Talking with new Sweetbridge Alliance member ixo CEO and Founder Shaun Conway. New economic models for funding sustainable development outcomes can be driven by verifiable data.At the Sweetbridge Alliance we’ve seen a lot of activity around achieving sustainable development goals, and ensuring that long-term impacts are aligned with the realities of short term funding needs and project data. That is why we’re excited to welcome ixo Foundation as a new Alliance member today, and talk to ixo’s President and Founder, Dr. Shaun Conway.The full interview and transcript is available on the SweetTalk vCast/Podcast below.vCast on YouTube:https://medium.com/media/eb06438f83fbc5c2fa1a6f5542760325/hrefPodcast on SoundCloud:https://medium.com/media/fddf1b223d4de1f26da4798ed993580b/hrefComplete interview transcript:Jason: Well, hello and welcome to SweetTalk Alliance Edition. Today I’m joined by Shaun Conway, President and Founder of ixo Foundation. This is a new partner project for Sweetbridge. It’s of a lot of interest to us, because it aligns impact investing and tracking data, aligns the economic incentives with the outcomes of these projects. But rather than me explain this, I think it would be good to watch a little, two-minute video right now from ixo. Let’s roll that tape. [Editor note: Jason knows there is no “tape.”]Video: Never before have we had such a unique opportunity to make a positive impact on the world. What really matters now is educating for the future, averting climate change, and ensuring that no person gets left behind. One of the biggest challenges in delivering, evaluating, and investing for results is the lack of good quality, trusted impact data. To count what matters, we need high definition data with crypto-economic proof of impact.https://medium.com/media/daf438a19ecbf619bad000e3028a020b/hrefVideo: What if you could track and value the impact of your contributions on people and the planet? Introducing, ixo, the blockchain for impact. Driven by data and optimized by AI, ixo provides a trusted, global information network that is owned by everyone. This enables you to become the creator of your own impact projects, and a stakeholder in the projects you believe in.Video: The ixo Protocol ensures that impact claims are verified with the help of intelligent evaluation oracles. Verified data is a valuable digital asset and is minted as an impact token. This enables us to value what counts. Now you can watch projects around the world grow in value as they generate proof of impact.Video: In the time you took to watch this video, ixo could have verified exponential impacts across the world. Enabling people like Nahal to have a future. If this is the impact we can have in 90 seconds, imagine what we can do together to achieve the global goals to end poverty, protect the planet, and ensure prosperity for everyone by 2030.Jason: All right. Well, that was very enlightening, so I’m glad we had that clip to start things off. Shaun, welcome to the show.Shaun: Hi Jason, really great to be here.Jason: Yeah. We find this to be a particularly interesting project, from the point of view of a lot of our discussion in the Sweetbridge Alliance is about achieving the triple bottom line, so not just economic and efficiency results, but results that impact the environment and also the common good of the people working within supply chains. We find the mission of ixo particularly interesting to our alignment as well.Jason: How would you describe the genesis of ixo, and how did you discover these unmet needs of social impact that the blockchain could uniquely solve?Shaun: Yeah, so my background is that I worked in international development and global health all of my career. In 2008, I presented the idea that has become ixo, so pre-blockchain. I presented this idea at a conference about digital innovation in London. I described it as a collaborative marketplace for delivering impacts.Shaun: It was really around the time of the financial crisis. I was working within the UK government. I was an advisor in the health and the health systems policy and research unit. There was a lot of talk about austerity. There was a reduction in the funding commitments that the traditional financiers of development projects, whether in health or education, all of the priority sectors at the time under the Millennium Development Goals, were really pulling back on their commitments. It really struck me that this dependency on central institutions to get funding and to deliver results on the ground was really not something that is scalable and sustainable to the extent that we need that to be.Shaun: In the other direction, I was delivering projects on the ground as well for a lot of my career and around that time. We were expected to report back up into the system what results had been achieved and so on. There’s a supply chain of capital down to the ground, supposedly, and there’s a supply chain of data which goes back up. Really, there’s huge mismatches between those value transfers.Shaun: The timing, the consequence, really, the exchanges of value where you’re exchanging capital for data essentially are incredibly inefficient. There are so many intermediaries in the process that what you end up with on both sides of that equation is not really the optimal value that you would want to get. Either