15 Jul July 15, 2020 – Universal Tracking Ron Rock and Global Trade Prof Edward Goldberg
Give me a scalable business model, that’s what I ‘ll invest in!
Ron Rock is the Founder of Knowledge Rules, an Accenture-acquired BPM technology firm; Execuetive Board Member at Savana Inc., a software company that combines people, processes and platform to deliver financial process automation that helps banking and mortgage customers win in their markets; and CEO of Microshare.io, priorly known as Point.io, a product designed to manage the data end-to-end, including universal access, privacy and permission-based sharing. Michroshare’s Patent Pending Policy Fabric software enables just-in-time sharing of private data under the right circumstances with complete security, auditability, compliance and control. Microshare has also developed Universal Contact Tracing™ solution, which helps mitigate contagion risk during outbreaks and the deconfining phase for large enterprises. Ron holds senior advisory roles for several mid-sized and start-up organizations and recently served as an Independent Director for Philadelphia Insurance Companies. Ron has spent about a third of his career with Fortune 500 companies, and the other two thirds with entrepreneurial startups.
Edward Goldberg – President of Annisa Group and Author of Why Globalization Works for America – Read interview highlights here
Edward Goldberg is one of the leading experts on the interplay between global politics and global economics. Having spent his entire life moving between the worlds of academia, international trade and trade finance, he has a unique and realistic understanding of globalization and international- political economics. He is an adjunct professor at New York University’s Center for Global Affairs, and a scholarly practitioner at the Zicklin School of Business. His name appears on Bloomberg’s list of 193 people to watch/follow in academic & market economics. At Annisa Group, his consulting firm, Mr. Goldberg has worked on global trade issues with such major companies as Goldman Sachs, Rockefeller Brothers Fund, and Raiffeisen Zentralbank. Professor Goldberg is a much-quoted essayist & speaker on globalization, EU-U.S. relations, NAFTA, International trade and U.S.-Russian relations. Professor Edward is author of the latest book, Why Globalization Works for America: How Nationalist Trade Policies Are Destroying Our Country, where he goes on to offer a historically-informed analysis of why people should celebrate globalization’s place in our lives.
Highlights from Ron’s Interview
So we didn’t start out with this Universal Contact Tracing™ bracelet, the bracelet has really been a reaction to COVID-19. Prior to this global pandemic, we were doing IoT; putting the Internet of Things, putting these low-cost sensors in all kinds of buildings, sensors to track occupancy; how many people are there, the quality of the air, doing things like predictive cleaning. So bringing all of our physical buildings to life, using this new low-cost IoT infrastructure, and the power of Microsoft Azure. One of our products was an Indoor Asset Tracking tool, and we were primarily using that in hospitals. At the time, it was things like hospital beds, wheelchairs, infusion machines. It’s a big deal. Hospitals need beds, you can’t check-in if they don’t have a bed, you can’t checkout if they don’t have a wheelchair. Everybody’s always fighting for the scarcity around ventilators and infusion machines. So we started out, adding our Indoor Asset Tracking to all these other sensors. We were primarily selling to commercial real estate, hospitals without touching the patient, airports without touching the airplane. So think unregulated space, where we were just producing all this data to help drive efficiencies, mostly around sustainability and ESG. How can I communicate to my stakeholders that I’m reducing my carbon footprint, that I’m being a good Global Citizen taking care of the environment? How do I do all that if I don’t have the data of how my building is living and breathing every day? So that was our core business. We sell primarily through Microsoft globally, a lot of our business is driven out of London, and things were chugging along just great. I’ve raised $20 million since the company’s inception seven years ago, we’ve got a nice steady run rate. Then all of a sudden, the week of March 16th, 2020 hit.
On a side note, let me tell you why our is driven out of London. The most important thing about Europe in general and as an American doing business in Europe, we tend to gravitate to London as our home base. So it’s just a European base. It’s important to note, I think people find of interest potentially that Europeans are much further ahead on the sensors in buildings than the United States are. In Europe, energy has always been much more expensive than it was in America. I like to say when I was a kid, my dad always hollered, shut the lights out. But even 30 years ago, Europe had lights on timers. So if nobody was in the space for a period of time, the lights shut out. The thermostats went way down at night. So they’ve always been further along in letting technology do things for them. Fast forward to 2020, business for IoT, smart building, smart cities is further advanced in Europe than it is in the US. Even within North America, it’s further advanced in Canada than it is in America. So again, it’s a cultural thing as to why we also spend a lot of time focusing on London.
