Friday, December 30, 2005

The Root of all evasion

I suppose I have to reply to Peter Caputa about's justification for existence now that he answered my annoying questions in the comments on his blog. Well, it's not technically his blog, he was hired recently to blog on behalf of, even though he's the CEO of his own three-year-old startup which has little or nothing to do with attention. I'm not as worried about the dodgy nature of that deal as I am about the fact that Peter's own blog features a huge picture of a cute girl! A more egregious a case of false advertising I have not yet seen in the blogosphere, just beating out Phil Sim's Squash which somehow gives out the wrong impression that he knows what he's talking about (just kidding mate!).

So anyway, where was I? Oh yes, attention. If memory serves, this thread of argument was started in a previous post where I tried to sieve Seth Goldstein's public pronouncements for nuggets of meaning. Peter attempts to keep the conversation going by replying at length (if not in detail) to my question about user benefits.

For clarity’s sake, rather than trying to compare the value of’s services (in their current or future state) to the value of a PIM or the value that google or another web company that collects information about its users, it might be easier to explain the functionality that’s services currently provide.

Peter, starting off by saying that you are not going to answer the question directly is the wrong way to go about answering anyone's question. It is a standard marketing technique to draw up a table listing features and benefits down the left and listing your company and its rivals across the top, with ticks and crosses and whatever in the table where appropriate. In the quest to get users to understand what you provide, might I suggest one of those?

Peter then goes on to list a number of features which Root's software will include, most of which sound useful. I have no problem with those functions, I am sure many people would enjoy being able to track their Web habits and whatever else is in the Root bag of tricks. All I ask is why people would want to use a service like that which requires them to give up their personal information, when they could get by without it and stick to their own memory and browser history. I question whether the average person would consider knowing their personal information is being stored by someone else is a high enough price to pay for what is, in reality, a very minor set of information management benefits. People give up their personal information all the time when they spend time and money at major commercial Web sites, that is true, but the ROI for the user in that case is measured in products and services they can consume, not just knowledge of their own habits.

The other aspect of this carrot-and-stick approach is that if it is shown that people want an application which does all the things Root's software does, what's to stop some enterprising programmer/s spamming the market with carrots: building an open source freeware app which performs all those functions yet, crucially, doesn't require giving up that personal data? The answer is nothing.

Then Peter gets on to the subject of control.

Regarding your statement of control, however, we believe we enable a lot more control and ownership of a person’s clickstream than any other service that stores clickstreams. Most websites (or toolbars) ask you to agree to provide your clickstream in their terms of service. We don’t know of any of them that let you see it. And we don’t know of any of them that let you delete it after you’ve shared it. We do all that. We think that is a lot more control. As you mentioned, the only way to maintain more control is to never share in the first place.

Root does not "enable a lot more control and ownership of a person’s clickstream" in comparison to not using any service which stores clickstreams. That's my argument, which you confirm. The only way I could see Root's system being superior to opting out would be if you managed to convince the owners of those sites and toolbars to sign up to a system which would legally bind them into deleting their own records of individual consumers' behaviour after adding them to the Root pile of aggregated data. I can't see that happening though, for reasons of competitive advantage as I explained in my previous post.

Future value to users of
Now, I assume you still are hazy about the value that we will provide in the future. Suffice to say, at this point, that users will financially gain from using /Root Vaults. We’ll be blogging more about what we have in development soon. Tune in after the New Year and we’ll be ready to unveil more of what we have up our sleeves.

As I have said before, how can you possibly give enough financial gain to make it worth the while of consumers? CRM data is only useful in huge lumps, meaning the value per user is vanishingly small. Even if you did manage to eke out a quantum of return value from retailers back to consumers which was meaningful to the individual, all the large retailers would add that cost per user (in addition to costs of operating the Root system) back on top of the price of their products, so it's a negative-sum gain and all Root ends up being is a parasite on each transaction.

This is my underlying complaint with Root. Seth Goldstein has openly stated that the venture is based on techniques developed in futures markets. Financial markets are parasites on the regular economy, and futures markets are parasites on the parasites. Futures markets do provide value back to the economy in terms of added stability and efficiency, I'm not arguing against their utility. However, they only work because they are parasiting off a "perfect market" in the sense that all pertinent data about its transactions and its participants are known, mostly due to legal requirements. Root, on the other hand, is trying to parasite off the most chaotic economic activity there is: that of sellers and buyers in the real economy trying to find each other. It will be a Sisyphean task trying to get market knowledge about Internet retail to the same level of perfection as financial markets.

So, Peter, I thank you for replying, but I still have two main issues with Root. The first is that I suspect that the carrot-and-stick approach on the demand side will fail due to either the stick being too intimidating or the carrot not being juicy enough. The second is that I suspect the larger players on the supply side will block any attempts Root makes to remove their competitive advantage. It's hard for these questions to be resolved at this early stage of Root's life, which makes Peter's blogging life difficult, so I wish him and the company luck.


Blogger Peter said...

Just for the record, I didn't think your question was annoying. And I was not attempting to be evasive.

You have valid points. We are certainly aware of the challenges ahead of us. As you've stated them eloquently. I guess we'll see whether it works out.

Hope you'll login and check it out at some point, if you haven't already.

6:02 am, December 30, 2005  
Blogger Peter said...

Also, the features that I listed is what the service currently provides.

6:04 am, December 30, 2005  
Anonymous seth goldstein said...

Ok, just checking into this debate now. Paul, you continue to bring up the hard questions and we would not be much of a company if we were not willing to stutter, stumble, and do whatever else it takes to really listen and really respond rather than changing the question. In terms of end user features/benefits, there are many we are debating internally that will start to play out in terms of prioritization over the course of 2006. The highest level benefits are: save time, save money, increase influence. The way these become tangible in various consumer interfaces are what is at stake in this conversation. Of course, enabling you to store your clickstream on a 3rd party server is nothing to jump up and down about. But doing interesting things with this data (sharing it, viewing others', monetizing it...) is a step in the right direction. As is complementing it with other sources of data and metadata input that you as the user can manage and output as well with you Vault. Any chance you would be interested in coming to VaultStock which we are holding for original Vault users on Friday Jan 20th in NYC? We are offering free bus fare for anybody within the 50 states, which we could apply (with perhaps some more subsidy in honor of your painfully useful questioning) towards your trip?

9:31 am, December 30, 2005  
Anonymous Phil Sim said...

Quick Monty, the 3:22pm bus from Melbourne to New York leaves shortly.

1:31 pm, December 30, 2005  
Blogger Paul Montgomery said...

Um, yeah, as Phil was saying, bus fare to NYC for me is a bit cost-prohibitive considering I'm 10,000 miles away. Otherwise I'd be there.

3:25 pm, December 30, 2005  
Anonymous seth goldstein said...

yes, jetblue doesnt work in australia yet. are there other reasons you might have to be in ny on jan 20th? perhaps we could help pay for part of your plane ticket? i am a big believer in reaching out to one's toughest critics in order to avoid being surrounded with yes people.

7:54 am, December 31, 2005  
Blogger Paul Montgomery said...

Yeah, we have Jetstar, which is not quite the same.

I have no reason to be in NYC any time soon, and I won't be going anywhere until at least March due to a heavy programming workload. If I ever have reason to go there, I'll be sure and drop by. Thanks for the offer!

2:29 pm, December 31, 2005  

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