Home

The Internet is the most convenient source of information when it comes to searching for and acquiring information in four main categories:

1) news and current events (eg, the latest on Tiger Wood’s interests),
2) facts and figures (eg, how tall Tiger is),
3) how to accomplish specific tasks (eg, how to swing a golf club like Tiger), and
4) what the world thinks about Tiger.

But the Internet has yet to reach the ultimate promise of using all of its implicit data and computing power to help people make smarter decisions and dispensing unbiased personalized advice- what I am calling Phase IV of online information.  Phase I was characterized by search (dominated by Google) and content verticals,  Phase II saw the emergence of online Q&A sites over the past few years, such as Yahoo! Answers, Answers.comeHow, followed quickly by Phase III social information, epitomized by Facebook and Twitter.

Now a new crop of Internet companies, such as Aardvark, Hunch, Keas, and my own Cake Financial, are working on Phase IV by combining aggregated data (oftentimes personal information such as health and personal finance) and human inputs with machine-based learning to provide relevant answers to the question: “What should I do?” about a variety of subjects.

The business opportunity is enormous.  As you can see from the chart below, the Phase II Q&A companies collectively serve over 100MM users each month and the verticalized nature of the content makes pages highly trafficked via SEO and targeted to advertisers.  In October, Yahoo Answers crossed the 1 billion questions and answer mark, and the site just celebrated its 4th birthday.  Rather than faltering with the rise of Phase III darling, Twitter, as I had initially suspected, the top three sites have increased their audiences considerably over the past year.

I did some quick analysis to see 1) if there were particular differences across the sites and 2) if particular categories of content are more appropriate than others for online advice.

Yahoo Answers

There are currently 83MM questions spanning 26 different categories on Yahoo Answers.  Anyone can enter a question and various people from the community provide answers, with the best ones voted up by the community.  The top category, by far, is music and entertainment (mostly around celebrities), followed by family & relationships and health.  While upon first blush the site looks mainly for entertainment, people are looking for real answers to their health concerns, fashion and beauty, culture, how to find love and happiness, and how to fix their computers.  Essentially, solutions for everyday tasks around living well, interacting with others and staying on top of pop culture.  It’s all about people on Answers.



It is also interesting to note what people are not using Answers for: food, news, local events, eating out, and environmental issues.  For immediate decisions around what to do in the local area or what to serve for dinner, people are finding alternative sources of information, such as Yelp.

So where are there still opportunities to improve upon Y! Answers?  Check out the content areas where there are the most “unresolved” areas, questions where people have not been satisfied with a proper answer.  Advice on interpersonal relationships, divorce, dating, dealing with ailing parents, and health appear to be verticals where startups can gain traction.

eHow

eHow takes a slightly different approach by curating “how to” pages in 24 categories with 1.3MM entries, by my count.  Compared to Y! Answers, eHow skews more toward home improvement, hobbies, and food preparation, yet, health is similarly a top area of interest.  Since eHow creates its own content, it is better suited for more routinized concepts, and not as helpful for the more interpersonal categories such as relationships, culture, parenting where Y! Answers excels.  Think of eHow as an encyclopedia of practical advice to solve specific household tasks.  It is great when you want to find out how to get permanent marker out of your dining room table, for example.

Answers.com/WikiAnswers

As opposed to Y! Answers and eHow, Answers.com is more of a lite reference site for science, history, and automobiles.  It is designed to quickly find a piece of information that you need to continue on with your research topic at hand- or to settle a bet with your buddies.  Again, health leads the way, further solidifying my thesis that health will be a winner in Phase IV, assuming the player can minimize the privacy risks around sharing personal information.

Phase IV Update

The rumors circulating around the inevitable sale of Aardvark to Google signals to me that the startup may be the first victim of Twitter.   If you are interested in quickly asking your social network a question, Twitter seems to satisfy the majority of those use cases.  Companies like Hunch and Keas are the ones to watch in this emerging space.  Distribution will be the key to winning here as there are clear network effects at work- the more people access and use the site, the better the advice will be.

Share

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s