In this episode of Executive Connect, Melissa Aarskaug sits down with technologist and system architect Jeff Mahony to talk about digital identity, interoperability, security, regulation, and why so many large-scale systems fail before they ever deliver real value. Jeff explains why trust has to come first, how weak identity systems create corruption and exclusion, and why being first to market often leads to costly long-term mistakes. He also breaks down the real-world barriers to adoption, from human behavior and bad incentives to regulatory lag and poor system design, and shares what leaders need to think about before they build anything meant to operate at scale.

This episode is for leaders, operators, technologists, and policy-minded builders who want to understand what it really takes to create secure, interoperable systems that people will actually use. Press play before you mistake new technology for real trust.

Chapters:
(1:58) Why digital identity has to start with trust
(4:46) Where identity systems are already failing
(6:37) Why first to market creates long-term problems
(10:27) The questions leaders should ask before selecting technology
(14:59) Why interoperability is more than a technical issue
(19:04) How regulation can help or hurt innovation
(30:57) Why human behavior is such a major barrier
(37:17) Who is accountable when systems fail
(41:32) What Web3 gets right and wrong
(47:33) Jeff’s biggest takeaway for leaders

Jeff

(0:00) Talent is equally distributed between ethnic groups, gender, socioeconomic standing, where you live on the planet, it’s equally distributed. (0:10) Opportunity is not. (0:12) Opportunity is something that true leadership tries to produce for the people around them and for their consumers.

(0:20) So if you’re actually building a technology or solution that addresses the opportunity imbalance, now you have a winner. (0:28) People will come to it, they’ll flock to that.

Melissa

(0:31) Every few years, we’re told we finally solved, not sold, solved digital identity, new technology, new standards, new promises, and yet trust still is fragile. (0:44) Systems don’t talk to each other, and when things fail, it’s not abstract. (0:49) Real people lose access to money, services, and opportunity.

(0:54) Today’s guest has spent decades building the systems that actually operate at scale, not prototypes, not theory, systems that move money, support governments, and handle real-world complexity. (1:08) Jeff Mahoney is a technologist and system architect with over 30 years of experience at the intersection of financial services and technology. (1:19) He’s the co-founder of RYT and the architect behind its patent, Proof of Majority Consensus Mechanism, now being piloted at the national state level.

(1:34) This conversation isn’t about hype, it’s about digital identity, what’s real, what’s not, and why leadership decisions, not technology alone, determine whether it succeeds or fails. (1:48) Welcome, Jeff.

Jeff

(1:50) Thank you for having me, Melissa. (1:51) What a pleasure.

Melissa

(1:53) Yes, excited to chat with you. (1:56) Let’s talk about identity. (1:58) I love this topic because a lot of times people jump immediately to technology or IT departments.

(2:06) You see it a bit differently. (2:08) What does this start with? (2:11) Why do you see it starting with trust first?

Jeff

(2:14) If systems aren’t trusted, then the people don’t get the services, they don’t embed themselves in those services, they don’t begin to utilize those services, and those services ultimately die on the vine. (2:27) We have a lot of taxpayer money in any particular country going into those types of services, whether it’s a socialized medicine or a regular medicine deployment, whether it’s a capitalistic society or a society with a middle class or one without a middle class, it’s all the same ultimately. (2:45) If who is using the system doesn’t trust the system, they won’t use the system.

(2:50) They’ll find another way around it. (2:53) Usually, that leads to corruption. (2:55) That leads to a certain portion of a society getting all the benefit because they happen to have the capital or whatever is required to actually, quote, grease the wheels.

(3:06) You need to have a system built from the ground up that has the trust built into it. (3:12) It’s both sides, Melissa. (3:13) It’s not just the consumer of those services.

(3:16) It has to be the provider of those services. (3:19) They have to have a trust that the systems they’re building on are compliant, that they’re going to grow into the future, that they’re going to meet regulatory requirements that are evolving. (3:32) They don’t know about today.

(3:34) They’re going to have to deal with cross-border issues, issues where there might be different borders supporting different compliance regulations. (3:44) How are you going to manage a world landscape? (3:48) We’re working in a ubiquitous environment here.

(3:51) Even if you’re at the lowest echelons of the socioeconomic strata, you’re still operating on a global basis. (3:58) Think about all the folks that are in different countries who are working odd jobs to send money home. (4:05) They’re now a global citizen.

(4:08) They’re working in two regulatory environments, one where their family lives and one where they’re currently operating. (4:14) Anybody who’s providing services to those two groups now is working in two regulatory environments. (4:21) There’s both sides of that equation, if that makes sense, Melissa.

Melissa

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(4:37) Don’t just watch, act. (4:39) No, it makes perfect sense. (4:40) Where have we already seen failures in identity systems today?

Jeff

(4:46) Oh, you see it all over the place. (4:48) Let’s take the United States Social Security system. (4:53) It’s blatant.

(4:56) I think last reports, we had 40 or 50 people that were over 300 years old that were receiving benefits. (5:03) It’s embarrassing to the country, but it’s certainly a real part of any societal deployment at a governmental level. (5:12) It’s bound to have challenges that will create an environment like the one that we just saw with the Social Security system.

