13 ms·

Data is not an asset, it’s a liability

217 points by markonen 11y ago

yuhong 11y ago
This reminds me of the RadioShack bankruptcy. I don't think the bankruptcy process was designed for "selling" personal data, right?
eanzenberg 11y ago
Data is absolutely an asset. All decisions are driven by data (could be personal, biased, anecdotal, etc.), so why not make decisions based on more data points? It's cute to think you can "ask questions first, then collect" but this wastes time in 2015. Imagine being asked at Netflix "calculate the % watch through of 18-21 year olds for kids movies", then a week later "for action movies in the 1980s. As opposed to having the viewing info for all your users before these questions arise. BTW, users DO want you to use their data to improve your service. Otherwise google, facebook, twitter, netflix, etc. would not be as successful as they are. Liability only comes into play when OTHER parties access (legally or illegally) your data.
- kuschku 11y ago
  Well, this collecting data is exactly why the US tech industry is considered to be reckless with privacy and safety of data. And lawcases have shown that the "we record everything" in the ToS is legally null and void – only stuff the user directly expects to be recorded are legal. If you are a flashlight app, and in your ToS is "we’ll send all your contacts to a third-party company", then this is void, and if you do so, the user can sue you. As has happened with Facebook in the EU several times. This reckless "we’ll record everything" is why the EU is planning their new "you can't record anything unless directly allowed to, and you can not sell it or give it away to any third-party entities, not even governments" law. (Well, the last part was thanks to the NSA). This attitude hurts the US tech industry.
  - eanzenberg 11y ago
    I am perfectly fine with that, in fact I expect it when using services like google and facebook. I expect that facebook is crunching my data and feeding me ads, while the advertisers never see who I am or what I'm about.
    - kuschku 11y ago
      Well, it's simple: If people are outraged when you tell them what facebook actually stores, then it's not okay. And the outrage exists. I do not think anyone should store anything about me unless I explicitly want to give it to them. One example is Google's horrible traffic tracking system. In my city every lane of every intersection has a separate inductive loop to measure traffic congestion, speed and amount. Also every few hundred meters between intersections. Perfect data, and you only collect as much as necessary. In comparison, Google's system: Track the location of everyone, and then check if people are moving slowly on a road in a car. One of these stores an Orwellian amount of information, the other stores just as much as necessary. Anyway, as a German, I hate this type of data collection. Yes, I openly admit, I hate the business model of the US startup industry. And I hope this fad stops very soon, as currently we have a truly dystopian nightmare of data collection. Just think about what a less-democratic government could do if they'd get elected in the US in a few years. They could seize Google's data, force them to comply (like the NSA already did) and then use the data against the people. You have location data of almost everyone, and not just for now, but for every day for the past 5 years. With 5 minutes accuracy. You have banking data and access, emails, browser and search history. This is too much power that rests in a single place. Potential for abuse is insane.
- pingswept 11y ago
  A company being successful doing X does not mean that X is what users want. Some users probably want Google etc. to use all data available to improve their services, but some don't. The vast majority of those companies' users don't think about how the companies use their data at all. The services get better, sure, but I don't think the full price has yet been paid.
- pdkl95 11y ago
  > users DO want you to use their data to improve your service. The tech industry really needs to stop projecting what they want to be true. This is a common delusion, unfortunately, and it is exactly this attitude that will eventually bring legislation to restrict data collection. > Otherwise [...] would not be as successful as they are. They are successful because they offer a useful way to take advantage of the massive utility available in a General Purpose Computer. Data collection is largely hidden from people, either intentionally or simply because it requires extensive engineering knowledge to understand all of the various tracking techniques and their how they are used. From personal experience, as I've explained what is actually happening to people, a very common response is, "This cannot possibly be legal. Why aren't they in jail?" This addiction to data only makes you a stalker or peeping tom. That "engagement" of people using various services isn't people happily - it's people who do not see any other option. When most people don't know about alternatives (if they even exist), most people end up resigned to using services they know are harmful[1]. If you want to see if people actually want to make this kind of exchange, get proper informed consent first. Put it in a contract, and make sure they understand the data they are giving up and what it will be used for. Anything less than this, and you're taking advantage of ignorance. > Liability only comes into play when OTHER parties access (legally or illegally) your data. Liability isn't in play right now because it has been kept out of legislation partly from successful lobbying by the telco and software industries, but mostly because our political system is currently a dysfunctional mess. Eventually, this kind of irresponsible, antisocial behavior will piss enough people off, and legislation to fix this liability problem will follow. [1] https://www.asc.upenn.edu/news-events/publications/tradeoff-fallacy-how-marketers-are-misrepresenting-american-consumers-and https://www.asc.upenn.edu/news-events/publications/tradeoff-...
readams 11y ago
It's definitely an asset, but it's potentially a dangerous one. It might be like owning enriched uranium fuel pellets. Extremely valuable asset that can power a society, but dangerous if it falls into the wrong hands or is allowed to contaminate the environment.
crimsonalucard 11y ago
Folks, Big data can cure cancer. Big data can also start world peace. Google it. I'm srs.
Lerc 11y ago
If data is a liability aren't we all worse off for knowing that?
- Mz 11y ago
  I read an interesting book once that distinguished clearly between data, information, wisdom and perhaps a couple of other levels of this hierarchy. Advice is usually not data. Data is raw, unprocessed information. Being awash in it is not necessarily valuable, but wisdom is a different matter altogether.
