Rob Nicholas Stone

Datavest CEO & Founder Rob Nicholas Stone discusses the monetization of private data through his blockchain based application DATAVEST, a cooperative that monetizes user data and pays back individuals in the form of datanotes.

Transcript:

INTRO

Method to the Madness is next.

You're listening to Method to the Madness, a bi-weekly public affairs show on K-A-L-X Berkeley celebrating innovators. Last time on Method to the Madness we talked with Block chain at Berkeley about block chain technology and what that means. Today we're going to be talking with Rob Nicholas Stone, the founder and CEO of DATAVEST, an application that sits on top of this block chain technology.

LISA: Thanks for coming in Rob. 

ROB: Yeah, absolutely!

LISA: What is DATAVEST?

ROB: DATAVEST is a way for individuals to monetize the value of their personal data. 

LISA: How is that different from what's going on right now? 

Rob: Data right now is being monetized. It's being capitalized by some of the largest corporations. And they're able to do that because they have the ability to kind of aggregate all of this data from multiple sources from millions of users. What we're saying is that it's an unfair exchange and the value of your data, the data that you're providing to these companies is greater than the value that is returned to you and it's driving up the largest market capitalizations of the largest kind of Internet platforms.

LISA: So it sounds like you're creating a meta transaction in which the intrinsic value of my data is more than just what I'm giving to Facebook or whatever.

ROB: Individually we don't have much leverage negotiating a fair price for our data. There's a value premium when that data is aggregated. It's been difficult to find a mechanism for allowing individuals to share that data and benefit from the aggregate value that's generated by a platform like Facebook. One of the challenges we had initially was trying to figure out how do we value data is it a pro-rata share of current revenue that that's generated from that data. Is it the kind of commodity price wanted sold by maybe a data broker? or in the context of Facebook and Instagram and Google and Amazon, they're able to capitalize the value because this data, even if they don't know what the application is going to be in the future they're able to price that into the current value of the company. One way that you could look at it is looking at the market capitalization of say Facebook and dividing by the number of users of Facebook. And that's going to be a much larger number than the current revenue of Facebook divided by the number of users.

LISA: I'm curious why you wanted to do this because reading about block chain technology the history of it, originally it was of culturally and socially revolutionary idea. Since that time about 10 years ago, I feel like it's lost a little bit of that sheen but what you're doing is sort of a throwback to that original idea which is that it belongs to the people. 

ROB: Right. I knew that everybody had this form of capital that was extremely extremely valuable. And I also knew that in order to appropriately monetize this data, individuals had to have ownership over the application of the data. And so the first two months was basically me trying to figure out how to provide individuals with how to give them a vested interest in the applications that are built atop the aggregate data that's provided. The first idea was we would basically issue individual stock in our company and that company would use this data and monetize it and capitalize it and they would have this vested interest not just in the current value of their data but also the future value. Obviously that for millions of people would be extremely difficult to do. It would be almost a logistical nightmare to pull off in. And so that's where cryptocurrency came into the equation through block chain, through smart contracts. There's a way to design a platform and issue this currency that is similar to equity in a sense, in that it provides individuals with a vested interest in the platform in the application. And so that that's kind of how I arrived at the block chain space.

LISA: What is the problem DATAVEST is trying to solve?

ROB:

A lot of the inequality or injustice right now occurs around this asymmetry of information. Whenever a corporation or a company or organization has more information about you than you have about them, it creates an inbalance. The reason why we decided to issue a digital currency in exchange for data is that I see currency as a form of language and it's a means, a tool of communicating and exchanging value. And what's interesting about data information knowledge is when it's exchanged there's no less of it in the hands of the one transacting it. If I explain an idea to you, I still have the idea and now you have it too. There's a greater supply. There was a book called Unjust Deserts written by Gar Alperovitz and he lays out the idea of this technological residual and it's kind of the gains in productivity not attributed to say capital or labor but is a product of technological advance generally speaking, where it's difficult almost impossible to attribute individual credit for this social phenomenon, but what capitalism tells us to do is is ascribe individual credit for the product of a social phenomenon. Similar to language, a piece of data or a word has very little meaning without the alphabet, without the multiple arrangements of those words and concepts and so similar to this our data doesn't have much value alone when it's siloed. This has been the challenge is that that individuals don't have a way to benefit. It's almost as if language has been co-opted or or taken, monopolized by a lot of these companies and corporations. The reason why we created DATAVEST was to create a platform, a cooperative platform, that basically co-ops back this data and information that's been taken from us and allows us to benefit in this common language through this digital currency.

LISA:That's revolutionary. It reminds me of Marx and Veblen. Where did you begin to start thinking about these kinds of ideas?

ROB: Maybe Veblen, actually. It's funny that you bring that up. He wrote about this idea of absentee ownership when capital is invested by those not vested in the in the company that that capital goes towards. It creates a kind of perverse incentive. If individuals had ownership and they were also the consumers within a company, the incentives are not really to to maximize profit at the expense of higher prices for consumers. I guess another way to put it is if consumers were the owners what would that look like? Right now there's a there's kind of a movement applying the concepts and ideas of cooperatives to Internet platforms. It's called Platform co-operative-ism and it's a guy named Trevor Schultz. He's a professor at the New School in New York and he's written a lot about this. If you look at maybe Uber and what that would look like as a platform co-operative, you'd have the situation where the drivers and the riders are the owners of the ride share company or YouTube platform where the content creators and users benefit from the value created in a business sense by that platform or AirBNB owned by those running out their houses and those using it. It's just, it's an alignment of incentives that I think is more rational. If the economy is unequal for rational reasons that's one thing. But when it's completely irrational and I couldn't ignore it any longer, if if you look back at kind of the progression of capitalism from laissez faire in the 19th century John Maynard Keynes basically kind of saving capitalism in a sense by figuring out a monetary policy that could or fiscal spending that could increase employment. But in finance everyone always talks about inflation, as well, we need a healthy level of inflation. But when you think about it its inflation is really just a decrease in purchasing power and Keynes, his kind of insight was that it's difficult to lower nominal wages. But if you print more money you devalue the currency, you can lower real wages without kind of workers knowing about it. So it almost seemed like a trick. It's like you're tricking labor into thinking that they're getting paid the same amount, that excess profit from real wages going down, you know goes towards the owners of the company. And so the stock market benefits from that. Seeing the irrationality there, this plays into kind of how we've created our currency. It's not like the Federal Reserve where a couple banks have access to the discount window. It's every single individual has direct access to the analog of the Federal Reserve. You have a direct line into creating new money and it goes to you, not to some large institution.

LISA: What are some of the challenges that you're facing right now?

ROB: I think the principal challenge is explaining a new idea and trying to communicate something really that hasn't been done successfully before.

LISA: Why did you choose the co-op structure?

ROB: I don't know if you've ever used Apple Itunes. It's basically data as a service or software as a service where you subscribe to a service and pay a fee. We're kind of turning that on its head. The future revenue that could be generated by this data needs to stay in the hands of those who produced it. If you were structuring this as a C corporation where the data was owned by conventional corporate structure. What happens when Amazon or some platform wants to buy all of the data and then what happens to the value of the currency when all of a sudden you know whoever is acquiring the information the data decides to use that monetize that more