(5:20) You see it in places like Latin America, where people can get a degree without actually going through a university. (5:29) They buy the degree and they use that degree to become a real estate professional, or in some cases in Costa Rica, they’re policemen. (5:38) These kinds of things happen all over the place.

(5:43) Identity in a real format, something validatable from beginning to end would have solved that. (5:51) Many countries have these problems all over. (5:54) Corruption comes in many, many forms, but often it’s because somebody’s faking an identity.

Melissa

(6:01) Yeah, I agree. (6:02) I think there’s a lot of that in my industry in gaming and gambling. (6:07) We do pretty good with it, but occasionally they get it wrong.

(6:12) Let’s talk about the leadership decisions at the top with some of this stuff. (6:19) As we innovate, before anything is organized or built, leaders are making decisions to really decide how things are going to be built, what’s the outcome, what are we hoping that this tool will do. (6:32) Where are we getting it wrong from the beginning inception of a product?

Jeff

(6:37) First to market is always the goal. (6:40) First to market is a terrible goal. (6:43) First to market doesn’t actually create a valuable product.

(6:46) It just means that you’re the first one to come formed well enough to actually meet the beginning demands of a society, a society who hasn’t had time to test your product, a society who hasn’t had time to break your product. (7:01) You talk about being a recovering addict from perfection. (7:06) Perfection is something that gets in the way of many products being deployed.

(7:11) It does, but the opposite is deploying too quick because you want to be first to market. (7:15) And so we need to be creating value. (7:20) And even if you’re second to market, are you creating true value?

(7:24) Money will come. (7:26) And first to market is just a grab for money. (7:29) And so if you’re building your business to be first to market so that you can grab money, you will ultimately fail.

(7:34) If you don’t create value along the way, that is filling a true problem for the audience that you’re trying to serve, you’re going to have some challenges. (7:45) The other that I’ve noticed as we’ve gone through my little life here is we’re looking for behavior changes. (7:52) You can’t change people’s behavior.

(7:54) It costs too much. (7:55) They will evolve. (7:57) They do, and their behavior changes.

(7:58) But it isn’t you that’s changing it. (8:01) So if you’re developing a product and introducing it into the market that requires somebody to change their behavior to use it, you’re most likely going to fail. (8:09) People are evolving their behaviors.

(8:12) And so if you’re just at the slight edge of that evolution and you’re there waiting for them with your product, that’s something else. (8:20) But if you’re asking someone to completely change their behavior, you’re not going to succeed. (8:26) Wallets are an example of this.

(8:28) When you look at the cryptocurrency pundits and those folks that are leveraging blockchain and some of the other types of solutions that have been around for let’s call it a decade, they’re used to a certain nomenclature. (8:40) They’re used to a certain way of working with the system. (8:43) They’re used to, I got to jump from here to this, and then I got to move from that to that, and then over to here, but it all works and I understand it.

(8:51) Great. (8:52) There’s eight billion other people who don’t get that. (8:55) So now you’re trying to introduce a behavioral change.

(8:58) We call it a wallet. (8:59) Everybody has one in their pocket or their purse, but it’s not the same. (9:04) And so you’re actually asking for a behavioral change and it’s going to be difficult to get that into the parts of society that aren’t pundits, if you will, of cryptocurrency and blockchain already.

(9:15) So what do I do with the real world circumstances? (9:19) And then the last piece, and I can go on about this, is you’re not including the major players in the edges, right? (9:27) So what are the edges?

(9:28) Edges are where you get your services, whether it’s a store or a bank or a utility. (9:37) Somewhere in there, they’re the point that’s delivering the service to you. (9:41) They’re the edge point.

(9:42) They’re the part that you interface with as a consumer. (9:45) If you’re building a solution at a governmental level, whether it’s a digital identification system or anything else that doesn’t cooperate with the edges that society’s already using, you’ve made another mistake. (9:59) And those are some of the big pieces, Melissa.

Melissa

(10:02) Yeah. (10:02) No, I think it’s very short-sighted, right? (10:05) I think a lot of times being the first to market, it may be a short-term win, but you’re really creating some long-term risks by just kind of getting there as fast as you can.

(10:17) So talk to me a little bit about what questions should be asked before technology is selected and we move forward with the development.

Jeff

(10:27) Security. (10:28) Are you developing something with security first or is it going to be an add-on? (10:32) Are you developing something that can evolve with regulation or is it an add-on?

(10:37) When we talk about the blockchain space, are you developing in layer one or are you the layer two that fixed the layer one that was broken, right? (10:45) What is the reason that you’re actually building this system? (10:48) And then are you actually accommodating what will be the long-range requirements of that?

(10:54) It’s more costly. (10:55) It takes more time. (10:56) It takes more engineering skill to build these types of pieces into your original infrastructure.

(11:02) Security is not cheap. (11:04) Security slows down systems. (11:06) There are trade-offs for it.

