Google Prediction Markets Case

Is it a good idea to encourage ALL employees to trade in these markets? Should insiders and/or highly uninformed people be allowed to trade? Do they help or hurt the market?

The first thought that comes to mind is not to allow ALL employees to trade in the prediction markets. Common sense tells you that people with insider information have the potential to sway the prediction in a manner reflective of the information that they possess. This comes across as an unfair advantage for these traders in addition to possibly swaying the end result. On the other side of the information gap, there are those uninformed individuals who our instincts tell us that they lack any information of value and thus, should also be excluded from participating. Setting aside these notions, we take a look at the theory of prediction markets. The theory tells us Yes, ALL employees should be allowed to trade. In theory, with a large enough active population, the few people with insider information and those lacking any information, will be absorbed into the masses thus, balancing out any of their efforts to sway the prediction. The model is successful due to a synergy from the masses, where the output is greater than any one individual’s input. The case mentions this by saying that the prediction outcome is more accurate from a large population than it is from one highly inlelligent/informed person.

People with insider information and the highly uninformed people have the potential to help and harm, respectively, the outcome on a small scale. However, as the population of participants increases, the degree of influence from these two groups decreases. Therefore, it is important to use a large enough population to balance out these effects, in order to obtain accurate prediction results. Also, as a side note, it is important to understand that even those with insider information aren’t guaranteed to have an accurate prediction, as nobody is 100% sure of what the actual outcome will be. (They may have a greater probability of an accurate prediction, however.)

Threadless Case

In what other industries or areas would Threadless’ community-driven product development model work well? And not so well?

Threadless’ community-driven product development model would work well in essentially any industry where consumer-generated products are valued. It would also have to be in an industry where simple products are sold. Highly complex products such as electronic devices, computers, etc. would not be candidates. Perhaps, the art industry would be able to utilize this methodology. Artists could use it for paintings, crafts, drawings, pottery, jewelry, etc. In addition, the music industry might also be a candidate. Singers/music artists/etc. could upload their music, have it critiqued, voted on, and sold.

However, this type of model is very limited in its applicability. This model mostly works for products (not services) that are provided by typically one person. People on their own, generally have limited resources and therefore aren’t able to offer many products or designs for products that are complex (i.e. usually this limits people to the arts.)

Social Networking Sites and LinkedIn

Online social networks have become ubiquitous in the past few years. What forms of value do users get from these services and who is most likely to sign up on LinkedIn versus other sites?

Forms of value that users receive from social networking sites:

1) Re-establish connections with former co-workers, friends, family, lovers, etc.
2) Form new relationships with individuals. (i.e. meet new people, form new friendships, find dates, etc.)
3) Knowledge of what others are doing in their lives. This is accomplished via status bars, bloggs, posted pictures and videos, messages, etc.
4) Self-expression. Users have multiple forms of media to convey their thoughts, expressions, stories, experiences, etc. for an audience.
5) Networking. Social networks make it possible to find people who have something of value. (ex. someone looking for a job at a software company could find an Oracle employee and get that person to pass his/her resume around within the company.)
6) Advertising and promotion. Individuals and companies can leverage social networks to promote events, products, bands, music, groups, etc.
7) Groups. Through social networks, people are able to find others with similar interests and form/join groups.
8) Social interaction. People are able to communicate and interact with each other in a virtual environment.
9) Social media. Social networks offer a place for social media.
http://en.wikipedia.org/wiki/Social_media

LinkedIn:
People most likely to signup on LinkedIn as opposed to other social networking sites are:

1) Human Resource (HR) recruiters - for companies looking to hire new employees.
2) Independent Recruiters - use it to match jobseekers with open positions at companies.
3) Jobseekers - those seeking new employment by passing their resumes around and meeting recruiters.
4) Career-minded individuals - those persons who actively network with the purpose of managing/enhancing their careers.
5) Entrepreneurs - seeking contacts to find resources necessary for starting up a business. (i.e. seeking venture capitalists)
6) Business Executives - establishing contacts with other business executives for purposes of mergers and acquisitions, lining up their next job, etc.
7) Salespersons - use it to find sale leads (typically business-to-business sales).
8) Venture Capitalists - use it to find entrepreneurs with great ideas and companies to invest in.
9) Consultants - use it to find clients.

LinkedIn has positioned itself as a business-focused networking site that attracts “business-minded” users. This particular niche is what distinguishes LinkedIn from many other social networking sites such as myspace and facebook, which are not segmented and attract the general masses.