Verified Digital Identity

Cameron D’Ambrosi [00:00:03] Welcome to State of Identity. I’m your host, Cameron D’Ambrosi. Joining me this week, we have Tomer Kagan, co-founder and CEO of Merit Tomer, welcome to State of Identity.

Tomer Kagan [00:00:13] Hey, thanks for having me. Really excited to to kind of jump in these topics.

Cameron D’Ambrosi [00:00:17] Yeah. So, so great to have you here. And look, you know, I think the notion of moving verified identities to the digital realm, giving folks verifiable credentials that can scale and federate, is in the in the parlance of Zoolander so hot right now. A lot of different approaches out in market. You know, as we discussed prior to jumping on the recording here, we’ve had a bunch of folks kind of in your same area on the podcast. And I think this is set to be a really fascinating conversation because there’s, you know, many similarities. But I think also a few key differences in how you at merit are specifically approaching these challenges. So, so excited for today’s conversation. But before I guess we get into the differences would help to lay down a baseline 15,000 feet overview sense like you know how did you come to to co-found merit and what is merit all about?

Tomer Kagan [00:01:15] Yeah. No, absolutely. So, you know, the founding merit of the initial story is kind of silly in its origination, but it leads to a really interesting philosophical conversation. So the idea for merit really came about on a trip to Belize and hiking in Belize with friends. And and one of our friends for God is Patty Carp and can go scuba diving. Right. And so all these places were really scuba diving and he’s there and and they’re like saying, no, you can’t go scuba diving. Right? So so we’re talking about this. We’re on a walk and we’re like, well, you say you’re a scuba diver, but if no place is going to actually let you scuba dove, are you a scuba diver as it is as being a scuba diver, something you can claim yourself in this world? Right. Like I’ll give you an example. If you ran 26 miles in the mountains on your own, did you run a marathon? Most people would say probably not. Right. That’s not really what a marathon is. A marathon is I ran 26 miles, but there was an organization to certify it, to give me a time that’s believable by others. Right. And so this kind of really got this notion of verified identity out of us, and it was really more of like declarative versus verified identity. And so the way we define it as a company, which is really the core of what we do, we build a system that enables verified identity is that we said, look, and declarative identity are all the aspects of your life that are true because you see they’re true, right? So you could be a good scuba diver. That’s a comment you can make on yourself. But the ability to scuba dove legally, you know, is up to organizations like Paddy and in the world. Actually, a lot of our information is one of those two buckets. Either it’s true because you trust me or it’s true because you trust a third party. And in fact, this sort of protocol, this operating system for society that’s taken thousands of years to iterate is, you know, prevalent. It’s everywhere. This is how government works. It’s how education works is how most corporation works, right? Statements are truth are given to you with the trust of these organizations and you provide to third parties who then it’s not really about trusting you. It’s about trusting the initial certification body that made that statement. So that’s what we do. We actually build an entire system to actually handle that. We work with organizations, organizations, we connect to their systems. And this is important. We don’t try to be the system of record. We connect to systems of record. We actually stream their information about people into what we call merits, which are like these certifications that you get, but they’re rich. All the information that is rich, it’s put together. It could be massive. It could be way more the information you have, the card in your wallet, right. And then all this information you can make available to be verified against, which is like you’re not passing any information like a test is being run against that or you can actually permission to share it into another system, effectively streaming from one organization’s data about you into the database of another organization and updating it almost real time.

Cameron D’Ambrosi [00:03:54] I love it. So, you know, I think anyone who’s listening to this podcast, I should hope at this point has bought into the notion of what we have right now is fundamentally broken. You know, we’re all in some form your friend who has lost their scuba diving or forgotten their scuba diving card and can’t do things. Obviously, in in our broader world, you know, scuba diving is opening a bank account, applying for a job, accessing credit, sending remittances, you know, you name it. Right? The use cases for digital identity are truly limitless. I think we’re seeing a ton of different go to market approaches and then a few different technology approaches. I would love to unpack, you know, how and why you have chosen the path that you’re on for merit and and why you think that that is the best place to start. Maybe from a technology perspective, we can start there. Blockchain is, you know, absent, shall we say, from your platform. And I think that’s a unique differentiator in the sense that for many folks, you know, the notion of verified credentials and user centric identity has become like inseparable from web3 and from blockchain, from decentralized databases. Why do you think that blockchain is not the right tool for solving this problem?

