The Hard Way

The first piece of news I saw this morning is that Angie's
List has filed to go public to raise up to $75 million. This is a big moment
for the company, which started in business in 1995, and has raised over $100
million to date. The result of that investment: over 820,000 paid memberships
in 170 markets nationwide. 2011 revenue likely to push $80 million. Over 2.2
million reviews of local contractors, service businesses and more recently,
healthcare providers. Yes, the company is still losing money, but this is
primarily due to a huge marketing expenditure to drive its rapid growth.

What has long intrigued me about Angie's List is its deep
and expensive commitment to build and maintain a human face, the critical key to
building a true community of subscribers. And this has consistently meant
taking a longer, harder path.

Angie's List could just as easily could have been built as a
Web 2.0 site with a totally automated system that allowed anyone to anonymously
enter reviews, with everything free and an advertising-supported business
model. Instead, Angie's List built itself on a subscription model, despite
long-standing consumer antipathy to paid information products.

But Angie's List didn't stop there. The company's eponymous
founder, Angie Hicks, understood from the start that she needed to deliver more
than the ordinary and often unhelpful reviews one encounters on review sites.
Instead, she needed to deliver reviews that provide depth, color and real insight.
This necessitates a substantial, ongoing, expensive effort to develop reviews
that meet this high bar, and that's where this sense of community becomes
essential, because the content it sells to subscribers is sourced from its
subscribers. Consider the complexity (and delicacy) required to extract a large
quantity of high quality reviews from a limited pool of people who you don't
want to annoy because they are paying you money!

As it has grown, Angie's List has been a trail-blazer on
many fronts. It launched a print magazine for its subscribers, both to maintain
visibility and further develop a sense of community among members. Since trust
is everything to a company that sells reviews as a product, Angie's List has
its policies and processes audited by BPA each year. It maintains a policy of
"no anonymous reviews" in a world where anonymity is the norm. It has
been a pioneer in variable pricing, allowing it to charge less when it enters
new markets and has fewer reviews initially. And the strong sense of integrity
it has built has allowed it to generate substantial advertising revenue from
the very companies its subscribers are reviewing -- a neat trick few in the
reviews business have mastered.

A big chunk of the success of Angie's List has to be attributed
to its founder, Angie Hicks. When Angie spoke at Data Content 2008, the
audience was transfixed by her energy and excitement, wrapped in an "aw
shucks" persona that belies sharp entrepreneurial drive (and a Harvard
MBA).

The model Angie's List adopted is a tough one, making its
resulting success story both durable and well-earned.

(For those of you interested in the nuances of the ratings
and reviews business, please download our recent, free white paper on this
topic: http://www.infocommercegroup.com/whitepapers/ICGDP_Ratings_8.11.pdf)

Data, Data Everywhere

I don't know exactly when it started, but the volume is growing every day. I am referring to emails, emanating from such well known companies as: E-Market Expert, Acquired Businesses, Sale-Perform and Application Users. And what are these companies selling? Data. Lots of it. And at bargain prices. Within the last 48 hours, I learned that I could obtain contact information on individuals in almost any industry, all with revenue data and SIC/NAICS codes, all with verified emails addresses and all of them opt-in names. And not to worry about legitimacy because "All data obtained legally from optin channels," as Stevenson Trina assured me in an email. That Stevenson's return email address is a metal stamping company in Germany should, I presume, not be cause for concern. What's going on? I am not sure. While the senders of these emails will often describe themselves as "a leading player in the list vending industry," and suchlike, the only commonality I have discovered so far is that none of them have working websites. Phone numbers, when offered, go directly to voicemail. And email addresses tend to be with the big providers of free email accounts. What's remarkable is that databases and lists have become such a mainstream business tool that they are now becoming the subject of scams. Because for scammers, there is nothing better than a product that everybody needs, but few really understand. Unfortunately, none of this does any good for the legitimate data industry, because these dubious data offers -- even if the recipient doesn't respond -- create a sense of commodity in the eyes of potential buyers: data is commonly available, data is cheap, industry coding and revenues should be available on 100% of records, etc. How exactly do these presumed scams work? I can't say I know for sure, but one person I talked to believes that these operators are not really out to sell data as much as they are out to collectdata. Every email open becomes a "verified" email address. Every opt-out request becomes a "responsive name." And for those who might actually send in 50 or more sample names as part of the company's offer to demonstrate its data appending skills, well that's 50 more names acquired for nothing. Crazy? Or just a crazy twist on user-generated content? These days, it's hard to say! PS -- Just a quick note to mention that the generous early-bird discount price for DataContent 2011 expires imminently, so take a moment and register now!

