TrustCloud gathers four layers of trust and safety data to certify service providers on peer-to-peer platforms. They offer the world’s first satisfaction guarantee for the sharing economy.

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Transcript:

Kevin: So, you’ve come up with the next Uber or the next Etsy and you want to power it. Certainly, you could go and spend $700,000 and develop a technology stack to power it. Or for a fraction of that cost, you could power it with Near Me. This episode of The Crowd is brought to you by Near Me.

Hi. Welcome to The Crowd, a podcast by Near Me. We’re talking about peer-to-peer marketplaces. We’re talking collaborative economy. 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.

Hi. I’m your host Kevin Cohen. I’m super excited about today’s interview. Today, I’ll be joined by Miles Spencer. Miles is the founder and CEO of TrustCloud. Miles, welcome to the show.

Miles: Hey. Great to be here.

Kevin: Thank you. Before we jump in to our discussion on the collaborative economy and TrustCloud, I’ve got some rapid fire questions for you. What book do you recommend most often?

Miles: Undoubtedly, it’s the 7 Habits of Highly Effective People by Stephen Covey.

Kevin: So, you’re a Covey fan. I like it.

Miles: Covey man.

Kevin: All right. What peer-to-peer marketplaces or on-demand services do you use personally?

Miles: Well, I really – I practice what I preach. So whether it’s Lyft and Uber and RelayRides for the rides, or Airbnb and HomeAway for staying but also on-demand babysitting platform, network. In our family, we use it quite a bit because I’ve got a 4-year-old and a 2-year-old. So, I try to use them all, not just the big brand names but experiment with the new and little ones that are making life a little bit easy on an on-demand basis.

Kevin: So, just to jump in to that a little further, you’re in New York City, correct?

Miles: I generally am in New York City but I spend a week or month out in San Francisco as well.

Kevin: Great. So, in New York City, there’s obviously a growing community of on-demand services. Can you give us the flavor of what’s going on in New York? I mean, we’re out in San Francisco so we see what’s going on here. And obviously, there are tons of new startups and a lot of the big boys. But New York is really jumping in head first. What can you say about that?

Miles: They certainly are. I guess, I’d say New York state of mind on some of that. So, babysitters happen to be and nannies happen to be one that comes to mind. So, a very dense population all piled into one island. We’ve lots of little kids running around that need supervision because their parents are busy. So, that seems to have been developed a little bit quicker. And of course, you read the headlines on our infamous Taxi & Limousine Commission and what they think of Uber and Lyft and the rest. And I’ll leave that for another story but that certainly grabs a lot of headlines. I think another one is the coworking and sharing spaces. It’s really beginning to develop in a lot of different models. I think they’re all good but not necessarily all on demand but I still lump them into what is now undeniably going to be called the sharing economy. It’s not the perfect nomenclature but the reality is it’s easier to spell.

Kevin: Totally. So, give us your back story. What did you do before you started TrustCloud?

Miles: Wow. So, I’m a baseball player from Pittsburg, Pennsylvania. But I realized I wasn’t going to make a living doing that. So I spent some time on Wall Street. It was my first job and realized that I definitely didn’t want to spend my time doing that. I was fortunate enough to be a principal on a venture capital fund during .com that was one of the best performers of that period and exited quite well with great timing but mostly that was luck. During that time, I also had the opportunity to run my first business with a real budget and 75 employees. And that was pretty interesting because I was suddenly sitting on the side of the table and actually had to execute and get things done which is quite different.

I thought about what I really wanted to do. And it was to found and cofound early stage businesses that are really attacking big problems and opportunities in the marketplace and usually solving them through technology in the most elegant way possible. And so, I’ve had the good fortune of founding or cofounding over a dozen of businesses in the last five or six years, all in mobile, social, big data platforms and consumer products. I partnered with some great entrepreneurs that kind of complete the skills that I don’t necessarily excel in. And we’ve created about 750 jobs in the last seven years and that’s probably the stat that I’m most proud of.