(11:07) You’re going to have to actually manage that. (11:09) When you’re looking at regulatory environments, cross-border, as we talked about before, can you actually manage conflicting configurations of this regulatory environment? (11:21) What are you going to do when you’re operating in a ubiquitous environment across borders?

(11:25) It sounds really easy. (11:27) Oh, we’ll just do a cross-border payment system or whatever it is that you’re trying to do. (11:31) No, you haven’t accommodated the regulatory environment.

(11:35) So if you’re just adding those pieces on or if you’re using the latest and greatest buzzwords, I hear AI agents and all kinds of things that are sort of being toppled into some of these governmental deployments, et cetera, all you’re doing is scaring off the governmental agency. (11:52) They don’t understand this. (11:54) They know eventually they’re going to get bit by security.

(11:57) They’re going to eventually get bit by a regulatory environment, whether it’s their own government or the UN or the IFC imposing some requirement on them that they can’t meet because they used your technology. (12:08) They’re going to abandon you really fast. (12:10) So when we’re having conversations at the governmental level, it’s addressing things like, oh, you just got $10 billion from the monetary fund.

(12:19) What do you have to report to them? (12:21) What kind of transparency do they want? (12:23) Well, we can do that.

(12:25) Can the next operator do that or the next technology do that? (12:28) No, they cannot. (12:29) So these are things that governments in particular are getting very savvy at evaluating.

(12:36) They’re like, how is it that you’re going to help me with these long range problems that I’m going to have? (12:41) I’m going to be the one that gets bit politically if this doesn’t work out properly. (12:46) So what is it that you’re doing?

(12:47) So often, Melissa, those mistakes are not the core of what you’re building, but it’s the ancillary support infrastructure that you just didn’t pay attention to. (12:58) And it comes back and bites you.

Melissa

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(13:39) I think it’s a gamble that a lot of companies make, right? (13:42) They’re like, we’ll get to the security after we get everything out and we can clean up the security and we clean up the source code and we’ll figure it out later. (13:49) And I absolutely agree with you.

(13:50) I see this over and over. (13:51) People gamble with it and they say, okay, well, it’s going to cost me X hundreds of thousands of dollars for security. (14:01) A regulatory fine is half of that.

(14:03) I’ll take the fine and save myself the money. (14:08) And so I think a lot of times to your point, it’s been a gamble with people saying, what’s the worst? (14:15) They’re not going to take my product.

(14:16) They’re going to slap my hand with a fine and fines less. (14:19) So I’m money ahead. (14:20) And so, and to be fair, security at the front end takes more work, right?

(14:26) And so it’s also kind of what you were saying at the beginning, getting the product out first to market. (14:35) So it’s tricky, but I agree. (14:37) I think on the backend, we talk identity and people’s PII.

(14:42) It’s something that you got to get right at the beginning. (14:45) So let’s talk about, you know, interoperability as a mindset. (14:50) And you’ve said that it’s not just technical, it’s a leadership mindset.

(14:55) Talk to me a little bit about what that means and what you think about interoperability.

Jeff

(14:59) Interoperability means you have to be able to interoperate with what is the existing system. (15:04) So I talked about the edge systems that were out there. (15:08) The edge systems require some kind of interface with you.

(15:14) They happen to also be your single point of entry for security issues. (15:20) So anytime you’re looking at bridges or APIs or something between two blockchains or something between two pieces of software, you’re going to have a potential hole for hackers to exploit. (15:34) And so coming back to security as a first mindset, you have to deal with interoperability and the interoperability requires that you have a very good understanding of what’s on the other side of that coin.

(15:47) What’s the edge that you’re working with? (15:50) And if that edge is full of holes, you’re going to have some serious challenges. (15:54) So there are ways to circumvent that.

(15:57) There are ways to insulate yourself from those edge holes. (16:01) There are ways to shore up those holes, right? (16:04) Web 2, Web 3 security protocols can be employed.

(16:07) There’s plenty of companies out there that are very good at doing that, that will take an existing protocol and harden it. (16:14) But your system can’t be one of those things that they’re hardening. (16:18) It has to assume that the groups, technologies, people that it interoperates with are nefarious.

(16:29) And it has to make those assumptions and then has to work with an understanding of what is a good actor versus a bad actor and make accommodations for that. (16:38) And that’s where you need security first. (16:41) Now, blockchains are really interesting in that they have at least an academic understanding of attack vector management.

(16:49) Now, if you can build that in a very serious way into something that was built with security first, unlike the Bitcoins and Ethereums that were more academic exercises, then you have a leg up. (16:59) So interoperability for me is not just with the edge technologies, but it also includes people, right? (17:07) There’s social pieces to this, right?

(17:10) How do I circumvent this system by tricking somebody who’s involved in it? (17:15) How do I trick somebody into helping me get access to this? (17:20) Where are my vulnerabilities when it comes to social engineering?

(17:25) There’s plenty, right? (17:27) People are people. (17:28) We make mistakes.

(17:30) We have empathy, at least I hope most of us have empathy. (17:33) Right? (17:34) It’s easy to exploit that empathy, right?

