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The gains from insider knowledge

The gains from insider knowledge
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First Published: Sun, Dec 25 2011. 08 13 PM IST

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Updated: Sun, Dec 25 2011. 08 13 PM IST
Unfortunately, many new technologies and business models make money for investors without creating jobs for workers. That causes unemployment and increases what the blogger Clay Shirky calls “cognitive surplus”—unused brainpower.
I won’t argue about net job creation here (though I think most innovation fosters it in the long run, so long as the education system prepares people for the new jobs that result). But it is exciting to see a company designed to extract some of the highest-value cognitive surplus around, and to make money both for the company and its—well, they are not exactly workers. Call them members—or even sellers of their own cognitive surplus through an exchange set up for that purpose.
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The story starts with yet another recent phenomenon: an increase in corporate transparency, whether companies want it or not. In the old days, most companies sold products and had specified spokespeople; more recently, many have added call centres, creating about 3.5 million jobs in the US alone, and many more outside it.
But now employees of all kinds, not just those in customer support or public relations, have an online presence. Some mention their employer; most do not. This makes most employers a little nervous. Companies seem to have become fishbowls, their contents visible to customers and strangers alike.
Insidr.com is now trying to make this phenomenon into a business. (I should disclose that I plan to invest in this company—not necessarily because I think that it will be the next hot IPO, but because I think that it exploits some interesting and accelerating trends.)
The problem Insidr addresses is familiar to almost everyone; there are about 45 billion customer service calls per year in the US, according to Insidr founder Antony Brydon, and six billion concern what the customer considers a problem. There are now also one billion tweets of complaint a year.
Insidr.com’s answer is not special access or a Twitter feed that will work until the volume overwhelms it, but rather a market for connecting current customers with former insiders who can tell them how to work the system. In other words, it is an open market for information, operating more or less parallel to the closed, non-market systems run by most companies.
Specifically, Insidr brings together consumers who have practical questions about how to deal with a specific company and (mostly) former employees of that company. For example, you want to know whether you can still get the unlimited-data-roaming plan that your friend has, but the company refuses to give you a straight answer. Somewhere, a former employee (or perhaps a knowledgeable phone-store saleswoman) knows the answer.
Amazingly, says Brydon, two companies have embraced the idea. Dish Networks now seems to encourage its employees to join the system, while a manager at another company has asked for a “white-label” version that would serve only it and its customers.
But, inevitably, the whole idea will make many companies anxious. Insidr lets users select the companies by posting questions, and adds the most-mentioned companies first; so far, it has 10, including AT&T, Bank of America, Sprint, and United Air Lines.
The users post questions, with or without a reward. (Insidr gets a 50% cut when they’re offered). “We originally thought that it would be mostly about information,” says Brydon, “and that the free answers would erode the revenue opportunities. But it has turned out to be more about relationships and connecting a person who needs help with a person who can and wants to help. This basic desire to help seems as important as the rewards. Questions are answered more quickly when there is a reward, but many of the workers help even when there is no reward.” In fact, free answers are a way for “workers” to establish a reputation, and they make more money actually performing services, whether helping someone book a complicated flight route or get a new loan officer. In one case, a current United Air Lines employee asked for a telephone number for a person, not a machine, in the company’s human relations department.
By making the market for insider knowledge and access transparent and open, Insidr raises a lot of questions about why companies operate as they do. People inside companies are paid to provide a certain level of customer service on the assumption that they will help to sell products, instruct users how to benefit from them, and improve customer satisfaction.
But customers are generally stuck with one-size-fits-all service. Can Insidr.com do a better job by unbundling the market and allowing a more direct relationship between consumers and workers, and give more power to both of them vis-à-vis companies?
This brings to mind persistent retail-business disputes about who can sell and service products. Some companies insist on controlling distribution channels—in order to deliver a full-service product, they say, though sometimes the goal seems to be merely to control the price. That tension— between the manufacturer and authorized resellers on the one hand, and cheap resellers and independent third-party service companies on the other—continues today in many markets. With Insidr.com, that same tension will spread to consumer service firms as well.
©2011/PROJECT SYNDICATE
Esther Dyson is CEO of EDventure Holdings, and an active investor in a variety of start-ups around the world. Her interests include information technology healthcare, private aviation and space travel.
Comments are welcome at theirview@livemint.com
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First Published: Sun, Dec 25 2011. 08 13 PM IST