The Rise of the Numerati

With the explosion of data from the Internet, cell phones, and credit cards, the people who can make sense of it all are changing our world

By Stephen Baker

An excerpt from the introduction of the book The Numerati.

Imagine you're in a café, perhaps the noisy one I'm sitting in at this moment. A young woman at a table to your right is typing on her laptop. You turn your head and look at her screen. She surfs the Internet. You watch.

Hours pass. She reads an online newspaper. You notice that she reads three articles about China. She scouts movies for Friday night and watches the trailer for Kung Fu Panda. She clicks on an ad that promises to connect her to old high school classmates. You sit there taking notes. With each passing minute, you're learning more about her. Now imagine that you could watch 150 million people surfing at the same time. That's more or less what Dave Morgan does.

"What is it about romantic-movie lovers?" Morgan asks, as we sit in his New York office on a darkening summer afternoon. The advertising entrepreneur is flush with details about our ramblings online. He can trace the patterns of our migrations, as if we were swallows or humpback whales, while we move from site to site. Recently he's become intrigued by the people who click most often on an ad for car rentals. Among them, the largest group had paid a visit to online obituary listings. That makes sense, he says, over the patter of rain against the windows. "Someone dies, so you fly to the funeral and rent a car." But it's the second-largest group that has Morgan scratching his head. Romantic-movie lovers. For some reason Morgan can't fathom, loads of them seem drawn to a banner ad for Alamo Rent A Car.

Groundhog Day

Morgan, a cheery 43-year-old, wears his hair pushed to the side, as if when he was young his mother dipped a comb into water, drew it across, and the hair just stayed there. He grew up in Clearfield, a small town in western Pennsylvania a short drive from Punxsutawney. Every year on the second day of February, halfway between the winter solstice and the vernal equinox, a crowd in that town gathers around a large caged rodent still groggy from hibernation. They study the animal's response to its own shadow. According to ancient Celtic lore, that single bit of data tells them whether spring will come quickly or hold off until late March. Morgan has migrated as far as can be from such folk predictions. At his New York startup, Tacoda, he hires statisticians to track our wanderings on the Web and figure out our next moves. Morgan was a pioneer in Internet advertising during the dot-com boom, starting up an agency called 24/7 Real Media. During the bust that followed he founded another company, Tacoda, and moved seamlessly into what he saw as the next big thing: helping advertisers pinpoint the most promising Web surfers for their message.

Tacoda's entire business gorges on data. The company has struck deals with thousands of online publications, from The New York Times (NYT) to BusinessWeek (MHP). Their sites allow Tacoda to drop a bit of computer code called a cookie into our computers. This lets Tacoda trace our path from one site to the next.

The company focuses on our behavior and doesn't bother finding out our names or other personal details. (That might provoke a backlash concerning privacy.) But Tacoda can still learn plenty. Let's say you visit The Boston Globe and read a column on the Toyota (TM) Prius. Then you look at the car section on AOL (TWX). Good chance you're in the market for wheels.