Karyl Fowler - From Transmute to Global Trade and the Power of Digital Identity

In this episode, I sit down with Karyl Fowler, co-founder and CEO of Transmute, a company at the forefront of integrating modern identity technology into global trade. Before founding Transmute, Karyl’s work in the semiconductor and bioelectronics industries provided her with unique insights into the complexities of global supply chains.

We explore a variety of topics, including:

• The challenges of digitizing trade documentation and how Transmute is solving the multi-billion dollar paper problem

• The evolution of decentralized identity and its application to physical goods and cross-border commerce

• Key lessons learned from working with regulators and how Transmute has navigated the highly regulated trade industry

Karyl offers valuable perspectives on the future of trade and digital identity, making this an episode you won’t want to miss!
You can learn more about Transmute on their website: transmute.industries.
Subscribe to our weekly newsletter for more announcements related to the future of identity at trinsic.id/podcast

Reach out to Riley (@rileyphughes) and Trinsic (@trinsic_id) on Twitter. We’d love to hear from you.

Full Transcript

Transcript lightly edited for clarity.

Riley Hughes: Welcome to The Future of Identity, a show that surfaces hard-earned insights needed to succeed in the fast-evolving world of digital identity. On The Future of Identity podcast, we skip the conceptual and theoretical conversations and dive into the tactical lessons learned from people in the trenches taking a product to market. I’m Riley Hughes, co-founder of Trinsic, and we are a reusable identity infrastructure company powering dozens of amazing identity products. Today, I spoke with Karyl Fowler, co-founder and CEO of Transmute, a company adding modern identity technology to supply chain and solving for global trade. Most identity conversations surround people, so it was fascinating to dig into how reusable identity for physical goods being shipped across borders can reduce costs and increase trade volumes. And it’s no wonder, given that shipments take, on average, 50 pieces of paper and touch up to 30 different actors for a single shipment.

Riley Hughes: So we talk about a lot of the hard lessons that Karyl has learned over the seven years in decentralized identity, including her earlier mistake of being technology first, and her interesting insight reframing interoperability as meeting users where they are, as opposed to enabling some future thing. So there are many good takeaways in this episode, and if you find something particularly interesting, feel free to reach out to me and let me know. I love to hear from people who get value from these podcasts. Now to my conversation with Karyl. Karyl, welcome to the show.

Karyl Fowler: Nice to be here, Riley. Excited to get into the discussion.

Riley Hughes: Me too. I’m especially excited because, you know, most people when they listen to our podcast, right, most of the guests we have on, we talk about reusable identity for people, verifiable credentials for people, but You’re working with verifiable credentials in a different domain for cross-border trade. So I wonder if you could set the stage for us. Why is identity relevant to global trade, and, you know, what is the problem that you’re trying to solve at Transmute?

Karyl Fowler: So really simplistically, we are trying to solve the multi-billion-dollar paper problem in cross-border trade. So when it comes to the technologies that we’re using, what we found is that the identity of the assets, so the goods or the physical products being exchanged across borders, is in many ways equally as important as the human actors involved in moving those goods. So, for example, just think of a single shipment that’s going to be imported into the United States, whatever that is. On average, and I think this is research out of McKinsey, a single shipment takes up to 50 pieces of paper and copies of those papers, exchanged by up to 30 different actors. And currently less than 1% of global supply chain documentation and the associated workflows are fully digitized.

Karyl Fowler: So we all know paper, PDFs, shuffling these kinds of documents around leaves us susceptible to a lot of things: human error, of course, but also when you think about the kinds of things that regulators or consumers, you know, everyday Americans who are going to purchase and receive those products, they care about the origin of the goods, the ingredients of the goods. There’s a lot of decisions around border clearance made based on the data elements in these various supply chain documents. And so the more you can eliminate the copying or the places where there’s chance of human error or fraud or other kind of violative or fraudulent behavior, the better and the more efficient trade can move. So that’s really ultimately the problem that we’re looking to solve, and very similar to what I heard on some of your other podcasts and, of course, Trinsic as a reusable identity company, it’s a very similar concept: the ability to reuse, say, a commercial invoice across an entire supply chain.

Karyl Fowler: An exchange original, you know, digitally certified information and in a more expedient and secure way really matters when it comes to the interests around a border.

