Rick Song: Why Commoditized Spaces Consolidate

I use you as a story all the time when I talk to earlier stage founders, when you're in this problem discovery phase, the opportunity canvassing. I love the fact that you look at what you built with Persona and it's very much a lived experience for you, with you at Square and Charles, your co-founder, at Dropbox. So maybe unpack that a little bit. What was this experience you had, and what made you realize that it was a big enough problem to say, "There's not good enough solutions out there that I would just want to go buy. This is something that I need to go create based on the experience that I've had"? What was that discovery process like for you?

I'll be particularly candid on this. I think in the earlier days, there were more revisionist history of how we came about this. But these days we're a bit larger and I can be a little bit more candid in the history of it all.

The truth on these ends, I didn't think too much about the opportunity size. In fact, when we had first gone off and started Persona and actually even well into the history of it, I think the consensus opinion about this space was that it's commoditized. That was actually one of the number one concerns. When we were talking with investors for our seed round, one of the most common things was, "This isn't a new space, and isn't it largely commoditized? How is there innovation left?"

I have opinions about that, but my background is engineer. So in all honesty, at that point in time, I was just learning what TAM meant. I had no idea. These days now I know actually the acronym. I don't think I still fully understand it, but at least know what the letters stand for. Actually, when we were preparing our first seed deck, I think one of the friends who was helping us was like, "Hey, you need to talk about the TAM of this." And I'm like, "How am I supposed to figure this out?" And then you're reading random McKinsey reports trying to add up numbers and be like, "Yeah, why not? This makes sense to some degree."

In terms of why we thought to solve this idea, it wasn't that the idea was big enough as much as we like this general problem set. The disconnect that we were seeing was that at every single business, at least at Square for certain, what we hear vendors talk to us about was that there's this one size fits all for identity, that there's going to be some holy grail, silver bullet. Every solution was that silver bullet to this type of way in which to think about identity. You will solve all your identity problems out there.

At Square, on the other hand, we were using an entire ensemble of solutions, not to mention customization, mixing, matching, thinking about how the journey would increasingly move from being this, "Let's collect everything of the world about this individual and add as much friction," towards this more progressive journey in which you gradually collect data, make decisions real time and modify that. There's this increasing disconnect between how we in the industry were thinking about us as customers versus how a lot of vendors were talking about how everyone's going to be this next silver bullet towards solving identity. I was pretty passionate about this idea. At the very least, I liked it enough such that I spent many years within the general identity space.

One other thing that we were seeing a lot of at that time too was this idea that identity for different perspectives was just going to be different. We always think about identity in the same way at that time, as authentication, in which we're going to use one set of credentials, this idea of, again, a silver bullet towards it. What we were seeing instead in the industry is that for Caviar for delivery versus if you were signing up for merchant onboarding versus if you're signing for Cash App, the requirements were different for every one of these.

So the early genesis actually was much more about, "Well, this would be an idea that I wouldn't mind working on for a bit longer." We used to make rather grim and dark jokes. One joke that we used to say was like, "Well, at least if this startup goes nowhere, I can go back to Square and be like, 'Hey, at least I worked on something that's relevant to what I was working on before.'" I don't have to dance around this topic of, "I just waste away a year of my life trying to do a startup or something." It would be a little bit easier to go back towards it.

That was actually a lot of the genesis. It was interesting because we hadn't thought so much about the opportunity size, actually. In fact, so much of the messaging at the time and a lot of the external messaging that we had gotten was that the opportunity was very small, that the space was commoditized, that there wasn't much room for innovation. And we just pressed through it. I joke about it at this point. I will say, actually, in the early days, I was very dismayed that everyone had felt so negatively towards us. Five years later, I think identity has become one of the most exciting spaces out there. At the very least, I'm very grateful that it seems like the consensus opinion about this space has changed.