  - deleted 11y ago
    [deleted]
  - hewhowhineth 11y ago
    DIKW Pyramid https://en.wikipedia.org/wiki/DIKW_Pyramid https://en.wikipedia.org/wiki/DIKW_Pyramid Now your turn. What's the name of the book? :)
    - Mz 11y ago
      Thanks! Unfortunately, I don't recall the name.
Tloewald 11y ago
Somewhat in this vein: Years ago I worked at a large advertising network that was concerned about fraudulent impressions. E.g. Ads placed "under the fold" or hidden or behind stuff or otherwise generating impressions that weren't real. I suggested we could build a small piece of supplemental ad code that would load alongside one of our ads in a row page and "look around" — see where ads were placed and so on. The idea was rejected because it would create too much data. I argued that we could trigger the fraud detection code once per n impressions with n being 100 or 1000 and still be able to identify fraudulent sites with statistical certainty (our problem would be false negatives) but they couldn't wrap their heads around merely sampling enough data to answer a question rather than ALL the data, so the idea was rejected. Of course it's also highly likely that they didn't actually want to detect fraud.
tuananh 11y ago
you make it work for you -> it's an asset. You leave it laying there doing nothing -> it's a liability. Perspective people.
colin_mccabe 11y ago
This article is highly misleading. Sure, certain kinds of data (like credit card data or medical data) can be a liability if not properly managed. If you are working in one of those industries you already know that (although arguably many financial and medical companies underestimate the risks). In contrast, data about what users have clicked, comments on an online forum, or who has friended who on your social media site is not a liability. In many cases this data is already public. Even in cases where it's not, it is usually incredibly boring for any hacker to steal, like what web pages John Doe has clicked on in the last 10 minutes. Hackers are going to go after stuff like social security numbers or credit card numbers, not data about the average length of time people spent looking at Pepsi Inc. web page layout A versus web page layout B. The argument that you should only store "the data that you need" is a circular one. How do you know what data you need? Well, you run an analysis. How do you run an analysis? Using the data you have. Short-sighted policies like throwing away historical data, as the article recommends, effectively blind you to long-term trends.
- x5n1 11y ago
  The bigger problem is the nature of this sort of data. All of this sort of data needs to be invalidated all the time and provided as some sort of hash rather than actual data that is usable.
  - roymurdock 11y ago
    Check out Enigma [1]. It allows a 3rd party to perform computations on encrypted data using distributed, secure multi-party computations. Thing is it's at least 20x slower than computing over plaintext, and nodes will have to be compensated with fees, much like Bitcoin miners. Still, for safety critical industries, this could be a very useful tool. Especially if the government steps in and mandates such a protocol. Here's a more in-depth write-up I did a few weeks back if you're interested: https://www.linkedin.com/pulse/iot-use-cases-enigma-homomorphic-encryption-roy-murdock?trk=prof-post https://www.linkedin.com/pulse/iot-use-cases-enigma-homomorp... [1] http://enigma.media.mit.edu/enigma_full.pdf http://enigma.media.mit.edu/enigma_full.pdf
BinaryIdiot 11y ago
I think this is a pretty good, general rule. But with everything in technology it's not true for everything. For instance auditing and medical records. Basically the only exceptions are going to be things not actionable in the market. Good read!
pisipisipisi 11y ago
Cultural difference: In US, your customer DB is an asset like anything else. In EU, your customer database is a liability.
- kuschku 11y ago
  One could, cynically, break it down to > In the US, your customers are an asset. In the EU, your customers are people with rights because that’s what this is about. And I, personally, have to fully support the EU view here, which is that the privacy of a person is more important than the profits of a company.
ohitsdom 11y ago
A $125 billion market for big data solutions is NOT a sign that data is a liability. What is the value of that data? I'm also skeptical of the compliance/privacy argument. If you're collecting any data at all, it's a potential liability. The volume of the data doesn't change the risk level much.
- dredmorbius 11y ago
  False premise. This assumes that: 1. The externalities cost of data exposure is fully realised. What is Ashley Madison's liability for suicides of members attributed to its data leak? Or of the multi-generational impacts of fractured families (immediate plus affected children, possibly parents of spouses who split on account of the breech). A frequently leveled compaint about "remediation" for data disclosure is that it does little to address the full costs to those victimised by it. AM is all the more interesting in that, as Annalee Newitz's investigative reporting reveals: not only were personal data collected, but (at least for straight males), it wasn't for the stated purpose: "Ashley Madison created more than 70,000 female bots to send male users millions of fake messages, hoping to create the illusion of a vast playland of available women." In fact, it was a feeder system to a set of bots, "affiliates", and, it seems, escort services. http://gizmodo.com/ashley-madison-code-shows-more-women-and-more-bots-1727613924 http://gizmodo.com/ashley-madison-code-shows-more-women-and-... 2. It assumes the market is rational. Enron's market capitalisation was $60 billion on December 31, 2000, prior to its collapse. The share price fell from $0.75 to less than one dollar by November, 2001, its bankruptcy filing was dated December 2, 2001. The larger problem: what is seen cannot be unseen. An exceptionally peculiar aspect of digital data is that, while it may remain in the boxes and cages provided for it, it's got a notable tendency to find itself liberated. Often without warning, and not detected for days, weeks, months, or longer, afterward (as in this case). In the real world we've got friction, especially associated with data processing and transfer. In digital form, far less so. Sometimes friction is good. Finally: that's the market for tools to analyse the data, not for the data itself. Big Data is a current business fad. Companies are told they must capitalise on Big Data, so they buy miracle solutions to do that. Some can, and in cases spectacularly. Many cannot -- the added value-per-customer is small, or, in the case of breach, negative.
mizzao 11y ago
