Blockchain Leader Everledger Tracks the Origins of Everything From Blood Diamonds to Alexander McQueen Couture

Transcript

Nick Abrahams:

Hello ladies and gentlemen and welcome again to the show. Today I’m talking blockchain and Providence and supply chain. We’re very lucky to have Dan Ryan with us who is the General Council of Everledger. Dan, welcome to the show.

Dan Ryan:

Thanks Nick. I’m very happy to be here.

Nick Abrahams:

And now Everledger, it’s a remarkable company and certainly has been at the vanguard around Providence and blockchain and so forth. Could you give us a little background on what is Everledger?

Dan Ryan:

Sure. We’ve started ourselves as a digital transparency company. Everledger was formally established over five years ago now in the UK by our founder Leanne Kemp. She raised money in London through Techstars and she was focusing on at that stage because she had a background in the jewelry industry as well as RFID technology on using blockchain to try to solve the blood diamond problem. You might recall at about that time there was the famous movie with Leonard De and there was the implementation of the Kimberley Process. That’s a paper based process.

Nick Abrahams:

Can you just talk through what is the Kimberley Process? That’s a paper based Providence process, is it?

Dan Ryan:

Yeah, that was put in place internationally to help prove that the diamonds that you buy in the retail store are not conflict diamonds, don’t come from areas where there’s child soldiers and all the other nasties that were just illustrated in that movie. And the diamond supply chain is a somewhat complicated one. We know it super, super well. About 90% of the diamonds in the world go through a place called Surat in India and then they go off many places via Israel and Belgium before they end up in the retail store on the high street. The Kimberley Process is essentially a paper based… You get a paper certificate. What we wanted to do was be able to make that digitized as well as include other ethical claims on the blockchain that members in the supply chain or the end user could pull up and easily draw on and have confidence because of the nature of the blockchain, its immutability that what is being said was something that they could have confidence in that was credible.

Nick Abrahams:

Right. Did you act, I guess as Everledger grew… Where’s Everledger’s place in the-

Dan Ryan:

Sorry. Yeah, maybe I should have described that more fully. So our holding company is based in London. We have subsidiaries in India. We have subsidiaries in the United States. Our CTO is based in Silicon Valley. We have a presence here in Australia. About half the team of the management team are here and about half the senior management team are based in the UK. So I’m based here, and my background maybe it’s worth describing, I spent about 15 plus years in Hong Kong and China. So in the technology sector, I’ve been a GC to a tech company previously and worked for some of the international law firms, Freshfields and Baker McKenzie and the like up there. So I have a fairly solid China background amongst other things.

Dan Ryan:

I’m based in Brisbane. Leanne spends a fair amount of her time. She was previously the chief entrepreneur of Queensland, the role that the Queensland government gives to certain entrepreneurs who’ve done interesting things. She did that for about three years. Actually I literally just came back from Asia where we had a global offsite for the people pulling together. Because the last couple of years we obviously haven’t been able meet as regularly as we might have liked. And it was good to see some people I actually work closely with but haven’t ever met in person. Yeah, we’re a global company. We’re about 150 people or thereabouts. We’re invested in by very credible investors and we’ve been at it now for five or so years. When people look to the application of blockchain at an industry level and really getting into supply chains, we’re at the cutting edge of that.

Nick Abrahams:

Yeah. Fantastic. I’m sure the two aren’t necessarily closely related, but it’s interesting to see that a Leonardo DeCaprio movie fired a business. Who knows if Leanne watches Wolf of Wall Street. What may she come up with then?

Dan Ryan:

Or the latest Top Gun movie. Who knows? That’s been mentioned to… Crazy schemes. Anyway. People get their inspiration from all different [inaudible 00:05:21]. Yeah.