Now, back to the contact tracing. So the week of March 16th, the whole world suddenly realized we have a problem, and we were no different. Our employees were flying to the respective home countries for an indefinite period of time. I was actually in London that week, I spend a fair amount of my time there. The State Department said, “Get home now or risk staying where you are in definitely.” So I needed to get back home to my family. We lost some of our biggest deals that had closed in early Q1, these were global deals primarily with Office share companies. We were going to be sensoring up conference rooms for any of your listeners that hang their hat at a WeWork or a Regus office center. The idea that we often use conference rooms without paying, we’re not really stealing, it’s just an impromptu meeting comes up and you say, there’s an empty room, let’s go. So the use case was going to be simple, if a conference room had people in it, we were going to just make a call out to the accounting system and say, did somebody book this space? If they didn’t, after a few minutes, we’d have the friendly receptionist knock on the door and say, I’d be happy to book this space for you.
So deals like that, we were closing at scale. Literally the week of March 16th, those deals just went away. If you think about the business model for companies like those, their revenues are down 80%. So everybody left the offices and went home, and we were hustling to figure out what are we going to do to survive? Again, we’re an early-stage company, we’re not that big. One of Microsoft’s biggest customers reached out to them and said, we noticed one of your partners, Microshare, is tracking hospital beds. Do you think we could use that to track employees? That was the beginning of this whole significant pivot that we made around putting wristbands on employees to provide what the industry now calls contact tracing. By the way, contact tracing is one of those wonderful terms that nobody knew what it was 13 weeks ago. Today, we’re on the front page of the New York Times. Today, the front page of The Wall Street Journal has an article about the reliability and the evolution of contract tracing solutions. So we’re using that same core platform technology that was around tracking hospital beds, and we are putting a wristband or a badge on every employee in a space. So if you and I are in the second floor hallway outside the conference room, and we are closer than six feet for more than 10 minutes, that just happens to be the definition of a contact event right now, we expect that to change over time. But today, if we meet that criteria, our wristbands or our badges register a contact event. We do that anonymously. So we don’t know the person’s name, we just know that there was a contact event.
If tomorrow I call in sick and I say I’ve got COVID-19, then and only then do they take my badge number, they associate it with my name. Then they look and they say, give me all the badge numbers that this person was at a contact event with over the last two weeks. Then imagine you’re getting an email saying, “Hey Jim, you had a contact event with somebody who tested positive, so we are not telling you that it was wrong, we’re just saying you’ve had a contact event.” So now, I can isolate a subset of my employees and have them go get tested. At the same time, I can also find out based on my badge, show me everywhere that Ron has been in the building over the last two weeks. So now I can isolate a part of my building and deep clean it, not worry about deep cleaning the entire building, which is economically impossible. So that’s the core of our offering. We take that contact tracing, we’ve now bundled it with occupancy, predicted cleaning, and real-time feedback, and it’s an entire clinical-safe reoccupy strategy. So as companies are thinking about bringing us back to work, there’s a whole inexpensive and highly-scalable infrastructure we can put in place to try and stay ahead of the virus and the curve spiking up again.
This is the same thing that South Korea and Singapore did so very effectively. Again, because those societies are much more disciplined than Western Europe and the United States or most of North America, they had the ability to force people into more stringent lockdown and quarantine. They don’t have the same movement and riots the way that we do here. But a lot of that was done manually. Even now, as we as we talk to universities and large corporate campuses, they’re trying their best. Imagine you calling in sick tomorrow. Of course, now you’re ill, you’re struggling, and now somebody from your HR department calls and asks you to recollect for the last 14 days everywhere you’ve been and everybody you’ve spoken to. That’d be very expensive and what are the odds that you’re going to remember
My entrepreneurial story starts really long before Microshare. I’m a lifelong entrepreneur, I’ve had multiple startups in my career. I had my first successful startup sold before I was 30. I was involved in multiple startups in the 90s and 2000s. My last startup, I was employee number one, I grew it globally and I sold it to Accenture in 2010. So that was a pretty big win. But I have to say, in there, I also had a really big loss. So I was employee number one and a company that grew to 80 employees, and then down to one again in nine months, and it was during the Dot-com meltdown. I launched it in March 2000. For any of the history buffs out there, March 2000 was about three weeks before everything hit the fan in Dot-com. I was already into hiring and I had commitments from VCs. Actually, we had a company that did the exact same thing Skype ended up doing, and we actually caught on eBay before eBay bought Skype. So we were in the VoIP business and video conferencing. Again, in 2000, we didn’t have fantastic products like Zoom or Microsoft Teams. So the pain of that process and the stress that I caused colleagues and associates is something that never left me.