(17:37) You have people who are sophisticated technology users and people who are not. (17:43) Those unsophisticated users are easy to exploit. (17:46) So you can’t allow those things to happen.

(17:49) And it sounds like a difficult problem, but there are ways to build that security into your original product to circumvent that. (17:56) So it’s all pieces that really come into play, Melissa, and it’s a tough one, but this is why it’s not an add-on. (18:04) It can’t be an add-on.

(18:05) You could never deal with it, whether on a security basis or even an interoperability basis. (18:10) I have to think. (18:12) I am building technology that will interoperate with edge pieces that I do not control.

(18:18) What will I do? (18:19) Period.

Melissa

(18:20) Well, I think there is a world where you can design systems that coexist versus compete. (18:28) I think there is this beautiful world, but so many systems, in my experience, fail to integrate. (18:37) And it doesn’t matter what it is or what industry it is.

(18:43) You buy a million-dollar piece of equipment and you need to integrate it with 50 things. (18:48) It takes another 10 times the money to integrate it, and you spend a million dollars already. (18:54) So talk to me a little bit about why is it so difficult for systems to integrate, and how can we play in a world where everybody can just play nice in the sandbox?

Jeff

(19:04) Well, that’s where regulatory environment comes in, oddly enough. (19:07) I know it sounds like it’s not related, but it’s hyper-related. (19:11) So regulatory environments spawn typically because a problem was seen or experienced.

(19:19) Then what they do in the regulatory environment is they try to dictate the process instead of the outcome. (19:30) And if a regulatory environment dictated an outcome instead of a process, and let me give you an example of that. (19:38) I would like for there to be a standard in which all protocols can intercommunicate with each other.

(19:44) It would be a wonderful outcome for a regulatory environment to impose. (19:50) Instead, they say, let me tell you how you should do wireless communication. (19:56) Here’s the bandwidth that you get to use, and here’s the maximum speed that you can have because we don’t want it penetrating walls or doing whatever it is that is our major concern at that moment that no one really knows the riders of these regulations actually what they care about.

(20:13) But if they instead imposed an outcome, then those really brilliant people that make all these solutions out there, even the first to market people are usually pretty smart people. (20:27) They might be unseasoned, they might be seasoned, who knows. (20:30) But if you said this has to interoperate with these other protocols, they could do it.

(20:37) They could actually make that happen. (20:39) They’re smart enough to make that happen, but there’s no incentive for them in a capitalistic society or any other society. (20:46) They want to be the leader.

(20:47) They want to be the only one. (20:48) They want to have the captive market. (20:50) They want to captivate that addressable market, and they want it to be their own, and they don’t want to share that market.

(20:57) But if they were to share that market because regulations required a specific outcome, they would actually see more benefit. (21:05) There’d be faster adoption. (21:07) There’d be more prolific adoption.

(21:09) There’d be more household usage. (21:11) There’d be more value to them and to the consumers. (21:14) And so I believe that actually starts with the right regulatory environment, as odd as that sounds.

Melissa

(21:20) I think it’s true. (21:21) Now, the only challenge with the regulatory environment is the speed at which regulation is approved, and I think that’s the other side of it, is regulation’s great. (21:36) When we’re moving regulations along at the speed that technology is changing, we got to pick up the pace.

(21:43) We’re light years ahead here. (21:45) You do.

Jeff

(21:46) I’m sorry.

Melissa

(21:47) No, no. (21:47) Go ahead. (21:48) Go ahead.

Jeff

(21:48) The way that you do that is you include those operators out there that have already proven themselves, not the lobbyists, but the operators that already have some technology out there. (21:59) You create some kind of forum or environment in which you can get a real understanding of what’s happening on the ground, that you can really focus on the evolving technology and where it’s going. (22:12) Regulatory environments are slow.

(22:14) Most of the time, they’re hindering. (22:17) They actually stop evolution of technologies. (22:21) I think there’s some purpose in that.

(22:23) You’d like to slow certain technologies. (22:26) I mean, let’s assume that AI just went rampant. (22:29) Okay.

(22:30) I think everybody can agree that’d be a little scary. (22:32) So let’s slow it down a little bit and get some proper regulation in it. (22:37) Okay.

(22:38) But other verticals, they don’t need to be slowed down. (22:41) They need regulatory environments to actually go and speak to those folks that are on the ground. (22:48) What is these things that we’re doing?

(22:50) How do we actually impose this? (22:51) Now, what regulatory environments typically do is they do like the SEC in the United States does, or like the SEC in any other country, is they wait for a problem. (23:01) Then they come in and they shut everybody down.

(23:04) And they go draconian on everybody. (23:06) And then they say, okay, prove to us why you are good for the consumers. (23:12) Now we’re a year and a half down the road, and everybody’s been stifled for a little while.

(23:17) And then we bring it back, right? (23:18) This is exactly what the SEC did in the United States. (23:21) They left Bitcoin and Ethereum running, but they closed down every other blockchain technology and everything else that was going on so that they could, quote, explore.

(23:31) Okay. (23:32) Great. (23:32) You just killed an industry for a year and a half.

