Dwolla’s Ben Milne: Identity needs a “smarter, safer, and intentional approach”
At the rapidly expanding and evolving intersection of finance and technology, industry veteran Dwolla has long driven innovation at the forefront of the space. Entering its eighth year, the Iowa-based firm — with backing from the likes of Union Square Ventures, Foundry Group, and Andreessen Horowitz — now helps to process billions of dollars worth of commerce every year. And earlier this year, Dwolla announced another major round of funding.
At its core, digital identity is merely an enabling technology — in that it’s only as useful as the ecosystem of financial tools you build around it. That’s why we’re so excited about companies like Dwolla, which are reshaping the financial landscape for a digital future. But most of all, we love them because they just get it when it comes to digital identity — both in terms of the problems of the present status quo, the challenges ahead, and globaliD’s long term vision for a new approach.
And so as a long time admirer, we were thrilled when Dwolla founder Ben Milne agreed to an interview. Ben covers all the bases — his vision for Dwolla, the importance of digital identity, and also touches upon the work we’re doing here at globaliD. He also gave some insight on what it’s like being a Midwest tech company.
A large part of Dwolla’s success at adapting in a rapidly evolving space comes from your vision. Can you give us a sense of that vision? Both in terms of where you see the industry today, where it’s going. And how Dwolla fits into all of that.
Ben Milne: Dwolla has always seen a world where all money is data and the cost of enabling transfers is a function of the electrical cost to support confirming transactions and the cost of fraud. A lot of our decisions have been made around how to efficiently enable transfers without ever touching an asset and protect it along the way. We’ve certainly learned a lot in the pursuit. I remember participating in a talk at Stanford years ago and the response to this was really skeptical at best. These days it feels more like common knowledge.
The industry has woken up a lot over the past few years. We’re talking about real-time in present-tense, discussing anomaly detection, cross ledger transfers, and global frameworks as a part of everyday business. It just feels like 5 years ago we were all talking about the future we wanted to build and now so many companies are scaling their ideas. I feel really fortunate to be a part of one of those.
Dwolla’s role in all of this is to provide infrastructure to businesses building innovative ideas.
One piece of the puzzle that’s starting to become central to the conversation, from banks to the big tech companies, is the role of digital identity. For instance, the World Economic Forum announced at Davos this year that digital identity would be one of its primary initiatives. Could you speak to the importance of digital identity, and perhaps the need for a smarter approach, in the context of the banking and payments industry?
Ben: I think the illusion is that the world doesn’t already have a global identity layer. We do, it’s a cookie. Big companies don’t even lack the ability to tie that cookie to your true identity which is a big problem. I think the permission that should be required to make that connection actionable for a consumer is something that payments can be used to help solve. A smarter, safer, and intentional approach is certainly needed.
Payments require explicit permission to take action. In our world the idea of doing something without permission is unthinkable.
Identity as a connection to banking and payments is inherently tied together. Where your money is stored, how, and in what form is tied to who you are. How you use that money is tied to you proving that you are indeed… You. By law and in practice your identity is the access point, control, and validation path to everything you own. You’d think that because of the important of this you’d see more innovation than you do in that space but historically we’ve seen it in large scale computing verifying the legitimacy of a request.
Along those lines, could you speak on your thoughts about the globaliD team and the work they’re doing? (And perhaps whether or not you see digital identity as complementary to the Dwolla vision.)
Everytime I see “digital identity” I always think Directory. The ability to find and actually pay what and whom you want to pay, is a fairly important part of any exchange. Dwolla spent some time building out a part of our system to enable that type of connectivity in the early days but it wasn’t at the scale that something like GiD could operate at.
If you think more holistically about all those identities (cookies) floating around on the internet and who they belong to, tying those identities to local currencies, and then creating a layer to transact globally there is amazing potential in that vision. Dwolla’s role in that isn’t global, it’s just in the US but I think the work the Global iD team is doing there is tremendously important.
Dwolla has done quite the job reinventing itself over the past couple of years. You successfully transitioned from a consumer-facing product, essentially rebuilding your business model from scratch, focusing on your API. Could you give some insight into how the last couple years have been? Was there some sort of “eureka” moment?
The last few years at Dwolla have probably been comparatively quite boring for many payments enthusiasts. We’ve kept our head down and focused on serving our customers. Serving them well means helping them scale their business. Dwolla has always been historically building exceptional infrastructure and as soon as we started focusing on helping customers by giving them the ability to focus on building a great payments experience and trusting us to scale with them as they need.
The Eureka moment, was more of a final decision. We used to say all the time that if we do our job right we’ll fade away into the background. One day we decided that was the future of the business and we haven’t looked back since.
In March, the NYTimes concluded — perhaps somewhat provocatively — that “Silicon Valley is Over” and that venture capitalists are taking bus tours across the Midwest. But Dwolla’s been there since the beginning, and given your recent move, could you speak to why you decided to move back and what it’s like to build a company away from the glitz and the glamor of the Valley?
I actually like the glitz in the valley and I travel there often. We have a strong San Francisco based team and I love working with them. I’m probably a little less jaded on the valley than many these days and I loved the time I had living there.
I’m not in the same place though personally or professionally that I once was and that’s led to my decision to spend a majority of my time in Iowa. There are a lot of inputs to that but the teams I work with most often are in Iowa so it makes sense for me to be here and I actually do like being in Iowa. I sincerely enjoy what I do and the people I spend my time with wherever I am.
Iowa does have a few things that I’ve had a hard time finding elsewhere, even though I’m sure it exists other places in the world. My commute in a bike or a car is 10 minutes. My kids’ school(s) are close and I can drop in whenever I need. Door to Gate at the airport is ~20 minutes on a bad day. My family has a breakfast and lunch routine that we enjoy. We’ve got a favorite movie theatre… The food is top notch and while we tend to get all the good shows after big city centers like NY/SF it makes traveling there that much more special when I don’t wake up there. It gives me a deeper appreciation and consideration of how to use my time to the fullest extent when I visit. I’m happy in Iowa and that seems stranger to most people than it probably should.
Building a company outside of the valley makes it more forgettable to certain people but I also realized at one point maybe their attention isn’t very important to building a great company.
The focus on the customer, team, and product is where the results tend to lay. Your zip code is a remnant of another time, don’t let it define you.
Thank you Ben, again, for your time!