Riley Hughes: Yeah. Interesting. Yeah, thanks for setting the stage. I’ve heard verifiable credentials be compared to shipping containers before. I think Timothy Ruff is the first person to kind of popularize that, at least with a blog post. And so you’re sort of doing shipping container—well, but verifiable credentials as shipping containers for data, right? And so it’s interesting, the, you know, you’re like doing—

Karyl Fowler: I love that analogy too. I think it’s extremely helpful, especially when you’re explaining these concepts to folks in trade.

Riley Hughes: Yeah, I was going to say, but it works really well in your industry, right?

Karyl Fowler: Yes, yes, really effectively. But I’m sure we’ll get into it. The kind of nuts and bolts of the technology matter a lot less to a manufacturer, for instance, than the regulator.

Riley Hughes: Yeah. So speaking of technology, I wonder if you could—I mean, the first thing I thought of when I thought of, you know, 50 papers, 30 actors, whatever, is PDFs, right? I mean, they’ve been around for a long time, and, you know, in my naive thinking, I’m like, well, it doesn’t seem that hard to make a PDF out of something rather than print it out, right? So I guess, tell me why things are still so analog today in this space.

Karyl Fowler: So there’s, I think, a lot of reasons for why, and I’ll also caveat with I don’t think PDFs are going away. And Transmute has a feature in our verifiable data platform that allows you to download verifiable credentials as PDFs. They have a little QR code where you can verify in any setting. Super useful because a lot of trade happens, or communications around trade happens not just in email or phone calls, but even applications like WhatsApp. But PDFs are still often susceptible to the same challenges of paper in terms of the easy editing or kind of modification of documents. And when you think about trade, being able to kind of cryptographically bind a brand’s identity to the claims they’re making on those documents really sets up the stage for kind of reputational incentive. So obviously it’s not a silver bullet, and we know in our industry in a verifiable credential, you can assert false information. I could say I’m Riley today, but the beauty of the technology is that I can’t lie tomorrow that I lied today.

Karyl Fowler: And so, in particular, enhancing trade documentation by not only digitizing it for efficiency’s sake, but also having these things signed cryptographically with decentralized identifiers or other identity technologies really helps insert kind of the brand reputation into the system.

Riley Hughes: So how did you land on this, right? This seems like one of the, you know, when I was in my college entrepreneurship class, you know, everybody basically had the same ideas, right? It was like an app to help me find something fun to do on Friday night or, you know, whatever. I mean, and in the identity space, we see a similar thing. It’s like, you know, a lot of similar use cases, obvious ideas, reusable KYC or a staff passport for this or that or something like that. But in this case, it’s not something a lot of people are going after, and it feels like something that’s obviously very big, but is, you know, maybe not as… Obvious. Did you land on trade as the place to focus on and then find your way to decentralized identity as a solution to the challenges there? Or did you start off in the decentralized identity world and find trade as a good kind of use case or wedge? Or how did that happen?

Karyl Fowler: For sure. So I would say it’s a more organic mix of the latter. So Ori Steele, who’s my co-founder and Transmute CTO, is fairly, I think, prolific at this point in terms of just the foundational, or what I like to think of as the pre-competitive foundations of the technical space that we were both operating in, along with many others. And his expertise has all been in kind of cryptography and cybersecurity, whereas my expertise prior to founding Transmute was largely in the semiconductor and bioelectronics industry. And I would say while we both became very obsessed early on with the kind of tenets and values of self-sovereign identity, in particular when Ethereum launched and we were seeing kind of, you know, uPort make their first moves and that kind of thing in the open source arena, we were personally often competing in local hackathons trying to build something with identity on Ethereum and generally targeting some of the same applications you just mentioned, focused on kind of B2C self-sovereign identity.

Karyl Fowler: Ultimately, in the course of kind of playing with that technology, we did not, we were unable to kind of really— find a market for B2C identity and ended up between my experience in the semiconductor industry, which I’ll talk about here in a second, as well as some of our early kind of proof of concept customers, that some of these same values matter a lot to the enterprise. They’re just not using the same words. They care about data privacy. They care about having, you know, reducing risk and data bloat, but in only being responsible for data that, or liable rather for data that is relevant to the transaction at hand, whatever service they’re providing their customers. And that combined with my experience in the semiconductor space, which is frankly the most highly regulated, highly complex supply chains on the planet, that along with bioelectronics really gave us the idea of starting with trade. So we were kind of already obsessed with the technology and the values before really pivoting to focus on trade.