(23:35) Nice job. (23:36) All right. (23:36) What would have happened if you’d let that go, but you included them in some of the regulatory builds that you were coming up with?

(23:43) Instead of taking this draconian, I’m shutting it all down. (23:47) I don’t trust you. (23:48) We’re going to lock and key everything until we think you’re ready.

(23:52) Okay. (23:53) Well, let me ask it a different way. (23:55) Does anybody believe that the SEC was populated with people who could actually evaluate a blockchain technology and its use in the industry?

(24:05) No. (24:06) Okay. (24:06) These are financial experts.

(24:08) They’re very good at their job. (24:10) Not one of them, what I say, could have evaluated, but they thought they could, and they shut down the industry for a while to do that. (24:18) And we see that all over the place, whether it’s in Great Britain, Europe, the European Union, you see these things going on.

(24:24) That has to stop. (24:25) You have to let the industry evolve. (24:28) You have to include the subject matter experts.

(24:30) You have to actually hear and understand what it is that they’re saying and figure out what the value points are for both the consumer and the industry. (24:40) There’s no reason for an industry to grow up services, consumer set and get no value in return. (24:48) They won’t do it.

(24:49) So figure out how both sides of the coin get value. (24:54) So speeding up the regulatory environments, understanding, and then thus it’s regulation building can only come by including the subject matter experts in it and not just the ones with billions to lobby.

Melissa

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(25:50) Just visit www.summitven.com forward slash executive connect. (26:00) Yeah, I like it. (26:01) I think it’s interesting in my industry and gambling and gaming.

(26:05) One of the most regulated industries in the world. (26:10) You know, I, during the pandemic, I would say, I would have said to you, we are way behind regulations. (26:16) And now I would say we, we have caught up and the regulators now understand very clearly on what they need to do.

(26:24) And now they’re, you know, talking about regulations with AI and other, other things, but to your point, regulation is different. (26:32) Gambling from one state to another is different. (26:34) And it’s different from the U S to Europe, to Macau.

(26:39) And so security compliance and regulations, it makes it difficult because gambling is not just one industry you’re talking about, you know, hospitality and banking and cryptocurrency and all the other things. (26:53) So it’s one of the trickier ones to, to regulate. (26:58) I would say that gaming is a really fun place to be right now as technology advances.

Jeff

(27:05) I like gaming. (27:06) I think gaming is what I affectionately call a supportive vertical. (27:12) From gaming comes so many other verticals that are a benefit to society.

(27:18) And it’s, I understand the drawbacks. (27:22) I do understand how some people might get themselves in trouble in that environment, but most people are prudent. (27:28) Most people are having an enjoyable time and most people are using this.

(27:32) Any vertical is going to have, if you will, bad actors, however, whatever we want to call them. (27:39) But the proliferation of value from the gaming industry is massive. (27:44) I mean, there’s whole cities that exist because of this, right?

(27:48) There’s whole industries, right? (27:50) There’s millions of people who are employed as an ancillary part of the gambling industry. (27:56) What makes gambling secure is a whole nother question, right?

(28:01) And that’s where you, I’m sure, plays very strongly. (28:05) And we’re trying to help that with blockchain technologies is, what is the place where I can get the source of truth, right? (28:14) So like the banking industry, I have a small story for you.

(28:19) I have a friend, a female friend, she pencils out her monthly bank statement to the pen, wants to balance it, just her idea of perfection. (28:33) One month, she was missing $67 and someone said, she came to me and she says, what do I do? (28:40) I said, good luck calling your bank and convincing them that they owe you 67 bucks.

(28:49) And I said, they’re the source of truth. (28:52) You’re not. (28:53) But if this were on a blockchain, there’d be 10,000 people that you could go, hey guys, help me back me up.

(28:58) Did they just take 67 bucks from me? (29:01) And there’d be 10,000 people that go, yeah, you did. (29:05) Now where’s her money, right?

(29:07) And there’s value in that, in spreading out, if you will, that single source of truth into something that’s understandable by tens of thousands, millions, people, billions. (29:21) So you’ve opened the conversation with trust. (29:24) That’s where trust is, right?

(29:26) Is where can I actually see what really happened? (29:30) Gambling has the same place, right? (29:33) So some end user comes to the table and says, you stole it.

(29:36) No, I didn’t. (29:37) And here’s 10,000 people that can prove that I didn’t take your money. (29:40) You lost it, right?

(29:42) Whatever that might be. (29:43) So it works both sides. (29:45) And this is the point that I’ve been trying to make in many of my conversations of late is trust is two-sided.

(29:51) I need to trust that that single source is actually accurate and I need people to back me up. (29:59) Well, the other side comes. (30:01) What about when the bank says, yeah, I’m really sorry that you’ve been penciling that out every month, but you did it wrong this month.

(30:06) And here’s a bunch of people that will show you. (30:09) Yeah. (30:10) And for me, I’m an old jaded man and I look at the lawsuits and all the things that are so frivolous out there.

