Founded in 2012 by entrepreneurs from Oxford University, Onfido is a private London-based technology firm with the aim of disrupting the background checking industry. In this episode of The Crowd, we talk with Husayn Kassai, the CEO and Co-founder of Onfido.

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Transcript:

Kevin: Hi. Welcome to The Crowd, a podcast by Near Me. We’re talking about peer-to-peer marketplaces. We’re talking collaborative economy and we’re talking about thought leadership. We’re talking about all these things, any and all of them with some of the best minds in the field. And of course, I’m your host, Kevin Cohen.

 

Today, we’re going to be joined by Husayn Kassai, the CEO and co-founder of Onfido. Onfido is an online background check company. Why is this important to you? Well, in today’s marketplace environment, some marketplaces require users to have background checks. That’s when Onfido comes in. Let’s jump into the interview.

 

Husayn, welcome to the show.

 

Husayn: Hello, it’s great to be on.

 

Kevin: Husayn, why don’t you tell our readers what is Onfido?

 

Husayn: So, Onfido background checks is a data-driven platform that helps build trust into the sharing economy by providing the tools to carry out automated identity, financial, criminal and other checks. You can use it on an API basis or use it on an online dashboard.

 

Kevin: Great. The online background check industry has been around for a long time. How is it currently being used in the collaborative economy? Give us some thoughts on that.

 

Husayn: So the collaborative economy is great. I mean, everyone loves to be able to share different resources. I love to be able to get into a car with others, use a room that others use, have a cleaner in my house and on-demand tutors and nannies and all sorts of things and they’re wonderful. But the number 1 challenge is you wouldn’t let a perfect stranger into your home or to share a car with and naturally to have that trust relationship. But the problem is that trust takes time and that’s something that, especially in the new world, we don’t have.

 

Traditionally, people tend to know each other and have few transactions. Increasingly, people are having multiple transactions with complete strangers. And that’s why an automated background check which offers live results is that buffer in many ways that can give you all the information you need to be able to signal that you’re sort of a trustworthy applicant, an individual that would be worthy of interacting with.

 

Kevin: We’re going to go deep into Onfido and what you’re seeing in the collaborative economy but first I’ve got some kind of rapid fire questions for you. What book do you recommend most often?

 

Husayn: What book do I recommend most often? I suppose Customer Centric Selling is a book I like, The Lean Startup as well but let me go – so Customer Centric Selling is great because it gets you very attuned to asking the right questions from the customers and to seeing what they need. So we started about two and a half years ago and our first customer was a sharing economy based one. And from the outset, whenever we’ve asked the right questions, we’ve been able to develop the best sort of features that the customers and clients want the most. And Customer Centric Selling just puts you in that zone of framing things in the best possible way.

 

Kevin: Wonderful. Where do you spend most of your time online these days?

 

Husayn: Where do I spend most of my time? Is this outside work or during work?

 

Kevin: Let’s say – let’s hear about both. During work, where do you spend your time online?

 

Husayn: So, I think emails and just getting back to customers. And that’s great because traditionally I guess most companies as they grow, the sort of executive level is a bit detached from what the customer is asking or what the feedback is which creates a bit of a barrier in some ways and that’s when you start drifting off. So I have been fortunate enough that my time is still dedicated heavily into being very customer based. And so I personally manage all the sort of aspects of what features go into the software and everything else. That is most of my time during, I guess, office hours.

 

Kevin: All right. So what peer-to-peer marketplaces or services do you use?

 

Husayn: So, I am a big fan of Uber naturally and BlablaCar out here in Europe is terrific to use. I’m on Airbnb, Flatclub. Naturally, it’s part of my research. I do a lot of this as a customer-based experience myself. And a lot of the others I use and we service quite a few of them. So it’s mainly just getting a sense of how, what the differences are but I am – I’ve seen many different things as including best part of the sharing economy. So even here, we have what are known as Boris bikes which are bicycles in London. You can use them and rent them. I’m a big fan of that too.

 

Kevin: Nice, nice. So what are some of the things you like to do when you’re not working?

 

Husayn: I guess, I don’t classify this as work. I really, really love what I’m doing. And what I like the most is I am a big soccer fan. So whenever I get a chance to play on weekends but not so much competitively anymore but any chance I get to play, I’m a big fan.

 

Kevin: Great. So give us your back story. What did you do before you started Onfido?

 

Husayn: So, I was at university along with my two other co-founders. And at that time, almost five or so years ago, we background checked ourselves. So we were interning in the city working for banks and sort of consulting firms. And we felt that it’s a bit of a paper-based, cumbersome manual-based process. And it took longer than it should have. So we felt this isn’t attuned to the 21st century and this seems to be something wrong. And so we knew that there was scope to introduce technology into this space. And then later as users of the on-demand and shared economy, we increasingly found that we’re fine with it and we love it but that our parents or other generations have a higher threshold of risk and trust and so that – there’s no need – there’s this asymmetry on information problem between two parties and that technology can be used to address that. So that’s why we essentially started the company and got into this space.