It's an interesting lesson to learn. There are a lot of people, bean counters is the meanest way to say it, but there's probably meaner ways to say it, who really know what TAM means and how to think about it, and they're microanalyzing all this stuff. For you, you're just living an experience where you know that this is a problem and you're interested in how to solve it, so you tackle it. Then over time you realize that the reason you're having this problem is because it's not a solved problem.

I want to unpack that a little bit before we dive into Persona and how the product has evolved. You talked about how a lot of people's concern is that a function of it is commoditized. When I think about the space, there are elements of this stack where there are a ton of vendors doing the same thing. Everybody's raced to the bottom on one piece of the puzzle. It seems like what you guys have unlocked is that you're trying to be this central switchboard control center, if you will, for everything that's going on in the space, which makes you kind of an index of all of the things that need to happen in identity. That's my understanding from the outside in, but how has the space evolved and how have you evolved Persona to fit the moment?

There's two halves of it. This was not things I was thinking about when we had first started Persona, but I always like to think about almost the meta analysis of what we've learned about startups throughout it all. This interesting thing about how most spaces online does consolidate. I think the much more challenging thing is whether a space is consolidated or not, not whether it's commoditized or not. When a space is consolidated, it's very difficult to break in. But generally speaking, I think a lot of folks mistake the two, one for another.

A classic example of this would be Stripe. In the early days of Stripe, in payments in general, there was a lot of talk at that time that payments is commoditized. This is obviously many, many, many years ago. I remember, because at that time I'd just come out to the Valley, there was a perspective that what Stripe was doing was a very commoditized construct. There wasn't much value behind that. Because of how commoditized it is, it will be impossible for that space to consolidate.

Fast forward to today, it's actually very fascinating. This space has 100% consolidated. There are very few mega players right now in payments. There's still a handful, but it has largely consolidated amongst, I would say, four or five players, and really just one or two at this point for the new era of payment technology. I have a perspective now even for, say, a Twilio. There was a perspective, I think mainstream opinion, that maybe five or 10 years ago, that space was rather insipid and effectively SMS and online communications would be largely commoditizable, and anyone could offer an API that allows you to send text messages. Fast forward, it's clearly consolidated around Twilio.

These days, I think a lot about how pretty much any space in which you see a lot of hyper-competition, where there's a consensus opinion of commoditization, there probably actually is, if someone is able to crack the equation, a way to consolidate that space. Because the fact that there's so much competition, but still no consolidation, means that at the very least there is an opportunity for consolidation.

In terms of how it ties into Persona's strategy, I think our strategy has evolved quite a bit, but at the same time been the same. The core thesis has always been this idea that there's no one size fits all towards identity. Identity is this ever-evolving thing. One thing that made that very clear was that, let's say 15 years ago, the de facto way most people prove themselves online and who they are online is through Social Security numbers. These days, I think most people understand that Social Security numbers have largely been leaked, at least for US identities.

After that, there was this whole period in which people would ask back of envelope questions, where it'd be like, "What's your mother's maiden name? What was your first street address when you're five?" And now that has gone out of vogue. Identity is the way in which we prove ourselves online. It's this ever-evolving thing, because the tie between your physical and digital self is a probabilistic tie.

During the boom of crypto Web3, there's a lot of perspective, "Can we digitize all aspects of identity?" The reality was that that became a little bit more complex. I think there's still a lot of innovation within that side of things, but it wasn't as simple as "Let me just digitize everything online," because sooner or later that credential can be shared and become a proxy that may not represent who you are physically. This space is fundamentally about understanding who's behind the screen. So the more you digitize, you have this very perverse thing in which you have less fidelity in terms of who's behind the screen.

But in terms of how we solve this problem, a lot of things have evolved since that. Early on, we've made a huge bet on making sure automation was a key part of our platform. We also embrace a lot of evolutions. Around 2019, 2020, there was this big push around no-code technologies. We looked a lot towards that in terms of how can we apply methodologies there to improve the ease of use and the capabilities of our platform. So we embrace a lot of ideas around no-code workflow orchestration, Retool as dashboard building tools, the ideas that they had, but remixed it into what would it look like for an identity platform.