So we tend to forget the winds pretty quickly, but the losses, you remember them like they were yesterday. I think that’s part of the entrepreneurial mission. I used to do a lot of lecturing in universities and in entrepreneurial startup things. I had a picture of a big guy sitting on a small can of dynamite and you can see the spark lit as it’s getting closer to blowing up, and the box that the dynamite was in was labeled whisk. So I think that entrepreneurs have an unusual sense to manage risk, either knowingly or not naively. We go in and we just take these huge risks. So the magic of starting a company, I think, is don’t be afraid to take the risks, don’t be afraid to pivot along the way, and let the market decide what you’re going to do.
I met a guy five years ago, I was raising money for Microshare. I got about three slides in and he threw my deck back at me; he threw it across the table. This was out on Sand Hill Road in California. He said, Ron, I don’t invest in technology because we have some really cool technology. He said, I am of the opinion now that if you’ve got cool technology, I can hire engineers all over the world that can build whatever I need. Give me a scalable business model. He said, that’s what I’ll invest in. So we ended up transitioning, because our pedigree; my team, and I, we’re technology guys. I’m a sales guy and a visionary guy, but my partners, one is an MIT guy, he can code anything, could break into NASA and launch a rocket to the moon. So we’ve got some really cool technology, but what we were lacking was a scalable business model. So we were on a continual search to marry that technology with a model where suddenly we might sell tens of millions of them. That was the evolution of Microshare.
I started the company out called Point.io, we started the company in 2013 timeframe. Our initial focus was helping companies manage the information and flow of data between what they have locked behind the firewall, and what’s out in the cloud, and our new evolving mobile devices. So if you think about a corporation spent trillions of dollars over decades locking everything down, and overnight, they’re being asked to take that data and share it with things like Salesforce.com, HubSpot, DocuSign, Box, Dropbox. Every employee is coming in the day after the holiday saying, I want to do my email on this device that my kids just got me for Christmas. So for corporate enterprise, that was a nightmare, and we were focusing on how to do that in a scalable and secure way. Along the way, one of our largest customers was getting into IoT, and they were going to flood North America with this low-power wide area network radio bandwidth that would suddenly allow these sensors, many of them under $20, with a five-year battery life, to suddenly put sensors on every refrigerator, door, toilet seat, dog, cat, kid, manhole cover; put sensors on everything to drive these efficiencies and help manage the new world. That’s how we got into IoT. That was about five years ago.
As we started gaining traction, we realized that the name Point.io was stupid, and we discovered that Microshare share was available, which by the way, blew us away. I just hired a guy that spent 22 years at Microsoft, and he just joined Microshare. So the running joke is unless you have Micro in your name, he’s not going to come work for you. So that in and of itself was great. But if you think about that corporate dilemma of cloud and mobile devices, well IoT: putting 100,000 sensors in an office building, putting a half a million sensors on a big college campus, that just takes that problem and exasperates it all the more. So how do you bring all that data together and make sense of it, that was the genesis of Microshare.
The early days because I sold my last company to Accenture, I had a lot of people that just wanted to invest in me, and they didn’t even know what we did. You’ll find that most entrepreneurs that have that first win or a second win under their belt, then success begets success. So people can’t even spell IoT but they want to write you a check, because they want to be part of the next new thing. That’s really important, that early seed funding based on your relationship matters. But as we morphed the company and pivoted the way that we did, all of a sudden, that halo wears off and now you got to start earning your credentials.
