Author: Doc Searls (page 1 of 35)

Pictures Unpack 20,669 Words

rsiskoryak-image

That’s a small sample of some great work by the artist R. Siskoryak, who (Wikipedia tells us), usually “specializes in making comic adaptations of literature classics”, but has now graphically adapted the complete text of what Joe Coscarelli (@JoeCoscarelli) of The New York Times (in Artist Helps iTunes’ User Agreement Go Down Easy), calls “the complete text of Apple’s mind-numbing corporate boilerplate” one must agree to before using iTunes.

The adaptation has its own Tumblr site, where it says, “@rsikoryak is on tour to promote the new color edition of Terms and Conditions: The Graphic Novel, out now from @drawnandquarterly.” Hence the image above. His  well-illustrated bio there is fun too. You can also read the original Tumblr version from the beginning here.

He’ll be appearing (and, presumably speaking and showing) at the Strand Bookstore, 828 Broadway, 10003, with Kenneth Goldsmith, at 7pm this evening (Thursday, March 9). He’s already been in Baltimore. Next up:

  • Pittsburgh, PA, Friday, March 17, 2017 – 6:00pm, ToonSeum with Copacetic Comics. 945 Liberty Ave, 15222
  • Cincinnati, OH, Tuesday, March 21, 2017 – 7:00pm, Joseph-Beth Booksellers, 2692 Madison Ave., 45208 with Carol Tyler
  • New York, NY, Friday, March 24, 2017 – 4:00pm, Spring Symposium, Cardozo Law Journal, moderated by Brett Frischmann
  • Rochester, NY, Wednesday, April 12, 2017 – 4:00pm, Rochester Institute of Technology, Bamboo Room in the Student Alumni Union, 1 Lomb Memorial Dr, 14623
  • Toronto, ON, Toronto Comic Arts Festival, Friday, May 12, 2017 – 9:00am to Sunday, May 14, 2017 – 5:00pm, Toronto Reference Library, 789 Yonge

Meanwhile, here are a few things we’ve been doing (both through ProjectVRM and CustomerCommons, which is working with the Consent & Information Sharing Working Group at Kantara) on terms and conditions you, the individual formerly known as “the user” (as if you’re on drugs) can assert as the first party. In other words, ways companies such as Apple can click “agree” to what you bring to the level table between you both. Four reasons they would do that:

  1. We have the Internet now. It’s a flat place. We don’t need to drag industrial age defaults that give companies scale across many customers, but don’t give individuals scale across many companies.
  2. Ours can have scale too. This is what Cluetrain promised in 1999 when it said we are not seats or eyeballs or end users or consumers. we are human beings and our reach exceeds your grasp. deal with it. Sure, companies haven’t heard of customer boilerplate before; but they do like consistency, simplicity, predictability, standardization and saving money and time. Customers’ scalable terms will bring them all.
  3. Our terms can be as friendly online as they are off. First example: #NoStalking, which can save the asses of publishers and advertisers, and maybe save journalism too.
  4. GDPR compliance. No need to worry about Europe’s new General Data Protection Regulation and its scary penalties when agreeing to friendly GDPR-compliant terms proffered by individuals obviates the whole thing.

Bonus links:

We will also be visiting all of these—on both the first and second party sides—at VRM Day, and then at the 24th Internet Identity Workshop, which happen together the first week of May at the Computer History Museum in Silicon Valley.

“Disruption” isn’t the whole VRM story

250px-mediatetrad-svg

The vast oeuvre of Marshall McLuhan contains a wonderful approach to understanding media called the tetrad (i.e. foursome) of media effects.  You can apply it to anything, from stone tools to robots. McLuhan unpacks it with four questions:

  1. What does the medium enhance?
  2. What does the medium make obsolete?
  3. What does the medium retrieve that had been obsolesced earlier?
  4. What does the medium reverse or flip into when pushed to extremes?

I suggest that VRM—

  1. Enhances CRM
  2. Obsoletes marketing guesswork, especially adtech
  3. Retrieves conversation
  4. Reverses or flips into the bazaar

Note that many answers are possible. That’s why McLuhan poses the tetrad as questions. Very clever and useful.