Today, I think there's a whole boom around AI, generative AI and LLM. We're looking a lot at that, a lot of the most innovative startups there, to think about ideas there in terms of how can that be applied towards what would be this universal identity platform that can support any business out there. In terms of the tactical aspects, the strategy is constantly evolved. Every single time it evolves, it takes a lot into account of these major innovations in almost parallel industries, or even sometimes the complete tangential industries. And how can we apply ideas there towards our business to continue forward this idea of what would an identity platform be?

It's so interesting that you say that, because beforehand I was sitting down thinking about your product and how it's evolved. You've mentioned three pieces of technology that I think all have played a really critical role or could play a role in your business.

The first is automation. Within ID verification alone, old solutions would literally send the photo of an ID to a big warehouse of people, and they'd literally look at it and say, "Do these have all the markings of an accurate US ID?" It would take minutes to get back. So automation was a big piece of that early part of the puzzle.

It maps to this framework that I have for all of the things that encompass the identity space. One bucket is that you have to gather the data, whether it is photos of IDs or Social Security numbers, and you guys applied a lot of automation to that. Then you go to the second piece, where we've gathered the data and now we need to process it. That might be workflows, it might be third-party checks where you have to ping the Social Security department. You talked a lot about no-code, and it feels like your workflows have taken on a lot of that drag-and-drop functionality.

The third piece I think is really interesting, and not something I've been as close to since moving away from your board. I think the third piece is reviewing the data, whether it's a simple report or something much more complex. You guys have this really cool graph visualization where you can take a look and understand your data. And it feels like from an AI perspective, there is a function of asking questions of your data, which is becoming much more common, that could have a real implication for your product. Is that the framework you use to think about the product, or do you think I'm off base?

I think that's incredibly accurate in terms of how we've gone through this overall space. The core thesis of what we believe in for identity has always been the same, and there's three fundamental pillars there that we think a lot about. The first is no one size fits all: flexibility, so important if you want to build a universal identity layer that works for any industry. The second is that there's going to be a lifecycle of identity, in which you'll verify yourself across many different touch points. Let's say when you first sign up versus when you recover your account. The third is helping the management and orchestration of that data. There's more regulations, more compliance requirements about that data than ever, and for businesses, managing that data is harder than ever. We want to help how you review it, how you move it around, how you visualize it. Those pillars haven't changed since the earliest days of Persona.

What I think is really interesting, and what you've highlighted there, is this idea of at the same time, the world of technology is changing. People, I think, sometimes are overly dismissive of it being a hype cycle. Is it overhyped? Almost certainly. But at the same time, there's a reason why it is hyped, and it's because there's a lot of innovation to be unlocked. I think reapplying those major trends into the lens of what your fundamental thesis is as a business is always really important.

I always think Amazon had a really good encapsulation of this. The idea for Amazon in the earliest days, ultra consumer centrism and moving fast, right? That bet on the immutables. I think the famous thing from Jeff Bezos one time was there's never been a customer who was like, "I really wish my package arrived later." But at the same time, Amazon has also been a company who has consistently been at the forefront of new technical innovation. AWS was way ahead of its time in many ways when it was first conceived. It's a great showing of a company in which they both always have had a good idea of the first principles that drive the business, while at the same time embracing the new ideas within a technology.

That's something that we think a lot about. What are our four first principles that we believe apply to identity space? What are trends that we think are 10-year trends? As a lot of investors oftentimes say, you want to build those 10-year trends. At the same time, there are some really cool things happening right now. We should think about how it applies to our business. I think it's foolish to rebrand your company as such. These days we see a bunch of companies like, "We're an AI company." It's like, let's take a step back on it.

You don't have the persona.ai domain. You didn't switch over to that?