I’ve had the good fortune of also leading a not-for-profit foundation that’s now 15 years old. And that also had 750 volunteers. A little bit interesting when they’re volunteers is you can’t give them a raise and you can’t fire him but you still need everything done on the big event day. So, I think all of that goes towards thought leadership and actually leading people. And it probably goes back to your first question. Stephen Covey’s book 7 Habits has been great for me in terms of not just integrity and leadership but also what you can accomplish with the speed of trust. And that kind of ties in to TrustCloud.

Kevin: Wonderful. So, give our listeners here today an overview of TrustCloud.

Miles: So, TrustCloud is actually the 4-year-old startup. It’s original vision – I was originally an angel investor, co-founder – was to basically enable participants in the sharing economy to give some level of trust to the other side of the transaction. We were really kind of thinking Craigslist there which has some trust issues when it comes to the participants sometimes. And the original thought was, wouldn’t it be nice if we can do some things with people’s social profiles that allow them to create a score and present that when they’re having an exchange on Craigslist about buying a used item or a car rental, etcetera? And suffice to say, that actually the idea was great and way early.

Since that time, of course, Airbnb and Uber and Lyft and Angie’s List and the rest of them have disintermediated Craigslist and have become platforms in and of themselves with specialties in what they do. And so, a year ago, Dave McClure from 500 Startups and his team came to me and said hey, look, you’re early in the sharing economy. You created the score. It’s got some interesting IP behind it. Is there a way for you to extend that into something that really has some utility? And he challenged us to think about that. We came back to him in the 500 Group shortly thereafter and presented the following value proposition which is about a year old right now. And that is to take our proprietary algorithm that is scoring people and make it akin to a FICO score.

So, if you’re going to go get a mortgage, you need a score, right? And it’s going to form basically how expensive your mortgage is and whether you’re going to get one or not. So we take four layers of data and create our score. The sine qua non of trust is putting your money where your mouth is. So I’ll tell you a little bit more about the product later but the short of it is that TrustCloud uses this algorithm and these four layers of data to arrive at a score. As a provider in the sharing economy on any platform, if your score is high enough, we will issue a Satisfaction Guarantee against your work such that if anybody’s dissatisfied we’ll adjudicate that claim and make good on it. It’s very similar to your iPhone or iPad. I mean, if you lost it or broke it or had it stolen, et cetera, there are policies that allow you to fix or replace that for free.

But instead of a physical device, we really take the services from a sharing economy that are generated by those mobile devices and we are willing to guarantee the performance of those. This can be a house painter or a dog walker or a babysitter. You name it. The reality is the scoring systems that are out there today, four stars, five – everybody is 4.6 stars. The reality is yes, the job was done. I did arrive safely to the airport but the car smelled, the air conditioning didn’t work. Were you satisfied? So I think that, we think that there’s a huge gap. There is trust that allows the transaction to begin but then there’s satisfaction that truly closes the loop.

And satisfaction motivates the users to do the next transaction. If there isn’t satisfaction, it can significantly de-motivate not just with that brand but within that category or the sharing economy overall. So that is what TrustCloud is and has been for the last nine months. We’ve been working feverishly underneath the hood to make our API work for folks that want to put this into their platform. And we’re just starting to see the traction from that now.

Kevin: Great. So how was your PeerProtect product different than a traditional background check? Let’s get in to the weeds a little bit and find out why your TrustScore is better than what some of your competitors are doing out in the marketplace.

Miles: Yes. Boy, this is probably my favorite question. So our PeerProtect product actually is several layers that culminate in our score. And that score informs whether we will issue a guarantee. So the very first part of this is this score is something that we are willing to put our money behind. I don’t see any other background check company or identity check company or social check company or anybody with a score that’s willing to put their money where their mouth is. So talk about the one big USP is that we do four layers of verification.

