The Role of Data in Network Businesses

By Morgan Citron

On Tuesday night, Applico hosted its quarterly Meetup at the General Assembly in Santa Monica, CA. The topic of the Meetup was the role of data in network businesses and platforms. To start, the event began with a fireside chat between Applico CEO Alex Moazed and Factual CEO Gil Elbaz. It was then followed by a panelist discussion between Applico’s Head of Platform Nicholas Johnson, Tinder VP of Tech Dan Gould, and Homehero CTO August Trometer.

Here are the top 10 things we learned about the role of data in network businesses & platforms:

1.The difference between data-first and big data companies

Big data is a commonly overused term. Big data companies sell software to other companies to help them analyze data, while data-first companies own, collect and distribute data. SAP is a big data company, Uber is a data-first company.

2. It’s difficult to compete with data-first platform companies

A lot of data-first companies are platforms and they collect data to drive their business. Because these companies leverage a platform business model, they will experience more success than linear companies, especially when it comes to data collection and analysis. Without availability to platform-quality data, it becomes incredibly difficult for non-platform companies to compete with platforms who can collect and analyze big data.

3. Data is a form of competitive advantage for platforms

Platforms keep knowledge and data to themselves as a form of competitive advantage. For example, Uber collects and analyzes massive amounts of rider data it collects. It can use this information to its advantage by predicting users’ future ride-hailing needs. Uber’s massive popularity and network effects enable it to collect more quality data than its closest competitors. 

Factual is very different. Factual’s position as a company is data-neutral. Gil explained that Factual’s goal is to convince data-first companies to contribute information to the Factual ecosystem and then take advantage of Factual’s variety of data, which creates an “everybody wins” scenario. 

4. Data gives you an advantage for any market entry

Having more knowledge and insights can create an easy entry into any market. Gil told us a little about his experience at Google before he started Factual. We learned that companies like Google are more methodical and strategic about collecting data than we thought. Large platform companies invest a lot into data, and use it for every strategic move they make. By having such large collections of information, this gives these companies more optionality and opportunity to compete.

5. Platforms use data for monetization and to provide utility

The goal of platforms is to add value to the lives of users, but there can be concern that some companies may abuse power. While most businesses do have the intention of improving their users’ lives, they still have to monetize users to “pay the bills.” Gil explained how there should be more checks and balances put into place so that companies do not abuse the collection of data and used the IAB, a self-regulatory agency that he is a member of, as an example. Because the world of platforms is new and gaining exposure rapidly, not many regulations have been made. There is a lot of talk and hope to instill such checks and balances in the near future.

6. Data can improve marketplace liquidity

A platform’s marketplace must be liquid in order to ensure the constant balance and exchange of value between producers and consumers. Dan explained that Tinder’s main goal was to create a double-opt in dating platform. To do this, they had to perfect the app’s algorithms and analyze the data they had to improve matching between users. If matching was more accurate and created a more pleasurable experience, Tinder would be able to dominate the e-dating marketplace with a high influx of users looking to connect with one another.

7. Data is critical to matchmaking in platforms

In order to create the most value for Homehero’s users, the company analyzes characteristics of its patients and caregivers to create the best matchmaking interactions and experience. Some of the factors it analyzes are the distance between two parties, quality of the caregiver, health of the patient, etc. By critically analyzing these facts, Homehero is able to identify patterns, better match caregivers with patients, and create the most valuable experience for both of its user groups.

8. Data can help your platform create its regulations

One of the four core functions of a platform is to set rules and standards for the company’s users. Dan from Tinder mentioned how there were numerous cases where users were just swiping right on every single person that showed up on their feed, without considering their true compatibility. To solve this dilemma, Tinder analyzed their users’ behavioral data and then created a daily swipe limit so that individuals could optimize their swipes and think more about the match potential before swiping right.

9. Feedback can be used to create predictive insights

Both Dan and August admitted how crucial receiving feedback can be for a platform company. With Homehero, feedback is generated in the form of anything from an uploaded photo to a brief survey on the users’ experiences. By doing this, Homehero formulates predictive insights that help it improve its matching process in the future.
Tinder does not have any form of follow-up after the matching takes place, which is understandable. In the future, Dan hopes to create a follow-up system for users’ post-match experience.

10. Data can drive your business decisions

As the use of data has become more popular, product teams within a company are slowly making the transition into becoming data teams. While Tinder started as product-driven company, it has become more data-driven over time. Dan spoke on how the company spends time with product managers to teach them how to pool data on their own. Because Tinder has a complicated marketplace, the platform has two separate data teams. One team focuses on infrastructure and algorithms, and one focuses mainly on business analytics. Being a smaller company, everyone at Homehero has access to data. Data is “just part of the company” and influences Homehero’s daily business decisions, like how to design the website to attract the most viewers.

To watch the full broadcast of the Meetup, click here.

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Filed under: Platform Innovation | Topics: data, Factual, Homehero, meetup, platforms, Tinder