Tomer Kagan [00:05:16] Yeah. Well, you know, let me start off by saying that, you know, blockchain is a technology, right? It may have uses in some cases and may not have in other cases, but in and of itself, it is not, in a sense, a revolution. It is not a operating system. It is not a new world we are going to be entering. It is technology that can enable a lot of these thoughts, ideologies, etc.. Right. And the thing about blockchain when it comes to identity is that it is a blockchain. It really pushes the notion of sovereign identity. Right? Like you have your identity, it’s yours. But have you ever read your driver’s license, for example? It literally says every driver’s license in the U.S. It is the property of the state. Right. A driver’s license actually is a relationship. It’s a two way relationship where both parties agree. You agree to follow rules of the road by accepting this license and the state offers you the right to use the road state. But taxpayers, because of the license, in fact, it’s very much that you can drive whatever you want in your private land. But once you come into an agreement and license, that information is not yours to do with as you please. It’s actually a relationship. For example, the DMV can actually take away your license, and that’s that’s necessary. And in fact, the work we do I’ll give you an example, because for us, it’s a theoretical example, one of the earliest things kind of silly. But we’ve had our law skydiving in the US. Right? And for skydiving, you know, it’s really important. For example, if someone gets their license revoked, is revoked in real time and they can’t take someone up and then jump with them, or if a classy license holder showing up to a drop zone, that if they’ve lost the information, they have it really available so they can actually, you know, transact fast, you know, have that trust, you know, lower incidents of death or lower incidence of accidents happening. Right. But at the same time, it’s not. There is an organization, USPA, whose job is to enforce these things, regulate the market, ensure that people are following rules and guidelines. And so in that way, there’s a relationship, right? If USB says this person has been known to jump drunk, which is a problem in the space they can revoke, and that a lot of them, for example, to do tandem jumps where you strap in somebody and jump out of a plane, they have to be able to act immediately and it can’t be a conversation. I’m like, please hand this back to us. Right? So inevitably, the relationship in certification, rulership and verified identity is a two way relationship where that what you’re seeing like what is a license, it is an agreement is like a contract. And so we built a system really just to do that, to really enable the intentionality of society, right? So we spend a lot of time looking at like, how do these organizations work? How do these industries work? How do we play a role between these industries helping them happen? I’ll give you another example really quick. So let’s talk about like, you know, emergencies. We power emergencies. Like right now we’re getting ready to deploy in Florida. We’re getting ready to deploy in California. We’re getting ready to release support for hurricane season, fire season. And what we do is we help the fact that vendors can deploy people of different skill sets all over the place, verifiably. They’re the right person with the right skillset in the right place. And then you can do massive coordination of moving people around to really handle the emergency. And this is kind of what we use our identity for. It’s I think you see this yourself on some of the podcast, like identity is a means to an end, right? And for us is this identity of you have these skill sets, the end is placing the right person with the right skill in the right place as fast as possible to deal with the emergency. And in fact, that information isn’t even done there. That information gets coalesced. And so you can Merit’s and then you eventually can fill out forms and in our case, something called A to 14 by the way, to 14 is how you get money back from FEMA. So it’s like if your company sends you to a place to do emergency work, you have to keep track of all the work you did and every day submit a form. And then all those forms that every employee submitted every day go to the state, they go to FEMA, go back to money to the state, and then money to the company. And then you get paid. And for example, in our system, all that information is information you’re collecting along the way. It’s your, you know, your your employer. It’s information from the sites you’re coming to. And then when you fill out those forms, you just permission the data to be moved. Now this sounds like really simple, but this, for example, causes no issues in the transferring of information. Right. There’s a lot of the problems of this they feel are rejecting a lot of these claims. This information is faulty, doesn’t match other information. Right. Because people are are writing things in shorthand or misinterpreting or typos, things in the wrong place. So we get rid of all that and cause efficiency in the system. That’s what identity really should do, is efficiency. We don’t see blockchain today as a system that can support fast free transactions, real time with a lot of controls and connections to a lot of third party capabilities. And maybe one day blockchain would be that. But, you know, for all we saw, it would basically be taking something like blockchain and hammering it until it looks like a single database. And then you’re like, Sure, it’s a blockchain, but we have central control. We can revoke your information is actually private or which is the exact opposite of like a public ledger. Right. And it actually follows all the rules. Right? Like having an unregulated financial market is one thing, but unregulated identity starts to actually get into a problem for how governance works. And so in that way, we just don’t see blockchain as really playing a role today.