Another way of looking at the article is that it's more important to have the right data than just having lots of data. So it's very important to think about the questions that one would want to answer and design data collection to capture the answers, rather than just going ahead and storing everything in a brute force way.
- rue 11y ago
  But having lots of data improves your chances of having the right data when you figure out what it is.
  - rodgerd 11y ago
    Like all the data the NSA, TSA, and FBI dragnet stopped 9/11, the Boston bombings, Christian terrorists shooting up doctors and churches? Oh, no, it doesn't. Not least because there's so much data even they have trouble working out what to do with it all.
    - kuschku 11y ago
      One of the arguments during the Bostom bombings was that "if Boston had, like NYC, a fully integrated CCTV system automatically filming everything and allowing to track people across the city, we could have found the attackers more easily". One has to seriously think about this. We, as a society, are signing away some of our most important rights for a statistically insignificant boost in security. I live in Germany, but even here we still feel these changes, which were started with 9/11. It's now the 14th anniversary of 9/11, and I have to say, long-term, Bin Laden has won. The western world has given up so many rights for the war on terrorism. Giving up privacy just to collect more data, so we feel safer (while the data is just thrown away) is just another step where we forget that people are actually, well, people. With rights.
    - rue 11y ago
      Right. Any data is useless until and if you know what to do with it.
  - 11y ago
lcnmrn 11y ago
Public data is an asset. Private data is a liability.
- dragonwriter 11y ago
  > Public data is an asset. Private data is a liability. I think, more precisely: Useful data is an asset. Legally sensitive (e.g., because of privacy laws) data is a liability. Those categories overlap, and data in the overlap may be a net asset or a net liability depending on the specific utility it provides balanced against the costs (both certain compliance costs and risks) associated with the specific legal protections. This isn't really unusual -- the same thing is true of pretty much everything a business (or individual) might own. Real estate, for instance, is an asset to the extent that it is useful, but owning (or even possessing as a tenant) real estate comes with certain maintenance costs and liability-related risks.
kainosnoema 11y ago
This is one reason we decided at Cotap to purge messages after 14 days by default, and only keep them longer if requested (https://cotap.com/blog/customizable-data-retention-for-business-messaging https://cotap.com/blog/customizable-data-retention-for-busin...). Contrary to what one might expect, most users embraced the change.
zeveb 11y ago
The reason to collect everything (or rather, more things than you think you'll need to answer the questions you think you'll need to answer) is that…you could be wrong about what data are required to answer the questions you've identified, and that you could be wrong about which questions you will care about. And historical data can be extremely useful, e.g. when looking at seasonal or cyclical trends (woe betide the grocer who doesn't stock up on turkeys in mid November, which means woe betide the grocer who doesn't order turkeys in the summer). Yes, he's absolutely right that data management and privacy impose a cost: the cost of storing a GB of data is more than S3's 10¢. It takes a human being to make a judgement call about whether this data is likely to be worth its overall cost and risk. That's why managers and other decision-makers get paid what they get paid. 'Data is a liability' is a nice soundbite, but it doesn't capture the full reality; one can't manage to soundbites.
- donlzx 11y ago
  Collecting everything would never be the optimum strategy and apparently the least meaningful one economically. For the unexpected extra values from history data, the possibility that the return value is greater than the associated total cost doesn't necessarily increases with the dataset size. If we look at the trends for history things, only those with scant availability and high quality will be of real values. I agree with the author that a better strategy would be to start with some unique and useful questions, store data for a purpose (insight). Asset or liability? It is not a black or white thing, it is a scale depends on the information value and fidelity. In information theories, the information quantity (entropy or bits) is inverse proportion to the available possibility.
- oconnore 11y ago
  This is a strange critique. His recommendation isn't a soundbite. It is: ask questions, figure out what you need to know to answer those questions, and then collect that data. That (asking questions and making informed decisions) sounds like exactly what those "managers and decision makers" ought to be doing in the first place. To collect everything because you can't decide on a strategy is exactly the opposite. (Re: turkeys and fairly complex retail sales cycles. A year or three of aggregated purchase history is likely to yield actionable insight. It's unlikely that a slight upward trend in turkey purchases since 2006 is very actionable.)
cwp 11y ago
He's on to something here, but I think the asset/liability duality isn't a matter of your point of view. Code really is a liability, even from the high-level view in the boardroom. The asset is functionality. If you can get more functionality with less code, you improve your balance sheet. By analogy, data is also a liability. The asset is insight.
- brianpan 11y ago
  I think the better analogy is inventory, which is an asset. The value of data depreciates over time. Having too much data that is not producing insight or value is inefficient asset allocation. In other words, lean principles should be applied to data. Reduce data collection that doesn't add value. Calling data a liability is not quite the right analogy for me.
  - stephengillie 11y ago
    Also, both are stored in warehouses.
  - riskable 11y ago
    The problem with this is that while the value of data may depreciate over time the cost to store it also costs less over time due to Moore's law and Kryder's law.
    - brianpan 11y ago
      The depreciation isn't the important part. The article suggests considering data as a liability in the accounting sense. But the author should have stopping at saying it's a liability in the non-accounting definition. Assets have value, but there is risk associated with it. Assets like inventory can lose value because of depreciation, or because demand for the finished good has dried up, there's a risk of theft, there's a cost of storage, etc. Data should be viewed as an asset like inventory and lean principles can be used to reduce your risk and produce customer value efficiently.