(30:18) And I’m like, you’re wasting so much taxpayer money and time just messing around with things that you know are a lie. (30:27) Can we just check this really fast and just get rid of that lawsuit before it even comes to something that costs taxpayers so much money? (30:34) That’s what I’d like to see is an environment that’s ripples through from beginning.

(30:38) I should say from top to bottom, bottom to top, that is just void of that sort of black box. (30:46) I think that’s your opening statement on trust. (30:56) Get rid of the black box.

Melissa

(30:57) So let’s talk about behavior. (30:59) That’s a fun thing to talk about. (31:01) Behavior is a real barrier.

(31:03) And a lot, I think back to when I was studying civil engineering, I had a real wake up call when I’m like, oh, well, I can build this. (31:12) And people laughed at me. (31:13) They’re like, you’re putting that house on the side of a mountain.

(31:15) You can’t just go build it. (31:17) So it’s a funny point to me because I think a lot of things are designed and built on paper. (31:26) But in the real world, you got to do some work on that mountain to build that house.

(31:31) So why is behavior such a challenge? (31:35) And maybe how do people underestimate the human behavior?

Jeff

(31:40) Behavior is locked in. (31:42) Behavior is not rational. (31:43) Behavior is typically emotional.

(31:47) And it’s an interesting thing about human beings. (31:50) So my degree is in basically AI. (31:52) We used to call it cognitive science.

(31:54) Now it’s AI. (31:56) And one of the first tenants I learned is the human mind needs to be congruent. (32:01) It needs to be congruent between its beliefs and its actions.

(32:06) And this is going to sound very, very odd to you, Melissa. (32:09) I don’t think anybody’s probably ever discussed this with you. (32:14) People do not act based on their beliefs.

(32:17) They act based on their emotions. (32:20) Then they can’t unwind that act because we don’t have time machines. (32:25) Maybe you do.

(32:25) I don’t have one. (32:26) I don’t know anybody else has one. (32:27) So we can’t fix the action.

(32:30) So now we’re incongruent. (32:31) Our action doesn’t meet our belief. (32:34) So we only have one choice, and that’s to change our belief.

(32:39) So it’s very difficult for us to operate in a logical environment because we’re constantly incongruent, and we’re constantly trying to fix that incongruency and resolve our belief versus our action. (32:56) Nothing can dissuade that new belief because anything that’s contrary to that action makes us incongruent. (33:07) So there isn’t enough logic that you can introduce to a person to get them to change that belief once they’ve re-established it based on a previous action, if that makes sense.

(33:20) So beliefs are ingrained, and so are behaviors as a result. (33:27) So if you are a technology that is coming to the table asking for behavioral changes, the same comment I had earlier today, you are making a mistake. (33:37) It won’t happen.

(33:38) And if that’s what you require in order to even affect the best good for that person, even in their highest interest, they won’t change. (33:48) So you have to let society evolve as it evolves at the pace that it evolves. (33:53) You have to let the narratives that are out, that are predominant at that particular moment, play out, take their effect.

(34:02) And then you have to be waiting on the other side with your technology that meets the new behavior. (34:09) That’s really all there is to it.

Melissa

(34:11) I agree. (34:12) I think we all evolve. (34:14) I mean, it’s spot on.

(34:15) There’s so much I need to unpack in that. (34:17) But some of us have to make multiple mistakes over and over, right? (34:23) Because we’re acting on our emotions, which I absolutely agree with.

(34:27) And then every now and again, we make the same mistake several times, and then we tend to change our behavior because we’re resisting an even better, call it system, call it thing. (34:42) But maybe the question here is, do most systems fail because they don’t fit into the real life? (34:53) I think of something simple as a co-pilot license, for example.

(34:58) It could be helping people take meeting minutes, which would save time, but people just don’t want to use the tool. (35:05) And so they act on emotions, and this tool may take my job, and this tool may da-da-da-da-da-da, whatever the story is we’re telling ourself. (35:17) But I think grounding this all in reality, there’s a lot of friction.

Jeff

(35:25) A lot. (35:26) A lot of friction. (35:29) People have an illogical response to emotion.

(35:34) Emotion and logic are not the same. (35:38) A lack of information is the biggest challenge. (35:43) I have five sons.

(35:45) I often remind them, 30 more seconds of thought before you come to me with that thing. (35:52) Just 30 more. (35:52) That’s all I want.

(35:53) 30 more seconds, and then I think you’ll find that maybe you don’t need to come and talk to me about that thing, right? (36:00) But people don’t do that, right? (36:02) We listen to headlines.

(36:03) We listen to whatever. (36:04) We listen to our co-worker. (36:06) Our sources of truth, the people we trust, should we be?

(36:11) Right? (36:12) Those people are the ones, though, that we build our ideas around what they say, right? (36:21) And that becomes a very permanent, persistent part of our personality.

(36:29) And it’s very difficult for you to change that. (36:31) You can have the smartest person on the planet go, you really shouldn’t be doing that the way you’re doing it. (36:38) And they will not hear them.

Melissa

(36:42) No. (36:43) Look, I think we’ve all been there. (36:45) All of us humans that are imperfect have been there at one point or another.

