How Big Data is Going to Change Entrepreneurship

Michele Chandler

At the GSB’s 2012 Conference on Entrepreneurship, executives from three startups explore the rise of big data, the size of the opportunity, and the economic value of personal data.

STANFORD GRADUATE SCHOOL OF BUSINESS—The latest new industry being explored by entrepreneurs is Big Data — the collection, storage, analysis, use, and monetization of the flood of information and personal data being generated in an increasingly digital world. At the recent Stanford Graduate School of Business 2012 Conference on Entrepreneurship, executives from three startups discussed the trend:

Joshua Feast is founder and CEO of software firm Cogito, which seeks to improve health care by using analytics to infer mood and predict behavior. Shane Green is president and CEO of Personal, which allows consumers to aggregate all of the available data on their own lives, and then choose whether to share it with advertisers and others wanting to reach them. And Charles Zedlewski is vice president of products at Cloudera, which helps companies harness the huge amounts of information Big Data presents. Here are excerpts from a panel moderated by Andrew de Maar, MBA Candidate 2012, edited for space and clarity:

Stanford GSB What has led to the rise of Big Data, why is it emerging now, and how big is the opportunity?

Charles Zedlewski The main thing that I’ve observed is data is growing faster than Moore’s Law. The collective ability of systems, phones, and machines to generate data beats Moore’s Law. It means there will never be enough memory or a big enough server. It’s the opportunity for all of you (MBAs) as well as entrepreneurs. Every time there’s a new platform, it’s typically the beginning of a new epoch, and there are first, second, third, and fourth generation companies that ride that wave. I would argue that Cloudera is in that first generation. We are starting to see the spark of that second generation, and there’s many more left to come. So, it’s an exciting time.

Stanford GSB What trends define Big Data right now?

Shane Green: I think this is just the beginning — the top of the first inning. I think you are going to see a lot of people fall by the wayside. I think one of the things that is happening now is data is becoming commoditized. It’s very hard to get access to it and collect really differentiated, actionable data. Even people who manage to collect it don’t often realize it and don’t know what to do with it once they have it. I think the next trend will be: How can you find and maintain a competitive advantage and have access to data that no one else has?

Another trend that’s probably not popular to talk about out here is regulation. I think it’s coming in a big way, in large part around privacy and security issues. It’s already happening in Europe, and it’s stifling a lot of innovation there. It’s very clear that issues identified around this are going to be addressed.

Stanford GSB Which industries is Big Data most likely to transform in the short- and long-term?

Shane Green There aren’t too many industries that it’s not going to have a huge impact on. I’m very focused on advertising. The entire industry is predicated on a 2% success rate, and Google made its fortune by increasing that to 3%. It’s still a 97% failure rate. You look around and ask what industries are based on that kind of failure rate and there aren’t many.

Stanford GSB What is the economic value of personal data, and what mechanisms exist today to begin thinking about that?

Joshua Feast There are certain pieces of data, which we see a lot of in the insurance world, that show that one’s individual risk profile can be worth thousands and thousands of dollars. The reason for that is because those in the insurance world essentially manage their populations according to risk levels. And if they are able to know that a particular population is riskier than another population, they can better manage their pricing.

Stanford GSB How can MBAs evaluate what entrepreneurial opportunities there are in Big Data?

Shane Green: What’s interesting to me are the two big analogies that people always talk about in terms of data. First, that data is the new oil, in that we are talking about the early stages of Big Data in the same way that, 100-plus years ago, people were talking about the early stages of Big Oil.  We know the industries that developed around oil. You had to find it, extract it, refine it, ship it. The World Economic Forum issued a report last year that I just love. They said that personal data is now becoming an economic asset class. It has, and people are going to manage it as thoughtfully, if not more thoughtfully, as they manage their money. When you look at the financial world, it’s everything from insurance to financial managers to banks. I think you’re going to see analogs across the board with businesses merging around data. This is not a trend that is going to be here for a while and then go. Data is just going to continue to grow, and the need to have all of these different kinds of businesses — including some that are entirely unexpected and we’ve never thought of — is going to continue.