core is...

    1) permission

    have consumers given their consent for their data to used commercially, or for revenue generation?

    if yes, BONSAI! congratulations, you have a business. now stop wasting ime on blog comments and go sell access to your data/demographic/userbase.

    if not, hari kari. at best you will be beacon -- admired but dead. at worst you will be indicted and perhaps jailed or fined.

    note: permission usually involves adequate DISCLOSURE (not just blindingly long gray "Terms of Service" texts)

    2) data hygiene

    is your data current - freshly and continuously freshed and updated?

    is your data de-duplicated and validated and -- are your metrics and categorizations not baloney when closely inspected? and especially when used for commercial purposes and revenue generation? in other words, don't tell everyone you have 1 million monthly unique visitors when in fact youy have no idea if that is remotely true or worse, when you produce exactly one click or acquisition for a prtner despite that you ostensibly showed their message to your all of your "1 million unique visitors"

    3) demographics and psychographics

    not all consumers, not all users, not all social graphs, and not all data points are created equal, or equally valuable in the marketplace.

    a simple example: 100,000 "young marrieds" may be worth a whole lot more than 1,000,000 "senior citizens" say, to a mortgage broker. on the other hand, the converse will true if the marketer is a casino.

    at gamesville, we collected literally thousands of data points on our many many millions of registered users (with their complete knowledge and permission of course). but at some point we realized the vast majority of data points were not relevent to advertisers, who in the end really can't make ends meet micro-targeting to such granularity (they need to catch lots of fish throwing big nets otherwise their own overheads get too big).

    so, what matters?

    zip code (from which virtually everything else can be derived or inferred, btw)
    age
    gender
    occupation (titles if possible)
    marital status
    presence of children (the more detail the better)
    presence of pets (the more detail the better)
    household net worth/household income

    and thats pretty much it. even that much is often too much for the average marketer to consider -- after all, like any good scientific buyer, a good marketer will not want to have too many variables in any test or experiment

    btw, if you want to see how much can be inferred from just yoru zip code, check out your "Prizm Cluster" here:

    http://tinyurl.com/8b2vd

    and note that Calritas calls this data sort "YAWYL" - "You Are Where You Live"

    ownership or flow?

    ;)
  • AP · 1 year ago
    There is definitely something to the way Umair thinks. He has me intrigued for sure. Since I am not directly a part of the tech industry, the examples he uses to illustrate his reasoning are a bit difficult to follow. There is something fundamentally different about his approach to thinking about companies, branding etc. I have spent some time on his website but cant seem to find a place where he has laid out his thinking in one spot - about edgeonomics - rather discussion on how strategic thinking by some company is not "edge" compliant. I am in the process of setting up a healthcare entity and feel there is a lot to be learned and adapted by understanding how consumers are behaving in the social media age....can someone please point me in the right direction?
  • gregory · 1 year ago
    umair would say dig deeper

    his underlying principles are decades old, if he has a uniqueness it is that the entrenched players in the industries he targets seem to be less dense than they used to be
  • vruz · 1 year ago
    same as I said a thousand times already.

    customers want water delivered.
    it doesn't matter if you're the lord of the pipes, or the lord of the pump machines.

    if you're in the business of selling water taps, water taps matter a lot.

    but the customer would just love to have water teleported to them if that were possible.

    it all comes down to

    WHAT THE CUSTOMER WANTS

    not what you want to sell them, be it pipes, water taps, pumping machines, or water taps fixing services.
    value resides in getting them water in the most efficient, agreeable, familiar, cheap and convenient way possible.

    however you do it, it's your problem.

    this is not revolutionary at all, it's just proper engineering and marketing.
    things have gotten so twisted that it's become hard to recognise where actual value resides.

    it's revolutionary to call the world round and the species evolving.

    there's a public for those who sell revolutions too :-)
  • Fitzroyalty · 11 months ago
    The problem is that the new information economy of abundance recognises the intrinsic value of information while destroying its commercial value. Nonetheless commercial media organisations refuse to accept this new reality. Result? No coherent business model for online social media. Individuals who value content over profit will win in the new inclusive sharing social media world. Corporates are dinosaurs. Is that a comet approaching? LOLs