
Warning: this is an academic post. If you’re not interested in SD Logic, service ecosystems, service science, institutional theory and academic work in this space, turn away now :)
It’s been an exciting month for those of us designing and implementing systems. The Nobel prize winners in economics validated an approach in economics that is much more pro-active, engineering-like, design-driven and evidence based that sets them apart from past work. In other words, it’s absolutely ok for economists to also shape the future with evidence based mechanisms rather than merely reflect the past. And in shaping that future, a systemic approach is necessary. Read Gorgi Krlev’s blog post on their work.
Taking inspiration from their work, I have of course reflected on my own efforts to grow the HAT ecosystem, changing personal data rights and data mobility on the Internet. We are now on our 6th year. I am acutely aware that it is not easy but navigating the funding landscape to raise the right kind of funds to keep up the work has been a challenge. The challenge is not fully overcome, but at least we have now got to first base.
What is first base and why is it so hard?
First base
First base is an institutional round of a VC investment that buys not only into the fact that personal data is the future (which is not hard), but who believe that we have the model to succeed, and will help us do it (which is hard). That model is the HAT legal, economic and technological model to scale HAT Personal Data Accounts. It’s a model I designed since the HAT project ended in 2015 and built it with my co-founders Andrius, Xiao and Paul from 2015–2018. And it’s that model that we have been raising funding on. On the academic side, we have been reasonably successful but the proof of a concept is when real investment funding comes in.
Side academic note: In SD Logic-speak (which my research work contributes into), that means that we are raising funding for our design of the HAT personal data service ecosystem that not only has been designed and built for resource integration (where the interactions are to co-create value and where the boundaries are for service exchange), but also for the institutional “work” ie rearranging institutions at a micro, meso and macro level to ensure the ecosystem is viable for all players and conducive for growth.
It’s a pretty tall order to raise private funding on a service ecosystem model and would need a rather enlightened kind of Institutional investor.
Why is it so hard
In the HAT personal data ecosystem, technology is only part of the model. The legal, behavioral and economic models are the other parts of it, and they interact with the technology, making it a cyber-physical-social platform – a service ecosystem in my research domain. The knowledge and understanding of this ecosystem sits within social science and humanities research. Most technology centric people don’t fully understand social science research and models, believing that these are just “real world practices” or “soft skills” as the engineers like to call it. But the real world has a code too. And real world can be designed, albeit with different tools, because real world social systems are interventionistic and not deterministic in the way they are engineered (think about designing a community vs designing a machine). “Coding” social systems require tools that are interventionistic because human beings must have, and should have, free will and freedom of behaviours, albeit with accountability. Designing social systems means recognising that enabling choice is important but then to also recognise that since all products are a template of behaviours, their mere existence disable choices. Thus in a social system, the interaction of products, people and organisations – the actors – could be redesigned and reengineered through incentive mechanisms, new offerings and different transaction boundaries, and new templates of behaviors that create new social norms, norms that could be better for society. In redesigning the personal data landscape, I draw very much from Structuration theory at the micro level. At the Meso level, institutional work is needed and it involves Roth-esque understanding of thickness and safety in market design as well as Baldwin’s modularity and transactions. Macro level is emergent but we can do what institutional theory call “institutional re-arrangements” with governance protocols ie. “Institutional work”. Only time will tell if we are successful.
In a world of STEM-envy and technology-and-IP-fixation, most people underestimate the need for social systems to be designed with technology. That is, until they see that elections can be influenced and communities can be intentionally disrupted through Facebook and WhatsApp.
Are you seed? Why?
Raising seed round on the back of the design and built of a service ecosystem is unusual, and yet that was really what we set out to do, on hindsight, through the commercial arm of the ecosystem, Dataswift. Many investors were surprised that we have a fully built technology and yet only raising seed. At the beginning of our raise, we were also conflicted. Are we seed? Or not? Usually at seed, companies raise to build. Technologically, ours is mostly built. So at the beginning, we, like others, fell into the trap into thinking that the technology was all that was needed and what we were raising for was just “the exploitation” of the tech.
The revelation was gradual as we engaged with our partners and investors. Our technology was built and proven, but the service ecosystem model was not. And you can’t build and test that model in a lab, like you can’t learn swimming in a library. Our service ecosystem is a social system and an economic model, and unlike technology, it has to be built in the “wild”. Resources that flow through that system comes from the actors – people and organisations. In the engineering world, a resource like liquids could go through a piece of technology for you to try it and test it to see if it works but resources for a service ecosystem (in our case) is data and currency and it has to be real to be proven. Of course, you can’t just raise funding without the blueprint and some proof of concept so we spent the last year crafting that service ecosystem blueprint. As we began to implement the blueprint, more partners came on board to build on the HAT, and the resource flow in the service ecosystem slowly began.

More importantly, our blueprint of the service ecosystem contained some crucial “institutional work” on the legal side – Ensuring a strong statutory governance meant mission locking the company in its Memorandum and Articles where the purpose of the company is for public benefit in personal data exchange instead of merely shareholder value; this immediately imply that the interest of humans – their privacy and data rights – are baked into the company not merely through technology, but statutorily. This has implications on exits for investors ie the company cannot be sold unless the mission is upheld. In other words, the company is mission locked. Finally, to strengthen the mission, the company has a guardian share held by the HAT Community Foundation representing global HAT owners and their interests with a set of oversight and governance protocol all predesigned and implemented to give the service ecosystem every chance of viability and scale. The guardian shareholder has a board seat and directors have a fiduciary duty towards the company’s purpose as well as return on investment. We are confident the service ecosystem can align shareholder value with the mission in the way the transactions and the economic model were designed. It’s just a matter of convincing an investor that the blueprint and proof of concept of the ecosystem is viable.
Raising the round
In March this year, we started our raise and gradually, our pitch became much sharper and more crisp in articulating the design and blueprint of the service ecosystem, the legal, economic, behavioral and technology models and how they interact and integrate on the HAT ecosystem. We pitched on what success looks like, what the metrics are and how the service ecosystem blueprint can be validated. (We didn’t exactly use those words of course – we had to sound like a proper startup and use more entrepreneurial jargon ;))
We found our lead investor in June. With our lead our second, third and forth investor followed and by the time I had only £150k left of the round to fill, I had 3 other VCs asking if we had room for them. 🙄 You can read my not-so-academic reflections on the round here.
The task now is to validate the HAT personal data service ecosystem and scale HATs based on the blueprint created, to achieve series A. Another step to Changing the Internet with the Hub of All Things (HAT).
Some of the history and thinking around building the ecosystem were presented on a keynote at the 7th International conference on Information Technology and Quantitative Management (ITQM) in Granada this morning, where I received the Daniel Berg award.
Academic Background
My website
My knowledge base as an economist, a service ecosystem designer and builder
For more on service ecosystem, read the section on service ecosystem in Handbook of Service Dominant Logic
Section editorial here
What is Service
SD Logic handbook
Handbook of service science part 2
Older Works