I bring this up for three reasons:

  1. The tetrad is also helpful for understanding every topic that starts with “disruption.” Because a new medium (or technology) does much more than just disrupt or obsolete an old one—yet not so much more that it can’t be understood inside a framework.
  2. The idea from the start with VRM has never been to disrupt or obsolete CRM, but rather to give it a hand to shake—and a way customers can pull it out of the morass of market-makers (especially adtech) that waste its time, talents and energies.
  3. After ten years of ProjectVRM, we still don’t have a single standardized base VRM medium (e.g. a protocol), even though we have by now hundreds of developers we call VRM in one way or another. Think of this missing medium as a single way, or set of ways, that VRM demand can interact with CRM supply, and give every customer scale across all the companies they deal with. We’ve needed that from the start. But perhaps, with this handy pedagogical tool, we can look thorugh one framework toward both the causes and effects of what we want to make happen.

I expect this framework to be useful at VRM Day (May 1 at the Computer History Museum) and at IIW on the three days that follow there.

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The distributed future is personal

The End of Cloud Computing, is a prophetic presentation by  Peter Levine, of Andreesen Horowitz, and required viewing by anyone interested in making the distributed future happen.

His key point: “We are returning to an edge-intelligence distributed computing model that’s absolutely thematic with the trends in computing moving from centralized out to distributed,” which he illustrates this way:

back-to-the-future

Later he adds, “We are absolutely going to return to a peer-to-peer computing model where the edge devices connect together creating a network of end point devices not unlike what we sort of saw in the original distributed computing model.” Here’s a graphic for that one:

sensor-data-explosion

I added the face in the middle, because the edge is individuals and not just the technology and data occupying their lives.

Joe Andrieu wrote about this a decade ago in his landmark post VRM: The user as point of integration.  An excerpt:

User Centrism as System Architecture

Doc Searls shared a story about his experience getting medical care while at Harvard recently. As a fellow at the Berkman center, he just gave them his Harvard ID card and was immediately ushered into a doctor’s office–minimal paperwork, maximal service. They even called him a cab to go to Mass General and gave him a voucher for the ride. At the hospital, they needed a bit more paperwork, but as everything was in order, they immediately fixed him up. It was excellent service.

But what Doc noticed was that at every point where some sort of paperwork was done, there were errors. His name was spelled wrong. They got the wrong birthdate. Wrong employer. Something. As he shuffled from Berkman to the clinic to the cabbie to the hospital to the pharmacy, a paper (and digital trail) followed him through archaic legacy systems with errors accumulating as he went. What became immediately clear to Doc was that for the files at the clinic, the voucher, the systems at the hospital, for all of these systems, he was the natural point of data integration… he was the only component gauranteed to contact each of these service providers. And yet, his physical person was essentially incidental to the entire data trail being created on his behalf.

User as Point of Integration

But what if those systems were replaced with a VRM approach? What if instead of individual, isolated IT departments and infrastructure, Doc, the user was the integrating agent in the system? That would not only assure that Doc had control over the propagation of his medical history, it would assure all of the service providers in the loop that, in fact, they had access to all of Doc’s medical history. All of his medications. All of his allergies. All of his past surgeries or treatments. His (potentially apocryphal) visits to new age homeopathic healers. His chiropractic treatments. His crazy new diet. All of these things could affect the judgment of the medical professionals charged with his care. And yet, trying to integrate all of those systems from the top down is not only a nightmare, it is a nightmare that apparently continues to fail despite massive federal efforts to re-invent medical care.

(See The Emergence of National Electronic Health Record Architectures in the United States and Australia: Models, Costs, and Questions and Difficulties Implementing an Electronic Medical Record for Diverse Healthcare Service Providers for excellent reviews of what is going on this area, both pro and con.)

Profoundly Different

Doc’s insight–and that of user-centric systems–isn’t new. What’s new is the possibility to utilize the user-centric Identity meta-system to securely and efficiently provide seamless access to user-managed data stores. With that critical piece coming into place, we have the opportunity to completely re-think what it means to build out our IT infrastructure.

Which brings us to Peter Levine’s final point, and slide:

entireworld-it

That world will be comprised of individuals operating with full agency, rather than as peripheral entities, and concerns, of centralized systems. Which is exactly what we’ve been fostering here at ProjectVRM from the start, ten years ago.

