Archive | October 20, 2014

Predicting the future using bits, bytes and people

What will happen in the future? This question might have been asked more in this world than ‘Will you marry me?’. Microsoft tries to answer this question by launching the Microsoft Prediction Lab. The lab is an interactive platform that is partially built around the basis of a game. Users can invest points by predicting the outcome of certain future events. If a prediction is correct, the user gains points and if the prediction is wrong it looses the points. Not only is the prediction lab a game, it is also a … lab. David Rothschild, an expert in data driven predictive methodology and researcher for Microsoft, sees the lab as a great laboratory for researchers and a new social experience. The team behind the lab tries to figure out what is the best way of predicting the future, using more than the typical dataset.

Why is this development intriguing? First of all, this platform shows that the wisdom of crowds can be used for making accurate predictions. The users fill in their predictions based on personal expectations as well as predictions made by the crowd. Secondly, this digital platform uses positive network effects for its own benefits. Last but not least, IT is used to predict the future. What is not to like about that?

Microsoft’s Prediction Lab is on the right track, if you consider the fact that it gave an 84% change of a ‘No-vote’ for the Scottish independence, and predicted 15 out of the 15 knock-out games on the FIFA World Cup correctly. For now it will focus on political events (such as elections) and sport, but the tech-giant plans to use the prediction technology for far more than that. Where do you think this technology will lead to? I would love to hear your thoughts!


Fat Tail Product Placement, So Many Choices!?

A while back I saw the TED talk about the paradox of choice (see video below). A very interesting talk in which the speaker, Barry Schwartz talks about how we the consumers are being bombarded with evermore choices and how this “freedom” is actually impairing our happiness.

Interestingly enough this view is in stark contrast with the current trend of long tail product versioning/marketing. Product (hyper)differentiation is becoming the norm where niche products that appeal to a smaller market share are being pursued for the increased profit margins. In theory this sounds logical but how far will the long tail eventually go? Will we be seeing smartphones with bottle openers in the future? (Actually that’s not even half bad of an idea, patent pending).

The selfie camera
A prime example of this long tail, product differentiated approach is the ‘HTC Desire Eye’, which has been dubbed ‘the selfie’ camera. Sporting not one but two 13 megapixel cameras with dual flitsers in the back as well as the front this phone will cater to even the most advanced self indulged selfie lunatic. However one thing the good folks at HTC have done correctly is making it a good phone in conjunction with the selfie camera. The phone sports a full HD (1920-1080p) screen, 16GB internal storage, optional micro-sd card expansion, Snapdragon 801-soc processor, all in all a nice set of hardware for a relatively low price (€499 at the time of writing this). This phone raises an interesting question namely, is this the future of product differentiation? Catering to one specific customer segment based on a specific preference while still including all the features and hardware that appeals to the ‘fat’ part of the tail (the masses). This, in my opinion is a very interesting development especially if we consider what is discussed in the video. Will this advanced product versioning truly make us, the consumers happier? Or will there be a turning point in which we all as a collective will hope for less?

What is Snapchat? Why people love and hate it?

Business Model

Have you ever heard about Snapchat? It is a mobile app that allows users to capture videos and pictures that can be self destructed after a few seconds. When a user sends a message they get to decide whether it will live for between 1 and 10 seconds. After that, the content would be deleted. Though Snapchat itself doesn’t support saving received messages to local folders, it does allow screen capture with notification. According to Snapchat’s official statistics in May 2014, the app’s users were sending 700 million photos and videos per day, while Snapchat Stories content was being viewed 500 million times per day.