the information you’re getting back, or the capital that’s getting down to the ground.Shaun: Intuitively, it felt to me like we needed to reboot that system and to have a much more collaborative, participative way in which to give people economic decision power as to how capital gets formed and allocated into projects at a level that is meaningful to individuals and to communities. Then to have reputational gains for those people who did a really good job of staking on projects that they believe in and that then perform.Shaun: But, of course, you need to have good measurement.You need to have ways of verifying that the impacts have actually been achieved. This design was great in principle, but it was really not very practical with the technologies that we had available. In fact, even today if we look at trying to implement that kind of idea using Web 2.0 technologies, it just really doesn’t cut it. Most of this really has to do with a kind of fungibility of funding and of data.Shaun: Really, I think what we’ve seen shifting hugely, and I believe is a big part of what Sweetbridge stands for, is that it does actually matter where goods came from. It matters that coffee was grown in a certain place by a certain farmer who did that under certain conditions. Not that it’s just coffee, and it’s put into some nebulous mass, and all coffee is the same.Shaun: This ability to create non-fungible data and non-fungible capital, which make sure that it gets to the right place and make sure that it identifies the right impacts, is a really appealing idea that is now possible with blockchain technologies and all the related information technologies, we have at our disposal. That was really the origin 10 years ago.Jason: Yeah, it’s been a long time. Always during periods of austerity, that’s when you see the clippers come out, and they generally tend to cut these kind of programs first, because, largely because they just don’t have good enough data on the outcomes, or that they’re getting what they paid for in terms of the investment. It’s up to individuals as well as these organizations to ensure that they’re getting a good kind of outcome from the process.Jason: Then it’s particularly interesting from the point of view of a supply chain. Yeah, how do I know where these goods came from, and that the farmer was actually paid a living wage, and that they got paid on time? So much of the inequity in these systems, and why at the roots of the supply chain things don’t develop as well … It’s the lack of liquidity and funding going to the right places. Anything we can do to ensure that’s happening in a more verifiable way is valuable.Jason: What kind of projects do you think would be best suited to initially take this on? Because, obviously, there’s a huge range or spectrum of different kinds of projects. But which ones are particularly suited to what ixo is doing on the ground?Shaun: Yeah. I think that there are really two answers to that. The first is about the protocol itself. ixo is a protocol-driven technology which is about how data gets captured, how it gets verified, and then, how it gets tokenized. Any data that can be formatted in what we call a verifiable claim which includes identifiers, digital identifiers embedded into their claim, which means you can identify the beneficiary, you can identify the issuer of the claim, who actually delivered the claim, and you can identify the claim itself, and anything else that needs to be identified, even an internet of things (IoT) device. Anything that can originate data in that manner where the data is making a claim about something that has happened in the world is suitable for the ixo Protocol.Shaun: The ixo Protocol really follows an archetypal pattern of taking information that you have no idea whether it’s worth anything, so unstructured, just information, taking that through an opinionation process which then adds verifiability, it adds other enriching insights, and it produces a digital asset.ixo Protocol definitions. (Source: ixo)Shaun: When we look at the kind of places in which that could be applied in terms of use cases, it really applies to everything. That’s a very grand statement to make. But these are core, new internet standards that we’re going to see built into our browsers and being very much part of the decentralized web architecture that is being built out, led by standards bodies such as the WC3.Shaun: Building on these standards, we’ve decided to focus on sustainable development. We have these 17 sustainable development goal areas which represent the largest, crowd-sourced set of consensus and agreements about what’s important that’s ever existed in the history of humanity.Shaun: They really are quite cross-cutting. It’s about life on land, life under the sea. It’s about our governance systems. It’s about education, health, et cetera. It really is all-encompassing.Shaun: What’s great about these goals is that they sit within measurable frameworks. There are indicators, and there’s data structures. There’s whole initiatives that are trying to generate information that enables these goals to be achieved, both in terms of knowing where to direct resources, knowing what to do with those resources, and then measuring that that has happened. We have this palette of SDGs, beautiful, multi-colored palette of SDGs that