Because decentralized identity can make life better: Why we converted to a public benefit corporation

by Jan 11, 2021Announcements, Public Benefit Corporation

In December, reincorporated as a public benefit corporation, joining a worldwide movement committed to align profit with a positive material impact on society.

For Indicio, it has always been clear that decentralized identity benefits the public—that is what brought us, the founders, together. It solves a massive structural flaw in the architecture of life online: The lack of an effective way to encode uniqueness and thereby verify individual identity; and it does so in a way that removes the need for third parties to control and store personally identifying information.

Decentralized identity allows people to give meaningful consent to sharing their data in a maximally private and secure way. It answers the deep disquiet over the misappropriation of personal data that has been given a voice in data privacy regulation—and it makes compliance with such laws easy.

All of these are public “goods.” Now, add in decentralized identity’s capacity to help those who have no formal, legal identity, those who are stateless, those who are refugees—a number estimated at over a billion people—to prove that they exist, secure access to health and financial services, and establish rights over property.

To dream this big we have to formulate achievable, incremental steps to get there. We have to create the technology and infrastructure that can realize these public goods; we have to make the tech interoperable and, wherever possible, open source. We have to make it as easy as possible to understand, use, and adopt. We have to build use cases and help others build use cases to reveal its value.

As Indicio grew, and as we saw decentralized identity as an ecosystem that needed to be seeded and cultivated, the public benefit corporate model became more and more compelling as a way of ensuring that our beliefs and values were baked into this mission. But we also saw the benefit corporation as a way of encoding a positive and inclusive culture inside our company. If each team member is genuinely valued for the work they do, they will give their best to our clients, they will become the most effective advocates for our mission.

A brief overview of the benefit corporation movement
The idea of a benefit corporation begins with long-simmering dissatisfaction in the argument that the only responsibility or duty a company had was to increase its profits, a claim that had been forcefully made by University of Chicago economist Milton Friedman in the New York Times magazine in 1970. Arguing that only an individual had responsibilities, and a corporation couldn’t be a person, Friedman defined a new era of shareholder supremacy in business.

In practical terms, the easiest way to see whether a business was acting responsibly was to see if its share value was increasing, a simple metric that had profound consequences for the way a business or corporation was run. The CEO’s job became defined by what he or she did to increase their company’s share price. Shareholders didn’t need to buy into the reasons why the business was founded, or the vision of its founders, or even the value the company provided its customers and society: share price higher, company good. There was no obligation to think, strategically, outside the short-term, or to consider the welfare of community, the environment, or the company’s employees.

Dissatisfaction with the inflexibility of this model from the business side and growing public interest in economic and environmental sustainability and social responsibility helped to open up a legal middle way between for-profit and nonprofit corporations. The “benefit” corporation was the result and the first benefit corporation legislation was introduced in Maryland in 2010. Simply put, profit and public benefit can be combined in a way that allows company directors to balance shareholder and stakeholder interests in the pursuit of that public benefit. Many states now offer similar legislation. In Delaware, where Indicio is incorporated, such corporations are called public benefit corporations.

The case for benefit corporations has been most forcefully put by one of the best-known B-Corps, Patagonia. In registering as the first California benefit corporation in 2017, founder Yves Chouinard said, “Benefit corporation legislation creates the legal framework to enable mission-driven companies like Patagonia to stay mission-driven through succession, capital raises, and even changes in ownership, by institutionalizing the values, culture, processes, and high standards put in place by founding entrepreneurs.”

The social impact of technology
It’s not surprising that environmental impact has been central to defining the B-Corp movement and the companies that have embraced it. 1 But decentralized identity offers a similar opportunity for tech companies to think about the social impact of technology.

We need to set standards for what the public should expect from technology companies and from decentralized identity. We need independent third parties, like B-Lab, which was instrumental in creating the B-Corp model, to help codify and provide independent certification that we—and other tech companies—are walking the walk on digital identity, data privacy, and security when we build and govern decentralized identity infrastructure.

At a time when “Big Tech” is looking more 19th century than 21st century in the way it acts—“Big Tech face its Standard Oil moment” was an end-of-2020 headline in the Financial Times—a transformational technology like decentralized identity gives us an organic opportunity for a reset.

We have the means to give people control of their identities, the right to share their data, and to give the identity-less legal agency in the world. We believe this will trigger a new wave of innovation that will benefit business and organizations too. But we believe, most of all, that it’s the right thing to do. A public benefit corporation is not just the way to do this, it’s the way to create a meaningful conversation in business about the role of technology in people’s lives—and to hold us accountable for all this talk.

1The use of a distributed ledger in decentralized identity does not involve “proof of work” or mining, both of which entail substantial energy costs. Instead, with the optimal network size being 25 or fewer nodes, writing credentials to the ledger is energy comparable to logging into a website or sending a form. Much of the activity in a decentralized identity ecosystem takes place off ledger. This all makes decentralized identity a low-energy consumption practice.


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