By Jim Fowler, Founder & CEO
I could also title this post “How to Make Money in the Data Business”. Here’s the fast answer: do NOT be an aggregator. Why? The carcasses of data aggregators litter the data superhighway.
Like just about anything related to the internet, data aggregation has many definitions. Here is mine: A data aggregator is a company whose business model centers on licensing other people’s data. Yes, they may have a field or two that they compile, but most of the value-add comes from licensing data from other sources and baking it in.
I know lots of data aggregation companies that have failed or that are zombies, but I can’t think of a single one that has become a big, successful company. I’ve always believed the way to make money in the data business is to compile a set of valuable data better than anyone else. Those that compile the best set of data and license it to others make the money.
Let’s take a real world example. Many companies license Dun & Bradstreet company profile data. Many of these companies are pseudo competitors of D&B (the data business is incredibly incestuous). The obvious question to ask is what happens when one of these companies gets big enough to start taking customers away from D&B? The answer is simple: they become roadkill on the data superhighway. D&B will shut off the supply and they will die, usually quickly.
This all assumes that the data aggregator can survive up to the point where they become a threat. Most often aggregators squeak by on razor thin margins, paying their bills to D&B all along the way, until they wearily lay down on the hot pavement of the data superhighway and become what they were born to be.
The lesson: don’t be an aggregator. Be original. Innovate! Make something new or find a whole new way to make something that is already perceived as valuable.
We did this very effectively at Jigsaw, my last company. Jigsaw entered the very crowded space of providing lists of leads for sales and marketing. There were literally thousands of companies that sold lead lists. Using an innovative crowdsourcing model, Jigsaw figured out a way to motivate members to give leads to get leads.
I was adamant from the beginning that Jigsaw compile and own its data. We never baked someone else’s data into ours. By avoiding the tempting lure of aggregation we were able to sell Jigsaw to Salesforce for $175M in one of the biggest deals of 2010.
At Owler we are taking the same approach of non-aggregation. This time we are compiling a bigger and more ambitious set of data and going directly after D&B and the other data dinosaurs. Because of our awesome community we currently have the best competitor data in the industry (when members sign up for Owler they tell us their company and their competitors). Getting our private company revenue estimates from good to great is next on our list (another crowd activity).
Our mission is to become the industry standard for company profile information. The market is thirsting for it and we plan to eventually be the biggest watering hole on the data superhighway.
|Go to D&B’s and Salesforce’s company profiles on Owler to find competitors, CEO ratings, latest news, and much more.|