we could operate in, and what we’re noticing though is that there are some thematic areas.Impact Optimization requires accurate data and transparency into project progress and funding. (Source: ixo)Shaun: I come from a background of health care, as I said at the start. We’re finding that in the social development space, health care, education, job creation are really important thematic areas. Then within environments, there’s some really exciting initiatives around tokenizing carbon credits and creating innovative investment mechanisms that can invest into reforestation, for instance. We have a number of reforestation initiatives, renewable energy initiatives, and so on.Shaun: If I could maybe talk about one or two example projects. In Madagascar, we’re working on a project which is both about reforestation, claiming back land that has been turned into rice paddies. But it’s also about the regeneration of the economy around those forests.Example ixo project page for Madagascar forest restoration project. (Source: ixo)Shaun: It’s not just about planting trees, it’s also about creating sustainable economy. What is the job creation opportunity that that creates? How do children who are part of the families of the people who are planting the nurseries and looking after the forests, how do they get educated? What is their future? This theme of growing trees but also growing children is a really great one that I’m pushing forward.Shaun: We had some chats with Mac and others at Sweetbridge about how we could thematically really capture the imaginations of people who have got a lot of capital, and who see trees as being something really that stable that you can count, you can measure, you can get dividends off of in terms of carbon credits, and then get capital returns when the trees are harvested. But potentially, they become collateral to issue debt that can be used to educate children and to look after the needs of early childhood development and growing children.Shaun: Some really interesting ideas there, and how one brings together the natural assets into the economy. How you bring together capital with impact data and start to create a whole new abundant economy around these kinds of initiatives. It’s very difficult for me to see things in a very narrow way, to say we’ve got a school program, which is an impact bond to educate girls, or we’re growing trees somewhere. I really see this in a much more holistic way.Jason: Yeah, the SDG goals provide a very broad framework, but it almost acts as this huge set of metadata that within those metrics, you can apply them to create criteria around how these projects are going. It’s particularly interesting, because It’s almost like you are setting up a framework or an API for these things where an outcome may be paid forward over the course of a couple decades.Jason: Obviously, if you drive educational goals that student receiving an education doesn’t pay back cash right away. But it does pay back in the form of improved society, lower costs of prison, better infrastructure, all of the things that come out of that. It’s a huge impact on the future. How can we set up some goals around that?Jason: How can we talk about the token economics of this a little bit, since we see everything in terms of this triple bottom line at Sweetbridge. But then there’s also the impact of using token economics and this non-fungible verifiable form of token alongside various forms of liquidity or payment that are being released, I suppose, in some way, to spur these projects along. Can you describe a little about that, Shaun?Big picture view of the Impact Economy. (Source: ixo)Shaun: Yeah. I think, firstly, I think the important concept here is that of impact tokens being an asset class. This is, I think, a lot easier for us to imagine these days, now that we’ve got bitcoins and altcoins and so on. It started off with carbon credits, essentially, creating an asset out of thin air.Shaun: That was like, okay, well, if you can create a carbon credit, and that’s worth something. It’s a piece of paper with a number on it. Then bitcoin came along, and, okay, that’s worth something. I’m willing to trade that.Shaun: Essentially, tokens, if they’re created in the right way, are an asset. In the definition of capital which is a statistical measure that you can measure stocks and flows, and that it can be exchanged with other forms of capital, well, then impact tokens are exactly that.Shaun: We can start off with an easy to understand carbon credits being turned into a token. As a token, it becomes a non-fungible credit, because it is uniquely identifiable. It has provenance. It has a whole lot of metadata around how it was produced, where it was produced, et cetera.Shaun: Then this can become completely transformative for how the carbon marketplace exists. Under the current system … I think if we use this as example I think it really is quite illustrative and to show how the token economics works, and how this potentially interfaces with the Sweetbridge Protocol.Shaun: In the current marketplace, it takes around two years to get a carbon project certified. We have a project in Laos together with South Pole. South Pole is the largest developer of carbon projects, and they’re the biggest wholesaler of voluntary carbon credits. When you buy a L’Oréal product