Three on a Match

If something crosses your mind three times in a short period – or if three different references all bring you to the same idea, there may be something going on. Other than coincidence, that is.

We think we see a potential crossover between an idea from knowledge management and a new idea that seems to be sweeping through the web.

The first time we thought about this idea was when Xerox started telling us about its Eureka project. Eureka is an internal Xerox knowledge management project which allows field customer service staff, initially in a pilot, but now rolling out to more than 20,000 world-wide, to share repair tips. Experienced CE’s (customer engineers) can write up their good ideas and offer them to Eureka, but ideas don’t get published until several of their colleagues review them and agree that they will work. In some sense, it’s like the peer reviewing system of a refereed scientific journal.

Eureka’s participants save time and money for Xerox by getting work done faster, making repairs instead of needing replacements, and keeping customers happy. Project Eureka has saved millions of dollars already, even before it’s full implementation.

Xerox CE’s are rewarded exactly the way they want to be: they get to sign their good ideas, taking credit for their expertise and participation. Xerox is now turning Eureka into a replicable methodology so that their customers can apply the idea to their own businesses.

Epinions.com is an Internet start-up that is another attempt at an information exchange. Another, because dozens of failed and less-than-successful attempts have proceeded them. I was particularly fond of one in the 80’s called (I believe) AMIX (American Information Exchange). But people keep trying. The brilliant company inventor Bill Gross of Idea Lab tried an information exchange a few years again and even with first class management it was unable to get going.

There are two problems with creating a successful information exchange (a place where you can go to find information on a variety of subjects, presumably offered by someone with expertise):

Epinions addresses these issues by building (with patented technology) what they call a "web of trust." This concept assumes a level of transparency between content and content creator, e.g., if you like and value an author’s content, you’d probably like his opinions about who else might be trustworthy.

In the Epinions model, content is free to the searcher, but the Writer (the one with opinions) gets paid by how often his page views are read, typically 1 to 3 cents per view. It’s a more complicated business model, but it seems to work.

Type of Information	Source of Information	Destination of Information	Who Pays?	How do they Pay?
Review/Opinion	Reviewer	Searcher	Searcher	Time (Consume Views; Ads)
			Advertiser	Ads
			Epinions	Fees to Reviewers by Page View

There is great similarity between the approval ratings in the Xerox Eureka model and the rating scheme in the Epinions model. Both depend on peers and users to validate information and expertise. Systems users rely on a growing network of trusted colleagues and a growing knowledgebase of information to make decisions.

In fact, we can immediately imagine using Epinions Web of Trust technology inside a company to allow diverse communities of users to build a large and useful knowledgebase, identifying experts who they don’t personally know, but who are known to their colleagues.

On October 11, Bill Gross will launch a new information exchange company, but iExchange is different. Its focus is making investments (mainly about stocks, bonds and mutual funds, of course, but much more broadly construed than that). Anyone can contribute opinions about investments to iExchange and decide what they’d like to be paid for viewing them. Opinion authors may offer some information for free (samples). Prices will be competitive, since so many people may want to offer advice.

But there’s an essential difference. Ratings will be based not only on how often pages are accessed, but also on the objective basis of how good the predictions are. If an adviser says a stock will go up and it goes down, his rating will, too. Advisers will be rated and users can choose among advisers on any topic based on their current ratings.

iExchange’s David Eisner, whom we interviewed before the launch, thinks many of the advisers will be amateurs, but others may be professionals, using iExchange to advertise their more expensive newsletters and professional services. Of course, there is nothing to indicate that investment professionals are necessarily better at individual predictions than savvy amateurs.

iExchange will also offer direct links to stock purchasing services, but advertising is not the main revenue of the site; revenue sharing with investment advice authors is at the basis of the business model.

	Epinions	iExchange
Information	Free	Fee (set by author)
Validation	Users’ Opinions Volume	Users’ Opinions Objective Measure of Results

We’re still not certain that users will pay for opinions in an area where so many free opinions are available. On the other hand, if particular advisers gain cachet through their high ratings, this could be a highly viable model.

It may be key that this is a highly focused site, aimed at a market where useful information leads to making money. I have a hobby site, FoodStyles , where we offer gourmet recipes and food advice. I’m not at all sure anyone would pay for those!

In any event, it is the convergence between technologies for creating and managing knowledge within and outside of organizations that is so interesting and it is that which we intend to watch closely.