Are you in the business of making money?

I write this having just returned from the Consumer Electronics Show in Las Vegas. It really is a contrast: a city which represents the decline of America (gambling, sex and wasted time) yet one that hosts the latest in technology and potentially the re-birth of America.

On with the Show… for the most part, I have absolutely no idea how anything works and quickly gloss over any attempt at even a lay description of the latest gadgets and gizmos. It forces me to think at a different level than those consumed by the wizardry on display. Although I accept it is a dangerous over-simplification to classify attendees, I found there were two main types of participants: those manufacturing software/hardware capable of gathering information, and those focused on monetizing that information.

Consider this: the Show was littered with home security companies offering the latest in remote controls, each promising to perform a wide range of tasks, presumably including making one’s bed remotely. Most of these start-ups (as a lot of them are) are hoping to capitalize on the valuation ascribed to Nest by Google, which acquired that company on the value resident in the data it gathered on households. I put these companies in the “information gathering” category.

It can’t be more than eight or nine years since the first iPhone arrived on the scene. What made it and its successors such a huge score was not that it was cool (although that helped) but that it connected its owner with the internet in a more convenient manner than was previously the case. And, its ever-expanding range of apps gave users access to such bits of information as the price and availability of a particular wine, just by scanning the label, or a description of a constellation of stars just by pointing the phone at a clear night sky. It was the “always on” nature of the information which made the device so successful. I think I’m right in saying there are now over 1.3 million apps, all designed to deliver interesting information which the user will either pay, or watch an ad, to access.

Google and Facebook are other examples of companies which have figured out how to make money with information. Although not described as such, they are really tremendous advertising machines which can deliver their clients much more relevant information on consumers such that ads can be targeted to very specific groups or sub-sets of people. Often, the advertiser only pays when an ad is clicked on. I saw very few companies focused on trying to make money with information or even designed to help companies which have information make money with it. This is where opportunity lies.
I have purposefully dismissed the category of manufacturing. There are lots of them (including robot companies) and it’s a tough game. Intellectual property in manufacturing is very difficult to defend while cost and scale are so important to success that it is very difficult to compete. Lots of people are doing the same thing so that it’s a bit like the restaurant business — more losers than winners. My advice? Stay away.

Meanwhile, the data world is exploding. I can’t give you specific facts to prove this allegation, but I’m pretty sure none are necessary. Just look at the growth of data centres and the capacity of the servers housed within them. We are gathering all this information and storing it but very few companies have actually figured out how to make money with it. Ask yourself where you and your business fit in this assessment. Are you positioned as an information gatherer, one of the many legions doing the same thing? Or are you focused using data in a meaningful way, a way destined to make money for you or your customers? Few are, which is exactly why you should be thinking about it.

John Risley
About John Risley

John Risley, president of Clearwater Fine Foods Inc., regularly engages in policy debate as a member of the World Presidents' Organization, the Chief Executives Organization and as a director on the Board of the Canadian Council of Chief Executives.

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