Cameron D’Ambrosi [00:10:14] No, I couldn’t agree more. And I feel like to some degree, I’m, you know, rehashing some of the things I’ve already said. But I admire the notion of, look, we should have identities that are somehow, you know, outside of the control of a power that might abuse and, you know, take advantage of their control over the system. But I think that can be achieved with the right structure of a traditional database and for the elements that the people care most about, which is I should be able to know who is accessing my information and revoke it if necessary or prevent it if it’s not someone who I want to have access. You know, but this notion that, you know, if the United States government or another major world power decides that you are blacklisted for whatever reason, right. You’re on the terrorist watch list or or they want to you know, you’re Julian Assange. The fact that you have a blockchain credential that can’t be revoked, but the legal identity underpinning it is persona non grata anywhere you try to use it like, you know, the blockchain is not going to save you, right? Like it’s awesome that that credential is irrevocable, but the practical legal identity underpinning it is still going to be the impediment to, you know, the abuse of those government powers that that people fear.

Tomer Kagan [00:11:29] So absolutely. And in fact, this is why our focus, our initial go to market has been in government. We’re not government exclusive, but we realize that, let’s be honest, the government philosophically has a monopoly on violence. No one else has this meaning. If you break the law, they can send you to jail. Right. Those are the merits. We have this notion inside record of merits that matter, meaning we focus on the merits where other organizations really care for like you really want to use them. You know, in fact, a lot of ways I can think of merits is like it’s kind of I always joke about this is like what Nfts have become today were like the original idea of merits. But we don’t like to do them when they’re just like for accomplishing something, they have to really be done. So it’s like literally usable in many of our use cases. It’s either life and death or it’s your, you know, your employment. It’s you getting through, you know, getting grant money like we power in Ohio, the, you know, education basically grant system there for individuals in poverty. Right. And so all of those are systems which use identity but use them subtly different ways. And, you know, there, you know, ultimately, the the idea is to to achieve the goal. Right. And so, like, to your point, to get around that goal by saying, oh, but like, oh, I can hack you. But that’s not like all these systems, like the cards we carry identities are just representations of contracts. Right. These agreements, ultimately, you know, a lot of the notion of the blockchain community works in a world where there’s no government. And, you know, we just do live in that world and not today. And trying to build a business which is allowed to be a business under the auspices of a government whose purpose is to cut out government is just not something we’re interested in doing. We want to actually affect everyday people’s lives. Go to market like we have been doing, providing identity solutions that get people the information about them to use in the right way, fully permission and fully private.

Cameron D’Ambrosi [00:13:13] I love it. So shifting slightly because you dropped a few breadcrumbs here that I would love to extend out. You know, from a go to market perspective, I think we’ve seen and again, this is, you know, well-trodden ground, but I think your approach might be really unique and differentiated, solving this chicken egg problem of, you know, you need use cases to get people to adopt a system of digital identity. But obviously you need users to compel relying parties to want to take the time and effort and capital to integrate with your system, to be able to leverage those credentials meaningfully. How are you thinking about solving this problem? And would you say you have targeted, you know, relying parties or you’ve targeted users when it comes to getting this critical mass and this flywheel going? Because I think, you know, everybody agrees if you can get that flywheel spinning, you know, momentum takes over and it’s like, okay, well, I have all these people on the system and organizations want to interact with them, therefore they adopt. And then you have more organizations that have adopted the system, which means new users want to come in who want to transact with them. But it’s that first mover challenge of, you know, there’s a heavy flywheel. How do we pump enough torque into it to really get it moving from zero?