Karyl Fowler: And the thing I would say about my experience in semiconductors is I was working in a fab that handled DoD, and I would say about 40% of that business was focused on DoD and ITAR, trusted foundry type work. I was not handling personally those clients, but was tasked with commercializing a lot of that IP into bioelectronics. So a lot of my customers were building, like, genetic sequencing chips and other types of kind of bioelectronic applications. And in both of these supply chains, for the most part, the commodities start in China or Taiwan. No one factory actually knows or can fully build those chips, and the reasons are different in defense than biotech. In biotech, often just the materials being handled are, you know, not favorable in every foundry. And so through that experience, I got a front row seat, frankly, to U.S.-China geopolitics, some of the strategies that, you know, democracies are employing to contend with supply chains where they may have, you know, less than trusted trading allies kind of in the mix, or just so many parties in the mix.

Karyl Fowler: And so if you think of the stat around the 50 documents being exchanged by up to 30 actors, the problem is even higher, or even greater, in biotech and kind of defense chip supply chains, where there is just an even higher burden of regulation. So kind of first, there was just so much manual data exchange. And then secondarily, the exposure to, you know, in bioelectronics, a lot of my clients were, you know, building here in the U.S., Western-funded, but initially even commercializing first in Asia and China specifically because of the difference in regulatory environment for bioelectronic applications or things like genetic sequencing. And so it got Ori and I really thinking about how do we—how does a democracy manage digital trade? And specifically, in a democracy and in many of our trade agreements, there, including the USMCA, there is a commitment and kind of a mandate to protect privacy and competitiveness. So those are two obviously big values in our society.

Karyl Fowler: And accounting for those things while also solving for the diverse interests at a port of entry or cross-border interaction is really challenging. And so you need different technology in order to make that happen.

Riley Hughes: So you mentioned interests at the port. What are those interests?

Karyl Fowler: I would say this is fairly universally true, but there’s generally three main interests that can get competitive if you’re not using a technology like ours. The first is just facilitation. Obviously, commerce just wants to flow. Like you ordered a good, it’s, say, being imported from Mexico or another region. You just want it to get here fast, and everyone in that chain, you know, has an interest or revenue stake in making sure that that good moves expediently. Then secondarily, you have kind of the government functions. You have the regulator who needs to do enforcement. They need to make sure that violative goods that are either, you know, dumped goods or something like fentanyl doesn’t come across our borders illegally. And so they’re looking for those charges. And then finally, revenue or tax collection. And for better or for worse, I think here in my home state of Texas, we’ve seen some of these things play out.

Karyl Fowler: You know, when our governor wants to make sure that our citizens are protected from fentanyl being imported into Texas, you know, one of the solutions today is to manually look for that. And if you’re not using technology, this is where it leads to— You know, drastic port bottlenecks rerouting some of our tax revenue to other states and becomes a bigger economic development challenge. And in those cases, commerce really, really suffers. And so in order to align interests, you need a technology or infrastructure that allows trusted trade to flow expediently, but also allows you to better target what enforcement actions need to be taken. So where is maybe the fentanyl in the haystack, for instance?

Riley Hughes: Yeah, that was really helpful. Thank you. As I’m thinking about this, you know, there are few industries in the world as big as trade, right? I mean, maybe like energy and, I don’t know, like there’s maybe a handful, but it’s just so big. I’m wondering, is there a place, you know, you mentioned the bioelectrical and the semiconductor industries. I know that you’ve done some work in steel and, you know, I guess I’m wondering, where do you start in an industry so big? Or is it the case that regardless of what is being shipped or traded, those requirements at the port, like you mentioned, are the same in all cases, and therefore you don’t really need to pick a specific sort of niche place to start, and you can sort of just start, you know, apply the same technology to any place? Does that make sense? So how did you find that first place to start?

Karyl Fowler: It completely, it completely makes sense, for sure. So I would say that you’ll see a lot of our engagement with the steel sector. We can talk about it more publicly. This is, of course, what we’ve been under contract with Department of Homeland Security and the Silicon Valley Innovation Program with U.S. Customs. First focused on steel was the first contract we were awarded. And this has more to do with the regulator’s interests, so this is where they chose to start. Transmute and our verifiable data platform is commodity agnostic. In fact, our go-to-market today is fairly regionally focused. We’re very focused on Mexican imports into the United States, since they’re our democratic neighbor and our biggest trading ally today. And I am a true Texan, and sitting here in South Texas, very interested in expediting border clearances and growing our economic development kind of in the border region. But our product supports and works the same for any commodity being shipped, whether it’s a finished automotive good or raw steel or an agricultural product.

