Reputation.comのMichael Fertik: データは新時代の石油だが消費者がその恩恵に与っていない

We live in a reputation economy and we are coming knowledge a reputation economy. I’m not comfortable with it; I’m ecstatic about it. I’m ecstatic the pundits are catching up to the reality.

What is it?

I hope they keep talking about it, whatever it is, for many years.

But you must have an idea of what it is when you use the term.

I have the point of view that the reputation economy is the reflection of the fact- the reality that 75% of economic value is actually tied up in reputation. That’s not my number, by the way. That is the Economist Intelligence Unit’s number when it comes to corporate reputation. They say that 75% of corporations reputation is tied up , value rather, is tied up in reputation. And I’d hazard the same statement about a person or a thing or a company or an office whatever it is; A location, a big business, a small business.

What other people think of you.

Right, what other people think of you or what people think of the thing. Some people used to call this brand. You could say cola or Cocacola and Cocacola wins because it’s got brand and it’s got a brand that people know and understand and love. I think that reputation is bigger and it applies to more things in the internet of everything that is now emerging. More or less, in our daily live, everyday, without thinking about it we understand that there are little reputation credits that we trade for different transactions in our lives. So if you’re going to give a recommendation for a job. You understand that your reputation is on the line in giving that recommendation. And you may very carefully construct that recommendation to not only enhance that person’s reputation, we hope because you’re giving a recommendation, but to enhance and preserve your reputation because you want to give a credible, bankable recommendation to the person you’re talking to.

In any kind of decision we make when it’s dating, profession, employment, romance, just simple retail shopping, we know that we are trading on our reputation, or we are trading on – the counter-party is trading on his or her reputation.

Now how do you actually quantify that?

So, it is never been possible at scale to quantify reputation the way it is today because of all the information, all the data points that are flowing out there on the web. And because of all the machines that we have, they are now enabling us to now quantify reputation. This is the next step in a natural evolution.

So the phase one of the socio-economy was kind of the small village where reputation was everything, or status in a small village was everything, right, and then reputation formed status.

And then we went to… society got too big, we gone to Guilds, right. Guilds were a form of reputation currency, right. If you were part of the Guild, you were a reasonably good carpenter or a reasonably good banker or something like this in the Middle Ages. Then we move to a form of period of time in which actual physical currency, right?

Coin of the Realm was our reputation. If you brought a whole suitcase of currency, then you had enough reputation credits to do the business.

And now we understand that cash currency is just one type of actual currency, and that when we do business with people, there are so many more interesting and nuanced pieces of information that go into a currency of reputation.

The only score that matters in America today after you basically go to college, your SAT. After you go to college, the only score that matters today is your FICO score, your credit rating. And if you look at it, so plus or minus, the credit rating has been stale, unchanging and based on the same data sets for 40 years, right?

And yet it is the number one and essential and ineluctable, unavoidable data point that informs whether you can buy a car, whether you can buy a house, whether you can transact business and so forth.That ‘s nuts, right? It’s nuts that we’re relying on this arcane, archaic data point for something that’s so vital for our daily lives.

It needs to be replaced by a reputation credit or a reputation currency.

And this, of course, would be an internet-centric one. Will it be like Klout or PeerIndex?

Talking Klout and PeerIndex are like eBay’s reputation scores. Right? Or Amazon reseller scores. Very interesting and useful, individual discrete components that will end up being your reputation on the internet. And the more that things like PeerIndex and Klout and eBay, eBay reseller scores appear, the more informed we will be, and the more nuanced our scoring can be in the Internet.

What do you make of Empire Avenue?

I don’t know Empire Avenue.

It’s a stock market for reputations.

Well good. You know, I think that we have a stock market for reputations in Hollywood. We’ve called that, I think, the Q Score, right? Called a Q Score. And if this star’s Q Score is going up, he or she is more bankable. That kind of thing is reasonably inevitable. for every body know, it’s everything.

So, the more math that we get throwing at this problem, and the more data that we can get to constitute the conclusions, the platform for the conclusions we’re making the more powerful to beat. Reputation is part of two things. One is authentication, knowing that you are actually our Andrew Keen. That’s a hard problem.

Right? Maybe not your case because you are well known but in the average persons case, very difficult. And number two: after authentication, qualification.Now we know it’s you. How good are you, by the way, by context? So, you might be X, as a businessman, Y, as a writer, C as a tenant, D as a landlord, right? So, there are all these different, interesting nuances that will start to emerge int he coming years. And we will start to see- A lot of sci-fi says that reputation will replace currency in a billion years or a

And can the reputation.com can be the index? Have you ever though of doing a
n index?

