What is a data business? How does one work?
Lots of big tech businesses derive much of their value from data. Some people have been saying (for years now) "data is the new oil". A recent article attempted to describe the economics of some of these so called "data businesses". They are defined as:
"A company is a data business if, and only if, data is its core product. Data is central to the activity of the company; without the data, there is no company"
The article has 3 main points:
I like some of this: for example, the observation that investment in building a quality dataset can be a defensive moat against competitors. But I don't fully accept all the analysis. I'm not sure I would put Google (a tech company with strengths in business model design, algorithms and infrastructure with services powered by a large dataset) in the same category as ZoomInfo (a data broker that sells B2B contact details) and Bloomberg (another data broker). These is a different between building a product that is powered by data and building a business that simply sells access to more or less raw data. The former is much harder to replicate than the latter.