To obtain full agency, with control over the data and machine power suffusing our connected lives, we will need what’s been called first person or self-sovereign technologies. Not “personal power as a service” from some centralized system.

One immediate example is Adrian Gropper‘s Free Independent Health Records, which he’ll talk about on Thursday, January 26, at the Berkman Klein Center at Harvard University.  At that link: “Gropper’s research centers on self-sovereign technology for management of personal information both in control of the individual and as hosted or curated by others.”

For other efforts in the same direction, see our VRM Development Work page.

 

 

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Let’s give some @VRM help to the @CFPB

cfpbThe Consumer Financial Protection Bureau (@CFPB) is looking to help you help them—plus everybody else who uses financial services.

They explain:

Many new financial innovations rely on people choosing to give a company access to their digital financial records held by another company. If you’re using these kinds of services, we’d love to hear from you…

Make your voice heard. Share your comments on Facebook or Twitter . If you want to give us more details, you can share your story with us through our website. To see and respond to the full range of questions we’re interested in learning about, visit our formal Request for Information

For example,

Services that rely on consumers granting access to their financial records include:

  • Budgeting analysis and advice:  Some tools let people set budgets and analyze their spending activity.  The tools organize your purchases across multiple accounts into categories like food, health care, and entertainment so you can see trends. Some services send a text or email notification when a spending category is close to being over-budget.

  • Product recommendations: Some tools may make recommendations for new financial products based on your financial history. For example, if your records show that you have a lot of ATM fees, a tool might recommend other checking accounts with lower or no ATM fees.

  • Account verification: Many companies need you to verify your identity and bank account information. Access to your financial records can speed that process.

  • Loan applications: Some lenders may access your financial records to confirm your income and other information on your loan application.

  • Automatic or motivational savings: Some companies analyze your records to provide you with automatic savings programs and messages to keep you motivated to save.

  • Bill payment: Some services may collect your bills and help you organize your payments in a timely manner.

  • Fraud and identity theft protection: Some services analyze your records across various accounts to alert you about potentially fraudulent transactions.

  • Investment management: Some services use your account records to help you manage your investments.

A little more about the CFPB:

Our job is to put consumers first and help them take more control over their financial lives. We’re the one federal agency with the sole mission of protecting consumers in the financial marketplace. We want to make sure that consumer financial products and services are helping people rather than harming them.

A hat tip to @GeneKoo (an old Berkman Klein colleague) at the CFPB,  who sees our work with ProjectVRM as especially relevant to what they’re doing.  Of course, we agree. So let’s help them help us, and everybody else in the process.

Some additional links:

#120—our lever on the world

archimedes120

Archimedes said “Give me a place to stand and a lever long enough and I can move the world.”

For decades, big business has had a place to stand and move millions or billions of consumers. That place is mass media.

Now, with the Internet, customers have a place to stand as well. Sure, businesses of all kinds and sizes can also stand there, but that’s a good thing, because the Internet is a place designed to get rid of distances. Think of it as a giant zero between everybody and everything on it: a second virtual world that coexists with the physical one.

We need our own levers in this world. We already have a few, in the form of browsers, email, and ways to publish on our own. But  we need new and better tools that make us both independent—able to stand on our own—and engaging, so we can do business.

Our developers list is constantly changing, but currently we list these categories of software and services:

That’s in addition to hardware, code bases, protocols, frameworks and other forms of work.

Now, in Phase Two, we need to focus sharply on making levers for the Archimedes in each of us: ways we can move the world. For example, here are two requests that came up just in the last few days:

  1. A single way any of us can view and control all the subscriptions in our lives. Maybe it’s an app. Maybe it’s a dashboard. What matters is that it’s a single lever that scales across every subscription we pay for. Every magazine, premium cable channel, public radio station, podcast, whatever. One tool that scales across all of them—rather than as many tools as there are services we pay, each provided by them rather than by us.
  2. A single way any of us can view and control relationships and data flows between ourselves and all of the utilities and service providers that serve our homes. With one of these, we can see and compare, for example, energy and water uses over time, and easily reach and relate to any and all of our service providers. This too might be a dashboard of some kind.

This is in addition to the commercial relationship manager we’ve wanted with from ProjectVRM’s start ten years ago: a tool that gives us one way to change our contact information (e.g. last name or address) for every entity we deal with, in one move.