Karyl Fowler: For us, the difference, the interests at the port are the same. We need to protect privacy and competitiveness while also expediting the border clearance, enhancing targeted enforcement. But what changes is the paperwork. So quite literally what our API is doing is ingesting a lot of different data formats, you know, PDFs, images, Excel. We have API connections to ERP systems like SAP, and it’s transmuting that information into verifiable credentials, or digital twins, that are machine readable. They’re inextricably linked to one another, and then you kind of gain those benefits of reusable credentials across the supply chain. But what varies is, you know, all products tend to have a commercial invoice, tend to require an entry summary, have some document that is representative or proves origin of the good, which is what most Most facilitative or enforcement decisions are premised on. But there may, for instance, in ag be toxicity tests, where in steel or other metals be kind of a mill test report that details chemical, mechanical. chemical-mechanical makeup.

Karyl Fowler: And so one of the big kind of starting priorities of Transmute was first recognizing what is common across all of these spheres and starting really with first digitizing that information, and then secondarily trying to make the user experience basically create standardization across the wide variety. So to do that, we actually have a credential or document template library that today supports any import into the United States. We’re continuously adding as we kind of gain business in other regions or other commodities. You know, we may be missing a timber-related certificate that a customer will let us know, but the technology or kind of the guts of what the API is doing remains the same regardless of the commodity.

Riley Hughes: Yeah. Awesome. Well, this has been a super duper helpful conceptual overview, right? And I think your last sentence here, digging into your, you know, for example, template library, has got me interested in maybe digging a little deeper into some of the other features of the platform, getting a little more into the weeds on what exactly the product looks like. So, you know, when I’m thinking about what this really looks like in practice, I’m having a hard time visualizing. Like, I guess, help me visualize: is this a case where every shipping container gets a verifiable credential and it’s just that simple? Or, you know, where does that credential go? Is there a wallet that is controlled by some key that is owned by who? And, like, when that gets transferred, it transfers parties? How does it transfer ownership? And I guess I just have a lot of questions about tech. Tactically, how this data digital twin, you called it, you know, follows this good throughout the supply chain.

Karyl Fowler: Yes. So it’s a great question, and I think first, digital twin is worth defining for Transmute. So obviously, a digital twin could be a digital representation of an entire factory or a single product. For us, the digital twin is the verifiable credential version of the manual document that exists today. And then the digital twin of the shipment is that aggregate, or the envelope, rather, of all the documents required for an import. So, for example, in the steel sector, there’s about eight mandatory minimum documents that need to be supplied in order to get a steel good across a U.S. port of entry. And for us, if each of those are digitized into verifiable credentials, that collection represents the digital twin of that paper trail, or what was once that paper trail, and a piece of the digital twin that represents the asset. We’re very focused on digitizing the paper trail, so that’s, you’ll hear us use verifiable credential and digital twin interchangeably, but we’re referring to the verifiable credentials and then the envelope that represents the entire shipment.

Karyl Fowler: There’s definitely opportunity to extend this to the container level. We’re always looking for other places where this kind of digitization makes sense. We have experimented with adding to that envelope by using the same solution with, for instance, smart devices or RFID, things that are not humans that can assert information that can be part of that collection, but it’s really that aggregate of the journey of the good that we’re digitizing. And then in terms of how it actually works, so all of our customers, whether it’s the U.S. government or it’s today we’re generally focused on manufacturers or customs brokers. So there’s lots of logistics intermediaries. We plan to tackle at some point, but we’re, I would say our commercial customer base is largely those two actors. And in their case, there’s a variety of ways that they’re issuing this documentation today. Paper is definitely still one of them. PDFs and sending lots of copies of PDFs by email and WhatsApp is definitely a huge portion of the business. Excel is still very commonly used. And then lastly, an ERP system.

Karyl Fowler: So a lot of our companies or customers use SAP, and so they’re literally typing into a web form in their ERP system to issue, say, a commercial invoice. And our API connects to that ERP system and transmutes that information into a verifiable credential that can then be used throughout their ecosystem regardless. So that’s one way, which I think is fairly straightforward. The user doesn’t get out of their habit loops. The magic is happening in the background. They just never need to make a copy of that information anymore, and it’s a lot more traceable and queryable as kind of the knowledge graph of their own supply chain grows. And the same thing is true for if you’re uploading a PDF or an Excel, that our API is then converting into a verifiable credential. I would say one thing that’s really unique. Because we use decentralized identifiers and verifiable credentials is, say, our steel manufacturing customer, they own and control their data. We can’t see their data. Their knowledge graph is proprietary to them. So, for instance, U.S.

