In November 2006, Google bought a 21-month old company called YouTube for $1.65 billion. In April 2010, Groupon was valued at $1.35 billion at the age of just 17 months. This speed of growth is completely unprecedented in the history of capitalism; it’s unique to a particular breed of software enterprise.
In the biggest success stories – like YouTube, Groupon, Amazon, AirBNB, and Uber – we see two common factors. The first is effective use of data. Unlike a regular taxi company, every time Uber provides a ride, they track every scrap of information about it. The length and location of the journey, the time of the day, the profit margin, the customer demographic – all this and more is logged, tracked, and analyzed. As a result, whenever Uber makes a business decision, from something as small as billing for one ride, to something as big as deciding to operate in a new country, they are making an informed choice. Amazon might find that raising the price of office chairs by 2% on Mondays translates into tens of thousands of dollars of extra profit. These sorts of decisions can’t be made by intuition, or life experience, or business acumen; they require a detailed, meticulously-gathered picture of the realities.
Data is the new oil. In a way, this is terrible news for small to medium enterprises. Compared to Amazon dynamically adjusting the price of their chairs based on data, the local furniture store is fighting blind. Large enterprises, doing a lot of business in a lot of territory, have access to large amounts of data. Small businesses naturally only have access to small datasets, so they are forced to make less informed decisions.
The second thing the success stories have in common is that they all connect buyers to sellers. AirBNB is the perfect example: millions of people had millions of spare bedrooms, but no convenient way to launch them onto the marketplace. Think of what eBay and Amazon did; they provided an easy way for people to sell that bric-a-brac they had lying in their attic, and they optimized the specifics using extensive data on people’s buying habits. YouTube launches people’s talents for licking their elbow, or giving annoying video game commentary, onto the marketplace.
Interestingly, small businesses often have specialized data sets that might be valuable business intelligence to other enterprises. The data from 100 local hairdressers put together might represent a real asset, but there is no way to make use of them. These datasets are like the of spare bedrooms that AirBNB launched; they are just waiting for a means to reach the marketplace.
RepuX is a unique startup creating a data-driven marketplace for data itself. Its recently announced platform will serve as a matchmaker between businesses and developers wishing to buy data, and those with data to sell.
The RepuX system is made possible by two new decentralized technologies: Ethereum and the Interplanetary File System. Ethereum is a blockchain platform allowing automated, verified payments to be made in digital currency. IPFS is a way of passing files around from peer to peer, without the need for a server. In RepuX, IPFS is the means of distributing data, and Ethereum provides the market solution, settling payments and granting access to data.
In the same way that Uber ranks and validates the drivers offering services on its platform, RepuX uses the buyer community to rate the validity of data. This ensures data on the platform is of high quality, while avoiding the need for a centralized authority in a position of trust.
It is too early to say what effect RepuX’s technology will have on the data divide, but it would be interesting to see how the economy would change if small businesses, as well as large, were able to make decisions on accurate data.