Social Media Do-Over?

A few months ago, I got a Facebook "friend request" from someone I had gone to high school with and hadn't been in touch with since. I accepted, and soon discovered an ambitious few from my school were busy trying to track down and connect through Facebook everyone from my school they could locate. It's actually been a fun experience learning who had ended up where and what they are doing now. Finally, I understood the appeal of Facebook. Am I really that dense? Well yes and no. I was introduced to Facebook years ago by business acquaintances who sent me friend requests so that I could see what Facebook was all about. I accepted, and consequently whenever I go into Facebook I am presented with the intimate life details of people I barely know professionally, and not at all socially. I continue to find this disconcerting, and it has warped my view of Facebook for a long time. I've had a somewhat parallel experience with Twitter. To me, Twitter is a great, expedited way to share news and thoughts with those of like interests. When my tweets include a link, I always try to provide some context, if not opinion, regarding the link. I don't use hash tags, because the notion of "viral taxonomies " offends my sense of order. That's my view of Twitter's place in the world: an easy way to send items of interest to the interested. I am very selective in who I follow on Twitter. I want to follow smart people who will share their insights and alert me to news and articles I might otherwise miss. I do get some of that, but the majority of what I see on Twitter can only be called digital narcissism. Details on one's meals, mood and hourly location updates predominate. Add to this sports scores and endless, mindless re-tweeting of breaking news as if everyone has suddenly decided they want to be the Associated Press. Does everyone really have that much free time? Social media has grown so quickly that operating rules and conventions were never established. This anarchic state may in fact have contributed to the rapid growth of social media, but in this case at least, freedom and creativity have come at the expense of utility. Internet visionary Patrick Spain told me years before Facebook was a household name that the blurring of our professional and personal lives would have great implications for the information business. It's a powerful insight, and one such implication that seems clear to me is that the collision of these two worlds has created a tremendous amount of clutter and noise. This leads me to two immediate thoughts: perhaps there should be business and personal versions of Facebook and Twitter, and certainly there are opportunities in curating this content to separate the wheat from the chaff. Surely there are other opportunities as well, and that will be among the topics we'll discuss at DataContent 2011.We hope you'll join in, and you can still sign up at significant early bird savings.

Great Expectations

I am a big fan of OpenTable. I use it regularly, I appreciate its transactional business model, and it is sitting on a mountain of incredibly valuable data that it has barely begun to tap.

Recently I was surprised to find an article entitled "Why OpenTable Is A Lousy Deal For Some Restaurants." Who says so? Apparently, a growing number of restaurants in the San Francisco area. And what specifically about OpenTable troubles these restaurants? Several things.

First, OpenTable allegedly does not increase the number of people dining out on any given night. Rather, it simply shifts some of those diners to restaurants using OpenTable.

Second, OpenTable costs money. And because OpenTable is so popular, restaurants feel compelled to subscribe, making OpenTable fees akin to extortion. Worse yet, restaurants have to raise their prices to offset OpenTable fees, which in turn drives down the total number of people dining out.

Third, OpenTable owns all the customer data that passes through its network. Cancel your subscription and you lose access to all that data.