Nick Abrahams:

It’s true. No, I mean it’s a fantastic… Because I think the issue with blockchain has been really since the advent of Bitcoin first introduced it and organizations have been looking for uses for an outside of cryptocurrency and I think it’s sort of widely been regarded as being a solution in search of a problem. But obviously that Providence issue is something that Everledger has identified and worked well with. Just in terms of the tech stack and not wanting to go into any great detail, but is it your blockchain or are you working off other blockchains or how does it work?

Dan Ryan:

We work off other blockchains, Ethereum and Fabric. And our magic is the way… The applications we build on top of those and obviously the understanding of the supply chains in which we work and how we’re able to ingest data and present that to the end consumer as well in an easy meaningful way. I mean, building your own blockchain is a different kind of [inaudible 00:06:28] and probably something that we wouldn’t really be wanting to do because… And probably I’m swimming out beyond my tech capability here, but it wouldn’t allow us to properly engage in the way we would want to with other players on who want to upload data to the chain.

Nick Abrahams:

Just on that, I think one of the things that I’ve seen in terms of enterprise blockchain projects is a lot of it is sort of almost herding cats as well because you have to get a lot of organizations or stakeholders around a particular product or project to actually agree to standards and so forth. How did that happen with the diamond project? Do you put together the collaboration agreements? Are you responsible for getting all the stakeholders together and getting them to agree to standards and so forth?

Dan Ryan:

Yeah, I mean maybe it’s worth just stepping back and tackling this often used line, that blockchain is a solution and such for problem. I understand the critique and actually I really like engaging with people like Calvin [inaudible 00:07:45] and Eliza, Mick, and others who make substantive legal critiques both of the technology and its limitations and some of the over hyped claims. But I think what needs to be understood with blockchain, it’s a technological tool that can be used in particular cases and has applications. It’s never going to be the be all and end all of your solution to every problem. It has uses in supply chains because of the ability to upload and its immutability that go beyond traditional databases and other track and trace technology.

Dan Ryan:

So in terms of… You mentioned standards. I mean one of the things… Obviously that’s data uploaded onto the chain and I ensure that whatever data is uploaded, if it’s personal data, then obviously we don’t put it on chain because then you can run into conflict with other personal data rules, GDPR and others.

Nick Abrahams:

Yeah. Of course.

Dan Ryan:

Because part of the rights that data users have is the ability to, in many cases, have some degree of control over their data. And if you’ve got it permanently stuck on chain and they lose that control, it limits the ability for you to give it back to them. And so we do that in other means. We keep it off chain, but have the ability of people access this.

Dan Ryan:

In of other non personal data, which is uploaded, or certificates or other… you can cover a whole host of things. So a Kimberley certificate that’s pulled from the database or the source, that doesn’t pose any super problems when you’re trying to upload large amounts of diamond data. While I’ve worked with our tech team to ensure that we have particular data [inaudible 00:09:41] in place and what we’re uploading is obviously not subject to any third party claims and it’s pulling in the right way, and we’re working directly with those that are producing the data. One of the reasons why it was interesting at the beginning that why diamonds were interesting for blockchain is because diamonds, unlike many other things, have a unique, there are no two diamonds are the same. They have their own unique fingerprint.

Dan Ryan:

So if you do a scan of a diamond, you can be sure it doesn’t need, in essence need to be tagged through the supply chain. So you can have a photograph of it or a scan of it and you can be confident that that particular photograph relates to that particular diamond. And then you can build up other information on the chain so people can, at whatever point in supply chain, pull information up and see where it’s come from and where it’s going to. So sorry we ran round about there, but hopefully that answers some of the questions on it.

Nick Abrahams:

Yeah, if we think about, to give folks a sense of what does it mean to actually have this transparency, if we look at how it rolls out. So you’ve got a diamond and you’re able to identify that it has its unique DNA as it were. And so the way that the Everledger solution works is that you, you’re able to track that through of a variety of gates as that diamond goes from being mined to then, it’s gets cut, and then distributed.

