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As published on GigaOM on November 17, 2013
Today, our hyper-connected society has resulted in a world where we create our own permanent records beyond high school and college, a life transcript of sorts. For better or worse, we document our triumphs and our sins for all to see. We tell our LinkedIn network that we got promoted. We tweet that we’re leaving one conference panel for the next. And, we blog about how becoming a dad made us more responsible.
Savvy employers are using all that oversharing to help weed out undesirable job candidates. What if that’s just the tip of the iceberg? What if our social sharing becomes an even larger part of how we’re judged? What if banks and credit card companies started to use our online footprints to review our creditworthiness or “risk profile”?
FICO vs. Facebook
Today, the primary way that lenders judge us is by our FICO score. The name FICO actually comes from the company’s original founders: engineer Bill Fair and mathematician Earl Isaac. These original pioneers of “big data” analytics (50 years before we started using the term) were some of Silicon Valley’s earliest entrepreneurs, having met during their stints at the Stanford Research Institute in 1956.
But the FICO score that we know and love today was first introduced in 1989 to help financial institutions determine the likelihood that we’ll repay our debts. It is established by a variety of factors, including our payment history, length of credit history, recent credit inquiries, current debt, and more. Sometimes, those with good credit scores are offered better interest rates or higher credit limits. But, isn’t there more to us than just what is in our financial records?
Why judge us based solely on a FICO score when we want to buy a new car, a house, or apply for a business loan, when a more complete analysis of our creditworthiness could be conducted by reviewing our social footprint? Moreover, creditworthiness can be inferred faster and much cheaper using social footprints, so why not use it more frequently?
Traditional loan paperwork will only ask if we’re married or single, but it won’t tell the bank if we’re a true blue family man that values stability. Social media can. Social media frequently does.
“As financial risk assessment comes into the 21st century, financial institutions cannot ignore the importance of social graph data in illuminating a user’s risk profile or financial responsibility, says James Gutierrez, CEO of Insikt Capital and founder and former CEO of Progreso Financiero. “And the more innovation happens in this space – by pulling in new data sources – the more potential there is to make credit more accessible to historically under-served demographics and communities. The more data, the better for the consumer.”
It’s already here
You know the old adage that we’re judged by the company we keep? Well, that’s never been truer in the age of social media. According to a recent MSN Money article, some financial lending institutions are using Facebook to help determine the creditworthiness of potential borrowers who lack a credit score.
Companies such as Lenddo are all too happy to use the payment and default history of our Facebook friends to determine what kind of borrower we might be. Granted, this is just one of the many tools that companies have at their disposal as they evaluate thousands of data points, but five years ago who would have dreamt of a world where the quality of our Facebook friends could be a factor in whether or not we get a car loan?
It doesn’t stop there. Kabbage, a web-based company headquartered in Atlanta, specializes in giving cash advances to small businesses and even investigates a borrower’s online footprint. Specifically, it will review data that includes a person’s eBay order history and the amount of time it took to make payment on a purchase or close a sale. The company has even made a direct correlation between positive social data and lower delinquency rates — to the tune of 20 percent.
One German company, Kreditech, even brings Amazon purchasing and payment history into the mix. Moreover, it will weigh the time of day you are online and incorporates information it attains from Facebook and other online accounts. It also uses GPS data to help in the equation. Long gone are the days of living life in a silo.
The one constant in life is change
We may have started off using social platforms for fun and frivolity, but more and more business are trying to find new ways to use social sharing to their advantage. Everything we share through social channels is, at its heart, data.
For banks to make smarter loans and more money, they’d be wise to better analyze the traits of their applicants. We’re more than a FICO score and an annual income, we’re people with relationships, hobbies, and personalities. And, thanks to social media, we’re all too happy to share the intimate details of our lives for the whole world to see.
Co-Founder + CTO
As published on PandoDaily on September 28, 2013
By the time you read this, Facebook’s stock will be trading at more than $50 per share. That would be an all time high. Now, I happen to own some Facebook stock that I bought at the IPO – but that’s not why I’m writing this piece, and it’s not why you should care. You should care because Facebook’s founding vision and product roadmap will continue to shape the world as we now know it.
