Invest Like the Best with Patrick O'Shaughnessy - Blake Hall - Combat, Service, and Innovation - [Invest Like the Best, EP.408]

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Starting point is 00:00:26 To see what happens when you eliminate the busy work, check out Ramp.com slash Invercored. Hello and welcome, everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. Invest like the best is part of the Colossus family of podcasts, and you can access all our podcasts, including edited transcripts, show notes, and other resources to keep learning at join colossus.com. Patrick O'Shaughnessy is the CEO of Positive Sum. All opinions, expressed by Patrick and podcast guests are solely their own opinions and do not reflect the

Starting point is 00:01:07 opinion of positive sum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of positive sum may maintain positions in the securities discussed in this podcast. To learn more, visit psum.vc. My guest today is Blake Hall. Blake is the co-founder and CEO of IDMe, a secure digital identity network with over a hundred million members. He was an officer in the United States Army and served our country for four years as a rifle platoon leader, battalion reconnaissance platoon leader, and as a battalion logistics officer. We explore his formative years in the military and transition into entrepreneurship. Blake shares powerful stories from his time, leading scout sniper missions in Iraq,

Starting point is 00:01:53 including how his unit achieved a 90% success rate in high-stakes operations through relentless preparation and learning. He shares the origin and evolution of IDME, a company dedicated to verifying digital identities to combat fraud and simplify login experiences. We discussed the role of identity in the modern economy, frameworks for building company culture, and evaluating executive talent. I am ridiculously inspired by Blake, and I'm so grateful for him and all the Americans who serve this country. Please enjoy this discussion with the awesome Blake Hall. Blake, I was wondering where to begin our conversation based on prior ones that we've had. And one place that is really interesting for me, and I've always been fascinated by is your

Starting point is 00:02:33 experience in the military. And specifically, the experiences you've had that have taught you lessons that you think would be pretty impossible to learn had you not had the experiences you had in the armed forces. And so maybe you can tell us a little bit about a sketch of what you did. And then I want to spend some time on some of the formative stories that have shaped your worldview that maybe you wouldn't have been shaped that way had you not had those experiences. Thanks, Patrick. I think you're always formed by your childhood first. And I grew up around amazing people. in my life. My grandfather, I was a war hero in War II, fought and landed at Anzio as a 17-year-old Browning automatic rifleman, standing guard in the Rhine of Germany surrenders, won a bronze star

Starting point is 00:03:14 with Valor for crawling out in front of three German machine gun nests as he was splicing a line that allowed the Ford Observer to call in artillery that beat back a Nazi counter attack that was about to wipe out his battalion, which today would probably be a different medal, but was a bronze star with Valor and War II. And then my dad served for 30 years, West Point graduate, it was brigade commander. And so I think the lens I grew up in was really about purpose and around service, like a full appreciation of America that what we enjoy in this country is quite rare in terms of our freedom. Those freedoms are supported by the bravery of young men and women who are willing to sacrifice everything at Omaha Beach and Iwojima and Okinawa. And so for me, I didn't

Starting point is 00:03:56 actually want to go into the military, but I felt I needed to in order to serve and learned a lot of lessons along the way that we can talk about, but really grateful for that upbringing because I think it gave me a context and appreciation for what we enjoy as far as our way of life that I might not have had if I'd grown up in a different way. And what was the brief timeline of your personal experience in the armed forces? What did you do? Where were you paint the picture for us? I went through ROTC at Vanderbilt University in Nashville, Tennessee, and in 2000, it was peacetime. It was just a way to pay for school, and then 9-11 happened. And overnight, I realized it When I graduated in 2004, I was going to go to war.

Starting point is 00:04:35 And I figured if you're going to go to war, you might as well play with the varsity. So I resolved, I wanted to be an Army Ranger. And my mom's from Queens. So growing up, my grandfather on my mom's side, had driven me around the city and showed me the Twin Towers and the Chrysler building and everything as a kid. So it was super personal to me, as I'm sure it was to a lot of Americans. And I wanted to defend the country after we had been attacked in that way. I commissioned. I went past airborne school, so to be a paratrooper ranger school, had a rifle platoon for five months, then was selected to be the scout sniper platoon leader, which is the most

Starting point is 00:05:10 senior platoon leader position in an infantry battalion. Ultimately, we deployed to Iraq from 2006 to 2007. So I fought in Mosul, every neighborhood in Baghdad, Krabala, outskirts of Fallujah and Lake Tar, So got the full tour. And our mission over there, right before we went into combat, Mosul, we had some three-letter agencies come in and say, hey, listen, forget everything that you guys have learned about reconnaissance and precision engagement. You're just going to be running kill capture missions against senior Al-Qaeda leadership. And we're going to give you some equipment and some intelligence assets to help you do that. And the next like 15 months, that's all that we did was run down mostly Al-Qaeda vehicle bomb networks. I was 23 years old at the time. And so it was

Starting point is 00:05:53 quite a lot of responsibility. Can you describe maybe anecdotes, sounds like the wrong word, like a story within the story of that 15 months that pops most immediately to mind to zoom it in on a specific episode, just to understand what you were doing? I think leadership starts with caring. I remember when I got to Mosul, and still to this day, I'm just terrified of letting my friends down. And so when you, I had 32 scouts and snipers. I met their wives and their parents and their kids. And if you make a wrong decision in combat, you could lose like a fourth of your platoon, just like, bam, a suicide belt, just gone. And so the first thing I did actually is I got to Mosul and I went up on top of a hill and I got down on my knees before God. And I said, there's a verse

Starting point is 00:06:36 from Isaiah that says, no weapon formed against me shall prosper. And so I claim that promise for my men. And God, it was just amazing to us over the next 15 months. But the mission said, my first firefight was in a neighborhood called Terrier. And as we were going through, It's northeast Mosul. It's, I think, the same mosque that was there where Baghdaddy made himself the caliph of ISIS of the Islamic State. And we had a high-value target in the neighborhood. And as I'm getting my guys out of the trucks, we're in these strikers. They're a 2010 vehicle. They have eight wheels. They could do about 55 miles an hour. So it's, I think, to a layman, it's almost like a lightweight tank with a 50 caliber machine gun on top. And it's got the sound signature of F-150. It's pretty

Starting point is 00:07:19 quiet. And as I'm getting out, the three-letter agency attachment is like, hey, sir, he's like, be careful. This commander is marked is extremely hostile and dangerous. And I was like, what, Al-Qaeda commander is not? Extremely. Like anything else, as soon as you get a little cocky, I was in a courtyard talking to some of the folks, and then just had AK rounds, like hit right over my head. The cinder block was spraying into my face because the rounds were that close to where I was at, and we were immediately into a firefight. That was my first firefight. I'd thought a lot about will I be brave when it counts, and will I care more about the team and my job than about myself? And so we basically, there's these three Al-Qaeda fighters that were shooting at us. I put my

Starting point is 00:08:03 snipers up in Overwatch. I got the team aligned. I was running through an alley as we were getting shot at. It felt like my heart was literally beating out of my chest. It's really hard to describe just how loud combat is and the adrenaline. But we were maybe five or six minutes into the firefight before I realized that it wasn't a training exercise. There was just so much muscle memory that is drilled into through repetition, and I was like, oh, wow, this is a two-way range. And we were just deploying.

Starting point is 00:08:27 So we ended up assaulting that house, taking it down. That was like the first firefight. A couple days later, we were just driving down a street. I was with the outgoing platoon. The name was Duke Ream. He was like orienting me to Mosul. And as we're going, we saw this utility pole. You could see the line going to the asphalt.

Starting point is 00:08:46 and it was clear that the asphalt had been altered, and it felt like slow motion. I was trying to toggle my mic to call back to the truck behind us to go break, right IED. And before I could toggle it, just boom, black smoke. It was a pipe bomb. It actually breached the hole of the striker, this armored vehicle.

Starting point is 00:09:05 Trapnel went into the compartment where the driver was sitting in the front, but he just miraculously, between his body armor in the back and this display that kind of wrapped around his head and neck, All the shrapnel hit that instead of him. But that was like day two in the firefight was just a few days later. And I just remembered being like, that's the first week.

Starting point is 00:09:26 I've got, we didn't know we were going to get extended. I was like, I've got 51 more in front of me. At that moment in my life, it's amazing to have this conversation because I was just so focused on what was right in front of me to keep my men alive and hopefully myself too. But that's maybe an introduction to first week in Mosul. I want to come back to, you said something there which reminds me of where you're building now, which is the fact that you got extended from 12 months, I think, to 15 months. And I'm putting a pin in that because that's going to become a relevant detail when we talk

Starting point is 00:09:53 about the origins of the business in a little bit. I'm curious in that stretch of time, what did you learn about yourself that you didn't know prior? I think the thing you can't know is just if you're going to be brave, everyone's scared when you're over in combat. You're not normal if you're not scared. But character is about pushing all that down and doing the right thing for the men that you lead when the chips are down. And honestly, every firefight is different. For me, just in terms of becoming a man and as a right of passage, will I be able to do my job when it counts? And you just don't know that until you're shot at. And it changes over time. The military has done a lot of research now to show that over the course of your deployment, at like month six or seven, you go into

Starting point is 00:10:36 God phase that you've survived enough of combat, that you actually will take extreme risk. And when we hit that time mark when we were down in Baghdad, we got into firefights where other captains would come out with us and ride. And I'd be walking around. My snipers would be walking around, laughing, point shooting. And they were like, you guys are just absolutely insane. But then as you get closer to coming home, you start almost like sports you're playing, like not to lose. And so it's really interesting is you take the most casualties at the beginning of your deployment when you don't have a lot of context about what the enemy's doing, but also at the end when you're playing not to lose. It's actually in the middle when I'd get back, as I was about to come home, I would think

Starting point is 00:11:18 about what I'd done in the middle of my deployment and my hands would shake because I was just, oh my God. So there's like these overarching learnings about, are you going to be brave enough to put the team in your brothers before yourself? But also, it's not even the same. There's these other contextual things that influence groups. And I think as a leader, you have to understand those team dynamics too, because the whole point of leadership is to be inversely correlated with the context. When the team's playing not to lose, you have to counter that with extreme aggression in terms of the mindset to offset because you know where the team's headed. When they're overly sort of risk-taking, you need to try to mitigate risk and pull it back.