I made a decision early on, based on all of my experience over the years, but I for the most part, don’t believe in funding from VCs. I think VCs typically are too egregious, their business model is simple: “Out of 10 investments, 8 are going to fail. How do we find the eight that are going to fail as quickly as possible and make them go away? I don’t know of any VC that would have grown with me over the last eight years to make the pivots that we made, to be into the position we are right now. So instead, I went after high-net-worth individuals and family offices. They typically understand alternative investments more, they manage their portfolio, they’re more of a hands-on, you can get to the person who owns the money. In a VC, you’re getting to somebody who professionally manages the money, and that’s got a couple of catch-22’s to it. One is they’ve never actually made money, so they’re just doing a job. When you talk to a high-net-worth individual, they typically understand entrepreneurs, they understand the importance of passion and persistence. Most VCs don’t, in my opinion, this is just Ron’s personal, because I’m sure some people out there will think oh, that’s outrageous. This is just my opinion.
o, please, the thesis of this radio show is that creativity, risk and passion are greatly overblown, that 93% of ideas are copies of existing businesses. So just go copy something and start a business. Don’t wait for the light bulb. That risk is inherently bad. And most entrepreneurs, you included I heard you say it are reducing risk by doing a lot of things you did some pre selling, you had some customers, you raise some money, you’re using other people’s money when surely you could have afforded to do it. You’re reducing risk because at some point we want to reduce risk. And then you also mentioned my third buzzword passion. I’m passionate for the lifestyle, the freedom the opportunity to work for myself. The fact that I can wear what I want commute how I want, I don’t really care what I sell Ron, as long as it’s mostly moral and kind of legal, and I’m passionate for entrepreneurship in and of itself, I have sold purses, leather stuff, a whole bunch of junk that I don’t use thou
As I’ve gone through the journey, when I say passionate, I am passionate for my employees being successful, I’m passionate for us not failing, I’m passionate for finding a scalable business model. I find it a little bit interesting. The number of times I’ve spoken at universities or classes around entrepreneurship, I often wonder can you learn to be an entrepreneur? Because entrepreneurship is not about studying all of the possible scenarios, picking one, justifying why you picked that, and then going; entrepreneurship moves much faster than that. I also believe that 93% of the technology out there, we’re just iterating what’s already there.
But to hit again on what I said about my Sandhill road experience, the opportunity to make these things explode is show me a scalable business model. It’s not the idea, it’s how did you package the idea in a way that people wanted to buy a whole lot of that stuff? Today, we have some patents pending around core stuff that’s interesting and unique, but we’re using off the shelf Bluetooth devices, we’re using sensors that are manufactured by other people. We just packaged everything in such a way, we took all the friction out of the sales process, that all of a sudden, instead of buying one people were buying a million of them. By the way, you can get passionate about that. Of course, as we talk about COVID-19, right now this is about saving lives, this is about improving the quality of life, this is helping whole economies get back to work with some sense of security and safety. So you’re not watching me right now, but believe me, I’m very animated right now. This is pure passion driving this. Given significant setbacks, like the week of March 16th, when it looked like the last year’s worth of work was going away, our funding had just dried up, we weren’t sure that we were going to survive. In moments like that, you can either throw the towel in, or you just brush yourself off and say, bring it on, let’s go. The analogy I told people the week after March 16th, I said I felt like we tended Dan, in that famous Forrest Gump Episode when he’s at the top of the boat and the storms are coming in, and he’s like, “Come on, is that the best you can do? Bring it on!” You don’t learn that in school, that’s pure passion.
To find out more online, you can go to Microshare.io. The website’s really up to speed on all of this. You can find me on LinkedIn, you can find me on Twitter. With a name like Ron Rock, you don’t have to look too far.
Highlights from Edward’s Interview
I have to say, seeing the different trends in geopolitical economics right now, I am tremendously distressed. In a part of my book, I have several pages talking about how similar we are to the 1920s at the moment. In a way, it’s like we forgot history. If we look at what happened in the 1920s, we had tremendous technological innovation. It’s interesting that 20% to 30% of the farmland became unuseful because it was planted for horses, but the automobiles took that industry away; took that part of farming away. Automobiles were the tech of the time. So we have a huge technological revolution going on in these times. How do the politicians go to solve the problem? The farmers put political pressure on the politicians, they come up with this gray word tariff. There were two horrible tariffs put on in the 1920s. Actually, this week is the anniversary of the Smoot-Hawley that was put on 90 years ago this week, which was probably the worst tariff in American history; because of the pressures from the farmers and in order to pacify constituency, not so much different today.
