GuessNow: Can Predictive Markets Be Fun?

I've always been intrigued by the potential of predictive markets: speculative markets created for the purpose of making predictions. That's why I was excited when Delray Beach, FL-based GuessNow contacted me about sponsoring an FVB review via PPP Direct. It was also timely because I'm following up my completion of Chris Anderson's The Long Tail, with James Surowiecki's The Wisdom of Crowds.

The broad idea behind predictive markets is that large populations of people, who stand to benefit from accurate predictions, can become an engine for predicting future events. If you read the wikipedia article I linked above, you'll find that there is some controversy around the accuracy of results and various approaches to received optimal results.

GuessNow.com has an interesting management team, with John Ferber leading the charge as CEO. John, with his brother Scott, previously founded Advertising.com before selling it to AOL in 2004. I like serial entrepreneurs. I like the connection of advertising minds to predictive markets, because I've seen too many companies pursue "cool ideas" like artificial intelligence, behavioral modelling or predictive markets with business models as a secondary concern. I also like that the site feels a bit more engaging/fun than you might expect from a predictive market.

Turning to the site itself, I thought John's incentive system was interesting. Instead of a pure stock market type of system with various prices for different outcomes, GN implemented a point system. Specifically, users can earn points for answering questions correctly (more points for correct, fewer points for incorrect), answering questions early (more points for early, fewer points for later), and avoiding group think (more points for correct answers going against the crowd). They also have a bonus point system for site participation and advertiser offers, but I don't entirely understand the "bonus" section of the site -- that section feels more like rewarding site behavior and CPA advertising than predictive.

Points are then redeemed for cash, according to a "point value" decided by the total Prize Pool for a month divided by the total number of points awarded in that month. For example, if 500,000 points are awarded in a month with a $5,000 Prize Pool, then each point is worth $.01. If you earned 1,000 points that month, then your points are worth $10.00. I believe a similar calculation happens for the Bonus Prize Pool and bonus points.

They have a good set of questions, including topic areas such as:

• Recently Added Questions
• Business & Finance
• People & Entertainment
• Sports
• US & World News
• Miss Internet Pageant 2007(?)
• Vida Latina

Some of the questions I've answered include:

• Why would you buy a hybrid car?
• Will Facebook do an IPO before Halloween?
• Will either Yahoo or Google acquire Facebook this year?
• Will there be a Microsoft announcement about the purchase of Yahoo by the end of this year?
• Will venture capitalists from the U.S. continue to encourage innovative entrepreneurs in India ?
• With the overwhelming popularity of blogs, YouTube, and interactive reality TV, do you feel that we are at the threshold of Andy Warhol's "15 minutes of fame"?

The model is pretty flexible. In addition to predictive questions, I also noticed trivia-type questions (e.g. "name the state that...") and survey-type questions (see hybrid car question above). It's not clear these are necessary to keep people engaged for predictions, but I can see them opening monetization options.

A few of my suggestions include:
1) I loved some of the higher level data concepts such as accuracy ratios, friction and confidence levels -- find ways to share that data and reward publicly on these;
2) I know the "Shocking New Video" ads are probably prompted/related to your Miss Internet Pageant 2007, but they could be a tad risque for the diverse demographic good predictions will require; and
3) I may have missed it, but I couldn't find where to compare past group predictions with past actual results -- that is the question everyone has about such markets and there has to be some data you can share, probably great linkbait.

And, lastly, I'd be remiss if I didn't mention GN's points-based affiliate program and blog. I don't know GN's funding status, but this review has prompted me to dig a little deeper. Thanks for reaching out to me guys!

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