Starting point is 00:11:57 But the other thing was, similar to entrepreneurship, we were given a novel problem set. And so I had a team. We had a mission, but we had never practiced for using. using signal intelligence and different techniques to basically be a SWAT team. That was new. And so a lot of it was just the scientific method of having a certain way of doing things and then codifying learning. So when we would come back, we would say, what worked really well that we should keep, what didn't work so well.

Starting point is 00:12:26 And over time, that led to a lot of specialization. And so maybe the arc in terms of performance, if you can codify learning and feedback loops, the average success rate for these kill capture missions was like 44% I think give or take. And in the first three months, we were in the 20th percentiles, which is to say that we sucked. But around month three, we hit average. And then we caught the head of the Mujahideen Shura Council for Mosul, which is this clearinghouse of nationalist and extremist Islamist groups. And we caught the spiritual leader of northern Iraq for al-Qaeda. So we were designated the kill capture force of choice for northern Iraq by Khrush. Colonel Townsend, who went on to become a four-star general. But by the end, our success rate was over

Starting point is 00:13:10 90%. And I think by some metrics was leading the theater in terms of our efficiency. So there was a lot. That was my first real job. I had a lawnmowing business and lifeguarding, but that was my first real job. What did you do to drive from average to 90% as the leader? I was relentless in preparation. I had an amazing team where there was a lot of prior selection that had gone into it. So in recon, you get to pick whoever you want. So I had already screened my team for certain skills to make sure that I had a good group around me. But the platoon leader is responsible for the maneuver and for getting the folks to the right place at the right time and orienting them to target. So I spent basically all of my free time studying these terrorist cells, their pattern, what was called pattern of life,

Starting point is 00:13:58 where they would be on a Tuesday for lunch, what their tendencies were. And it's just like anything else. humans get lazy and they get complacent. And if you're willing to put in a time, you could really get a feel for how this person operated and where they were likely to make a mistake. It was that. And then just, I think the biggest difference between mediocre leaders and great leaders is great leaders plan for contingencies. So before we even went on a mission, we would plan for all the things that might happen.

Starting point is 00:14:26 So when it did happen, we knew what to do. I think relentless preparation and learning is just so important because it, It both inoculates you against risk proactively, but then if you do find yourself in a position where everyone's like, you're in fight or flight, the adrenaline's going, it's really difficult to communicate and tell everyone exactly what you want to do. The more that you've rehearsed that and prepared for it, the better you're going to be able to execute when it counts. And the military really drilled that into me. And I've carried that particular lesson with me throughout my life. I'm curious because you've earned the answer to this next question more than most people that

Starting point is 00:15:01 I've ever met. In addition to that idea of preparation, what are your other most deeply held beliefs about leadership and what makes for great leadership, both from earned lessons yourself, but also from the leaders that you worked with for around? You have to be credible. That's the most important. You have to be credible. You have to care. So when I went through Ranger School, there was a moment you go through three phases, Benning phase, Mountain Phase, Florida Phase. I had this just miserable experience in mountain phase. It was wintertime, so it was freezing. I got a little bit of poison ivy right at the end of Benning phase,

Starting point is 00:15:35 and I like begged the medic to give me some steroids because I'm just super allergic to it, didn't give me steroids. Poison Ivy spreads all over my body. They see that, then they finally give me these steroids. That weakens my immune system. I get bronchitis. And you're carrying these 75 and 80-pound rucks up a mountain in mountain phase, and I could barely breathe.

Starting point is 00:15:53 I would see starburst color as we crested a ridge because I just couldn't get enough oxygen. So I was still so proud completing Mountain Phase, just as a personal achievement, I think, was where I had to dig deepest in terms of grit. And it got to the point you'd jump into Florida phase and we're jumping into the final phase of Ranger School. The doors are opening.

Starting point is 00:16:13 And I just remember I got to this point where I didn't care if my parachute opened or not because I was that miserable. I just had poisoned ivy everywhere. I felt terrible. I went at 195 pounds. I graduated 160. So just starving. And I just remembered, I don't care if it opens or not, but I also realized I would die before I quit. And that's the purpose of that school and what it means to have a Ranger Tab is it separates people who are just psychologically really tough and resilient. And as a social signal to the men that you lead and to everyone who sees it, it is an indicator that you have grit. And so I think as far as what gives you the right to lead, you have to lead, you have to to put yourself through a crucible where you can prove to yourself and to your team that you're

Starting point is 00:17:01 worthy to lead that tribe. And so I'm super grateful to Ranger School for providing that to me. The other part after the sort of grit part is that the leader has to be the most skilled at whatever it is they do. And when I showed up and talked to my men, I said, listen, I might not be the fastest. I might not be the best shooter. I might not be the best at combatives, but I'll be damned if I'm not top five and everything. And so you just have to be really good at what you do across the board. And it's like sports. The team captain isn't necessarily the best player on the team, but they're one of the best players. And so I think that combination of grit and skill really matters. The hard part now about being a founder is if you're fortunate enough to scale, you take on more and more

Starting point is 00:17:48 scope and the skills you need to be effective. And so you need to be a relentless learner. But I think at the court, if you care about people, if you have the grit yourself where you'll put in whatever hours it takes, you'll never give up. And then you're curious and you're capable of learning the skill that you need. You've got to do all three and you've got to do it in an excellent fashion if you want to keep up with what is required to lead a team and to be an effective leader. In a rock where the stakes were my men's life, there wasn't anything I wasn't willing to do to prepare myself for that. And I think those habits that were so deeply set from when I was a young man in my early 20s have carried through to today. Is there an episode of leadership from someone in your

Starting point is 00:18:33 orbit during your time overseas that most exemplifies leadership to you that you saw some other leader perform? Yeah, my buddy, Phil Schneider, is my worst day in Iraq. We were in a neighborhood called Dora, which the L.A. Times referred to as al-Qaeda's al-A. in Baghdad. And we were 13 months into combat. We took more casualties in two weeks in that neighborhood, like a three by five kilometer box, and we take it in the 13 months. It was literally hell. There were standing sewage because Al-Qaeda didn't care about the locals. They'd put in so many bombs into the sewer system that the sewage was just spilled out. It was a Sunni neighborhood. You had a Shia-Iraqi army military unit that would sniped people as they went out for groceries and things.

Starting point is 00:19:18 Then little kids would chuck grenades at us. If there's hell on earth, it was probably Dora. And so the reason that al-Qaeda would put these roadside bombs into the sewer system is the kind of law of explosives is that the force travels the path of least resistance. So if you have concrete on two sides and underneath, but the road is dirt, it's a natural charge that directs upwards into the bottom of a vehicle. So there's two elements to this. One was when I saw that I was happening, they would put 500-pound buried bombs underneath that would literally saw a striker in half, like these 20-ton vehicles from... front to back, just rip it completely in half to give you an idea of the force. And so when I saw this during the SIR, I wasn't getting a lot of sleep, the first thing I did is I went to the operation center. I said, give me the infrastructure plans for all the sewage

Starting point is 00:20:04 system in Baghdad. And I went out to the truck with my radio telephone operator. And you have a graphic overlay of the streets. And we stayed out there until three in the morning, even though our next mission was like at 6.30, just until I had the final thing done. And once I had mapped it, I pushed it out to all the other trucks in our unit. And I said, For us, we are never going to drive on these roads ever if we can avoid it. And if we do avoid it, you guys are both going to the rooftops. You're going to cut every single wire down to the street. Phil was unfortunate enough.

Starting point is 00:20:32 He went across an intersection that had one of these 500-pound bombs underneath it. And my platoon was the first one to respond to that scene. And it was devastating, as you might imagine. He was just severely concussed, but was just relentless in terms of providing aid to his guys, getting them into the tracks, I'm going to get emotional about it, so I'm sorry. But we raced a few of the guys who were critically wounded to the Green Zone to the Combat Sport Hospital that was there. And Phil was just unbelievable.

Starting point is 00:21:00 When we finally, when his men were taken care of, he was so concussed. He was puking, and he knew that he was about to just pass out. And he just grabbed me by the lapels, and he said, Blake, my guys, take care of my guys. And that for me is just, that's what it is right there. His men love him for it, that when the chips are down, you can't. more about other people than yourself and his like will even though he was physically really banged up got him through it and I think man America is super lucky to have leaders like Phil Schneider he was decorated for heroism for what he did that day. I have a question which is a hard question

Starting point is 00:21:35 to ask and maybe an impossible one to answer but I'm asking it because I want the way I think of you is like you've gone a level up and the way that you started ID me was to serve this community in a deep and real way and we'll tell that story in a minute. But this is also absolutely for us that haven't been in service, certainly not in such incredible harm's way. I'm just curious to help people understand the people that are doing this for us, the nature of taking life or seeing life taken amongst your friends as the ultimate stakes. And try to help people understand those stakes because I'm sure the answer is there's no way of understanding it unless you go through it yourself.

Starting point is 00:22:12 But this is the ultimate sacrifice that so many people put themselves in this kind of harm's way. Do you have a closing thought on just the nature of that life of living that experience that people can understand why this group is so critical to support? Yeah, I'll try to do justice to it because I lost some wonderful friends who were just amazing people that gave their lives for this country. Richard Henkees, my interpreter Roy, who died with the platoon that followed us, Garrett Slaughter, Ryan Denison, just wonderful people. And if you serve this country, it's because you believe that people have a right to live free. Life, liberty, and the pursuit of happiness. That's the core of what we enjoy, but it is protected at great cost.

Starting point is 00:22:54 And you want to protect the weak and the vulnerable who are being oppressed, truly oppressed, in terms of values and what they are allowed to say or do. And the way that manifests, we would have, there was an Iraqi woman. She was Sunni and her husband was Shia, and as the sectarian violence was going, some of the al-Qaeda militants who'd moved into this neighborhood called Amaria. They liked his car, and they just pulled him out of his car, a block away from his house, shot him in the head, and then just had his silver Mercedes that they would then drive around. And she had to basically look at her husband's murderers every day.