We’ve spent a lot of time. We’ve had a full-time R and D team for years. PHDs in everything from robotics to sentiment analysis to statistics to physics to mathematics. We’re hiring an economist right now. We’ve got a full-on R and D team and we’ve been spending a lot of time for a long time trying to figure out interesting and nuanced scoring systems and reputation systems, yes.

I like Jeff Jarvis and-

We all like Jeff Jarvis. We all say we like Jeff Jarvis and then you lay into him.

Well I like Jeff Jarvis and I think that, in fairness, like you, he is a polemicist. I think that Milton
Freedmen, I think it was that said about economics in every generation, somebody has to go all the way.

Well, He’s certainly gone all the way.

Quite literally and he talks about it.

But I think that Jeff Jarvis is the kind of the guy who see’s himself as going all the way on publicness and you might be the guy who see’s himself as going all the way in your point of view and polemicist both build brands for themselves and also advocate and, and further the conversation by setting up poles in the conversation to help, illuminate the topic.

So, I think polemicists usually do us a good service by doing that. Especially if they are, as he is and I think you are, intellectually honest about the strengths and the weaknesses of his own argument. So, if you actually get down to the nitty, nitty gritty about Jeff Jarvis, with Jeff Jarvis. And I’ve said the same thing to him in front, I’ve said the the same thing in public with him, in private with him.

I actually don’t think that, he is correctly understood as being just for publicness. He is actually for privacy and he says this all the time, but as in the case of almost every polemicist the only thing that people hear is the thing that’s more controversial. And his case he believes in publicness, you know, going naked everywhere and talking about.

What I, what I appreciate about his point of view of publicness, is that I think he is right that publicness is a very good solution to taboos. that should not be taboos. So, if you want to talk about things that are off the table, you can start to put them on the table through creative publicness.

But you talked to him, in a heart beat he will say, “Look. I believe that privacy is a person’s choice. A lot of people are more private than I am. And people should have that elective ability to choose what they want to do.” And so I think he’s nuanced about it.

Well to be… I don’t want to make this just a conversation about Jeff. There are number of other theorists, Don Tapscott, Clay Shirky. They’re all really saying the same thing, that the openness, the transparency of the network will result in a better society. Do you believe them?

I do believe that openness and transparency will result in a better society in many features and facets, and in many parts of a life. I also am confident that no one person who claims that he or she stands for publicness really means it if you nail him and grill him, right? Because there are parts of their lives that they do not want made public.

There are parts in their internal networks that they do not want plugged into the internet at large. They do not want to be mined for certain pieces of data. And all of us, by the way, have a line between what we want to be public and what we want to be private and of course it’s not a bipolar world. There’s extremely public. There’s extremely public and inevitably found about you first, second, third. So it’s no only public and findable but, actually, defining you. There’s also private among your friends, there’s private among your family members, there’s private to you. There’s private to you five years ago versus private to you today. I do think it’s true that our morays change. Our points of view change as society over time, but the biggest mistake that people who think about the future make, when they think about the future, is they think about the future as the present day with only one variably changed.

So they’ll say, “Hey, that photograph of a guy drinking a beer on Facebook, that’s not going to matter in five years. It probably won’t. I’ll sign up for that, but there will be some new thing person is publishing today because he or she does not think it’s a problem. Take facial A lot of us have been benefiting from the indemnity that emerges from obscurity. it can’t be found so therefore only my bubbles very, very fast.

And guess what, facial photograph that you thought was apose and interesting in different problems. Also, if two points make a line, a hundred points make a life and if you get all these data points about someone together and you have this interesting mash-up about what they look like. You can make interesting and powerful conclusions about their health, about their employability, about their intelligence.

About all these things that we are going to be afraid to confront as a society, but that mathematicians will be able to show provably and demonstrably are true. And we are all living this interesting trail behind us and I am worried about the things that we have not yet anticipated as being consequences from the lives we’re living on the Web.

Now, I am very much pro-Internet. Right? I don’t want to be the anti-Internet guy. I’m not, I’m very up to pro-Internet. My goal, the reason my company exists, is to give people, tools they can live their life in the web without worrying about it within impunity, free tools, pay tools, whatever it is, and not worry about the consequences that some very bright group of kids who mean well are going to come up and generate because they are mining our data. Not for Advertising which is simple old-school stuff, but for health predictions, for romantic predictions, for planner presequencing on the web that we’re not aware of.he only guy, right now, who’s not benefiting from that data-geyser is the consumer and that is what we need to change.

