Mike Collier in Riga -
The best business ideas are often those that provide a satisfactory answer to a simple question - in which case Latvia's Veritweet should be onto a good thing. If someone asks you if you trust what you read on Twitter, chances are you will answer "No" - unless you are the sort of person who believes the moon landings were faked by Lee Harvey Oswald from his base in Atlantis. Veritweet lets you answer "Yes" without the danger of being dragged away by men in white coats.
The company is the brainchild of Latvian entrepreneur Rihards Gailums. Like any self-respecting internet player, he checks his iPhone throughout his conversation with bne at Riga's trendy Birojnica, a bookstore-cum-cafe-cum-open-office-space where one gets the feeling the clients are all putting the finishing touches to their own billion-dollar business plans as they sip espressos and prod iPads.
In essence, Veritweet is a service "broadcasting Twitter for a niche market," Gailums says. Users all have verified identities, be they individual or institutional, so Veritweet tweets have an official stamp that is all too rare in cyberspace. Such verification would have helped news outlets in Australia avoid the problems they got into in April, when they relied on a fake Twitter account claiming to be from Zimbabwe's ruling Zanu-PF party to debunk stories about Robert Mugabe being on his deathbed.
Gailums' first thoughts about the concept date back five years, but only in the last two has the idea grown into a fully-fledged business. "It's a simple concept, but quite difficult to implement," Gailums explains. "Social media were growing fast, so we started looking at that sector and saw Twitter had a problem with authentication of its users. There were lots of complaints from celebrities and other people about being impersonated. I was at a Twitter development conference in San Francisco in 2010 and realised that verification is very valuable to social networks, so we set about building an extra security layer for Twitter."
Raising money was a problem, Gailums admits, particularly if investors gained the impression they were talking to a European start-up that was hoping to expand into the US, rather than a US start-up that just happened to have its research and development offices located in Europe. "Keeping in mind the lessons we were learning in Silicon Valley, we made a business plan here in Europe and raised our first seed money from local venture capital company Imprimatur Capital. They had access to the [EU's] Jeremie fund to support small businesses, so we managed to raise €100,000 for the development project and have been working on it very heavily during the last year."
"From the very beginning, the concept was developed as the opposite of Google," Gailums says. "Our system doesn't collect a person's data. You control your digital identity, we just tell the rest of the world that it is really you and that you have paid for it, whereas Google will take your private data and earn money [from that]. The problem is that Google has taught people that everything is free, but really it is [charging] the price of all your tracking data."
Gailums suggests that ultimately a figure of around $20 per year for a secure digital profile is reasonable, in the same way that a domain name needs to be renewed on an annual basis. "We really think it's a niche for the future. In 20 years, every human being on the planet should have some sort of digital identity, so the potential is huge. Just think of what's happening in India or China: India is trying to introduce a programme right now because they don't even have personal, unique IDs for all of their people. This is a huge problem in a region where the internet still isn't very common."
"We basically work with sectors in which you need to know if the person tweeting is a real person. One of those sectors is governmental, so the first person we authenticated was the prime minister of Latvia, Valdis Dombrovskis. We have a system where it's also clear whether a tweet is coming from someone's personal or official stream," he says.
It has been a happy coincidence that Latvia's current cabinet has more than its fair share of young ministers who are comfortable tweeting, including Foreign Minister Edgars Rinkevics and Economy Minister Daniels Pavluts, as well as Dombrovskis - all of whom regularly update their feeds.
Gaining the trust of public bodies while demonstrating that Veritweet is robust and reliable will help sell the concept to the private sector, believes Gailums, who is currently seeking investors to ramp up Veritweet's reach. "Working with just the private sector you would never get back your cash flow in the first year. It's the same problem for internet start-ups everywhere: you can't monetise it straight away even if you can get a customer base. To prove the concept we're trying to align it with business-to-business services."
Despite their incredible popularity, social media are notorious for failing to return a profit. Even the titanic Facebook has yet to earn a penny despite being "worth" between $75bn and $100bn if valuations of its forthcoming IPO are to be believed. Yet one statistic Gailums calls up live on screen indicates the size of the niche Veritweet could fill. Of the 140m people Twitter claims as users, a paltry 26,000 have been verified by Twitter's own system. Everyone else could in fact be Lee Harvey Oswald tweeting from Atlantis. That suggests that Twitter itself or an established IT security company might be the best investor or even buyer for Veritweet, using it to bolster Twitter's questionable reputation for veracity and security.
But equally importantly, Veritweet can also add functionality to Twitter by allowing users to attach PDF files to their tweets and follow live video streams, opening up a range of possible applications from e-voting (useful in a country with a penchant for frequent referenda) to e-education via live broadcasts of lectures. A pilot scheme Veritweet is running in Sweden is already providing four online members of the audience for every one sitting in the lecture hall itself; students may never have to get out of bed again.
The technology has been used to provide coverage of conferences and seminars in Latvia with the local American Chamber of Commerce streaming a series of its events live. Veritweet has also been used to provide live feedback from viewers of TV shows. Early broadcasts saw comments scrolling across the screen dominated by a handful of users, but they did show the system worked and that by having only verified users, abusive comments and trolling miraculously disappeared.
Noticing Latvia's lack of an official presence in Silicon Valley, last year Gailums was instrumental in founding the Latvian American Business Association of California (LABACA) to help promote the Latvian tech sector in the world's most important shop window for IT investment. "It's a complete contrast with Estonia, Lithuania, Ireland, Finland... our investment agency is more interested in bringing investment companies into Latvia, not in tech companies going abroad. It's a pity. We're really trying to push them so they understand this is an important thing for any small economy. If you want to expand your economy, you need to be in some of the hubs to pick up contacts and investors."
The importance of a credible Silicon Valley connection cannot be overestimated, Gailums believes. Veritweet is technically a wholly-owned subsidiary of his US-registered company e-TAG and the ultimate goal is to break into the US, following the lead of Lithuania's hugely successful app store GetJar.
Gailums is under no illusions that the US market is easy to crack, particularly given the fact that Americans are so much more reluctant than Balts or Scandinavians to carry out all their banking online (Veritweet uses bank IT systems as one of its verification methods). Nevertheless, he is optimistic about future prospects, including back home in Latvia, citing the success of TechHub Riga, the first international expansion of London-based TechHub space for IT entrepreneurs. "A couple of recent start-ups will be moving out this year," he says. Their destination? Silicon Valley.
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