Making Money Web

Starting in January 2011 the IRS is no longer mailing paper filings for taxes, credit card spending has hit a 31 year decline while debit card transactions have  increased nearly 7.9% overall.  It’s estimated that credit card usage will drop below 50%while frauds drops quickly due to new detection systems.  Consumers are using less credit and wanting less credit. In a world where traditional credit has evaporated, consumers have changed not how they spend money but how they perceive and attain credit- this time without banks.

Facebook the New Credit Database?

It used to be that credit scores were good indicators of risk associated with consumers.  Looking at outstanding debt, previous history of payments, previous history of spending transactions you could evaluate the worth of someone’s credit and assign a credit score.  For years banks had massive transactional data and tried to figure out the best way to calculate risk both for major fraud (on a criminal level) and minor fraud (personal, potentially accidental level).  Obviously systems are in place now with algorithms that formulate risk.  This isn’t a secret, it’s the bones behind why your debit or credit card has been declined: your cardholder information is processed against which ever authorization program being used and an answer is sent back to the originating terminal from either ‘approving” or “declining” that particular transaction. You know who is also really good at making algorithms and understanding user behavior? Facebook.

A Transaction is a Transaction

Transaction amounts and types are quickly categorized which is why with online banking many times a larger amount than spent at a gas station will be held against a checking account or why with some business debit cards a small transaction will be declined at one restaurant but not another. Many times transactions limits are set higher than they should be, as it allows banks to rack up fees for overdrawn or accounts improperly used.  Americans poor spending habits have been nurtured by banks, it’s been a way to make money but with recent court cases like this one against Wells Fargo, banks are being forced to tighten the rope on spending and on granting credit.  Tightened financial regulation has been needed for years just as paper checks are being phased out of Europe.  Banks have less incentive to give money and consumers have less reasons to use banks.  The bank and consumer relationship has become a hostile one coming and social media is becoming the catalyst for divorce.

Who Needs Money Anyway?

Already online holiday  spending is up 7-9%.  Credits can be earned taking surveys online, money can be made and spent playing games, loans can be given via websites like ZestCash and Prosper. The joke has always been and will increasingly become true  that one day you can pay rent with Farmville points.  This isn’t far fetched:  earlier this year Zynga partnered up with a Softbank a Japanese venture, while SponsorPay continues to dominate the Europe virtual currency market.  and the U.S banking system quickly falls behind the mark, or even worse can’t keep up.  Mobile payments make taking money on the go easy, Paypal allows prepaid cards for cashing out accounts, and Facebook is partnered with Amazon for social shopping.  Facebook credits the new money?

Klout Score the New Credit Score

Every time you use your credit card transaction information is being stored and used to evaluate risk.  Everytime you like or share something on Facebook its being tracked. Retweets, tracked. Friends, tracked. With Facebook opt-in many other things you do online are tracked and associated with your Facebook user account, we know this thus how Klout is now able to give a “influence” score for Facebook as well as Twitter.  Your Klout score tells the world the power you have online.  It shouldn’t be long before the same principals behind traditional electronic spending can be applied to online influence. Want to get a homeloan?  Did your car insurance rates go up? All of this, could, be measured against your online score.

What will consumers be doing this winter retail season? Besides shopping online, it may just be the beginnings of building online credit, social media style.

Google made a stunning revelation this morning: the existence of a secret self-driving car project. Even more amazing: it has been in testing for months, on actual roads across California, and things seem to be running smoothly. Fans of Total Recall, Minority Report, and Knight Rider are hyperventilating at the prospects. And while the technology is likely still a long way from being widely implemented (The New York Times piece on it suggests eight years), there is one big question: why?

Google’s answer seems to be a “betterment of society” one. “We’ve always been optimistic about technology’s ability to advance society, which is why we have pushed so hard to improve the capabilities of self-driving cars beyond where they are today,” Google engineer Sebastian Thrun, who spearheaded the project (and also runs Stanford’s AI Labs, and co-invented Street View), writes today.

