Turn on, opt-in, drive off — or how your car will earn you money in the near future
Reading the news these days, you cannot help but wonder, when exactly technology business models started straying so far as to be actively hostile towards their users. It seems that not a day goes by without another privacy scandal, mishandling of data or people up in arms against certain terms of service.
Certainly, we live in an age where we produce a lot of valuable data as evidenced by the rise of data science driven products and ultra targeted advertisements. So far though, consumers have only benefited from this trend by receiving a certain amount of free service in exchange for being targeted for data harvesting.
In the current climate of data regulation and increasing privacy driven focus, to a lot of people, this no longer sounds like a fair deal. New business models are sorely needed to enable all market participants to benefit from the so called “Data Economy”, currently projected to reach a volume of around €739 billion by 2020 in Europe alone.
That is why we at Widgetlabs were interested to learn about a new blockchain backed technology startup called CarBlock, aimed towards the automotive industry.
CarBlock promises to not only enable the owner of a smart car to take control and monetize the valuable data she produces while driving, but also increase the availability of such data for equipment manufacturers and data driven startups — previously only reserved for big brand name manufacturers.
Since CarBlock plans to offer a proprietary data exchange where drivers can offer and retain control of who uses their data, they create the kind of aggregation point for data that is currently missing from this fragmented space.
Interview with Julie Wang
CarBlock’s Co-founder, Julie Wang, was nice enough to let us do an interview about this exciting project.
W: First things first — how did you guys come up with the idea of CarBlock?
Julie: Well, CarBlock’s founding team originally started out with a company called nonda in 2014. It was right after the hype of smart wearables and we were looking what could be the next big thing that would reach the mass market. We came across the connected car market which at the time was deemed less interesting than wearables and smart homes by many entrepreneurs. So, we started looking into that in 2014 and founded the company which accumulated a large number of users and data across several years — also it is currently the largest connected car hardware company in the US. It has exclusive partnerships with retailers like Wal-Mart or Best-Buy.
So last year we realized that we accumulated a large user base and it came to how we should be using their data. The question was how we could make use of the data without jeopardizing their data ownership. Around mid-last year we were looking into different options and business models and this is how CarBlock got started.
As CarBlock began to grow, we realized that in order to create a truly fair marketplace we needed to be a neutral platform, without any ties to data users or providers. In early 2018, CarBlock formally became a separate company from nonda. This allows nonda to be one of our most valuable partners while being able to provide fair and accurate data to anyone interested, even if they may be in the same space as nonda.
W: What are your hoping for your impact to be like for the automotive space and transportation in general?
Julie: The automotive industry is very consumer focused, but many organizations don’t know how to properly gather and use data to improve the user experience. Even a lot of OEMs spend a lot of money on hiring software engineers, but in-car software experience so far has been very bad. We wanted to be the fundamental infrastructure for developers and entrepreneurs for access to automotive data. Also, we wanted to provide consumers benefit — forming a way for them to get them better services based on more accurate and better data they provide.
W: Do self-driving cars change your value proposition?
Julie: I would say that any disruptive technology changes how the industry works. Driving cars are an indicator of the entire automotive industry shifting from a manufacturing industry to a services industry. I don’t think that fundamentally changes what we do. The industry is targeting a higher level of customer experience with better and more accurate predictions of what the users like and this is where we would like to contribute.
W: Is the EU’s GDPR either a hindrance or a boon to your business model?
Julie: The best thing about it is that people are talking about it and are starting to take privacy and data ownership more seriously. If we tell our customers “You need to have the right data” and people don’t care about their data, then there is just not enough community momentum to back it up.
On the other hand, it can also discourage companies and lead them to give up on data driven product enhancements altogether. Some of the traditional companies who don’t know the legal risks, would rather not touch or collect any data because of GDPR. The model where companies just collect data because it might become useful later when they know how it can be applied is no longer viable for them. We are then facing a more conservative industry of data applications because they don’t know if that is the better way to do it.