(36:49) But actually, I love that rule. (36:52) I think I’m going to take it from you, Jeff, because I have four kids, three girls. (36:56) And so I think that’s a great rule for the girls, too, not just the boys.

(37:02) And so I want to circle back on something you were talking about that made me think about really owning outcomes that are affecting people’s PII. (37:17) When you have systems that have access to people’s information, money, services, the stakes are really high. (37:25) And there’s a lot of responsibility for leaders.

(37:29) And to your earlier point, I would agree. (37:31) Get it out. (37:32) Get it first to market.

(37:34) But when you have people’s information attached to it and systems fail at a scale, it’s a really big deal. (37:44) Who’s accountable for the loss? (37:46) And how should leaders think about risk and responsibility?

(37:51) And at the end of the day, I’ve had this conversation over and over about who’s responsible for things. (37:58) And most people are pointing to the owner. (38:00) But I think it’s really how it lands.

(38:05) But let’s talk about that. (38:06) What happens when systems fail? (38:09) And why can this not be outsourced to vendors or technologies alone?

(38:16) A lot of times, I have this MSP. (38:18) It’s their fault that something happened. (38:22) Or it’s my engineer or whoever.

(38:25) We’re quick to point fingers, right?

Jeff

(38:27) We are, right? (38:29) And as leadership, the buck stops with you. (38:33) And there’s an argument that says that consumers should be responsible for what they consume.

(38:42) There’s also an argument that says that leadership knows that those consumers generally don’t act on logic. (38:51) So we can’t hold them accountable for narratives that are pushing them in certain directions, for behaviors that they’ve grown accustomed to. (39:01) We have, as leadership, a responsibility to understand who we’re actually working with and what might be their fallacies in our context.

(39:13) And thus, we have a responsibility. (39:15) Back to my sons. (39:17) They’ve dated.

(39:18) And I remember asking one of my sons, he was a young man, young boy. (39:24) Let’s call it a teenager. (39:26) And I said, are you guys exclusive?

(39:28) He says, well, and I go, does she think you’re exclusive? (39:33) He goes, well, I didn’t say anything. (39:35) And I said, no.

(39:38) She thinks you’re exclusive and you know she thinks that. (39:41) So you have a requirement to reset that expectation if that’s not, in fact, true. (39:47) Go do the hard thing and fix that.

(39:50) And I believe the same thing applies to leadership. (39:54) If you have a consumer set and addressable market that you know that you’re pulling the wool over, right, and you created something that has an error in it and you know it, you have a responsibility to reset that expectation. (40:07) You have a responsibility to know that that consumer is easily fooled or has a behavior that would easily create an environment where they will adopt your broken product.

(40:18) It’s your responsibility to know that and fix it, just like it was my son’s responsibility to reset that expectation with that woman. (40:28) And so I believe, yes, consumers should take better control over their life and be informed. (40:37) It’s difficult in this world.

(40:38) Most of the world is headlines and it’s hard to find actual data. (40:43) But we have, as leadership, you know who you’re dealing with. (40:47) You know exactly what they’re going to be doing.

(40:49) And you’re either exploiting that behavior or you’re supporting that behavior. (40:55) So if something breaks because you came to market too fast, it’s your responsibility as leadership to fix it and to hopefully make all those people that you affected whole. (41:06) That’s my personal belief.

Melissa

(41:08) No, and I agree with that. (41:10) Ditto, ditto. (41:11) So let’s talk about what Web3 gets right and wrong.

(41:14) I think that’s a perfect, you know, segue into that. (41:19) So you’re integrating decentralized principles into real world systems. (41:24) There’s a lot of hype around Web3 right now.

(41:27) What does that actually look like and what does Web3 actually get right?

Jeff

(41:32) Well, I think you said it. (41:34) It’s a tremendous amount of hype and it’s these groups that want to be first to market that are creating this hype. (41:39) If you have real value, you don’t have to create hype around it.

(41:44) It gets discovered, it gets proliferated. (41:47) It will actually be adopted by the consumers that you’re attempting to approach. (41:55) So hype is the one.

(41:56) Anything where I see a tremendous amount of hype, when I see 45 billboards on my way to San Francisco proper and they’re all talking about how AI is going to help them with potato farming and I’m just like, oh my gosh, stop. (42:11) That’s hype. (42:14) When I see something in the Web3 environment where I have a distributed system that can help me assure that the source of truth is pristine and guarded, now I see that you’re getting it right.

(42:28) Now when I see edge layers built on top of that that are helping consumers by ensuring that this person is who they say they are, which is in their own best interest, they’re going to get better services if they’re not sharing it with 400,000 other fake people. (42:47) They’re going to actually see the value that was intended for them. (42:51) So uptaking some kind of edge service built on a Web3 solution that creates a true source of truth for that person’s identity is incredibly useful.

(43:03) When I see socialized services that are actually removing the intermediary because that intermediary is where corruption occurs, now I see real value in that. (43:15) I’m going to say something unpopular here. (43:18) You don’t need Uber if you have the right blockchain in place.