Tomer Kagan [00:14:27] Yeah. I mean, I feel like listening to you could write my investor pitch because that’s, that’s what we focus on, right, is how you get those, you know, those going. We actually early days we first went to market, we started in the skydiving space and we actually saw that happen there. We were able to kind of take a smaller industry. We’re not trying to look at the market like all financial transactions are like, that’s insane. We’re also a little different. We’re not trying to do that. You are who you say you are. It’s more like and these attributes are true about you, so therefore you get access right to us. That was a harder problem, more important problem. You know, the way we kind of sold this is twofold. One is we we don’t try to to to sell it into a massive industry. At first. We try to go smaller industries that we can saturate, and those are industries that are usually highly governed. So we started really monetizing in the emergency space, for example, we power the entire response to the Surfside Building collapse in Florida to allow for human coordination of all different credentials and skill sets and for police and fire to effectively move people around the track. Right. And so by doing that now, you know, we already have merits and information credentials for a lot of the emergency people in Florida. And we already you know, now we’re we want our fees. There were now we’re being used by a lot of vendors for the deployment because, again, they already have those are, you know, the merits. And so they want to use those merits. We’re actually seeing those flywheels. But again, they starting in constrained areas, monetizing it directly and then growing out from there. And that’s the second point I was going to make is monetizing. The way we make money in these various business lines. Again, it’s all using the exact same platform, same technology. But we we create business lines, a market very effectively to very specific industries. We make money by selling to the organizations in those industries and usually oftentimes government as well, you know, solutions to help them implement this in the space because it helps everyone in the space, right? It helps all the company. It creates a faster transaction. It creates more privacy, more trust, more efficiency, more verification. And so this is what we’ve kind of done. We actually sell directly to these large organizations and then government bodies. And then the thing is, is that we just don’t believe in in making money off of a few ways. We don’t believe in making money from users. That’s insane. This is our identity. You don’t have to spend money today, you know, to use your driver’s license in your wallet. And in fact, we don’t believe in charging for any form of verification. Isn’t it the weirdest thing that we’re moving from an analog world where any business can do an I.D. check for free to a bunch of companies trying to think that they’re going to monetize online digital checking, which doesn’t even really cost anything. Right. The whole point is, if you give someone a license, the whole the whole you know, the whole point of the Internet, the whole point of the digital revolution is that there is no scarcity. The whole point of it is like you should be able to use this license anywhere. Everywhere. Connected, like efficiency. Have more transactions you’ve ever had. So we don’t believe in ever charging for verification. We also don’t believe in charging for issuance of merit because it just creates the graph that creates the flywheel. So now we’re kind of stuck. We have this core platform who the core capability, we don’t charge more and is highly secure, highly private. You can cut it in any time. And we as a as a policy, we do not monetize that platform. Any organization wants to be on there. And so as long as it has a real business license by some sort of state entity can be on there, any person who has a real identity can be on there. So that’s the core. So what we do is we, we sell implementations and endpoint solutions that live on top of the platform. Write to these organizations that we work with to help implement the know what they want to see happen. And so that’s what we found is that is the most useful thing. It is tough because we’re talking about an entire free platform. And you always have investors which are like, I don’t know, a lot of people are using it. Why don’t you just monetize that? Right. But our point is the platform showcases the value of what a true digital identity ecosystem could look like. And the way we monetize is about solving direct problems which exist today, which is how does an organization play into this? And what you find out, what we found out is it’s not that simple, right? Their data, it’s not like oh it’s an API supported over of those are data is in dozens of databases some of them are ancient different structures, different schemas. And you’ve got to pull data together. You got to combine it. Some of the data is digital. Some of it’s real time, some of it’s files, right? And you got to pull it together. You’ve got to send it over. And you have to have the ability to, like, update the dupe. You have to have the ability to create statuses to say when something is active or inactive, like when you can use an they’ll use it when it’s revoked. Right? And so it turns out to do that, you have to build a lot of tooling on the organization side really to make it seamless for them to interact with this. And that’s what we’ve done and that’s where we monetize is really there.

