Every so often a term becomes so beloved by media that it moves from “instructive” to “hackneyed” to “worthless,” and Big Data is one of those terms. When I started IA Ventures in 2009, I used “Big Data” as a quick and easy way to describe the thematic focus of my fund. And it worked. People got that it implied tools for managing large amounts of data and applications for extracting value from that data. It also implied a high level of technical and product expertise with specific relevance for assessing, investing in and supporting these kinds of companies. And perhaps most importantly, people understood that this wasn’t a cyclical theme but a secular phenomenon, one that would eventually touch every business and every consumer, wherever they may be. Taken together, pursuing this market opportunity in such a focused manner resonated with corporations, LPs and entrepreneurs alike.
But since this time the term Big Data has become diluted. Very diluted. So much so that it is almost totally meaningless. Does Big Data mean new kinds of databases? Sure. Does it mean innovative ways to visualize data to create actionable intelligence? Absolutely. Can it be applied to the health care sector? Without question. Has it contributed to the rise of the Data Scientist? Mos def. The reality is that solutions for managing, analyzing, generating predictions and acting upon insights gleaned from massive amounts of data are not confined to a particular vertical or geography and span both public and private sectors. Data is everywhere, we are generating more of it, have the ability to store increasing amounts of it and it is moving at speeds that soon will approach the speed of light. This is happening. It is not my view: it is a fact. But identifying a market opportunity and capitalizing on that opportunity are different things entirely.
Large, scared, fossilized bureaucracies (both large private enterprises and Governments) are frequently hard to sell to and in the best of cases have long sales cycles. This necessarily means a larger amount of start-up capital to bridge the gap between product shipment and cash receipts, and oftentimes a “minimum viable product” that has more features and is costlier to produce than a consumer-facing web application. This means taking more seed stage risk than many investors are comfortable with, but the potential payoffs can be very, very large. Further, these enterprises always have legacy systems and often employ the people that installed them in the first place, rendering a wholesale “rip and replace” strategy a long-shot at best. So creative grass-roots tactics are frequently helpful to avoid selling to the CIO, and instead getting usage in the ranks that forces enterprise adoption (a la RIM across Wall Street trading floors). And this has to happen in areas where there is a lot of noise (database architecture, business intelligence, cloud storage, etc.). Bottom line, there is a lot of domain knowledge and experience in selling to the enterprise that comes into play when pursuing these opportunities.
There are also new kinds of businesses founded by data-savvy founders that don’t look like classic “Big Data” opportunities at all. We think businesses that build platforms to harvest user data, such that the learnings from that data are used to benefit all contributors, which then results in a better product for all new users who contribute their data, is a non-intuitive application of our Big Data theme. BillGuard, Coursekit and Simple firmly conform to this notion. Each company started with zero data and isn’t a tool specifically designed to manage general data sets (such as databases or business intelligence tools). They are growing up in their own respective verticals and leveraging collective data for the benefit of the individuals in the collective. The businesses were set up to do this from Day 1 because of the “data DNA” of the founders. Every business generates data, but it is a far smaller number that view data as a strategic asset that is actively managed for the benefit of their customers and the bottom line.
Greater access to data and the technologies for managing and analyzing data are changing the world. We are at the beginning of a secular trend that, in my opinion, will sharply increase the aggregate quality of life across the globe. Better health through prediction and prevention. Richer education through collaboration and access to the best teachers and programs at a much lower cost. More satisfying and effective communication across vast distances. Greater personal data transparency and portability for better decision-making. The list is endless. But let’s be clear - the term Big Data doesn’t begin to explain what’s going on here. Whether the data is big, small, fast, slow, structured or unstructured, everything that is going on now is attempting to do one thing: making data smart and actionable. And this is a mission driven by the passion of the entrepreneur - and their investors.