(43:22) You remove the intermediary. (43:23) Now I’m not suggesting that Uber is corrupt, but they’re certainly increasing and inflating the price of a ride. (43:31) Okay?

(43:31) So if I were to remove that from governmental situations in a Web3 environment, now I’m actually producing value for the country’s citizens, the consumers of its systems. (43:43) So that’s where I start to see real value. (43:46) So that’s both sides of the coin, right?

(43:48) And it’s difficult sometimes. (43:49) Is this value or is this hype? (43:51) What do you actually have under the hood?

(43:54) Because a lot of people are saying what you’re saying to me right now. (43:57) Can you show it to me? (43:59) Yeah.

(43:59) And that’s what I’d like to be able to expose, if you will, from our technology. (44:06) It’s like, no, look under the hood. (44:07) Come and check it out.

(44:09) Governments look at this. (44:10) We run sandboxes all over the world. (44:12) We’re exposed.

(44:13) Come and see. (44:14) If you’re unwilling to do that, then it’s hype, right? (44:18) And Web3 is in that bubble that the dot-com was in.

(44:25) In 1999, when it all blew up, around the 1999-2000 time frame, the lead up to that from 1992, the Web was 1992. (44:34) Within seven years, we had the dot-com blow up, right? (44:38) And then we’ve gone through now three series of robo-advisors.

(44:43) This pattern is repeating itself. (44:47) And now we’re seeing it in Web3. (44:49) And we’re in the same place we were at the dot-com.

(44:52) A lot of these companies are just going to implode because they’re not real. (44:57) They’ll get discovered because there’s real companies out there that are doing real work that have actual real-world experience that are not just intelligent, but they’re seasoned. (45:07) And they’re going to bring real solutions to the table.

(45:10) And the hype versus the real will weed itself out, but it’ll take a while. (45:15) And so the detriment to society is you’re going to put a lot of time, effort, money on a personal basis into technologies that aren’t ready, aren’t real, are full of hype. (45:28) And it’s just somebody doing a bait and switch or what we call a flip, right?

(45:32) Just hoping to make a bunch of money, get out of the market before anybody discovers what’s going on and roll onto the next project. (45:39) And so I look at these groups a lot of times when I’m evaluating companies. (45:45) Who’s the leadership there?

(45:46) Have they done a bunch of companies? (45:48) Well, how many? (45:50) You just did 30?

(45:51) That seems like an extraordinary amount for somebody who’s trying to produce real value for somebody. (45:56) Maybe you’re just the flip person. (45:59) And I don’t know if what you’re producing is actually real out there.

(46:02) When I see somebody with a couple of big wins that are still in the marketplace, now I go, all right, whatever that person’s building, let me take a serious look at that. (46:14) And that’s how I begin to evaluate this. (46:17) But I’ve been caught up in the hype.

(46:21) I’ve seen, I’ve invested in it. (46:23) I bought into it. (46:25) I’ve lost money in it, right?

(46:26) I know how this works. (46:28) So it’s not to say that somehow I’m more intelligent and more seasoned to other people. (46:32) It’s just, I’ve been burned.

(46:34) And so I look at things a lot differently. (46:36) And so Web3, I’m very optimistic and I’m cautious about the hype.

Melissa

(46:42) Yes. (46:42) Well, look, we all win some, we lose some. (46:45) That’s the nature of playing.

(46:47) You can’t win them all, but you got to play to win. (46:51) So I love it. (46:52) I think, and I think that’s a great way to kind of close up here is, there’s no silver lining, there’s no magical anything.

(47:03) There’s pros and cons to everything. (47:06) Do your research, do your due diligence, understand where things are misunderstood or oversimplified and realize that you need a balanced innovation and operational reality all the time. (47:20) It’s just something that’s going to happen.

(47:23) And so I want to get kind of any final thoughts. (47:28) And if leaders can take away one idea from this conversation, what would it be?

Jeff

(47:33) Well, talent is equally distributed, Melissa, between ethnic groups, gender, socioeconomic standing, where you live on the planet, it’s equally distributed. (47:45) Opportunity is not. (47:47) Opportunity is something that true leadership tries to produce for the people around them and for the consumers.

(47:55) So if you’re actually building a technology or solution that addresses the opportunity imbalance, now you have a winner. (48:03) People will come to it. (48:05) They’ll flock to that.

(48:06) So talent, hire everybody, make sure that you diversify. (48:11) You’re going to get different perspectives, perspectives that you may or may not like, but in consensus, you’ll end up with the right direction. (48:19) And if you’re building opportunity for your consumer set, you’ll be a win.

Melissa

(48:24) I love it. (48:24) That’s great. (48:25) What stands out to me is digital identity is not just infrastructure, but it’s trust at a very large scale.

(48:32) And so thank you so much for being here and sharing your knowledge and time with our listeners. (48:38) And if you want more conversations with operators, technologists, and leaders shaping our future, visit us on YouTube or wherever you podcast. (48:48) Thank you so much, Jeff.

(48:50) That’s the Executive Connect podcast.

Jeff

(48:52) Melissa, I appreciate the time today. (48:54) Thank you.