Gordon Gould’s Blog Thoughts on entrepreneurship, the Product graph, and life in SoCal

Alpha is a term I am borrowing/adapting from finance to apply to social media and calling it Product Alpha.

In finance, humanistically speaking, alpha is the measure of value creation/destruction a management team brings to a stock or a fund, presumably due to their skill. Alpha is the reason why VC’s and hedgies “earn” such ridiculously high carries on their funds (insert wallet envy here).

Similarly, certain influencers- or in ThisNext parlance, Mavens- also exhibit alpha in their product choices in particular interest areas. Their product recommendations tend to lead/catalyze and influence trends, hence their product alpha. These influencers/Mavens are the people that advertisers are dying to meet and are the target of many WOM campaigns and much good/insightful thinking about how to scalably reach this crowd. (Of course, I think it makes more sense to invert the problem and focus on the product graph first and worry about the specific influencer targets secondarily).

Products themselves also have alpha as they can lead in a trend or portfolio of products. IOW, certain new products can make or revive a category, thus exhibiting alpha. (Yes, I know, this is not an exact match w/the financial term but it is more about borrowing the concept of having a measure of how potent a product is and applying that thinking to the Product Graph than about creating rigorous parallels.)