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Google: The Information-First Conglomerate

By - November 21, 2014
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Larry Page on the cover of Fortune, Nov. 13 2014

Last week Google CEO Larry Page got the Fortune magazine cover treatment, the latest of many such pieces attempting to quantify Google’ sprawling business. The business press is obsessed with answering the question of whether we’ve reached “Peak Google.” (Clearly Fortune’s opinion is that we have not, given they named him “Businessperson of the Year.”)

“Peak Google” is what I like to call a “contagious misconception” – it seems to make sense, and therefore is worthy of consideration. After all, we’ve seen IBM, Microsoft, and other companies hit their peaks, only to drop back as they face the innovator’s dilemma.  Search is past its prime, Google is a search company, ergo – Peak Google.

But as the Fortune piece argues (and yes, I’m quoted, for what that’s worth), Google has a lot more going on beyond search. And while it continues to milk that multi billion-dollar quarterly profit center, it’s built five additional billion-dollar businesses – some of which are directly related to its search empire, but others that are not. Google Apps/Cloud, YouTube/Play, Android, Ventures, and Adtech are already past the billion-dollar mark. Huge businesses in waiting include plays in home automation (Nest), healthcare (Calico), transportation (Chauffeur/self driving cars), and connectivity (Fiber). Beyond that group lie a dozen or so potential blockbusters in energy, robotics, AI, wearables, and the unknown moonshots behind the curtains at GoogleX.

It’s that stunning breadth of scope – what Fortune calls the company’s seemingly limitless ambition – that has caused a prolonged internal debate around Google mission statement:

“To organize the world’s information and make it universally accessible and useful.”

Page has been floating trial balloons about expanding Google’s mission statement for nearly two years. When Tony Faddell, CEO of Nest, announced Google’s acquisition to his staff in January of 2013, Page took the stage and took questions from the stunned audience. One staffer asked Page why Google had any interest in a home automation company – it seemed quite orthogonal to Google’s focus on search, apps, and mobile. According to sources at the event, Page answered by acknowledging that Google’s mission statement may not be large enough to contain his company’s ambitions.

Since that first admission, Page has been testing out the idea of an expanded mission, and with Fortune he aired his ambivalence in public, telling Miguel Helft that “it’s probably a bit too narrow.” And on first blush, that seems right – what does a thermostat have to do with organizing the world’s information, anyway?

Actually, quite a lot.

When you look at Google through the lens of what I call “information first” businesses, things start to make a lot more sense. By that measure, Google is not only an information-first company, it’s also the world’s first information-first conglomerate – starting or buying businesses in every market undergoing the transition from “matter first” to “information-first.”

We see the transportation business shifting to information first, for example. The currently maligned but nevertheless extraordinary Uber is proof of it, but so is Zip Car, Tesla, and the entire autonomous car industry. The true value of these new kind of businesses is in how they understand information flows in the transportation markets, then execute new approaches to old problems (how do I get from here to there?) using novel and/or more efficient methods based on information technologies. Uber doesn’t put cars (commodities) or drivers (means of production) first – it puts information processing first. The cars and driver then reorganize to the new information flows and – voila! – a $17 billion company is born in four years. Uber proves that if you solve difficult information processing problems in traditional markets, you can create world beating value. Airbnb, DocuSign, Lending Club, and many more are further examples of the same thesis.

So what markets are ripe for transition to an information first framework? Well, let’s break down what makes for a “ripe” market. I think there are two key attributes of a market ready to be radically shifted by an information-first approach. First, a market where there’s liquidity of poorly organized and processed information. In other words, there’s a ton of data, but it’s not well organized or computed. Think about the world wide web in 1998, for example. Sh*t tons of information, terribly organized and lacking a processing layer. Google came in and – voila – a multi billion dollar company was born in five short years. Secondly, look for a market currently controlled through centralized chokepoints, but with the potential to be rapidly reorganized if and when consumers gain control. Again, look at search – before Google, portals like AOL and Yahoo ruled the web. Everyone went to a chokepoint to “see what was on the Internet.” After Google, consumers took control of their own web surfing.