Karyl Fowler: Customs’ version of the knowledge graph is only going to include the data elements that a company opted to share with them. And generally what they’re, you know, opting to share is what’s legally or minimally legally required to move that good. There’s lots of, of course, regulatory kind of incentives that may compel someone to issue more information, but no actor in the supply chain is going to be able to peer into all of your proprietary data. And in trade, I think that is particularly different from a lot of the kind of consortia-style or blockchain-based plays we’ve seen attempt to solve for bridging data silos in supply chain, because routes, relationships, those types of things are proprietary in these businesses. And so the ability to show deeper granularity into your supply chain in a useful way is kind of one of the value-by-products of using this technology.

Riley Hughes: So what happens when, say, you sell your verifiable data platform to one actor in a supply chain, right, and your APIs are integrated with their ERP, credentials are issued, and everything is, I assume, you know, working really well until they bump up against someone in the ecosystem who doesn’t have technology to support verifiable credentials, right? Is that, is that like, I guess, how do you— think about the almost chicken-and-egg problem that exists, or is there something that you build into your solution that kind of gets around that in the meantime? Yeah, I guess, could you speak to that?

Karyl Fowler: For sure, for sure. So this is where I think, you know, early in the company, and definitely still today, probably like you and many other companies, talk a lot about interoperability. And generally when we’re talking about that, especially with early customers, which our early customers are focused on the regulators and standard setters, folks like GS1 who really have authority in how products are identified, verified, and moved today. That interoperability is more around kind of the technical layer, the infrastructure, the architecture, the standards you choose to build on, and it’s really, really important. But what we’ve discovered since we launched the verifiable data platform commercially late last year is that interoperability means something different to manufacturers, logistics providers, and brokers who are, you know, they want to check the compliance box. They want to use the latest and greatest if that makes them faster. But for them, what we’ve discovered is interoperability really means being able to meet them where they’re already at.

Karyl Fowler: So if they are using PDFs, we want to be able to have PDF upload and download in terms of our platform, and that’s absolutely a hard request. I would say it came from about 80% of our commercial customers last year, and we implemented it. We actually had the feature early in the product days, our kind of early instantiations of the product removed it, thinking, Oh, we’re going fully digital and verifiable credentials. But no, those are actually kind of habits that folks want to be able to remain in. And same thing with Excel and the ERP systems. So that’s kind of one piece that we’ve built in. The other is because we built on those open standards and we have interoperability at the technical layer, as well as these kind of pieces that meet our customers where they’re at, we’re able to add value first by way of cost and time savings, even if only one actor in the supply chain is using Transmute.

Karyl Fowler: This was really, really important and core to our business as we began building out the product, is we were watching other companies, you know, folks like TradeLens, who had more of this consortia approach where— It was hard to add value or the overall promise value without having the full supply chain or a full group kind of on board. And so it was important to us to build out a product that would add immediate value regardless of who else in the supply chain is using it. So today, in fact, we do have manufacturers as well as customs brokers who are using the product even though no one else in their supply chain is. And we’re still able to capture up to 90% of cost savings for that actor or that customer when it comes to managing the paper or PDF part of their business. So when you eliminate copies, you’re also, say for a customs broker, drastically increasing throughput.

Karyl Fowler: When your solution automatically links and formats data, which is a tremendous expenditure in trade, and reconciles that information or, in some cases, pre-fills information that you may have needed to do manually previously, you’re able to really amp their business and their throughput even though others in their supply chain may not be using it. The other piece that we have been really mindful of and that we’re really working on now is, of course, if one actor is using Transmute and the rest of the supply chain is not, it’s a huge opportunity for Transmute because every time the verifiable version of the PDF is shared, they’re exposed to our product. And so we’re able to kind of build in more network effect or exposure as a result. And so that’s kind of how we’ve approached it.

Riley Hughes: Yeah, there are a lot of really great nuggets in here for, I think, our listeners, Karyl, so thanks a lot. I mean, like the point about interoperability, meaning almost like, for lack of a better term, I’ll just say backwards interoperability, right? Like interoperability with the things people are already doing, as opposed to interoperability, like forward interoperability, as in, like, interoperability with what people will do in the future. That is, like, a super compelling, I think, concept and insight. I think it’s really interesting, so I appreciate you sharing.