Those levers give each of us scale:

seesaw

Ten years into this project, and the idea of giving individuals scale is still new, still odd. So, to help move both development and conversation forward, I suggest a new category, just for levers that give each of us world-moving scale: One to Zero, meaning One to the Whole Net. Abbreviation: 120. Hashtag: #120.

So, rather than asking if some product is an example of VRM, we can ask “Does that do 120?”

And let’s see how it goes.

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VRM Day: Starting Phase Two

VRM Day is today, 24 October, at the Computer History Museum. IIW follows, over the next three days at the same place. (The original version of this post was October 17.)

We’ve been doing VRM Days since (let’s see…) this one in 2013, and VRM events since this one in 2007. Coming on our tenth anniversary, this is our last in Phase One.

sisyphusTheRolling snowball difference between Phase One and Phase Two is that between rocks and snowballs. In Phase One we played Sisyphus, pushing a rock uphill. In Phase Two we roll snowballs downhill.

Phase One was about getting us to the point where VRM was accepted by many as a thing bound to happen. This has taken ten years, but we are there.

Phase Two is about making it happen, by betting our energies on ideas and work that starts rolling downhill and gaining size and momentum.

Some of that work is already rolling. Some is poised to start. Both kinds will be on the table at VRM Day. Here are ones currently on the agenda:

  • VRM + CRM via JLINC. See At last: a protocol to link VRM and CRM. , and The new frontier for CRM is CDL: customer driven leads. This is a one form of intentcasting that should be enormously appealing to CRM companies and their B2B corporate customers. Speaking of which, we also have—
  • Big companies welcoming VRM.  Leading this is Fing, a French think tank that brings together many of the country’s largest companies, both to welcome VRM and to research (e.g. through Mesinfos) how the future might play out. Sarah Medjek of Fing will present that work, and lead discussion of where it will head next. We will also get a chance to participate in that research by providing her with our own use cases for VRM. (We’ll take out a few minutes to each fill out an online form.)
  • Terms individuals assert in dealings with companies. These are required for countless purposes. Mary Hodder will lead discussion of terms currently being developed at Customer Commons and the CISWG / Kantara User Submitted Terms working group (Consent and Information Sharing Working Group). Among other things, this leads to—
  • 2016_04_25_vrmday_000-1Next steps in tracking protection and ad blocking. At the last VRM Day and IIW, we discussed CHEDDAR on the server side and #NoStalking on the individual’s side. There are now huge opportunities with both, especially if we can normalize #NoStalking terms for all tracking protection and ad blocking tools.  To prep for this, see  Why #NoStalking is a good deal for publishers, where you’ll find the image on the right, copied from the whiteboard on VRM Day.
  • Blockchain, Identity and VRM. Read what Phil Windley has been writing lately distributed ledgers (e.g. blockchain) and what they bring to the identity discussions that have been happening for 22 IIWs, so far. There are many relevancies to VRM.
  • Personal data. This was the main topic at two recent big events in Europe: MyData2016 in Helsinki and PIE (peronal information economy) 2016 in London.  The long-standing anchor for discussions and work on the topic at VRM Day and IIW is PDEC (Personal Data Ecosystem Consortium). Dean Landsman of PDEC will keep that conversational ball rolling. Adrian Gropper will also brief us on recent developments around personal health data as well.
  • Hacks on the financial system. Kevin Cox can’t make it, but wants me to share what he would have presented. Three links: 1) a one minute video that shows why the financial system is so expensive, 2) part of a blog post respecting his local Water Authority and newly elected government., and 3) an explanation of the idea of how we can build low-cost systems of interacting agents. He adds, “Note the progression from location, to address, to identity, to money, to housing.  They are all ‘the same’.” We will also look at how small business and individuals have more in common than either do with big business. With a hint toward that, see what Xero (the very hot small business accounting software company) says here.
  • What ProjectVRM becomes. We’ve been a Berkman-Klein Center project from the start. We’ve already spun off Customer Commons. Inevitably, ProjectVRM will itself be spun off, or evolve in some TBD way. We need to co-think and co-plan how that will go. It will certainly live on in the DNA of VRM and VRooMy work of many kinds. How and where it lives on organizationally is an open question we’ll need to answer.