- yshklarov 11y ago
luckydata 11y ago
This person doesn't know much about data.
tarr11 11y ago
Private customer data often includes a liability, but not for the reasons that OP states. The liability is that companies have an ongoing obligation to their customers to protect their private data. However, a lot of data does not have this liability. If it gets published to the world, it wouldn't matter. This article portrays a common misunderstanding of the accounting terms liability and asset. Just because something has a cost to maintain, it does not make it a liability. Code is an asset. Data is an asset. Businesses do not value assets at their cost, as the article represents, but in their future economic value. Asset: "Things that are resources owned by a company and which have future economic value that can be measured and can be expressed in dollars. Examples include cash, investments, accounts receivable, inventory, supplies, land, buildings, equipment, and vehicles." Liability: "Obligations of a company or organization. Amounts owed to lenders and suppliers. Liabilities often have the word "payable" in the account title. Liabilities also include amounts received in advance for a future sale or for a future service to be performed."
- Mz 11y ago
  A liability can mean something that is a hindrance or puts an individual or group at a disadvantage, or something someone is responsible for, or something that increases the chance of something occurring (i.e. it is a cause). https://en.wikipedia.org/wiki/Liability https://en.wikipedia.org/wiki/Liability
xcyu 11y ago
TL;DR Don't collect or store data you don't need yet.
roymurdock 11y ago
It depends on what industry you're in. So JPMorgan took a bit of a reputation hit when hackers compromised the data of 83m of the company's clients. [1] The financial repercussions were minimal, if there even were any to begin with. You can bet they still collect and store all the data they can. They don't really care, and customers don't really care all that much either. On the other hand, we have medical data, which is essential for pharmaceutical and academic research but would be very, very harmful in the wrong hands. A non-compliant company will get smacked with heavy fines under HIPAA for not safeguarding data in a strict, standardized manner. Until government regulation makes data breaches substantially costly for Company X (Target, Adobe, LastPass, Department of Personnel Management, etc.), Company X will continue to gather as much data as possible. It's an asset with unbounded upside (who knows what great economic engine data might fuel in 5-10 years) and no financial downside because it carries no legal risk, and very minimal storage costs. [1] http://dealbook.nytimes.com/2014/12/22/entry-point-of-jpmorgan-data-breach-is-identified/?_r=0 http://dealbook.nytimes.com/2014/12/22/entry-point-of-jpmorg...
dredmorbius 11y ago
I'm quite happy to see others starting to recognize this. It's a problem, as someone who's dealt with "big data" since the early 1990s, that I've been quite well aware of for several decades. An exceptionally peculiar aspect of digital data is that, while it may remain in the boxes and cages provided for it, it's got a notable tendency to find itself liberated. Often without warning, and not detected for days, weeks, months, or longer, afterward (as in this case). In the real world we've got friction, especially associated with data processing and transfer. In digital form, far less so. Sometimes friction is good. What you almost always want to do is to roll data up to non-individualised aggregates as soon as practically possible. The rest is just dry powder waiting for a spark. https://www.reddit.com/r/dredmorbius/comments/3hn4r5/on_the_media_asks_what_can_we_learn_from_ashley/ https://www.reddit.com/r/dredmorbius/comments/3hn4r5/on_the_...
lighthawk 11y ago
"Then you collect the data you need (and just the data you need) to answer those questions." If you are providing something to anonymize activity- then sure, if it is legal. And you want to store as little data as possible that would be hazardous if it was made public. But for everything else, it's probably not a good idea to have this attitude. There are many questions you don't need to answer before you need them, and then it would be good or even necessary to have them historically. For example, auditing changes made to the system or data, logging some requests and responses, tracking user behavior for analysis by marketing, etc. Over time, depending on the site/service, you may want all those things and more.
m52go 11y ago
First, hat-tip to Marko for running a business with integrity. I really like the parallel between data and finance as it relates to privacy. As it turns out, banks have a very similar history of making promises & violating them. There are many parallels between banks & debt and data & technology. I wrote a post titled "Silicon Valley Data is the New Wall Street Debt" that you folks may like: http://livefreeortry.com/2014/04/30/silicon-valley-data-is-the-new-wall-street-debt/ http://livefreeortry.com/2014/04/30/silicon-valley-data-is-t...
deleted 11y ago
[deleted]
mmaunder 11y ago
Totally agree. Was going to add that an expanding schema is a liability but that seems self evident with the comments about code expansion. If you've ever built a very busy application you know the truth of this. At first the massive access to data you have seems like a gift and you'll log it all "just in case". You might even brag about the volumes of data you have and speculate about their value to investors and internally. But eventually you realize the risk and cost and cost of managing the risk.
tomlock 11y ago
>>Think this way for a while, and you notice a key factor: old data usually isn’t very interesting. You’ll be much more interested in what your users are doing right now than what they were doing a year ago. Sure, spotting trends in historical data might be cool, but in all likelihood it isn’t actionable. Today’s data is. Uhhhh, really? There have been a lot of times in my past where, as an analyst, I wished I had an bunch of historical data to measure the seasonality of trends. Am I the only one who baulks at this comment? Is this a startup-oriented perspective?
MikeNomad 11y ago
Data are an asset. Data custodians are the liability.
rdlecler1 11y ago
Maybe you don't have the resources to analyze the data today, but you still need to collect it for when you do. A history of data can give you a null hypothesis to work with. When we see a drop in traffic in August is it because we're losing relevance, or because August tends to be a slow month.
qihqi 11y ago
Well, Asset = liability + owner contribution. /s

