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What is an algorithm?


An algorithm is a procedure used for solving a problem or performing a computation.


An algorithm is like a cooking recipe.

In order to complete a recipe to perfection, you must follow a specific set of steps.

Some recipes are more complex than others. Some recipes are proprietary whereas others are more common knowledge.

In other words:

An algorithms is an exact list of instructions that conduct specific actions, step by step, in order to accomplish a specific task.

Why are algorithms important?

It's one thing to know what a term means, but that is worthless if you don't know why you should know what an algorithm is in the first place. Let's break down the importance of this tech term based on two high level categories. We'll walk through an explanation as well as provide a score, 1-10, that shows you how much you should care about algorithms.

Pre-Product: 3/10

The first will be if you do not have a product yet. This means that you don't have a physical product. Maybe you're in the ideation phase, or maybe you're almost ready to start development. Whichever it is, we'll get into why an algorithm is important and why you should or shouldn't care about it if you do not have a product.

An algorithm is only relevant for you to know if your product is dependent on one. So, if you are building a marketplace, for example, then this term isn't as important. If you are building a listings site, then maybe it is more important because the way you list your content can have proprietary value.

Live Product: 6/10

The second category is if you do have a live product. Maybe you just launched your business or maybe it's been live for years and you're continuing to improve its quality. Regardless of the scenario, if your product is live, algorithms carries a different weight.

Examples of an algorithm

So you know what an algorithm is, by definition. You know if you should care about it or not depending on your situation as a business/company/product. To dig in deeper, we will walk through some examples so we can make sure you really have a solid grasp on algorithms.

Three examples of companies with impactful algorithms:

We're going to walk through three algorithms that you likely interact with on a daily basis, showing the magnitude of impact algorithms can have.

  1. Google

    Whenever you go search for something on Google, it is pretty remarkable how such accurate listings appear, directly answering the question or intent of your search. The science behind it is Google's proprietary search engine algorithms. Google has sophisticated equations behind the scenes that scan every single web page on the internet, reporting back the pages that are most likely to answer the intent of your search. Without this algorithm, searing for information on the internet would be incredibly difficult as you wouldn't have a high degree of certainty as to whether the highest ranking pages are actually going to give you the answer you were looking for!
  2. TikTok

    Have you noticed how when you scroll through TikTok, all of the videos seem to be really targeted towards your interests, and all of them are captivating? That is thanks to TikTok's proprietary algorithm, which ensures that the TikToks that appear on your feed are ones that you will find interesting - or ones that will keep you scrolling through the application. TikTok has sky-rocketed to popularity thanks to their algorithm, viewed as the most personalized and targeted social media algorithm out there!
  3. Uber

    When you call an Uber, it would be pretty ridiculous if someone 2 hours away accepted your ride and you then had to wait 2 hours to be picked up. You'll also notice that most of the drivers who pick you up have a really strong rating. This is thanks to Uber's algorithms, which help determine which drivers your ride request is shown to. If a driver has too low of a rating or is too far away, that driver may not get the same opportunity to pick you up as a closer driver with a higher rating. This helps ensure the quality of Uber's service.

Key Takeaways:

  1. An algorithms is an exact list of instructions that conduct specific actions, step by step, in order to accomplish a specific task.
  2. If you don't have a product yet, you should think about how algorithms could play into your business model.
  3. If you do have a product, it is important to note if an algorithm is one of your major value propositions.
  4. The most successful businesses out there utilize proprietary algorithms to make their business more efficient and personalized.
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