We do an ID verification to make sure you are who you say you are. You are not a bot. We do background verification to make sure that your activities haven’t been hitting local police departments, courts, et cetera. I admit and acknowledge that both of those are done by many different companies out there. We then do a social check which basically looks at your social profiles that relate to our scoring mechanism and we have an algorithm that actually pulls that all in and scores. So there are three layers of data that – individually, there are companies that do each one of those things and a few of them that do a combination of those things. Our fourth layer is transaction data. From partners we’ve worked with already in the last year, we have over a billion dollars worth of transaction data that we’ve been able to analyze together with the other three elements of our score.

And that really, really makes us unique. We’ve certified over 50,000 service providers in the sharing economy based on those four layers of data. I don’t think anybody else has done that. But I think the most important thing of the certification and the score is TrustCloud will write a Satisfaction Guarantee against that provider, for that provider. We’ll allow him to market more effectively on his platform. We’ll allow him to win more business and allow his users to have a third party referee to adjudicate the claim if they’re not satisfied. So is PeerProtect different than your ordinary background check? Heck, yeah.

Kevin: Great. What was the influence behind coming up with a four-layer TrustScore? What was the magic moment were you said yes, we have to go that deep?

Miles: You know, being a baseball player as I mentioned, you can fool some of the people some of the time, all the people all the time gets really hard. So multiple social profiles, identity, real world background, transaction data on platforms that you’ve been active on, you know, I suppose you can gain that system. But wow, every time you add a layer, it gets harder and harder to do.

Kevin: Very much so. So as an early stage startup, what are some of the challenges you’ve faced at TrustCloud?

Miles: I think the biggest challenge that TrustCloud faced was just being so damn early. The idea had merit. And to be honest with you, the marketplace wasn’t there yet.

Kevin: Right.

Miles: Sharing economy had seven names that were being debated and no presidential candidate had mentioned what it was either positively or negatively. We were just so early. And because you’re early, you kind of have a hard time getting people’s attention. Luckily, it gave us a decent amount of time to quietly work on our algorithm. So we think that actually emerged as a pretty strong part of our IP. But the biggest challenge is sustaining yourself when you’re so damn early and then suddenly the marketplace starts to take off which is really what we’re seeing now.

Kevin: Right, right. So what are some of the early wins you’ve had at TrustCloud?

Miles: So you know, remember that the platform is – although the score has been around for quite some time, our API with all of the trust checks and the guarantee is just coming into the market now. So we’ll post this on our website shortly but as of today, we’ll add a babysitting company, dog walking company, home sharing company, locksmith company. And I’m going to go with those four today. We have a letter of intent with a home services business that would be a Q4 integration. It’s quite large. We want to be sure that we’re servicing medium-sized platforms until then which is really what our summer project is.

Kevin: So with such rapid growth plans and the fact that you went from, it sounds like you’re going from 0 to 100 pretty quickly, how are you dealing with that in terms of staff, in terms of funding? I mean, I saw on CrunchBase you guys did a small seed round a few years ago. What are your plans in terms of addressing this rapid growth?

Miles: Well, we’ve not kept our public disclosures up with what’s actually been going on in the capital front. So we’ve been in stealth mode in terms of our resources which we basically have the support of a handful of family offices that are deeply invested in the insurance business. And so that has been our capital base for the last couple of years and will be for the foreseeable future. It’s also a relatively profitable business when it begins to scale. And so the capital requirements aren’t as great as perhaps some of my prior businesses have been.

And from a staff standpoint again, we’re kind of managing to right size that. We’re in San Francisco now. It used to be in New York. The nice part about that is there are sharing platforms on every block and you see them when you’re going out for beers. But it’s great from a market awareness standpoint. I think we’re going to be very deliberate in terms of who and how many platforms we load on because we want to get this right. And our point of view is there is not anyone else that’s doing this today nor all that close. And so we’d much prefer to add platforms deliberately that really buy in to our value proposition and grow reasonable rapidly. But we’re not after hyperspeed growth.

