This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Digital Skeptic: The Dumb Reason the Web Doesn't Make Money

Stocks in this article: GOOG

NEW YORK ( TheStreet) -- You made it to 2013, so you deserve to know a secret about the Web.

"Dumb algos are what work," Joseph Turian told me over cocktails on a rainy night here in New York last fall. (That's not the whole secret. You'll have to read on.)

Turian knows his way around the Big Data ordnance. He got a doctorate in computer science from NYU after an undergrad stint at Harvard. And he runs a gun-for-hire data analysis outfit called MetaOptimize.

Here's his drop on dumb algorithms: Complex computer programs that manage nasty so-called Big Data problems, including recognizing speech or buying and selling stock, can be mighty impressive. But it turns out, what really rocks the information house when it comes to brutally tough, data-heavy computer problems is programming simplicity to the point of stupidity. There's a catch, though.

"You need access to massive amounts of data to make these dumb algos work," he said.

Take Google Translate, the search giant's marvelously effective online translation app. Apparently, programs such as this tend to stay away from complex computer models that account for linguistic nuance such as object-oriented grammar or deep syntax. Rather, they tend to rely on basic concepts such as the simple probability that a set of words will appear in a given order. Then these not-so-smart algos do little more than rank and compare the number of times such multiword phrases occur in a language to quickly translate one equivalently ranked word set to another.

"It's not exactly that simple, but it is not that far from it," Turian said. "The important thing is, have as much text as possible. And what Google probably does is grab every written word from all the websites on Earth to make Translate work."

Turian is not out on an algo limb here. I confirmed the "dumb algos work" sentiment with pretty much every data nerd I could get my hands on.

That includes Michael Selik, a New York economist and software engineer; my big data buddy Brian Dalessandro, vice president of data science for Media6Degrees, the New York advertising data shop; and most interestingly, Dennis Mortensen, who helped developed Yahoo!'s (YHOO) big data apps and now runs a New York media data analysis firm called Visual Revenue.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,546.47 +146.80 0.90%
S&P 500 1,932.38 +28.37 1.49%
NASDAQ 4,389.9730 +73.8990 1.71%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs