Algorithms are the new "brand"

If you spend a million bucks establishing a brand, and you do it well, you could benefit from that investment for years. But if you spend a million bucks on innovation, society will benefit forever.

Establishing market share has been important since the start of the post-war consumer economy ... an era that hasn't ended, but has morphed a little into to the knowledge economy. As a business tactic branding is still relevant. Ask Jeeves, Yahoo and even Google are cute and huggable -- more so than the racks of computers that comprise their offering.

But, clearly, one of these is winning where the others are not, and it's not because people want to hug it. It's nice that a search for "blue jays" no longer returns ornithology, as it easily could have prior to Google, but the company's better search results are only the first taste of how algorithms will displace brands.

Plentyoffish.com is a dating site. It could be the most profitable company in the history of legitimate business (income is suggested to be $5 - $10 million annually). One man manages one website -- oh, and he writes algorithms, which form the core of his site. He doesn't advertise and clearly has never worked with a graphic artist. I'm not even sure if his neighbours know what he does. What does he do? He simple runs a dating website that learns about people's tastes and matches them with similar people. But here's the brilliant part -- rather than coding psychology, he simple allows his members to interact with one another, providing real-time feedback on what makes people get along. If, all things being equal, people who like Ikea furniture also want to visit Thailand ... Pentyoffish.com probably knows this. Over time, the site introduces members to fewer duds and, like how Google gives you the right Blue Jays, builds its popularity by continually improving its ability to match potential mates.

Not that lava life doesn't have sexy ads. They do.

Amazon has been doing this with books for nearly a decade, but their system doesn't appear as sophisticated. Web2.0 definitions may miss the boat when they talk about Ajax and social networking. FaceBook is cool, but so are those hub caps that spin around when you stop. What's really of value are the algorithms that build value in a knowledge economy, and displace the need for branding.