So…what markets have both data liquidity and are currently controlled by centralized chokepoints? Well, let’s look at mobile. Tons of data, terribly organized, controlled by the chokepoints of carriers and OS vendors. Check! Or, how about healthcare? Oh hellz yeah! Energy? Yep! Connectivity? Most certainly! Markets where there’s not yet liquidity of information, but there’s about to be – home automation, food, retail – are also ripe for reinvention.

The world is turning into information, and that information wants to be organized, accessible, and useful. I don’t think Google’s mission needs to change at all. Whether or not they knew it at the time, Google created a manifesto that I believe will prove to be dead on in the context of an economic shift to a information-first paradigm. And when the history of this era is written, I’d wager that Google will be seen as the first information-first conglomerate to both identify and exploit that shift.

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The Web Will Kill Apps

By - November 17, 2014

wired web dead coverLots of the “apps are killing the web” meme going around these days, with the latest batch of casket sealant come from no greater validator of commonly agreed upon wisdom than the Wall St. Journal. “The Web Is Dying; Apps Are Killing It” argues Christopher Mims, and it’s hard to argue with him given the preponderance of current evidence.

I disagree.

I am in the midst of a long stew on the future of mobile, it’s taken me through deep links and intelligent links, to the future of search on mobile and beyond, and I’m nowhere near finished with either the reporting or the writing – so I can’t definitively counter the Journal’s argument – yet. But I feel it in my bones – apps, what I’ve disparagingly called “chiclets” – are not the model of how we will interact with information, services, or the world via mobile. The best of the web – open, low cost to entry, no gatekeepers, end-user driven, standards-based, universal namespace, etc. – will prevail.

Why am I so sure of this? Because just about every single person I’ve spoken to – some three dozen or so, to date – are convinced we’re in a secular shift from the app model to….something else, something new, something better. I had a great meeting today at the mobile search startup Jack, for example, with people who are super-qualified to have opinions on the matter (ex Facebook, Excite, Apple, et al, backed in a quiet $6mm round early this year by John Lilly and Reid Hoffman at Greylock). And they are not alone – the caliber of people I’ve encountered who share my point of view is extraordinary. Something big is brewing, and I’m deep into figuring out how to frame it. It’s  a big story, and I don’t know if I can tell it as well as it deserves to be told. But I’m going to try, and if you’re reading this, well, it’s your job to course correct my attempts.

Stay tuned. The web as we knew it ten years ago may be “dead,” but its core values and framework are alive, kicking, and poised to once again disrupt the current oligarchs of mobile.

The Internet Big Five: Doubling In Three Years On A Trillion Dollar Base

By - November 16, 2014

From time to time I have tracked what I call the “Internet Big Five” – the key platform technology companies that are driving the Internet economy. Nearly three years ago I wrote the first of this series – The Internet Big Five. I identified Apple, Google, Microsoft, Amazon, and Facebook as the “big five,” and compared their relative strengths in financials, consumer reach, and technology strengths. Some of the metrics were admittedly subjective – ranking relative offerings in “engagement” and “data,” for example.

It seems about time to take another look at the Big Five, and to consider a changeup – the introduction of Alibaba as a public company in the US certainly merits consideration. But before I do that, let’s quickly take a look at how the companies have fared over three short years.

Nov. 14 big five market cap

The first thing to observe is this: The top five Internet companies had a combined market cap of nearly one trillion dollars three years ago, a very large base to be sure. But in those three short years, the group managed to almost double their market cap – to $1.8 trillion. That’s impressive growth, and a testament to how central the markets believe these companies to be in our economy. Also, in terms of relative market cap, the Big Five have stayed pretty constant, with Facebook lapping Amazon, but not reaching the heights of Google, Microsoft, or Apple. It’s interesting to see that the market still values Microsoft above Google, something I imagine might change over the next three years.

Stock prices show a similar trajectory. You’d have almost doubled your money if you had invested in these five companies back in late 2011:

Nov. 14 stock big five

Clearly these companies are killing it at a very large scale. And Alibaba, at a market cap of nearly $300 billion, can now claim its place comfortably on the list above both Facebook and Amazon.