Dan Ryan:

Yeah, yeah. Well so we offer the ability, obviously the Kimberly process certificates and stuff were the initial impetus for the company. But there are other things that people are interested in. The providence, that they can guarantee that the providence comes from Tanzania or India or God knows where. That they may be interested in that for sentimental reasons or for because of ESG reasons. There are other people might be interested in the carbon dioxide content which was involved in transporting the good, or they may be interested in any other ethical claims. And we don’t really take a position on the nature of the ethical claim. We want people to upload either their own industry standard certification or if it comes from a government one that can be uploaded as well so that the consumer is empowered with as much information that they want about an item which they don’t get through the current labels that are on the… or they can’t have confidence in.

Dan Ryan:

Yeah, I like to think actually this stuff is, it’s almost like an augmented trademark. Trademark is a sort of 19th century technology. You pop a badge Coca Cola on your can and it gives you a particular idea about the style of the [inaudible 00:12:48], and the quality and this that and the other. But with technology we’ve got the ability now with someone swipes across an item to really should be able to find out much more meaningful information about where that comes from. So to guide their choice and those products that have that information will be able to differentiate themselves from those that don’t. Diamonds are valuable, they’re emotional kind of items and girls tend to know a lot more about them than guys.

Nick Abrahams:

Yeah.

Dan Ryan:

But it’s a choice where people have strong views and so the more meaningful information we can provide to them, the better. So that’s where we think it’s all heading and that’s what we’re trying to, well both change certain industries but also move beyond the diamond industry, move beyond that into others.

Nick Abrahams:

Yeah. So in 2021, so last year, Everledger won a contract with the Australian government to do a critical minerals supply chain project using blockchain. Can you talk us through a little bit about that? That was a great success and I understand it’s been successfully completed. Can you give us a sense of what was that project about?

Dan Ryan:

So we’d been working, building from the work that we’ve done in diamond, which is a resource industry in essence. We’d been working with the future Battery Industries Cooperative Research center in Perth and the automobile companies in different Europe and United States because we wanted to build out the supply channel, get adoption of Everledger’s technology throughout the EV and the battery supply chain. The Australian government opened this grant for using blockchain technology to track and trace products through the critical minerals sector. And we won it. It’s the first of its kind globally. So other countries in the world, broadly similar to Australia, like Canada, have been very interested in how that has gone and may be implementing further things in their countries as well. The Queensland government has been all based here and the WA government also been very interested in what and how that has gone and watch this space will likely be doing much more additional work with both of those resources states. Yeah.

Dan Ryan:

And so critical minerals covers lots of different things and the definition varies slightly depending on which country you are you’re dealing with. The United States has a different difference to Australia. Countries that have an abundance in particular products, they’re not critical for them, but they’re not be critical for others.

Dan Ryan:

We focused on nickel because Australia’s a big nickel producer and nickel’s a critical mineral for other countries, including the United States. And there’s a lot of rich data regarding nickel, which we were able to utilize in our pilot. So that was, like you said, it was successfully acquitted. And what we really want to do is build on that and build the digital infrastructure for the mining industry so that when resources are exported from Australia, they don’t just go into the global pool and are priced. An Australian nickel, Australian other copper or God knows what is priced at exactly the same price as copper from, I don’t know, Myanmar or deepest, darkest Africa. There should we think be a premium on the resources that come from Australia. Because despite all our flaws and the rest of it all, if something comes from Australia and can demonstrate that’s come from Australia, it’s going to be more ethically produced than pretty much anywhere else in the world, in the resources industry.

Dan Ryan:

So that’s the broader game. People can see the end goal. There are challenges throughout to do that effectively, but we’re certainly at the cutting edge of implementing that.

Nick Abrahams:

Yeah. And so is the main reason for doing it, this idea of the ethical sourcing proposition so that you can tell that, “Okay, this is nickel that’s come from Australia.” And so that sounds like that’s the main driver. But you also mentioned, there’s that metadata around things. I’m not sure whether there’s any metadata that’s relevant around nickel, but in terms of what’s happened to it over its time and so forth. Is that also relevant in the critical mineral space or No, it’s really just about where did this come from?

