The Evolution of Market Intelligence

November 08, 2020

Author: Guy Soreq

“It is not the strongest of the species that survives,
not the most intelligent that survives.
It is the one that is the most adaptable to change.”
― Charles Darwin

In 1834, Charles Darwin stepped off the HMS Beagle and set foot on the Galapagos Islands. Over a period of 5 weeks, Darwin studied the unique animals indigenous to the island. Upon careful analysis, he understood that what was once thought to be one type of finch was in fact 18 different species with remarkable diversity in beak form and function. The finches had undergone an evolutionary process called adaptive radiation, in which organisms rapidly diversify from a common ancestor in response to a change in environment that makes new resources and thus new niches available. In the case of the Galapagos finches, the birds evolved to have different beaks in order to utilize the different food resources available on their isolated island. Or in evolutionary biology terms - speciation via habitat specialization. This breakthrough helped Darwin develop his famous theory of evolution and the rest is history.

If you followed this blog for some time, you probably know that we like to take lessons from history and science to apply them to business strategy. Today we’re talking about specialization, not just among finches, but in business. In the business world, specialization is an efficiency strategy for lowering unit costs and expanding to new markets. In short, do what you’re good at in order to survive and thrive. We have seen just the opposite among many providers of market intelligence who offer their service as an add-on to other lines of business. Online marketplaces and distributors share analysis with their customers, while news agencies and marketing platforms manage price reporting divisions to further attract readers. This lack of focus detracts from what these businesses do best. And even worse, it interferes with the objectivity of the data.

The business model of a news agency relies on bringing the most interesting news to its readers, which is in conflict with accurately reporting pricing. Sometimes the changes just aren’t that interesting. Naturally, a marketplace wins when trading occurs and distributors benefit from margins on increased prices. Price reporting based on data from a marketplace has the potential of skewing overly high. This is the reason that it is critical that we understand the incentives of information providers in order to understand the biases inherent in the data. This is also the reason that we are not a news provider or a marketplace (many of you have asked!). At the same time, it is very much the reason that we love to work with both news providers and marketplaces. They offer an invaluable service to the industry, just with a slightly different specialization from us.

Glowlit is highly specialized for pricing intelligence, and just that. We minimize bias by incentivizing users to submit real deals from across the supply chain in return for market intelligence, and use AI to verify the accuracy of each data point. This has allowed us to offer the Glowlit community a clear view on the market in real time, and has resulted in some important industry collaborations with our fellow finches.