That’s great. But Google is still a public company in the business of making money for its shareholders. So one can’t help but wonder what, if any, money-making prospects there are here?

“The Google researchers said the company did not yet have a clear plan to create a business from the experiments,” according to the NYT. Further, they quote Thrun as saying that this project is an example of Google’s “willingness to gamble on technology that may not pay off for years.”

We know Google has a history of idealism — co-founders Sergey Brin and Larry Page, in particular — but this project cannot come cheap. And the fact is that Google remains basically a one-trick-pony when it comes to making money. They are so reliant on search advertising revenues, that if something suddenly happened to the market, they’d be totally screwed. Android may prove to be their second trick, but it’s not there yet.

But there may be more to these automated cars than just an awesomely cool concept. At our TechCrunch Disrupt event a couple weeks ago, Google CEO Eric Schmidt gave a speech about “an augmented version of humanity.” He noted that the future is about getting computers to do the things we’re not good at. One of those things is driving cars, Schmidt slyly said at the time. “Your car should drive itself. It just makes sense,” he noted. “It’s a bug that cars were invented before computers.”

If your car can drive itself, a lot of commuters would be freed up to do other things in the car — such as surf the web. One of Google’s stated goals for this project is to “free up people’s time”. That matched with Schmidt’s vision of mobile devices being with us all the time every day, likely will translate into more usage of Google.

That may sound silly and not worth all the R&D an undertaking as huge as this will require, but don’t underestimate Google. This is a company who cares deeply about shaving fractions of a second off of each search query so that you can do more of them in your waking hours. Imagine if you suddenly had an hour or more a day in your car to do whatever you wanted because you no longer had to focus on driving? Yeah. Cha-ching.

Or imagine if your on-board maps where showing you Google ads. Or you were watching Google TV in your car since you didn’t have to drive. Or you were listening to Google Music with Google ads. It’s all the same. This automated driving technology would free you up to use more Google products — which in turn make them more money. Make no mistake, Google will enter your car in a big way. And automated driving would up their return in a big way.

And, of course, none of this speaks to what, if anything, Google would actually charge for such technology implementation. You would have to believe that if and when it’s available, this automated driving tech would be built-in to cars. Would car manufacturers pay Google for it and pass off some of the costs to customers? Or would this all be subsidized by the above ideas?

It’s way too early to get into that, I’m sure. And in 8 years, there will be things out there that we can’t even imagine right now. But it’s interesting to think about. The Google Car.

Now, don’t get me wrong, I have little doubt Google is being sincere in their broader hopes for such a technology. Here’s their key blurb on that:

According to the World Health Organization, more than 1.2 million lives are lost every year in road traffic accidents. We believe our technology has the potential to cut that number, perhaps by as much as half. We’re also confident that self-driving cars will transform car sharing, significantly reducing car usage, as well as help create the new “highway trains of tomorrow.” These highway trains should cut energy consumption while also increasing the number of people that can be transported on our major roads. In terms of time efficiency, the U.S. Department of Transportation estimates that people spend on average 52 minutes each working day commuting. Imagine being able to spend that time more productively.

That first part is awesome. If we could halve the number of traffic deaths each year, it would be world-changing. And if energy consumption could be cut, it could re-shape economies and save our future. But again, don’t gloss over the last part. Freeing up those 52 minutes a day to be productive — that’s a lot of potential money for Google.

And that’s great too. If Google can spend the time and money working on such amazing technology they should be rewarded for it. There’s no rule that says you shouldn’t be able to make money by changing the world. And Google can’t be praised enough for trying.

More:

• Google Has A Secret Fleet Of Automated Toyota Priuses; 140,000 Miles Logged So Far.


• Google’s Self-Driving Car Spotted On The Highway Almost A Year Ago 

[images: Dreamworks and TriStar Entertainment]

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