At the same time, there's a lot of ideas there which you probably can improve your business and strategy with. I think that's a really good way to think about it.

If you start to unpack your product, you're finding the opportunities in the surface area of your product to leverage different technology. But there's the strategy, and there's this lagging reality where today we are solving these things for our customers. They need these things right now, we're selling it to them, they're measuring us on that. And then there is the longer term strategy of how the product evolves. In the early days, it was ID verification, taking pictures of photos, doing it very quickly. Is that still true today, where there is the gateway on ID verification, or has another product in your suite emerged where more and more people are starting to find you because of the workflow tool or whatever it might be?

Three years ago, we made a bet that we didn't want to be a single gateway type of product in which we have only a single way, and to be a platform. In all honesty, I think at that time that was a rather contentious decision for us, both internally and externally. We had a lot of uncertainty from many different parties. In retrospect, that decision has been pretty good.

The theory at that time was that, first off, flexibility is such a core thing. We have our core flagship of this idea of focusing essentially on visual forms of verifications, biometric based or ID based, documentary based, a lot of visual forms, that that just won't be the end all be all. We always believe that that won't be the end all be all. We already were experimenting with database-based verifications, integrations with external parties. We understood already that there was a whole ecosystem, not to mention some of the newer products we were developing at that time. We thought a lot about how could those end up becoming somewhat independent, because why not? If we're really trying to build a platform, an ecosystem, everything should be a building block.

One thing we thought a lot about was how the magic of AWS isn't that it just allows you to operate your infrastructure on the cloud, is that you can get started on AWS from almost any one of the products that they have and over time gradually migrate your way there. I don't think that the future of most people, how they adopt Persona will be, "I'm going to take on all the Persona platform." It'll probably be through bits and pieces, and those bits and pieces have to be the ones that are the biggest pain for those businesses.

That was the perspective about three years ago, and today that's definitely become really true for us. We have a lot of folks now who even use our SDKs. This was just from a couple of days ago: they're doing pharmaceutical data collection, because collecting personal information, especially with relation to health records, is incredibly sensitive, incredibly regulated. So they're utilizing our SDK to create dynamic flows in terms of fulfilling prescriptions. That doesn't require any sort of verification whatsoever. It's just collection of sensitive personal information.

We have folks who are using Graph as their core entry point in the Persona platform. Workflows has become something people utilize just as the core decision-making platform, and they already have a lot of other vendors that they rely on today. I'd like to believe that one day they'll utilize us, but those vendors are working for them, are fantastic for them. We want to make sure that they can continue to have the great experience while at the same time leveraging the workflow technology we have.

And then, of course, one of the most recent things for us is leveraging a lot of internal tools for stuff like KYB. Where we specialize for KYB is in the business lookup records, where we realize that KYB, a large half of the complexity of it is the orchestration of getting all that data, making sure all the beneficial owners are who they say they are, making sure that you can create a quick flow to collect all that data, fan out and go through all the operational tasks. All that's built on these core building blocks of Persona.

I think that overall perspective, especially in today's ecosystem around tech, I think it's added a lot of resiliency to the business as well, because it's made it such that we aren't just pinned to the trend. We can continue to attach ourselves to these 10-year trends that we believe in, the flexibility of identity, the management of the data, which helps insulate us from, I would say, the ups and downs. Is biometric good or bad? I don't know, right? And I don't want us to just be a biometric business. What we are is an identity company. Biometrics is one form of identity, and it's a very powerful form, a very novel form.

There's a lot of third-party tools out there, whether it's somebody who's a specialist in scraping business filings, or the same thing with different types of IDs. When you think about your current customers, how interconnected is the Persona platform with all these other third parties, whether they have relationships with third parties they're using in tandem with you or are pinging something you've built an integration with?

The answer is both. These days, especially as we work with larger and larger customers and move towards an enterprise space, two of the five largest companies in the world now operate a significant part of their business through Persona. Those types of businesses have a ton of existing relationships and a lot of existing technologies already within their platform. We have not replaced all of that, not even close. I would say we're just scratching the surface. Even for them, they both have existing relationships and also start adopting new vendors through Persona and our marketplace.