Riley Hughes: And then the other piece that I think is critical that people really struggle to nail initially is adding value to one party independently, so that there’s an incentive for the first person to, you know, or the first entity to buy your product first because they get value from it by themselves, and then building in the, you know, if you’re focused on, you know, verifiable credentials, et cetera, building in that technology in a way that will, you know, seed the rest of the ecosystem around it, as opposed to waiting for, you know, I mean, if you needed to sell to both the shipper and the receiver, for example, in order for either of them to get any benefit, it creates a really tricky kind of chicken-and-egg problem that it sounds like you’ve been able to get around.

Karyl Fowler: A hundred percent. And I think folks are kind of leery of solutions like that because it’s a tough sell and trade is moving fast. Shipments are only ballooning. And the other thing that we found that’s, I thought was quite interesting, but is actually, I think, very rational and intuitive when you think about it, is, you know, no one could plan for COVID, but that focused the entire world of trade on digitization. Now, everyone has a digitization budget and strategy, and their attention is there. But it wasn’t that there was no digitization before. What we’ve seen is that even with manufacturers, the logistics providers, brokers, a lot of the digitization and innovation was happening where they meet their customers. So the back end that we were talking about and kind of being backwards compatible with existing processes, that’s where the digitization is lacking. And so using a solution like this, we can kind of stitch those worlds together in a way that makes a lot more sense.

Riley Hughes: Yeah. One thing I’m interested in here, you know, with identity companies is that identity and identifiers and data, right, when you break down the concept of identity, right, you really just get down into, you know, a lot of these lower-level concepts, and these apply horizontally. They apply to everything we do, regardless of whether you’re talking about people, content, organizations, goods, etc. And so a lot of ID tech platforms end up looking quite similar and being quite broad in their focus, right? They have, like, issuer-verifier APIs for, you know, verifiable data. They probably have a dashboard, probably have a wallet app or some wallet, you know, infrastructure somehow. And they sort of try to tackle a lot of things by being general purpose. And Trinsic, we’ve done this for years, and so I know the woes of doing this pretty well. But you’ve been really focused, obviously, on this use case for a long time. And obviously that seems like it has compounded into, you know, a really strong position in the space. So I guess I wonder if you could speak to this.

Riley Hughes: Like what compelled you early on to go narrow on a specific direction as opposed to going more broad? And how do you think that that’s affected, you know, where you’ve ended up?

Karyl Fowler: So it’s super interesting because I would say we have experienced those woes and have had multiple instantiations of the product that were very much more general purpose. For us, I think it was more of a result of our early customer base, the regulators and the standard setters, really deeply caring about the technology. Whereas what we found in the commercial market is, you know, now we want to not be the DVR problem. We want to look enough like a trade management tool and not so much kind of a decentralized identifier platform.

Riley Hughes: Could you speak to the DVR problem?

Karyl Fowler: Yes. So, and I’m going to get this story probably wrong, but my kind of lore of DVR is that when it first came out, the product looked and felt too much like a DVD player. And so even though you had all this magic technology, it was really tough for the market to recognize the value or just, you know, see it. And I feel like the same thing can be true in software and especially in the identity space, where early on we definitely, you know, even showing to manufacturers the full strings that are completely illegible of the decentralized identifier, going deeply into explaining the nuances of digital signatures and why this format is better or worse. And ultimately that is not what most of the commercial trade folks care about. There are, you know, compliance checkboxes, laws and regulations you need to be able to prove compliance with, but they’re more focused on their business problems. And so the ability to actually show the value of these technologies and the platform without being a scary identity platform and instead being a trade management tool has definitely been a big focus.

Karyl Fowler: And so I’m excited to know that it seems that we’ve been laser focused the entire time, and I think we have on trade, but we suffered from the same woes where, you know, really believe in the technology and our early customers did do as well. And so that’s what we were initially surfacing. Versus, you know, the ability to reuse that commercial invoice instead of making multiple copies, the ability to actually visually see how these different documents are connected in a shipment and whether or not, say, you’re missing one document before you file an entry. And those types of kind of features that now are more elevated in our dashboards and products, that’s what our commercial trade customers care about. Of course, we also still have the section where an IT professional can go manage keys or issue more identifiers if they need to, but it’s abstracted away from the common procurement or, say, trade compliance user who’s going to issue a certificate of origin.