Starting point is 00:23:28 And so she took her three kids, and she walked down this super dangerous road to the Baghdad International Airport for maybe seven or eight kilometers with like a three and a five-year-old. And she just showed up and she said, I want justice. Now, we let her down. The legal system let her down. Everything checked out. We caught the guys she talked about, found a lot of evidence. They were tied to Al-Qaeda. The car was there. We lost the war in our prisons. Why you serve is for that woman. And that if you believe human rights are universal and what America has is special, then it is worth defending. And therefore, politicians have a sacred responsibility to make sure that our military is used judiciously and to protect our way of life. Because the men that I just talked about who gave their life, they were just exceptional men who could have had amazing lives, could have had families and accomplished great things in industry. And they sacrificed everything for all of us. And you can't help but be moved by that. If you go to Army Navy and you watch the cadets and the midshipmen who are literally willing to give their life to protect our way of life, it's the most noble thing that you'll see. And I believe firmly that humans are meant to live free.

Starting point is 00:24:43 And to be a part of a group whose very, like, nature is to be selfless is an incredible thing. And it's an incredible thing to be around. I think a lot of Americans are jaded. If you spend some time around our military and folks who put the whole country in our way of life above themselves, you won't help but be inspired and start to feel patriotic about why America is so special in the world. I'm so grateful for this first 30 minutes.

Starting point is 00:25:07 and you sharing all this. It's an incredible, incredible story. I and we all listening, I'm sure, are so grateful for what you and your team and everyone else like you did and does. I think it's the perfect bridge to set up why you started the business that you're now leading. Originally, yeah, I want to harken back to that 12 versus 15 months and the sort of the benefits that were supposedly accessible to the people for those extra three months that they deployed, but how hard those are for our veterans to get and that kind of original intention and nature of your idea for this business. So maybe you can bridge that story for us and tell us what you did originally when starting IDME, why you did it and who you originally served. The closing chapter in Iraq,

Starting point is 00:25:48 which was the last thing that we did was we were asked to target a vehicle bomb network that had set off, I think, at least 17 vehicle bombs in Baghdad. It killed thousands of people. And the British SAS had been targeting them, had not been successful for various reasons, and asked us to help. And over the next two weeks, actually, I think it's like 10 days, we caught nine of the top 10 and the entire level of hierarchy underneath it. It was gone. The last thing I did in Iraq was I stood in front of my 32 guys, all of whom came home, thank God, to their families, which I'm grateful for every day. And I said two things. I was like, pretty sure we all know Iraq. The story of Iraq, it probably isn't going to turn out the best. But I was like, but for what we were asked to do,

Starting point is 00:26:29 the math is pretty simple. This network killed thousands of people. And if it continued, it would have killed thousands of people more. It doesn't exist anymore. Intel folks come in and said, we've never seen a network taken down this fast ever. And I was like, you'll never see the faces of the people that you save from the car bombs that didn't go off. But man, what an amazing thing to tell your grandkids about that you made a real difference here and an impact for those people. You go from that, and I didn't believe America's, and the strategy was making the world better because we were just creating these power vacuums and everything else. And I didn't want to be a part of taking life or risking life if I didn't feel like we had

Starting point is 00:27:09 a strategy and a specific end that made sense. And so I didn't feel I could continue to serve in the military because there wasn't a strategy. But, man, I missed the purpose that I felt you don't have to question the meaning of your life when you're trying to get to a terrorist and a phone before a car bomb goes off in a market full of innocent civilians. So went from that scene and got into Harvard Business School because my battalion commander refused to write me a letter of recommendation unless I applied to Harvard. I was like, sir, I was like, I haven't used a three-syllable word in the last year. I don't think I'm ready to write an essay for Harvard. He's like, you're going to apply to Harper.

Starting point is 00:27:48 I'm not going to write a letter of recommendation. So all of a sudden, I'm in Cambridge, Massachusetts, I'm 26 years old. The biggest decision is like where to go on Friday to have a beer with my friends. I just couldn't shake it because I'd seen I'd been exposed to so much. And I just knew that life is short. You don't have a lot of time. None of us know how much time we have. War had just infused lightning into my bones.

Starting point is 00:28:11 Every time you get one of these kill capture alerts, it's just a flood of adrenaline. So in some ways it makes you an addict. And so I realized, oh my gosh, like I've basically been turned into an addict by this 15 months of like really high intensity tempo, I want to make an impact. And what combat taught me is that you can't take anything with you. So material stuff, like who cares? What matters is making a positive impact on someone else's life. And looking for that sense of purpose, I started to see stats around there was so much goodwill trying to get the military suffer from identity theft at rates that were nearly twice as high as a general population. And I can walk you through the story. But that

Starting point is 00:28:48 ultimately became the thing that I ravitated towards because I felt it was a worthy mission to solve with my life and that if something happened to me that if God forbid I were to die, I would do it trying to accomplish something that mattered and not being a cog in the wheel at a consulting firm or in banking that's just making capitalism work a little bit more efficiently. And so I think just the nature of risk was quite different. I thought risk was going into an organization where I didn't believe in the mission. I felt like I was wasting my life. I didn't really care about the financial side nearly as much because how could you after coming out of combat? And so I'm super grateful for that. But it was very schizophrenic to go from a time in your life where

Starting point is 00:29:32 you're like 70 years old, maybe in normal time, your friends are dying, you're contemplating your own mortality. Most of us will get there later. I kind of had already been there and then felt like a time traveler coming back. And it really just shifted my whole mindset. And it's why I started IDME because I felt like it was a worthy mission to improve people's lives. I didn't know it would grow to become a multi-billion dollar company like it is today. I just wanted to help the military community that I came from to start. But that's the bridge for how I got from the military to running this technology company. Can you tell us the story of the earliest days and the very first things that you did and for whom and why you cared about those specific things at the start that's grown into this

Starting point is 00:30:13 big thing? First thing, I just want to be honest. I like, I had no. idea what I was doing. All I knew is I spent a summer at McKinsey, and the McKinsey people were wonderful, built a business model, the first phone call at this telecom company, they say, $17 million. And I went home that night, and I was like, I don't care. It didn't move the needle at all. So a few things happened. I saw that there was this need for a better solution for the military community. I started to dig into that. I naively did this as a academic project, my second year at business school. I said, let's incorporate. I'll solve this problem. It'll be easy and then I'll be on with my life. Literally, looking back, you couldn't have known less about what it means to run and start a company

Starting point is 00:30:55 and to make sure that it is built to last. And so a few things happened. One, this is more the luck part of it. My brother insisted on investing $20,000. And I love my older brother. He's just like the hardest working guy. He works his tail off. And I actually begged him not to. I said, please do not invest money, Russ. No. And he insisted on it. And I was like, you know what this is. going to do to my stress level. I've been a lifeguard and I've gotten shot at and I've mowed some lawns. Don't do this. He said something to me. He said, you've never failed in anything you've done in your life. I was like, that's so messed up, man. But he insisted on doing it. So he invested a $20,000 check in to me. David Tisch was one of our first checks in. He ended up becoming really

Starting point is 00:31:38 impactful. So he's a box group, one of the best angel investors in the country and then was the first managing director of Techstars New York. And what David Tisch did that I really am grateful for is I was talking more about business development and relationships. And he pointed me to this book, Steve Blank, Four Steps to the Epiphany. He said, you really need to read this book to understand how to build a company. And it's wonderful. It's basically like the scientific method for how you build a company stage by stage. And he introduced me to some other folks. And one of my classmates invested $80,000 in me. What was pretty crazy is even like a year into it as I was raising our angel round where we put together, I don't know, roughly a million dollars in a convertible note,

Starting point is 00:32:17 I would continually have investors that listen to the pitch, and they would say, I'm going to invest, and I'm going to invest like 50K or 75K, and they would thematically tell me two things. They're like, I don't think, because the initial name of IdaMe was troop swap. They said, I don't think that this business model is going to be successful, but then they would say, I believe in you, so I'm writing the check. And then they'd be like, by the way, here's a picture of my daughter. This is her college fund. And it's like a baby.

Starting point is 00:32:45 It's like, what is that? Completely wild started this whole thing. And so tell us what was that pitch? What were you pitching them with Troopswap that became ID? I've just been fascinated by how big companies start. And all the big companies actually start in a pretty focused way. So Facebook started just for the Ivy League's first. And then students then grew up.

Starting point is 00:33:05 Dan Rose, who's on your show, talked a lot about that. But you only student. And at some point, they opened it up to everybody. I think their users increased by four or five X. Uber started with affluent riders and black car drivers, right? Very true. Pinterest started with Midwestern moms. Paradoxically, to get big, you have to focus small. And so I thought there was a void in the market around Craigslist in terms of trust. And because military families move so much that you could have gated community of maybe military and then students. And that would actually be a way to disrupt the sort of peer-to-peer classified and like marketplace space. And so a few things happened as I was giving this pitch.

Starting point is 00:33:41 USAA and Military.com loved it. But then I called them back and they're like, yeah, fast for us is like two to three years to give it a pilot. So that sucked. And I was like, I'm not, it got to a low point in 2011 where Kelly Purdue, who's David Tish introduced us was our first board member. I was like, Kelly, I was like, I don't know if this is going to work. And he said, Blake, and look, that takes a lot for somebody who's been through Ranger

Starting point is 00:34:02 school or whatever to be on the verge of, I do not quit at anything in my life. So he said, Blake first, never say that to anybody ever get out. especially investors. And he said, chin up, we're going to get through this, which I'm super grateful. Your best friends in life are super positive when the chips are down and there for you. And maybe when your head's getting too big, they're pulling you back down to earth to ground you. And Kelly's been that for me.

