McKelvey Suggests Regulation for Metaverse

are you doing great? Vaccinated and happy? Cripple or double Oh yeah, same with us. We're waiting for that third. Well. It's interesting. We have talked a lot with you about, you know, the use of data, and this is something that you you know, it's front and center with you when it comes to data collection, managing it, data protection. And I think it's a timely conversation to continue having kind of always, but also in a week or so that we're now talking about Facebook, it's name change and

it's focused on the metaverse. I've talked about the metaverse more than I have in a long time. UM, that to me says Jim, even more data collection. How do you see it is? I'm just curious what meta stands for. I know, I know, but is this a good thing or worse thing? Can regulators keep up with it? I mean regulators are always going to follow behind popular trends.

I mean it happened with the automobile. You know, we started building whatever we wanted, and eventually the gut got involved and said, hey, look you need to put seat belts on this thing. And the government you know, had a big fight over whether we should have say seat belts and say cars, and eventually we came to an agreement that hey, look, airbags are good things. Um, I think regulation is probably necessary. And it comes a little bit later because you got to see what problem is

you're trying to regulate. You don't want to just start regulating when there's nothing wrong. What about when it comes to specifically the metaverse? I mean, what kind of regulations could you foresee being necessary for the metaverse? I don't know what the metaverse is. You're not the only one

speculate on that, not. You know, sort of the platforms right now have a business model that is sort of contrary to personal interests and basically on the platforms, uh, you're the product, and you get monetized in ways that are to the platform's benefits and not necessarily to your benefit. And I'll give you the sort of the classic example, which is that if your measuring engagement and you say, well,

the best thing we can do is keep our users engaged. Um, and then you realize that one of the ways to keep people engaged is to upset them, to feed them news and messages that anger them so they get more you know, engaged, but they're angry. That's probably bad for the individual. Like I don't want to go around being angry, but if Facebook wants to make me angry, they have the power to do so because they basically control what I see. That is disturbing and you know it makes

me angry, right exactly. Well it's interesting too, well and I think, well exactly, But what's interesting right now is right when we go to sites in something, we now are able to say, Okay, here's the data I want you to be able to have access to. Right, We're getting a little bit more. Say it feels like, although I'm never quite sure when I'm dealing with a digital world, really how much say I ultimately really have but it feels like we have a little bit more power. I

mean ultimately you really feel that way? Which way that yeah, that you have more power? Now? No? No, no, no, I'm saying that like I'm questioning even though like I'm being asked when I go to a site like how much data and how do you want to? You know, I still feel like in a digital world, I feel like there's just so much out there that we have no control over. You really want in line enlightened incentive.

So if the platform that is giving you that so called power is really making day, is really making money by manipulating you, then they're not going to give you that power. What will typically happen is the government will say, well, you have to give users this much control, and then they'll data dump, you know, fifty screens of asky code on you and say here, have fun with it. Go you know, learn to write and binary and you're just not going to be able as an individual to do that.

You need somebody who's essentially working on your behalf, and right now we don't have that. We don't have a uh an agent that represents you. Carol in the you know, uh, into transactions like Tim's not represented. You know, I'm an agent, but that's what you guys are working to do it invisibly. Correct.

We're trying, I mean, we're we're we're experimenting with you know, invisible digital agents that work on tiny, tiny amounts of currency, like the tiny little transactions where you know, I'll buy or sell your attention in a way that suits you, and I'll do it in a way that totally is not annoying you know. So in other words, I'm invisible most of the time. But at the point where I do something wrong and you notice that, you can call me up and go, hey, you screw that negotiation up,

don't do that again. You're like, don't don't sell my kids data. But you're you're absolutely fair to trade on my sexuality, you know, if you want to or don't monize my sexuality. Um, but you can. You can trade on my age and my demographics and all this other Like you tell me what's fair game and then let the agent sort of work on your behalf. What's interesting is we're in an era and I'm thinking about the

data collection that's just going out. Well, certainly it's happening in China, and they have incredible oversight of what they can collect from their people. I think about the people who have you know, tapped into twenty three and me and giving away a lot of information. I mean, I almost it's just a very weird, weird world where I think people are still giving away so much and do they realize the value of a jim. They certainly don't.

And one of the things that we had real trouble with it invisibly was figuring out ourselves what it was worth. And it just reminds me of the days when we started Square, Like Jack and I had no idea where the money was going. Took the better part of a year to find it out, and that was in the money business. You know, it's even worse than this data world where you know, originally all partners that we had were just misrepresenting their numbers by factors of ten. So

the numbers I was getting were just wildly inaccurate. And and the problem is that there's so much slop in the system that, um, you know, an AD could be worth a penny, it could be worth twenty cents, it could be worth you know, a fraction of a cent. You and you just don't know, so you have to let these little markets determine what those prices are because everyone's going to make up their own number, whatever number suits them. So it's the wild West and we're just

trying to figure it out now. Jim, I want to go right back to invisibly and try to understand exactly how you're able to do this. I understand how you can do this on behalf of a customer, a user of the service, but what kind of cooperation you're buying do you need from the side or the the app or the platform that this is serving as an agent of the user on behalf, Well, we need full permissions.