So what these tariffs do is they basically raise the cost of products into the United States. They call the rest of the world to tit-tat. You’re going to raise tariffs on my things, I’m going to raise tariffs on your things, just like the Chinese have done on agricultural products or lobsters from the United States. Consequently, Ford in the 1920s was the largest seller of cars in Europe. All of a sudden, Smoot Hawley, we put tariffs on the European counter, Ford loses most of its business in Europe. RCA was the major radio maker, don’t forget what there was no television at the time, showing tremendous radios in Europe. Germany puts tariffs on RCA radios to counter the tariffs that America put on. What happens is RCA isn’t selling any radios in America, so in Germany, interestingly enough, a little family company no one ever heard of, Siemens, in Germany starts to boom, making radios in Germany. But what’s the effect? Ford has to let go of workers in the United States, RCA has to let go of workers in the United States. The tariff game gets you nowhere just to pacify constituencies. What happens is, unlike a poker game, where I’ll see you and you see me, and you can always say, I’m not going to see you, I’m not going to do the next hand. In the political game though, you can’t back out because your constituencies are pressuring you to raise if the other guy raises.
Now from a globalization perspective, the reality is the majority of Americans have come out ahead with globalization. Yes, there are people that have been hurt, that’s sad and that’s a whole other conversation to go into. But the majority of people in America have been winners of globalization, and two-thirds of our problem now, forgetting what’s going on in COVID, has nothing to do with globalization. It’s how to handle this great change that’s going on core technology and automation. Let’s look at steel on tariffs, which was his first action. Well, the reality is that in 1970, it took 10 people to make a ton of steel, today it takes one. All the tariffs in the world are not going to bring back those steelworkers, because technology has moved on. Look at Upstate New York, look at Rochester, it used to be the home of Kodak camera; booming, making Kodak film, making the brownies. You must have had a brownie camera as a kid, everyone did. Well, that’s gone. Globalization didn’t take that brownie camera away, your iPhone that can take the picture took that camera away. So that’s the change that’s going on mainly in the last 10 years in America. If you even look at the supermarkets, the supermarket checkout counter used to be a place for teenagers to have summer jobs and part-time jobs during the checkouts from the supermarket. Now it’s scanners. It’s also interesting, before the COVID disaster, we had full employment in the United States. So we have to put it all in perspective. Yes, globalization has taken some jobs away, but it has not been a panacea for everyone. For sure some people have got hurt, but the majority of people in this country have benefited.
Many people may argue that even before COVID, China deserved a slap on the wrist because of the unfair trade. But honestly, China has been pushing the WTO rules wherever they could afford to push and get away with. But amazingly enough, with pushing the WTO rules, I could be off by one or two, but out of the last 20 cases that the US has had with China, we’ve won 18 or 19 of them. So trying to push or re-push back, this is the game of business; someone pushes and someone else pushes back. Without a doubt, China has not played by British upper-class rules. But once again, there’s the face issue, where all of Asia is obsessed with self-perception and the way other people see them. It’s all pride issue, they say face is a good way of saying pride. You hurt someone’s pride or face. So do you attack China where they played fast and loose with the rules by saying, “You are horrible, we’re putting these tariffs up against you and start a trade war?” Or do you get your other partners, whether it’s the European Union or Japan, to join with you in the back room, to pressure China to change its ways?
Again, one may argue that that has been going on for decades and it’s too slow, but the reality is that Trump actually stopped it. He stopped working with the Europeans on it, he stopped working with our Asian partners on it. Let’s be confrontational. If you want to get the, you know, once again the face issue, which is truly a real thing, if you want to make problems further and in Asia, you confront head-on. Tom Friedman had an interesting piece on Wednesday of this week on the Chinese-US relationship and whose fault is it. He says, Xi has been overly aggressive, Xi has almost been a smarter version but a similar personality than Donald Trump.