Starting point is 00:34:24 So basically had this learning, which was we couldn't get enough distribution to get the buyer and seller part going. But we were also spending three-fourths of our time on identity, on actually making sure that somebody signing up was, in fact, a member of the military community. As we talk to different marketers from various firms like Microsoft and Under Armour, they said, we're not really interested in your app or some gated garden for whatever. Like you don't have enough users to have it be meaningful. But your ability to actually know if someone is a part of a particular community is really

Starting point is 00:34:56 important and valuable. We would use that within our own channels. And so a few things happen. I saw that on Veterans Day, veterans to get like a free blooming onion at the outback, we're taking in their paperwork that has their social. security number on it, and they would show this form with their social to a stranger to get a fried vegetable. And no wonder why identity theft is twice as high. You're showing your social to strangers all

Starting point is 00:35:20 over the place. And then I talked to this marketing manager at Microsoft, and they were delivering e-learning vouchers to veterans in person and making them bring their paperwork in. And I said, doesn't the in-person redemption defeat the entire point of e-learning? And she said, yeah, we know it sucks, but we don't have a way to know on our website if somebody is a part of the military community, so we're not able to keep it safe. And because we're not able to keep it safe, we can find distribution to brick and mortar channels. And I said, and if you had a way to keep it safe, she said we would bring it online. And then these different retailers said, by the way, it's not just military, pretty much every segment. It's students, it's teachers, it's first responders,

Starting point is 00:35:56 it's social influencers, it's beauticians. And that was the aha moment where I said, wow, it's not an app, it's a utility. It's like what PayPal was for the early days, the internet with payments, that we could be this identity utility. And if we're spending three-fourths of our time on identity and login, trying to build an app.

Starting point is 00:36:16 If we could build this utility, then all these other developers that might want to create experiences based on trust could just use us and then build on top of that. And that's actually the right thing to do. So there are some key moments in terms of how we did the pivot that I could talk about, but that was the learning.

Starting point is 00:36:33 I have one question going back to something you said earlier around the book that David gave you the four steps to the epiphany, the steep blank book. Is there anything from that book that you, looking back on that time, find to be the most valuable that other people out there should think about? Yeah, so the four steps, just really quick, so maybe I can give you the clip notes. The first one is just pure scientific method, form a hypothesis that there's a problem worth solving and what that is. And then the way that you validate the hypothesis is that people are willing to pay you for the solution to solve it. And so until you've done that, you don't earn the right

Starting point is 00:37:08 to even figure out if you've got a scalable company. So this constant iteration, this is what most founders struggle with, am I even working on a problem that matters? You could convince yourself that your baby's not ugly and like every day, but the only way to really validate the problem is meaningful and your solution is the right one is to get people to pay you. And then Jeff Moore has written all this other literature around what part of the market's target. So the first two steps are, I have a hypothesis about a problem and my solution for it. And then step two is I validated it because somebody paid me to solve it for them. Now, once you've passed step two, it's four steps, the epiphany. Step three is how much revenue do I get from that customer when they pay me in for how

Starting point is 00:37:44 long? And then how much does it cost me to acquire them? And those are your unit economics. You can see companies that skip the stage from two to three, this is Living Social, raised a billion dollars here in the DC market went to zero, because if you violate the four steps of the epiphany, if your unit economics are upside down, you're just going to set money on fire. Groupon pivots from daily deals to e-commerce takes a haircut from $20 billion to $5, but survives and is still around today because you can't violate the steps. And then if your unit economics are good, step four is really culture and it's the gym college good to great, great team, great retention, focus, alignment, all the things that help you capture hopefully a disproportional share of the market. And so what's really amazing is you can't

Starting point is 00:38:30 skip stages. This is why you raise a ton of money from investors in Silicon Valley. Congratulations. You just ratcheted up expectations. And if you don't fundamentally know your sort of ideal customer profile and whether you have product market fit or not, you can get really perverse incentives where folks try to move the revenue line up, even though the underlying unit economics are toxic. Yeah, the genetics of the business are bad and therefore screwed. I'm starting to wonder then about if we zoom all the way to today, if you can give us sort of an overview on the topic and the importance of identity. This is something that I met you through Mickey at Ribbitt and Mickey and I were having this long, fascinating discussion about the role that identity has played and will play as a sort of

Starting point is 00:39:15 primitive for millions of workflows and products and actions that we take as humans. And it was something I really hadn't thought all that much about you take it for granted that like you prove your you in a variety of different ways and some are jenky and terrible and some are whatever, but I never really thought about it too much. Could you give us the sort of overview as you see it on the role and importance of identity as a function in the modern economy? Identity is how you make life safer and easier. And here's why it matters. So in April, the government accountability office released a report on fraud in federal spending. It's just federal benefits, the federal level does not include federal dollars, the state or tribal level. They estimated that the government

Starting point is 00:39:54 loses $233 billion to $521 billion per year to fraud. To put this in context, total aid to Ukraine is $65.9 billion. The U.S. defense budget is $824 billion. So if you take about half, it's about half the defense budget lost every year to fraud, just federal dollars at the federal level. It's 2% of GDP. An aircraft carrier costs $13 billion. So that's the magnitude of what we're losing right now when we have extraordinary debt of over $30 trillion and interest payments. And so it makes ransomware look almost insignificant by comparison. We played a pretty central role in stopping fraud during the pandemic.

Starting point is 00:40:41 So there are seven states on a record that have credited us with stopping $270 billion worth of fraud. And let me zoom in on the impact that we had. We went into Arizona in October of 2020. When we went in there, this is six months into the pandemic, Arizona had 570,400 new weekly unemployment claims in a state where there's only 7 million people including kids. And the state agencies would tell us, we know it's fraud, not because we have any advanced tooling, but because the bots are filing the claim end to end in less than 60 seconds.

Starting point is 00:41:11 Because all that you need is a name date of birth social. You could pinky swear that you're a lift driver and you can start collecting $600 per week. The week after we were introduced, it went down to 6,700 claims per week. And so then Michael Wisehart is the director over there of Arizona DES at Hey, Blake. He said, listen, we processed about 265,000 claimants that were paying on a weekly basis. And he's like, I feel it's my job to make sure that we're not paying these out to organize crime and overseas groups. So we're going to run those six months worth of claimants back through y'all in December. I said, okay.

Starting point is 00:41:47 So when they did that, of the 265,000, how many do you think even tried to verify their identity? Oh, God. I don't know. Some crazy number. 92,000. Two-thirds didn't even try. We were able to successfully authenticate, think about 86, 87,000 of the 92, which is our job. And then other service channels handle the rest.

Starting point is 00:42:07 We were immediately hit with four denial of service attacks out of West Africa. We had, there's something called the DNS query, which is yellow pages look up. It maps out your infrastructure. So we had 2.2 billion queries from IP addresses around the world. And then we saw hundreds of millions of Yandex IPs, which is Russia's internet service provider. I've never seen anything like it before in my life. What's really devastating is that every name date of birth social that these criminal groups were using, that's a real person.

Starting point is 00:42:36 If they need help, if the bad guy beat you to your own identity, you're done. The government agencies weren't able to tell who was friend and who was foe. So California shut down for two weeks. at the same time. We enabled them to reopen. And so on and on. Then the fraud, it moved to Florida with the BOT attacks in January. It moved to New York and March. And that's ultimately why 27 state unemployment agencies adopted us in 15 to 18 months. Now, the crazy thing was, I actually hadn't built it for fraud. Initially, it was more for customer experience to put people in control to help homeless veterans, international veterans, get access to VA. Because when I left the military, you had to go into the VA in

Starting point is 00:43:11 person to prove your identity. But now that the pandemics ended, this next evolution is deepfakes, where in 2022, right before AI has three phases, like the LLMs and text, then the media with face and voice, and you've got like Sam Altman and Scarlett Johansson going back and forth about stuff. The Nigerian print scams are like at a whole different level. So in 2022, we had about 180,000 logins across our wallet that we saw were targeted by scammers for account takeover. The same 90-day window in 2023, it went up to 1.3 million. Holy cow. And so the net of all of this to your original question, which is like, why is identity so critical?

Starting point is 00:43:49 What I learned in Iraq, what General McChrystal taught us is that it takes a network to fight a network. If you have an inherently decentralized enemy that is learning and asymmetric and amorphous against a centralized foe, the decentralized insurgency is just going to crush you. And so the only way to respond is to do what General McChrystal did is empower the edge, give local autonomy, redesign the organization to flood everyone with real-time intelligence, so now your network of good guys can respond in real time. And that's tough to do as a general. That's why he's so remarkable. He said, we need to get the captains and lieutenants and sergeants the tools and push the decision-making to them because we're really fighting a network.

Starting point is 00:44:27 And this is a network for. And so as a shared service, we are the network of good guys effectively that are able to see patterns that other folks can't. So, for example, we're over at the Treasury and then we're over at these unemployment agencies. We were able to see 50,000 identities that have been used for unemployment went over to apply for business owner aid for owners of transportation companies.

Starting point is 00:44:50 Get into a login or you, just contextually, you can't be unemployed and own a transportation business at the same time. But the thing is, that signal as far as what's going on with the same identity at different levels of government, that hadn't existed before. And so you appreciate this is why we're losing hundreds of billions of dollars a year, is that we're getting picked off like one by one where the attackers are just going to the most

Starting point is 00:45:12 vulnerable agency. And unless you have authentication as a shared service to normalize and standardize trust, it's Blockbuster versus Netflix, it's Data Centers versus GCP or AWS. You need to have standardization and consistent security and feedback loops if you are going to withstand the assault of organized crime. And we ended up helping NBC News break the story that APT-41, which is China's economic warfare arm, was involved with directly attacking individual Americans to steal their unemployment benefits. And I've shared some videos now on LinkedIn as well of some of these deep fakes where these Chinese threat groups are targeting individual citizens

Starting point is 00:45:52 to try to steal their tax refunds and defraud the treasuries. So the net of it is we're losing hundreds of billions of dollars a year. Those dollars are, also represent hundreds of thousands to millions of victims, and the money is flowing, in many cases, overseas. It's a national security issue. And then the other side is people hate managing logins and passwords. And if we can both make it safer and easier for people to interact online, that's become my life's work. Can you describe the building blocks of signing up to begin with, to say, me as a human being is some like verification and authentication process? Those are different. How do you do that? What are the ways that I prove that I'm me? And I want to also ask about the non-IDME

Starting point is 00:46:35 versions of this. I remember you tell me like a branded relationship with the customer like Apple might have or Google might have or clear might have. So I want to talk about the ecosystem, not just IDME, but the ecosystem of people that represent a way to prove your identity and get access to something or stop something. So what are the building blocks? How do you literally know a person is a person? Walk us through that. It seems this really important thing for the future. Time is one of the most important aspects of identity and not just for technology, just for relationships in general. Think about the first time that you met your best friend or your wife or whatever, what you knew about them then and what you know about them now. So time and the frequency of how often you interact with someone and the quality of those interactions really informs your perception of their identity as it relates to you. And you have a lot more touch points. For time, you might know, I'll trust this person with anything. You might know, if I ask this person to do something, I'm going to prepare myself to be let down. And so what I

Starting point is 00:47:33 learned in Iraq was a lot about how telecom networks work. And the thing about bad guys versus normal people is that bad guys do things that you can see in math related to time that make them stand out. So you're probably not doing sim swaps and changing your phone to different devices and porting your phone number that often. You probably change your phone every two to three years. You've likely had the same phone number for over 10 years now. And so that tenure when it comes to identity really matters. If we can look at records and see, oh, Patrick's phone number has been tied to Patrick since he was at Notre Dame. And then you prove possession of that phone number. And we can see that the phone number hasn't been ported because we can check with, that's really good.