Dan Ryan:

Oh, well, I mean metadata, the more data you have on chain, the more metadata you have which can be analyzed and processed in different ways. I mean, it does depend on the sector, does depend on what the ultimate end consumer or the participants in the supply chain want to know. But yeah, look, it’s both consumer-driven and it’s government-driven, the need for four certification or technologies which can demonstrate the compliance with ESG standards. The Europeans are certainly pushing ahead with the requirement that … and the big automotive industry there that the manufacturers there are responsible for sourcing ESG materials. And then the latest in the United States, I think it’s the Biden Administration’s Inflation Reduction Act, contain provisions there, which give a benefit to those sourcing materials in the EV sector from those that are countries that have free trade agreements with the United States-

Nick Abrahams:

Right.

Dan Ryan:

… which Australia is obviously one. And then beyond that, I mean, the short, simple way I’d describe it is the Tesla driver in San Francisco that’s very socially aware wants to be able to tell his or her friends that demonstrate that the battery that’s in the back of his car or her car is not, wasn’t produced by child labor in the deepest, darkest Africa. Right? Or doesn’t contain cobalt from those areas, and that flows through across the system.

Dan Ryan:

People are increasingly interested in where products have come from. This can be not just ESG claims, but I mean, we do work in the apparel industry. Maybe I haven’t touched on that.

Nick Abrahams:

Yeah, yeah, yeah. No.

Dan Ryan:

Alexander McQueen, I mean, they also have issues related to ESG compliance, and famously there was this recent … They want to be able to justify any claims that they’re making to the end consumer, because otherwise they run the risk of being attacked for green washing claims as well. Yeah, regulations coming from a variety of different angles, consumer sensibilities are also changing. There’s a demand for technology which can help validate the claims that they’re making or the demands that the consumers want in their products.

Nick Abrahams:

Yeah, I mean you mentioned Alexander McQueen. I guess, how does Everledger work with brands like Alexander McQueen?

Dan Ryan:

Oh, similarly. Again, we’re a small company. We’re still about 150 people, and I’ve worked for tech companies in the past, one of the particular challenges, which you alluded to earlier, is that we do have to pull different participants together to make it work. Within the apparel industry, we work with the Australian Innovation, it’s a part of the Australian government responsible for the Wal-Mart brand amongst others. We work with high-end fashion companies like Alexander Queen and others.

Dan Ryan:

It may not be that they want to demonstrate a particular certification in some cases. They may just want to tell the story of an item so that the consumer, when they swipe their high, overpriced garment in London can see that on chain that the wool grower who actually produced the materials that are in their suit or dress or what have it, and all that can be easily accessible through pulling it through a chain for which Everledger has responsibility. Again, I like to think about it. We do enterprise-grade supply chain validation, but we also provide a much more way of end consumers meaningfully engaging with the source of their products.

Nick Abrahams:

Right.

Dan Ryan:

Which again, is not something that we’re traditionally used to. A glass turns up or an item turns up and we read some of the info on the paper packaging, but we don’t have any … or even if there’s some website which we can go to, we don’t have any way of truly trusting what is being given to us. Because we’re an independent company or independent technology. I mean, there was De Beers, to go back to the diamond industry, De Beers did try and set up their own blockchain-related thing. It still exists, I believe, called Tracer, but they haven’t had that much success because no one wants to be on the De Beers blockchain.

Dan Ryan:

I mean, they control supply chains in the diamond industry enough already. There’s been an opportunity for an independent company rather than one that’s grown out of an existing incumbent. In the apparel industry, Alexander McQueen, we allow consumers to much more fully engage with the supply chain, so they can see where it’s come from and there’s all sorts of other media. Some of it’s not that groundbreaking, but it’s an easy way of putting a whole lot of certifications in media and other things on chain which the consumer can access and assess.

