Reduce all our complex economic activity to its essentials, and you are left with just two activities: buying and selling. Given the fundamental role and importance of these activities, there is a lot of money to be made by those who can streamline the process. Traditionally, this has been a space occupied largely by publishers. And it is a space -- happily -- where data can play an important role.
Until quite recently, the gold standard was buying guides and yellow pages that provided buyers with little more than a starting point ("we think these companies probably sell what you want -- good luck"). Advertising in these guides was intended to help buyers further refine their search by providing more detail, but few of these guides had enough ads with enough information to truly alter the dynamic.
The opposite extreme of the spectrum are services that match buyers and sellers. The buyer indicates a specific need, and the intermediary service introduces the buyer to one or more pre-screened and qualified sellers. We've seen some enormous successes here, ranging from BuyerZone to ServiceMagic to perhaps the granddaddy of them all, 1-800-Doctors. There are lots of variant models here, but underlying them all are several hurdles. The intermediary must convince the buyer that the matching process is not only fast and efficient, but that it is honest. Is the buyer being connected to truly qualified, high quality sellers, or just anyone who spends money with the intermediary?
Another area of tremendous growth is in user-generated supplier reviews. We all know about remarkable success stories like TripAdvisor and Yelp. But reviews come with problems as well. They seem most popular with so-called experience goods: things you can't properly evaluate until you experience, purchase or consume them. You don't, for instance, see a lot of user reviews for stainless steel ball bearings. But when people start reviewing their individual experiences, you get tremendous variability that can ultimately be unhelpful. When I go to TripAdvisor to check a hotel, I invariably encounter 50 reviews extolling the perfection of the hotel, and 50 reviews vehemently denouncing it. What am I to conclude? Generally, I leave TripAdvisor more uncertain than enlightened. And let's not forget there is increasingly a trust issue around anonymous reviews these days. We've certainly proven people are willing to offer up their opinions. The work now is to fashion them into something that offers real and consistent information value.
The most audacious new direction for bring buyers and sellers together is the so-called "social graph," a concept advanced by Facebook. From a buy-sell perspective, you can think of it as seller recommendations filtered by the recommendations of your friends -- the people you trust most and have similar tastes and interests to yours. Think of it as putting structure around word-of-mouth recommendations. There are a lot of issues with getting the social graph properly scaled to support a broad array of buying activity, but it can certainly happen.
One interesting start-up puts a clever spin on the social graphy concept. Called Bizzy, it lets people write reviews just like other sites, but only if you first answer a series of demographic and lifestyle questions. In exchange, Bizzy returns a list of sellers highly recommended by people like yourself. You get the benefits of the social graph without the constraints of being limited by what your friends know about.
The process of helping to connect buyers and sellers is big and vibrant, and chock full of creativity, with new business and content models emerging with great frequency. It's one we are watching carefully.