Has it ever struck you as odd that we live in an increasingly global, increasingly digital society, but we have to wait weeks or months for official macroeconomic data on factors like inflation and the cost of consumer goods? It struck David Soloff as odd, and he thinks his San Francisco-based startup called Premise Data — which officially launched on Monday with backing from Google Ventures, Andreessen Horowitz and Harrison Metal — is the solution.
The big-picture problem, according to Soloff, is that the economic indicators many investors, business leaders and decision makers rely on are just too outdated by the time they’re released. People “lurch to the number,” but the world has often moved since it was calculated and they won’t know it until the next report comes out, he explained.
“As these things speed up,” Soloff added, “the indicators bear less and less resemblance to what people experience on a day-to-day basis.”
It’s true in advanced economies, but it’s even more true in emerging economies where reliable data can be sparse at best. Take, for example, the case of rising food prices in India and China that are driving up inflation for a significant percentage of the world’s population. It made news on Monday, but Premise claims to have been seeing the trend shaping up for weeks.
Have phone, will capture data
Premise is able to capture economic data in near real-time in some cases — or at least much closer to it in others — thanks to the technology trifecta of e-commerce, cloud computing and smartphones.
“You’ve got whole percentage points of GDP that are now electronic” — tens of percentages points in some economies — Soloff explained, and it’s a gold mine for data. Thanks to collapsing prices for capturing data and storing it in the cloud, that data can be retained and analyzed rather than thrown away. (For the tech geeks: Premise runs on Amazon Web Services and uses Spark to process data, and Soloff knows a thing or two about big data and cloud computing.)
However, while e-commerce data is helpful for gauging the prices of certain products in certain economies, it doesn’t really touch emerging economies where the vast majority of transactions are still local and cash-based. It certainly doesn’t touch food, which Soloff calls “the stuff of life” in the developing world. But that’s important information to know: If food prices are rising across Asia, for example, that likely means, among other things, worse health and less money to spend on non-essential consumer goods.
That’s where mobile devices come into play in the form of Premise’s Android army (my term, not Soloff’s). The company has more than 700 contributors in 25 cities, mostly in Asia and Latin America, who go into stores and markets and capture data about specific items on which Premise needs data. “We use them as sort of discovery agents,” Soloff said.
The contributors take a picture of the item either on the shelf or in a market stall; it syncs with Premise’s servers in the cloud; and Premise’s system is then able to extract information from the photos. It can determine information such as price, brand and quality of the items, and even environmental information such as how clean the store is and how stocked the shelves are.
Because Premise knows its contributors’ commute routes, the lists they receive are for items and stores in those areas. This saves contributors time — they can just do it while going about their daily business, Soloff said — and it also lets Premise understand its coverage across the cities it’s monitoring. Contributors make the equivalent of about $10 per day, generally in the form of subsidized (or free) data plans and devices.
Interestingly, but not surprisingly, the app that contributors use is only for Android phones and the company doesn’t have any real plans to develop it for Apple’s iOS. “We went right to Android because we knew we wanted to build for that world,” Soloff said.
Building a business around onion prices
The company’s first three products — a global inflation monitor, a food security monitor and a competitive intelligence tool of sorts — help illustrate how all the microeconomic data it’s collecting can be valuable. Anyone from hedge fund managers to relief agencies to consumer-goods companies can track the true value of currency in a country, spot potential problems arising from food shortages (or abundances), or even measure how one company stacks up against another in terms of price or presence on stores’ shelves.
Premise has six paying customers right now, including Bloomberg, which makes Premise’s country-level data available on its terminals. Soloff said Premise is giving away its data for free to nonprofits and academic institutions, and plans to continue building products on top of its data platform. By some point in 2014, the company hopes to open it up to developers to access via API.
And although the U.S. government shutdown might be bad news for a lot of reasons, Soloff thinks it’s a shining example of why the world needs a company like Premise. For one, while the Bureau of Labor and Statistics spends hundreds of millions of dollars a year gathering data, its Consumer Price Index only tracks tens of thousands of monthly prices from physical businesses. Premise collects 240,000 real-time prices from across physical stores and the web.
Oh, and while the BLS is currently shut down, Premise is not. It’s still gathering data and has calculated a 0.2 percent increase in inflation on food products in the United States since the bureau’s last report of August’s data in September. People who make decisions based on this type of data need improvements in the infrastructure and redundancy of their data sources, Soloff said, and Premise will be happy to deliver them.