Starting point is 00:48:16 That'd be if some bad guy was like setting us up and like from college. It's almost like the bad guy. They deserve it. I started seeding this phone number in college and now I'm like 55 and I'm going to pass it in. The long con. Yeah. These guys aren't playing the long game.

Starting point is 00:48:33 And so what's really interesting is most folks have a phone number with tenure. Now, it's not for everybody. You'll get to 85 to 90 percent will have a long relationship. And then you'll expats coming back to the country, low income communities tend to switch their phone numbers more often because they're using prepaid devices and stuff. that is subscription and maybe avoiding collections calls. So it's not perfect, but just on that one signal alone, you can go, wow, if you did have a phone number for 20 years and showed possession, we're pretty confident right away.

Starting point is 00:49:02 That's Patrick. So the basic premise is there's a big theme in security right now about moving away from passwords. And this is also why you want a shared service to do it. How long is it going to take each company to figure out how to do pass keys, which is just a fancy name for touch ID or face ID on your device, that why can't we use things? that are really convenient on our phones and our computers to be able to securely prove that we're the owner of the login credential, it's going to take time. Whereas if it's more of a

Starting point is 00:49:29 SaaS approach where it's already just baked in as capability, if you use a shared service for login, that one capability as we deliver it through our R&D is instantly available to thousands of different organizations. That's a much more efficient way where they just have to say, yeah, please turn that on. Or we turn it on and cool, thanks. So that's login security. identity can take many different forms because you've got your legal identity, which is where we've focused on proving that you're you. But then you also have different personas. One out of five doctors in the country uses us to prescribe narcotics and other controlled substances. And that is not sufficient for you to be Patrick or me to be Blake. We have to go out to different databases that are

Starting point is 00:50:11 sources of truth for medical professionals. And so this is where I start to geek out because what you want to do is you have to be like, what's the source of truth for whether or not your your medical provider. It would be the federal DEA number. Health and Human Services is a national provider identifier and then state medical licenses are issued at the state level. For military, it's obviously DOD, VA, and then maybe non-intuitively, the National Archives is actually the repository of military records down to St. Louis. And this is what we call the trust graph, which is maybe this isn't just for like everybody. It's only for tax professionals or lawyers or for doctors or for HR staff at Social Security uploading W2s and W3s.

Starting point is 00:50:53 So you have to figure out what's the source of truth for that claim. If you said I went to Notre Dame, how did I know that? We can actually go back to the registrar at Notre Dame with your permission, and we could find a record in the registrar's database that shows that you went there, your graduation date, and your degree. So a lot of the connectivity you have to build is our connections into sources of truth. as you say something, we can instantly go out and see if it's true. And so maybe the distillation of all this is that if you're like, everyone knows, if you're out at a bar and if you like walk up

Starting point is 00:51:27 to a girl cold, you're fighting an uphill battle from the start. But if you, for both of you, because he's like, who are you? But if a mutual friend introduces you and says, oh my gosh, Patrick is amazing and vice versa, then all of a sudden you're into an amazing conversation. That's effectively what we're doing. We're that trusted intermediary, kind of like V-Santis. said between banks and merchants, but for a lot more ID cards to say, hey, this person just said their military. A merchant's like, I don't know, but we're like, no, no, no, DOD, we're good. And now they can have a trusted interaction in a way where they're both better off while keeping bad guys who didn't serve or do Dolan Valor stuff out. And I just think that's so amazing because

Starting point is 00:52:06 when I came back from combat, there was so much goodwill. I couldn't go out in Nashville in my uniform without people buying me lunch. It's incredible. Often, I would even know who did it. That's the way or waitress come over and just be like, hey, listen, someone picked up your bill. And to be able to provide infrastructure that allows that connection to happen without humans in the loop. So you don't have to always interact in person like it's the 1950s and keeping the stolen valor out is just really, really cool. We obviously won't have time to go into all the intricate ways that you've built this network. And I think the shorthand you provided is right. But would it be a convenient way for me to think about it that if I, Patrick, have an IDME wallet,

Starting point is 00:52:43 that there's some amount of work that goes into establishing that wallet and that wallet is related to me. And then there's some set of steps that I can deploy that wallet to check in and lots of different places and effectively create this layer of convenience for me that instead of going to the VA with my documents to get my extended 15-month deployment benefit, I can just do it digitally and much faster. I know it's more complicated than that, but at its most simple, that's a convenient way for us listening to think about it. When I think about what I want my kids to say to me when they grew up is, Daddy, did you really have to manage different passwords and logins at every website they went to? Yeah, in the same way that somebody who grew up before Visa or MasterCard

Starting point is 00:53:24 would be like, wait, you had to pay cash everywhere? That sounds terrible. So in Europe, this has already happened. There's bank ID in Sweden and the Nordics and now our co-founder is Estonian. And in the Nordics in Estonia, they don't have a different login for different websites. They have bank ID. The average suite uses it five times per day. It's the same login for health care. for government, for banking, for commerce, and you control your own data. So the log and security effectively is your wallet. And what we're creating as a digital twin to a physical wallet, the root of trust within your physical wallet is your driver's license. It's your government issued photo ID. That's why government has been so important for us, because a lot of the

Starting point is 00:54:01 credentials that we carry, they're public, these medical licenses, the state license, they're all published on public portals. There's no notion of a breach. They were meant to be public. The hard part is knowing that you're you. If somebody's going into prescribed narcotics, is that really a doctor or is that somebody who's going to prescribe narcotics by the leader and contribute to the opioid crisis and everything else? So the more that we can just replicate exactly what your physical wallet does in digital form, it makes your life safer because we have the root of trust that you're you, and it makes it easier because you're in control of your identity and when you want to get access to something, you don't need to reprove who you are. And our first mantra of user

Starting point is 00:54:39 experience is never make the same person do the same thing twice. Obviously, everyone, that's interested in investing has done some amount of time studying Visa and MasterCard as these gold standard business models. There really aren't higher quality businesses than these things because the network effect associated with them is just so incredibly powerful and therefore their margins are crazy high. I've heard you describe what you're doing as like Visa in 3D in some dimension. Can you just describe the business lessons that you've learned from Visa and why you think the way that you're building IDMe will be such a good enduring business beyond just the service that it renders for its customers?

Starting point is 00:55:15 So I love how markets develop. I'm such a nerd for it. Economics in American history are my double majors at Vanderbilt. So take Henry Ford. Henry Ford, maybe the most famous entrepreneur ever, invents the assembly line, invents the automobile, and he does the Model T, and he's like, I did it. Everyone needs the Model T.

Starting point is 00:55:34 And what's remarkable is at phase two of the market is Alfred Sloan, the CEO of GM, General Motors, comes along, goes, no, Henry. They don't all want a black Model T. They want pickup trucks and minivans, and they want different colors. And GM just kicks Ford's ass for the next two decades. Like, Ford doesn't catch up until a war or two. I think over and over, you can see the 1.0 version of a market is monolithic,

Starting point is 00:55:57 and then it just explodes and personalizes. So the same thing is true, like Facebook and Friendster and Myspace, pretty monolithic, and then just look at what we have now. TikTok and X and Instagram and Snapchat and threads, all this other stuff where the market is personalized. And so the V1.0 of digital wallets are payment wallets where PayPal and eBay, like the hardest thing, the most ubiquitous thing on the internet early on to enable commerce was to pay for stuff. And actually payments are interesting because most of identity is exclusive. It's not about ubiquity.

Starting point is 00:56:28 The reason that you have military ID is to separate you from everyone who's not military or a student ID is everyone who's not a student. Credit cards, kind of everyone needs payments. So it's interesting. It's the logical place the market would start. But then it just stopped. And so there's been all this, let's just make it easier for young people to pay and everything else. And like this very myopic view, I came in from outside the industry and said, no, when I think about my wallet and my identity, payments is just one part of it. And in fact, if I'm out buying something at a store and the cashier says, hey, can I please see some ID?

Starting point is 00:57:02 They want to see my government ID. And when you realize that, you're like, okay, the root of trust is actually my driver's license or my passport. That's what authenticates and gives trust to every other ID card in my wallet that has my name on it, because they can compare my face to me. They can see that the credential looks legitimate and doesn't look to be counterfeit. And once they trust that I'm Blake, well, now if I show a health insurance card that has my name on it, and this is why hotels collect your legal ID and your payment every time you go in because the stakes are quite high.

Starting point is 00:57:31 So from a first principle's point of view, I'm like, if the root of trust is our interaction with the government, if everyone in banking and health care, said, we don't want to be in the credential issuance business. That's what the government does. So you just bring over a government ID, whether it's an ID car, like a driver's license or a passport, and then we'll help you open up a bank account. I was like, well, that's how the market should work. That whoever builds a consumer-centric digital wallet that is able to be accepted by the federal government, and when you deal with the government, you're at the apex of risk and standards and incentive, then you can go back to the private sector and make it really

Starting point is 00:58:06 easy for people to open up bank accounts and to check in at a health care clinic. I'll share one story that's super meaningful to me. When we first started working with VA, you had to go in person when I got out of the military. Then we brought it online. And the more that I looked into it, I realized you had to have a presence in basically credit records in order for you to pass these federal standards, which I found deeply unfair for folks that effectively like we'd linked access to affluence. And so I went back to NIST and said, hey, you've got to rewrite these standards. Do you have an exception flow to people who are homeless, who live overseas. Like homeless veterans are super important to me, always have been.

