Utilizing Collective Intellect for Market Futures

Collective Intellect is a Boulder based company that uses the collective ideas of bloggers to predict the rise and fall of stock values. I watched Don Springer, President & CEO of Collective Intellect, present at the 2006 DOW Jones Emerging Ventures Forum 2006.

Collective Intellect taps into tacit knowledge in order to reduce company risk. The Internet allows the generation of tacit knowledge because it is a lateral media instead of a central one, such as television. It has a feedback system, because it is a product and a holding contained for consumer generated media.

How does one find the spring from which a river of ideas flows? Each profession, each category of interest has its own spring, or head influence. In fashion, the top design houses determine the fashions that trickle down to lower level designers. Though the Internet allows rapid communication to occur, the spread of ideas still takes time. In computer terms this is called ‘lag’.

When the CEO presented this company to venture capitalists, he described the company structure as follows:
This company uses an algorithm to determine the highest level idea-maker or blog of highest social influence. The algorithm is applied to blogs within an interest category, and each blog is assigned points based on blog visit stats, number of comments, and certain category-specific keywords. Blogs are also analyzed for lags in category-specific keywords from site to site, so that blogs who use category-specific keywords sooner than other blogs can be assessed.

Once the points are accrued, it is easy to see which blogs have access to relevant information more quickly than others. These blogs have the power to change ideas of other ‘downstream’ blogs, and have the least lag time in accessing and reporting on relevant ideas. Financial Companies pay for access to ranked blogger data.

Consider the following:

  • A simple design story. One of CollectiveIntellect’s clients designs tupperware and wants to know how to design a next generation tupperware product that is superior to its competitors.
  • It can purchase top blog information tracking from CollectiveIntellect in order to see the top tupperware ergonomic problems that have occurred in the past with other tupperware products। This tacit knowledge can then be used to design a product that has a relatively sufficient chance of success — one that will satisfy investors.
  • Similarly, the tupperware company can check up on its design success by puchasing blogger information collected by CI about the product, post-release. Investors in the tupperware company can purchase the same information from CI to determine whether the tupperware company’s stock will go up or down.

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