Needless to say, this is some mighty weak reasoning. OpenTable was not created to popularize the restaurant experience and expand the market. It has a simple goal to make subscriber restaurants more attractive to diners by providing a simple, fast, seamless reservation experience. 

The second argument, that restaurants resent OpenTable because it works so well is equally odd logic. OpenTable provides a powerful application most restaurants could never afford to build and maintain. More importantly, OpenTable provides the audience as well. By the way, OpenTable succeeded in large part because it was so painful and inefficient to make reservations before it came along. Further, OpenTable helps fill seats that might otherwise go empty, makes it easy to cancel reservations that otherwise would cost a restaurant money, and helps the restaurant professionalize and better manage its entire operation, all without additional staff. Presumably benefits like these offset the fees being paid.

On the issue of data ownership, I have more sympathy. At the same time, it's news to me that non-chain restaurants ever worried about their customer databases, since so few make even the slightest effort to build them on their own.

The bigger issue here is that companies, whether data providers, transactional services providers or both, can become victims of their own success. All the rumblings above suggest an emerging view that OpenTable is so dominant it is being thought of as a monopoly and a utility. And nothing good comes out of assuming either status. We all seek lock-in and workflow embedment, but once we achieve it, we are faced with a delicate, ongoing balancing act to keep the goodwill of the industries we serve. And that challenge is compounded when industry objections are long on emotion and weak on logic, especially in the wonderful world of online, where "free" is considered an entirely reasonable price point and value is hard to demonstrate when so much is taken for granted. Going forward, OpenTable will need to continuously re-calibrate its value proposition, perhaps unlocking some of the treasure trove of data it is amassing to help its subscribers fine-tune their marketing and tighten their own business operations.

Start Scheming

Just a few weeks ago, Google, Microsoft and Yahoo announced that their search engines would jointly support a new semantic markup language convention called microdata, the details of which can be found at a site called schema.org.

Semantic coding? Microdata? Okay, I promise not to go too deep into the details, but this is important stuff. In a nutshell, this new schema -- which will be recognized by all major search engines -- allows websites to present their information to the search engines in a more structured fashion. The schema supports standardized HTML tags. By tagging data at a very granular level, search engines not only get smarter about the data they are indexing, they can manipulate and process it just as if it was information in a conventional database.

Yes, by encouraging website owners to add these standardized tags to their content, the search engines want to marry the power and precision of structured data with the richness and depth of textual and graphical information.

As a data publisher, should you be concerned? Well, let's look at just a few of the specific business types already defined by the schema: travel agency, child care, financial services, real estate agent, shopping center. If enough of these types of companies ultimately add these tags to their websites, the search engines will be able to pull them out with complete precision.

Not precise enough? Doesn't impact your industry? Well consider too that the schema allows for tagging of postal address and geo-coordinates. That means that over time the search engines will with precision be able to list (and even sort) all businesses at any location or zip code. Precise mapping will also be a breeze.

And let's not forget products. The schema provides tags to identify specific products, and even if a specific item is being offered for sale or not. There is a way to tag associated product reviews, and even to identify a product ID code -- either a proprietary code, or an industry standard code system.

Most significant of all: this schema will allow search engines to do easily what they've never been able to do before: parametric searches. Want all self-storage centers in Fairfield, Connecticut? Done. All self-storage centers within 50 miles of Wichita, Kansas that have units for rent? Done. Yes, it starts to hit a little close to home, doesn't it?

Will this schema take off? It depends on wide-scale adoption, of course, but it's free to use and there's the huge carrot of potentially improved search engine results rankings. The schema is not sufficiently robust as of now to scare too many data publishers, and it does feel heavily weighted to local, retail businesses, but by improving the precision of search engine results, it reinforces the thinking that the big search engines are "good enough."

Can you use these tags to improve the results of your own web scraping efforts? Absolutely. Like almost everything with the search engines, this one is a two-edged sword.