Logo: University of Southern California

A Marketplace for Algorithms

Former Ph.D. candidate sees an opportunity in bringing algorithms out of academia and into the marketplace
By: Natalia Velez
April 28, 2015 —
Illustration by Katherine Duffy

Our entire digital world depends on algorithms – sets of detailed instructions that computers follow in order to solve problems. Algorithms determine the ads we see on the Internet, matchmaking on OKCupid, high frequency stock trading and the news that show up in our social media feeds. In a modern, computerized era, these processes will only continue to grow in importance and complexity.

Because algorithms are the foundation of computer science, most engineers spend a lot of time developing and testing them. Nonetheless, the majority of algorithms born in academia never make it outside the classroom.

Kenny Daniel, a 30-year-old former Ph.D. candidate in the USC Viterbi Department of Computer Science, sees an opportunity in bringing algorithms out of academia and into the marketplace.

“Engineers develop new algorithms on a daily basis, but what normally happens is that they write a paper about it, get it published and move on,” Daniel said. “These algorithms don’t make it out into the world, where they could actually benefit people.

“There’s a huge supply of algorithms and a huge demand for them, they just aren’t meeting,” he added. “I saw this as a perfect opportunity to build a market.”

And so he has. Algorithmia is a marketplace for algorithms, which means that developers can go on-line and upload their code making it available as a web service. The prototype works very much like the Apple Store, in which users buy apps according to their needs.

With Algorithmia, users can purchase and download sets of instructions that allow their computers to perform specific tasks, such as language processing and computer vision. This system creates an opportunity for both companies in need of algorithmic talent and computer scientists whose work remains in the form of a published paper. The cost of an algorithm oscillates between $20 and $100, and the author sets the price.

Some small companies are already beginning to become familiar with the system. For instance, the travel agency Concur is contemplating the possibility of incorporating an algorithm to categorize its seating data. By finding an algorithm that can perform this function via Algorithmia, Concur could obtain it at a reasonable cost.

Going Back in Time

Before Algorithmia, Daniel and his best friend, Diego Oppenheimer, had considered building a computation market for a while. But it wasn’t until 2008, when Daniel enrolled in the doctoral program for computer science at USC and Oppenheimer landed a job at Microsoft, that they developed the idea of Algorithmia.

Algorithmia founders: Kenny Daniel (L), a former USC Viterbi Ph.D. candidate, and Diego Oppenheimer (R)

“As a graduate student, I became familiar enough with the experience of working hard to create an algorithm and then just throwing it away,” Daniel said. “On the flip side, Diego had a more corporate vision.”

Initially, the two friends worked on Algorithmia on the side, but developing the prototype required full-time commitment. In the fall of 2013, they took the leap. After six years at USC Viterbi, Daniel decided to expand beyond his academic research, while Oppenheimer quit his job at Microsoft. The pair rented some office space in Seattle, since Oppenheimer’s family was already established there.

“As we started building Algorithmia, I would work every night with Kenny from 9 p.m. to 4 or 5 a.m., and then go to my ‘day’ job at Microsoft.” Oppenheimer said. “We eventually realized that it was time to switch from eight hours a night to full time."

Today, all those long hours are beginning to pay off. Algorithmia now employs six software engineers and has started developing projects for a small number of companies.

“The moment we started getting attention from investors, the entire tone of the conversation changed,” said Daniel. “We confirmed that our initial hypothesis was true, and that a connection between companies and algorithm developers would be mutually beneficial.”

Daniel believes that he wouldn’t have been able to develop the idea of Algorithmia without the influence of his classmates and professors at the USC Viterbi Department of Computer Science.

“Soon after Kenny joined USC, he talked about his idea of creating algorithms to support new markets,” said Sven Koenig, Daniel’s doctoral advisor at USC. “It was no big surprise to me that he became interested in applying his ideas in a more applied and thus non-academic setting. The idea behind Algorithmia is unique.”