Premise taps into hunger for real-time data

October 15, 2013 5:22 am

Premise taps into hunger for real-time data

By Richard Waters in San Francisco

The rise in US food prices accelerated in September and has continued into October, according to a detailed study of retail prices – though the US federal government shutdown has robbed financial markets of any official measures of the state of the economy. These unofficial inflation figures, from a US start-up called Premise, highlight the growing use of massive data collection and analysis – known as “big data” – to supplement and in some cases replace official economic statistics.Supporters say that mining digital sources such as the web could provide far more accurate insights into economic conditions than do those supplied by traditional government measures, potentially affecting everything from the trading strategies of hedge funds to business decisions by companies looking to expand into new markets.

“There’s a disconnect between the data and what people experience on a daily basis,” said David Soloff, one of Premise’s founders. The company, partly funded by Google Ventures, the US internet group’s investment arm, is collecting inflation data across 30 countries and already claims two investment funds, a large consumer products company and a government agency among its customers.

The idea of turning to the web to glean deeper insights into economic activity is not new. Economists such as Hal Varian, chief economist of Google, have speculated for some time that the value of information caught in the search company’s trawl of the web could put official statistics in the shade.

Academics from the Massachusetts Institute of Technology launched one such initiative to mine online data, called the Billion Prices Project, five years ago. It has since been acquired by State Street, the US financial institution, to supply global inflation data to its customers.

Premise has gone one step further, tapping into the smartphone revolution to supplement its analysis of web data with the on-the-ground collection of figures in some emerging markets. About 700 part-time workers, armed with handsets running Google’s Android operating systems, collect information on food prices in 25 cities, according to Mr Soloff, and coverage of 100 cities is planned by the end of next year.

Such real-time data collection stands to identify food shortages and price spikes before they feed through into official reports, according supporters. Premise, for instance, claims to have had early insight into the rapid rise in onion prices that began in India in May, leading by August to government intervention to hold down prices in one of the country’s main food staples.

In addition to Google, Premise, which has operated quietly since signing up its first customers earlier this year, has raised seed capital from Andreessen Horowitz, a leading Silicon Valley venture capital firm. It counts Mr Varian and Alan Kruger, a former assistant Treasury secretary in the Obama administration, among its advisers.