Digital world solutions to physical world problems

Digital world solutions to physical world problems
In a recent talk, Madrona Venture Group Managing Director Matt McIlwain discussed how digital information can address real-life challenges, but also how companies can positively influence public policy in their industry when they employ a proactive mindset. Photo: gas2.org

New technology can bring uncertainty about its impact on society. As companies such as Waymo begin rolling out self-driving vehicles, safety concerns have led Washington lawmakers to create a working group to offer public policy recommendations when those cars appear on the roads. And although Facebook was started over a decade ago, a recent scandal over the improper use of personal data by political consultancy Cambridge Analytica prompted a congressional hearing and has raised privacy questions over how user information is handled by companies that rely heavily on that data for their features and services.

In a recent talk, Matt McIlwain outlined the value of digital information in the physical world, but also how companies can positively influence public policy governing their industries if they employ a proactive mindset. He is the managing director of Madrona Venture Group, a Seattle-based venture capital firm he says “invest(s) in companies often times from day one, and by day one I literally mean day one.”

At an April 18 event in Seattle hosted by the Institute for Legal Reform (ILR) and the U.S. Chamber Technology Engagement Center (C_TEC), McIlwain touted Seattle metro’s status as a major tech hub as evidenced by Microsoft, Amazon and Google’s corporate campuses located in Redmond, Seattle and Kirkland, respectively. He also cited the Allen Institute, Fred Hutchinson Cancer Research Center, Global Innovation Exchange (GIX) and UW Research.

“There are (a) number of great ecosystems in the world and in the United States of America,” he said. “Seattle happens to be a very special one.”

The data available to them and tech startups can create an opportunity for the “physical world and digital world working together to solve a physical world problem,” he said.

One example he cited is real estate company Redfin, which he said has “fundamentally transformed the experience of buying and selling your home” by collecting user data and  search history on the site to create a profile, which can then be used to alert users about relevant house listings and the price they’re likely to sell.

That same kind of digital-physical connection is used with Amazon’s bookstore, he said. “Almost everything they do is different from a traditional bookstore; how they organize the books, the lack of prices on the books…the fact that you pay a different price if you’re a prime member.”

Digital technology could also lead to significant changes in the transportation sector. Madrona was an early investor in Booster, a startup founded in 2015 that offers users a mobile fuel station via a smartphone app. Started in Seattle, the company eventually moved to California in response to customer demand. No service fee is charged, and the prices are comparable to those at a gas station.

“They couldn’t possibly have done this five years ago,” McIlwain said. “But now I can take out my phone, say ‘Give me a boost,’ the fuel delivery comes to my place of work.”

In a blog post, McIlwain cited Booster’s success in part to a combination of “designing efficient and effective physical delivery systems” with “navigating federal, state and local regulations and relationships. Blending these elements into a compelling and economically sustainable offering is hard. But, Booster has done exactly that.”

At the April 18 event, McIlwain said, “Imagine that you’re a no-name company and you go to the governmental leaders and say: ‘We want to fill up people’s cars with gasoline at their places at work.’ Think about all of the layers of regulatory challenge that presents to you. It presents a national standards layer of challenge. It presents a state jurisdictional layer of challenge.”

He adds that at a local level, “a mayor and a city council may not approve. Even if they approve, there is a fire safety chief in that city that has a say. Are you being compliant both from an environmental perspective as well as a safety perspective in delivering the fuel?”

He added: “Some of these things can be a barrier to innovation and adoption, but a lot of times if you’re thoughtful and take the long-term view, as Booster has, it can actually become a source of competitive advantage” by “influencing local leaders in the public sector to say: ‘Shouldn’t this be the standard?’”

Watch a video of the April 18 event below:

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