Not only will Facebook, through its immense social graph, continue to innovate and disrupt the one-third of the world that is already “connected,” but its founder is also intent on connecting the next 5 billion people that are not yet online through internet.org, a project he started to enable the “knowledge economy.”
Mark Zuckerberg famously commented earlier this year that he doesn’t care so much about Facebook being cool anymore so long as it continues to be essential to our lives, like a basic need – a utility, like electricity.
The early signs are that for business, Facebook could be the electricity of the future. There are three pillars to this business innovation:
First, the single sign-on Facebook Connect tool can become the dominant gateway to your media, e-commerce, and mobile experiences.
Startups such as Janrain and Gigya have pioneered identity management as they have built login widgets for thousands of publishers and e-tailers alike. These widgets save users time in the login process while giving businesses a ready-made if still somewhat nascent CRM system. Although only a minority of websites currently takes advantage of this tool, Facebook Connect’s traction is growing rapidly – by some accounts more than doubling every few years – as it continues to disrupt how we interact with media, e-commerce, and apps.
Second, and derivative of the growing dominance of Facebook Connect, will be the introduction of a new personalization paradigm across the web as sites take advantage of the social data voluntarily sharedthrough Connect to dramatically improve user experience and target ads by accessing Facebook’s social graph.
Third, and less obvious, Facebook’s utility will go beyond ID management and personalized commerce to encompass a Brave New World of data analytics. Insights previously purchased from third-party data vendors that scrape information from offline and online sources to paint a portrait of each user will be replaced by equally if not more accurate inferences derived purely from a user’s social graph.
Expect new insights, such as your “credit score 3.0”based on social data, to disrupt old monopolies as users’ digital and social fingerprints eclipse their old world, off-line analogs.
By applying Big Data analytics to social data, we can reliably infer a user’s demographics, income, and even her potential to repay a loan. Vendors like Acxiom, Neustar and FICO will face upstart contenders leveraging the new world of social data for competing insights. More recent powerhouses like PayPal may be disrupted if a new “Facebook wallet” is coupled with Facebook Connect. In fact, PayPal co-founder Max Levchin is himself a pioneer in this new world as his company Affirm taps new data sources to facilitate mobile payments while assessing a consumer’s ability to pay.
But Facebook’s relevance to your future goes far beyond its commercial potential.
The most disruptive event in modern US history was – not coincidentally – directly linked to Facebook. The online campaign coordinator for our first African American president was none other than Facebook co-founder Chris Hughes. Indeed, it’s hard to imagine Obama winning the 2008 election without the youthful support and individual donations that the Obama campaign tapped through the social network.
At its core, Facebook reduces the friction and increases the velocity of information sharing. A post to a group of 500 friends can show up in seconds in front of 100,000 friends if only half of them share it. And quickly tens of millions after that.
While most of us yield this immense power to share newsworthy life events (like the photo of our pooch wake boarding), every once in a while a fewimpertinent denizens of the “under-developed” worldboldly use the medium to organize mass protests (like the ones that took place in Tahrir Square) to topple dictators.
And that’s what’s different about the next 5 billion people who will become “connected.”
The newly initiated are more eager than we, the already connected, are to use Facebook as a vehicle for game-changing political discourse, organization and even revolution. Oppressive regimes are on high alert to the existential threat posed by social networks such as Facebook, Twitter and YouTube. Their oppressed citizens are equally vested in the success of internet.org as a Trojan horse for freedom.
The metaphor of Facebook becoming as essential to daily life as electricity may not have been far from the mark. And like electricity, Facebook has sparked far more than just a new way to power commerce.
It may actually light the path to a freer world. I hope so.