Karyl Fowler: And that, I would say, is a challenge we share with the rest of the identity, and especially the decentralized identifier community, where user experience had been sorely lacking in the early days. And we all have had to kind of figure out, based on the users we’re serving, especially in the commercial front, there’s so much diversity there. What is it that they care about, and how do you surface it?

Riley Hughes: That’s interesting. Thanks for sharing. How do you think that focus on trade has translated into, you know, success or adoption? I don’t know how you measure, you know, success and adoption at Transmute, but, you know, I don’t know if it’s in terms of, you know, number of credentials issued, or if you just think about it in terms of, you know, customer and commercial traction or whatever. But, you know, yeah, I wonder if you could, you know, speak to basically how you think the—what is the correlation between that focus? Like, how much of your commercial success and adoption success has come as a function of that focus?

Karyl Fowler: So I would say, again, the early days were focused very much on the regulators, as well as maturing the technical foundations ahead of product launch. And so those milestones and metrics of success looked a lot different than where we’re at today now that we’ve launched commercially. So, of course, we’re trying to drive more network effect, onboard more users. But then I would say the metrics of success are kind of divvied up depending on what you’re looking at. So on an individual manufacturer brokerage basis, we’re really looking at how much cost savings are we driving. You know, have we truly been able to measurably eliminate data redundancy, copies of information? What is the time savings or throughput increase for a specific broker commodity because of use of our system? And that’s kind of the immediate less sexy benefits, I would say. Then there’s kind of the future benefits, which I’m excited to begin to measure as folks use our product more and more over time, which comes as a result of us using so much semantic web technology.

Karyl Fowler: So because all of our credentials have context and meaning and they’re machine-readable, the output of using our product is, you know, the knowledge. graph that I mentioned of your supply chain. And so when I think about the future that we’re headed towards, I want to be able to measure, you know, the opportunities identified or the risks in a supply chain, how, you know, how many of those have been able to be identified and mitigated or taken advantage of as a result of having your data structured. And I think that’s something that is going to take a little while and use over time in order to measure, but it’s one of the things that’s most exciting to me. And then just zooming out from the individual customer basis and kind of their risk and opportunity areas, digitizing trade promises to, fully digitizing trade promises to add over 75 billion in annual trade flows into the United States alone every year. And if you go just down to the U.S.-Mexico border, if we could just speed up those ports of entry by about 10 minutes, we’d add over 300 million in annual trade volumes alone.

Karyl Fowler: And that doesn’t count kind of the continual uptick and the trade relationship that continues to grow between us and Mexico. And so I would love to be in a world, and we’re definitely working towards a world where those are also some of the metrics of success. How much faster did we speed the border? Like how much more tax revenue or commerce was able to be accomplished as a result? And then finally, how many violative goods or other activities were prevented because of use of the solution? And so I think personally, in addition to being obsessed with our customers and the value we’re providing there and the cost savings and throughput amping that’s so exciting, I’m most, like what gets me up in the morning is kind of that more macro view of like, what does it mean when this is the kind of infrastructure that our trade is operating on across the nation and beyond.

Riley Hughes: Yeah, I want to transition gears a little bit here and just kind of zoom out and look at the space more broadly. And kind of, you know, in the spirit of on this podcast, we try to highlight some of the things that are going well and some of the things that maybe aren’t and what, you know, what you’ve learned about some of that to save other people maybe some time. You’ve been in this decentralized identity space quite a while. What hard lessons have you learned about go-to-market in a highly regulated industry like trade? Or I know you’ve obviously had some government contracts as well, which seems like it can be, you know, either a saving grace for some startups or like the death knell for others, right? So curious if you have, you know, lessons learned, because, you know, a lot of identity companies succeed in regulated industries, right? So curious if you have thoughts on that.

Karyl Fowler: So I definitely have thoughts. I would say the big lesson learned as a venture-backed startup was just understanding the appetite on the venture side for dual-use companies. And there’s a rise of funds that support dual-use technologies and companies. I mean, Moonshots Capital at our first round, and they are one of the early investors in IDM, and they deeply understand selling into government and the enterprise. But Silicon Valley, to some extent, our experience has been that they don’t—it’s not that they don’t understand it, but it’s slow, and the time horizon is different. Given I had come from a space where I was used to that pace and timeline in the semiconductor world, it, you know, to me, the government is an incredibly reliable customer and an incredibly validating customer. It’s appealing that they deeply care about the technology. When I think about the technologies we’re using and what we’re building for, what we built for trade, it’s kind of one of the most indefensive democracy solutions that I can imagine because it gives folks that privacy preservation.