For some smaller businesses who are just starting off, they find a lot of success by starting with a clean slate and having everything housed on a singular platform. At the same time, when they find something that doesn't work, or we're missing functionality, they integrate with other vendors through our platform. I think it's really important for us as a business to have the humility to say, "Our solution may not be the best for yours right now. Maybe one day it'll get there, but today that's not the case." There are other vendors out there who I think do a fantastic job, and we want to make sure that you always are building the best identity experience for your business.

Larger businesses already have existing integrations with external players, and the migration towards having us a centerpiece of the control center for all of these different parts, it's a gradual migration over time. Generally they'll adopt certain solutions from Persona while gradually doing more of the orchestration through it over time. At least I like to believe that.

When I think about this space, you went from tackling what felt like a very commoditized space, where there's actually a lot of varying degrees of quality. That's phase one. Now you start to think about the other piece you talked about, which is consolidation. As far as I can tell, the identity space is certainly not consolidated. It's a big network of lots of different things that specialize in different areas.

I remember a year or two ago looking at Clear. A lot of people are familiar with Clear as just this thing that makes it a little easier to get through the airport security line, but they also are pinning themselves on identity. Everybody has these different entry points, but at the end of the day, people are trying to build this unified identity company.

I think about companies like GitLab, where they really had this idea of, "We want to be an end-to-end solution. We want to make it flexible, where you can use other tools at various levels of CI/CD, but at the end of the day, our dream would be that we are this consolidated end-to-end platform." So when you think about the competitive landscape in identity, is the vision for you guys basically to build or buy end-to-end everything that you would need in the stack in the long term, or is there always this need for checks and balances of multiple players doing multiple things?

I love that you bring up GitLab, because they're one of my favorite companies. I've never met Sid. I don't want to pretend as if I know at all who this guy is. I've creepily watched some of his podcasts and interviews online, all the key parts of the GitLab handbook. I love how everything's just complete open source of this company, and I learned so much from him.

I had the chance to invest in Sid when I was at Coatue, and you guys would really get along. You really should meet, because you just see the world very similarly. He's a remarkable leader, truly.

I think GitLab's a remarkable company. From a strategic perspective, I appreciate how they have executed it. I love that they think about the whole end-to-end CI/CD developer experience lifecycle. They love if everyone's operating their whole pipeline through GitLab, but at the same time have the humility to understand that each one of these are just parts of it, and everyone has preferences.

I think it's important that on every aspect of identity, there's continued push towards innovation, and the way to achieve that has to be through some degree of competitive pressure. Otherwise, spaces languish. There becomes a lack of innovation, a lack of progress in that overall space. For a space as critical as identity, I think it's important that we're always pushing boundaries on it and not creating an ecosystem in which effectively there's no way that people can compete anymore. I think that's a terrible outcome for this overall space.

That's why I think for AWS, there's a great aspect of, despite AWS owning so much of the overall cloud infrastructure space, you have businesses like Cloudflare that just execute from a CDN level infinitely better. I don't want to disparage Amazon in any way, but the reality is I think Cloudflare is an infinitely better platform right now, at least for what they do, in comparison to some of the offerings right now for a lot of the cloud platforms.

I think that the long-term identity is that there will be fewer players. There are so many players today, and I think that might have been an offshoot of the last 10 years of the great growth of tech. I think we're going to probably see a smaller number moving forward, and some of that already is happening today. At the same time, I hope this space doesn't become one in which it's impossible to innovate in. I hope that for every aspect of the lifecycle of identity, whether that's the orchestration aspect, the data management, the verifications and all the new forms of verifications, whether that be mDLs, new digital wallets, all these forms, that there continues to be a push towards embracing those new technologies, as opposed to extinguishing new ideas because you have some sort of lock hold on this overall space.

