[Originally recorded on March 10, 2019]
Motley Fool Explorer Lead Advisor Simon Erickson: Hi everyone I'm Simon Erickson, Motley Fool Explorer's lead advisor. I'm here at South by Southwest and joined by Katryna Dow, who is the founder and CEO of Meeco. Katryna thanks so much for joining me!
Meeco Founder and CEO Katryna Dow: Hi Simon, thank you so much for having me.
Simon Erickson: Katryna, we just came from the floor downstairs at South by Southwest. Everything is internet-connected. Basically every gadget you can think of is now connected to the net. This is bringing in a new world of discussions for consumers about data privacy, and who owns that information? We're seeing data privacy all over the headlines of the news these days, most notably with Facebook.
You've looked at this topic for several decades now. What's going on in this world of data privacy that maybe is concerning, and maybe we should be paying attention to?
Katryna Dow: Well I think the interesting thing, Simon, is it's either super creepy, or really cool.
So I think we're at this point right now in our digital evolution, and we're kinda still digital teenagers. So it's been a couple of decades that we've had this social connection. And we're now moving to this interconnected world of things as well. We're never separate from our devices. But that's only really been a couple of decades. We're kinda just growing up.
There are some things that we still really need to work out, as for any shift in technology. When you think of moving from the horse to the car, how many things had to change? Infrastructure. The way cities work. The way rules work. The way you insure things.
I kind of feel like we're at that same point in our digital lives. There's a French tech theorist, Paul Virilio (I hope I pronounced his name correctly), and he says when you invent the ship you also invent the shipwreck. When you invent the plane, you invent the plane crash. Every technology carries its own negativity, invented at the same time as technical progress. The interesting thing for us right now is we've invented these amazing things, but what's the capacity for the shipwreck, and then how do we course correct?
If we specifically look at Facebook, I guess in some ways I have Facebook to thank for being motivated enough to found my company. In early 2012, I wrote our manifesto, with this expressed idea that everyone on the planet should get equity and value for participating in the digital world. This is something that each of us creates through the course of being digital, physical and digital. Therefore we should be directly part of the value that's created.
It was just a concept. I was thinking there is an opportunity now for consumers. But not just consumers: patients, students, citizens, employees [also] have a different relationship with data and the way they participate. So I thought, OK, who's really on a trajectory around data right now? And of course it was Facebook, they were about to launch their IPO. I thought, I wonder if there's some risks buried in that IPO document.
I read the document, and there were four things that leapt out for me.
First of all, potential impact to their share price if there were privacy concerns.
Secondly, if there was regulation. And we see already in Europe now, GDPR, open banking, the California bill here that's proposed in the US.
[Third], the risk that people will become aware of the value of their data.
But I think the thing that most stood out for me was their move at that time from desktop to mobile, and the fact that the business model would become quite opaque. And it would go under the bonnet.
I think one of the difficulties with any technology is if you can't see it, you kind of forget about it. Then if you forget about it, the unintended consequences may end up in that shipwreck. But we don't really see it coming.
Simon Erickson: So let's do some course correcting then, to avoid those shipwrecks!
Back to the point that you made about deriving value from the data that you're providing to these networks. It's not just mining data from consumers. There's a two-way interaction with customers or consumers. The users of Facebook. The people that are giving biometric data, even genetic data. There's got to be a two-way street for this.
How should companies be approaching this two-way street and interacting with consumers? In a way that builds trust with them, rather than feeling like they're being manipulated or used?
Katryna Dow: I love this point that you make in terms of building trust. Because the low-hanging fruit is to sell it. It's like the robber baron mentality. It's like when the gold rush of California or the same situation in Australia around the mid-1800s. There's this amazing deposit of potential value. Let's rush to it, let's dig it out of the ground, and let's sell it, right? If I get there before you, and I can build the infrastructure around it -- well hey, I can have more of it than you can.
I think we've reached peak mining. And things like Cambridge Analytica, or some of the stuff that has started to come out around the Equifax (NYSE: EFX) hack, the impact on people around their credit score. So we see this is now starting to hurt people. 23andMe have just done a huge deal with a giant pharmaceutical company. Maybe that's gonna cure cancer. But maybe it's also gonna mean everyone that did that test won't get insurance. We don't know. Both are possible.
So this idea of building trust, I think is really the edge of the innovation and possibility. If we get this right, we'll move from consumers to this idea of personalized outcome. Personalized education. Personalized medicine. Personalized finance. Then you think about that in the context of, say, enterprise or government, how that would lower the cost of compliance, onboarding into products and services. How it could mean that certain products would be dropped because they just don't match. Or things may actually be increased and tailored based on individual circumstances. Which has a huge financial opportunity.
But it's not because you're selling the data. It's because now the individual, you and I, are in that value chain, or what we call the "API of me." Now I can bring data from the credit card that I'm wearing on my wrist today. And my fitness data. And maybe the way my body is responding to the fact that I'm being interviewed right now [laughs].
All of these different sensory things, into my technical ability to plug that in, and derive exchange and value. I think this is the tipping point for where we're heading, if we course correct, if we get this right. Then I think the exponential value of that is, we haven't really even started to think about what that could mean for transforming society.