217 points by markonen 11y ago

This reminds me of the RadioShack bankruptcy. I don't think the bankruptcy process was designed for "selling" personal data, right?

eanzenberg 11y ago

Data is absolutely an asset. All decisions are driven by data (could be personal, biased, anecdotal, etc.), so why not make decisions based on more data points? It's cute to think you can "ask questions first, then collect" but this wastes time in 2015. Imagine being asked at Netflix "calculate the % watch through of 18-21 year olds for kids movies", then a week later "for action movies in the 1980s. As opposed to having the viewing info for all your users before these questions arise. BTW, users DO want you to use their data to improve your service. Otherwise google, facebook, twitter, netflix, etc. would not be as successful as they are. Liability only comes into play when OTHER parties access (legally or illegally) your data.

kuschku 11y ago
Well, this collecting data is exactly why the US tech industry is considered to be reckless with privacy and safety of data. And lawcases have shown that the "we record everything" in the ToS is legally null and void – only stuff the user directly expects to be recorded are legal. If you are a flashlight app, and in your ToS is "we’ll send all your contacts to a third-party company", then this is void, and if you do so, the user can sue you. As has happened with Facebook in the EU several times. This reckless "we’ll record everything" is why the EU is planning their new "you can't record anything unless directly allowed to, and you can not sell it or give it away to any third-party entities, not even governments" law. (Well, the last part was thanks to the NSA). This attitude hurts the US tech industry.
- eanzenberg 11y ago
  I am perfectly fine with that, in fact I expect it when using services like google and facebook. I expect that facebook is crunching my data and feeding me ads, while the advertisers never see who I am or what I'm about.
  - kuschku 11y ago
    Well, it's simple: If people are outraged when you tell them what facebook actually stores, then it's not okay. And the outrage exists. I do not think anyone should store anything about me unless I explicitly want to give it to them. One example is Google's horrible traffic tracking system. In my city every lane of every intersection has a separate inductive loop to measure traffic congestion, speed and amount. Also every few hundred meters between intersections. Perfect data, and you only collect as much as necessary. In comparison, Google's system: Track the location of everyone, and then check if people are moving slowly on a road in a car. One of these stores an Orwellian amount of information, the other stores just as much as necessary. Anyway, as a German, I hate this type of data collection. Yes, I openly admit, I hate the business model of the US startup industry. And I hope this fad stops very soon, as currently we have a truly dystopian nightmare of data collection. Just think about what a less-democratic government could do if they'd get elected in the US in a few years. They could seize Google's data, force them to comply (like the NSA already did) and then use the data against the people. You have location data of almost everyone, and not just for now, but for every day for the past 5 years. With 5 minutes accuracy. You have banking data and access, emails, browser and search history. This is too much power that rests in a single place. Potential for abuse is insane.
pingswept 11y ago
A company being successful doing X does not mean that X is what users want. Some users probably want Google etc. to use all data available to improve their services, but some don't. The vast majority of those companies' users don't think about how the companies use their data at all. The services get better, sure, but I don't think the full price has yet been paid.
pdkl95 11y ago
> users DO want you to use their data to improve your service. The tech industry really needs to stop projecting what they want to be true. This is a common delusion, unfortunately, and it is exactly this attitude that will eventually bring legislation to restrict data collection. > Otherwise [...] would not be as successful as they are. They are successful because they offer a useful way to take advantage of the massive utility available in a General Purpose Computer. Data collection is largely hidden from people, either intentionally or simply because it requires extensive engineering knowledge to understand all of the various tracking techniques and their how they are used. From personal experience, as I've explained what is actually happening to people, a very common response is, "This cannot possibly be legal. Why aren't they in jail?" This addiction to data only makes you a stalker or peeping tom. That "engagement" of people using various services isn't people happily - it's people who do not see any other option. When most people don't know about alternatives (if they even exist), most people end up resigned to using services they know are harmful[1]. If you want to see if people actually want to make this kind of exchange, get proper informed consent first. Put it in a contract, and make sure they understand the data they are giving up and what it will be used for. Anything less than this, and you're taking advantage of ignorance. > Liability only comes into play when OTHER parties access (legally or illegally) your data. Liability isn't in play right now because it has been kept out of legislation partly from successful lobbying by the telco and software industries, but mostly because our political system is currently a dysfunctional mess. Eventually, this kind of irresponsible, antisocial behavior will piss enough people off, and legislation to fix this liability problem will follow. [1] https://www.asc.upenn.edu/news-events/publications/tradeoff-fallacy-how-marketers-are-misrepresenting-american-consumers-and https://www.asc.upenn.edu/news-events/publications/tradeoff-...

readams 11y ago

It's definitely an asset, but it's potentially a dangerous one. It might be like owning enriched uranium fuel pellets. Extremely valuable asset that can power a society, but dangerous if it falls into the wrong hands or is allowed to contaminate the environment.

crimsonalucard 11y ago

Folks, Big data can cure cancer. Big data can also start world peace. Google it. I'm srs.

Lerc 11y ago

If data is a liability aren't we all worse off for knowing that?

Mz 11y ago
I read an interesting book once that distinguished clearly between data, information, wisdom and perhaps a couple of other levels of this hierarchy. Advice is usually not data. Data is raw, unprocessed information. Being awash in it is not necessarily valuable, but wisdom is a different matter altogether.
- deleted 11y ago
  [deleted]
- hewhowhineth 11y ago
  DIKW Pyramid https://en.wikipedia.org/wiki/DIKW_Pyramid https://en.wikipedia.org/wiki/DIKW_Pyramid Now your turn. What's the name of the book? :)
  - Mz 11y ago
    Thanks! Unfortunately, I don't recall the name.