But what about strategic strengths? This is the area I find fascinating. Two years ago I wrote The Internet Big Five By Product Strength , and featured this chart:

TheIntBigFiveByProdv2-1024x642

Pulling back, it strikes me that the chart needs a refresh – something I hope to do during the more reflective down time of the coming holidays.  I’d also like to add in Alibaba. But a quick scan of this two year-old chart shows some interesting developments.

In Operating Systems, Social, and Entertainment, each company’s position has pretty much remained constant, but Facebook’s Oculus purchase bears watching in all three fronts.  In Productivity Software, Google’s position has strengthened, as has Apple, but I’d give the edge to Google, whose Apps suite has gained serious traction. In Advertising, Facebook is now very strong, Amazon has also strengthened, and it seems Apple has determined that advertising is a necessary evil not worth pushing very hard. “Tablet” doesn’t feel like a category to break out separately anymore – in the next rev, I’ll probably just call it “mobile devices.” In that category, Microsoft keeps trying but not gaining traction, Amazon flopped with Fire Phone but holds steady with Kindle and Fire tablets, and Facebook seems uncertain if it wants to play. Google and Apple remain the kings. Search as a category that bears scrutiny – what is “search” in a post mobile world, anyway? This question is fundamental to the next five or so years in computing, I’d warrant – expect more posts on that over the holidays. In Payment, Apple has strengthened, And in Voice, almost all the players have improved as well.

All of these companies have shifted over the past three years, some in unpredictable ways. With Page back at Google, the company has broadened its scope to include wearables, transportation, health, and energy. It’s become what I’d call the world’s first information-first conglomerate. Apple has kept its narrow hardware focus, expanding slowly into wearables (the watch) and shying from bets outside its clear wheelhouse. The market seems to be rewarding this focus. Facebook has made some big bets with drones and VR, and its advertising business is on a tear. Amazon hasn’t have any breakaway hits over the past three years, and I sense the company is uncertain how to proceed given the maturity of its core market.

In fact, one way to think about these behemoths is to identify and explore their core cash cows, and then map their strategies to diversify from that core. To wit:

Apple ———> Hardware

Microsoft —–> Desktop, Enterprise SW

Google ——–> Search Advertising

Amazon ——-> eCommerce

Faecbook —–> Social Advertising

Perhaps that’ll be the fodder for another post.

Whither the Public Commons? Enter The Private Corporation

By - November 05, 2014

uber-protests-europe

(image) From time to time a piece reminds us that we are in a slow, poorly articulated struggle over what we hold as a public commons. That was the case with Vanity Fair’s Man and Uber Man, a profile of Uber’s Travis Kalanick by Kara Swisher. Swisher deftly captures Kalanick’s combative approach in prosecuting what he calls Uber’s “political campaign” to beat established regulated markets in transportation, a campaign he believes he must win “98 to 2″ – because the candidate is a product, not a politician. In short, Uber can’t afford to win by a simple majority – this is a winner takes all scenario.

This gives me pause, and I sense I’m not alone. On the one hand, we praise Uber for identifying a huge market encumbered by slow moving bureaucracy, and creating a service markedly better than its alternatives. That’s what I’ve called an “Information First” company.  On the other hand, we worry about what it means when something that was once held in public commons – the right to transportation – is increasingly pushed aside in favor of private alternatives. Messy as it may be, our public transportation system is egalitarian in its approach, non-profit at its core, and truly public – as in, bound to the public commons through government regulation.

Are we sure we want to outsource our commons to private companies? I think that’s the existential question we face as a society. I wrote about it three years ago in a post What Role Government? From it:

Over the past five or six decades, we’ve slowly but surely transitioned several core responsibilities of our common lives from government to the private sector. Some shifts are still in early stages, others are nearly complete. But I’m not sure that we have truly considered, as a society, the implications of this movement, which seem significant to me. I’m no political scientist, but the net net of all this seems to be that we’re trusting private corporations to do what, for a long, long time, we considered was work entrusted to the common good. In short, we’ve put a great deal of our public trust into a system that, for all the good it’s done (and it’s done quite a lot), is driven by one core motivation: the pursuit of profit.