Nick Abrahams:

Okay. Okay. Fascinating. I think you mentioned batteries and electric vehicles, and so that’s another area you’ve been doing a lot of work in?

Dan Ryan:

Yeah. Like I said, we originally started off doing work with a cooperative research center in Perth, with just some participants with some of the other resources companies there were a tech element to it. But the reason why people are talking about critical minerals is, well, there’s geopolitical interest in it and then there’s also the growth of electric vehicles because it’s things like lithium and cobalt and what that make up, the batteries which end up in the Teslas or similar types of vehicles.

Dan Ryan:

We work at both end of the chains, and part of the challenge for us is as a technology company it’s almost like a public relations role. We’ve had to pull different parties together and Leanne spends a lot of her time networking and overseas on planes and within different forum like the Global Battery Alliance is one, which we were very much a part of from the beginning, some of the automotive consortium, which I mean put together to ensure that different participants in that can meet their ethical obligations and use whatever technologies they have in the disposal to do so. Yeah, we’re involved in the critical mineral sector. We’ve been involved in the battery … And what we have done is we have something it’s a digital passport. A battery passport, essentially, is term that people use.

Nick Abrahams:

Right, right.

Dan Ryan:

That will give you information not only about whether that product has come from and the components that have been involved in making it up. Like I said, any ethical claims were added to it, but also where it’s going to.

Nick Abrahams:

Oh, right.

Dan Ryan:

Post purchase by the consumer, there’s issues obviously, what you do with the battery once it’s used. It needs to be recycled and repurposed and this, that and the other. The extent to which you can demonstrate that in an easy way, rather than scraping out around your suitcase to try and find a paper-based forms and stuff. That all makes things a lot simpler.

Nick Abrahams:

Interesting. Okay.

Dan Ryan:

Yeah. Likewise, we’re simply not used to being able to … we just don’t think about where products fully come from and where they’re going to. In the apparel sector, it’s interest that your garment isn’t produced by sub-standard conditions in Bangladesh or God knows where, and that the products involve that your garment actually contains like 100% cotton or 100% wool, or whatever mix that the retailer is claiming. But it’s also interesting in the secondhand market, if you’re wearing a black dress, a little black dress, not you, but your partner.

Nick Abrahams:

Yep.

Dan Ryan:

It’s interesting if Kate Moss wore that dressed previously, right? Or if you are having a glass of beer and you can demonstrate that Hugh Jackman drank from that glass previously. Whereas at the moment, you’ve got no idea you might be drinking from a glass that Hugh Jackman had a beer from, but you’ve got no idea about that. But if you’re able to swipe and demonstrate that quickly, well obviously, that becomes a much more interesting thing. And there’s a whole lot of web three and other consumer related stuff which people are interested in and has marketing applications and stuff, which people can, whatever, put on their Instagram feed or brag about or God knows what, right? there’s a whole lot of post-purchase applications that the blockchain potentially has too.

Nick Abrahams:

Yeah. No, very interesting. And I guess, without wanting to go into a great amount of detail, but obviously the general council, they’re sending me out for the legal aspects as well of the organization. And you mentioned some of the issues associated with personal information and privacy compliance.

Dan Ryan:

Yep.

Nick Abrahams:

What are some of the other, some of the of legal issues that you’ve sort of faced with putting data onto the blockchain?

Dan Ryan:

Well, it’s again, well, it’s to ensure that, because it is immutable once it’s on chain, it’s important that again, there’s no third party claims against any of the data that’s uploaded. I have the general challenges of being responsible for a company which has employees in India and God knows, and elsewhere. Ensuring that our commercial standard licensing agrees and everything else makes sense, especially with the companies that we’re engaging with.

Nick Abrahams:

Right.