Starting point is 00:58:40 I want to serve the most vulnerable. One of the first gentlemen that we got through, he was 81 years old. He lives in Tokyo. His wife had Alzheimer's. And he hadn't been able to get access to his VA benefits in years because there's no VA facility near him and he can't travel. And at the end of this video chat session, which was this exception pathway that we had, he began to cry.

Starting point is 00:59:00 It was just the most touching thing ever. And so now we've had over 10 million Americans go through that process. The security and the inclusion gains that we drove in the public sector as a shared service, now anywhere where the IDB buttons at, if it shows up at a bank or a FinTech or a patient portal, he would be locked out because most of those organizations use data brokers that are only focused on domestic folks and don't cover a lot of low-income folks. He would now be able to seamlessly prove his identity, so making his life safer and easier than what it was before. And when I think about what we get to do as a team, one, we get to protect people, which is like my core drives why I was a soldier.

Starting point is 00:59:40 But we also get to give them time back. So Visa and 3D means once your core identity enables more access to financial services and healthcare, that's the next phase. But that will be done. We've already issued 65 million of these portable identities. On top of that, maybe your Netflix subscription and think about setting up an Apple TV or a Roku box, how long that takes you to authenticate to every single streaming subscriber, we could just turn that into API calls. So once we know that you're you,

Starting point is 01:00:07 you could just tell us your subscriptions. If we could just fire off and say, hey, Netflix, Hulu, ABC, NBC, Paramount, whatever, is this person a subscriber? Yep, cool. Bound. Authorize out, done. Checking in at Vegas,

Starting point is 01:00:18 just as a tactical example to close us out. It was always like a happy hour. It'd be like an hour long wait. And all your friends are there waiting for you. And it's just so demoralizing when you're behind this long line. And we went to them several years ago and we said, hey, why don't we make this work more like airline boarding passes

Starting point is 01:00:34 where you can just do it on your phone, the human agents, the bottleneck, clearly it doesn't scale as you're turning over these huge hotels at 5 o'clock every day. And today, millions of guests use IDME to check in to MGM and to win properties, and we save them an average of 15 minutes of their life, which is incredible. Sometimes when you look at the time savings of the access games we drive for federal agencies or like what it means to do authentication before somebody might interact, with a different system, we're saving on an annual basis hundreds of years of life that people spend waiting. And I think with my single life, that's really motivating in terms of giving people

Starting point is 01:01:14 time back to spend it in a way that is much higher quality than standing line at a DMV or at a hotel. And instead, they could be with their family and friends. There was another source of inspiration, which I found really interesting, which was Disney and how they think about authentication. What did you learn from Disney? So usually if you're just curious about the world, you can go find examples of folks who've already solved the problem that you're working on, but maybe in a more local way. So what Disney did is really ahead of their time. If you were going into the park, you would authenticate with a biometric, with your fingerprint in the magic band. If you're authenticating to the web app, you'd start with the password because that's what most people were familiar with. And then if you were on a mobile device and using their native mobile app, you would use whatever is on your phone with like touch ID or face ID.

Starting point is 01:01:59 And so I think in many ways, Disney already figured out what's the most convenient way for you to open up your digital wallet based on channel. If you extend that to the call center, you'd be like, what would be the most convenient way, the safest and easiest way for you to authenticate? And so the natural things you use when you're calling someone is your voice and a device and a phone number. So the more that you can make that be the way that we recognize Patrick. Now, once that's done securely, then there's a host of other things related to it. It could be you've got tickets to the park. You might have a fast lane pass. You might have all these other things.

Starting point is 01:02:34 And so when I saw what Disney had done, I said, all you really have to do is just make this accessible to everyone, democratize it through a network. And if we can build the same capabilities to allow for these really fluid in person and online and call center experiences, then everyone will benefit even if you don't have the R&D budget of a Disney. even if you're like a little app developer that's like just getting going

Starting point is 01:03:00 as dreams of competing with the giants, but doesn't necessarily have the budget to make your login and identity experience on par. So I looked at Disney. I looked at Amazon as another one of amazing data about feedback loops. And the problem is that the newer upstarts don't have that data.

Starting point is 01:03:17 But if people begin to take their own data with them and they're starting to populate profiles of their tastes and their preferences, and if an app developer is, willing or is able to have somebody give them consent to access some part of their identity graph that you could actually create a level playing field. You mentioned the attacks that you suffered when you came between the international bot armies and their pot of gold. What have been the ways that more legitimate entities have tried to kill you? Who do you threaten that isn't like

Starting point is 01:03:49 an illegal attacker but is like an incumbent U.S. company or something like that? And what's that been like? It had both sides. I mean, I had Russian callers calling me up during the pandemic and telling me where I lived, where my kids went to school. We had private security on the house when Christmas where I had former Marines that were around it. So I've gotten a lot of death threats as we've cut off fraud. And for me, whatever, I don't care. It's my family that I care about the most. I think on the corporate side, we're disrupting these data brokers. And we went through an episode in 2022 just a couple of years ago where these data brokers basically created a lot of misinformation and fud. And I just had no idea how the media worked and how this whole dark arts work thing where lobbyists pull the wool over staff's eyes and get them to write a letter and get principals to sign it. The media covers the letter. They don't even care what's true. They won't even come to you to be like, is this accurate? They just cover the letter. And then it's the Mark Twain quote that like a lie gets twice around the world before the truth has time to lace up its boots. And that's exactly what happened to us on the way up. Phil Knight talks about that in his book,

Starting point is 01:04:55 Shoe Dog, where once the incumbents don't have a product or a business model response, they start to come after you to tarnish the new technology is unsafe. Yeah, it's a fascinating experience. I'm sure you told me last time we talked about this, that you're a ranger and you can get ambushed once, but not twice. So what does that make you think about the future, about like, part of this building an enormous business necessarily bumps into lots of other entities that are self-interested? So I'm curious about what you think about credit bureaus, the role that they play in all of this, or other groups of entities like this that you may end up displacing and improving upon for the end customer. How do you think about that as part of your job that it's not just this idealistic, like we're going to build something really nice and everyone's going to be happy? Not everything is positive. You're taking share from somebody else in some way. How do you think about that as part of your job as a leader?

Starting point is 01:05:44 Love that question, because that is a job of a leader. The job of the leader is to basically from first principles look at a team and be like, hey, you're fine, but the scope creep, you're doing way too many things. You need to focus. You do best. And so that's how I think about credit bureaus play a really important role in the economy in terms of figuring out your creditworthiness and whether or not what's the probability you're going to pay a loan back based on your reputation.

Starting point is 01:06:09 But should they be the gatekeepers of identity? Heck no. That doesn't make any sense. That's why you can literally look at who has a fine time with credit bureau. is higher income people who has a tough time. Why? Because they're underbanked or unbanked. And so why would you want to make those vendors the gatekeepers for identity? And so when I'm like, how would you really design it if you were to do it from just pretend that nothing exists? And you'd say, identity naturally comes from health care and from government. Your identity life cycle begins in a hospital

Starting point is 01:06:38 where you're born, you get a birth certificate. And then the birth certificate is sent off and the Social Security Administration issues you a social security number. So when you literally just back up to cradle to grave, what happens cradle, you would go, your financial life cycle doesn't really begin until you're, I don't know, 17 to 19 years old. So as an entrepreneur, I said, all right, credit bureaus are for credit underwriting, which is an overlay. The real identity should come from the government and from health care. And that's the right place to start. And that's going to take time because you're like building this new way of doing things while the existing world continues to putter along, just like Visa and MasterCard didn't get rid of cash payments overnight. They

Starting point is 01:07:13 just gradually shifted the mix. But I really stuck to my guns on that. My running joke with the treasury was, I've stopped measuring the sale cycle in terms of weeks and months, but instead by the number of children, I thought. And all the board meetings, you can imagine, they were like, Blake, should you do banking or maybe you should go into this other thing? And it's all given a lot of things, but not on this. Your identity needs to come from the government. What role do clear Apple, Google, other huge players like that play in this whole identity story to you? Yeah, I think it just depends on for what. So if you want to turn your mobile phone into a wallet, great. And so you'll see a lot of what Google and Apple are doing with transit cards and maybe

Starting point is 01:07:58 your driver's license or your passport on your phone to get through a TSA checkpoint now. You'll see that in some places. That's all well and good because in person, the attack surface is inherently limited. Attackers in China obviously can't show up en masse in the Dallas airport and deepfakes. There is no concept of deep fakes in person. You can clearly see if somebody's got a mask or something on or some sort of disguise. So if you just wanted to replicate exactly what a physical wallet does in its analog form, cool. And that's where a lot of the innovation has been going. The problem is really risk. When you start to put things online where now the attack surface is global. So this notion of a physical wallet was designed for inherently local use. It just moves where

Starting point is 01:08:43 you move. But now when you go online, you can literally go anywhere. Like an attacker in China can come attack American systems. You need a lot more capability. And so the limitation of the hardware manufacturers approach, they have basically said, we're not going to be able to see anywhere the ID is used and there's no tracking and they'll put it underneath privacy. And I would say for physical interactions that are localized and for use cases where the risk is morality, maybe adult websites or kids in social media, all good. Client side's great. But when you look at financial risk, the way the market operates is quite different.