Here is a straw man context for all of those and more.

  • Top Level: Tools for people. These are ones which, in legal terms, give individuals power as first parties. In mathematical terms, they make us independent variables, rather than dependent ones. Our focus from the start has been independence and engagement.
    • VRM in the literal sense: whatever engages companies’ CRM or equivalent systems.
    • Intentcasting.
    • PIMS—Personal Information Management Systems. Goes by many names: personal clouds, personal data stores, life management platforms and so on. Ctrl-Shift has done a good job of branding PIMS, however. We should all just go with that.
    • Privacy tools. Such as those provided by tracking protection (and tracking-protective ad blocking).
    • Legal tools. Such as the terms Customer Commons and the CISWG are working on.
    • UI elements. Such as the r-button.
    • Transaction & payment systems. Such as EmanciPay.

Those overlap to some degree. For example, a PIMS app and data store can do all that stuff. But we do need to pull the concerns and categories apart as much as we can, just so we can talk about them.

Kaliya will facilitate VRM Day. She and I are still working on the agenda. Let us know what you’d like to add to the list above, and we’ll do what we can. (At IIW, you’ll do it, because it’s an unconference. That’s where all the topics are provided by participants.)

Again, register here. And see you there.

 

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We’re done with Phase One

Here’s a picture that’s worth more than a thousand words:

maif-vrm

He’s with MAIF, the French insurance company, speaking at MyData 2016 in Helsinki, a little over a month ago. Here’s another:

sean-vrm

That’s Sean Bohan, head of our steering committee, expanding on what many people at the conference already knew.

I was there too, giving the morning keynote on Day 2:

cupfu1hxeaa4thh

It was an entirely new talk. Pretty good one too, especially since  I came up with it the night before.

See, by the end of Day 1, it was clear that pretty much everybody at the conference already knew how market power was shifting from centralized industries to distributed individuals and groups (including many inside centralized industries). It was also clear that most of the hundreds of people at the conference were also familiar with VRM as a market category. I didn’t need to talk about that stuff any more. At least not in Europe, where most of the VRM action is.

So, after a very long journey, we’re finally getting started.

In my own case, the journey began when I saw the Internet coming, back in the ’80s.  It was clear to me that the Net would change the world radically, once it allowed commercial activity to flow over its pipes. That floodgate opened on April 30, 1995. Not long after that, I joined the fray as an editor for Linux Journal (where I still am, by the way, more than 20 years later). Then, in 1999, I co-wrote The Cluetrain Manifesto, which delivered this “one clue” above its list of 95 Theses:

not

And then, one decade ago last month, I started ProjectVRM, because that clue wasn’t yet true. Our reach did not exceed the grasp of marketers in the world. If anything, the Net extended marketers’ grasp a lot more than it did ours. (Shoshana Zuboff says their grasp has metastacized into surveillance capitalism. ) In respect to Gibson’s Law, Cluetrain proclaimed an arrived future that was not yet distributed. Our job was to distribute it.

Which we have. And we can start to see results such as those above. So let’s call Phase One a done thing. And start thinking about Phase Two, whatever it will be.

To get that work rolling, here are a few summary facts about ProjectVRM and related efforts.

First, the project itself could hardly be more lightweight, at least administratively. It consists of:

Second, we have a spin-off: Customer Commons, which will do for personal terms of engagement (one each of us can assert online) what Creative Commons (another Berkman-Klein spinoff) did for copyright.

Third, we have a list of many dozens of developers, which seem to be concentrated in Europe and Australia/New Zealand.  Two reasons for that, both speculative:

  1. Privacy. The concept is much more highly sensitive and evolved in Europe than in the U.S. The reason we most often get goes, “Some of our governments once kept detailed records of people, and those records were used to track down and kill many of them.” There are also more evolved laws respecting privacy. In Australia there have been privacy laws for several years requiring those collecting data about individuals to make it available to them, in forms the individual specifies. And in Europe there is the General Data Protection Regulation, which will impose severe penalties for unwelcome data gathering from individuals, starting in 2018.
  2. Enlightened investment. Meaning investors who want a startup to make a positive difference in the world, and not just give them a unicorn to ride out some exit. (Which seems to have become the default model in the U.S., especially Silicon Valley.)

