Whether Big or Smart - data is on everyone's lips. In most cases, this is still internal data. But by 2020 at the latest, companies should also be purchasing external data and using it just as smartly. Datarade's intelligence platform aims to make exactly this possible and at the same time provide more transparency in the global data market. #KI_Berlin spoke to co-founder and CEO Thani Shamsi.
When one talks about Big Data and Business Intelligence, it's mostly internal data. Dan Woods, a Forbes contributor, believes that the world is suffering from a "Data not invented here syndrome". Is external data underused?
The acquisition and use of external data have a long history: with the invention of the stock ticker tape, stock prices were digitally transmitted and purchased via telegraphs between 1870 and 1970, until the technology was replaced by computers. For decades, banks and insurance companies have used consumer and corporate data to assess creditworthiness or calculate insurance premiums. Address and behaviour data have also always been traded in marketing and used for personalized advertising, which, as is well-known, has provoked many controversies in recent years. The "Data not invented here" syndrome is nevertheless real: on the one hand, companies place more trust in the quality of their internal data, while on the other hand they do not have to pay for it. In other words, external data is out of control and a cost factor, but can be a strong competitive advantage.
The potential for using external data is far from exhausted: the abundance and richness of available external data is exploding and far exceeds the available volume of internal data. By using Big Data technologies like Hadoop, Spark, Kafka, or in-memory database systems like SAP HANA, companies are only today able to handle huge amounts of data and make "intelligent" predictions for their business with machine learning/deep learning. These new capabilities fuel the hunger for data that can no longer be satisfied solely with internal data.
For which external data is there a particularly large appetite?
I estimate that global data trading generates annual sales of around 60 to 70 billion US dollars per year. Of this, approximately $ 30 billion are accounted for by company-related data from top dogs such as Thomson Reuters, Bloomberg or Dun & Bradstreet, about $ 20 billion by personal data for marketing purposes and the rest by other data types, such as sales data from POS systems, which are used primarily in the Fast Moving Consumer Goods/Consumer Packaged Goods (FMCG/CPG) area. Many AI start-ups today ask us about many other data types, such as annotated image data, in order to train their algorithms. In my opinion, machine-related data, i.e. IoT/sensor data, will be the biggest revenue drivers for data trading in the future.
Are these data supplied by professional data providers?
Right, the lion’s share of external data comes from companies whose core business is aggregating and selling data. But even companies whose primary business purpose is not data trading are increasingly willing to share and monetize their internal data with non-competing companies. This massively increases the number of available data providers: if we assume that there are tens of thousands of data providers today, we are likely to see several million data providers in the future. Even today, finding the right external data is like finding the proverbial needle in a haystack.
And this is where Datarade comes in?
Correct! We help companies to get two complexities under control. On the one hand there is external complexity: the data market is extremely confusing and untransparent, often the necessary trust between data buyers and sellers is missing. Where can I find suitable external data? Is the data of high quality? Do I pay a fair price for the data? What is the data protection risk, keyword GDPR? On the other hand, there is internal complexity: in global companies, data is today purchased across departments and countries without a standardized process. This often results in companies wasting many months searching for external data, or very often several departments buying the same data. With Datarade, we provide these companies with a powerful software system that allows them to easily understand the external "data universe", centralize and control all their external data collection. In this way, suitable data providers can be identified within a few seconds, which would otherwise take months of expert research. We have often been called the "Tinder for Data" (laughs)...
With a swipe to the right data?
Almost. Many of our customers still do not have centrally responsible managers for the procurement of external data and the management of data provider relationships. Therefore, in addition to our software system, we offer so-called "managed services" and management consulting for external data strategy. Customers who have already gone further can use our system in a self-service model. From our discussions with Chief Data Officers (CDOs), we have found that the central management of external data is an increasingly important mandate for CDOs. We are going this way together with our customers, because we are developing our system in close collaboration with them.
One aspect of data protection is protection against misuse. How do you deal with this?
Data protection is an extremely important issue for both data providers and data buyers on our platform. When the GDPR comes into force at the latest, companies will be aware of the risks of non-compliant use of personal data: fines of up to 20 million euro or four per cent of global annual sales may be imposed, whichever is the higher.
Although data privacy is not 100% secure, we can at least help data buyers identify data providers who are serious about privacy and offer mechanisms to maintain privacy compliance.
Sounds like big plans for such a young company. What is your recipe for success?
We three co-founders complement each other very well in our skills and have seen a lot over the last few years: we have worked in various large companies such as Siemens, IBM, T-Systems and Daimler, as well as start-ups, and have built up teams. We also have many years of experience in the data industry. In setting up Datarade, we are focusing on three things. Firstly, we want to have fun at work and grow personally. Secondly, we are extremely implementation-oriented and experiment a lot in order to learn quickly. Thirdly, we attach great importance to recruiting employees - the stronger our team, the greater our potential for success. And last but not least, we are supported by a strong network of investors, advisors and mentors such as the Hasso Plattner Institute (HPI), SAP.io Foundry and Techstars Accelerator.
All three partners are located in Berlin. What makes this location so attractive?
For us, Berlin is home, we were born and grew up here, we have our network here. But if we came from another city, our first impulse would probably have been to go to Berlin with Datarade. What's attractive is the incredible access to talent. By that I mean not only those who come from Berlin, but also international talent for whom Berlin is an attractive and popular place to live. For example, if we're looking for programmers, 80 per cent of our applications come from North Africa, Europe, the USA, England... from all over the world. Our immigration laws also allow us to bring this talent on board. In addition, there is the proximity to the many universities and colleges, our CTO comes from the Hasso Plattner Institute, for example. Berlin also has the most active venture capital scene in Germany, and building a software company is capital-intensive. Many tech start-ups are located here, they support each other, exchange contacts, and the personal can't be replaced by anything else. This has already made San Francisco big. This self-fulfilling prophecy also applies to Berlin: if I found a tech company, then I have to come here to be successful. The network becomes stronger with each new founder.
Speaking of success: What should Datarade look like in 2020?
Of course, we want to continue to grow and build a strong team, product and business. For large companies and data buyers we want to be THE central gateway for the universe of external data with which one can not only find and evaluate data providers, but also constantly check external data flows for costs, benefits, quality and data protection.
Thanks very much for the interview.