Starting point is 01:09:16 Your bank can actually see everywhere that you transact. And for some reason, as a society, we've decided that's okay. Well, why? Because credit card fraud is a real issue. And we've actually decided that if it looks like your visa card is a potential to be everywhere that you want to be, but if it actually starts to find, you. fly around. Your bank can see that and go, hey, time out. Let me go talk to Patrick, make sure this is legitimate. And there's consumer protection. So if you go, oh my God, it was compromised, that's not

Starting point is 01:09:42 me. In a client-side model, when you start to deal with financial risk where the phone manufacturer can't see it, imagine this. Imagine there's a 65-year-old woman. She's somebody's grandmother. She's about to retire. She's been scammed by one of these LLM-enabled AI scams that is really sophisticated. Her 401 balance goes to zero. And now this attacker out of probably Lagos in Nigeria isn't taunting her that he's ruined her life. And she goes, I need help. The reason banks can see that is banks can help. The reason that IDME can see that is IDME can help. We can provide recourse to the victim. We can also go back to the government agency and go, here's the audit trail of what we saw. This woman was not involved with any of this stuff. Or two, the 401k provider in this case and say,

Starting point is 01:10:29 this is what happened, and now there's feedback loops, there's learning about what happened. For some reason, people are losing their minds when it comes to digital identity that there are just different forms of risk and what's good changes based on that risk. If you say it's decentralized, you can't see it, what you've actually said is there is no recourse for victims, there is no audit trail for the government, and if these really terrible things happen, you're on your own, which I think is unacceptable. So we actually think it's both. It doesn't have to be this monolithic tradeoff, if you actually know what you're solving for, then if the attack surface is global and the risk is financial, you have to have a centralized entity like a major bank

Starting point is 01:11:11 or a credit card network that can see things to provide feedback loops and protection to both customers and users. You start to deal with things where the risk is different than all bets are off. But that's how I think about the approach, which is it's good. It's also limited in terms of what it'll allow you to do when it comes to online transactions. If you think about the, let's say, five-year hence future to give it not infinite time, but a decent chunk of years, what's your dream for the state of IDME and what it's doing for people on that time horizon? Yeah, in five years, I wouldn't want there to be logins that you would have to create at every single website you would go to. The same way that when you open up your laptop and you're just able to open up Word and you're

Starting point is 01:11:55 able to open up Adobe and all these other systems, I think you should be able to open up Coinbase or Chase or Social Security or IRS as apps. And then the flip side of that is, as we are able to label and tag more content, we're able to help people navigate really difficult life events like disaster relief in LA right now. What's really interesting is every use case around like this is what is needed to access it. Like you've got to be a doctor for a prescription app or you have to be in a disaster zone for FEMA aid and everything else. There's going to be some access policies that we need to know about in order to make sure that you're you and that we've established trust to the right level. But also, how do we help you find out about those programs

Starting point is 01:12:36 when you don't know about them? And this is actually the other part of the story when I was first starting. There was about $750 million of combat pay that had been approved by Congress to soldiers who were stop lost and voluntarily extended. Congress approved it like two more years. And at the end of it, about a quarter of a billion dollars went unclaimed because government just couldn't get the word out. All these service members had to do is fill out a form, and then we get $5,000. It was crazy. And the quarter billion dollars of combat pay when expired. So the same thing is likely happening right now in L.A. There's all these programs and things that can help. But if you're displaced, you're trying to get your dog or your cat and just figuring out a hotel room,

Starting point is 01:13:12 you don't have time to research FEMA or nonprofits and figure out what's going on. And so we have this amazing ability that if we're doing it right, that whether it's disaster relief, taxes, retirement, graduating from college, buying a house, for the first time. We can help provide a curated view of here's all of the government and nonprofit and private sector offerings that are relevant to you. And when you want to get access to it, there's the IDMe button waiting so that you don't have to create a login and fill out forms and waste hours of your life or maybe even have to go in person if they use a vendor that doesn't cover you because you live overseas. If in five years, we can be everywhere that you want to be

Starting point is 01:13:50 to borrow a line for Visa for online use cases. And we're helping connect people to relevant financial programs and benefits that matter faster than what an amazing impact and legacy to leave on the world. I would love to know how you decided what your business model would be and what you've learned about designing a business model alongside a valuable product. Because in your case, when you've got this network that's growing and the surface area, the network is so big, and there's lots of different stakeholders. You've told stories already today about how governments are beneficiary, how consumers are beneficiaries, how companies might be beneficiaries, how banks and other intermediaries might benefit from the use of this network. So there's lots of ways that I could imagine you making money by doing your job

Starting point is 01:14:33 and having your product be in market. And you've chosen a subset of those or one of those. How did you do that? What are your principles that others might borrow for, okay, I've got a good idea that's valuable. It's valuable to lots of people. I'm not really sure who should pay. And how did you get to that answer and maybe just describe it a little bit for everyone. Yeah, I think maybe I'll start philosophy and then I'll go into like how I did it Friday typically to separate the two. I think philosophically, I just don't believe in charging customers for anything unless I've created value that demonstrably makes them better off. So I never wanted my incentives at odds with my customer. And I view if someone buys our software, I want that person to get promoted. And if somebody

Starting point is 01:15:09 uses our software, I want their life to be better for IDME having been a part of it. So that's where I'm coming from, which just goes back to service and purpose, which are core drives for me and for a lot of folks who are built that way. Now, I saw two things. When I saw that basically Visa and PayPal were the V1.0 of this market, I looked at how their business model was designed. Visa doesn't sell data. Visa sells trust and convenience. You decide if your money moved to a merchant when you want to pay. And what Visa did is they basically has a business model that adjust to risk and value. The amount, the financial dollar of the transaction is the value, and then risk is, well, is it card present, or is it not present? Is it online? And then grocery, jewelry, very complicated business model

Starting point is 01:15:52 that they've unpacked. On a more round truth note, we were using a credit bureau. I won't say who back in, this is like 2015 time frame, and just for records validation. So just if we try to find a named data, birth, social address in records, could we find it? And these credit bureaus will charge you transactionally. So every time that you query their API, you have to pay money. How does that manifest in practice? I saw there were two veterans. One was in the 60s. The other one was in the 70s. One had just recently moved. The other one had credit, even as an older person just never had credit. These two folks tried 50 to 70 times each to prove their identity. It looks really cheap. It's like 25 cents an API call, or depending on what you're

Starting point is 01:16:34 calling, it could be 10 cents an API call. But then you have to play it through in terms of, I can only imagine how frustrated those two veterans were with us at that moment. But then they're not done. They still haven't gotten access. So they either give up, which is the worst thing, or they have to go to the call center. There's probably a credit bureau waiting for them, too, that also doesn't have coverage. And then they have to go in person. By the time they get in person, just think about how you would feel. So that's awful. And what I realize is that for worse data coverage, they actually made more money. If they had the data coverage, it would have passed on the first attempt. But when they didn't cover somebody and that person tried to just repeatedly attempt multiple times,

Starting point is 01:17:09 you might end up paying tens of times, so 50 times 25 cents. And I was like, you know what, that's just such a perverse business model where you actually make more profit and revenue for having a deficient product. I resolved. I said, I'm never going to have a business model that is misaligned with the incentives of this B2C ecosystem that we serve, that I'm only going to charge a government customer when we successfully authenticate somebody and get them access. And that actually makes sense for the user, so that,

Starting point is 01:17:39 If we're not able to get somebody through who's not fraudulent, we suffer as a business, and rightly so. Now all of our incentives are aligned in harmony with who we serve. I think it's value and alignment with stakeholders. And once you commit to it, those are some of the things from a values basis as a founder that I really enforce as sacred that will never violate. It's core to our DNA and who we are. You said something to me about the business which I found so interesting, which is that you don't want diversity of values at IDME. I want to ask a couple of questions about just the principles and the culture in that step four of the steep blank book and how you've thought about philosophically deploying those things. Maybe start with that one as an example. And then riff on the other principles that you've established, like the one for business model there in building the business and the power of those principles.

Starting point is 01:18:23 And if you don't screen for it, you're in for a tough ride. So I think e pluribus unum out of many one, this is the whole premise of America that what our country is struggling with right now, that everyone is welcome as long as you are committed. to the fundamental American values of freedom, that you can criticize any religion, you can burn any book, and you will not be met with violence. People might have problems with that, just like I'll have a problem if you burn the American flag,

Starting point is 01:18:48 but the fact that you can do that, not be harmed, it shows that you live in a free country. So when you let people in who fundamentally reject the premise of your country, your culture begins to suffer. Our country is suffering for that right now because we haven't been intentional about it.

Starting point is 01:19:00 The same thing is true with the company. So right now, the whole country is struggling with this battle really between enlightenment values and postmodernism. And if you let that conflict into your company, it's like a wagon that has two hands pulling on the wheel. Is it merit or is it something else? What are we really focused on driving? For me, what I loved about the military, what I loved about growing up, what I loved about fairness in what my dad told me, three rules that his grandfather had given to him. And one of them was never think that you're better than the men that you lead.

Starting point is 01:19:29 And that we come from different backgrounds, we come from different places, from different experiences, all army green and your job is to treat everyone fairly according to the same standard. And that's why I loved about service that if you listen to my guys talk to each other, part of you would be like, oh my God. But the other part would be like, these guys would all take a bullet for each other. They're brothers. And so true intimacy is being able to be open, not malicious, to love each other, joke and have a good time and not have folks throwing yellow cards because you said something,

Starting point is 01:20:01 just ridiculous. So if you want to move fast, you don't want ideological tension. I'm really deliberate about that. We published some value statements about our commitment to really classic liberalism. Everyone is equal before the law. It's not good or okay to be racist in any direction. And just like you would want your kids elementary school teacher to treat everybody, not giving preference, but teaching kids about character and you're responsible for what you do. And that's all that matters. Crazy to me, that's even a question, but it's therefore even more important that you screen that out at the beginning. Once you move past ideology, you're looking

Starting point is 01:20:36 for I basically designed our cultural values around all the patterns that I'd seen across my time in the military about what makes for effective teams. So you can imagine selection is a triangle where one point of the triangle's skills, one point of the triangle's capability, just raw sort of intellectual potential. The other one is your behaviors and habits. And you can hear this echo to Aristotle. We are what we do. Excellence therefore is not an act, but a habit. FBI profilers, the best predictor of future behavior is past behavior. We defined our cultural values. First rule is don't be a jerk. And what we mean by that specifically is if you are not emotionally self-regulated, if you can't control your fight or flight response, you're not welcome here. Because ultimately, that's when we do things

Starting point is 01:21:21 that are really mean and cruel is when we go into fight or flight. And actually, there's a lot of research, too, that shows a really good CEOs. And Rangers, for that matter, are able to move out of fight or flight very quickly. I had this briefing after Ranger School from a Delta Force recruiter who showed us the cortisol profile of a Ranger graduate versus general public. And he's like, here's the profile of somebody who's exposed like a life and death traumatic event. And it's three or four days before it goes back to normal. Here's the profile of Ranger School graduates. And it was like a 30 to 45 minute rebound effect that after near life of death, you and I could be talking like this. And it's fine. So anyway, so there's that. There's always compete with the grit. We don't hire pessimists here.