That's why I think the GitLab perspective is really great. I hope that for every aspect of that lifecycle of identity that Persona has built and has competed on and has our competitive offerings on, that those can stand on their own legs. Actually, to tie it back to the previous point you made, that was a lot of the theory of why we thought so much about this. One of our core parts of our strategy is decoupling the platform, making sure every part of it is its own independent entry point into the Persona ecosystem. The idea at that time was that every one of the products that we create should be independently a great product. I think it pushes us from a product perspective, pushes from an internal perspective. I think the worst happens when everything rests on other things and you just have subpar products that people are forced to use because they're already pinned on your core product. I think it just builds a bad platform. Long term, it creates a very fragile and brittle platform in which, once your entry point is no longer in vogue, the rest of the business effectively becomes fragile as well.

Anyways, towards the long point of this, I think that there's going to be consolidation. But at the same time, I hope that we never build business so much you're just locked into it.

It seems like the distinction that you're drawing is between consolidation and centralization. If everything is really centralized into one, maybe two vendors, there's a reason that we legally try and avoid monopolies. Maybe another analogy that we can draw, timely now but it won't be when we release this episode in a little while: Meta just launched Llama 2. It's basically the first real hit on the open source side of building a foundation model in AI. Contrary Research put out a deep dive recently about this centralization of AI versus openness and what role open source plays in AI.

It's crazy how even a company like Google, which has historically been, in AI at least, a very open company, you look at the Transformer paper that basically made GPT possible, as soon as ChatGPT launched, everybody was just like, "Lock it down. We've got to take control of everything." Meta is, at least, the only large company that has really taken an open source approach in AI. It seems like the fear there is that the technology in AI gets so centralized and so controlled that it makes it much harder to control for things like bias.

Even in identity, it feels much more palpable, because people have seen what happens with things like identity theft. If you have this centralized model where all of the systems are being controlled by one company, that starts to feel really intimidating. They'd have a lot of control over your ability to interact with the internet writ large, because they control your identity at all these various points. So when you think about those kinds of existential threats, does it feel like centralization is a big deal? Or maybe it's more of a cyberattack evolution that is more intimidating? What are the things that scare you about this space or that you're actively fighting against?

Identity is a scary space. I've joked, actually, in the earliest days of Persona, one joke I used to say to Charles: "It's scary if we fail, but I'm no stranger to failure, Charles. I'm not that scared of it." What I'm much more scared of: if it works out.

These days in the world of tech, we've had unbridled optimism for 10 years. There are certain things that have been released now within the world of tech which I think many people may look back on and be like, "Maybe this was not the best thing that was built." We don't know. Jury's out right now, but there's definitely suspicions now of certain things that some of the largest companies now are uncertain if this was good or bad.

For identity, obviously there's a tremendous number of threats from over-centralization. I think the cyberattack side actually isn't, to me, the biggest threat. A very common critique is, "Well, if Persona becomes one of the core infrastructural businesses, doesn't that put a huge target on your back?" The quip I always say to that is, look, we're on a lot of these cloud platforms, so we're a strict subset. Hacking a cloud platform is going to be infinitely more lucrative, right? Hacking Visa is going to be incredibly lucrative in that sense.

I actually think that allows you to protect those platforms far better. Having this hyper-decentralized, where at the same time the data is the same on every one of these platforms, just means that if you can break in any one of these systems, it's effectively the keys to the vault.

But I do think what you call out there is this idea of, what if there's an over-centralized network of your identity is controlled by just a single private entity. Your existence online and wherever your digital footprint is owned in that way. I actually strongly am against that idea. One way in which I think we architect Persona is explicitly against that vision. We think so much about GitLab and AWS and businesses like that, because our perspective is Persona doesn't control your data. We should not be the ones. There shouldn't be this third party that you go through to be yourself online, and over time, if they do become successful, there's this third-party entity that effectively controls your identity.