The question of the role we wish government to play seems even more pressing given the advance of largely private services such as Uber. We are in the midst of a heated social conversation around the topic, and we see the edges of it when silly insta-startups pop up to privatize public space such as parking spots. In my longer piece, I identify a series of areas where we’ve outsourced formerly public “features” of our lives to private companies. The trend has only strengthened since, and I don’t expect it will flag anytime soon.

So perhaps instead of “What Role Government,” or “What Commons Do We Wish For,” the question we need to ask ourselves is this: What kind of a corporation do we want? If we are going to have corporations play a larger and larger role in what we formerly understood to be the public commons, we might want to we spend a few cycles asking ourselves what kinds of behaviors and values we want our companies to exhibit?

Come to think of it, that’s kind of why I started NewCo last year. It strikes me that we’re just starting to have a conversation about those corporate values. I laid out some of this in What makes a company a “NewCo”?, to wit:

Driven by capitalism’s central motive – profit – corporations have become one of the most powerful actors on the global stage. Besides government, no other institution in society has amassed as much wealth, power, and control as the corporation.

But at their core, corporations are just people. And over the past few decades, in parallel with the rise of the Internet, those people have begun a quiet revolution that has redefined what a “corporation” can be.

The global economy is transitioning from hierarchical models of command and control to more networked and flexible approaches. A new kind of organization – one that measures its success by more than profit – has emerged. We call these companies “NewCos.” As the networked, information-first economy has taken hold, NewCos are building innovative, purpose-driven new ways of doing business.

A NewCo views “work” as more than punching a clock or doing a job. The people behind these companies believe work can equate with passion, community, and a force for positive change.

 

It’s fascinating to watch the debate over Uber play out – is it a good actor, or a bad one? Is its CEO a driven role model or a bully? Or is it, perhaps, still figuring out what it really means to have the public trust? Once you’ve won that trust,  well, maybe that’s when the real work begins.

Else 11.03.14: It’s Over, Google. Now What?

By - November 03, 2014

google-s-cost-per-click-growth-year-on-year_chartbuilder-1(image) Our friends in the press have decided that search has had its decade in the sun, and I can’t disagree, at least as it was known before. The question of how it becomes something else is still very much afoot, but not solved. But glimmerings abound, including from Twitter. For more, read on for the week’s best links….

Google’s dominance in search is nearing its peak – Quartz

A number of “Peak Google” pieces are in the air. But let’s not forget that Google has multi-billion dollar businesses in Android, YouTube, Ventures, and Apps/Drive et al. And it’s making plays in auto, healthcare, and energy. I don’t think Page is resting. To wit:

FT interview with Google co-founder and CEO Larry Page – FT.com

Page has been tessting a “we need a new mission” trial balloon for more than a year now, ever since the Nest acquisition (which is kind of YouTube like, come to think of it.) If you follow Google, read this summary of the Page interview.

Twitter’s Audacious Plan to Infiltrate All Your Apps – Wired

I am glad Wired wrote this piece, because I had not yet groked Fabric. Now I want to know much, much more. In short, Twitter’s new Fabric tool set is aimed squarely at mobile developers, helping them do a bunch of things that were previously hard and expensive. This may well get Twitter’s code in tons of apps, and provide, well, a fabric for the mobile web that didn’t exist before. Think AWS for mobile services.

Why the U.S. Has Fallen Behind in Internet Speed and Affordability – NYTimes.com

Reading this makes me angry. Why do I pay nearly $200 a month (two Comcase business plans) for such crappy service? Oy.

So Facebook controls the way millions of people get their news. What should we do about it? — Gigaom

We have a choice to make as publishers – do we take Facebook’s new deal, where we can pbulish directly on its platform? I think readers know where I stand on this one – Put Your Taproot Into the Independent Web.

It’s time for a biological commons – Medium

Strong idea, though I’m not savvy enough to understand if the metaphor holds completely.

