Do crowds get dumber the larger they get? That’s what Drew Curtis, founder of Fark.com and a previous guest host on Vator Box, said about predictive markets. Because NewsFutures CEO Emile Servan-Schreiber called Drew “clueless,” we decided to take another crack at services that tap into the wisdom of crowds. This time, we set our sites on Emile’s company NewsFutures, a place where you can buy and sell predictions with virtual currency, but win actual cash prizes. Given our focus on aggregating information to predict future outcomes, who better to be the guest host of this show than Paul Martino, whose company Aggregate Knowledge is about predicting behavioral outcomes based on the aggregate actions of crowds. Given Paul's expertise in the area of crowd sourcing, we also had him help us analyze Wize, an aggregator of consumer reviews.
Let's start with NewsFutures, as we said in the last Vator Box on predictive markets, NewsFutures competes with Hubdub as well as Spigit, Inkling markets and to some extent, Younoodle, Pollection or Vizu. My observation was that for this or any predictive market to work, there needs to be a lot of people participating. Well, it looks like NewsFutures has that critical mass of participants. One study comparing outcomes of NewsFutures and TradesSports.com showed that both marketplaces “exhibited significant predictive powers.”
Paul brought up the point that the biggest challenge this company face is the “federal government.” That's because Paul, along with Mark Pincus, thought about creating a company called “Betonnews.com.” In fact, Paul still owns the URL. The problem with these businesses, said Paul is the uncertainty about the regulatory environment. If NewsFutures’ has a good attorney to navigate these waters, then perhaps it has a chance, he suggested. All told, the three of us – myself, Ezra Roizen (Vator Box regular) and Paul liked the company.
We then set our sites on Wize, which competes with Retrevo, Bazaarvoice and as well as the good old fashion Consumer Reports. “I love the Wize number,” said Paul. Ezra and I agreed that Wize was a “clever idea,” but the question was whether the service would actually drive consumption of long-tail items. Paul seemed to think it did. His criticism was that the company may be challenged maintaining a balance between its customers (that Wize creates leads for), and poor reviews of those same customers’ products.
On the upside, Ezra said that the market for contextual and guided shopping services is pretty “hot.” To that end, Wize may be a good acquisition candidate.
Note: As always, I'm not going to give away all the commentary in the video. Please watch and let us know where we were off. Again, Vator Box is more about starting a dialogue than it is about giving you expert analysis - though we try! Also, please let us know which companies you'd like us to review!