Simon Erickson: Tactically, how do we actually do that? I know you have a lot of background in zero-knowledge proofs and cryptography. Just seeing a few steps out on how companies can do this -- what tactically should they be doing to accomplish everything that you just described? And what do you want actually to accomplish with your company with Meeco?
Katryna Dow: So there are a couple of really simple, easy places for companies to start. If we talk about zero-knowledge proofs: a zero-knowledge proof is actually the way that I can prove something about myself without giving the information away. The really easy one for young people is date of birth. Can I buy a beer? Can I go into a bar? Can I insure a car? Am I at a certain age?
When you start to look at the trusted entities — whether or not it's government that issues your passport, or your state license, or something like that. If we start to think about their trustedness to verify something — I've given you my birth certificate once, and now you have my back, you're gonna verify that for me in the future. So instead of me giving away my date of birth, you can just say "I'm over 21, yes or no?" It's a really, really simple way for value to be created by that trusted source. To be doing something for the customer, for the driver, for the university student that's just trying to get into a bar and buy a beer. Or whatever the case may be.
It makes life easier, more convenient, increases trust, and there's great privacy byproduct there. Everyone has what they need. I've been able to prove something, but the guy on the door hasn't gotten to see my date of birth or my address at the same time, and potentially put me in harm in some way.
Simon Erickson: Fit for purpose.
Katryna Dow: Absolutely. So from a practical point of view, that's a really easy place to start. If we start to think about that, well, where else could that go? This is starting to say, there are new business models associated with trust. We're living right now in this kind of "post-truth" world. Every time I read or hear something, I'm more inclined now to say "Who is that journalist? Who do they work for? Who are their main sponsors? Is there a political agenda, or, is this an infomercial? Am I reading this because it's being reported or am I reading this because there's influence with it?"
I think we haven't even begun to imagine what these new verification or trust-mark business models are.
If I have a good relationship with my financial institution, or my doctor, or my healthcare provider, or my bank — then how might they be able to extend different forms of trust and verification for me that will make it easier for me to do things? Beyond this idea of "collect data, sell it", this is a whole new value chain that we're just at the beginning of.
To be frank, that's the whole focus for us at Meeco. It's saying "how do we enable — you and I — to get into the value chain, to lower the cost of transacting, but increase the likelihood of there being a shared outcome that is mutually beneficial?"
Simon Erickson: And are there partnerships? At the highest level, the highest tier of trust that companies have differentiated themselves — how do you see this integrating with not just going to the bar and seeing if I'm 21, fit for purpose, something like that? Is there an ecosystem at the top, of the top suppliers of trust?
Katryna Dow: Yeah, I think that what we'll see is we'll see these various ecosystems of trust forming and they'll overlap.
Let's just look at a couple of the tech giants right now. Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) have both got out ahead of some of this news. Now it's not to say they're perfect. But you have Tim Cook saying his opinion is privacy's a human right. You have Microsoft working right now on distributed digital identity, or the right for you to own or control your identity, and for them to be developing an open source stack. So we already have some of these technology enablers, or — if a lot of people argue, "Yeah, but Apple is a walled garden, it's a closed ecosystem" — that's true. But I would rather be wearing a health device that had their operating system, than a different operating system where I'm not clear where that data is going. Or that I have no recourse in the terms and conditions.
So I think we'll see infrastructure ecosystems. Then we'll see trusted ecosystems based on organizations that say, actually, we really want to be in service to the customer, and we don't own the customer any more. Like this idea in, here we are, coming up to 2020, and we're saying, "Oh we own the customer." I mean no one owns the customer anymore.
How easy it is to connect and break up and move in and out of that relationship — this is also going to mark, particularly for a digital generation, the brands that they will trust.
So I think it's early days to see who's going to get out ahead of this. But there's no doubt in my mind that what we'll start to see is organizations realizing that they have real risk by centralizing data. They put customers' data at risk of fraud, of identity theft, and if they can start to think about these distributed edge capabilities that technology can enable, and then they put a business model layer on top of that, which is around value and personalization, now we're starting to move into the digital evolution or revolution that's possible.
Simon Erickson: And that sounds good for businesses and both for society.
Katryna Dow: This is what's so great about this. Is that if we keep going down this path of centralized — you know, there are a handful of companies in the world that have this amazing amount of power and control and they're able to manipulate everything -- then there'll be no customers left. If everything is gamed, game over.
But if we think that there is this opportunity for people to use their environmental data, their wearable data, open data, mashup maybe the way they live or drive or the temperature of their home, with what's happening outside, or traffic conditions, and create this meaningful story, then that's a win-win both ways. But if that's only ever owned by Amazon (NASDAQ: AMZN), and they own it from end to end, then I don't know where we go from there. Maybe that'll be super-convenient for a period of time. But what history has shown us, if people have that loss of agency and self-determination, I think you can only control customers in that way for a relatively short period of time. A generation at most, before there's some kind of backlash.
Simon Erickson: Well it sounds like a promising and brighter future for all of us. Again Katryna Dow here, the CEO and founder of Meeco, Katryna thanks for joining me at South by Southwest.
Katryna Dow: Thank you.