Tloewald 11y ago

Somewhat in this vein: Years ago I worked at a large advertising network that was concerned about fraudulent impressions. E.g. Ads placed "under the fold" or hidden or behind stuff or otherwise generating impressions that weren't real. I suggested we could build a small piece of supplemental ad code that would load alongside one of our ads in a row page and "look around" — see where ads were placed and so on. The idea was rejected because it would create too much data. I argued that we could trigger the fraud detection code once per n impressions with n being 100 or 1000 and still be able to identify fraudulent sites with statistical certainty (our problem would be false negatives) but they couldn't wrap their heads around merely sampling enough data to answer a question rather than ALL the data, so the idea was rejected. Of course it's also highly likely that they didn't actually want to detect fraud.

tuananh 11y ago

you make it work for you -> it's an asset. You leave it laying there doing nothing -> it's a liability. Perspective people.

colin_mccabe 11y ago

This article is highly misleading. Sure, certain kinds of data (like credit card data or medical data) can be a liability if not properly managed. If you are working in one of those industries you already know that (although arguably many financial and medical companies underestimate the risks). In contrast, data about what users have clicked, comments on an online forum, or who has friended who on your social media site is not a liability. In many cases this data is already public. Even in cases where it's not, it is usually incredibly boring for any hacker to steal, like what web pages John Doe has clicked on in the last 10 minutes. Hackers are going to go after stuff like social security numbers or credit card numbers, not data about the average length of time people spent looking at Pepsi Inc. web page layout A versus web page layout B. The argument that you should only store "the data that you need" is a circular one. How do you know what data you need? Well, you run an analysis. How do you run an analysis? Using the data you have. Short-sighted policies like throwing away historical data, as the article recommends, effectively blind you to long-term trends.

x5n1 11y ago
The bigger problem is the nature of this sort of data. All of this sort of data needs to be invalidated all the time and provided as some sort of hash rather than actual data that is usable.
- roymurdock 11y ago
  Check out Enigma [1]. It allows a 3rd party to perform computations on encrypted data using distributed, secure multi-party computations. Thing is it's at least 20x slower than computing over plaintext, and nodes will have to be compensated with fees, much like Bitcoin miners. Still, for safety critical industries, this could be a very useful tool. Especially if the government steps in and mandates such a protocol. Here's a more in-depth write-up I did a few weeks back if you're interested: https://www.linkedin.com/pulse/iot-use-cases-enigma-homomorphic-encryption-roy-murdock?trk=prof-post https://www.linkedin.com/pulse/iot-use-cases-enigma-homomorp... [1] http://enigma.media.mit.edu/enigma_full.pdf http://enigma.media.mit.edu/enigma_full.pdf

BinaryIdiot 11y ago

I think this is a pretty good, general rule. But with everything in technology it's not true for everything. For instance auditing and medical records. Basically the only exceptions are going to be things not actionable in the market. Good read!

pisipisipisi 11y ago

Cultural difference: In US, your customer DB is an asset like anything else. In EU, your customer database is a liability.

kuschku 11y ago
One could, cynically, break it down to > In the US, your customers are an asset. In the EU, your customers are people with rights because that’s what this is about. And I, personally, have to fully support the EU view here, which is that the privacy of a person is more important than the profits of a company.

ohitsdom 11y ago

A $125 billion market for big data solutions is NOT a sign that data is a liability. What is the value of that data? I'm also skeptical of the compliance/privacy argument. If you're collecting any data at all, it's a potential liability. The volume of the data doesn't change the risk level much.

dredmorbius 11y ago
False premise. This assumes that: 1. The externalities cost of data exposure is fully realised. What is Ashley Madison's liability for suicides of members attributed to its data leak? Or of the multi-generational impacts of fractured families (immediate plus affected children, possibly parents of spouses who split on account of the breech). A frequently leveled compaint about "remediation" for data disclosure is that it does little to address the full costs to those victimised by it. AM is all the more interesting in that, as Annalee Newitz's investigative reporting reveals: not only were personal data collected, but (at least for straight males), it wasn't for the stated purpose: "Ashley Madison created more than 70,000 female bots to send male users millions of fake messages, hoping to create the illusion of a vast playland of available women." In fact, it was a feeder system to a set of bots, "affiliates", and, it seems, escort services. http://gizmodo.com/ashley-madison-code-shows-more-women-and-more-bots-1727613924 http://gizmodo.com/ashley-madison-code-shows-more-women-and-... 2. It assumes the market is rational. Enron's market capitalisation was $60 billion on December 31, 2000, prior to its collapse. The share price fell from $0.75 to less than one dollar by November, 2001, its bankruptcy filing was dated December 2, 2001. The larger problem: what is seen cannot be unseen. An exceptionally peculiar aspect of digital data is that, while it may remain in the boxes and cages provided for it, it's got a notable tendency to find itself liberated. Often without warning, and not detected for days, weeks, months, or longer, afterward (as in this case). In the real world we've got friction, especially associated with data processing and transfer. In digital form, far less so. Sometimes friction is good. Finally: that's the market for tools to analyse the data, not for the data itself. Big Data is a current business fad. Companies are told they must capitalise on Big Data, so they buy miracle solutions to do that. Some can, and in cases spectacularly. Many cannot -- the added value-per-customer is small, or, in the case of breach, negative.