Karyl Fowler: It fosters competitiveness, but it also allows us to act in unison when we need to or so choose, and in some really interesting ways. But ultimately, you know. Bureaucracies move slower, often than commercial customers, even enterprise customers. And so I think the hardest lesson has really just been understanding kind of on the company growth trajectory and financing front, how to frame that. For us, those early investments were required. I very much view us as kind of, I think it was Steve Case that coined the term the third wave companies. Like there’s a lot of areas that are ripe for disruption, trade, healthcare, but they’re highly regulated spaces. And if you don’t understand where the regulator’s position is, or have them as a customer, it’s really hard to create a market or to access the commercial market. And so you want to spend time and attention kind of maturing that relationship and understanding their position. That said, it is a slower go-to-market. There’s no doubt about it.

Karyl Fowler: And so being capital efficient, focusing your operations and kind of how you define success on de-risking measures for those early relationships, I think is really important. And I think that’s something that we just wouldn’t—hindsight shows you that. Like until you’re, you know, pitching a new capital partner and you kind of hear perception on doing business with the government, you don’t know it.

Riley Hughes: Thanks a lot, Karyl. This has been a super interesting and dynamic conversation, and hopefully our listeners agree. We always like to wrap up these episodes by asking our guests what the future of identity looks like to you.

Karyl Fowler: So I have become obsessed with the policy part of trade, and in particular policy around digitizing trade. and supporting more dynamic trade. And I think if I imagine, you know, 10 or 20 years in the future, when the kind of infrastructure Transmute has built with the verifiable data platform and the technologies we’re both working on are ubiquitous across border trade, I think the future holds way more interesting and dynamic policy. So what I mean by that is if we’re managing everything manually, it’s really tough to, you know, kind of change laws in real time or permit one thing for one trading partner but not another. We see this in particular, I would say, in de minimis in the e-commerce sector. But if we have sufficiently granular information and the digital rails that we’ve built are ubiquitous, I think we’re in a world where policy can be a lot more dynamic, and our policy can be crafted in a way that is truly in the service of meeting all the diverse interests involved. So that’s probably what I’m most excited about.

Karyl Fowler: I’m not exactly sure what all that policy looks like because right now a lot of my examples are rooted in proposals that I’ve seen today. And then I’ll kind of end by saying what I talked about a few minutes ago, which is I think this infrastructure is in defense of democracy. And I think it allows for us to, as democracies alongside others, act in unison when it makes sense and act competitively when it makes sense, in a way that will be transformational. And then finally, I think there’s a lot of really interesting other kinds of markets, including financial markets, that can result from having such granularity of information.

Riley Hughes: Awesome. Thanks a lot. Well, one of the big takeaways that I have from this episode is that, you know, saving just 10 minutes at a port of entry could result in an extra, what’d you say, $300 million worth of trade?

Karyl Fowler: Yes, it’s over $300 million. I think it’s like $325 million in annual trade volumes into the U.S. alone just by speeding up the southern border ports by 10 minutes.

Riley Hughes: Yeah, and that’s going to translate directly to people and to the economy and to, you know, everything. So that’s another example that I’m taking away of how impactful what you’re doing could be. So glad you’re out there doing it, and thanks for joining us and talking about it.

Karyl Fowler: Awesome. Thank you, Riley. This was fun.

Riley Hughes: Well, Karyl, yes, do you have anything to plug? If people want to learn more or get in touch or inquire about your platform, where should they find you?

Karyl Fowler: So our website is transmute.industries, so a little bit of a weird domain, but transmute.industries, and you can click on the Verifiable Data Platform tab, and it’s live now. We have a free tier. We’d love developers, even if you’re not in trade, come test it out. Fundamentally, we’ve seen folks who are just interested in decentralized identifiers make use of it. We’ve seen some really interesting things in utility and software supply chain and other kinds of cases where you’re trying to prove provenance. But you can definitely test it out. It’s live. We love feedback. And then we also have the Transmute blog on Medium, which goes deeper into a lot of kind of our philosophies on the technology, but links you literally to various kind of demos, proof of concepts, and more actual use cases.

Riley Hughes: Great. Awesome. Well, thanks again for coming, Karyl, and appreciate your time.

Karyl Fowler: Awesome. Thanks, Riley.