What we lack is research. And by we I mean the world, and not just ProjectVRM.

Research is normally the first duty of a project at the Berkman Klein Center, which is chartered as a research organization. Research was ProjectVRM’s last duty, however, because we had nothing to research at first. Or, frankly, until now. That’s why we were defined as a development & research project rather than the reverse.

Where and how research on VRM and related efforts happens is a wide open question. What matters is that it needs to be done, starting soon, while the “before” state still prevails in most of the world, and the future is still on its way in delivery trucks. Who does that research matters far less than the research itself.

So we are poised at a transitional point now. Let the conversations about Phase Two commence.

 

 

 

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The new frontier for CRM is CDL: Customer Driven Leads

cdlfunnelImagine customers diving, on their own, straight down to the bottom of the sales funnel.

Actually, don’t imagine it. Welcome it, because it’s coming, in the form of leads that customers generate themselves, when they’re ready to buy something. Here in the VRM world we call this intentcasting. At the receiving end, in the  CRM world, they’re CDLs, or Customer Driven Leads.

Because CDLs come from fully interested customers with cash in hand, they’re worth more than MQLs (Marketing Qualified Leads) or  SQLs (Sales Qualifed Leads), both of which need to be baited with marketing into the sales funnel.

CDLs are also free.  When the customer is ready to buy, she signals the market with an intentcast that CRM systems can hear as a fresh CDL. When the CRM system replies, an exchange of data and permissions follows, with the customer taking the lead.

It’s a new dance, this one with the customer taking the lead. But it’s much more direct, efficient and friendly than the old dances in which customers were mere “targets” to be “acquired.”

The first protocol-based way to generate CDLs for CRM is described in At last, a protocol to connect VRM and CRM, posted here in August. It’s called JLINC. We’ll be demonstrating it working on a Salesforce system on VRM Day at the Computer History Museum in Silicon Valley, on Monday, October 24. VRM Day is free, but space is limited, so register soon, here.

We’ll also continue to work on CDL development  over the next three days in the same location, at the IIW, the Internet Identity Workshop. IIW is an unconference that’s entirely about getting stuff done. No keynotes, no panels. Just working sessions run by attendees. This next one will be our 23rd IIW since we started them in 2005. It remains, in my humble estimation, the most leveraged conference I know. (And I go to a lot of them, usually as a speaker.)

As an additional temptation, we’re offering a 25% discount on IIW to the next 20 people who register for VRM Day. (And it you’ve already reigstered, talk to me.)

Iain Henderson, who works with JLINC Labs, will demo CDLs on Salesforce. We also invite all the other CRM companies—IBM, Microsoft Dynamics, SAP, SugarCRM… you know who you are—to show up and participate as well. All CRM systems are programmable. And the level of programming required to hear intentcasts is simple and easy.

See you there!

 

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What small businesses and their customers have in common

small vs largeSmall businesses and their customers both have problems dealing with big businesses that are more vested in captive markets than in free ones. So, since VRM is about independence and engagement, we may have an opportunity for customers and small businesses to join in common cause.

To dig deeper into that possibility, I interviewed LaVonne Reimer, who runs Lumenous (a startup that  provides ways for small businesses to create and share credit profiles on their own terms). Here goes—

DS: How big is small business?

LR: The domestic small business market in the U.S. is currently at 28 million firms. This includes employer and non-employer firms that provide products or services to their neighborhoods and communities as well as those that provide a unique offering to a larger supply chain or marketplace.

The impact of credit decisions is another big number—how at least $4 trillion flows to small business in the U.S.. That includes a significant portion of over $1 trillion in federal contracts and grants, and $700 billion in loans, a substantial portion of which are backed by the Small Business Administration (SBA).

DS: What’s the biggest issue for small business, and how is that similar to issues for individuals?

LR: Credit. The $28 billion credit industry provides creditworthiness indicators as well as personal identity and entity verification for both businesses and individuals. From the standpoint of both, that industry is a collection of black boxes. They are unaccountable collections of algorithms that can make or break a business, or often its owner, without explaining why. Or even knowing why.