Kevin: Right. And because you haven’t taken traditional venture capital at least from the menlo park standpoint, you don’t have the same hockey stick requirements that a lot of the early stage companies in San Francisco and in the peninsula as well.

Miles: Well, not yet. And I do love Sandhill and I think they add a lot of value at the right time and I think they could add value to us at some point but that is not the yardstick that we use to measure our success or our progress. And so they know who we are, they know where we are and how to get in touch. But in the meantime, we’re fine in terms of resources and very focused on what we want to accomplish. So I kind of feel like we’re in a very good place with a very good team and having fun executing.

Kevin: That’s great. And are there any plans to grow your team in the third and fourth quarters of this year?

Miles: Yeah. We’d probably make a couple -- well hey, I’m the big recruiter in the company. And so a head of product is certainly on our radar screen and some junior engineers which is so easy to hire in the Bay Area. So we’d like some people to work together with our technical lead. And I think that about sums it up.

Kevin: Great. So what’s on the horizon for TrustCloud for late 2015 and 2016?

Miles: Yeah. I think the answer there is to deliberately add additional platforms that appreciate our value proposition and continue to basically stand alone in terms of the combination of trust and satisfaction in the sharing economy, acknowledging that other people can do you background check or identity check or things like that but we do all four and we put our money where our mouth is. And in that case, we think we are a singularly unique solution for satisfaction in the sharing economy.

Kevin: Very good. So where can our listeners learn more about TrustCloud?

Miles: Well, no surprise, you can learn more about TrustCloud from trustcloud.com. Interestingly enough, if those listeners are platforms, we not only have a special page for them which is right on the front but we’ve been doing some very interesting research in satisfaction in the sharing economy and have one of the largest research studies in the sharing economy on satisfaction at the user level and satisfaction at the provider level. So we’ve gathered all of that data and we find that could be helpful to platforms as they’re devising these programs. And we published a summary of that data with the FTC last month when they had their sharing economy conference in Washington. But we have additional data that can be very interesting to platforms and especially providers to the extent that are listening to the program as well on how to really differentiate on this really important issue of trust and satisfaction in the sharing economy.

Kevin: Miles, the study that you’re talking about sounds really interesting. Where can our listeners go and get a copy of this, the study that you guys did?

Miles: Well, you certainly can go to our website and grab it off trustcloud.com on the platform link but you can also get it on SlideShare. Hopefully, you put that in the notes as well. It’s a very interesting drill down. And some of the points that I thought were interesting was – you know, I’m all about trust and satisfaction. In our survey, 18.4 percent of the people that responded were not satisfied with the service that was provided through their sharing platform or were completely dissatisfied. So basically, people are saying hey, look, I got some service but it wasn’t what I was expecting. They would want to call the manager of the hotel if they had stayed in one but they didn’t or the manager of the rental company but they didn’t because it’s a peer-to-peer transaction. And so they’re stuck and that’s 18.4 percent of the people were stuck.

Kevin: Yeah. That’s very significant. Well, we’ll make sure to put all that information in our show notes so everybody can download that report and check out the SlideShare about the study.

Miles: Sounds great.

Kevin: Miles, it’s certainly been a pleasure to connect with you today. It sounds like you guys are doing great stuff at TrustCloud. And for all of our listeners who are looking to have the next generation in trust verification, check out TrustCloud. They’re doing some really revolutionary stuff, stuff that no one else is doing. So you should check them out. Anyway, Miles, thanks for your time today. We wish you the best of luck and thank you.

Miles: Thanks, Kevin. I appreciate it.

Kevin: So that’s it for today’s show everybody. I’d like to thank Miles from TrustCloud for joining us here today. They’re doing great stuff so check them out. If you want to learn more about TrustCloud, we’ve got all of their information in the show notes at 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 go to iTunes and leave us a five-star review. It really helps us out. Also, make sure to subscribe while you’re there. Thank you and make it a great day.