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How to measure trust

Juan Cartagena: “The problem of building trust online is not a fad but it is fundamental.”

Traity CEO Juan Cartagena knows how to measure trust

by Rachel Botsman    4 August 2016  AFR

In 2011, Spanish-born Juan Cartagena was scammed buying a computer on Gumtree, the second-hand goods website.

He lost £250 in the fraudulent transaction. Around the same time, he was trying to get in contact with a girl who went to the same school as he did, on Facebook. But at the start, she wasn’t sure about meeting him in person. Cartagena even sent her his résumé to try to convince her he was a decent person in the hope of getting a date. Both experiences pointed to the same problem: building trust and proving that a person is trustworthy online is tricky and taxing.

Cartagena, a 34-year-old entrepreneur with a background in electrical engineering, realised this was a problem worth solving not just for himself but for other people. In 2012, with close friends Jose Fernandez and Borja Martin, he founded Traity, a reputation standard to help people prove their trustworthiness across the web. To date, the Mountain View-based start-up has raised more than $US4.7 million.

In the age of companies such as Airbnb, Uber and eBay that depend on the willingness of strangers to trust one another at a global scale, the idea behind Traity seems big and logical. But as Cartagena has discovered, getting people to value their online reputation is challenging because we still don’t quite get how it works or understand its value.

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Canadian ice hockey great Wayne Gretzky famously said, “I skate to where the puck is going to be, not where it has been.” It’s a metaphor that resonates with many visionary entrepreneurs. So how does Cartagena think Traity can crack the future of trust?

Why do you want to help solve the difficulties of proving you are trustworthy online?

The problem of building trust online is not a fad but it is fundamental. When people don’t trust each other, there are social and economic limitations to human transactions. And this is a big problem to solve because we now operate in very large communities, open networks, where we don’t know the buyers and sellers. We are transacting with strangers all the time and it requires a new level of understanding and trust between people. Because of my engineering background, I think about economic inefficiencies and how to solve them in ways that generate real economic value. So I figured I could build a trust engine that would help those transactions happen more fluently and eliminate barriers to trade.

What is Traity trying to achieve?

Traditional systems of proving whether people are worth trusting are not particularly effective or empowering. They diminish and devalue people when they go through the automated screening processes to get a credit score. This score then seriously affects how easy or difficult it is for people to make all kinds of transactions, from securing a loan to a rental agreement to getting a job.

I want to build a world where more people can trust one another and where we are not solely judged by traditional systems of assessment. There will always be lack of trust between people, but if we can make a dent into how people can enter into the economic graph, then it would be very significant.

How do Traity reputation standards work?

To help people trust one another online, we give people a reputation passport that consists of different dimensions. The first is to do with identification, which is proving you are who you say you are. Next, it has to do with behaviours, which shows interests you may have common with another person. For example, you both play tennis or love cats. The final dimension is about transaction data, which means analysing people’s ratings, reviews, history and testimonials to see how they have behaved in past. These components create a personal reputation standard you can use across the web that can empower people to achieve things or access opportunities that may not have otherwise been possible.

Traity recently received a patent for a “network of trust”. How will it work?

The patent basically says that we are like a social network. If you trust somebody on the Traity network, you use the “trust” button in the same way on Twitter you have the “follow” button. But if that person misbehaves in some way, that will have implications for you; it will lower your reputation.

Your reputation does not increase if the person you follow behaves well. It is designed this way to create incentives to trust only people you really believe are trustworthy and not have a network of a thousand followers. We expect people to have networks of three to five people who really trust each other and to be able to use the web of trust in different contexts.

You are working on future-oriented products. How were you able to convince investors to trust your vision?

At our first investor meeting, I said, “Look, Minority Report is going to happen. The key question is, who is going to do it? It may be Google, it may be Facebook, or it may be a small start-up from Spain.” They were very impressed by that because I was thinking 15 years ahead. When I talk about Traity, I tell stories to get people to empathise. I usually put people in the framework of a future that’s five to 10 years’ away, full of micro-entrepreneurs and micro-franchises of companies powered by the likes of Etsy, Uber or Airbnb. I tell investors that these companies can make a significant impact on the GDP and they all need better systems of trust.

What makes the founders of Traity a good team?

I met Jose, one of my co-founders, when we were eight years old in school. Jose completed his PhD in machine learning and I went on to get an MBA. I met Borja, a phenomenal programmer, when we were 18. We have complementary skills: Jose brings an academic point of view; Borja is the pragmatic executor who can design and deliver the actual products himself; and I am the hustler and driver of the long-term vision.

What are the challenges of making Traity a successful business?

When we started, we thought that people would want to see each other’s reputation and profiles from Traity, and maybe pay a few cents to see, say, your profile. That was not true. People aren’t used to paying for what they already think they know. That’s why we have shifted our focus on how trust profiles and technology can be leveraged to transform the delivery of products people already buy, like house insurance or income protection.

The insurance industry will fundamentally have to change from basing products on assets to focusing on insuring personal behaviours. Reputation data can help large insurance companies give more efficient pricing to people who deserve it.

What keeps you and your team motivated?

Two weeks ago, I got the team together for a meeting. I asked everyone to complete the sentence “Traity is important because…” When they finished, I said, “Take whatever you have written and write, “And that is important because…” It allowed us to focus on the inner purpose of what we’re trying to do. It was really exciting to see what everyone came up with because most people had written something to do with people deserving a fairer world. Thinking of that refuels me and I was reminded that I’m starting something that could really improve the status quo.

You are asking people to trust a start-up with their data. Why should people trust Traity?

We transparently explain what we do and how we do it, so people have confidence in how we’re using and treating data. As a company, we discuss ethics in terms of giving people full control over their data and giving them the right to eliminate an infraction on a reputation after a certain period of time. Our competitive advantage is not to tightly control data, but to empower people to use it better. There are tangible things we are doing to prove we are the right people to be trusted with sensitive data. For instance, we are fingerprinting everything on the blockchain, the public ledger technology that enables people to verify something actually happened. This means in the unfortunate case that Traity goes bust or a customer decides they don’t want to be a Traity customer any more, they can still have full control over their data and take it with them.

What will Traity never do with people’s data?

Large companies have made us offers such as: “We’ll pay you $50,000 if you can analyse our users in X way.” I’m very happy we’ve said no to those offers even though we don’t have any revenue yet. We don’t want to be a typical data analysis company. Traity is a company that focuses on giving people the proactive ability to decide how they want to use their reputation. To give them the same control as they would over a university [report] card; they decide where, when and who they’ll show their card to.

Research Mia de Villa

Original article here

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About steveblizard

Steve Blizard commenced his financial planning career in 1988 from a background of life insurance broking, a field in which he still works. He is a member of the Financial Planning Association and the Responsible Investment Association. His experience ranges from administration of Superannuation to advice regarding insurance, retirement, remuneration and investment planning. Steve is an accredited Remuneration Consultant, specialising in salary packaging. He is a columnist for the Swan Magazine and the WA Business News

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