Security Problem

Snapchat endured a hard time these days. Hackers claimed they had breached the company’s servers and made away with hundreds of thousands of users’ pictures and videos. After a few days of bragging and bluster, Snapchat finnaly admitted online in a 13GB dump. The third party software service has also confirmed it was compromised as part of this attack. Many media says that we should not only blame Snapchat for the leak of those photos but the fault also lies in the third party apps such as and to some extent, also in the users themselves. Teens who sign up for services like Snapsave or SnapSaved (the ‘d’ makes all the difference – as Snapsaved got hacked and not SnapSave) have made their otherwise self-destructing photos permanent. Snapchat alerts users when someone has taken a screenshot of their photo, but there exists many third-party services using Snapchat’s API simply to help users save snaps. As a result, even if Snapchat is actively cracking down on those apps, a cursory search of the App Store and Google Play turns up plenty of services that do exactly what SnapSaved did—and might be vulnerable to the same type of hack. However, even been confirmed as not the source of these leaks, Snapchat is still facing criticism about what more they could have done. An article from Wired says, “Good data security means effectively educating users so they can work with companies to protect information.”


On October 8 this year, the CEO of Snapchat announced that “Ads will be coming to everyone’s feeds in Snapchat, but they won’t be targeted.” Untargeted advertising is the least effective, least valuable type of advertising there is. And the App customers would undoubtfully complain about it because it’s irrelevant to their needs. There is one qualification: Users will be able to choose whether to see ads, so there is at least one level of targeting — whether you want spam. However, it is very strange why Snapchat don’t serve targeted ads since it begins spamming its users because they want to make money. By making use of social media login data on Facebook or Twitter, advertisers could target people on Snapchat. Under such condition, Snapchat can surely gain more revenue. But the contradictory about this point is that the feature of Snapchat: It deletes users’ personal data as soon as possible in order to provide privacy. So there might be a little difficult for Snapchat to do targeting spam. What do you think? Do you think Snapchat should take targeting spam actions?


Banks and Crowdfunding: Embrace it or perish

Firms increasingly involve customers in the production process and service they provide in order to realize successful projects. They outsource tasks to an (un)identified crowd, called crowdsourcing, in forms of idea generation, product development, problem solving and fundraising. This is a low-cost method of increasing product/service performance since the only optionally additional costs are rewards for the crowd.

In this blog the focus will be on the fundraising form, crowdfunding, where the crowd can online donate money to projects and firms. This money will be used to finance the projects or investments of the firm. Furthermore, crowdfunding creates public attention for and feedback on the project and tests the market potential of the product.

Firms can choose to raise capital in the form of equity or debt. Factors like a lack of pre-existing resources, risk, moral hazard, information asymmetry and the amount of capital needed should be taking into consideration in deciding how to raise capital (Schwienbacher and Larralde, 2010).

Next to the question how to raise capital it is also important to address whether raising capital for a project by crowdfunding will be successful. First of all this depends on legal issues. The regulations on crowdfunding by the JOBS-act permit companies to raise limited amounts of capital from a large pool of smaller investors (Mollick, 2012). Moreover, there are national regulations on the number of shareholders a private company can have. Secondly, geography is important since this might enable firms to have a large social network and high quality products. These factors can predict the success of the project (Mollick, 2012).

Other factors that determine the success of crowdfunding projects are the type or organization (profit/ non-profit), control preferences, amount of money required, fundraising duration and project size.

The overall success of crowdfunding depends on the success of these projects as well as the success/failure rates of start-ups. Crowdfunding will success in the future when investors will have high returns on their investment.

These high returns might persuade investors to invest their money in crowdfunding projects instead of saving their money in bank accounts receiving lower returns. Since investing in a few crowdfunding project would be more risky for investors than saving their money in bank accounts they can invest in more crowdfunding project (hedging) or can invest by the use of pooling investments and thereby bear market risk over multiple investors.

Moreover using crowdfunding investors will be able to choose in which project they want to invest their money. When putting your money on a bank account, banks will invest your money to projects that are unknown to the investors. In the former, investors feel empowered and have the idea that they contribute something to a project.

In order to tackle this threat banks should embrace crowdfunding. They can realize this by letting investors choose where their saving money is in invested. In order to implement this banks have to deal with IT and risk management implications. Although crowdfunding is focused on projects that raise relatively small amounts of capital in comparison to the money stored in banks, this crowdfunding solution will increase investments in banks as well as the popularity of the banks.