Can large government IT department’s become breeding grounds for new start-ups? In the case of Ross Hughson, former CIO of Inland Revenue, it appears so.
Hughson has been developing, with the help of the Wellington business incubator Creative HQ, a product that helps the individual citizen keep personal data about themselves in a secure storage space.
Any number of organisations from social media giants like Google and Facebook to government agencies are trying to integrate all the information they can on individuals they deal with. But the most obvious source of full integrated information on an individual is in records kept by that individual itself, says Hughson.
Hughson’s solution MyInfoSafe allows a person’s data to be offered, under the individual’s control, to organisations who request the information – be it a government agency, a website that the person wants to access or a finance company seeking particulars to support a request for a loan.
Having all the information to hand saves filling in the same form over and over again, he says – and from the point of view of the requesting organisation, ensures that the information is always up-to-date; all they have to do is revisit the user record and update the items to which the owner has granted them access.
“I know from my experience, you spend a lot of money as an organisation, keeping the quality, the integrity of that information up to date,” Hughson says. “At Inland Revenue we had truckloads of returned mail every week, because people had changed address and not told us. We had teams of people finding out the right addresses.” Yet we persist in adopting a “corporation-centric” view of the maintenance of such information, rather than locating the centre with the person best able and motivated to keep the information up to date.
Leaving government work two years ago, Hughson decided it was time to implement his idea. “I’ve been working on this for three to four years now in the background; I launched my first PC version a couple of years ago and entered it into the Bright Ideas competition for Grow Wellington. It won the services category. Creative HQ saw this and said ‘why don’t you come into the incubator?’ So there’s obviously people seeing value in this; I thought: I’ve won this award; if I don’t do this now, I’ll never do it.”
The PC version of the product, MyInfoSafe, he describes as “a digital vault you can set up on your PC to store information like where you’ve worked, your education, your assets, your birth certificate and other vital documents, such as your will, as well as your identifiers and passwords for websites”.
“I’ve sold hundreds of those around the world, most of them in the US, through channels such as CNet’s download.com,” he says.
“That’s where I was at when I went into Creative HQ. They asked is that a scalable business model; is it going to see sufficient growth to become a viable business?’
“[With their help] I saw that I would need to do a heck of a lot of marketing at probably high risk to tell everyone. Research told me out of 100 people who look at the website, 10 might download it and one would buy it. That 1-2 percent conversion rate isn’t unusual for the application market. You have to tell a hell of a lot of people.”
So Hughson and CreativeHQ resolved to target people at the specific times when they become aware of the need – such as when visiting a financial planner for advice.
Also, he has taken the logical step of putting the product in the cloud, so a number of organisations who may want access to the same individual’s information can be given it conveniently.
“I’ve teamed up with a national financial planner.” When the transaction reaches the point where the client fills in a form, the advisor will pitch the electronic version. “They’ve allocated four of their advisors and committed to getting 100 of their clients to use the service over the next month. Then we’re going to survey as a physical part of the validation process. We will ask people; did you find this helpful; did it feel good submitting your information online; did it give you control; did you like the experience; is it good that you can continues to access that information? Will it help you protect it? We’ve also enabled them to upload PDF’s such as their will.
“The pilot will run over the next month; then we’ll analyse it and assuming it’s successful, we’ll raise the next round of capital.” Working through Creative HQ has a number of advantages, Hughson says. “I know a lot of start-ups fail. With an incubator you have a higher chance of success; they’ve got experts that have worked in the start-up space and seen the pros and cons; they have evolved good processes. I think I’ll build value in the company quicker in the incubator.
“To date I’ve been the sole shareholder in the company; now they’ve taken a five percent stake. That gives them skin in the game and it creates a team looking at the problem, rather than me just conversing with myself.
“You’re in an environment with 20 other companies in that high energy start-up phase; you see other people, you’re looking at what’s working. They’ve helped connect me with a different community from those I was in touch with through the corporates, and I think it’s a community that’s very positive in Wellington. There’s a lot of entrepreneurial activity and to be honest when I was in the corporate space I didn’t seen that.
“They’re going to give me advice on how to structure the company and how to raise funds; I’ve found it very positive.”
Some start-ups, he acknowledges, won’t work well with an incubator. “You have to be prepared to listen.” An incubator-aided start-up should be passionate about their development but not too possessive. “Some will go into the incubator and they won’t listen to the advice they’re given, because they’re the passionate entrepreneur and they know best about their product.”
At the other extreme is the venture who expects the incubator to supply all the expertise and do most of the work. They are equally unsuited to the model, he says.
Creative HQ encouraged him to explore the market internationally. “I came across a consortium called the Personal Data Ecosystem Consortium PDEC. They had about a dozen start-ups, Silicon Valley, UK Austria, Canada and I joined them as a start-up.” All the PDEC start-ups have different approaches to the “personal data ecosystem,” he says, and are dealing with different parts of the problem; other members of the consortium are more likely to be inspiration than competitors.
“They see that people are losing control; Google and Facebook encourage you to put as much information out there about yourself as possible and they make money out of that; you heard it at [the Privacy Forum earlier this month] – you are not the customer; you are the product.
“I came across a World Economic Forum report that said you should think of personal information as an asset class; like your house or your superannuation. Your information is valuable, they say, and you should be looking after it. Google and Facebook are making money out of it; why shouldn’t you?”
This is the first in a series of three articles about the Wellington IT scene. Tomorrow web company SilverStripe discusses why Wellington is a good place to do business.