Cameron D’Ambrosi [00:18:50] I mean, so much so many pathways we could take, you know, fundamentally agree with a lot of what you’re saying and want to unpack in other areas. The other area, which I think is always been a sticky wicket and we’d love to hear how you’re approaching this and maybe differentiating yourself again is this notion of liability or, you know, how relying parties within the network handle if something goes wrong? Like have you encountered these questions from peers and you know, how do you at merit plan on addressing you know, again, these are these are edge cases but I think they’re kind of important things to think about proactively, you know, when something goes wrong, you know, who bears responsibility within the system and how some of that risk is apportioned, for lack of a better word.

Tomer Kagan [00:19:40] Yeah, I think that’s something we’ve thought about a lot is very early days. Right. And in fact, in the in the architecture of our system, this is why we decided we are not a record of truth. What we do is take whatever systems you claim are your record of truth in a sense, stream that data. Right. Pull it together. That’s that’s one thing we do. The second thing we do is and again, this is why things like blockchain are difficult is we work with organizations which are actually kind of messy. So I’ll use an unnamed state who we work with, their whole professional licensing and like any, almost any organization, by the way, maybe a third of their data was somehow wrong, corrupt, wrong, duplicated, you know, or for some other reason shouldn’t exist in a way it does. So by releasing it, we were able to help them change it, giving feedback so they change their, you know, their source of truth and really work with them to identify were these emails were in their, you know, typos. And that’s just a normal thing that happens. And so the first thing to lower liability is you really work with the organization, you work on their data and you make sure the data is correctly representative. And then the second thing is we actually leaned into this. We allow for compliance, we allow for regulation because in a sense, like the 214 example I gave you, we ensure that the right data is going to the right place. You’re never reentering it. It’s permissioned. You can see the stream and lineage of permission and where it comes from. Right? And in this way, we actually allow organizations to track this better. For example, organizations can request a snapshot, which is a static imagery of your data for their records, oftentimes for regulation purposes, where they have to show that right versus an ongoing stream where you can cut in any time. Right. So there’s a lot of ways where we don’t just, I think, ensure that we don’t have a liability in our own system. And part of that is being able to like make changes into the system, changes to data, because organizations oftentimes have faulty information. But it also means that, like, we think that we empower the usage of identity in a way that is compliant and regulated and privacy and safe.

Cameron D’Ambrosi [00:21:30] You know, I’m struggling to find some challenging questions because I think in many ways you guys have built the approach that we think, you know, makes the most sense again. Obviously, with any set of decision points, right, you need to balance the needs of all the users in an ecosystem, both the individuals and the relying parties, as well as the more pragmatic elements of, you know, what is the structure going to look like and how it’s going to be adjudicated. And quite frankly, you know, what problems are in the scope of being able to solve and which stuff needs to be left off and, you know, balancing. Doing the most good for the most people while not trying to, you know, boil the ocean in consulting parlance. I think it’s always a challenging tightrope to walk, and I think it’s really elegant the way in which you guys have have managed to do that. So in, you know, bringing us somewhat to a close here, you know, what’s next for the platform? And as you think about what the next year or so for Merit holds like. What would you like to see happen? You know, maybe on the more pragmatic side and then longer term, you know, more aspirational, where do you hope that you can take the Merit platform?