that says carbon-neutral, they’ve purchased their carbon credits from the South Pole.Shaun: We’re working with the South Pole to tokenize the carbon tokens, so carbon credits from community-owned hydroelectric plants in Laos. Now, it would typically take two years for a project like that to get certified through a very complex, very intermediary, thick set of processes.Shaun: You get your certification after two years which means you can start generating carbon credits. It takes about a year for a carbon credit to be certified. That’s three years until that credit comes on to the market. Then you need to sell it. You might get your payment somewhere between three and four years, after you’ve initiated a project. Now, that can be make or break for that renewable energy project, and it can mean that many thousands of renewable energy projects are just not viable.Shaun: If we completely flip that model on its head, and we create a verifiable token that people are willing to buy, because they know that it’s verified. It’s not necessarily produced to the whole laborious certification process. Much cheaper to produce than that certification process and much more trustworthy and much more creatable.Shaun: If we produce those kinds of tokens, we have a much reduced pathway to the marketplace for those carbon credits, and we’ve really achieved what Sweetbridge sets out to do, which is to make the producer much more proximal to the buyer and to cut out a lot of the unnecessary middlemen and costs. That’s the first part of it.Shaun: The second part of it is now, how do you create … How do you create liquidity for that hydroelectric plant to be built? Or if you have an offtake agreement for the electricity, and you have an offtake agreement for the purchase of the carbon credits, you now have got the perfect recipe to create a loan facility which can be offset with Sweetcoins to reduce the interest repayments, and that can be used as an incentive for the operator of that renewable energy plant to do what is necessary to ensure that that plant generates the positive impacts that it sets out to do.Shaun: You have a measure of compliance or, let’s say, a value measurement to know that the impacts are being achieved. You have the incentivization to make sure that that happens. Then you have the financing mechanism, which creates the liquidity for the project, and you have the supply chain mechanism to make it all actually work and flow. I think that’s a great example of how this could possibly all fit together.Jason: Indeed. There’s a lot of working capital requirements for any kind of project like that — if you set up a huge hump in front of the ability to deliver, you could sabotage any efforts to get something going. Time and money are still the important factors, so how can we move it up and tie it to achievable goals along a timeline instead of doing that. I really like that approach that you’re talking about.Jason: A big factor of your success at ixo is about building a large community of interest including sources of funding other technology partners, organizations, governments. How do you go about engaging and building an audience with so many different types of stakeholders in your ecosystem?Shaun: Yeah, that’s a very big question. A lot of our stakeholders are not from the crypto community. In fact, I would say most of them are not from the crypto community for starters, except many people are interested in our work and want to support it. There’s also the potential for a lot of interoperability with blockchain protocols and applications and so on.Shaun: We’re very actively involved in key partnerships with leading blockchain companies like Sweetbridge, like the Ocean Protocol, like the Sovrin Foundation, and some other leading pieces of the puzzle that are bringing together the necessary components of this new stack. Through that, we are actively involved in hackathons and all the tech meetups, and so on which is the real fun part of the work that we do.Shaun: Then we’re speaking to the development community. The development community is … No, this is not code development, but international development, sustainable development. This is a lot more my comfort zone, because it’s the space I’ve been working in all of my career.Shaun: We’re involved at the level of the UN. We’re involved with a number of leading international organizations, and have them on board as collaborators. We have received funding from UNICEF, from UNICEF ventures. This tends to build networks and build credibility as you get more and more partners on board. There’s that kind of level.Shaun: Then there’s the impact investors. It means a lot of speaking at conferences and reaching out to these key, influential groups. We have an ambassador program. Our ambassadors are really great. They’re from all around the world. They’re people who have come forward and volunteered their interest and their efforts.Shaun: A lot of those people are actually key, influential people within those kinds of organizations. Whilst the engagement happens at an institutional level and is quite formal at one level, it’s really about people at the heart of it. Who are we getting as real advocates of the project and as ambassadors and so on?Shaun: For us, the next phase is to really make it possible for anyone to launch an impact