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Tuesday, May 24, 2022

Cruttenden Startup Pays Consumers for Online Data

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Just days after California Governor Gavin Newsom called for consumers to be paid for providing companies access to their data, a new Orange County fintech company announced the launch of a service to do just that.

Newport Beach-based Ant Transaction Machines late last month announced a service that would allow users to be paid up to $100 a month for allowing collection and use of their personal data.

Ant, with the atm.com domain site, is the latest fintech startup from Walter Cruttenden, founder and former chief executive of what is now Roth Capital Partners LLC in Newport Beach, as well as Irvine-based micro-investing company Acorns Grow Inc.

Ant co-founder and Chief Executive Mike Gleason is a Massachusetts Institute of Technology scientist and founder of Newport Beach-based domain developer Consumer Brands.

Ant, currently a web platform with an app in development, allows users to get a piece of the roughly $2,000 per year that the average American consumer’s data is now worth to advertisers and major brands, according to data cited in a recent MarketWatch article.

That’s roughly 100 times more than what an individual’s data was worth five years ago. Gleason said the value of a user’s data has gone up so much because of the increased monetization of that data by large online companies—namely Facebook, Google and Amazon.

The old model of users “paying” for content and free platforms by giving those companies access to their personal data is no longer a good one for consumers, he said.

“If your data is worth $20 … you were getting a decent value for having a platform where you could keep your family photos, share and interact,” he said. “When you get to $2,000, are you really getting a good value for using a search engine for free, getting a Facebook account for free?”

Ant is currently privately funded, but Gleason said the company has two venture capital groups that are expected to invest, and is also in talks with a third, Silicon Valley-based venture capital Greylock Partners, as well as having friends and family that will be investing.

The startup is in the process of hiring its first few employees, and Gleason said they will be hiring more people in Orange County.

Battling ‘Data Monarchs’

Gleason said the idea behind Ant is to help people monetize their own data, potentially by treating it as intellectual property, which has different rights under the law.

The Ant team aren’t the first ones to introduce the concept.

Last month, musician will.i.am of the Black Eyed Peas, wrote an op-ed in The Economist, calling data ownership “a human rights issue.”

He argued that as a musician, his ideas are copyrighted, but as a person, the data he generates helps make millions for “data monarchs” like Facebook and Google but has no monetary value to him.

The average user spends nearly four hours a day consuming content on smartphones, tablets and computers, according to 2018 Nielsen data.

When users opt-in to Ant’s service, the company’s DVM or data value meter, shows them in real time how much money they can make with each piece of information they enter or third-party app data source they integrate.

Users can pick what data to share on a line-item basis, and can choose to share their information specifically or anonymously amongst the colony. They can also opt out of the service altogether whenever they choose, Gleason said.

Scale is key. Currently, the website has a waitlist to join. Once it reaches a million members, the company will have enough data to pool the information of all Ant users, and then bundle and sell that data to major brands.

Users are incentivized to get their friends involved, as the more users Ant has, the more earning potential for everyone, though consumers will split proceeds 50-50 with the company.

Based on the current $200 per month valuation of each Ant user and the 1 million users the company wants to eventually have, the company’s business plan could in theory bring in over a billion to the company annually.

The company announced the new service on the heels of Newsom’s first State of the State address in which he proposed a “new data dividend” that would allow consumers to be paid for providing access to their data.

In his speech, the governor said companies that “make billions of dollars collecting, curating and monetizing our personal data have a duty to protect it.”

Last year, the California state government passed a data privacy bill, which Newsom called “first in the nation.” The law, which goes into effect next January, gives consumers the right to know what digital information is collected, shared or maintained by companies, how it’s being used and the ability to request that their data be deleted.

Gleason said Ant is based on mathematician John Nash’s equilibrium concept, with the idea being to balance the interests of the individual, the colony, digital platforms and advertisers.

Micro Manager

In the case of the company’s users, or “ants” as the company refers to them, they have the opportunity to earn some extra money through what Cruttenden calls “micro-incomes.”

It’s an issue that Cruttenden has focused heavily on the past few years.

Earlier this month, Cruttenden told the Business Journal that 70% of Americans don’t have enough money saved to cover a $400 emergency, which leaves them at risk if their car breaks down—they can’t get to work, and could lose their job or even their house.

“Blast, Acorns, all the companies we’ve been involved with, we’re trying to develop sources of micro-income that can help people build that balance,” he said. “You can preach to people all you want [to save] but what they really need is a little extra income.”

Gleason said he sees Ant as a type of Airbnb alternative for the many Americans who don’t have a second property to rent out.

“If your own data becomes something of [intellectual property] that you can then use to monetize, it really creates an opportunity for people who don’t have other assets at play to create extra income,” he said.

Cruttenden’s other fintech startups, micro-investing app Acorns and Blast, a platform which allows gamers to earn money for playing, have seen success from investors, with Acorns raising a total of $207 million, including a $105 million round in January.

Last year, Blast raised $12 million in two rounds, and is looking to complete another this spring.

Ant is currently operating out of an office at 4600 Campus Drive in Newport Beach, the same space where Acorns got its start.

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