Tomer Kagan [00:22:46] Yeah. So I think, you know, and then to your point in boiling the oceans exactly right, that is always the challenge. That’s we literally have presentations called How do you boil the ocean? Right. And by the way, the old Roman joke is in pots. You just have a lot of pots. And that’s kind of how we look at it. We have a lot of business lines. Right. You separate the smaller pieces and you tackle those pieces. Now, all pieces overlap. There’s lots of things, industries. That’s the other thing where they all kind of overlap. You can’t be like, okay, well, like this credential for, let’s say, you know, from the Red Cross for is that really for for medical is effort teaching is you know where does that go right so I industries doesn’t make sense we can artificially carve them. So what we’re going is to show that we can do this many many times over helping and solve it’s it’s it’s not as exciting. It’s doing what we’ve already done, but do it over and over again and scale it correctly. Part of that scaling, by the way, are things like we’re scaling how we deliver. Like I said, we don’t just deliver software, we call it software with the service, all the help, you know, deployment, marketing help, even writing laws. We just passed a law in Rhode Island that basically allows for workforce to do operations and says the workforce development programs have budget for digital credentialing of those accomplishments because today it isn’t hard to track those, therefore enabling an entire private sector to use those and allow people to use those, you know, workforce development credentials to gain jobs, to gain licenses, etc., in a very easy way. The next thing for us really is building on top of that and building on our workforce development just in general to create something we call opportunities. And they’re already out there. We use them somewhat, but it’s it’s more of how we kind of test it right now. And opportunities allows organizations with levels of approval and so forth to actually write something like, okay, I have a job available for anyone who has this license of this kind. And I’ve had this training and it lives in this state, you know, and then we can like populate those. And the whole point is that it’s targeting without knowing who you’re targeting and it’s truth targeting, you’re targeting based on known certified verified truths, like in skydiving, we do this where it’s like, you know, we will have an organization that offers courses for Class A license holders and they can target everyone for Class A license. And of course, we cover all class licenses. So therefore the targeting is perfect. And so what we’re going and we’re very careful about this because this isn’t an ad network. It sounds like it, but it’s not. It’s we’re using it. We’re really looking at it like, can we show you that by getting an identity, access is equivalent and this is like a really important part of society because it isn’t. You become a mechanic and your Uncle Joe, meaning no, no, someone who can hire you. But if your Uncle Joe doesn’t, you may not get a job as a mechanic. And that sucks because in the world of like merit, it really is about the fact that you should have equal access to your accomplishments. And so that for us is a big opportunity using identity to create accomplishment, merit based equality, right? And that and that’s going to be a long process. And again, it’s not just doing together, not in the work. It’s about figuring how to do this the right way. But we believe the right way will actually help all the individuals on our system, help the organizations that are, you know, allowed to to target and even help, you know, government. I’ll tell you, they shouldn’t be saying this one. But one of the projects we currently have working on in the benefit space and in the grants is working with states to basically do a single analysis. So you can come in and say, I want you to analyze all this information about me and certify it, get a single instance merit. Shouldn’t every government program, every state program that helps and benefits, shouldn’t it have like an equation? Oh, if you’re under this much income, you can do this. Or if you’re part of this program, you can get this. Or if you’re unemployed, you can get these. And basically. One time review of your of your situation and every single benefit program that’s available. And this is a hidden rule for one that you want to be part of. Why don’t we do that? Why don’t we get the programs aimed at people to 100% of the people around us? And I think for us, that’s the next big thing. How do we actually achieve the quality?

Cameron D’Ambrosi [00:26:23] A violent, violent agreement. It’s been so. So great talking to you. I think you have, you know, a fundamental grasp of kind of the the market that is really, really relevant and, you know, fanboy going out to to a little degree here. So it’s been a wonderful, wonderful conversation in that vein. Shameless plug time, you know, for folks listening who are thinking, how do I get involved in the network? You know, I want to become a ruling party. I want to leverage Merit for the challenges I’m facing in digital identity. You know, what are the best channels for them to go to? Is it your website? Is it reaching out to you directly as a sales posse? Where can they go? And then for folks who just have more questions, want to learn more about merit and the infrastructure, whatever elements or questions that might be. Where’s the best place to hit those resources?

Tomer Kagan [00:27:15] Yes, I would tell you, American empire. It’s dot com. Check it out. Or even LinkedIn. I mean, we’re open to anything. We’re open for business. We will move as fast as you can. We’re open to ideas. We’re open to two ways to work together. And that includes you offering free services that just help, you know, the whole ecosystem. So reach out if you’d like. And also, very soon, we’re going to start putting out a lot of white papers. We’ve been building in quiet for a long time, a really revolutionary new platform that does all this in a kind of like really cutting edge sort of way. And the next few months, we’re going to start releasing White Paper after White Paper really detailing how we’ve done it.

Cameron D’Ambrosi [00:27:49] Awesome. Well, Tomer, it was so great to finally connect with you. I know we’ve been been dancing around each other for a while, but I think it was well worth the wait. Hopefully our audience feels the same way. Thank you again for your time and looking forward to circling back with you soon to check in on some of those predictions and hopes.

Tomer Kagan [00:28:05] Yeah, absolutely. And looking forward to stay in touch and love the work you do. So hopefully we can find some other time to do this again.

Cameron D’Ambrosi [00:28:11] Fantastic. Thanks again.