project and to run an impact project of their own. For me it would be, the core of what is ixo is about. It’s built on solid protocols and so on, but it’s really about enabling a democratic participation in financing impact, investing in impact, delivering impact, and evaluating impact.Shaun: I believe everyone should have the tools to be able to do that. The days of making impact investment a privilege of institutional investors, I think really needs to change. Both because we need a broader base of capital, but we also need greater civic engagement.Shaun: There’s nothing like giving people the opportunity to have a stake in something, skin in the game, for them to be interested. Give them skin in the game, in carbon markets or in educating kids, or whatever. They’ll want to see those outcomes. They’ll want to see the financial returns and the impacts, the social impacts, the environmental impacts.Shaun: I think the new generations of investors, particularly, millennials … There’s really good evidence from surveys that Morgan Stanley’s been doing year on year for the past number of years that shows that the percentage of millennials to whom it matters that their investments go into investments that have an impact those percentages have been increasing year on year. They’re now sitting probably close to 90%.Shaun: I think we’re going to see a concrete shift in the way that impact is financed, and the way that impact is seen to be not just a nice to have on the side, but is actually seen to be the thing that I want to buy. I think this is also really important from a corporate perspective and the triple bottom line that you were talking about earlier. The bottommost line is the impact stuff. Actually, it should be the top line, because a lot of … The core value that is going to be delivered in this new economy, the decarbonized, dematerialized economy, is going to be top line stuff.Shaun: Everything that’s produced at some point is going to have a fingerprint. We’ll be able to know from that fingerprint has it had a positive impact, or has it had a negative impact. We have now the data tools and so on for this fingerprinting.Shaun: I had lunch with Mac in Berlin a few weeks back, and we were talking about how to bring together our two protocols. Everyone talks about carbon footprint as being an idea that we all intuitively get.Jason: Yeah.Shaun: I said, “Why don’t we have a carbon fingerprint?” Which is what is on the goods that we buy and that pass through the supply chain. You can look at it, and you can check the fingerprint and know how much of an impact this has had.Shaun: Those are things that are theoretically possible with the kinds of tools we have now. Now we just need to make it possible in the new reality by creating the right models and incentives and so on, and I believe that by having the economic power or capital which Sweetbridge brings, the sweet deal, and having the data capabilities and bringing those two together provides really the incentive and the means.Jason: Yeah, that’s a really good thought, Shaun. I think that consumer demand is going to drive this just as much as investment or more so. Once we have this insight and the transparency into how goods are made, and where they’re made, and the impact of those goods, it’s going to have a sea change effect on buying behaviors.Jason: The companies that prepare themselves for that kind of change are going to be best situated in the future economy with this new set of buyers. There are so many elements that are going to lead into how this is all going to happen. From both of our technology stacks, as well as all the organizations that you just mentioned.Jason: Well thanks for joining me, Shaun. Where can people go if they want to get involved in ixo and find out more?Shaun: Great. Well, we’re about to launch our beta platform which will be at ixo.world, I-X-O.world. It depends on when you watch this video. It might have launched already. We’ll have an ongoing, onboarding process inviting everyone to join this new world.Shaun: What that enables you to do is not only just have interest in the project, but, actually just start playing around with the tools, setting up your own projects, looking at the projects that are running, checking out how they’re performing, and, in future, actually being able to stake onto those projects and really become a stakeholder and a participant with economic interest in the projects. That’s on the roadmap for down the line.Jason: Exciting. Well, can’t wait to see that platform. I’d love to play with it as well. Sign me up for some testing. I can’t wait.Shaun: Wonderful.Jason: All right, Shaun. Well, thanks so much and thanks for joining us on SweetTalk today.Shaun: Thanks very much.Sign up for future updates at https://ixo.world.vCast: Watch the video feed of the interview on the Sweetbridge YouTube channel here: https://youtu.be/JwXpZcO-mo0Podcast: Listen/download the complete SweetTalk podcast on SoundCloud here: https://soundcloud.com/sweetbridge/ixo-shaun-conway-sweettalk-alliance-edition-august-2018/s-dGMisSubscribe to the podcast on iTunes or Stitcher.SweetTalk Podcast/vCast: ixo — A New Economy of Impact Investment (review) was originally published in Sweetbridge on Medium, where people are continuing the conversation by highlighting and responding to this story.