So here it is: our new product, Killi. And, yeah, I want to change the world with it.
Killi is a consumer-facing mobile application that allows people to opt-in to take back control of their personal data and enter into direct financial contracts with brands and advertisers via the blockchain. Killi directly tackles the issues of personal data breaches and massive corporations getting rich by selling their customers’ data in exchange for, well, nothing. Killi also provides a transparent market solution in the face of growing cries for government regulation around the collection and use of personal data. Killi is owned, conceived and developed by Freckle as there is an important symbiosis between the two business concepts that I will outline in a future post. Today though it’s all about Killi.
Killi is the manifestation of an itch that I couldn’t scratch — an idea that I started poking at around 11 months ago. Any watcher of the signs could see this data privacy wave coming, and I have been paddling like hell to get ahead of it. Recent events such as Cambridge Analytica have simply confirmed my initial beliefs around data control and caused the shift to happen faster than expected.
Four key macro trends came together to make this product essential and of the moment:
- GDPR and Privacy
- The Eroding Consumer Value Proposition
- The Indebted Consumer
GDPR and Privacy
For those of you who are not familiar with GDPR (and I hope there are only a few) it is a new privacy framework generated in the EU that prohibits the use of consumer data without first getting an explicit opt-in from the consumer. In addition to the required opt-in, those entities which maintain data need to also allow a user to be forgotten while also revealing specifically how their data will be used. Failure to do so will result in fines of 2–4% of topline revenue. While this law originates in the EU, you would be naive to think that a version of this legislation is not coming to North America. It is arguably already here.
Killi is an application that is entirely controlled by the consumer. The consumer opts in and decides what personal information they would like to share and sell directly to brands. Should the consumer change their mind, they can drop or delete any of the various pieces of data that they elected to add. Any data that is purchased is done so directly between the consumer and the brand that bought it.
We have designed and patented the architecture so that not even Killi has access to the data. Yes — not even Killi. Data remains with the consumer at all times. Not only is Killi data GDPR-compliant, it also reveals the fidelity, or lack thereof, of data that people have been buying today in what is loosely referred to as ‘segments’ (code for modeled, third party, non-compliant data operating in a hashed blackbox). Let’s call that data what it really is — garbage.
The new Killi data model is a private marketplace controlled by the consumer and built on the blockchain. Those other data companies are nothing more than the modern day equivalent of the open exchange, a blind ecosystem of little accountability and a lot of fluff. Good luck with that.
The Eroding Consumer Value Proposition
Are you aware that you, as an individual in North America, are worth approximately $25 per month to Facebook? Are you aware that this open-ended license on your personal data is growing at a rate of 35% a year? Are you aware that there are thousands of other firms using similar data to make billions of dollars a year? Facebook made $40 billion NET last year through its 2.2 billion users. Your take: $0.
Today your identity is worth approximately $25 to $200 a month. The advertising world has been operating on a free input to run its business. Not only is this number real (Facebook publishes this in theirfilings), it is going up as consumers get wind of what’s going on (ex: Cambridge Analytica) and eventually demand a piece of the action. The companies that benefit from this system will not change this on their own, doing so would just hurt their businesses, consumers will need to be the catalyst. Nobody can credibly suggest that the consumer should be entitled to all of this revenue, as it does cost money to build and maintain these products, but the notion that companies need to use your data to provide you with free access to their products starts to ring false when, after expenses, they still have amassed $40 billion from your personal information.
This isn’t an attack on Facebook et al. but highlights the need to change the ecosystem as a whole. Helped along by the new government regulations, Killi is a steward of the consumer’s data and educates them on how their data is being used and what it is worth. The end result — a more involved, knowledgeable consumer and a more balanced ecosystem where the consumer has a choice.