mizzao 11y ago

Another way of looking at the article is that it's more important to have the right data than just having lots of data. So it's very important to think about the questions that one would want to answer and design data collection to capture the answers, rather than just going ahead and storing everything in a brute force way.

rue 11y ago
But having lots of data improves your chances of having the right data when you figure out what it is.
- rodgerd 11y ago
  Like all the data the NSA, TSA, and FBI dragnet stopped 9/11, the Boston bombings, Christian terrorists shooting up doctors and churches? Oh, no, it doesn't. Not least because there's so much data even they have trouble working out what to do with it all.
  - kuschku 11y ago
    One of the arguments during the Bostom bombings was that "if Boston had, like NYC, a fully integrated CCTV system automatically filming everything and allowing to track people across the city, we could have found the attackers more easily". One has to seriously think about this. We, as a society, are signing away some of our most important rights for a statistically insignificant boost in security. I live in Germany, but even here we still feel these changes, which were started with 9/11. It's now the 14th anniversary of 9/11, and I have to say, long-term, Bin Laden has won. The western world has given up so many rights for the war on terrorism. Giving up privacy just to collect more data, so we feel safer (while the data is just thrown away) is just another step where we forget that people are actually, well, people. With rights.
  - rue 11y ago
    Right. Any data is useless until and if you know what to do with it.
- 11y ago

lcnmrn 11y ago

Public data is an asset. Private data is a liability.

dragonwriter 11y ago
> Public data is an asset. Private data is a liability. I think, more precisely: Useful data is an asset. Legally sensitive (e.g., because of privacy laws) data is a liability. Those categories overlap, and data in the overlap may be a net asset or a net liability depending on the specific utility it provides balanced against the costs (both certain compliance costs and risks) associated with the specific legal protections. This isn't really unusual -- the same thing is true of pretty much everything a business (or individual) might own. Real estate, for instance, is an asset to the extent that it is useful, but owning (or even possessing as a tenant) real estate comes with certain maintenance costs and liability-related risks.

kainosnoema 11y ago

This is one reason we decided at Cotap to purge messages after 14 days by default, and only keep them longer if requested (https://cotap.com/blog/customizable-data-retention-for-business-messaging https://cotap.com/blog/customizable-data-retention-for-busin...). Contrary to what one might expect, most users embraced the change.

zeveb 11y ago

The reason to collect everything (or rather, more things than you think you'll need to answer the questions you think you'll need to answer) is that…you could be wrong about what data are required to answer the questions you've identified, and that you could be wrong about which questions you will care about. And historical data can be extremely useful, e.g. when looking at seasonal or cyclical trends (woe betide the grocer who doesn't stock up on turkeys in mid November, which means woe betide the grocer who doesn't order turkeys in the summer). Yes, he's absolutely right that data management and privacy impose a cost: the cost of storing a GB of data is more than S3's 10¢. It takes a human being to make a judgement call about whether this data is likely to be worth its overall cost and risk. That's why managers and other decision-makers get paid what they get paid. 'Data is a liability' is a nice soundbite, but it doesn't capture the full reality; one can't manage to soundbites.

donlzx 11y ago
Collecting everything would never be the optimum strategy and apparently the least meaningful one economically. For the unexpected extra values from history data, the possibility that the return value is greater than the associated total cost doesn't necessarily increases with the dataset size. If we look at the trends for history things, only those with scant availability and high quality will be of real values. I agree with the author that a better strategy would be to start with some unique and useful questions, store data for a purpose (insight). Asset or liability? It is not a black or white thing, it is a scale depends on the information value and fidelity. In information theories, the information quantity (entropy or bits) is inverse proportion to the available possibility.
oconnore 11y ago
This is a strange critique. His recommendation isn't a soundbite. It is: ask questions, figure out what you need to know to answer those questions, and then collect that data. That (asking questions and making informed decisions) sounds like exactly what those "managers and decision makers" ought to be doing in the first place. To collect everything because you can't decide on a strategy is exactly the opposite. (Re: turkeys and fairly complex retail sales cycles. A year or three of aggregated purchase history is likely to yield actionable insight. It's unlikely that a slight upward trend in turkey purchases since 2006 is very actionable.)

cwp 11y ago

He's on to something here, but I think the asset/liability duality isn't a matter of your point of view. Code really is a liability, even from the high-level view in the boardroom. The asset is functionality. If you can get more functionality with less code, you improve your balance sheet. By analogy, data is also a liability. The asset is insight.

brianpan 11y ago
I think the better analogy is inventory, which is an asset. The value of data depreciates over time. Having too much data that is not producing insight or value is inefficient asset allocation. In other words, lean principles should be applied to data. Reduce data collection that doesn't add value. Calling data a liability is not quite the right analogy for me.
- stephengillie 11y ago
  Also, both are stored in warehouses.
- riskable 11y ago
  The problem with this is that while the value of data may depreciate over time the cost to store it also costs less over time due to Moore's law and Kryder's law.
  - brianpan 11y ago
    The depreciation isn't the important part. The article suggests considering data as a liability in the accounting sense. But the author should have stopping at saying it's a liability in the non-accounting definition. Assets have value, but there is risk associated with it. Assets like inventory can lose value because of depreciation, or because demand for the finished good has dried up, there's a risk of theft, there's a cost of storage, etc. Data should be viewed as an asset like inventory and lean principles can be used to reduce your risk and produce customer value efficiently.
yshklarov 11y ago

luckydata 11y ago

This person doesn't know much about data.