 

Kevin: Great. So what were some of the challenges you faced in starting up Onfido?

 

Husayn: The main one is that we are young. We are a young team. So this is again two and a half years ago. We were even younger than we are now. The average between the three of us was about 22 or so. And so, trust in many ways or background check is an experience good. So you essentially trust the platform that banks provided that they’re processing these checks. And when you have such large competitors when we were starting out at least, it was a challenge to sort of be able to signal that, look, even though we are a young teams, it’s worth giving us a shots because, you know, you’ll be impressed. So that was a barrier we had to overcome to begin with but in some ways, it helped because it forced us and made us to make sure that this software does all the talking. And so we had to make sure that it’s even better than what you otherwise would’ve needed. And it’s paid off because now most of our customer base really appreciates the fact that it’s always been developed with them in mind and that the fact that we’re a young team has helped because we have innovative and a new approach to handling these sort of background check processes.

 

Kevin: Great. So tell us about some of your early wins.

 

Husayn: The main ones were around cleaning, nannies and tutoring markets and also recruitment businesses. So in many ways, recruitment companies that do contract workers are sort of the other side of – in many ways, they are on-demand sort of marketplaces with a different business model. And they all had a uniform need for fast turnaround times and competitive pricing and good quality of information. So when we got – I suppose it was the seventh or eighth customer that we had when we landed our first major customer and having – it’s quite a bit of a difference when you go from a handful of smaller ones to one major one. And we were able to work really closely with a major customer making sure they’re really happy. They allowed us to learn exactly what their approaches and how it works so that we eventually were able to just take it to the others and show them, look, it’s already been done. So why don’t you look at it to improve your processes?

 

Kevin: So background checks obviously have been around for a while. First of all, what makes your product different? And how are you using that difference to serve the collaborative economy?

 

Husayn: So the main core difference is that if you look at the at is as a different background check in perspective, it’s quite a manual-based process. So you have different data points static data points that are processed sequentially. Sometimes, it’s typically with a manual-based operation. And the trouble is that it’s prone to human error firstly. And secondly, because it’s processed sequentially, they have a turnaround times. And naturally, as a result, you have high prices.

 

So we’ve automated the process so that it’s through live data feed. You get the results as and when they come back and by making it automated, you also get a faster turnaround time. And amongst the platforms, it’s sort of the sharing economy types who use it more often than not. It’s a case of consistency in quality and they don’t want to be burdened with sort of pages and pages of reports of what’s happening. They just want to tick or clear of a sitter  and then they can make quick, fast and informed decisions on who they can trust and who they can onboard on their platforms.

 

Kevin: And these early wins that you talked about, are they integrating to your platform via the API? Are they are doing third party or external searches for their marketplace participants?

 

Husayn: So typically, we have both. So typically, we have an online dashboard so companies can start up. So any size they are you can sign up and start using the software. And more often than not especially sort of startups in the sharing economy, they want to have that flexibility. They may be busy and they may have 101 different things to do. They just want a quick solution that they can onboard as soon as possible and get going. And as their volume increase on average about 150 to 200 or more, then there’s the option for the API. And they get integrated to it and they can just continue using it but it’s a lot more streamlined that way.

 

Kevin: So I’ve noticed that you are on a lot of speaking panels regarding trust in the collaborative economy. What are some of the big macro level trends that you are aware of? And what are your thoughts on those?

 

Husayn: And so, one of the major things is that you have the early adapters and they use this and I suppose in some ways the younger generation and they love the so-called sharing economy. But in order for the sharing economy to become mainstream, the threshold or the bar by which a background check is carried out seems to have increased so that increasingly platforms are using it because they want to signal a more credible and thorough background check to the wider user base. That is one trend that we have sort of seen.

 

Another one is that platforms, once they pass a certain number of users, it depends on what market it is but once they pass a few thousands, then you’re natural other signaling mechanism is feedback. So if your users on your platform have feedback, it’s a great signal whether you’re trustworthy or not. But the challenge becomes when you have new users who don’t have any feedback, then they sometimes are at a bit of a disadvantage because they’re one of the first individuals in the platform. So by introducing background checks, you’re raising that and enabling everyone to have more of a level playing field at least on a platform more of a chance of getting selected if it’s sort of an on-demand platform. Those are two other things that we’re starting to see more of.

 

Kevin: And who’s typically bearing the cost for the background check? Is it the individual vendor who’s trying to sell their goods or services on it? Or is it the marketplace themselves?

 

Husayn: It can be both. So the option is it depends what market it is. In the early days, it was nearly always that the actual clients increasingly as the clients are integrating with us and asking for the applicants to pay. So it mostly depends on the business but the answer is both. There are also clients that are being more sort of selective in terms of what checks they carry out and when. So it is common for a standardized check to be carried out on all the individuals in the platform and then for certain ones to have a more premium or higher level check in order to help them be able to signal even a higher credibility threshold to their own users.

 

Kevin: And in terms of the background checks themselves, there’s the traditional kind of state, federal and natural databases at least in the US that are being looked at. How are your background checks different? Are you looking at social media? What other sources of data are you guys looking in going through your background check process?