Our explicit perspective is that we want to offer the infrastructural layers such that the status quo continues to be that anytime you want to share your identity online, it is on the business that you've chosen to work with to make that decision for them. They are the controllers of your data. There's almost a decentralization of who owns your data, who's managing it, who you're establishing a trust relationship with. What we instead offer is the infrastructural parts for them to operate better and for your data to be managed securely, in the same way that I think a lot of platforms have increased security, because they've made it such that not everyone's building out their own infrastructure. We want to be that enablement layer. But our goal is explicitly not one day to become the world in which we effectively own your digital footprint and everything's operating through a third party. Our belief is that an AWS-type mentality towards the future of identity is better than, say, a single sign-on type of form of identity.

Take it from the existential future and some of those risks that you've laid out, and bring it in now to the very real present. I think most end users are really only familiar with the identity plays of the largest companies, based on things like sign-in with Google or sign-in with Amazon or Apple Pay. You just think, "Oh, that's convenient. I can click a button and log in with my Gmail everywhere I go." And then you start to think about the risk that that creates: if your Gmail becomes compromised, that creates risks systemically throughout your entire digital identity. Are those companies legitimate threats to you on the identity side? Is one of them making a bigger play than others, or do they just want to control those buttons as much as they can? How are those guys playing in this space?

More so than ever, I think there's a fragmentation in the space of identity. Identity, it's a word that means a lot. It's all I'll say, right? There's a lot of ways in which people interpret identity. I think the biggest fragmentation we're seeing in identity today is an increasing realization that the idea of a physical identity and the idea of a digital identity are fundamentally different from each other, and trying to piecemeal those together as a single unified concept is not realistic.

The first one that actually emerged was the idea of digital identity for online. The way in which I always like to frame digital identity is that if I want someone else to be able to be myself online, I should have the option and freedom to do so. If I want someone else to log into my Reddit account, I should have the freedom to do so. Another way I oftentimes like to frame it is that Reddit doesn't care if I have five usernames. Reddit shouldn't care. Anytime I want a new identity online, I can do so.

So when I think about players like single sign-on, your Google logins or Facebook logins, the reality for your Gmail is that you can have as many Gmail accounts as you want. In fact, if I want you to have access to my Gmail, I should have that freedom to do so. It's an email address, in that perspective. I think for that world of digital identity, it's incredibly useful. There's a lot of services online, a lot of the most influential services online, in which a truly self-identified identity is what they fundamentally care about. The one I used to give the analogy to was Netflix: they don't care if you share your account.

But I use Netflix as an example because they have also pivoted towards this new emerging world of identity, in which I think it's largely spurred on by the last 10 years. If you look 20 years back, let's say 2000, 2010, we're in an era in which it's all about digitally native type businesses. You have social networks, in which every interaction occurs fully online. You have blogs, in which every interaction occurs fully online. All the value that's provided is the information exchange that occurs completely digitally.

The last 10 years, I think, has been a very interesting evolution of what if we instead think of not just the value that the internet can provide purely digitally, but rather think about the internet from the perspective of how we can actually streamline things that occur in the physical world. Whether that be delivery, whether that be getting from point A to point B, whether that be finance, whether that be getting a degree or education, all of these ideas actually occur in the physical world. And it's interesting because digital identity doesn't apply nearly as well towards that physical world.

For example, if you are going to go get a degree, at the end of the day, it has to be you who took all those courses. I can't choose to share my account with someone else and later get this degree, because that's impacting my physical world. If I want to order alcohol, I am well over 21 now, but had I been under, I have to make sure that it isn't just someone else's identity that's doing so. If I'm making a huge trade online or opening a bank account, it has to be my bank account. I can't just have someone else open it on my behalf. I can't open up 10 of these. There's a physical impact on all these.