Overall it is positive that it encourages companies to think about how they use data and discourages companies that are not equipped to handle data in a safe way to pursue this path.
W: How do you enable users to take and retain control of their data?
Julie: Since the hardware company that we started made us ask many questions about user data very early on, for us it became really easy to transfer the knowledge and patterns to CarBlock. The idea is we would allow users with hardware to “Opt-In” to CarBlock and they will have full control which data is shared. This could anything from car battery or mileage data to location data and driving information.
The data is stored encrypted on your own device with your own encryption key and through a menu, the user can select how data is shared. CarBlock by default only knows what type of data is available for when someone is interested in that data. If a service provider is interested in that data, the user can then authorize the use of that data and receive a CAR Token as a reward. CAR Tokens can be used for example to purchase services.
W: How do you enable those service providers to do a better job?
Julie: I think we can differentiate three types of companies here.
First there are the very tech oriented companies. Companies that were startups before, have owners from a technical background and understand the role data plays very well. Those are the companies that are very easy to work with. For example, we just announced our strategic partnership with YourMechanic, the largest online marketplace for car repair services in U.S. and they provide services including battery change. One of the great benefits that they can provide is to give users information about battery health. It gives them lead generation possibilities and customer retention. These kinds of predictive examples give great room for a good customer journey for service providers.
The second category falls under the category of bigger companies like for example tier one suppliers. These might be companies who already have some data but are now interested in using data, but they don’t necessarily know how to use it. We have more difficult discussions because they are more entrenched and less tech savvy than tech-startups.
The last category are the ones who do not understand data usage at all and are really afraid of even trying. These are the ones we are not touching yet.
The low hanging fruit for us are seen in the first and second categories where we can gain headspace through partnerships and though leaderships. This is where we really can have an impact.
W: How can you help insurers do a better job?
Julie: There are many discussions surrounding usage-based insurance in the automotive space, but insurers have a very hard time installing their hardware in their customers cars. This is because they are conditioned to think only about OBD (On-Board-Diagnostics) as the major source of data. Not many customers understand what OBD is, let alone want to install it in their cars. So, what we can do is give insurers an alternative source of data they can use.
Usage based insurance is a very complicated model though and we are interested in simplifying this for our partners. For example, we were exploring partnership opportunities with a company called Root. They will give you insurance after a trial of about two or three weeks while they determine if you are a good or a bad driver. After this period, we would help them determine your premium based on which risk category you fall into. Good drivers get good rates and will not be put into the same pool as bad drivers based on factors like geography for example. Our marketplace can also give them access to more data sets, which lets them more accurately price for the risk.
Another great example is how when we were working with an insurance company, we were able to show that when backup cameras were installed into their customers old cars, it significantly reduced their number of claims. It turned out that that was because around 40% of their claims came from customer’s cars backing up out of garages.
When you have more measures of driving behavior you get entirely new perspectives on how you can better reduce risks associated with it.
W: What blockchain technology do you use?
Julie: We currently implement our CAR Token as an ERC-20 token on Ethereum making extensive use of sidechains, but down the road it will not be suitable from a performance standpoint. So, we will be implementing our own blockchain in the future, to make sure we can handle large transaction volumes. This development takes place in parallel and is estimated to take around two years.
W: What specific use cases do you see for the blockchain?
Julie: Besides the token rewards settlement and the market mechanics, we are very interested in building applications on top of the blockchain.
Like we would be interested in having a cars history data reside on an immutable ledger. Take for example Carfax, which is a company that provides you with basic statistics from previous car owners. A future Carfax could do so much more, if for example you would be able to see how previous owners treated the car. If they went to regular checkups or were speeding on a daily basis. This is where blockchain technology really shines.
For more information, join CarBlock’s telegram group, or meet their team at InsurTech Boston and Consensus 2018.
Read more about CarBlock here:
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