 

Husayn: It’s the same. So it’s a state level, federal, county based. And essentially, so, the way the natural, the safest way to do it is that you do a national search. And the national search typically would pick up about 40 percent of the crimes committed. In the States for instance, it would be captured in the national search. But the challenge is you have some that wouldn’t be part of that. And the second challenge is you have some individuals that are on there but when you dig deeper you realize that is a different person. So what happens is a national search is accompanied by a county level search. And based on the address history of an individual that is captured through their Social Security number trace and their address history, it is used to pick out the county that they’ve lived at and those are searched accordingly. And that is combined with a national search to give you a good understanding of a person’s criminal history. It works in similar ways to different countries. Every country has its own model. And in the UK for example, there’s a similar database, a national database that holds your criminal history in a similar way.

 

Kevin: Okay. So in terms of – again back to the conversation that you’re hearing. Trust takes many forms. I mean Uber has recently been criticized because they’ve been taking an extensive amount of personal data from handheld devices through their app. What are your thoughts on that?

 

Husayn: So all platforms because – you have to consider the number of users. And when it runs into the hundreds of thousands and millions, then just by statistics alone, you’re going to have those things that come up. And the media just picks out those specific things. But in many ways, Uber does do a good job of making sure that at least there are certain thresholds by which the individuals are coming on board. And they are increasingly doing more work and so are the other platforms too. So it is an area that everyone is looking to improve and everyone acknowledges is an area that needs to be improved. The great thing is that there are increasing enablers that are helping to make that happen.

 

Kevin: For our listeners out there who are thinking of starting a marketplace or just recently have started marketplaces, what advice would you give them around trust? What are some of the minimum kind of benchmarks or practices they need to be employing in their marketplace?

 

Husayn: So there are a few options. One option is naturally the feedback mechanism is one of the things that we sort of in the sharing economy have done very well from day 1. So getting that spot on is important. The other thing is there is the option to have or encourage interactions be it like a Skype call, enabling Skype calls between users or whatever means of communication, even meeting in person. This all helps with building that trust. And then we have to remember that trust is essentially needed in the absence of guarantees. So recognizing that nothing can be guaranteed in so far as how much you’re able to gather information on someone in order to be able to signal they’re trustworthy or not, that’s all you can be expected to do. It doesn’t guarantee that anything in the future won’t happen. So to have that contingency plan if things should go wrong and as much as possible you’re able to show to your user base that these are the steps you’ve taken, these are the checks you’ve carried out, in an ideal world, they’re minimizing the risk of that happening. So my recommendation would be is to have a great feedback system, enable your users to interact with one another as much as possible and naturally a background checked individual is far less likely to be a risky one than one that hasn’t been background checked.

 

Kevin: Great. So what are the big objectives that your company has for 2015?

 

Husayn: So global expansion is one. So we’re currently carrying out our checks in 28 countries. We want to grow that to be 35 countries by the end of the year. And the second side is continuing to build our technology. So we’re currently a team of 28 and we’re on boarding quite rapidly on a monthly basis around two individuals. And it’s to continue building the technology to make sure we’re at the cutting edge of being able to offer the fastest turnaround times and the best quality of information you could possibly hope for.

 

Kevin: So you recently went through obviously a successful funding round, what was that like?

 

Husayn: It was good. It was great because a lot of our customer base, they themselves in turn made a lot of investments. And this sort of different funds would be part of due diligence and other sort of means. They have kept coming across our name. So we’ve been in touch with them or they’ve been in touch with us. And we essentially found good relationships and we’re able to pick a deal that worked best for us in terms of a strategic fit. And we’re also quite lucky in that we invited other strategic angels to join us as part of the ground and other sort of co-founders and very reputable sharing economy based platforms as well as tech entrepreneurs and others to increasingly build our advisory board as well.

 

Kevin: Nice. So if our listeners wanted to learn more about you and Onfido, where can they go?

 

Husayn: So we have an active blog. So it’s onfido.com and there’s a blog section there that tells you everything about what we’re doing. We’re active on Twitter @onfido. We’re active on LinkedIn, Facebook and all the other means. We do a lot of events. So we’re sponsoring the FT Sharing Economy Summit and a whole host of other events too. So you’ll be able to catch us at one of these if you’re interested.

 

Kevin: Perfect. Well, thank you so much for your time today. We’ll have all your pertinent contact information below in the show notes and we wish you the best of luck in 2015.

 

Husayn: Terrific. Thank you very much.

 

Kevin: Thank you.

 

So that’s it for today’s show everybody. I’d like to thank Husayn from Onfido for joining us here today. They’re doing great stuff. If you want to learn more about Onfido, we’ve got all their information in the show notes. Go to www.near-me.com. Click on the blog and then go to the podcast listing. Also, if you like today’s show, we’d really appreciate it if you can go to iTunes and leave us a five-star review. It really helps us out. Also, make sure to subscribe while you’re there. Make it a great day. Goodbye.