This idea of physical identity, I think, is a very nascent idea of what does it mean to create an infrastructure. Today we consistently try to use the paradigms of how we think about digital identity applied towards it. My perspective is that it's really orthogonal, and how we have to think about physical identity has to be more so from first principles.

I don't think of a lot of these single sign-on technologies as being more of a threat towards the world of physical identity, because I think they miss a couple of the very key differences of why physical identity has historically been so challenging. If everything's digital, then that means account sharing is very easy, and pure account sharing suddenly breaks a lot of the constructs that have to be true for a physical identity. Ordering alcohol versus getting a million dollar loan, from a risk perspective, are wildly different from each other. If you're using Facebook sign-in for both of those, that doesn't make any sense.

It's the regulatory aspects. I always love to share fun facts about crazy regulations, but technically in Massachusetts, if you want to buy alcohol, you have to have a Massachusetts ID. I'm not saying anyone respects it, but this is a real law. If you go online, if you want to order alcohol in Massachusetts, you have to have a Massachusetts ID. There's all of these regulatory things that complicate the physical identity world that trying to apply a pure digital approach towards it just doesn't really work.

So for us, we think a lot more about what does that new layer look like and how do we have to build it and free ourselves from the shackle of, "Well, what if we just made it a username, password type of thing, or maybe even WebAuthn?" I think there's ways in which WebAuthn can help, but at the same time, it isn't just going to be that. You have to know who the person behind the screen is.

That's so interesting. I don't think that I have made that distinction well enough in the past, that combination of the physical and the digital world and how they interplay with each other. It's a good segue into my final question. We're facing these macroeconomic pressures, and we've gone through the journey from your seed round all the way to now, where you've grown into a really sizable business in a very different world. If you were to speak to the folks who are maybe earlier in their journey than you are, still in that discovery phase, chasing a problem, but staring down the barrel of a very different environment than you were when you were raising your seed round, what advice would you give to those folks?

More so the aspect of self-discovery. Throughout this overall journey, the psychological and the mental side of it all, of understanding yourself. In many ways, especially as founders, as the company grows, your beliefs, your perspective, your framework of how you view the world, of fairness, of good, of what's right and wrong, that spreads. The culture that implicitly is created from your core belief system is powerful.

For myself, I do a lot of self-reflection, over these past five years, of just, what does all this mean, and what matters to me? The advice I really have to give here is to not underestimate how much understanding yourself applies to that overall journey of the business, and that the leap of faith towards going off and being a founder has to be more about the journey than it will ever be about the destination.

I can share the story about how, in the early days, a lot of investors thought that what we were doing might be commoditized and there may not be an opportunity there. But an alternative viewing of that is I got really lucky that they were wrong. If the consensus is wrong, that means you were really lucky, right? Despite sometimes going against the grain working out, nine out of 10 times, usually there's the wisdom of the crowd. So in this sort of situation, we got really lucky that maybe we were a little ahead of the curve. Nine out of 10, you'd be wrong.

The reason why that's important is that if you focus too much on the destination, everything stops making sense. It doesn't make sense to go off and try to build something from scratch. There's nothing about it makes sense from a pure rational level. You start thinking about opportunity cost of, "Well, why not go back? Am I wasting away my career?" Instead, I think to make that leap of faith, it's a lot more about embracing the aspect of the journey and embracing the self-discovery that comes along with that journey.

Throughout this overall journey, at the very least, I've understood what I believe in, my overall values, more so than ever. I think that is invaluable. In all respects, I have really enjoyed this journey. I have a lot of gratitude for the people I've met, including you, all of these folks I never would have crossed paths with in my life, all the folks I have the pleasure to work with. All that, I think, is just invaluable.

I think very little about where Persona will wind up these days. On one hand, I think about the strategy and the future of identity so much. On the other hand, I just am like, it depends on where it takes us, right? But I don't regret where we've gone to, and I'm excited to see what's to come. That's all I can say. Don't focus too much on the destination. If you're going to make it, embrace the journey and embrace what you'll learn from that journey as well.