The Equifax data hack in the United States was a seminal moment in data security. Equifax gave up 146 million profiles of consumers, including social insurance numbers, addresses, dates of birth, etc. in its data breach. Not to be outdone, Yahoo coughed up over 3 billion profiles of its users when it was targeted — the single largest data breach ever. It has become regular news to see reported weekly hacks — Intercontinental Hotels Group, Saks,FedEx, Arby’s, Verifone, Dun & Bradstreet and more. In 2017, there was a 45% increase in data breaches versus 2016. This trend is not slowing anytime soon, especially when you consider that the value of data is only increasing.
The takeaway? The notion of storing data in a centralized manner is over. If you ignore the facts and store sensitive data in a central location you deserve to be hacked. The only reason you have not yet been hacked yet is because your data is not as valuable as the data of others. Don’t feel bad… they will get to you eventually.
The Indebted Consumer
As per the Wall Street Journal, citing Federal Reserve data, U.S. consumers are paying approximately 5.8% of their disposable personal income to stay current on their non-mortgage debts. This figure is at the highest level since the end of 2008. Additionally, in Q4 2017 consumer debt rose 5.5% to $3.8 trillion — the highest amount ever recorded since the Federal Reserve Bank of NY started tracking it in 1999. Last, student debt in the USA just hit $1.5T (yes..T) exceeding both credit card ($977B) and auto debt ($1.1T).
How about Canada, one of the more stable banking environments in the world? Here consumers are drowning. Canadian household credit totaled a record $2.13 trillion at the end of February, roughly doubling since 2006, according to the central bank. Driving this is residential mortgages accounting for 72% of this total. In a report put forward by MNP Financial, over one-third of mortgages are up for renewal within 1 year, and one-third of respondents have stated that the rising interest rates could possibly push them toward bankruptcy. Forty-seven percent of the respondents also said they do not believe they’ll be able to cover all living and family expenses in the next 12 months without going into further debt. And did I mention that the government has doubled its interest rate since March of last year?
At some point — this will get ugly.
The consumer has never been in more need of cash since maybe the Depression; yet there is a honey pot of money, derived from their identity being used to pay corporate bonuses instead of consumers’ bills? Want to see a primal reaction? Go tell your neighbor that you have been stealing $25-$200 from them every month for the past 10 years and see what happens. The Cambridge Analytica story was an interesting one as it exposed how data was being used, but what it never covered was the amount of money the data is worth. When the penny drops and the consumer gets wise to the value of their identity being sold by business, the ferocity of this data revolution will rival #ArabSpring, #BlackLivesMatter, #MeToo and #OccupyWallStreet.
Putting Money Back in the Consumer’s Pocket
The rise of the shared economy has created the foundation for Killi. Consumers are increasingly open to participating in the “gig” economy and operating a “side hustle” to get back into the black. People drive for Uber and rent for Airbnb to make extra money. Intuitively, these people, and many others, should be interested in controlling and monetizing their own data if the process was made frictionless. This equates to a massive redistribution of control from the corporation to the individual.
This is where this product gets exciting for me. Yes, Killi can solve issues around privacy and data, but if we get this right, this could be the single largest redistribution of wealth from the corporation to the consumer that the world has ever seen. Sound ridiculous? Let’s unpack it. In 2017, the largest donation in the world was $4.6 billion from the Bill & Melinda Gates Foundation, an extraordinary gift of generosity. However, when compared to the value of data used by corporations, the value of this gift is tiny. If Facebook gave every one of its members $0.50 a month for a year, the redistribution of wealth would be 3x that given of Bill and Melinda Gates in 2017… and that’s only one company.
Let’s Change the World
Many of us create products, but very few of them extend beyond a business vertical and even fewer impact every person. I believe this product actually helps people. Consumers, brands, platforms and politicians can all support this. Could Killi redistribute $1 billion of money back to the everyday consumer? Yes. I find this tremendously exciting, and one that I am hoping that millions of consumers and brands around the world will help us accomplish.
John Lennon tried to start a revolution from his bed; let’s start one in our pocket.