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2010 October 27

I’m seeing more and more written about the emergence of personalization on the web, a trend that has had me pounding the table for over a year. Recently Chris Dixon, a co-founder of Hunch, (which I covered in an earlier post), addressed a comment by an anonymous user of formspring asking (a little contemptuously) why Hunch’s approach was so broad. Others commented on Dixon’s thoughtful response and speculated that he was trying to sell his company. Several interesting points emerged from the discussion.

1. Is there a demand for a broad-based personalization site/service? I think there is.  I think Hunch is really on to something, even though I take issue with how they’ve implemented it on their current site.

Why? Let’s start with TMI. The web is vast and is only getting bigger. The amount of information we’re exposed to is humanly impossible to absorb. I heard a statistic quoted recently that human beings have generated more data in the last 24 months than in the past 2,000 years. So it’s obvious that we’re all going to need filters and curators to help us navigate the tsunami of meaningless, irrelevant data. Search engines are increasingly ineffective. Friends’ recommendations can be helpful or totally off base.

Complaining about a “generalized product” as the formspring user did is knee jerk prejudice. There’s nothing wrong with a site that is “broad-based” per se. Niches are all the rage these days among VC’s these days because traditional portals are struggling. “A mile wide, an inch deep.” “Trying to be all things to all people.” I heard those accusations at AOL over a decade ago. But the very nature of a personalization strategy that will appeal to a wide audience is that you have to cover a wide range of categories. We’re complex beings and we all have many interests. In my opinion, Hunch has too many categories and made a mistake allowing users to create their own topics.

There’s nothing wrong with being broad—aggregation is an underrated value-add these days, IMHO. It’s just hard to execute well in a world of angel investors and 3- person startups. (Believe me, I know.) In aggregate, a personalization engine ends up creating a bunch of niche sites. Which also happens to be an excellent monetization strategy.

2. Hunch faces a strategic issue: should they be a destination site or technology licensor or both? It looks like they’re aiming for both. But can they do it? Licensing a branded personalization engine to other sites builds awareness and ultimately drives traffic to your site. But it takes a billion $ and total focus to build a major consumer brand. And, whatever else they do, Hunch is clearly going that route. They’re either going to be the next Yahoo or they’ll go broke trying. But combining both B2C and B2B strategies is going to strain their resources and possibly cause them to lose focus. Hunch is lucky to be flush with cash for now thanks to a significant investment by Khosla Ventures but they’ll need to raise a lot more. My guess is that their “engine” strategy is a short-term effort to build their brand and to gain critical mass since acquiring giant amounts of customer data is the only way to improve their AI technology.

3. Dixon says they’ve talked to a “hundred” other web sites and they’re all building personalization technology. This is interesting news because not many have implemented it so far. Yahoo is missing a big opportunity with My Yahoo, in my view.

3. Several of the resulting comments to Chris Dixon’s post suggested that the “subtext” was that Hunch is for sale. I think that’s reading a lot into what he said in his post but there’s no question that it’s a natural outcome for him and his co-founders. I mean, duh! It’s very likely Hunch will be bought before it becomes a big consumer brand because its unique technology is going to be very much in demand. We all know who the potential acquirers are. As the saying goes, “Round up the usual suspects.”

I’ve been critical of Hunch but I’d answer the naysayers with this: kudos to Chris Dixon, Caterina Fake and the team for having the balls to swing for the fences. And kudos for their willingness to engage in discussion with the web community as their site gains more and more visibility.

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