Co-Founder + CEO
As published on CIOReview on April 5, 2013
Every time a user logs on to your business website, an opportunity is born to connect with her at the deepest levels. But for most businesses, this opportunity instead becomes a "missed connection" as they throw up the usual login gateway in front of new users, leaving these visitors gasping: "another username and password to remember? …" Imagine how many visitors to your site have not connected at all when faced with this hurdle.
Our online lives are governed by an interminable collection of usernames and passwords. The standard site specific username-and-password, with account confirmed by email, is no longer scalable as users suffer from password fatigue. Just as important, the data collected from users (basic user name and email) through this ancient method pales in comparison to the modern, social alternative: social sign-in tools like Facebook Connect and Google+ Sign-in.
Facebook Connect was the first widely adopted solution of its kind that permitted users to leverage one set of credentials across the entire web. Instead of creating a new username and password and confirming by email, a new user can register with one click, using their preexisting profile credentials. By some estimates, over eight million unique sites are now using Facebook-Connect authentication to save their users time.
And the implementation is easy. In addition to the plugins provided by Facebook, Google, Twitter and LinkedIn for their respective signin tools, companies like Janrain and Gigya bundle all of these different options into convenient widgets that are easy to implement. Just as important, social sign-in tools have explicit user opt-in click-through gateways that maximize user privacy while minimizing the hassle of signing onto a new site.
But even most online sites that are leveraging tools such as Facebook Connect are not using it to the fullest. That is because these sign-in tools bring with them a trove of valuable data that businesses cannot adequately analyze on their own. To fully unlock the potential of this information, your merchandising and marketing teams will need analytics tools that use state-of-the-art semantic analysis and machine learning technologies to turn raw data into actionable insights.
A simple example will illustrate the value of social graph data when touched by Big Data analytics. Imagine a typical user John Doe who uses Facebook to talk about his favorite athletes (like Buster Posey), his favorite events (perhaps the World Series) and his favorite foods (…beer and nachos?). Analyzing this data through the latest technology in natural language processing will help you uncover that this user is almost certainly a huge baseball aficionado, likely a San Francisco Giants fan, and into select beverages and snacks. If you are a commerce site, now you have a better grasp of which offers to send him (hint: sports related items would be more relevant than feminine hygiene); if you are selling content, such as mobile apps, now you know that he will care more about ESPN’s latest score app than Angry Birds; and if you are an online services recommendation service, perhaps you should target John a deal at Chevy’s Mexican over a fancy French restaurant. Knowledge is power, and properly leveraging social data puts you in the driver’s seat to better serve your users.
The benefits of Facebook Connect and similar tools extend far beyond streamlining the signup and authentication process. With access to the user’s Facebook profile information including likes, posts, check-ins, and photo-tags, your website has the opportunity to truly personalize the user’s experience according to his or her interests and demographics. These personalization tools can be used to solve the “cold start” problem for new users, build your brand, increase conversions, and make new customers repeat buyers. By matching content or products with a user’s interests and demographics, your website can bring the user’s attention right to the items he is most likely to enjoy. Instead of information overload, the user saves time and finds value on your site right away. The user experience goes from random and burdensome, to one-click and highly relevant.
Social sign-in plugins like Facebook Connect are more than a conversion funnel tool. With access to social data, websites can reduce the information overload that users face, and deliver a custom, personalized experience. With the right tools, you can harness the cross currents of “Big Data” and Social to put a smile on the face of every user, and your CEO.
Co-Founder + CEO
As published on ROI.com on December 14, 2012
Black Friday is now officially a statistic, and an impressive one at that: According to a recent comScore report, over $1 billion in online sales were transacted on Black Friday, representing a 26 percent year-over-year increase. At the same time, early reports indicate that brick-and-mortar sales were actually down 1.8 percent on Black Friday. We can expect more of the same for the remainder of the holiday season as offline sales migrate online.
Though much of the revenues will be eaten up by the usual suspects (Amazon.com, eBay, Wal-Mart), the steady consumer adoption of Facebook Connect combined with game-changing analytics and personalization technologies to turn Facebook activity into more effective marketing have dramatically leveled the playing field.
