Why Factual’s Gil Elbaz Sees Renewed Promise in Contextual Computing

Google celebrated its tenth year as a public company last week, closing out a decade in which the search giant outperformed all but ten companies in the world. Now, Gil Elbaz, an early pioneer in data analytics who was instrumental in developing one of the company’s most profitable products, believes that one of the technological challenges at the heart of Google’s ascent will come back into the spotlight.

A year before Google went public, the company acquired Applied Semantics, a startup founded by Elbaz that developed software to analyze the meaning of words on a webpage. Elbaz went on to spend the next four years at Google, helping to infuse the technology developed by his startup into the foundation of AdSense, the search company’s immensely profitable ad serving tool.

Elbaz, who serves as the chief executive at data firm Factual, believes that the technology industry needs to build a new approach to relevancy that accounts for increasingly complex context of a mobile user. Today, the words on a web page or app can only provide a small window in the mind of a smartphone user; mobility has added a new, and extremely complex variable to the context equation: the world around us.

Street Fight caught up with Elbaz recently to talk about the opportunity in contextual computing, its insatiable appetite for data, and what it all means for the competitive landscape in the marketing and technology industries.

Many in the technology industry credit Applied Semantics with the invention of context-based advertising online. Today, we’re seeing a revival in contextual services. How has the concept of context changed as the industry has shifted from a desktop to mobile devices?
There is a tremendous analogue between these two adventures at Applied Semantics and Factual. They both come down to understanding the context of where you are. At Applied Semantics it was understanding the context of where you are online while you’re sitting at a desktop. The chief obstacle was understanding all the words on the web page that you’re staring at and trying to figure out what are the meanings, what’s the category, what’s the frame of mind of the person as they are consuming this content?

On mobile, it’s much harder because you have to understand the context of not only what you’re looking at on your mobile device but also what might be happening around you in the real world. There’s much more information and it’s much more disparate. There’s so much more to data capture — whether it’s about activity, who’s at a place, what other people are there, events that are going on, frame of mind, what are people looking for, et cetera.

Often, certain trends and concepts will ebb and flow in popularity among technology folks. Why has “context” retaken the narrative today?
I think there’s a few things that are happening now that are going to catalyze focus in this area of contextual services. One of them is that consumers are starting to understand how much better technology is if it’s contextual, predictive, and personalized. An engineer might say a given result is not predictive, they’re not personalized, they’re not contextual. But at the end of the day, from a consumer’s standpoint, they’re simply bad.

Today, we’re just on the verge of consumers demanding good experiences. They’re starting to see what a Google Now experience can offer. Systems can guess the types of businesses that you’re interested in and make the right kind of suggestions. So that consumer bar is getting raised very quickly. Probably the other half of the coin is the amount of data and power of these devices. The ability to stitch all of that data is growing very, very quickly.

Help make the connection between the rise of contextual software and a growing demand for data.
The way software had evolved, it’s become more and more data hungry. It’s less and less common for people to think of software that doesn’t require a huge amount of underlying information to run.

So there’s this tremendous opportunity to power all sorts of software verticals. There’s a massive opportunity that’s in front of us. The opportunity is to shape behavior in the real world. We saw that early and we’ve been on this course since six months after our launch to be very focused on capturing as much information as possible about the activity and reality of the physical world.

Okay, so we know data has become an extremely important asset across a number of marketplaces. How will the rising importance of data as an asset impact the competitive landscape of the technology and marketing industries?
You can kind of draw two world views. One is that the big companies — the haves — get bigger and bigger. The very powerful data-first companies (the Googles, Facebooks, and Twitters of the world) that have more data than anyone else will gain more and more power either by acquisitions or simply having more users and more to share. That’s already happening: the app stores are totally dominated by Google and Facebook right now.

But that’s just one world view. We subscribe to the other world view, which is there will be the rise of the neutral data companies that are B-to-B. They’re not going after the consumer. We support more democratized access to the best kinds of data and tools and algorithms. We help create a more level playing field.

Imagine a world in which that first scenario — the one in which data is owned and not shared between firms — wins out. Would that eventually led to the consolidation of power in the hands of a handful of massive technology companies?
If you believe in a world where it’s highly verticalized, a world in which you don’t have neutral hubs of data, then you have no choice but to go after as much consumer data as possible. In that world you have to be a consumer company and you have to work as hard as you can to capture consumer eyeballs to get at that data. But again, I think I believe in the other direction.

We’ve already seen the increasing demand for data outstrip the structures built to help ensure consumer rights. Do you see privacy concerns as a material liability that could hamstring the industry or as a bump in the road that will eventually work itself out?
At some point, people will demand more clarity around what’s going to happen if they share their data. Shortly thereafter, they will get that clarity. Even with a new wave of interfaces, I think people are still going to share information. Yes, they’ll ask deeper questions about what’s going to happen with it but it’s not going to change the fact that these apps are just delighting users left and right. So users are not going to stop sharing information with apps that help them live productive, exciting, happy lives.

There are probably some practices that aren’t ideal that other companies engage in where information is brokered, bought and sold unbeknownst to the consumer. There’s probably too much of that going on. We’ve been very careful to avoid brokering private information.

Steven Jacobs is Street Fight’s deputy editor.