Starting point is 01:21:56 We love critical thinkers, but we want optimists who can believe in. a contrarian point of view if they have first principles conviction. I think you want to be really intentional about that to make sure that as you scale, you don't end up sideways. And you need only look at Paul Graham and the whole Google Gemini thing was going on where you wanted an image of George Washington and God forbid show an actual historically accurate picture of George Washington. That's a great example of if you emphasize things other than truth and merit and excellence, you end up with pretty bizarre outcomes. I've been pretty ruthless about enforcing culture because I know what it is to be in an intimate, close team where everyone's treated fairly as an individual, don't care about

Starting point is 01:22:38 anything else other than performance. And I want that for everyone who works here. It's a wonderful environment. It's what I loved about the military and what I'm really passionate about enforcing here at IDME as well. What were the two other things that your grandfather told your dad? Yeah. So his other rule was if you have a choice of unit to go to the one with the worst reputations that when you leave, you can see the difference that good leadership makes. And then he had one that was quite specific to his experience, but he said, never let your name be associated with S4, which is supply and logistics. He had fought his way up through Anzio into the Alps, and it was wintertime, and everyone in the Alps on the front lines, they all had frostbite or frost

Starting point is 01:23:16 nip of some form, and he got pulled on a detail to go all the way back to headquarters for something that they needed to do. And so he's in the back of this truck. And as they got further and further back, he started to see jackets and gloves and fur-lined parkas until they're back at headquarters. Everyone's got the latest, greatest cold weather gear, and there's heaters and stuff. And meanwhile, he and his brothers who are in the Alps on the front lines have none of that. So I think there's a more general lesson there to be extrapolated, which is leaders eat last, always serve those who you're responsible for, who are at the tip of the spear before you take care of yourself. And that's more, again, back to caring and selflessness. But those were the three

Starting point is 01:23:55 rules that he gave to my dad after his experiences, 66 months in combat. I love it. On the topic of performance, you turned me on to something I hadn't heard it before, which is this stratum concept behind levels of leadership. Can you explain what that is and how you found it useful? Our brains hear the same words, but it interprets it into different meanings. So maybe the easiest example would be like, if you asked Thomas Jefferson or your average high school student about what's the purpose of education, you would get two very different answers. Jefferson's going to be talking to you about how an enlightened citizenry is indispensable for the proper functioning of a republic. The high schooler is probably talking to you about whether they should go to a vocational school

Starting point is 01:24:34 or whether they should get a bachelor's degree or join the military. It's very tactical. And so at root, what you're screening for is you're screening for linear versus conceptual thinkers. And what's amazing is that So for our overall selection, we have the triangle, which has skills capability, is sort of your habits and expressed values in terms of behavior. Maybe your childhood. We can fix a lot of things. I can't fix your childhood, so we want to screen for that. Then for executives, you have, it's really like the cognitive equivalent of speed.

Starting point is 01:25:05 And so people talk a lot about systems level thinkers. Well, what do they mean? So the first thing you want to do is you want to separate linear from conceptual thinkers. And so this theory of strata, and we have these two trained psychologists that administer interview tests. You could ask a Rorschach block question, like, what do you think about a bachelor's degree? Should we legalize cannabis? Do you think that it's okay to paint your house pink or that you have to buckle up when you drive?

Starting point is 01:25:28 And what's amazing is that thematically, you will get similar answers from the same person at a certain level of thinking. So, for example, if you ask somebody about buckling up when you drive or painting your house pink, they might say like, yeah, it's annoying, but it keeps you safe. and I think it makes sense and people should buckle up more often. You're in a conversation about buckling up when you drive and we should probably be more responsible about that. The systems level thinker will have a totally different answer. They'll be like, that's bullshit because it's the same question. So they reject the frame first.

Starting point is 01:25:57 They go, what we're really talking about are what are the limits of individual freedoms when it comes to some broader impact on the surrounding community or public? And so maybe let's just talk about that. You could talk about cigarettes in public too, right? So let's talk about that. And now you're into a completely different conversation. So what's true thematically is true systems level thinkers, they think over different time horizons.

Starting point is 01:26:18 So think about Elon Musk. He's thinking over millennia. He wants to make humans multi-planetary. And all of his actions day to day are guided by this overriding mission to get folks to Mars as a broader bridge to being a multi-planetary resilient species. Who thinks over, and when you think about your CEOs of oil and gas companies and everything else, and they're riding these broad macroeconomic trends responsible for. geopolitical dynamics across different cultures. They have to be good at so many different things.

Starting point is 01:26:48 And so what's remarkable is stratum four is the shift from linear thinking to conceptual thinking. But the thing about stratum four is they'll be able to start to feel concepts, but they wouldn't be able to go to a whiteboard and explain to you how they influence each other. So for us, like stratum four is where we want our VPs to be who are on the road. But keep in mind, it takes maybe five to ten years to move from one stratum to the next. Stratum five is when you can not only see concepts, but if you went up to the whiteboard, you could organize them and you can make it really simple. That's where you go, hey, guys, it's really this. This influences all this other stuff.

Starting point is 01:27:23 And so what you'll typically find with like stratum four thinkers is just a lot of detail. But what you'll continually have to go back to is, hey, listen, I love the math. I love the work. What's the headline synthesis? If you find yourself talking for like, you're like, look at this Excel spreadsheet, they haven't taken the time to just give you the headline number, you're probably talking to a stratum three or a stratum four worker. And it's just how their brain works. Stratum 5 is where it's simple.

Starting point is 01:27:46 And then stratum 6 and 7 is we start to deal with like how concepts influence other concepts. You're thinking over very long time horizons. So to be on our executive team, you have to be at least stratum 5 because you have to take a very complicated thing and make it clear. And I just noticed that as we were scaling. I would have different conversations with different executives. The higher stratum ones would come to me and they'd be like, Blake, I got 99 problems. Like everything's burning.

Starting point is 01:28:10 But these are the three that matter. Here's how I see. If we execute on this, it. it's that, is that a line? And I'm like, yeah, that's aligned or if it's not, we just revise it a little bit, we go. The other ones, I'd be like, what are you working on? And then you go, what's important? All of it's important. And I agree through, I'll be like, actually, these things are grouped under that and this is under that. And what I was actually doing, we had a chief people officer of background and talent, he had spent some time at Bridgewater.

Starting point is 01:28:33 She would actually be able to predict what would happen after I had conversations with executives. I'm like, I couldn't make it more simple. He's like, that's not what he heard, though, because his brain works a different way. He just heard you giving him more work. doesn't know how to approach it in a more creative way in a way that scales. It was to the point where it was consistent enough, I was like, what am I missing? And so now that we screen for that, it's remarkably predictive. I think the closing thing is it teaches you to be much more empathetic because I believe that most people show up to work, trying to do a good job, working their best. Once you understand stratum and how their brain works and whether if they can see the field or not,

Starting point is 01:29:06 a physical analogy would be like if you had a sports coach that asked kids to sprint and there was like Tommy's running as hard as he can, but he's slow. And the coach is like, Tommy, if you only cared and if you tried harder, you'd be fast. The kid would be like, what the hell? That's just mean. So once you understand it's not a effort thing, it's not a trying thing, it's a capability thing. Their brain doesn't work like yours works. It's cruel to try to do it because it's immutable. You can't train for it. It's literally, it's like your whole life. You're grooved into this pattern and it changes very slowly. So I think, honestly, honestly, honestly, Obviously, that assessment, as well as getting the skills assessment, culture kind of takes care

Starting point is 01:29:46 of itself over time. If you bring in a jerk and nobody in the company's a jerk, those people get put on an island pretty quick. It's like an immune system response. But it's so hard. And the most common mistake that I've made is to promote and overtitled people, not realizing that doing a great job just means hanging on title and hypergrowth because the business is growing faster than most people.

Starting point is 01:30:03 And that has its own thing where folks who would be fine in one position when they're overtitled, they become insecure and realize that they're not effective. And so what they'll naturally do is a defense mechanism is start to set like other people up to take blame. It's really hard. It's really hard to be amazing. I have so enjoyed you teaching me and now us about not only your story, but the system that you yourself are building and working on the potential implications of it. I think your story, my obsession with this notion of life's work. And it's stories like yours that I'm always trying to find more of to be able to show people as examples. Obviously, no one's going to live your exact story, but the authentic nature of it, the unique nature.

Starting point is 01:30:40 of it, the way you've embraced challenge and risk and all these things. I just find deeply inspirational. So thank you for doing this with me today. I ask everyone the same traditional closing question. What is the kindest thing that anyone's ever done for you? I don't even know where to start. Honestly, I'm full of gratitude to so many people. Sergeant Berkman saved my life in Iraq. Tackled me as like tracers. We're going by my head, said they almost took you out, sir. I'm so grateful for that. Kelly Perdue took me under his wing when I had no idea what I was doing. I wouldn't be an entrepreneur if it wasn't for Kelly. I'll just stick with two for right now. But man, I'm so grateful for all the people who've helped me along this journey. And I'm grateful

Starting point is 01:31:17 to you for telling people's stories in a way that we can all learn from. You're just a master interviewer. And I really appreciate the collection of lessons that you put together for everyone else to enjoy because you're doing your life's work as well, Patrick. Thanks for saying so, Blake. This has been such a total pleasure. Thanks for your time. Thanks for your time. If you enjoy this episode, check out join colossus.com. There you'll find every episode of this podcast complete with transcripts, show notes, and resources to keep learning. You can also sign up for our newsletter, Colossus Weekly, where we condense episodes to the big ideas, quotations, and more, as well as share the best content we find on the internet every week.

Invest Like the Best with Patrick O'Shaughnessy - Blake Hall - Combat, Service, and Innovation - [Invest Like the Best, EP.408]

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