The Three Breakthroughs That Have Finally Unleashed AI on the World – Wired

Kevin Kelly never disappoints when it comes to the technium. Then again…

Should Airplanes Be Flying Themselves? – Vanity Fair

This very long piece on the crash of an Air France jet back in 2009 is riveting. Steeped in larger questions of the role humans and algorithms/AI play in our lives.

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Else 10.27.14 – Assange Takes on Google

By - October 26, 2014

23200_large_google-dr-evil(image) So what are the most powerful, important, noteworthy stories of the past ten or so days? Read on to find out….

Assange: Google Is Not What It Seems – Newsweek

Julian Assange veers between wild eyed conspiracy theory and, well, level-headed conspiracy theory in this rather factless but quite compelling read.

The Surveillance State and You - Vice

Behind the scenes when Snowden spilled the beans.

The Digital Media Layer Cake — Backchannel — Medium

A breakdown of how value is working in today’s media world. Worthy.

The End Of Apps As We Know Them – Inside Intercom

This company is on top of the most important story on the future of mobile.

Peak Google – Stratechery

Great piece, but flawed. I rebutted it: “Peak Google”? Maybe, But Is “Native” The Reason?

The age of loneliness is killing us – The Guardian

I understand the argument but am unsure if this is really an issue, or rather, something we always struggle with.

Nerd culture is destroying Silicon Valley – Quartz

An ongoing meme these days, however – if nerds are destroying it…who built it?

Else 10.13.14: Smiling Happy Facebook People (Not Teens, Though)

By - October 12, 2014
Facebook Atlas

Now you can buy real, smiling, happy shiny people all over the web, courtesy Facebook.

Today’s summary covers the past two weeks of worthy reads, with a strong dose of the Internet’s twin titans Facebook and Google. I’ve also been busy writing on Searchblog, so you’ll find three of my own pieces highlighted below.

Facebook’s new Atlas is a real threat to Google display dominance — Gigaom

The first such challenge in … forever.

Facebook is unleashing its ads—and surveillance—onto the internet at large – Quartz

And while it took a long time, it’s now real. So what does it mean for publishers? Read on…

A tip for media companies: Facebook isn’t your enemy, but it’s not your friend either — Gigaom

The industry seems to be slowly waking up to the fact that Facebook is more complicated than perhaps we gave it credit for. Sure, BuzzFeed has been winning by leveraging viral content, but now that Facebook is leveraging its data across the web, including the data it picks up from publisher’s sites, those same publishers are starting to do the math and realize that perhaps they aren’t winning after all.

Teens are officially over Facebook – The Washington Post

Until they’re not.

Programmatic Ad Buying to Reach $21 Billion – CMO Today – WSJ

That’s a very large piece of a growing pie – and it’s set to only increase as programmatic underpins nearly all digital advertising, period.

Some pros and cons of Google’s plan to give every “thing” a URL — Gigaom

The phsyical and digital come one step to connection in this Google-led open source schema. Browse the web, browse the world…

End-user computing — The Truant Haruspex — Medium

I love pieces like this. From it: “We increasingly live in a computer-embroidered reality, and the ability to manipulate that reality is empowering. If we can find a way to bring that ability to a wide audience, it could have an impact comparable to the invention of the printing press.”

A Secret of Uber’s Success: Struggling Workers – Bloomberg View

“On-demand has thrived, in part, because the nation has dropped a bedraggled and optionless workforce in its lap — and on-demand’s success depends in part on the idea that our nation won’t change.”

Venture capital and the great big Silicon Valley asshole game | PandoDaily

Any piece that starts with “Silicon Valley has an asshole problem, and it’s high time we owned up to it” is going to get attention, and Sarah Lacy’s piece did exactly that. Lacy deconstructs the forces driving behaviors in the Valley these days, and finds our industry wanting.

Killer Apps in the Gigabit Age | Pew Research Center’s Internet & American Life Project

What might a true gigabit Internet bring? Pew asked the experts.

A Master Class In Google — Backchannel — Medium

Steven Levy is right – to understand the world today, it sure helps to understand Google. Not sure that’s possible, but one can try.