The incumbent with the biggest impact on small business credit is Dun & Bradstreet. Founded in 1841, D&B is the grandfather of all credit bureaus and in many respects the originator of corporate surveillance.  And now D&B is in the identity business as well, putting those being identified at D&B’s mercy.

DS: How?

LR: Through the Data Universal Numbering System, better known as DUNS. It’s a loss leader that gives D&B a potent tool for finding and extracting information from business owners not otherwise publicly available. And it’s all done out of the sight of the business, and—effectively—government as well.

DS: Are they alone at this?

LR: No. A handful of venture-backed “fintech” startups are using similar technology to harvest data. Some of the data gathering might be initially authorized by the business owner. Other data they can scrape or mine from the Web to determine creditworthiness for purposes of making loans. Many do not disclose “effective APR” but recent Federal Reserve System research suggests the range may be from over 50% at the low end to somewhere in the hundreds. Business owners may get loans they couldn’t get from regulated or traditional banks but are blind-sided by onerous terms and in some cases thrown into bankruptcy because the collection model—daily automated micro-payments—catches them off guard, for example by triggering excessive non-sufficient funds (NSF) fees. To a business owner, these providers seem much like credit bureaus. There is no way yet to leverage or re-use the data you have to supply to get the loan, much less understand how the algorithms work.

I should add that a small business “bill of rights” has been circulating among start-ups; but it under-estimates the degree to which the odds are stacked against a small business across commercial credit.”

DS: What about government oversight?

LR: Today, consumer identity and credit providers must comply with the Fair Credit Reporting Act, but the FCRA and similar regulations do not govern small business credit, not even when consumer credit information is used to verify the identity and creditworthiness of the entity and owner.

There is, however, increasing scrutiny by the Federal Trade Commission (FTC) of big data systems in credit profiling and other data brokers. In multiple enforcement orders and two major reports, the FTC is calling on identity and data providers to demonstrate greater transparency and accountability in the uses of personal data. One report is Big Data: A Tool for Inclusion or Exclusion? The other is “Data Brokers: A Call for Transparency and Accountability.

Still, as is true of the Fair Credit Reporting Act, small business is left unaddressed, even if creditors use consumer credit information associated with the owner of the business.

DS: What outcomes are we looking for here?

LR:  At Lumenous, we are applying the principles of VRM to transform the relationship between small business and creditors. As a result, up to six million small employer firms will be able to access the credit, capital, and commerce they deserve.. This will lead to better leverage of cash and ability to not only meet payroll and pay bills on time, but also better contribute to the economic well-being of their communities. Twenty-two million “non employer firms”—freelancers and sole proprietors, for example—will have access to credit, and more easily form trusted joint ventures to bid on otherwise out-of-reach projects.

DS: Are there any large companies that are working to bring small business and their customers together in the fight to improve the economy from the bottom up?

LR: I really like what Xero is doing. It is far more friendly and useful to small business than other accounting software and services companies (especially Quickbooks). It’s growing rapidly too. I believe that;s because it has a deep understanding of how small business works, and a genuine respect for how small business owners think about their firms, and those firms’ roles in the world.

DS: I noticed. Xero’s CEO, Rod Drury, sourced a recent post of mine in a talk he gave just a few days ago. And Gary Turner, an old friend from my Cluetrain days, is Managing Director of Xero in the UK. I’ll be talking with both in the next few days as well.

LR: I expect that Xero will also have lots of useful intelligence about what’s actually happening with small business, worldwide—and with possible VRM connections.

And here are some bonus sources, mostly courtesy of LaVonne:

There are many more, but I’ll save those for a follow-up post.

 

 

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What VRM is about

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ProjectVRM fosters development of tools and services that make every person both independent of others (especially companies), yet better able to engage with them. There are a lot of developers doing that now, but we could use a lot more. Bigger ones, too.

Our main problem, to the small degree we have one, is VRM as a TLA (three letter acronym). Each of the three letters—Vendor, Relationship and Management—is a one-word MEGO: a four-letter acronym that says “my eyes (or ears) glaze over.”

I bring this up because we are often asked why we don’t have a less boring name for what is becoming an exciting category, and something that’s finally catching on. The answer is that the baby got named long ago, and changing what we call it now is, to use a FLA, a PITA.

Meanwhile, I kinda like the little image I put up, above, just to see if it has any box office.

 

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