Dan Ryan:

If you’re talking in general terms, yeah, personal data is one question, although because we don’t upload it on chain, we’ve been able to avoid main issues regarding to that. And no one, as far as a lawyer, has been able to solve being able to reconcile the obligations you have with GDPR and other things with the blockchain, the immutable nature of the blockchain. I mean, we have… Look, what other things do we really bounce up against?

Dan Ryan:

I mean, it’s mainly to do with… There’s a variety of different, I think you mentioned earlier, standards out there for ESG compliance. I personally don’t think you’re ever going to get a situation where there is one global standard for particular things. In some ways, that suits us because you can put on different standards on chain. You’re not bound to want it and allow the end user to select the one which is most meaningful to them. But some of the work that I’ve been involved with has been pulling together different parties to try and create compliance that they do, can all sign up to.

Nick Abrahams:

Yep.

Dan Ryan:

I mean, what else do we really bump up against? It’s mainly… If we’re dealing with a major corporate, or we’re raising money or doing other different things, that’s me pretty… A lot of that falls on my shoulder, so-

Nick Abrahams:

I can imagine.

Dan Ryan:

… That kicks me up nice. Yeah.

Nick Abrahams:

Yeah. It’s busy. And just as a final question, I guess, for those that might be listening out there and organizations who might be sort of struggling with some of those prominence issues that you’ve talked about, or how could see value in being able to identify where the product or the constituent components came from and so forth, what advice do you have from… How do they get started on this sort of supply chain validation journey?

Dan Ryan:

Yeah. Well, look, I mean, they’re welcome to contact Everledger.

Nick Abrahams:

Yep.

Dan Ryan:

We have a team, which, of analysts essentially, who have done work across a variety of different industries. We don’t know everything about every supply chain, but we have a great amount of expertise in quite complicated ones. So we can kind of do an assessment about whether the blockchain or what we offer is going to work for them, in a way that makes commercial sense for everyone. I mean, Leanne’s got a famous line that she’s, “We’re not in the business of tracking and tracing lettuces.” No disrespect, there’s a whole industry, there are people in the agriculture and other sector. We’ve been interested in more focusing on more of the high end items. Diamonds, batteries, high end power and the like. That’s just the ones we’ve been able to make work commercially. So, but look, we’re happy to have discussions with whomever comes across.

Dan Ryan:

There’s a whole lot of world out there. Prominence is not going away. The interest that consumers have on the supply chain is not going away. The government regulation that’s coming to be able to further guarantee any claims that corporates might want to make about their product is not going away. I mean, and part of… One of the drivers for the bigger corporates is that if you are using a technology like ours, which is best in class, then you can at least put that forward to any regulator or litigant that comes against you and say, “Well, we are genuinely using the best in the business to be able to demonstrate that the claims that we’re making.” So that, yeah, look, we’re happy to have discussions with anyone. It’s not going away. And I said this at the crypto conference, which we both attended, whatever it was, two, three weeks ago?

Dan Ryan:

And which is a fun time and lots of people with different entrepreneurial ideas. One of the ironies I think is that the original crypto utopian dream, where the borderless world and you won’t need to sort of engage with countries or jurisdictions and God knows what, the irony is that ultimately, blockchain might be used, become most meaningful outside of the digital asset space, to be able to assist governments to be able to properly regulate investment and trade flows. And so those… And actually bind particular countries together that can satisfy the ethical requirements which their governments and peoples require. So it’s sort of, I find it quite interesting how ultimately, the story doesn’t always turn out as people originally expected, and especially in this technological space. Yeah.

Nick Abrahams:

Yeah. No, fantastic. Yeah, no, I agree. I mean, I think the whole idea of prominence is something who’s time has come and it’s going to continue to be critical for organization. So Dan Ryan, thank you very much for spending time with us today. I really appreciate it.

Dan Ryan:

No problem, Nick. I like your work. Thanks a lot.

Nick Abrahams:

Great. Thanks.