Armed with the power of social inference, retailers can now be sure they won’t be left in the dust. Here’s how.
Take the Step and Connect
The secret of the e-commerce titans isn’t just their size — although that helps — but their excellent service. One key element of that service is personalization. Now any business can know as much or more about a given user than all the information that Amazon and Google have been collecting on us for years. How? Through Facebook Connect.
The real brilliance of Facebook Connect isn’t just that it saves users from having to memorize a new user name and password for every site they visit. Rather, it’s the data. The data that a user shares via Connect can easily eclipse the prior purchase behavior that drives the current state-of-the-art in personalized recommendations, so-called “collaborative filtering” technology.
Smart social analytics companies are now introducing new technologies that take advantage of Facebook Connect’s increasing popularity and make sense of the billions of social data points found on Facebook to turn them into profitable insights for your business.
Dropping the ‘Cold Start’ in Favor of Warming Up Client Engagement
The biggest problem that retailers face is that they generally don’t know what their users are looking for until the user expresses purchase intent. And prior purchases — if the retailer even has access to them — aren’t necessarily great indicators of future buys. The key is to understand who the buyer is today and to help her discover what she wants on your site before she goes elsewhere.
Co-Founder + CEO
A version of this blog post was published on Corp! on November 29, 2012
With the election behind us, we Americans have re-focused on what really matters: shopping! Forrester’s newest report projects a 15% increase in online retail sales this holiday season over 2011. Much of this $68.4 billion pie will be eaten up by the big boys – Amazon, Walmart.com, and other giants.
But you don’t have to settle for the crumbs. The steady consumer adoption of Facebook Connect, combined with game-changing analytics and personalization technologies to turn Facebook activity into marketing firepower, have dramatically leveled the playing field.
Now David can beat Goliath. Here’s how.
First, you have to Connect
The secret of the e-commerce titans is not just their size – although that helps – but their excellent service. And one key element of that service is personalization. These businesses are able to better serve their users because they know more about them!
Now any business can know as much – or more – about a given user than all the information that Amazon and Google have been collecting on us for years. How? Through Facebook Connect.
The real brilliance of Facebook Connect is not just that it saves the user from having to memorize a new username and password for every site that he visits. Rather, it’s the data. The data that a user consensually shares via Connect can easily eclipse the prior purchase behavior that drives the current state-of-the-art in personalized recommendations, so-called “collaborative filtering” technology.
GraphDive has introduced new technology that takes advantage of Facebook Connect’s increasing popularity and makes sense of the billions of social data points found on Facebook to turn them into profitable insights for your business.
Curing the Common “Cold Start”
The biggest problem that retailers face is that they generally don’t know what their users are looking for until the user expresses a purchase intent. And prior purchases – if the retailer even has access to them – are not necessarily great indicators of future buys. The key is to understand who the buyer is today and to help her discover what she wants on your site before she surfs elsewhere.
Facebook data allows retailers to solve this “cold start” problem of not knowing much about their first time visitors. And that’s how David can beat Goliath. For this new technological sling promises new profits to businesses and a better experience for their customers.
Retailers along with pure-play etailers looking to boost online profits should focus on two key elements to better understand and serve their users. GraphDive delivers both.
First, they need to gather a clear “macro” view of all their Facebook Connected users by summarizing key demographic segmentation and user interests, both declared and inferred. This macro analysis is critical to understanding who your users are and reducing new customer acquisition costs. For example, once a retailer discovers that a large part of their engaged audience comprises teenage girls who love Rihanna, they’ll know to target more of their ad spend on similar demographics – the low hanging fruit.
Second, they need to delve into the “micro” level to personalize the user experience on the retailer’s site. So if you’re a middle-aged man who’s constantly posting status updates on Facebook about the 49ers and football, you won’t see purse recommendations when you visit an online retailer (unless its for your wife’s upcoming birthday). Rather, you’ll see items directly related to your explicit likes and implied Facebook interests. This “social personalization” is a game changer that promises to dramatically boost user engagement, turning what used to be cold starts into hot purchasers.
