Michael Fertik - The Reputation Economy: How to Optimize Your Digital Footprint in a World Where Your Reputation Is Your Most Valuable Asset

Copyright 2015 by Tall Tree Enterprises, LLC, and David C. Thompson

All rights reserved.
Published in the United States by Crown Business, an imprint of the Crown Publishing Group, a division of Random House LLC, a Penguin Random House Company, New York.
www.crownpublishing.com

CROWN BUSINESS is a trademark and CROWN and the Rising Sun colophon are registered trademarks of Random House LLC.

Library of Congress Cataloging-in-Publication Data is available upon request.

ISBN 978-0-385-34759-4
eBook ISBN 978-0-385-34760-0

Jacket design by Gabriel Levine
Jacket art: Shutterstock/A-R-T

v3.1

Michael: For my parents, Bill and Greta, for all they have done. And for my past, current, and future colleagues at Reputation.com for changing the course of the Internet for the better.

David: For Steph, Cooper, and Riley for being amazing and supportive.

R EPUTATION IS POWER .

Your reputation defines who will talk to you and what they will do with you or for you. It determines whether your bank will lend you money to buy a house or a car; it determines whether your landlord will accept you as a tenant; it determines which employers will hire you or whether you can even get a job at all; it may determine the types of special offers and VIP experiences you receive; and it can even profoundly affect your dating prospects. Your reputation among insurers determines your ability to get coverage for your health, auto, home, or life. And your reputation with the government can even determine whether you are investigated for a crime.

And its getting more powerful than ever. Thanks to rapid advances in digital technology, your reputation will become ubiquitous, permanent, and available worldwidewhether you like it or not. Everywhere you go, other people will be able to instantly access information about your reputationwith or without your knowledge or consent.

This goes well beyond so-called Big Data, the trend of huge amounts of data being collected and stored. Instead, the new Reputation Economy depends on what well call Big Analysisthe power of new systems to extract personal predictions from these massive collections of data and turn them into action: denying you a loan; getting you an interview for a job that wasnt even advertised; or even turning a potential date away at the door. All of this based on your reputationnewly digitized and networked, in all kinds of dizzyingly sophisticated ways.

Of course, reputation has always been important. Just ask anyone who has ever lived in a small town about how long a reputation can last and how it can color your interactionsespecially if you ever make a big mistake. But back before the Reputation Economy, reputation was earned slowly among peers and dissipated over time: very few people knew anything about most non-celebrities, and a reputation lasted only as long as a human memory.

Today, digital technology has made it possible to collect, store, analyze, and distribute all kinds of information about you, ranging from your demographic profile to your driving record to a complete list of all your online activities. This so-called data miningthe 2010s buzzword for the trend toward collecting huge amounts of data about nearly every subject imaginableexists because technology has made it nearly costless to collect and store data. The easiest way to understand the capacity of digital data storage today is that a 1-terabyte disk drive holds more information than is housed in an average research library. Such drives are readily available to consumers, fit neatly in a large pants pocket or a small purse, and cost comfortably less than $100and the price is falling lower every year. The result is that today a company or an individual doesnt have to have the resources of a giant corporation (or the National Security Agency) to store a seemingly infinite amount of personal information about other individuals. This collapse in the price of storage (which can be neatly traced across thousands of years from the painstaking process of copying clay tablets through the printing press through magnetic media of today and the massive solid-state devices of the near future) allows nearly unlimited data to be stored and processed in a way that was never previously possible.

Now that digital data storage is practically free, everything that can be will be collected and storedpermanently. In fact, it is fast becoming cheaper to keep large data sets than to try to figure out which data to delete. And once the data is available, you can bet somebody will find a use for it. As a result, massive digital dossiers are being developed on every individual, right down to the websites you visit and the links you click on. There is even a fast-growing underground economy of archives and data storage sites that quietly collect records of trillions of online activities, often just waiting for someone to figure out a way to make use of all that data.

But while Big Data is scary to think about, this data in and of itself is worth nothingits just a series of 1s and 0sif companies dont know how to use it. The real power (for both good and evil) of Big Data comes in the next step: unlocking actionable intelligence through new computer systems and algorithms that sort and sift through millions of data points to find meaning. Which is why the future will be dominated not by those companies and individuals who collect the most data but by those who can make the most sense of these massive data setsBig Analysis. If Big Data is knowing that youre sitting on a gold mine, Big Analysis is actually getting it out of the ground and turning it into bullion.

The change from Big Data to Big Analysis is huge. Its not just that our storage capacity has grown. Our ability to parse, sort, and analyze that data has increased exponentially as well. If Moores Lawa general rule that computers get about twice as powerful every two yearscontinues to hold true, as it has for decades, then the power of digital analysis will continue to grow. As a result, people are beginning to entrust more and more decisions to computers, including millions of decisions formerly made by humans.

To see how this will affect you, think about how companies are already developing systems to make millions of decisions about consumers (like you) each minute. And the scope of these decisions is quickly expanding from reasonably unsurprising ones (like trying to reduce credit card fraud by identifying unusual transactions) to ones that would shock you: ranging from insurers denying coverage on the basis of online activity, through employers automatically deciding whom to hire and promote on the basis of computer-driven analysis, to mobile phone applications that allow instant background checks at bars. What decisions will be made on the basis of the fact that you purchased this book? Hopefully good ones, but well spend the next chapters exploring them.

Soon, companies will even be using the massive data sets they have acquired to assign you reputation scoressimilar to a FICO credit scorebased on your reputation for everything from hard work to financial responsibility to health. Just as search engines allow users to search the Web for information, reputation engines will allow companiesand, increasingly, everyday peopleto search your digital footprints for information about all your online