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Start-up of the week

The pluses of going public on your mobile device

Mobile service providers are following Google and Facebook’s data mining example. But it’s not a bad thing, says an Israeli start-up

The Racana team accepts the Global Innovation Award in Nokia Siemens Networks' Israel Innovation Competition. Holding the award: Amit Sternberg, Racana CEO (Photo credit: Courtesy)
The Racana team accepts the Global Innovation Award in Nokia Siemens Networks' Israel Innovation Competition. Holding the award: Amit Sternberg, Racana CEO (Photo credit: Courtesy)

To the panoply of groups who are data mining your every move, add your mobile service provider — and blame websites like Google and Facebook, said an Israeli start-up that has developed a method for service providers to monetize the reams of data they collect.

But no worries; this isn’t an NSA-type spy sting. Your service provider’s job is to make money, and a company called  Racana has a content personalization engine that helps them do just that. It serves up personalized recommendations for content, products, and service — just like Google, Facebook, Amazon, and many others do. It’s a unique solution for service providers, said founder and CEO Amit Sternberg, so unique that Racana last week was awarded Nokia Siemens Networks’ Global Innovation Award for its solution.

Racana’s system applies business intelligence analysis techniques to the data logs mobile service providers collect as a matter of course about their customers’ smartphone usage. The logs are built into the system, consisting of the typical information on usage, location, web connections, and so on — the same information collected on any computer system or network. Such information is generally used to debug problems when they arise, or for legal and insurance purposes, and has been collected since the first cellphone call (and the first connection to the Internet) was made.

So it’s somewhat surprising that Racana’s is the first solution that data mines this valuable information; as far as he knows, there is no other company anywhere doing business intelligence analysis on data collected by mobile service providers, said Sternberg. Considering the success Google and Facebook have had from data mining just the information on users’ surfing habits, one would have expected service providers to figure out ways to use the much more extensive information they’ve been collecting for far longer.

“In the past, the service providers didn’t need to do this,” said Sternberg. “They had plenty of income from their regular service fees.” But in recent years, as competition has increased and subscription fees have come down, established service providers have been feeling the squeeze, and have been searching for effective ways to monetize their data assets.

There was also a cultural component to service providers’ reluctance to mine their data, said Sternberg. In the past, service providers may have felt that using their data to sell services and promoted content may have seemed too invasive to customers. But times have changed. “There has definitely been a change in the past few years in the concept of ‘privacy,’ what it means and where it applies,” said Sternberg. Facebook, Google, and other web services and applications have skewed the idea of what privacy means, making users more comfortable with the increasingly invasive aspects of data mining. “The service providers see Facebook doing this, and even more, they see customers embracing it, since they are getting the benefits of a more personalized web experience.”

If it’s good enough for Facebook, it’s good enough for them, the service providers have decided — and Racana is thus filling an important niche in the mobile business. Racana’s proprietary system analyzes users’ data and infers from it the specific interests of consumers based on their online activities and behavior.

Racana’s algorithms enables an accurate and constantly changing user profiling technology based on the user’s online habits, and does not violate privacy, as the personal information on customers is kept separate from their “personalized” information in the activity database. The ID numbers used for data analysis are not in the same database as the users’ name and phone number, so there is no automatic way to connect the two.

Critics of this kind of protection say that it is insufficient and claim that information on customers could easily be compromised, with the information used by hackers to steal credit card information or even identities. In their defense, mobile service providers (along with ISPs) say that they are very cognizant of the dangers, and that the last thing they want or need is the major public relations (not to mention legal) fiasco that could result from hacking. Stories of customers suing over losses from such hacking incidents are incentive enough for them to take all the steps necessary to protect data, they say.

With Racana’s system, service providers can recommend content based on interest, offer coupons and sale offers based on location, interact with local businesses to serve up ads that users would be likely to be interested in, and so on. Thus, service providers can get in on the data mining bonanza that have made many web companies rich.

Even if they didn’t want to go into the ad or content business themselves, said Sternberg, analyzing and packaging the data would prove valuable, because a web company would probably be happy to pay for results that would let it get to its goal of engaging with the customer more quickly. Amazon, for example, could collect information about their customers from their web and mobile activities on the site, but they could speed up the process significantly by knowing in advance what offers to target to which users (Racana’s solution works for not just mobile service providers, said Sternberg, but for ISPs and website owners).

Racana, located in Ramat Gan, has been in business since 2007, and has been funded privately by some top-flight angels since. Last week, Nokia Siemens Networks awarded Racana the Global Innovation Award in its Israel Innovation Competition, a contest the company ran only in Israel to discover the latest and greatest in mobile technology. The competition was judged by experts from Nokia Siemens Networks, representatives from Intel Capital, Cellcom Israel, the Israel Export and International Cooperation Institute and Amos Talmor, an experienced angel investor who is involved with many emerging technology companies in Israel.

“We are delighted with the quality of solutions we received through the Israel Innovation Competition. I congratulate Racana for winning the Global Innovation Award,” said Hossein Moiin, executive vice president for Technology and Innovation at Nokia Siemens Networks. “Racana’s innovative solution related to personalizing user experience ties in very well with our technology vision.”

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