Shifting gears a little bit, as far as intellectual property theft goes, it does bother me. But I know historically, the Chinese didn’t invent this game. Alexander Hamilton, when he was Secretary of Treasury in 1782, offered rewards to Americans who could steal on the patent to British technology on weaving and the textile industry, because the textile industry was the tech industry of the time and Britain was booming from it. So Hamilton said, we should have this also. So I think we just have to realize it’s not a new game. I’m not saying it’s the correct thing to do, because once again, it’s not playing by the fancy rules. But we have to do everything to stop it. In fact, interestingly enough, under Obama, it slowed down a little bit. Xi and Obama had an agreement, which Trump then walked away from.
Here are my thoughts on the topic of diabetes drugs not being made in the United States at all. First of all, I am totally a free market and an international trade guy, but you wouldn’t outsource your fire department. You wouldn’t send your fire department to Vietnam to protect you, that doesn’t make much sense. So why should you outsource these things? So I’m in favor of certain things being nationalistically protected, just like we protect our defense industry. There was an interesting comment someplace that we spent billions and billions of dollars in the defense industry, meanwhile, the enemy came from a place we weren’t protecting, and we hadn’t spent basically two cents on it. So I think some industries should be protected, we need to have stockpiles of some things here or the industry itself to be protected. Back to my analogy, you wouldn’t outsource your fire department, it’s just foolish. But we did it. It was a place government has a role in, laissez-faire doesn’t only work if the government balances it.
I’ll give you two references from my book, Why Globalization Works for America, and those are Star Wars and Downtown Abbey references. Downton Abbey is, basically we had an upper class in England, trying to once again stop tomorrow with high tariffs. For a while, they lived very well as we see in Downton Abbey. Eventually, they had to marry American millionaire in order to keep their lifestyle going, because the government changed the policy and realized how it was hurting the country. But Downton Abbey is a prime example of how it goes wrong, of how a group in order to protect their lifestyle wants very high tariffs that are threats to the country. Not only do they have to marry into American millionaire class to save the family, by the end of the series, even her money can’t save the estate and it starts to fall apart anyway. But they get their money originally by having a law cash which forbids on cheap agriculture coming into the UK. So they, on his biggest state, can sell at whatever price they want their grains. Not a bad thing though, if you can do it.
Moving on, I used the Star Wars analogy because there was a disturbance in the force and it was called globalization. What happened here in the United States, for some reason, and I don’t quite understand it, the American political system absolutely failed with globalization. If we look back in history, economic changes are some things that constantly happen, it’s evolution. In fact, globalization is a political and economic form of evolution. The Industrial Revolution in the 1890s, when the big companies were monopolizing everything; Standard Oil was taking over the oil industry, you had these meatpacking factories that were just producing meat and food without any regulations, you had Teddy Roosevelt come in and basically assume powers that weren’t in the constitution, to piss anti-monopoly laws. So you broke up Standard Oil, you had rules about how you could produce food, you had all these new rules to regulate and stop capitalism from basically just becoming these huge five to six companies monopolizing everything. So they saw a problem that was happening during the Industrial Revolution, and the government went to solve that problem and took powers beyond the constitution.
1932, the same thing happens. We now have the Great Depression, there is no safety net. FDR comes in and he makes a safety net: unemployment insurance, Social Security, so on, and so on, not in the Constitution. So he actually seizes more power for the federal government and puts a safety net in to adopt the government to the new economic problems that are happening; not to the 1789 economic problems, to the new economic problems. For whatever reason, there was a massive disturbance in the force with globalization in the 1980s and 1990s. But the government didn’t do anything. It’s really a total failure of the American system. The government could have had massive re-education for workers. Recently, just in the past eight years as an example, we were all worried about the change over because of global warming away from coal to cleaner energies. Wouldn’t it be interesting if the government said, “Kentucky, West Virginia, whatever the federal government, here’s a billion dollars, you guys be the center of development for the new energy industries to replace the old industry?” Once again, it’s back to the issue. Let’s say if you have got a dozen needs, a moderator needs the government to balance it off. When it came to globalization, unlike in the 1890s and 1932, our democracy was asleep, it didn’t work.
You can get a copy of the book, Why Globalization Works for America: How Nationalist Trade Policies Are Destroying Our Country, on Amazon. You can follow me at EdwardGoldberg.info, or my Twitter site, which is @EdwardGoldberg.