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A bi-weekly column with timely, relevant and possibly irreverent insight into the BC technology industry. Something Ventured: November 24th, 2006 By Brent Holliday Greenstone Venture Partners Data, Data Everywhere “Just to try to figure out What all this is for. Try to see the world Beyond your front door.” – Barenaked Ladies, Pinch Me A lot of existing business models became supercharged by the Internet ten years ago. From commerce to digital content to advertising, we have seen huge shifts of revenue to new companies in this exciting decade.  But one of the more interesting models to me has been data.  The purchasing, packaging and re-selling of data has become a huge opportunity for many entrepreneurs. Back in 1996, one of the many projects I was overseeing at Multiactive in Vancouver was the accessing of data for use in Maximizer, the contact manager software that we purchased in late 1995.  We were the first Internet company to show up at the doors of American Business Information (business lists) and Polk Data (consumer lists) in the early days of 1996.  We were the first to negotiate deals with these companies on the use and sale of their data through us and specifically modified for use in Maximizer.  Today you can access the sales leads data directly from these companies as they have set up sophisticated systems for selling their data.  As original re-sellers on the Internet, all we did was show them the way to a very profitable distributions means. Companies that dealt in data pre-Internet were giant sweatshops of telephone based employees gathering the relevant data, whether it be addresses and contacts (ABI and Polk) or sales and other business metrics (Dun & Bradstreet).  Their key asset was relevant data.  These warehouses of data are even more valuable today and much easier to keep up to date.  But a new generation of data-preneurs was hatched with the Internet and new possibilities emerged that are very exciting today.  Aggregators of data on-line, like Hoovers in the business information market, Knowx in the people information market and Zillow in the real estate market became on-line windows to data sources.  These companies buy data from the collectors and cross-reference the data in more meaningful uses for the consumer.  For instance, Zillow gets geodata, crime data, economic data and real estate sales data and other metrics of house value from different sources and pulls it together in an intelligent interface to show what your house is worth on a daily basis.  Hoovers combines D&B credit data with EDGAR public stock data and ABI-type contact data to provide a one-stop shop for all information about a given business. Finally, Knowx aggregates data on property ownership, criminal records, bankruptcy, IRS, military and geodata to do background checks on any individual in the US. Our local technology behemoth, MDA, has been in the data game for a while now.  After their satellite imagery business took off in the 80s, MDA has realized the value of related data sources and started buying up databases around the world, like BC’s land appraisal database and UK land value information. Combining imagery data with geodata and land values, MDA sells access back to services like MLS and the aforementioned Zillow as well as to multiple government agencies and NGOs around the world. Their imagery data is everywhere in Google Earth. Data aggregation models still exist today on the Internet, especially if you can introduce a new source of data to your aggregation.  A local company, Vivonet (disclosure, we invested in Vivonet a year ago) has tapped a new data source from retail hospitality sales and packaged it in an aggregated format called Zata.  Using their own point of sale terminals (the first Internet based and hosted, SaaS POS systems) and APIs from the other major POS vendors, key data about the business of being a restaurant, coffee shop or fast food company is dumped weekly to Vivonet’s database.  The restauranteurs that add data to the system (even if they do so manually through the Web) get a Zata score that adds geodata and helps them understand how they are doing relative to everyone else in their category and in their geography.  This is catching on very quickly across North America because there has never been this source of data before.   So if you can find a new source and aggregate it with other existing sources, you have a unique model to make money. The other interesting data model emerging from the Internet has been tracking data. Indeed, Google was born on the back of tracking data because its revolutionary (at the time) search algorithm used the amount of incoming links to a given site to rank it higher in relevancy in search results.  Alexa is a lot of fun and useful as you can see traffic on any website or blog and use the data to sell advertising.  A hundred other services have use tracking or tracking analysis to make money from the data about what you click on every day on the Internet. But, as my friends Andre, Boris and Roland would say to me, all those aforementioned business models are so Web 1.0.  The really interesting data out there today is derivative data or metadata (for those of you who didn’t take calculus, it’s data about data).  Paul Kedrosky, formerly of UBC and now with Ventures West, has always had a data fetish.  Indeed, he just invested in DabbleDB a local Web 2.0 company that makes slick tools for data collection and presentation.  I would argue that clever new data aggregation companies like Zillow and Vivonet’s Zata are “viral”, based on open standards and very Web 2.0.  But the real interesting stuff with metadata is just beginning.  There are metadata web sites that grab and present data about auction information on eBay (HammerTap) to help you make decisions as a power seller.  As Paul showed on his blog, Flickr just realized that they have information about digital cameras from every uploaded picture.  They publish a graph that shows what camera brands people are using.  Last.fm takes metadata about what you are listening to on Internet radio and creates a ranking of your taste in music.  Whatever you listen to or download can be tracked and added to the database.  As a recommendation engine, it is more and more powerful the more that people use it.  There are thousands of other examples and there will be thousands more. It is information that helps make decisions and data needs help to become useful information.  Data needs context and analytics as well as great presentation.  A tiny local company called Business Objects is aware of that fact.  With storage incredibly cheap and more standards around data presentation and subscription, data will be even more useful to all Internet users from the consumer to the business to the entrepreneur.  I’m with Paul… there is a lot of great opportunity out there for data.  Send me your favourite data examples on the Net and I’ll publish a list next time. What Do You Think? Talk Back To Brent Holliday Something Ventured is a bi-weekly column designed to supplement the T-Net British Columbia web site with some timely, relevant and possibly irreverent insight into the industry. I hope to share some of the perspective and trends that I see in my role as a VC. The column is always followed by feedback (if its positive or constructive. I'll keep the flames to myself, thanks). Something Ventured Archive Printable edition