Blake Hall
speaker
270 appearances
1 recordings
1 series
first heard Jan 2025
last heard Jan 2025
Blake Hall’s voice in public audio — every appearance, attributed to the second.
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It's like what PayPal was for the early days of 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, 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.
Yeah, so the four steps, just really quick, so maybe I can give you the cliff 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 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 and for how 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, 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 five, 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 Jim Collins good to great, great team, great retention, focus, alignment, all the things that help you capture hopefully a And so what's really amazing is you can't skip stages. This is why you raise a ton of money from investors in Silicon Valley. Congratulations. You've 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.
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 at the federal level does not include federal dollars at the state or tribal level. They estimated that the government loses $233 billion to $521 billion per year to fraud. To put this in context,
total aid to ukraine is 65.9 billion dollars the u.s defense budget is 824 billion dollars 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 two percent of gdp an aircraft carrier costs 13 billion dollars so that's the magnitude of what we're losing
right now when we have extraordinary debt of over $30 trillion in interest payments. And so it makes ransomware look almost insignificant by comparison. We played a pretty central role in stopping fraud during the pandemic. 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.
Because all that you need is a name, date of birth, social. You could pinky swear that you're a Lyft driver and you could start collecting $600 per week. The week after we were introduced, it went down to 6,700 claims per week. And so then Michael Weishart is the director over there of Arizona DES at HeyBlake.
He said, listen, we processed about 265,000 claimants that we're 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 organized crime and overseas groups. So we're going to run those six months worth of claimants back through y'all in December. I said, OK.
So when they did that, of the 265,000, how many do you think even tried to verify their identity?
92,000. Two thirds didn't even try. We were able to successfully authenticate, I think about 86, 87,000 of the 92, which is our job. And then other service channels handle the rest. 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. 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.
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 in like 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 person to prove your identity.
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