tarr11 11y ago

Private customer data often includes a liability, but not for the reasons that OP states. The liability is that companies have an ongoing obligation to their customers to protect their private data. However, a lot of data does not have this liability. If it gets published to the world, it wouldn't matter. This article portrays a common misunderstanding of the accounting terms liability and asset. Just because something has a cost to maintain, it does not make it a liability. Code is an asset. Data is an asset. Businesses do not value assets at their cost, as the article represents, but in their future economic value. Asset: "Things that are resources owned by a company and which have future economic value that can be measured and can be expressed in dollars. Examples include cash, investments, accounts receivable, inventory, supplies, land, buildings, equipment, and vehicles." Liability: "Obligations of a company or organization. Amounts owed to lenders and suppliers. Liabilities often have the word "payable" in the account title. Liabilities also include amounts received in advance for a future sale or for a future service to be performed."

Mz 11y ago
A liability can mean something that is a hindrance or puts an individual or group at a disadvantage, or something someone is responsible for, or something that increases the chance of something occurring (i.e. it is a cause). https://en.wikipedia.org/wiki/Liability https://en.wikipedia.org/wiki/Liability

xcyu 11y ago

TL;DR Don't collect or store data you don't need yet.

roymurdock 11y ago

It depends on what industry you're in. So JPMorgan took a bit of a reputation hit when hackers compromised the data of 83m of the company's clients. [1] The financial repercussions were minimal, if there even were any to begin with. You can bet they still collect and store all the data they can. They don't really care, and customers don't really care all that much either. On the other hand, we have medical data, which is essential for pharmaceutical and academic research but would be very, very harmful in the wrong hands. A non-compliant company will get smacked with heavy fines under HIPAA for not safeguarding data in a strict, standardized manner. Until government regulation makes data breaches substantially costly for Company X (Target, Adobe, LastPass, Department of Personnel Management, etc.), Company X will continue to gather as much data as possible. It's an asset with unbounded upside (who knows what great economic engine data might fuel in 5-10 years) and no financial downside because it carries no legal risk, and very minimal storage costs. [1] http://dealbook.nytimes.com/2014/12/22/entry-point-of-jpmorgan-data-breach-is-identified/?_r=0 http://dealbook.nytimes.com/2014/12/22/entry-point-of-jpmorg...

dredmorbius 11y ago

I'm quite happy to see others starting to recognize this. It's a problem, as someone who's dealt with "big data" since the early 1990s, that I've been quite well aware of for several decades. An exceptionally peculiar aspect of digital data is that, while it may remain in the boxes and cages provided for it, it's got a notable tendency to find itself liberated. Often without warning, and not detected for days, weeks, months, or longer, afterward (as in this case). In the real world we've got friction, especially associated with data processing and transfer. In digital form, far less so. Sometimes friction is good. What you almost always want to do is to roll data up to non-individualised aggregates as soon as practically possible. The rest is just dry powder waiting for a spark. https://www.reddit.com/r/dredmorbius/comments/3hn4r5/on_the_media_asks_what_can_we_learn_from_ashley/ https://www.reddit.com/r/dredmorbius/comments/3hn4r5/on_the_...

lighthawk 11y ago

"Then you collect the data you need (and just the data you need) to answer those questions." If you are providing something to anonymize activity- then sure, if it is legal. And you want to store as little data as possible that would be hazardous if it was made public. But for everything else, it's probably not a good idea to have this attitude. There are many questions you don't need to answer before you need them, and then it would be good or even necessary to have them historically. For example, auditing changes made to the system or data, logging some requests and responses, tracking user behavior for analysis by marketing, etc. Over time, depending on the site/service, you may want all those things and more.

m52go 11y ago

First, hat-tip to Marko for running a business with integrity. I really like the parallel between data and finance as it relates to privacy. As it turns out, banks have a very similar history of making promises & violating them. There are many parallels between banks & debt and data & technology. I wrote a post titled "Silicon Valley Data is the New Wall Street Debt" that you folks may like: http://livefreeortry.com/2014/04/30/silicon-valley-data-is-the-new-wall-street-debt/ http://livefreeortry.com/2014/04/30/silicon-valley-data-is-t...

deleted 11y ago

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mmaunder 11y ago

Totally agree. Was going to add that an expanding schema is a liability but that seems self evident with the comments about code expansion. If you've ever built a very busy application you know the truth of this. At first the massive access to data you have seems like a gift and you'll log it all "just in case". You might even brag about the volumes of data you have and speculate about their value to investors and internally. But eventually you realize the risk and cost and cost of managing the risk.

tomlock 11y ago

>>Think this way for a while, and you notice a key factor: old data usually isn’t very interesting. You’ll be much more interested in what your users are doing right now than what they were doing a year ago. Sure, spotting trends in historical data might be cool, but in all likelihood it isn’t actionable. Today’s data is. Uhhhh, really? There have been a lot of times in my past where, as an analyst, I wished I had an bunch of historical data to measure the seasonality of trends. Am I the only one who baulks at this comment? Is this a startup-oriented perspective?

MikeNomad 11y ago

Data are an asset. Data custodians are the liability.

rdlecler1 11y ago

Maybe you don't have the resources to analyze the data today, but you still need to collect it for when you do. A history of data can give you a null hypothesis to work with. When we see a drop in traffic in August is it because we're losing relevance, or because August tends to be a slow month.

qihqi 11y ago

Well, Asset = liability + owner contribution. /s