And it’s this personalization-driven strategy that will empower businesses to close more deals, engage their users, and make one-time visitors into repeat customers.
The road to profits has never been easy, but social media and innovative startups have just paved a brand new path to success. So this holiday season, remember to Connect with your users and make sure to take a piece of the $68 billion pie for your business.
Co-Founder + CEO
As published on Forbes.com on October 25, 2012
Wall Street’s current pessimism about Facebook, triggered by a bungled IPO, has investors experiencing a familiar form of whiplash – one typically reserved for car crashes and roller-coaster rides. But lets face it – Wall Street analysts are hardly reliable signposts of wisdom. Remember the rosy forecasts for the dot-coms before the bubble burst in 2000? Or the more recent frothiness preceding the financial collapse of 2008, leading to the “Great Recession”?
Lessons from Titans Past and Present
Despite its less than glorious IPO, Facebook stands at a huge inflection point: it will either become the next Yahoo, a popular but diminishing brand struggling to make a buck from ads, or the next Apple, a diversified mega-company led to unparalleled heights by its visionary founder and CEO.
In that contrast, we also find the answer to Facebook’s current predicament: the enterprise.
Although ads will always constitute a major source of revenue for any social media site such as Facebook, they need not be the sole – or even dominant – source. In fact, for Facebook to become the next Apple or Microsoft in terms of market cap, it will need to take a page out of their business models and diversify its cash streams. Just look at Microsoft’s fiscal 2012 revenues:
- Windows: $18 billion
- Servers & Tools (IT): $19 billion
- Business Division (Office, SharePoint): $24 billion
- Entertainment (Xbox, Skype): $10 billion
- Online Services (Bing): $3 billion
That’s right: call it what you want, but Microsoft isn’t just a one-trick pony. It’s a fortress atop five pillars, four of which easily exceed Facebook’s revenues by a healthy multiple. Similarly, eBay is seeing double-digit growth in its newer payments and merchant solutions businesses, which it continues to wisely double-down on through visionary acquisitions such as PayPal, Zong and Magento.
And then there’s Apple. The iTunes and app store businesses bring in a combined $6B per year, eclipsing Facebook’s total estimated revenues for 2012 and complementing the over $100B that Apple makes from its ever-evolving “iProducts” and Macs.
The lesson is clear: smart revenue diversification equals growth.
The Facebook Supremacy
“[Facebook] ads, which appear in the user’s ‘news feed’—comments, pictures, and videos from friends—may be alienating users and driving them away from the Website.” – Barron’s
How can Facebook diversify its revenues while leveraging its huge comparative advantage – the enormous social graph it owns and the “data-verse” it engenders – without destroying the user experience? Enter the enterprise.
In fact, Facebook has already crossed the Rubicon on its enterprise strategy by promoting Facebook Connect, an increasingly popular tool that disrupts how businesses connect with and deliver a more personalized experience to their users.
Yet most businesses have barely tapped the potential of the social data that users voluntarily share with them through Connect. And this is where Facebook can mint its new enterprise coin – by continuing to enable, foster and monetize the rich ecosystem of services that are built on top of its open graph strategy. And this ecosystem could be key to its success.
Companies that have built a community of apps, services and entrepreneurs around their core offerings – think Apple’s App Store, Salesforce’s appexchange, and Google Play – have consistently won the hearts and minds of the developer community and ultimately better served their end users. Startups like mine work tirelessly to offer users unique experiences, greater choice, and innovation.
Imagine the future: everywhere a user goes, she would receive offers specific to her. Visiting an e-commerce site? How about custom discounts on products you’d love based on your implied preferences. Looking for new movies? How about recommendations based on your social graph chatter, not just your prior viewing history. Seeking a mate on a dating site? Ditto.
If it effectively taps the enterprise, Facebook has the potential to be as transformative in its business model as it has already proven to be to the lives of everyday users. And my gut says the real opportunity has just begun.
Co-Founder + CEO
www.graphdive.com is now live!