Private Company Information: The Opacity Conundrum

opaque-glass_w725_h553Anything that does not change hands very often becomes scarce. As much as it applies to things like art, it finds use in things that are otherwise rather fluid – financial data for example. Take the case of private company information. Private companies are not listed and hence do not have any regulatory compulsions to divulge information about themselves – especially their financial performance. A deluge at the supply side  goes on to complicate things – there are way too many private companies for anyone to create a business model to bring their data together. Data vendors have tried to solve for this problem but an optimum solution is still lurking somewhere – undiscovered

Stripped of all frills, scarce data is scarce because – one, the originator does want to readily part with the information and two, any secondary holder does not wish to pass it along. However, there does exist incentives – standalone incentives for both parties to change their going-in stance. For example, a private company may need bank funds for working capital and for that will readily share quarterly sales and inventory numbers with the bank. The Bank (in our definition, the holder of this information) will also share the same information onwards if there is an effort by someone to securitize these working capital loans. So incentives exist – but they are not shared incentives

I believe there is space for creating a clearing house of sorts for private company data. The platform provider – the clearing house that is – must invest in either creating shared incentives or invent shared economics for fluidity to resume in the dataset. In a manner of analogy (not a very tight one, I must warn), app stores are equivalent vehicles that bring the supply and demand side for apps together by creating shared incentives (and economics). As this platform builds up and the dataset becomes richer, the economics will tilt towards transactions that happen on the platform based on the data. This is something that traditional data vendors should understand – the data by itself (like unmined natural resources) have little value. The value of data is unlocked by actions of economic agents and these actions make economics. Facilitating economics will facilitate the fluidity in private company – and other such scarce – information

Apple Pay: We Live In Interesting Times

apple0132After a long break, people following Apple are in a dilemma. Should they focus on the Watch (I hope this is how one should refer to the device) or Apple Pay. The Watch is interesting and has the potential to unravel a slew of use cases and apps for a new device but given that smartwatches have been around for a while makes the other announcement – Apple Pay – more fascinating. A lot has been written already about how it works, how PayPal should be worried and so on – and it is not my intention to add. Rather I think it is about time Apple stopped bothering about personal productivity apps (their Office clone – iWork) and focus on developing financial wellness/wealth management application suites

Think about this – if Apple Pay does take off, the company will cover almost all aspect of spending by its users and have real-time records of that. Not only can it account for these spends – it can weave them into magical apps where users get to know their financial well-being right there instantaneously. Physical well being on the Watch, financial well being on the phone. Think of how you thought of a phone and a watch last month and the pace of change hits you like a train. If I were Intuit (mint.com actually) – I’d be a touch worried (actually more than just a touch). I am yet to fathom how Apple Pay can invade the Enterprise but if it does then I’d be really worried if I were Intuit. Accounting is a slap-on process atop the data that is created in the process of transactions – the real deal is, well, deals. And very soon Apple Pay will have a barrage of advertisers sucking data from Apple’s read-only APIs and pushing deals through to users mining dimensions of their transaction data. That is what spenders care about – deals that help them realize value. Apple Pay might have just started out two days back but it has the potential to disrupt a lot of things beyond just payments

As the <insert your favorite countrymen> say – “we live in interesting times”

Image from TechCrunch