Marc Andreessen on Finance: ‘We Can Reinvent the Entire Thing’ – Bloomberg

This interview lit up the Interwebs big time last week.

You are not your browser history. — Medium

Artist Jer Thorp launches a project to visualize what can be known from browser history.

New Statesman | The most influential tech company you’ve never heard of

Spoiler: It’s Alcatel-Lucent.

The NSA and Me – First Look

Veteran NSA watcher James Bamford tells his story.

The Next Stage of Mobile Quickening: Links Get Intelligent- Searchblog

In which I argue that what Branch Metrics is doing is a good next step toward a true mobile web.

My Picks for NewCo Silicon Valley – Searchblog

NewCo SV is next week!

Living Systems and The Information First Compan- Searchblog

Companies that put information flows at the center of their businesses are winning.

Living Systems and The Information First Company

By - October 11, 2014
uber map

A map tracing the information flows within Uber’s San Francisco market.

One of the great joys of my career is the chance to speak at gatherings of interesting people. Sometimes it’s an unscripted, wide ranging conversation (like during Advertising Week, for example), but other times it’s a formal presentation, which means many hours of preparation and reportage.

These more formal presentations are opportunities to consolidate new thinking and try it out in front of a demanding audience. Last month I was invited to speak in front of group of senior executives at a major bank, including the CEO and all his direct reports. I was asked to focus my remarks on how new kinds of companies were threatening traditional incumbents – with a focus on the financial services industry, as you might imagine.

Now, I’m not an expert in financial services, but I do know how to ask questions, and I’ve been watching as the core assumptions any number of markets, from media to transportation to hospitality, have been upended by Internet upstarts like Buzzfeed, Uber, or Airbnb. So I started preparing for this talk by interviewing half a dozen or so senior executives at the bank. I was prepared for defensive answers, but instead found myself pleasantly surprised – not only did these executives acknowledge a threat, they also spoke eloquently about the self-created barriers which blocked their ability to respond. Some of these barriers were regulatory and therefore out of their direct control, but many were organizational – this bank had been in business more than 100 years, and its DNA was pretty deeply set.

There’s no dearth of literature and leaders with strong points of view about corporate change – Clayton Christensen’s Innovator’s Dilemma  is the classic, and there are plenty of others – Downes’ Big Bang Disruption and Moore’s Crossing the Chasm come to mind. But I’ve not made my living writing about corporate disruption, nor do I expect I ever will. As much as these kinds of books lay out specific and intelligent management lessons, I didn’t want to dole out second hand advice – after all, if the banks wanted to hear that, they could have asked Christensen, Downes, or Moore.

So preparing for this talk forced me to do exactly the kind of hard work any writer both fears and relishes – coming up with something original to say.

So I started to think about why it is that large enterprises fail to innovate. What was it about new, digital companies – which I’ve come to call “NewCos” – that allows them to so quickly pose significant threats to the incumbents in their respective markets?

It struck me that corporations – which by US law enjoy the status of personhood – act much like organisms in biological systems. Some are fitter than others, and every so often you see punctuated equilibrium – a quick reset of the ecological landscape. Further, it struck me that we’re in the midst of such a phase shift as we become information – a theme I’ve written about quite a bit (and the core thesis of my long-unfinished book).

That got me pondering the role of information in companies. I wondered, what is the role of information in biological systems? A bit of Googling reminded me of living systems theory, which I last encountered reading Kevin Kelly‘s What Technology Wants, which posits that technology itself is a living system. But I found myself pursuing a narrower path: What if we understood corporations as living systems? Might there be an insight or two to gain?

Living systems theory is the work of biologist James Grier Miller. From the wikipedia entry: “Living systems are open self-organizing living things that interact with their environment. These systems are maintained by flows of information, energy and matter.”

Bingo – there it was, right in front of me – a new way to think about corporations. The first thing that struck me in this definition was the use of the word “open” – most large enterprises are not open in most senses of the world. But most interesting was the framework of understanding flows of information, energy, and matter in a corporation. Immediately, I came up with a hypothesis: most corporations are organized to maximize their use of energy and matter, because those are the most expensive parts of their businesses. NewCos, on the other hand,  place information at the center of their business.

