This week, I’m back at OWI HQ in NYC after a two-week trip to Japan. While not a practical tool that can be deployed with frequency, immersion in a foreign culture is one of my favorite ways to gain perspective on the challenges facing us here in the United States. Simultaneously hyper-modern and intensely steeped in tradition, Japan is a country quite unlike any other I have been fortunate to visit.
Perhaps most surprising to me as a visiting American was the power with which personal reputation still underpins processes that technology has replaced in cities like New York. For a Tokyo local making a dinner reservation months in advance, no credit card deposit will be taken, nor email reminders sent. Your word that you will arrive on time, at the date specified, is all that is required. The idea of making a reservation and then no-showing, to the detriment of one’s personal reputation, is nearly unfathomable.
Sadly, this has closed some doors for tourists. Americans and others struggled to understand the sanctity of a reservation held without a credit card nor the threat of punitive monetary damages for no-showing. Access to the highest tier of Tokyo sushi counters is now restricted to guests who can provide third-party attestations to their character, courtesy of a regular patron willing to vouch for them.
The degree to which this system is able to function in the absence of any technological underpinning was fascinating, frustrating, and also illuminating. As an American who is fortunate enough to not face financial or identity inclusion challenges in his daily life, it is not often that I’m confronted with barriers to access the services I desire. Yet, here I was in Tokyo, unable to leverage any of the reputations that I have (*fingers-crossed*) established as a polite and timely diner at the restaurants I frequent in New York City.
While Tokyo’s ad-hoc trust network for screening diners is quite adept at eliminating bad actors, it’s only able to do so at the cost of excluding worthy Japanese and foreign diners lacking the proper connections to prove their trust score. While exclusive enclaves are seemingly quite able to fill their seats each night with regulars and personally-vetted diners, any attempts at growing a larger customer base would soon strain the limitations of such an exclusionary system.
From what we’ve seen in 2019 the companies attracting the market’s interest are those that can seemingly deliver the best of both worlds: a level of trust provided by “word of mouth only” at the scale required to be inclusive. At the heart of IDology’s $300M sale to GBG is the ability to accurately risk score transactions for the widest swath of consumers, while leveraging network intelligence. And just this week Drawbridge was acquired by LinkedIn based on the power of their identity graph to bring 97%+ accuracy at a scale of billions.
Expect the proverbial “hot stove” to continue as institutional investment money finally made aware of the identity sector seeks to buy into the game. With several top-tier names in the space reportedly rejecting buy-out offers more deals are on the horizon, as attention shifts to earlier stage ventures more amenable to acquisition.
I joined One World Identity in 2016 on the belief that the identity sector was the critically under-appreciated linchpin of the growing digital economy. While many (present company included) have proclaimed each year since then to be a breakthrough year for identity, this year it finally feels like the walls may actually be coming down.