So it's a totally permission system where users give us access to the data and then we have to negotiate with our content providers to get access to their content. So it's it's totally open. It's just done in tiny, tiny increments, um, but we think it's possibly a remedy to some of the problems we're seeing with the platforms. But look, very very early days. I don't want people to run to invisibly dot com and say, oh my god,

mclby solved that. No, no, no, we're still experimenting. Um, this is a lot of the stuff that I talked about in the book, which is like I spent a lot of time doing stuff that's never worked. And the thing about stuff that's never worked before is that all of a sudden it starts working and then you go, oh wow. But right now we're in the fits and starts. We've got a product that's been pretty popular, but honestly, it's going to get a lot better and we're still

very very early days. Well what is it in terms of what you see on your platform and what people may be in terms of the data that I guess people are getting more comfortable with in terms of sharing or they're not. I mean, you guys collect so much data that we talked about it when we're going into the elections that you were getting some great insight about what was going on in the election. So I am curious in your platform, Jim, what other insight you are

are getting access to. So it's it's the interesting Carrol's what you just said before, which was before the break, you said how scary it is how much information we all shed on a daily basis, And it's true, and we asked people explicitly for things like access to their bank account information, access to their browser history. Would you

install a plug in? Would you do this stuff that you know I thought, which could be you know, very very invasive, And a high percentage of people are saying, if you'll treat it well and and actually compensate me for it, sure, because they have the off switch. I mean. The trick with invisibly is that the user controls the off switch if they if they don't want to trade something. So it's a way for people to come on and sort of explicitly control what it is, uh that they trade.

And look, it's primitive, early days, but the basic idea here is that your data is very valuable. But how how valuable is it? We don't really know. We we haven't had a market that's been clear. So let's start to have that market and then let people make their decisions. So what do you pay people for the information? Oh? Fractions of a cent, tiny bits, I mean, but it depends on the information. Like in some cases, we've got one sponsor that's uh, that's offering you know, tens of

dollars for an action. And I'm not gonna tell you what because I'll get all these people who preudulently tell you that. But like, there are those actions that result in you know, tens of dollars, but we're really talking about, in many cases fractions of a cent. What's the business model for the company? Oh, build it and taken it, take a percentage. I mean, it's it's it's it's the classic agent model. You know, we're going to be your agent on on on both sides of the transaction, buying

your attention and selling your attention. And what we want when we're buying it is to get you access to everything you could possibly want. And our first, you know, our first sort of big target is paywald news. Like I can't tell you the number of people who you know, get tricked into, you know, wanting to read an article alot and gets slammed into a paywall that preventsive we're

reading the article. And so we're going to try to negotiate eventually one day passed to all those articles that you don't even have to be aware of the fact that you've got, so you would be you would be paying for it or who would be paying for it, because you know you'll be paying for it from this tiny little invisible wallet you had, it's kind of it's got a balance in it, but you're talking about fractions of assent here. So if you want to be bothered with it, great. And if you say to me, look,

I don't want to pay for everything. I think everything should be free, I'll say, okay, Tim, let's talk about what free is free as you give me your tension for free and let me sell that, and then I'm gonna take what I sell that for and I'm gonna shove it in your wallet. I mean, if that's if that's free to you, cool. If not, I mean, he give us a visa card and we'll just hook up your up to you know, cook up to the cash app and you can pay. You're like, like, however you

want to fund this, it's up to you. And and and you know, you you can change your mind, like you can say, well, look, don't bother me in the middle of the day. But you know, if I'm waiting for a plane or something, or got five minutes to kill, maybe I want to watch and ad and earn twenty cents, you know, Jim, to some extent, we do do we already do that on some of I think about whether it's Uber eats or a platform. Right like, I use it and then I get a credit and I get

I get, you know, little perks to do. I mean, we kind of already are doing that in some ways, but maybe not really understanding what we're giving away. Yeah, it's it's a behavior that's common. The problem is that it's a behavior that we're used to doing in in dollars and tens of dollars and hundreds and thousands of dollars.

But it's not something that we're used to doing in fractions of ascent, and so we don't think it works at fractions of ascent unless some agent that works on your behalf, because nobody wants to be bothered by a quarter cent here and ten cents there. It's just too small to really annoy me with. Hey, Jim, I gotta ask about crypto, especially in regard to regulation, because of what Square does with crypto, and and how Square has been thinking about crypto for years. I know you've been

thinking about crypto for years. What is it? What does the US government need to do, What do regulators need to do when it comes to regulating crypto? Well, I think government regulators and I've talked to a bunch in

the last week about this very topic. Need to understand that it's coming in multiple forms, including those forms named after various dogs, UM, and that there's some really really positive things, but it's going to be disruptive to the system, and the way we regulate something that's new determines how it unfolds. And so I'm hoping that we'll get a lot of thoughtful, UM sort of forward looking policies that

that allow the innovation to continue. I mean, you don't want to squelch out the innovation because that's super valuable UM. And it's it's easy to say that in the question is what do you do to protect us from you know, in some cases ourselves. Jim, forgive me. You just go about forty seconds. What's the mind blowing utilization of crypto? Ultimately?

And I bring it up because every time we talk crypto, were like, I'm quite sure I totally understand it yet And as I get from much smarter people than myself, what is kind of the mind blowing concept of crypto that that you should maybe keep in mind that's potentially going to happen. Just kind of quickly, what what crypto is going to do ultimately is allow many people who have been disenfranchised to get into a system that's safe and fair. And you don't realize because we're all, I mean,

you're all your Bloomberg listeners. You guys are all probably well to do. Okay, I'm well to do. Everybody in this broadcast is not in the target market that's going to be most effective by these are people who have literally been preyed upon their entire existence, and we'll have

access to the things that we take for granted. And that's that's going to be the big mind blowing thing and won't be mind blowing for folks like us, because look, if you're part of the regular banking system, you're fine, you don't neither sen like. But if you have been shut out, this will be an an for you in the future. Alright. Really appreciate Jim McKelvey. He's co founder of Square, founder and chairman of Invisibly, and also a

member of the board of the St. Louis Fed. Thank you, Thank you so much.