Put another way, NewCos are “information first” companies.  They map the flows of information in a market, and organize themselves so as to exploit or leverage those information flows, even if the flows are “potential information” – information used in a new way, a manner which may be more efficient, productive, or valuable. Put information first, and let that determine how best to organize energy and matter. Industrial era-companies, on the other hand, value their hard assets first (energy, matter), and only view  information  as a way to organize or protect those assets.

I’ve been wandering the halls of theory for a while here, so some examples are in order. I’ll start with everyone’s favorite disruptor, Uber. What has Uber done? Well, it’s stared long and hard at the information flows of the transportation business, and it’s created a service that re-imagines how, by leveraging information flows, it might go about more efficiently organizing the energy (people, gasoline) and matter (automobiles, roads) in that market. Uber is an information first business, whereas taxi commissions, rental car agencies, and even automobile manufacturers are energy and matter-first businesses.

Or let’s look at another market: hospitality. Hotel companies are energy and matter-first businesses – they look at the world as a collection of places where expensive hotels might be built, and they then spend a lot of energy and money convincing the market to come to their hotels. Airbnb focused on information flows first, and created a new approach to organizing the energy and matter of the hospitality market: it uses information to organize people (energy) and matter (people’s homes).

Once I started thinking about companies as either “information first” or “energy and matter first,” I began to see information first companies all over the place. This wasn’t hard, because I’ve been spending the past year looking at applicants for NewCo festivals around the world. GrubHub, for example, takes an information first approach to take out dining. Casper takes an information first approach to the design, manufacturing, sales and delivery of mattresses. DocuSign is obliterating paper with it’s information-first approach to trusted signatures. Hampton Creek is a classic information first company in food. On and on and on – the theory is perhaps too neat, but neat it was nevertheless.

Then I wondered – what are the information first companies in financial services? After all, I needed to bring this theory home with a strong example native to the folks who I’d be speaking to. And that’s when I remembered Earnest, a NewCo I had visited during our San Francisco festival.

Earnest

And man, does Earnest bring the point home in spades. In my talk to the bank, I laid out how Earnest’s “information first” approach allows it to entirely rethink the lending landscape. First, I explained how Earnest works: It builds an information-rich profile of a prospective lending client, using APIs from LinkedIn and the client’s own bank account. In his NewCo presentation, Earnest CEO Louis Beryl explained that the company uses more than 100 parameters of information to make a lending decision, and models that information against ever-more intelligent algorithms. It’s a process that is familiar to every information-first company, from Google to Uber, GrubHub to NetFlix.
Earnest 1

Let’s compare Earnest’s information-first approach to the traditional lending practices of most US firms. These companies lend money based largely on an outsourced information source called the FICO score.

earnest2

As you can see, these businesses are built on a relatively thin information flow – and most of it is outsourced to another company (FICO). Lenders tend to organize around three things: Lead generation (marketing cost), conversion (to a loan), and collections. Defaults are a cost of doing business. But Earnest’s approach focuses on identifying qualified clients, then servicing them in an information first manner. While still new, Earnest’s approach radically changes the game – it charges 50% less for a loan, and has no defaults to date. Time will tell if Earnest executes its game plan well enough to become a major disruptor in the financial services sector, but the company’s already convinced Andreessen Horowitz and several other major VCs to invest $15mm in its first round of financing.

###

This post represents my first “thinking out loud” about what it means to be an information-first company, and it’s in no way complete. The concept isn’t original per se, but I think might add some structure to the terminology that has bedeviled our industry for years. So often we talk about “tech companies” who “leverage big data” to  “disrupt” incumbent players. I like the idea of calling these businesses “information first” companies – because in the end, any company can put information flows first. Get that right, and the energy and matter will follow.