Michael, you’ve talked about the future. Everyone now is thinking about the future in terms of privacy and reputation. The Commissioner of Privacy of the European community has argued that the internet must learn how to forget. Are there solutions to reputation and privacy? Do they lie in technology?

Do they lie in the market? Or do they lie in the government? Totally a Jedi-level question, for sure. So.

What is a Jedi?

Jedi-level question.

What does that mean?

Oh my god. OK. So you’re not American. So, it’s like Jedi, like Star Wars. Like a Jedi, like a Yoda level question. So, I’m an American, and I generally think that the market will solve problems, and I believe that entrepreneurs will solve problems.

Guys like you, basically.

Yeah, guys like me. But there are a lot of guys like me. They’re cool, interesting people who solve different parts of the problem and who want to install the technology that eats at this edge of the problem, and so forth. So, I generally believe that the free market is generally the best solution to most things like this.

There’s a funny phrase that says, there’s no business problem that’s big enough that the government can’t make it worse. Right?

At least the American government, anyway.

OK, whatever. I’ll tell you, I’m not a European. I don’t believe that regulation’s the first place to go. I’m hopeful and optimistic that technology and markets will solve the problem. I do believe that the law does need to catch up with technology, and I think there should be some incremental changes at the margins that can really not only solve a lot of privacy problems and not have a lot of downsides consequences, but also unleash a huge amount of new innovation and wealth creation that will be enabled by very, very minor nips and tucks in regulation.

So, right now the law in the internet is basically governed by two pieces of legislation in the U.S. So there’s the Communications Decency Act, Section 230 that says that if someone else anonymously publishes something very, very vitriolic and hateful and libelous anonymously on a website, the website’s not liable and so, you can spend years trying to find that person and litigating against that person, suing him and even if you win, the content doesn’t go down, so the libel continues forever.

Or the Digital Millennium Copyright Act, which protects copyright, which says that Viacom can send one letter to YouTube and get it to remove 50,000 videos with one letter because it owns the copyright protection claim. But if your daughter, or your brother, or your kid sister is filmed on a digital camera phone drinking a beer or kissing a guy, or whatever it is, at a party, legally he or she is SOL.

That’s an unintended and perverse consequence of the law as it is today.

So, copyright and trademark enjoy a lot more protection than privacy and reputation. Which is, by the way, not consistent with the hundreds of years of law that we’ve had in the west. So, reputation and privacy actually enjoy protections that are older than the US Constitution. We just haven’t updated the American legal system to make it work.

Again, I went to Harvard Law School, so some people sort of imagine that I am the regulation guy. I’m not. I think there is a need for some changes, but I do believe in the market. I believe the market will solve it. What about technology? There are some researchers in Holland who are working on technology that will enable the internet to forget data that will disappear over time.

What do you think of those sorts of solutions?

I think they’re cool, and I think that my company is making some of them, right. So, if you can live your life socially on Facebook with Are You Protected plugin, and then it locks up all the contents that even Facebook doesn’t get the content, and none of your friends, who used to see the content two years ago, can still see it because it just creates a forgetting mechanism that deletes the data.

The cool thing about this topic is that it does not require sort of a mental leap to imagine a future that is more within the control of the individual. If you’re a real Libertarian, you should believe and you do believe, that the individual should control his or her destiny as much as possible.

And the technology exists today, a lot of it. And the will exists today, a lot of it. and there is no need to opt people into a set of technologies that will be a forget button or a delete button for the web. But if they want the tool, I think they should have it.

Right now, the alternative is true. Right now, we are all being opted into the machine without our knowledge or consent, right? The data are the new oil. The only person not benefiting from those data are you, the end consumer.

In my view, you should benefit from them the same way that you should benefit from your genetic code. If your genes are being mapped, I think you should still benefit from the economic upside that comes from that mapping. And in my view, your digital privacy trail is also part of your personal genetic code that should benefit you as a consumer.

Final question Michael, very briefly. There going to a lot of people in the audience, a lot of entrepreneurs who are perhaps thinking about getting into the privacy ecosystem.

Awesome .

A bit of advice from you, what should and shouldn’t they do, in under a minute?

The biggest advice I would say if you are in the privacy space or want to get some privacy space is develop a business model that generates revenue fast because there are still a received wisdom in the venture community that people will not pay for privacy. So if you build a whole bunch of apparatuses that nobody is effectively using to pay you, then you actually don’t get the benefit of the doubt.

You do get benefit of the doubt in an economic model that looks like advertising if you don’t have revenue. But in privacy so far, generating revenue is a key first step to getting traction.