Else 9.29.14: Google snorts milk through its nose; Food, Things, and Marketing

By - September 28, 2014

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(image) This past week’s links are rife with people asking hard questions of Google and Facebook, and so much the better, I’d warrant. You don’t get to the lead position without raising questions. In fact, that seems to be the theme of the week – asking interesting questions – of our online services, our marketing, and our food (yes, our food). To the links:

How Facebook and Google are taking over your online identity – Quartz

Look, it’s not like we don’t realize that these two companies are tracking everything we do. We are inured, we are banner blind, we are…well, we are about to realize we have a lot more power than we thought. But this piece doesn’t make that point, unfortunately.

Websites Are Wary of Facebook Tracking Software – WSJ

Wary, but not stopping themselves from using it.

Google’s Schmidt: Tim Cook, what are you talking about? - CNBC

Put another way: Apple, you are so damn precious, so damn arrogant, STFU.

Google Responds to News Corp’s EU Antitrust Case Criticisms – TNW

Another way of looking at this might be “Google snorts milk through its nose when asked about the EU.”

Facebook Demetricator – benjamin grosser

Ah, I love a good hack. Alas, not many others do. Ever wish you could use a service like Facebook without the constant numeration? Check this out, a worthy addition to the debate. And code to boot.

The tyranny of digital advertising  (Medium)

A relatively new participant in digital advertising takes stock, and has more questions than answers. But I liked his perspective and his questions.

Every Company Is An Experience Company – Searchblog

A dude who’s been in the media business longer than not (really, I’ve been in this game more years than not, which is rather stoney) has a few ideas about where “content marketing” and “native advertising” has to go next.

Copy-Remix-Profit: How YouTube & Shapeways Are Inventing the Future of Copyright – Hunter Walk

First, make it possible for everyone to ignore dumb laws. Next, profit from it. No wonder Google is the largest investor in Uber.

Inside Solid: who will build the god platform for the Internet of Things? - O’Reilly Radar

Well, there you have it. The race is on to create the next platform we never thought we would use (but will).

Forget GMOs. The Future of Food Is Data—Mountains of It – WIRED

I had a chance to go to Hampton Creek last week. Super inspiring. I hope to write it up soon (but I’m in New York for NewCo NewYork and Advertising Week. GAH.)

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Else 9.22.14: Good Design Trumps Good Code

By - September 21, 2014

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This week’s Else is brought to you by good design, which trumps good code any day. And by the Alibaba IPO, which kind of pissed me off (see below). Enjoy the links!

The UX App That’s Driving Design Everywhere, From Airbnb to Zappos – WIRED

When I read this I thought – “Of course there’s an app for that.” And then I thought – “I gotta use this app!”

Pranking My Roommate With Eerily Targeted Facebook Ads  – My Social Sherpa

This is just so good, so rich, so fun. If you work in media or marketing, a must read.

Why Is Our Sci-Fi So Glum About A.I.? - NYTimes.com

Yes, my point exactly when I wrote my review of Her, which does not hew to the Hollywood narrative of AI Will Kill Us All.

Apple will no longer unlock most iPhones, iPads for police, even with search warrants – The Washington Post

Bravo, Apple, a huge play to push the data control off platform and into the hands of everyone. BRAVO.

Tim Cook Interview: The iPhone 6, the Apple Watch, and Being Nice – Businessweek

If you want to understand the new guy running Apple, this is the place to start.

Amazon Tops List of Google’s 25 Biggest Search Advertisers – Advertising Age

I wonder why? Hmmmmmmmmmm.

The $3.2 Billion Man: Can Google’s Newest Star Outsmart Apple? | Co.Design

I don’t think Tony Fadell thinks his job is to “outsmart Apple” but then again, it makes for a good headline. And the profile is good too.

Yahoo Stock Crashes As Alibaba IPOs – Business Insider

Ah yes – Alibaba. It’s not that Yahoo! exactly crashed (down 5%), but that it’s really worth very little were it not for the Alibaba holdings. That simply doesn’t make any sense.

Thoughts On Alibaba (Searchblog)

In which I think out loud about Alibaba. I am pretty sure I will piss a few folks off with this one. Sorry.

Venture Capitalist Sounds Alarm on Silicon Valley Risk – WSJ

Bill Gurley may well also have pissed some folks off, but in the end, I think he’s right in the thesis that too many companies are burning too much cash.